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Islamic State Fighting Strains Pentagon Budget

President Barack Obama's expansion of airstrikes in the Middle East is creating new strains on Pentagon planners who thought the days of costly military operations in that region were over—at least for now.

The U.S. military campaign is expected to cost tens of billions of dollars in the short-term, creating new demands on a tightening Pentagon budget.

That volatile combination is certain to put renewed pressure on Mr. Obama and Congress to come together and reconsider spending caps on the U.S. defense budget that resulted from a bitter and protracted budget standoff in 2011.

But deep partisan divisions over the budget may resist even the widespread political support for taking on Islamic State militants controlling large chunks of territory in Iraq and Syria.

Instead, lawmakers are relying on an existing pool of extra wartime funding that the U.S. has used for more than a decade to pay for military operations in Iraq and Afghanistan.

"The debate is still locked in the trap that it's been locked in for some time," said Rep. Adam Smith (D., Wash.) "The Gordian Knot hasn't changed."

The Pentagon is spending up to $10 million a day on the growing military operations in Iraq and Syria, military officials said. Depending on the size and intensity of the U.S. airstrikes, they could end up costing between $2.4 billion and $6.8 billion a year, according to a new estimate from the Center for Strategic and Budgetary Assessments, a think tank with close ties to the Pentagon.

Those estimates pale in comparison to other Pentagon priorities, such as the $85 billion the U.S. has allocated for military spending this fiscal year in Afghanistan.

But the spending in Iraq is expected to increase in the coming months as the Pentagon sends more forces and devotes more resources to the fight against Islamic State militants. That is sparking a new push from lawmakers and Pentagon leaders to make a deal to eliminate automatic spending caps that are reining in military spending.

"You can't cut the military while we keep asking them to do more," said Rep. Buck McKeon, (R., Calif.), chairman of the House Armed Services Committee.

The Pentagon isn't only facing new threats in the Middle East; it also is confronting challenges from Russian forces in Ukraine, the Ebola crisis in West Africa, regional instability in North Africa, and continuing risks from North Korea.

Nonetheless, the current crises may prove incapable of moving the needle in the debate because lawmakers can continue to rely on budgetary maneuvers, such as supplemental wartime funding—the pool of extra money—to cover the costs, said Todd Harrison, a defense budget expert at the Center for Strategic and Budgetary Assessments.

"That is kind of the easy compromise solution," he said. "You can fund these operations and you can fund even more, and you don't have to change the budget caps."

Last December, lawmakers and Mr. Obama agreed to a short-term deal to avoid the steepest cuts until 2016. But efforts to come up with a long-term agreement to eliminate spending caps have been thwarted by ideological divisions about how to fix the problem.

Many Democrats want to raise taxes or tap other sources of revenue to cushion the blow of cuts sought by Republicans to domestic programs. Many Republicans oppose raising taxes as part of any pact, but want to restore military spending.

Some lawmakers are arguing that relying on the supplemental budget, known in Washington as Overseas Contingency Operations funds, are at best a stopgap measure. "OCO is going to have to be increased to pay for those operations, but that does not heal the wounds of the cuts," said Rep. Mac Thornberry (R., Texas), vice chairman of the House Armed Services Committee. "Further cuts when your tempo of operations is going up are just foolish."

Lawmakers from both parties said they don't expect a real budget debate to begin until after November's midterm elections, which could tip the balance of power in the Senate to Republicans, giving them full control of Congress. That would provide the GOP with more clout in negotiations, but they still aren't likely to force through a compromise without help from Democratic lawmakers and support from Mr. Obama.

But some lawmakers say Congress can't keep deferring the tough decisions, especially now that the U.S. is becoming more involved in the Middle East.

"We need to start rebuilding right now," said Sen. James Inhofe (R., Okla.), the top Republican on the Senate Armed Services Committee. "This is a war—and you've got to win a war."