DEFICIT WATCH TRACKS COST OF WAR ON TERROR: S.A. GROUP WARNS OF DANGER POSED TO ECONOMY

January 3, 2003

DEFICIT WATCH TRACKS COST OF WAR ON TERROR: S.A. GROUP WARNS OF DANGER POSED TO ECONOMY
By W. Scott Bailey

A San Antonio-based national think tank is set to release a report this month that the organization's top executive says will reveal how the United States is "planting its own seeds of destruction" in the war on terrorism.

That report, says International Horizons Unlimited (IHU) President and CEO Dr. Saul B. Wilen, will divulge the staggering costs associated with the war effort that could prove to be disastrous for the Texas economy.

IHU is set to release its first Deficit Watch - a bi-monthly report detailing the ongoing costs of the war on terrorism. Wilen says the initial report will show that the United States will spend nearly $290 billion toward the war effort in 2003. That, according to IHU, is more than double the total amount spent between Sept. 11, 2001, and mid-December 2002.

"The deficit is a dynamic indicator of the financial stability of America," says Wilen. "The Deficit Watch goal is to be a single objective source of information compiled from public records and budget documents where the public and private sectors and the media can turn to learn about the factors contributing to the rising deficit, the impacts of the war on terrorism and other significant influences resulting in the growing deficit threat."

The inaugural report, which will soon be distributed to the media, public officials and private-sector economists nationally, will reveal that the United States is projected to spend $287.5 billion in 2003 to fight the war on terrorism. That compares to $139.1 billion IHU says was spent from the time of the attacks on Sept. 11, 2001, through Dec. 19, 2002.

As a result, IHU officials say the diversion of funds essential to support important state services and programs - such as education and health care - will only further weaken the U.S. economy. In Texas alone, IHU predicts that the Lone Star state will now experience a revenue shortfall of $6 billion to $9 billion for fiscal 2003. That's greater than the $5 billion Texas Comptroller Carole Keeton Rylander originally projected.

Rylander was unavailable for comment. But a spokesman in her office, while agreeing that the shortfall is expected to surpass the $5 billion mark, says that is not as a result of costs associated with the war on terrorism.

Spokesman Patrick Fortner says the comptroller's office is attributing the shortfall to a "decrease in business investment" and "softer sales-tax figures."

Wilen says Rylander has to maintain a political distance between the war on terrorism and the budget shortfall to avoid providing ammunition to the Democratic camp. But politics aside, Wilen stresses that the money Texas could lose to the war on terrorism presents serious problems.

Asked what the projected spending on terrorism would mean for Texas, he says, "Disaster. Disaster in education and disaster in health care. That's frightening because we are already at the bottom of the heap in health care."

COSTLY EFFORT

On Dec. 17, IHU sent out a request across the nation to city and state officials and to the private sector, enlisting their aid in gathering data for Deficit Watch. Within 24 hours of that request, Wilen - who has been invited to serve as a speaker at the 13th World Conference on Disaster Management in Canada - says 287 entities stepped forward to provide information and assistance.

The federal government, Wilen says, was less cooperative.

"They haven't been willing to come forward," Wilen adds. "But they've had no option because it's public record. It just took (IHU) to put it all together."

Some of those who have come forward to provide useful information include a couple of state comptrollers. Wilen won't identify their names or the states they represent. He also says a number of representatives from Fortune 500 companies have also offered their assistance.

The initial Deficit Watch report will show that the United States spent a total of $40 billion in military costs related to the war on terrorism between Sept. 11, 2001, and mid-December 2002. Those costs, according to the report, are conservatively projected to surpass $70 billion in 2003. Wilen says they could escalate to well over $200 billion if the United States is pulled into a lengthy war with Iraq.

Other areas worth noting include projected costs for businesses and universities. Based on numbers provided by IHU, private-sector investment in security could reach $4 billion in 2003. That is double the amount spent between 9/11 and year-end 2002.

University and private-sector research related to the war on terrorism is projected to cost at least $3.9 billion in 2003. That compares with the $1.7 billion IHU says was spent in between 9/11 and year-end 2002.

PLAYING CATCH-UP

Wilen says IHU acknowledges the need for the United States to fend off global terrorism. But he adds that the federal government is going about it the wrong way, and that, he explains, could generate dire consequences.

"We must fight the war on terrorism," he insists. "But we must do it cost-effectively and through prevention. We are doing neither. We are almost 100 percent reactive. We can't win that way."

Wilen says the missteps in how the United States is dealing with terrorism come from misunderstandings and miscalculations. "(Terrorists) are much smarter than we give them credit," he says. "These are people who sleep in caves but at every turn (they) out-think us. These people are goal-oriented. But when we are responding, we aren't goal-oriented. We're playing catch-up."

Wilen continues, "Terrorists won't put us out of business with bombs. But if they rock our economy, they will put us out of business."

Although Wilen says the news in the initial Deficit Watch is not good, he adds that San Antonio's national profile could rise as a result of the project: "Here's a company out of San Antonio that is doing what no one else in the country chose to do - to look at our economic vulnerability. In the process, we have immediately jumped this informative piece to a national phenomenon."