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Bush Wars
See other Bush Wars Articles

Title: The true cost of the Iraq war: $3 trillion and beyond
Source: Washington Post
URL Source: http://www.washingtonpost.com/wp-dy ... 010/09/03/AR2010090302200.html
Published: Sep 7, 2010
Author: Joseph E. Stiglitz and Linda J. Bilmes
Post Date: 2010-09-07 16:42:40 by go65
Keywords: None
Views: 16268
Comments: 29

Writing in these pages in early 2008, we put the total cost to the United States of the Iraq war at $3 trillion. This price tag dwarfed previous estimates, including the Bush administration's 2003 projections of a $50 billion to $60 billion war.

But today, as the United States ends combat in Iraq, it appears that our $3 trillion estimate (which accounted for both government expenses and the war's broader impact on the U.S. economy) was, if anything, too low. For example, the cost of diagnosing, treating and compensating disabled veterans has proved higher than we expected.

Moreover, two years on, it has become clear to us that our estimate did not capture what may have been the conflict's most sobering expenses: those in the category of "might have beens," or what economists call opportunity costs. For instance, many have wondered aloud whether, absent the Iraq invasion, we would still be stuck in Afghanistan. And this is not the only "what if" worth contemplating. We might also ask: If not for the war in Iraq, would oil prices have risen so rapidly? Would the federal debt be so high? Would the economic crisis have been so severe?

The answer to all four of these questions is probably no. The central lesson of economics is that resources -- including both money and attention -- are scarce. What was devoted to one theater, Iraq, was not available elsewhere.

Afghanistan

The Iraq invasion diverted our attention from the Afghan war, now entering its 10th year. While "success" in Afghanistan might always have been elusive, we would probably have been able to assert more control over the Taliban, and suffered fewer casualties, if we had not been sidetracked. In 2003 -- the year we invaded Iraq -- the United States cut spending in Afghanistan to $14.7 billion (down from more than $20 billion in 2002), while we poured $53 billion into Iraq. In 2004, 2005 and 2006, we spent at least four times as much money in Iraq as in Afghanistan.

It is hard to believe that we would be embroiled in a bloody conflict in Afghanistan today if we had devoted the resources there that we instead deployed in Iraq. A troop surge in 2003 -- before the warlords and the Taliban reestablished control -- would have been much more effective than a surge in 2010.

Oil

When the United States went to war in Iraq, the price of oil was less than $25 a barrel, and futures markets expected it to remain around that level. With the war, prices started to soar, reaching $140 a barrel by 2008. We believe that the war and its impact on the Middle East, the largest supplier of oil in the world, were major factors. Not only was Iraqi production interrupted, but the instability the war brought to the Middle East dampened investment in the region.

In calculating our $3 trillion estimate two years ago, we blamed the war for a $5-per-barrel oil price increase. We now believe that a more realistic (if still conservative) estimate of the war's impact on prices works out to at least $10 per barrel. That would add at least $250 billion in direct costs to our original assessment of the war's price tag. But the cost of this increase doesn't stop there: Higher oil prices had a devastating effect on the economy.

Federal debt

There is no question that the Iraq war added substantially to the federal debt. This was the first time in American history that the government cut taxes as it went to war. The result: a war completely funded by borrowing. U.S. debt soared from $6.4 trillion in March 2003 to $10 trillion in 2008 (before the financial crisis); at least a quarter of that increase is directly attributable to the war. And that doesn't include future health care and disability payments for veterans, which will add another half-trillion dollars to the debt.

As a result of two costly wars funded by debt, our fiscal house was in dismal shape even before the financial crisis -- and those fiscal woes compounded the downturn.

The financial crisis

The global financial crisis was due, at least in part, to the war. Higher oil prices meant that money spent buying oil abroad was money not being spent at home. Meanwhile, war spending provided less of an economic boost than other forms of spending would have. Paying foreign contractors working in Iraq was neither an effective short-term stimulus (not compared with spending on education, infrastructure or technology) nor a basis for long-term growth.

Instead, loose monetary policy and lax regulations kept the economy going -- right up until the housing bubble burst, bringing on the economic freefall.

Saying what might have been is always difficult, especially with something as complex as the global financial crisis, which had many contributing factors. Perhaps the crisis would have happened in any case. But almost surely, with more spending at home, and without the need for such low interest rates and such soft regulation to keep the economy going in its absence, the bubble would have been smaller, and the consequences of its breaking therefore less severe. To put it more bluntly: The war contributed indirectly to disastrous monetary policy and regulations.

The Iraq war didn't just contribute to the severity of the financial crisis, though; it also kept us from responding to it effectively. Increased indebtedness meant that the government had far less room to maneuver than it otherwise would have had. More specifically, worries about the (war-inflated) debt and deficit constrained the size of the stimulus, and they continue to hamper our ability to respond to the recession. With the unemployment rate remaining stubbornly high, the country needs a second stimulus. But mounting government debt means support for this is low. The result is that the recession will be longer, output lower, unemployment higher and deficits larger than they would have been absent the war.

* * *

Reimagining history is a perilous exercise. Nonetheless, it seems clear that without this war, not only would America's standing in the world be higher, our economy would be stronger. The question today is: Can we learn from this costly mistake?

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#1. To: A K A Stone (#0)

you might want to speed up the counter on the front page.


And the Conservative plan to create jobs is......?????

go65  posted on  2010-09-07   16:43:05 ET  Reply   Trace   Private Reply  


#2. To: go65 (#0)

We believe

The overwhelming theme of this horseshit

no gnu taxes  posted on  2010-09-07   18:08:32 ET  Reply   Trace   Private Reply  


#3. To: no gnu taxes (#2)

The Left hates it when we win.

Obama's first all-by-his-lonesome budget, btw, calls for a $1.17 trillion deficit.

Badeye  posted on  2010-09-08   9:13:03 ET  Reply   Trace   Private Reply  


#4. To: Badeye (#3)

Did you read this tripe?

I can't believe EVEN the WP would allow such shallow baseless hand waving to be published.

They might as well be blaming the Haiti earthquake on the Iraq war.

no gnu taxes  posted on  2010-09-08   9:17:52 ET  Reply   Trace   Private Reply  


#5. To: no gnu taxes (#4) (Edited)

Did you read this tripe?

What exactly is incorrect here, Paddy?

In a time of universal deceit, telling the truth is a revolutionary act.

war  posted on  2010-09-08   9:24:12 ET  Reply   Trace   Private Reply  


#6. To: war (#5)

What exactly is incorrect here

What exactly is CORRECT?

----

Afghanistan

The Iraq invasion diverted our attention from the Afghan war

Bullshit. We overtook the country and there wasn't much to do there before 2008.

Oil

We believe that the war and its impact on the Middle East

Who gives a shit about what you leftist appeasing dumbasses believe. Oil went up t0 $140 a barrel and back down to under $40 a barrel while the war was going on. Exactly what events in the war caused that?

Federal debt

There is no question that the Iraq war added substantially to the federal debt.

The federal deficit decreased from 2004 - 2007 during the height of the war.

The financial crisis

The global financial crisis was due, at least in part, to the war.

It had nothing to do with the war

The Iraq war didn't just contribute to the severity of the financial crisis, though; it also kept us from responding to it effectively.

More bullshit. Once the severity of the crisis was apparent, $800 billion dollars was tossed at it about as quick as governement can act on anything.

no gnu taxes  posted on  2010-09-08   9:51:37 ET  Reply   Trace   Private Reply  


#7. To: no gnu taxes (#6)

Bullshit. We overtook the country and there wasn't much to do there before 2008.

Afghanistan was NEVER stablized. There was never a widespread "pacification" undertaken and the prosecution of the war was DUMB and totally ignorant of the histortical aspects of doing battle there.

Oil went up t0 $140 a barrel and back down to under $40 a barrel while the war was going on. Exactly what events in the war caused that?

It's called the fear factor, Paddy. But the best thing that happened to oil prices was Bush's depression.

It had nothing to do with the war

Debt and deficits most certainly affected interest rates, Fed policy, economic activity etc etc etc ALL elements of the financial crisis.

As usual, your analysis fails to maintain even a modicum of legitimacy.

In a time of universal deceit, telling the truth is a revolutionary act.

war  posted on  2010-09-08   9:59:06 ET  Reply   Trace   Private Reply  


#8. To: war (#7)

As usual, you just add your leftist bullshit to the other leftist bullshit.

no gnu taxes  posted on  2010-09-08   10:12:59 ET  Reply   Trace   Private Reply  


#9. To: no gnu taxes (#8) (Edited)

Chuckles...blah blah blah...

As usual Paddy...your defense is no defense at all...

Iraq and Afghanistan, when all is said and done, will go down in history as abject and glaring failures of the Bush administration and will be stark examples of how NOT to prosecute a war...the first lesson being when you go to war do so out of a sense of purpose and not arrogance.

In a time of universal deceit, telling the truth is a revolutionary act.

war  posted on  2010-09-08   10:23:49 ET  Reply   Trace   Private Reply  


#10. To: war (#9)

My defense was absolutely correct.

The point was that Iraq most certainly did not detract from Afghanistan. There was nothing to fight against in Afghanistan from 2003-2008. If there had been been, we would have been doing the fighting, Iraq and your views on Afghan history, notwithstanding. Just admit you are full of shit.

You want to argue deficits caused by the Iraq war was the cause of the the financial crisis, yet amazingly, you want to argue that much larger deficits are the cure to the crisis.

Just admit you are full of shit, like this article.

no gnu taxes  posted on  2010-09-08   10:28:32 ET  Reply   Trace   Private Reply  


#11. To: no gnu taxes (#10)

There was nothing to fight against in Afghanistan from 2003-2008.

www.americanprogress.org/...008/01/forgotten_war.html

An independent study of Afghanistan, co-chaired by retired Marine Corps Gen. James Jones and former U.N. ambassador Thomas Pickering, released today has concluded that the country is indeed the forgotten front in the fight against global terrorism and risks becoming a failed state if more is not done to stabilize the country soon.

lucysmom  posted on  2010-09-08   10:40:43 ET  Reply   Trace   Private Reply  


#12. To: lucysmom (#11)

Defense Secretary Robert Gates said he was not familiar with the study's findings, but he struck a more optimistic tone on Afghanistan's future.

"I would say that the security situation is good," Gates told The Associated Press. "We want to make sure it gets better, and I think there's still a need to coordinate civil reconstruction, the economic development side of it."

Gates said more troops are needed in Afghanistan, but "certainly not ours." When asked how many more NATO troops might be needed, he said that number should be determined by ground commanders.

no gnu taxes  posted on  2010-09-08   10:49:23 ET  Reply   Trace   Private Reply  


#13. To: no gnu taxes (#10) (Edited)

The point was that Iraq most certainly did not detract from Afghanistan

Just about EVERY global military expert disagrees with you.

You want to argue deficits caused by the Iraq war was the cause of the the financial crisis

A cause not the cause. Government spending most certainly chokes off private sector capital.

In a time of universal deceit, telling the truth is a revolutionary act.

war  posted on  2010-09-08   10:51:15 ET  Reply   Trace   Private Reply  


#14. To: lucysmom (#11)

Paddy has a way of creating his own history. It's why he's in a pepetual state of cognative dissonance.

In a time of universal deceit, telling the truth is a revolutionary act.

war  posted on  2010-09-08   10:52:31 ET  Reply   Trace   Private Reply  


#15. To: no gnu taxes (#12)

"I would say that the security situation is good," Gates told The Associated Press.

Gates glosses over the truth in Afghanistan. As the Center’s report demonstrates, suicide and roadside bombings were at unprecedented levels in 2007; last year was the deadliest on record for U.S. and foreign troops; the Taliban have reformulated and taken control of vast expanses of southern Afghanistan; and Al Qaeda has reestablished its command and control, its funding sources, and its training camps in the borderlands of Pakistan and Afghanistan.

lucysmom  posted on  2010-09-08   10:53:18 ET  Reply   Trace   Private Reply  


#16. To: war (#14)

Paddy has a way of creating his own history. It's why he's in a pepetual state of cognative dissonance.

Makes me wonder where he's been the past several years - it ain't like this stuff was secret.

lucysmom  posted on  2010-09-08   10:58:10 ET  Reply   Trace   Private Reply  


#17. To: lucysmom (#15)

If you want to believe that drivel, fine, but it's beside the point. The point is that the reason more troops were not sent to Afghanistan had nothing to do with the war in Iraq. Gates did not believe they were needed.

End of story.

no gnu taxes  posted on  2010-09-08   10:58:58 ET  Reply   Trace   Private Reply  


#18. To: no gnu taxes (#17)

The point is that the reason more troops were not sent to Afghanistan had nothing to do with the war in Iraq.

BUllshit.

In a time of universal deceit, telling the truth is a revolutionary act.

war  posted on  2010-09-08   11:00:51 ET  Reply   Trace   Private Reply  


#19. To: war (#18)

Wow.

Such a cogent rebuttal

no gnu taxes  posted on  2010-09-08   11:01:46 ET  Reply   Trace   Private Reply  


#20. To: no gnu taxes (#19) (Edited)

It's the rebuttal such a lie deserves, Claiming that there was nothing to fight in Afghanitan as the country devolved back into the Taliban's hands coupled to the fact that the Boy Blunder himself recognized this and in 2007 and 2008 sent some more troops [that had been in Iraq] there. By then it eas far too late.

In a time of universal deceit, telling the truth is a revolutionary act.

war  posted on  2010-09-08   11:04:25 ET  Reply   Trace   Private Reply  


#21. To: war (#20)

It's the rebuttal such a lie deserves,

So I guess when Gates says the reason more troops aren't being sent to Afghanistan is because he doesn't believe they are needed, he obviously means something else.

Yeah, right.

no gnu taxes  posted on  2010-09-08   11:06:23 ET  Reply   Trace   Private Reply  


#22. To: no gnu taxes (#21)

Gates glosses over the truth in Afghanistan. As the Center’s report demonstrates, suicide and roadside bombings were at unprecedented levels in 2007; last year was the deadliest on record for U.S. and foreign troops; the Taliban have reformulated and taken control of vast expanses of southern Afghanistan; and Al Qaeda has reestablished its command and control, its funding sources, and its training camps in the borderlands of Pakistan and Afghanistan.

In a time of universal deceit, telling the truth is a revolutionary act.

war  posted on  2010-09-08   11:07:19 ET  Reply   Trace   Private Reply  


#23. To: war (#22)

If you want to believe that drivel, fine, but it's beside the point. The point is that the reason more troops were not sent to Afghanistan had nothing to do with the war in Iraq. Gates did not believe they were needed.

End of story.

no gnu taxes  posted on  2010-09-08   11:09:30 ET  Reply   Trace   Private Reply  


#24. To: war (#22)

And Gates judgment was so bad that The Kenyan didn't hesitate to keep him aboard.

LOL

no gnu taxes  posted on  2010-09-08   11:11:30 ET  Reply   Trace   Private Reply  


#25. To: no gnu taxes (#17)

End of story.

Sounds like something Bush might have said, however claiming the story's ended don't make it so.

Feb 29, 2004 ... TIME cover story: Tied down in Iraq, the US is still struggling to pacify Afghanistan, root out the Taliban and snare bin Laden.

Here's another

Before the heavy snows came that fall, the Taliban were overthrown, Al Qaeda scattered and it was only a matter of time, President George W. Bush assured the world, before bin Laden would be brought to justice.

But five years on, the war is far from over. The Taliban are resurgent in Afghanistan and Pakistan.

...

Insufficient U.S. troops on the ground, inadequate real-time intelligence and a reliance on local Afghan warlords were what those officials believe allowed bin Laden to flee. Those same deficiencies and flawed strategies persist as the hunt continues, they add.

www.nytimes.com/2006/09/1...12iht-afghan.2785628.html

lucysmom  posted on  2010-09-08   11:14:09 ET  Reply   Trace   Private Reply  


#26. To: no gnu taxes (#23)

Gates glosses over the truth in Afghanistan. As the Center’s report demonstrates, suicide and roadside bombings were at unprecedented levels in 2007; last year was the deadliest on record for U.S. and foreign troops; the Taliban have reformulated and taken control of vast expanses of southern Afghanistan; and Al Qaeda has reestablished its command and control, its funding sources, and its training camps in the borderlands of Pakistan and Afghanistan.

In a time of universal deceit, telling the truth is a revolutionary act.

war  posted on  2010-09-08   11:14:11 ET  Reply   Trace   Private Reply  


#27. To: no gnu taxes (#24) (Edited)

You're under the very mistaken impression that suddenly I've shifted my POV of the war on terror. Unlike you, I haven't.

In a time of universal deceit, telling the truth is a revolutionary act.

war  posted on  2010-09-08   11:14:57 ET  Reply   Trace   Private Reply  


#28. To: lucysmom (#25)

You can post all the opinion pieces you want, but the bottom line is Gates himself said the reason more resources weren't being used in Afghanistan is because they weren't needed.

And Obama readily kept him in place.

End of story.

no gnu taxes  posted on  2010-09-08   12:30:28 ET  Reply   Trace   Private Reply  


#29. To: no gnu taxes (#4)

They might as well be blaming the Haiti earthquake on the Iraq war.

They once blamed Bush for a hurricane my friend.

Obama's first all-by-his-lonesome budget, btw, calls for a $1.17 trillion deficit.

Badeye  posted on  2010-09-08   14:21:40 ET  Reply   Trace   Private Reply  


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