US Democrats forecast 3.5 trillion dollar in war costs

WASHINGTON, Nov 13 (Reuters) The Iraq and Afghanistan wars could cost the United States 3.5 trillion dollar through 2017 if ''hidden costs'' like higher oil prices, care for wounded soldiers and interest on borrowed money are counted, congressional Democrats said today.

The estimate, in a report by Democrats on the Joint Economic Committee, is about 1 trillion dollar higher than an Oct 24 analysis of war costs by the nonpartisan Congressional Budget Office, which mostly weighed direct war expenditures and borrowing costs of more than 700 billion dollar.

The new report assumed the US would withdraw about half of its present combat troops from Iraq by 2013 and maintain 75,000 soldiers there from 2013-2017.

The estimate was released as the US House of Representatives again prepared to debate legislation setting timetables for ending US military involvement in Iraq, now in its fifth year.

Anti-war Democrats want to link new war funds to a call for combat troops to withdraw from Iraq by the end of 2008.

''We cannot afford this war,'' Senate Majority Leader Harry Reid, a Nevada Democrat, told reporters, noting that 3,860 US troops have been killed and 38,164 wounded in Iraq.

A Republican congressional aide, who asked not to be identified, said there were ''multi-billion-dollar errors'' in the report. ''There are no benefits calculated in here from curbing terrorism,'' the aide said. ''Removing the ... regime in Afghanistan was a benefit that doesn't seem to be reflected in this paper.'' Sen. Charles Schumer, the New York Democrat who chairs the Joint Economic Committee, acknowledged his staff's analysis did not incorporate positive economic impacts.

''No. That money would've been spent on other things,'' Schumer replied.

Since the attacks on the United States of Sept 11, 2001, Congress has appropriated about 604 billion dollar to fight in Iraq and Afghanistan and President George W Bush has asked for nearly 200 billion more dollar.

But the Democratic report estimated the total economic cost so far was about double that amount, at 1.6 trillion dollar.

It said the war in Iraq had further hurt the US economy by helping drive up world oil prices at a time of growing demand and declining excess production capacity.

''Both the direct effect of the war in reducing Iraqi oil production and the indirect effect of creating greater instability in the Middle East can act to increase oil prices,'' the report said.

Reuters RC VP0130