U.S. money is Taliban's No. 2 revenue source

Afghanistan Taliban
Taliban fighters hold their heavy and light weapons before surrendering them to Afghan authorities in Jalalabad, east of Kabul Afghanistan, Sunday, July 31, 2011..
AP Photo

It's no secret that war is expensive, but a report out Wednesday says the U.S. has wasted billions in Iraq and Afghanistan. More tax dollars will go down the drain unless the government makes big changes.

CBS News correspondent David Martin reports that in ten years of war, the U.S. has paid contractors $206 billion to do everything from building schools to guarding diplomats. Today, a blue ribbon commission put a number on how much has been lost not to violence but to mismanagement and corruption.

Commission on Wartime Contracting Chairman Christopher Shays says: "We are wasting between $30 and $60 billion during the course of our engagements in Iraq and Afghanistan."

Shays says $30 billion in waste can be documented; Everything from leasing four-wheel vehicles at "grossly exorbitant rates" of about $40,000 a year, to a $124 million prison renovation that was never finished. The larger $60 billion figure includes an estimate of how much money lined the pockets of corrupt officials and even the enemy.

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The commission was told that except for the opium harvest, U.S. contracts were the Taliban's biggest source of funds. A separate investigation estimated $360 million has ended up in the hands of the taliban..

The sheer volume of spending -- as many as 260,000 contractors on the payroll at any one time -- amid the chaos of war was simply too much for the U.S. to manage.

A $60 million project to distribute seeds and fertilizer to Afghan farmers became a $360 million cash for work program "paying villages for what they used to do voluntarily." The commission also warned of massive new waste. For instance, there is a planned $82 million Afghan defense university that the government of Afghanistan cannot afford to keep up.

"What is the point of spending hundreds of millions on projects that will then fall into disuse?" asks commission member Dov Zakheim.

The commission warned that, without a major overhaul of wartime contracting, we can expect more of the same as the wars drag on.

  • David Martin

    David Martin is CBS News' National Security Correspondent.