"The troops are fighting abroad -- Americans should be making some sacrifices at home. The great wartime leaders have all recognized this. They never shied away from asking sacrifices of the American people," he said.

Hormats said U.S. national defense spending as a whole was far lower today than during any other time of war. He said defense spending during World War II was 35 percent of gross domestic product, or GDP, 10-15 percent during the Korean War and 10 percent during the Vietnam War.

Hormats cited Presidents Abraham Lincoln, Dwight D. Eisenhower and Woodrow Wilson as successful models for war presidents. He said the current Bush administration should have engaged in a World War I process of "capitalizing patriotism" in order to generate revenue for the war through the sale of government bonds.

That process was also followed with great success by President Franklin D. Roosevelt during World War II.

Hormats said that during previous wars, in order to capitalize patriotism, the American public was told, "If your husbands, sons, brother or friends are fighting in the trenches of France you should be fighting in the financial trenches of the United States by buying war bonds."

"The problem is, I think, Americans have been led to believe that you can finance national security on the cheap. Americans were led to believe at the outset of the Iraq War that it would be short and cheap and that it would be paid for by oil. Well it's been long, expensive and it's not being paid for by oil," Hormats said.

"Americans were never really engaged in this war," he said. "After 9/11 there was a great opportunity to engage Americans and say, 'Look, we're at war here.' We should have and could have had some request for a response by the American people either to engage them."

Hormats said much of the current fiscal crisis from the Iraq War relates to the notion that national defense spending is part of discretionary spending.

AEI analyst Frederick Kagan told the meeting, "A very large part of the problem we have today stems from the fact that we continue to regard defense spending as discretionary. We continue to regard the wars that we are engaged in as luxuries from which we can withdraw without penalty if we so choose. And we continue to believe that we will be able to choose in the future any wars that we might fight and define their scope and nature in accordance with what we feel like spending on them."

"We see ourselves continuing to act freely and to be able to choose freely in a world that will force nothing upon us," he said.

"It should be apparent, whatever you think about the war in Iraq, whatever you think about the war in Afghanistan, whatever you think about the war on terror and all the complexities involved in that, it should be apparent that there are enough threats out there that are challenging American interests one way or another that we cannot be confident that we will be able to control entirely our participation in world affairs in the future," Kagan said.

Hormats said the current Iraq conflict was "the first war we've funded entirely without raising taxes, it's the first war we've funded without cutting domestic programs and where the borrowing has come substantially from lenders abroad."

Hormats said a bolder energy policy and an end to earmarks could decrease the U.S. fiscal burden. But nothing would have any real impact unless increasing entitlements are curtailed, he said.

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