Government auditors told Congress Thursday that waste and fraud in the reconstruction of Iraq have been rampant.  They predict they will uncover losses in the billions of dollars. Key Democrats on the House Armed Services Committee demanded an accounting within two months. 

You can see traffic flowing on some Baghdad streets--and evidence of progress.  In Baghdad the traffic lights are under repair.

Some reports say Americans and Iraqis have made headway reopening schools. The U.S. has pumped about $22 billion into Iraq reconstruction -- mostly between the years 2003 and 2005.   Many reports out of Iraq indicate the U.S. has little to show for the effort.

Democrats now running the House Armed Services Committee called government inspectors general and auditors to explain.

Rep. Ike Skelton, a Democrat from Missouri and Chairman of the House Armed Services Committee, explains. "The story on reconstruction is that it's not a total failure but it's not, by any means, a success."

The auditors said the assumption of those who planned reconstruction is that daily violence would be long over by now, but it is not.

Last week President Bush announced, in the face of mounting political opposition, that he plans to send more than 21,000 additional troops to Iraq to reduce the violence.

Comptroller General David Walker said Iraq was expected to be a relatively stable society. "That's the number one problem--the lack of adequate security.  And the lack of adequate security also impairs the ability to make progress with regard to oil, electricity, potable water as well as employment." 

After years of anecdotal reports of waste and abuse, the Pentagon is now auditing the overall performance of its largest contractors.

Special Inspector General Stuart Bowen, Junior told Chairman Skelton the first of the findings will be reported sometime this year:

Mr. Bowen added, "Then we can begin to parse what the actual waste number is."

To which Mr. Skelton asked, "Do you have that figure as of this date?"

"No, I don't have that figure yet," said Bowen. "Do you have a judgment as of this date?" he was asked.

"As I said, the potential loss could be 10 to 15 percent.  But we are waiting till we finish the actual hard analysis," Bowen answered.

Bowen said that losses at that rate would amount to perhaps $3 billion.  But Walker is more pessimistic. "I think the numbers, frankly, will be higher than you might expect. Given G.A.O.'s professional standards to have evidential matter, I can't give you an estimate right now.  I can tell you that it's billions," said the comptroller general.

The Iraqi government has allocated another $14 billlion in oil revenue for reconstruction. Committee members asked Bowen how much of that has been spent wisely. He answered, "Given the fact that there's been three governments over the last three years in Iraq and the lack of accountability on the Iraqi side of how they've disposed of their funds, we don?t have a firm figure of how much as been spent since 2004."

One Democrat, Gene Taylor of Mississippi, wanted to know if auditors would look not just at money squandered by contractors, but at bad decisions: "My question is, in Iraq, how often do you look at something and say:  ?Gee, that was a stupid way to spend money " 

The congressman did not get a clear answer. The comptroller did say that so-called "cost plus" contracts give government officials in Iraq the power to spend freely. He said that should be curtailed.

President Bush is asking for another $1.2 billion for rebuilding and jobs in Iraq. But with so much uncertainty, the committee chairman wants the government auditors to return in two months with estimates on how much money has been wasted in Iraqi reconstruction.