War costs could be under $170 bln: Pentagon

WASHINGTON (Reuters) - The wars in Iraq and Afghanistan will cost the United States less than the $170 billion estimate given earlier this year by Defense Secretary Robert Gates, the Pentagon's budget chief said on Tuesday.

"I expect it to be less," Pentagon Comptroller Tina Jonas told Reuters after a speech to a conference sponsored by Jane's Information Group. She did not give a figure.

Jonas said would discuss with Gates whether to give lawmakers a total estimate for war spending needs. The Bush administration has already requested $70 billion for the fiscal year starting October 1 and is pushing for about $100 billion more for the current fiscal year.

Asked whether Congress might combine fiscal 2008 and 2009 war spending, Jonas told the conference she was confident that lawmakers would "come to some accommodation."

That idea got a boost from Senate Armed Services Committee Chairman Carl Levin, a Michigan Democrat, who told reporters, "It makes sense to me to attach (FY09) bridge funding to get us...into early next (calendar) year."

Levin was to meet with Gates this week to discuss ways of prodding Iraq to pay for more of its own reconstruction costs, relieving U.S. taxpayers of some of the burden. "My own approach would be to prohibit the obligation of funds in certain areas, including Iraqi reconstruction," Levin said.

Sen. Lindsey Graham, a South Carolina Republican, agreed, saying: "It's only fair and appropriate they (Iraqis) fight more and they pay more."

Democrats also expect to try to add language to the war-funding bill on ending the U.S. combat role in Iraq, which President George W. Bush has consistently opposed.

The White House has warned Congress it must approve additional war funds by the end of May or risk the start of Defense Department layoff notices.

Jonas said the Pentagon was working on contingency plans, in case those funds were not approved.

COST PRESSURES WEIGH

She said U.S. defense spending, including base budgets and supplemental war spending, was around 4.7 percent of gross domestic product -- lower than during other major conflicts.

Defense spending reached 8.9 percent during the Vietnam War and 6 percent during the defense buildup under former President Ronald Reagan.

Jones expressed concern about rising operating costs, spurred by a tripling of spending on fuel and steady increases in health care costs.

In constant fiscal year 2009 dollars, the Pentagon budget was expected to decline 3.3 percent by fiscal 2013, she said.

Procurement spending was expected to increase 9 percent over the same period, while research and development spending would fall nearly 14 percent.

She warned that pressures on defense spending were mounting, as the country was forced to spend more on health care for the poor and elderly and the next administration could be facing a possible "train wreck."

Jonas also expressed concern about cost increases and schedule delays in major defense acquisition programs. She said 17 programs had breached congressional cost overrun thresholds and required certification to continue.

The portfolio of major defense programs had grown by $900 billion to $1.7 trillion since fiscal year 2001, but cost growth accounted for 44 percent of that, Jonas said.

"That is a stunner. We have got to do better in managing costs," she said, noting that would be a big challenge for the next administration.

(additional reporting by Richard Cowan, editing by Alan Elsner and Eric Walsh)