Saturday, March 01, 2008


Bush"s Three Trillion Dollar War

February 23, 2008

The three trillion dollar war

The cost of the Iraq and Afghanistan conflicts have grown to staggering proportions

The Bush Administration was wrong about the benefits of the war and it was wrong about the costs of the war. The president and his advisers expected a quick, inexpensive conflict. Instead, we have a war that is costing more than anyone could have imagined.

The cost of direct US military operations - not even including long-term costs such as taking care of wounded veterans - already exceeds the cost of the 12-year war in Vietnam and is more than double the cost of the Korean War.

And, even in the best case scenario, these costs are projected to be almost ten times the cost of the first Gulf War, almost a third more than the cost of the Vietnam War, and twice that of the First World War. The only war in our history which cost more was the Second World War, when 16.3 million U.S. troops fought in a campaign lasting four years, at a total cost (in 2007 dollars, after adjusting for inflation) of about $5 trillion (that's $5 million million, or £2.5 million million). With virtually the entire armed forces committed to fighting the Germans and Japanese, the cost per troop (in today's dollars) was less than $100,000 in 2007 dollars. By contrast, the Iraq war is costing upward of $400,000 per troop.

Most Americans have yet to feel these costs. The price in blood has been paid by our voluntary military and by hired contractors. The price in treasure has, in a sense, been financed entirely by borrowing. Taxes have not been raised to pay for it - in fact, taxes on the rich have actually fallen. Deficit spending gives the illusion that the laws of economics can be repealed, that we can have both guns and butter. But of course the laws are not repealed. The costs of the war are real even if they have been deferred, possibly to another generation.

On the eve of war, there were discussions of the likely costs. Larry Lindsey, President Bush's economic adviser and head of the National Economic Council, suggested that they might reach $200 billion. But this estimate was dismissed as “baloney” by the Defence Secretary, Donald Rumsfeld. His deputy, Paul Wolfowitz, suggested that postwar reconstruction could pay for itself through increased oil revenues. Mitch Daniels, the Office of Management and Budget director, and Secretary Rumsfeld estimated the costs in the range of $50 to $60 billion, a portion of which they believed would be financed by other countries. (Adjusting for inflation, in 2007 dollars, they were projecting costs of between $57 and $69 billion.) The tone of the entire administration was cavalier, as if the sums involved were minimal.

Even Lindsey, after noting that the war could cost $200 billion, went on to say: “The successful prosecution of the war would be good for the economy.” In retrospect, Lindsey grossly underestimated both the costs of the war itself and the costs to the economy. Assuming that Congress approves the rest of the $200 billion war supplemental requested for fiscal year 2008, as this book goes to press Congress will have appropriated a total of over $845 billion for military operations, reconstruction, embassy costs, enhanced security at US bases, and foreign aid programmes in Iraq and Afghanistan.

As the fifth year of the war draws to a close, operating costs (spending on the war itself, what you might call “running expenses”) for 2008 are projected to exceed $12.5 billion a month for Iraq alone, up from $4.4 billion in 2003, and with Afghanistan the total is $16 billion a month. Sixteen billion dollars is equal to the annual budget of the United Nations, or of all but 13 of the US states. Even so, it does not include the $500 billion we already spend per year on the regular expenses of the Defence Department. Nor does it include other hidden expenditures, such as intelligence gathering, or funds mixed in with the budgets of other departments.

Because there are so many costs that the Administration does not count, the total cost of the war is higher than the official number. For example, government officials frequently talk about the lives of our soldiers as priceless. But from a cost perspective, these “priceless” lives show up on the Pentagon ledger simply as $500,000 - the amount paid out to survivors in death benefits and life insurance. After the war began, these were increased from $12,240 to $100,000 (death benefit) and from $250,000 to $400,000 (life insurance). Even these increased amounts are a fraction of what the survivors might have received had these individuals lost their lives in a senseless automobile accident. In areas such as health and safety regulation, the US Government values a life of a young man at the peak of his future earnings capacity in excess of

$7 million - far greater than the amount that the military pays in death benefits. Using this figure, the cost of the nearly 4,000 American troops killed in Iraq adds up to some $28 billion.

The costs to society are obviously far larger than the numbers that show up on the government's budget. Another example of hidden costs is the understating of US military casualties. The Defence Department's casualty statistics focus on casualties that result from hostile (combat) action - as determined by the military. Yet if a soldier is injured or dies in a night-time vehicle accident, this is officially dubbed “non combat related” - even though it may be too unsafe for soldiers to travel during daytime.

In fact, the Pentagon keeps two sets of books. The first is the official casualty list posted on the DOD website. The second, hard-to-find, set of data is available only on a different website and can be obtained under the Freedom of Information Act. This data shows that the total number of soldiers who have been wounded, injured, or suffered from disease is double the number wounded in combat. Some will argue that a percentage of these non-combat injuries might have happened even if the soldiers were not in Iraq. Our new research shows that the majority of these injuries and illnesses can be tied directly to service in the war.

From the unhealthy brew of emergency funding, multiple sets of books, and chronic underestimates of the resources required to prosecute the war, we have attempted to identify how much we have been spending - and how much we will, in the end, likely have to spend. The figure we arrive at is more than $3 trillion. Our calculations are based on conservative assumptions. They are conceptually simple, even if occasionally technically complicated. A $3 trillion figure for the total cost strikes us as judicious, and probably errs on the low side. Needless to say, this number represents the cost only to the United States. It does not reflect the enormous cost to the rest of the world, or to Iraq.

From the beginning, the United Kingdom has played a pivotal role - strategic, military, and political - in the Iraq conflict. Militarily, the UK contributed 46,000 troops, 10 per cent of the total. Unsurprisingly, then, the British experience in Iraq has paralleled that of America: rising casualties, increasing operating costs, poor transparency over where the money is going, overstretched military resources, and scandals over the squalid conditions and inadequate medical care for some severely wounded veterans.

Before the war, Gordon Brown set aside £1 billion for war spending. As of late 2007, the UK had spent an estimated £7 billion in direct operating expenditures in Iraq and Afghanistan (76 per cent of it in Iraq). This includes money from a supplemental “special reserve”, plus additional spending from the Ministry of Defence.

The special reserve comes on top of the UK's regular defence budget. The British system is particularly opaque: funds from the special reserve are “drawn down” by the Ministry of Defence when required, without specific approval by Parliament. As a result, British citizens have little clarity about how much is actually being spent.

In addition, the social costs in the UK are similar to those in the US - families who leave jobs to care for wounded soldiers, and diminished quality of life for those thousands left with disabilities.

By the same token, there are macroeconomic costs to the UK as there have been to America, though the long-term costs may be less, for two reasons. First, Britain did not have the same policy of fiscal profligacy; and second, until 2005, the United Kingdom was a net oil exporter.

We have assumed that British forces in Iraq are reduced to 2,500 this year and remain at that level until 2010. We expect that British forces in Afghanistan will increase slightly, from 7,000 to 8,000 in 2008, and remain stable for three years. The House of Commons Defence Committee has recently found that despite the cut in troop levels, Iraq war costs will increase by 2 per cent this year and personnel costs will decrease by only 5 per cent. Meanwhile, the cost of military operations in Afghanistan is due to rise by 39 per cent. The estimates in our model may be significantly too low if these patterns continue.

Based on assumptions set out in our book, the budgetary cost to the UK of the wars in Iraq and Afghanistan through 2010 will total more than £18 billion. If we include the social costs, the total impact on the UK will exceed £20 billion.

© Joseph Stiglitz and Linda Bilmes, 2008. Extracted from The Three Trillion Dollar War, to be published by Allen Lane on February 28 (£20). Copies can be ordered for £18 with free delivery from The Times BooksFirst 0870 1608080.

Joseph Stiglitz was chief economist at the World Bank and won the Nobel Memorial Prize for Economics in 2001. Linda Bilmes is a lecturer in public policy at the Kennedy School of Government at Harvard University

As we tally the many costs of this unjust war, we must assess its impact upon us as a nation. Fear now dominates policy, expenditures, world diplomacy, and in the extreme, politics. Not until the war is ended and this administration removed will we be able to reject fear based govennment and begin to rebalance our priorities. Of course we need reasonable security, but not at the expense of who we are as a people.

Jennifer Hann, Jonesborough,TN,

As long as the ignorant masses accept the fear mongering strategies used by the neo-conservative Bush Administration to start the Iraq War, such unbelievable costly calamities as now exist are likely unavoidable. The disasters which occurred on 9/11/01 are prime examples of 'false flag' events; no Bin-Laden inspired group of extremists could possibly have demolished the WTC or Pentagon as described in the main-stream press. It was an 'inside job' in which the Bush administration was complicit in ways which are generally unknown except for the obvious facts that much lying and misrepresentation played important roles; those details will never be known unless there is full investigation of the 9/11/01 disasters.
Meanwhile, the secretive Bush administration continues to mesmerize the ignoramuses among us to entertain ideas about 'evil doers'. The actual 'evil doers' are those who lied to justify these fiascos; the politicians and war industries in both the US and the UK.

Wm Wilson, Arlington, TX

If John McCain - a proponent of perpetual war - becomes the next American President, things can become more ominous for the USA with escalating trade and budget deficits plus more wars that will cost trillions of dollars. Contrary to the wishes of the merchants and potential profiteers of the war, these combo may be sufficient to sober imperial arrogance. So guess who may be laughing from the cave?

Habib Siddiqui, Philadelphia, USA

Whose idea was the War, anyway? Will those responsible please stand up? It wasn't Bush's, he didn't know how to react to 9/11.
There was a ready made plan that could go under the umbrella idea of "Democracy" but it wasn't thought through and had sundry self-serving agenda.

M Cochran, Sheffield , UK

The US is in various ways commiting economic hari kiri. No one doubts its declining moral and economic status. Its military is literally being ground into the desert dust in Iraq and Afghanistan. The appalling opportunity cost of the massive defence budget and war costs will have a long term knock on effect lasting decades and will hobble the US into the foreseeable future. In short, the US is laying the basis for a polical and economic revolution in their own country. Ironic in view of their projection of power overseas!

Nigel Maund, Perth, Australia

Let us tell like it is; this is nothing but "Class Warfare". The wealthy call the shots, they send poor and middle-class troops to fight and die. They make "Billions" of dollars off the war through no-bid contracts. They take huge tax cuts through political shenanigans. Special interests pay politicians to make it all legal - it would seem. But the arrogant misuse and manipulation of our system of government by Bush/Cheney and their cabal is obvious. Waterboarding would be too good for these criminals. Their behavior is criminal and immoral, but some in this natiion use wealth and power to this end.

Donald Burnison, Plymouth, Michigan

It's hard to give what U. of Chicago economists call "total systems costs". For example, it a GI is totally disabled in Iraq, the taxpayers will have to pay all his medical expenses, burial expenses, and other living costs for eighty years or more. How can anybody come up with a reasonable estimate of these costs (one thing is sure--the future US economic environment will have little resemblence to the present one). I personally think that the hidden, underestimated, and ignored costs of the Iraqi war and occupation will be at least three times those currently acknowledged by government "experts", and this assumes that the occupation will terminate during the first term of the next president (these costs, of course, are in 2004 dollars). I think a total systems cost of eight trillion dollars is reasonable and highly conservative. Don't worry--you won't have to pay much of this--it's your children and grandchildren that will be the stuckees!

G. Anton, Mexico City, DF (Mexico)

The motivation to murder 3000 Americans and fool the world is pretty high- when $3 Trillion in defense, oil, and political benefits are on the table.

Santa Claus is the commercialized exaggeration (of a real man) used by big business to sell goods... Where oh where could Bin Laden be?

Frank, Rome,

I wrote my senator (McCain) 3 years ago, that his and Bush's adventure in Iraq were going to bankrupt our country. McCain is no more fit to be President than GW is.

Tom, Phoenix, AZ

Please read

can someone tell me how for the first time in history steel structured buildings collapsed, 3 in all, one which was not hit by a plane if that is the rational one want to use for 2 of them, and why no such structures have collapsed since then do to fire? Perhaps, one can come up with the odds of this happening.

There are many other firsts and incredible occurrences as well whose joint probabilities are staggering.

indc, Alexandria, va

Scientific research would be a good place to start to prevent this colossal waste of money. All wars are about humans attempting to secure resources eg land,water,food. It was poverty after the 1stWW in Germany that caused the 2ndWW. Obviously recent wars as a result of Capitalism are about oil.
Scientific research should be used to create a more equitable standard of living throughout the world a 'green technological revolution'. Only $175 billion would be required to wipe out world poverty. Heathcare, education and clean water worldwide for every poor person. What about a World union or parliament there is an innate good in humans to do good for others when we vote as a group. At the moment we are witnessing the awe-inspiring collective free voice of hope in America.
There should be worldwide compulsory education until 18. Sanctions should be imposed on countries that do not aspire to this and spend their money on military weaponry. It is this generation that must have the mettle.

A.Fatima, Aberdeen, UK

it's only money!

Andy, france,

This is a lot of money to spend on Israeli territorial expansion. Would have been cheaper to have given them Nevada.

paul Roberts, Washington DC, USA

"Cost is the one single factor that can put a brake on politicians military ambitions"

Yes, but the feedback loop requires people to start complaining about having their money being flushed down the toilet. For that to happen someone has to explain what the real costs are, such as by writing a book about it. Only when people start complaining does the brake get applied to politicians military ambitions. We should send the bill to Bliar and take a charge on his now considerable income.

John Small, Faversham,

And had you noticed, no-one is bothering to tell us just how much it is costing Britain?

S. Barraclough, Huddersfield, W. Yorkshire

The instigators of the USUK attack and occupation are the owners , or controlled by the ownersof the means of production of the WMD. Viz. the arms/oil cartel.
It has been a roaring success - profit wise.

Not mentioned is the likely figure of 40,000 US dead if suicides are counted. See CNN research on this...nor the civilians dead , now likely to be around 2,000,000, (some unborn from DU and associated nano-pollution ) mostly children.

Verite, Paris, France

Yes, the cost is very high... the real question is not the total exact cost; the real question is how and who can bring about a change???... a return to sanity and a realization that the cost is so high that the general populatdion could never win!!
The winners must be among the leadership of the county!!

Howard Fauss, Minerva, Ohio

"Yes, but what would be the cost of not having this war? Another 9/11...George, London"

Oh, please !

Can't people see that all we're doing is generating hatred towards the West for generations to come.

Do we have an idea of what "winning" in Afghanistan will look like ?

Will be be a military victory ? Don't think so - no one has beaten the Afgans in centuries (and the general population will become bored with the "war")

Will it be a political settlement ? Hardly likely in a country that's essentially been a group of tribes, run by warlords, for the past who-knows-how-long.

If we spent one tenth on developing Afghanistan and other Muslim countries that we do on killing Muslims, the soldiers could come home and we could sleep safely.

Clive, Surrey,

The difference between these wars and those of the past is the priovatisation of all but the troops themselves. There is a vast transfer of public funds into the hands of private contractors, especially in the USA but also the UK (e.g. private security, transport, running bases, etc.). All of this contributes to the GDP and thus, for the economists this is all looking good.

David Gallagher, sarajevo, Bosnia & Herzegovina

One way to stop all this nonsense would be for Parliament and Congress to enforce strict borrowing limits on governments. Both sides of the Atlantic are lumbering future generations with enormous debt, and in the UK a lot of this is not even on the nation's balance sheet! Brown now faces a serious choice, borrow a lot more or increase taxes or most likely, both. We all know what will happen and in fact is already happening. Prices wil rise rapidly and those on fixed incomes will pay for the depreciation of the borrowings. That's the older generation. Why on earth do our politicians think that foreign wars are the answer to anything?

Colin , Shrewsbury,

"Our calculations are based on conservative assumptions... A $3 trillion figure for the total cost strikes us as judicious, and probably errs on the low side".

No problem; Dubya will just say the methodology is unsound - as he did in the case of the Johns Hopkins/Lancet studies.

I agree wtih Jayil; Americans are all too prone to thinking they are the chess players, knowing more and seeing further than stupid foreigners. But it seems bin Laden may have turned them into his pawns.

Tom Welsh, Basingstoke,

If a tenth of that figure had been spent on research over the next 20 years (15 billion per year), we could have probably accelerated hyper efficient cars, trucks and planes to market, accelerated efficient cellulosic biofuels to economic viability and possibly hydrogen and reduced our dependence on oil hopefully breaking the stranglehold the Middle East has on the West. This would hopefully eventually force the despots of the Middle East to change their ways as denied of their oil revenues, they would probably have to reform their nations to become truly economically viable. Support of terrorism would not be part of that. Incidentally 15 billion represents about a fourfold increase in research into this area.

S P, Swansea, UK

Yes, but what would be the cost of not having this war? Another 9/11, perhaps with nuclear material and misiles funded by Osama in Afghanistan and Sadam's oil in Iraq? The loss of complete Western Cities, millions of deaths, and collapse of our financial wealth? Or would you rather wage this costly war after these things happen?

George, London,

We can afford it, why we're the Empire now. We make our own reality now don't we? The US Empire strikes back!
Bwaa, Ha, Ha (Austin Powers, remember,,,)

Tim, Los Angeles, CA

What a load of rubbish! - cost accounting a war! I remember a young Barbour jacketed civil servant strolling amongst the troops in the Falkland Conflict taking notes. He was carrying out a cost assessment and use of resources study! On being shown the dangerous end of a pistol he vanished back to the ships.

War is expensive in lives and property it always will be, and the more expensive, the better. Cost is the one single factor that can put a brake on politicians military ambitions. It is the huge cost alone that has tempered the US original idea for full and absolute occupation of Iraq and Afghanistan.

So the more money the forces use up, the quicker they will be home again.

Jonathan Mills, Brighton,

McCain said he would stay in Iraq and Afghanistan for another 100 years if necessary. Seems he is going to live a long time and somehow remain in power. Of sourse, he will expect other countries to stay there, too. How dare he!

margie, victoria, australia

May I suggest that the public in both the UK and US are reacting quite rationally to this.

Such an unfunded expanse will lead, as it did after the war in VietNam, to a wave of inflation.

How do you hedge against inflation? You get the biggest mortgage you can obtain and buy a house or other tangible asset.

When the wave of inflation hits, the house will go up in price and the mortgage will gradually be inflated away.

jon livesey, Sunnyvale, CA/USA

Thats exactly what old Bin-Laden wanted, to financially 'bleed America' to death. He is going to be in the history books to have single handedly brought American to it's knees.

jayil, london, uk


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