The High Price of War
One aspect of the Iraq War that I think's gotten remarkably little attention has been the extraordinary expense. According to the best estimates available, the ultimate financial price is going to turn out to be way, way, way higher than most people realize or than official figures indicate. This, at any rate, is the subject of my new article in The American Prospect:
The same CRS report indicated that before it ends, the war will likely cost somewhat more than the $549 billion spent (adjusted for inflation) in the much more lethal Vietnam War. But even this figure will likely prove to be off by hundreds of billions of dollars because it accounts only for funds directly appropriated for war fighting. As Linda Bilmes, a leading Harvard budgetary expert, and Nobel Prize–winning economist Joseph Stiglitz point out in their January 2006 paper, “The Economic Costs of the Iraq War,” the spending captured by the CRS, even in strict budgetary terms, is “only the tip of a very deep iceberg.”
Wartime appropriations do not, for example, include the cost of disability payments to veterans wounded in the war, payments that will continue throughout their life spans. Nor do they cover the costs of medical treatment for those seriously injured in the war, or even such basic war-related costs as the replacement of equipment and munitions expended in the conflict or the need to transport soldiers back to their home bases when they rotate out of country. The war has also substantially increased the military’s overall recruiting costs, reflected in bigger bonuses and additional recruiters. What’s more, by combining the war with aggressive tax cutting, the administration has ensured that the operation is paid for entirely by borrowing money on which interest will need to be paid. The shocking truth, according to Bilmes and Stiglitz, is that if one applies the Congressional Budget Office’s basic assumptions about the duration of the conflict (“a small but continuous presence”), it will cost nearly a staggering $1.27 trillion dollars before all is said and done.
The number is so high as to defy human comprehension. All the numbers ending in “-illion” sound the same. But a trillion is what you get if you spend a million dollars a day … for a million days. That’s 2,737 years -- a cool mil a day, every day, in other words, until the Year of Our Lord 4743. Or, working backward, from the time when Homer wrote the Iliad up to now. The $270 billion in rounding error is worth another 750 years at the million-a-day rate. That takes us up to the year 5493 -- or back to when Moses fled Egypt.
It's a lot of money. What could you buy for that amount? Well, read the whole thing to find out.
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Matt, what we really need is a graphical representation of the cost of the war. Perhaps a graph with two lines, one showing total US government expenditures from, say, 2000 to the present and then projected to 2020, a second line showing Iraq War expenditures. Just the numbers don't help.
June 26, 2006 11:32 AM | Reply | Permalink
Depending on which administration official you, um, believed, the Iraq War was going to cost anywhere from $200 million to zero. But it’s going to fly over $1 trillion.
I think this is supposed to be $200 billion. Wasn't going to be that cheap be anyone's estimates, I think.
That's an interesting list of alternative ways we could have spent the money. The only thing is that, as all of this is borrowed money, it would be a hell of a job convincing people in this country to float bonds for foreign aid. Much easier to ignore a deficit when it's couched in the language of "defendding the homeland". Or if it's for local pork.
June 26, 2006 11:41 AM | Reply | Permalink
Matt,
Good stuff. But remember Brad Delong's "Twelve Things Journalists Need to Remember to Be Good Economic Reporters"
(http://www.niemanwatchdog.org/index.cfm?fuseaction=background.view&backgroundid=0093)
"4. No meaningless numbers. Do not report budget, trade, tax, or other numbers in billions or trillions or even millions. Use per capita or per worker or per household or per share terms to make them meaningful. It's not a $70 billion tax cut--it's $43,000 per recipient millionaire per year. It's not a $300 billion deficit--it's an extra $4,000 per family of four per year that the government has charged and is expecting you to pay through additional taxes sometime in the future."
So if I'm doing the math right, that means a $1.27 trillion war, financed through borrowing of course, is about the same as each family of four taking out a second mortgage for about $17,000.
June 26, 2006 12:44 PM | Reply | Permalink
I don't understand how this massive debt and deficits are ignored. It just blows my mind.
June 26, 2006 2:20 PM | Reply | Permalink
"That takes us up to the year 5493 -- or back to when Moses fled Egypt."
This is kind of a side issue, but where did you get that as a date for the historical Moses? There isn't any archaelogical evidence for the existence of an actual Moses, nor is there evidence of a Jewish exodus from Egypt. Of those who believe that such an exodus actually took place, the earliest they date it is around 1400 BC. Egypt itself wasn't even united until around 3100 BC, which makes the date of 5493 pretty much impossible.
June 26, 2006 6:08 PM | Reply | Permalink
Stras-
I think you're not quite reading it right. It's confusingly written, but Matthew's dramatizing by counting backwards from the present to the Iliad, and *then backward again from the present* to the time of Moses.
The additional $270B requires a further backwards step of 750 years "from when Homer wrote the Iliad" (if memory serves, that was about 800BC), so the assertion is that Moses fled Egypt c.1550BC.
June 26, 2006 6:23 PM | Reply | Permalink
That's what's most interesting to me about the article, though, and a point deserving of extensive discussion -- why is it harder to sell things like medical foreign aid and actual spending focused on actual homeland security to the American people than it is to convince them to go to war?
And how much easier is it? Why?
I personally suspect it's an issue of the anti-welfare voting bloc combined with the dishonest and morally pitiful rhetoric of savage conservatives and cowardly liberals, but we can't say until people who know more than I investigate the question.
mike
June 26, 2006 8:58 PM | Reply | Permalink
Okay, alright - rereading it that becomes a lot more plausible.
June 27, 2006 6:13 AM | Reply | Permalink
My cynical side wants to say that this -- MY: "Wartime appropriations do not, for example, include the cost of disability payments to veterans wounded in the war, payments that will continue throughout their life spans. Nor do they cover the costs of medical treatment for those seriously injured in the war" -- is no accident, especially given the current environment. (For the record, my naive side is whistling in the dark right now.)
When I clicked on the article's headline, I didn't expect to see dollar signs. Money is one of the big costs of the Iraq war, along with lives lost, goodwill squandered, damage incurred, etc.etc. I guess I need to get with the economists' definition of "cost."
PSA: There is a Users' Help Forum.
June 27, 2006 6:16 AM | Reply | Permalink
I think it would also be useful to compare Iraq costs to other budget items. You also have to keep repeating it and using new examples to drive home the issue of priorities.
June 27, 2006 6:18 PM | Reply | Permalink
Feh, that's nothing.
Wait until you see the cost of the IRAN war...
At a minimum, it HAS to be at LEAST two to four times as much.
Given that the occupation of Iraq costs between six and ten billion dollars per month, the cost of fighting Iran AND Iraq at the same time will be at least twice that and probably more - or ten to twenty billion per month, or 120 billion to a quarter of a trillion dollars PER YEAR FOR THE NEXT TEN YEARS.
The total cost is likely to be five trillion dollars or more over ten years.
Bush is spending probably 120 billion dollars a year NOW for Iraq and intends to KEEP spending that much for the next three years at least - unless the rumored troop drawdowns actually occur next year - and even then that will likely only reduce the amount by perhaps 25% or so.
And if the attack on Iran costs four times as much - and it could because Iran is three to four times bigger than Iraq in size, population and military - the US could be spending half a trillion dollars a year just for Iran, PLUS another 120 billion - and possibly MORE if the Iraqi insurgency gets worse - making a ten-year projection more in the seven trillion dollar range.
And none of those figures includes the ancillary costs cited in the studies - so you're actually looking at probably eight to ten trillion dollars.
NOW does impeachment seem cheaper?
June 28, 2006 3:25 AM | Reply | Permalink