Collateral Damage: Syria Strike Would Hit U.S. Budget

By White House FOXBusiness

A Potential Strike on Syria...But at What Cost?'s Victoria Craig highlights one of the main budgetary concerns facing the Pentagon.

President Barack Obama said, in no uncertain terms, the United States will not enter into a war with Syria.But that doesn’t mean America’s involvement in that nation – no matter how limited – won’t cost the U.S. billions of dollars.

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After a gruesome chemical weapons attack on Syrian civilians from the Bashar Al Assad regime two weeks ago, President Obama made clear the U.S. will not stand for the moral violations, and the attack clearly crossed America’s “red line.” Though he said he is ready to retaliate, the president left the decision almost entirely up to Congress. The power is now in the legislative body’s hands to lay out the broad brushstrokes of a potential strike.

And the decision the legislators will make is anything but certain: “The looming House rejection of the Syria resolution will reverberate for years and years,” Potomac Research Group said in an ominous note Friday.

Echoing that sentiment, LandColt Capital Managing Partner Todd Schoenberger said the president’s strategy faces a sure battle in Congress.

“His comments (Wednesday) from Sweden were telling: Congress is to blame for the red line. So, he knows he needs Congress to secure the green light for military action against a country that poses no imminent threat against the United States,” Schoenberger said.

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But what also makes the plan so dicey is its cost. This military intervention comes at a time when Congress  is only in session for nine days this month, and as it prepares for what’s sure to be a drawn-out battle at the end of the year over the nation’s budget and debt limit.

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The Continuing Costs of Conflict

No matter what conclusion Congress reaches, one thing is certain: The U.S. Department of Defense will potentially be on the hook for billions of dollars as a result of an attack. It’s just a question of exactly how much.

The problem the DoD faces, though, is a depleted budget thanks to last year’s sequester: The billions of dollars in arbitrary cuts to defense spending that hit the Pentagon with brute force.

So how will America finance another battle?

“There’s no price tag or budget given to this operation. What does that do to debt and an already fragile situation in the U.S.?" Schoenberger said.

While the total costs of the military engagement aren't clear yet, it costs about $1.5 million for every Raytheon-made (RTN) cruise missile launched. Analysts say it's possible for hundreds to be lobbed at Syrian targets.

Additionally, Admiral Jonathan Greenert, chief of naval operations, outlined on Thursday additional costs of military involvement in Syria for between the 60 and 90 days Congress and the president must first authorize.

A carrier strike group, for extended operations, would run the U.S. about $40 million per week, while a destroyer costs around $7 million for every week it’s in use.

In a kind of foreshadowing back in July, General Martin Dempsey, chairman of the Joint Chiefs of Staff, wrote a letter to Congress laying out possible options for the potential use of U.S. military forces in Syria. In his assessment of limited stand-off strikes, Dempsey said potential targets include regime air defense, air ground, missile and naval forces and supporting military facilities – and this kind of strategy would involve “hundreds of aircraft, ships, submarines, and other enablers.” 

He went on to warn of the implications to the nation’s fiscal situation.

“We must also understand risk – not just to our forces, but to our other global responsibilities. This is especially critical as we lose readiness due to budget cuts and fiscal uncertainly….Once we take action, we should be prepared for what comes next. Deeper involvement is hard to avoid.”

In stark contrast, George Little, a spokesperson for the DoD, said Thursday the major defense cuts from last year aren’t likely to pose much of an issue.

“When it comes to sequestration and budget uncertainly, when this country decides to come together and take military action for a just cause that’s rooted in legitimacy of a very strong international norm, then we’ll find a way to fund it,” he said.

Still, despite the back and forth and polar opposite viewpoints form those in the government, Schoenberger only sees this Congressional battle over Syria as little more than a political game for the Obama administration, a way to take the pressure off a high-stakes battle over the nation’s finances.

“Due to sequestration, our military has limited resources,” Schoenberger said. “What better way to 1) divert attention from the upcoming fiscal fiasco than by starting a war, and 2) how about asking Congress to increase the debt limit to help pay for military action?”

Indeed, this item of business will likely dominate focus for the nine days Congress is in session this month, while other pressing fiscal issues remain on the back burner.

In order to keep the government functioning through the end of the fiscal year, which ends on September 30, Congress much reach some kind of bargain before members leave for a fall break, and a continuing resolution is almost certain, according to a research note from the Potomac Research Group Wednesday.

But that’s not all; the federal government is once again rubbing up against the dreaded debt ceiling -- the $16.7 trillion cap to the nation’s borrowing power -- an issue that must be addressed before 2013 draws to a close.

The Treasury Department is currently undertaking so-called "extraordinary measures" to allow the country to continue funding itself, but Congress will have to vote to raise the cap by mid-October. In the past, debt-limit fights have sometimes roiled the markets -- and helped spark a downgrade of the American debt rating by Standard & Poor's.

PRG said the outcome is more unclear than the almost-certain budget resolution.

“We think the chances have improved greatly that Congress will approve a modest stop-gap hike – perhaps $250 billion – postponing that slugfest until early 2014. The sequester, meanwhile, will continue."

Still, the question remains: What happens if Congress passes its resolution on a Syria strike? PRG wonders whether a supplemental funding bill to finance the strike will become a ‘must pass’ way for a deal to extend the debt ceiling and modify or kill the sequester altogether.

Michael Block, chief strategist at Rhino Trading Partners, said the whole debt ceiling, federal budget debacle is just “noise.”

“I think there’s a lot of concern coming into this month and into next month about the debt ceiling and us hitting that,” he said in a conference call Wednesday. “I think it’s all a lot of noise. It’s been noise in the past. I remember the hand-wringing that went on at the end of the year. And what happened there was we had a lot of drama, and then finally Joe Biden came in and saved the world. 

"You’re going to have a lot of railing back and forth about the morality of bombing Syria or not, and then you’re going to get into what it’s going to cost," he said. "You know, these Tomahawk missiles aren’t free. Look at Raytheon stock and you know that.”

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