Iraq War Costs
Joe Stiglitz, a Nobel Prize winning economist, has just published a review of the true cost of the Iraq war. There is no prize for guessing that the figures he comes up with are vastly different from those publicized by the Bush regime. Remember that when the war began the Administration’s economists gave an original estimate of between $100 and $200 billion. This was quickly countered by the then Budget Director who spoke about a more palatable $60 billion. Well it turns out that all these numbers were as fanciful as the roses to be thrown at our victorious soldiers feet.
As Stiglitz points out even the current estimate of $500 billion, which is the figure in vogue at the Budget Office, is hopelessly wrong because it only includes direct costs to the economy. It is however a good starting point. Then, in order to be thorough, we need to add in all those indirect costs that are littered throughout the budget but which are not directly tagged as being Iraq war expenses. One such cost is the lifetime support and healthcare costs for all those severely wounded soldiers, the ones Bush won’t even talk about, let alone honor. There have been some 16,000 so far. This cost is hidden in the Veterans Department expenses. Another example is the rise in signing and re-enlistment bonuses being offered by the Army as it struggles to keep up with its recruitment goals. These costs have risen by about 20% in just three years and are not counted by the Budget Department as being Iraq war expenses, but are clearly attributable to the war. Then there are wear and tear costs on equipment etc. The list gets pretty long.
According to Stiglitz when these indirect costs are added to the official total the war has a cost of between $652 billion and $799 billion. But wait there’s more! because the war has been financed by raising debt we have to add the interest that results from that debt. Depending on the interest rate you use to do the calculation this could add anywhere between $98 and $358 billion. And we shouldn’t stop there. Economists have this nifty idea called “opportunity cost” which is the cost of doing something defined as the value of alternative things we could have done had we not spent our money on the project in question. In this case we have to ask what could we have spent the money on if we hadn’t gone to war. Plenty of alternatives spring to mind: education, job training, roads, research etc. Each of these things would have added to the potential of the economy and would have generated more wealth in the future than conducting a war [which adds very little, if any future wealth]. So we have to include this “forgone” wealth as a true cost of the war.
When all is said and done Stiglitz’s grand total comes to between $1 and $2 trillion, or anywhere between twenty to forty times the President’s original estimate. Not that we should be surprised by Bush dissembling a little. It’s just that in this case that’s our cold hard cash he grabbed for his pet project. And its cash we won’t get back.
