Obliged to add troops, army agonizes over costs.

Speculation that the Bush administration, once reelected, would resurrect the military draft to shore up Army and Marine Corps forces in Iraq created much anxiety among voters in last month's presidential election.

In reality, substantive discussions about reviving the draft have not taken place, according to senior Army officials. It is no secret that the services oppose the draft. They point to the success of the all-volunteer force in satisfying the national security needs of the United States.

Army Vice Chief of Staff Gen. Richard A. Cody asserts the issue that should have been more thoroughly debated by political leaders, but has largely been ignored, is not the draft, but rather how the nation will pay for the additional troops the Army requires to keep fighting in Iraq and Afghanistan.

"We don't need a draft. What we need is to have the discussion on how we will pay for the end-strength we need," Cody said.

Specifically, the problem is that the Army must, by law, expand by 20,000 active-duty soldiers beginning in fiscal year 2005. These would not necessarily be new recruits, but soldiers who already have been added to the Army rolls on a temporary basis to meet urgent deployment needs--and are funded by emergency war appropriations, rather than through the Army's personnel budget. The Army's position is that it should keep the 20,000 extra troops, only for the time being, and continue to seek supplemental dollars to cover the expense until the pace of operation slows down.

But Army officials were unsuccessful in convincing Congress to endorse their plan. The defense authorization bill signed by the president in October allows the Army to fund the 20,000 soldiers with supplemental appropriations only through September 30, 2005. But beginning in 2006, these troops will have to be computed into the Pentagon's budget request, which now must cover 502,400 active-duty soldiers, instead of 482,400.

Cody and other Army leaders have been sounding alarms in recent months about the financial consequences of permanently making the force larger.

These officials paint a grim picture. They worry that the cost of adding more soldiers--estimated at $3.6 billion a year for each 10,000 extra troops--will result in cutbacks to weapons programs, research, training and equipment maintenance.

Congress, for its part, has been displeased by the Army's resistance to expand the force. The service's expressed intent to only retain those troops on a short-term basis was viewed by many on Capitol Hill as an accounting gimmick that failed to acknowledge that the Army is stretched too thin and must augment the force.

As to whether Army programs would have to be sacrificed to fund the 20,000 troops, the answer is "absolutely not," says a senior congressional staffer who works on defense budget issues.

He points out that Congress managed to formulate a funding work-around that would free up $10 billion in the Defense Department budget, beginning in 2006, to pay for the added soldiers.

To make up for the $10 billion it will cost annually to maintain the larger force, the Pentagon will be exempt from having to pay $10 billion a year into the "Tricare for Life" trust fund that finances health-care benefits for veterans and military retirees who are Medicare eligible.

"We relieved the Defense Department from paying these accruals," the staffer says. The responsibility for disbursing the $10 billion owed to the Tricare fund will be reassigned to the Treasury, which would take the money from "intergovernmental transfers."

This funding mechanism is often described by insiders as a "black hole" that the government dips into, to cover "unfunded liabilities," such as retiree benefits.

In effect, the staffer said, "we have created 'headroom' in the defense budget" so that the Army can afford to pay for the troops.

It is not yet dear, however, how exactly this budgetary maneuver will be executed.

Congress expects the Defense Department and the White House Office of Management and Budget to work out the details. The way the legislation is written leaves no loopholes for the Pentagon, the staffer says. There is always a chance, nevertheless, that OMB could refuse to go along and could dock the Pentagon $10 billion to cover the Tricare payment. If that happened, Congress would step in and fight back.

"How OMB will allocate the funds remains unknown," the staffer says. Although the increase of the force is a "done deal" as far the legislation goes, he notes, further actions are needed from the administration.

The legislation that makes it mandatory for the Army to get bigger also includes similar provisions for the Marine Corps. The Corps is about 3,000 over its authorized force level of 175,000. Congress will allow the Corps to unload the Tricare payment responsibility so it can add 6,000 more Marines in the next five years.

Earlier this year, Army Chief of Staff Gen. Peter Schoomaker presented his case against the permanent troop increase to congressional and administration leaders, but did not prevail.

Schoomaker has legitimate concerns, to be sure. The long-term financial implications of growing the Army are substantial.

"You have a retention investment, a healthcare piece, a training piece. Believe me, [personnel] it's the most expensive piece," Schoomaker told reporters. "That's why [Chief of Staff] Gen. John Jumper's trying to reduce the size of the Air Force. That's why the chief of naval operations is trying to reduce the size of the Navy."

As long as the Army remains heavily engaged in Iraq and other hotspots, Schoomaker's argument may not resonate, especially at a time when the service is activating an unprecedented number of reservists and guardsmen to keep up with deployment demands. It is arguable, however, whether it makes sense to shift the Tricare burden to the Treasury to offset the cost of adding troops.

Observations in recent months by senior Army leaders suggest that they would much rather have Congress increase the Army's budget overall, than have it artificially produce the money by relieving the Pentagon of its financial commitment to retirees' and veterans' benefits.