The costs of the Iraq War, 10th anniversary edition

Today marks the 10th anniversary of the US’ invasion of Iraq.

A new study by Brown University’s “Cost of War” project tallies the costs of the war, finding the total cost of the Iraq conflict to be devastating: at least 190,000 killed, and $2.2 Trillion in economic costs – not including interest payments on the money we borrowed to pay for the war.

It’s surprisingly hard to calculate the economic costs of war. While it’s fairly straightforward to add up the budget appropriations for certain military operations, other costs – increased veterans’ health care & disability payments, increased costs at military bases, additional Homeland Security costs, and so on – are harder to pin down. But the Cost of War project has made a serious, ongoing effort to understand the costs associated with the wars in Iraq and Afghanistan. (If you’re interested, I also recommend The Three Trillion Dollar War, a 2008 book by two economists, Nobel laureate Joseph Stiglitz and Linda Blimes. Blimes also contributes to the Cost of War project.)

But the fact remains that the Iraq War has been much more expensive than the quick, cheap exercise that was pitched to the American public. Of the many lies that led the country to war, this is among the easiest to spot.

As the drive for war with Iraq picked up steam in September 2002, Federal Reserve Chairman Alan Greenspan told a Congressional committee that “he believed the economic effects of a short war in Iraq would be negligible”, as Guardian reporter Matthew Engel put it. Just a week later, Lawrence Lindsey, head of Bush’s Council of Economic Advisors, told the Wall Street Journal that the war would probably cost 1–2% of GDP, for a one-time cost of $100-$200 billion. WSJ reporter Bob Davis noted the amount was “considerably higher than a preliminary, private Pentagon estimate of about $50 billion.” Lindsey, though, insisted the amount would be negligible in the grand budgetary scheme: “That’s nothing.” [1]

The Bush administration quickly distanced themselves from Lindsey’s estimate. Lindsey, along with Treasury Secretary Paul O’Neill, was forced out in early December 2002.

At the end of December 2002, Mitch Daniels, then the director of the Office of Management and Budget, told the New York Times that he estimated the cost of war with Iraq to be $50-$60 billion.

Mr. Daniels would not provide specific costs for either a long or a short military campaign against Saddam Hussein. But he said that the administration was budgeting for both, and that earlier estimates of $100 billion to $200 billion in Iraq war costs by Lawrence B. Lindsey, Mr. Bush’s former chief economic adviser, were too high.

[…] Mr. Daniels declined to explain how budget officials had reached the $50 billion to $60 billion range for war costs, or why it was less in current dollars than the 43-day gulf war in 1991. He also declined to specify how much had been budgeted for munitions and troops.

The very next day, OMB spokesman Trent Duffy backed away from the number, saying that Daniels hadn’t meant to give those numbers as an actual estimate. In the decade since, Mitch Daniels has continued backpedaling from those numbers, offering a variety of excuses.

At Mother Jones, Tasneem Raja points out that:

On-the-ground operations alone ended up being 16 times more expensive than the Bush cabinet’s original estimate for the entire enterprise.

Apparently the Office of Management and Budget was really, really bad at math for a while there in 2003.

Raja’s piece is accompanied by a couple of charts, showing the disparity between the estimates of the war’s cost and the actual costs.

But I don’t think those charts are quite fair – the biggest problem is that Daniels’ estimate is still in 2002–2003 dollars, not 2013 dollars like the other amounts. I wanted to be as generous as possible to Daniels, so I used the upper bound of his estimate ($60 billion) and rounded up on the inflation, coming up with an estimate of $77.4 billion in 2013 dollars. (I did the same with Mr. Lindsey’s estimate.) That’s still a long way off from the $1.7 Trillion we’ve spent so far.

Cost of Iraq War to US

Sometimes, a picture is worth a thousand words – or, in Mitch Daniels’ estimation, about 35.2 words.

  1. “Bush Economic Aide Says Cost Of Iraq War May Top $100 Billion”, Bob Davis, Wall Street Journal, September 16, 2002. As reprinted in the Congressional Record of the 107th Congress, September 17, 2002, pages S8643-S8644. (PDF)  ↩