How the geezers cashed in on the Gulf War; and why you'll pay for it.

• Author: Ericson, Edward

And why you'll pay for it

Even if General H. Norman Schwarzkopf couldn't

count on $50,000 speaker's fees or his reported E$5 million book deal, the retired four-star would do just fine. As a general who maxed the pay grade, Schwarzkopf will take home 1,028,953 in federal retirement in the next decade alone. If he had quit the service before the Gulf war, however, he'd be taking home thousands of dollars less-not because of his service there, but thanks to a little-noticed statistical fillip created by George Bush's blind faith in the free market. Of course, Schwarzkopf isn't the only one cashing in. As a direct result of Bush's oil policy preceding Operation Desert Storm, the U.S. government will spend billions of extra dollars in the next decade upping the pensions of federal workers from the general on down to the lowliest GS-2.

Each year, all 3,700,000 military and federal civil service pensioners receive an annual cost-of-living adjustment (COLA). Even under ordinary circumstances, the bill for all these pension checks is staggering. Payouts this year alone are estimated at $56.5 billion, up three billion from two years ago. "I think it has something to do with inflation," a public information officer at the Pentagon offers helpfully. Problem is, inflation doesn't just happen. This time, George Bush helped hike it up.

Market forces are a complex product of popular mood and government action-or inaction, as in this case. Last August, oil prices shot up in the wake of Iraq's invasion of Kuwait, and fears of gas lines began to fuel a new national resolve to fight a war. At the same time, the Consumer Price Index, the government's main inflation barometer and the key indicator for the year's cost-of-living adjustment, shot up .8 percent, the biggest rise since the previous January. The oil price alone was responsible for about half of that increase.

But the oil shock did not last. A month later, President Bush opened the nation's strategic oil reserves, world oil prices plummeted to below pre-invasion levels, and inflation for the rest of the year retreated to a modest .3 percent. But by that time, irrevocable damage had been done. By failing to open the reserves sooner, Bush made himself responsible for $226 million in increased pension expenditures this year alone. Thanks to compounded COLAS, the outlay resulting from this brief increase in the inflation rate will probably reach $3 billion by 2001-money that might otherwise have been...