A Project of The Annenberg Public Policy Center

The $79 Billion Iraqi Surplus, Reconsidered

We’ve criticized both Barack Obama and Joe Biden several times now for claiming that the U.S. is spending $10 billion a month to Iraq while that nation is sitting on a $79 billion surplus. We wrote that the $79 billion figure was out of date because Iraq had since passed a $22.3 billion supplemental spending bill. Our criticism was based on a report from the Government Accountability Office. But we misread the report. The figure that Obama and Biden use is probably still too high, but how much too high is an open question.

The Government Accountability Office projected in August that by the end of 2008 Iraq could accumulate a budget surplus of $67.2 billion to $79.3 billion, depending on oil revenue, price and volume. But, in early August, the Iraqi Legislature passed a $22.3 billion supplemental spending bill. So if the Iraqi government were to spend the entire supplemental budget, the country could end the year with a cumulative surplus of up to $57 billion.

But GAO spokesperson Chuck Young told FactCheck.org that the Iraqi government “may not be able to spend all that it budgeted for 2008, based on our analysis of Iraq’s past spending performance.” The GAO report we cited mentioned this as well. In 2007, for instance, the Iraqi government projected that it would end the year with an $8.1 billion deficit. Instead, Iraq ended the year with a $13.5 billion surplus. That’s because the government has been unable to spend money on infrastructure projects.

The upshot is this: If Iraq spends its entire supplemental budget, the nation will end the year with as much as a $57 billion cumulative surplus. But if 2008 resembles the past three years, the nation could well end up much closer to the $79 billion surplus Obama touts.