Iraq: A Shocking Waste of Money

On September 11, 2001, the United States was hit by devastating terrorist attacks perpetrated by a transnational terrorist network. Less than a year later, it was apparent that the Bush administration wanted to invade Iraq, allegedly as part of the response. Famously, selling this agenda involved a highly deceptive effort to link the two issues. Iraq was said to have an advanced nuclear weapons program and to be likely to provide the fruits of its research to al-Qaeda.

All this we know. Less well remembered nowadays, though -- in fact, almost never discussed in the major media -- was another implicit prong of the argument: that invading Iraq would be cheap and easy, leaving plenty of resources for other purposes. When White House economic adviser Lawrence Lindsey stumbled off message in September 2002 with his prediction that war could cost $100 billion to $200 billion, the administration flew into crisis mode. Budget Director Mitch Daniels was trotted out to label the estimate "very, very high." Deputy Defense Secretary Paul Wolfowitz opined -- in testimony to Congress, no less -- that reconstruction would cost virtually nothing in light of Iraq's promising oil revenues. Daniels proffered an estimate in the $50 billion to $60 billion range, substantially less than the $80 billion inflation-adjusted cost of the Persian Gulf War. Lindsey, famously, was soon after fired -- for his troublesome cost estimates and, reportedly, the President's annoyance at his poor personal fitness habits.

By April 2006, a Congressional Research Service (CRS) inquiry concluded that Lindsey's estimate was, indeed, way off -- but in the other direction. Around $261 billion had already been spent. Given the human stakes, it may seem crass to worry overly much about the dollar cost of a military conflict. But the fact that a CRS report is needed at all, as opposed to the straightforward accounting that either the White House or the Pentagon could surely provide were they so inclined, points to the basic reality that the war's proponents are continuing the prewar pattern of covering up the costs. And with good reason: They're enormous. Scandalously enormous.

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.