How much is the war in Iraq costing us?!

Villa · Congressional Page Joined: 30 Dec 2007 Posts: 16

How much is the war in Iraq costing us? How much of our money is the government spending?!

Given the chaotic nature of war and the complexities of government accounting, it’s pretty much impossible to come up with a hard number. And as soon as you come up with one, someone will come along and challenge what you’ve chosen to include or leave out.

When economists or financial analysts make estimates like these, they often take one of two approaches: “bottom-up” or “top-down.” In a bottom-up estimate, you’d try to add up all the individual costs on your list of war-related expenses: everything from the preparation of a meal for the troops to the manufacture of each bullet. The top-down approach just looks at what has been spent and estimates the level of future spending. The two methods are almost guaranteed to come up with different numbers.

So you’ve got several comprehensive studies to choose from. One of the most up-to date comes from the National Priorities Project, and Amherst-Mass.-based group that tracks the impact of federal spending on local communities. Using a “top-down” calculation based on U.S. budget appropriations, the group estimates the total money spent or allocated comes to about $255 million per day, or a little less than $1.8 billion a week. That figure includes both military and non-military spending on things like reconstruction.

Other estimates cast a wider net in their definition of total costs — including things like the loss of life. Insurance companies and juries in wrongful death cases inevitably come up with a dollar figure, but any number used to represent the financial loss resulting from the death of more than 3,000 soldiers is only an estimate of the true economic impact. Such estimates also include the short- and long-term cost of caring for the tens of thousands of those disabled in combat.

Then there are future costs that don’t show up in current appropriations, like the money needed to replace equipment that's wearing out faster that it would if wasn’t being used in combat. And, since the government is running deficits — and borrowing to make up the difference — at least some of the interest on the national debt has to be added to the Iraq war bill.

If you add these costs, and others, to the total tab, the cost of the war has jumped from $4.4 billion to $7.1 billion a month since the 2003 fiscal year, according to a paper co-authored in January by Columbia University professor and Nobel-prize winning economist Joseph Stiglitz, an outspoken critic of the war. The paper estimates the total cost could top $1 trillion.

There are some savings that offset the costs. Scott Wallsten at the American Enterprise Institute noted in a Sept. 2005 study that the the U.S. no longer bears the cost of enforcing the “no fly zone” that was in place before the war began. That report estimates the total cost of the Iraq war of up to $1 trillion. But, as Wallsten noted, a lot depends on the assumptions you make about future costs. To come up with your own estimate, Wallsten has created a calculator that let’s you make your own estimate.

Some estimates include what economists call the "opportunity costs" — all the things you could have done with the money if you didn't spend the money on the war. So, if you take that view, you can add to your list all the roads that didn't get built or public school programs that didn't get funded because the money was spent on military operations.

Lastly, no accounting would be complete without looking at the financial and economic impact on Iraq. If part of the reason for going to war was to liberate the country from dictatorship, end global sanctions and allow Iraqis to thrive economically, that hasn’t happened yet.

In the short term, for example, the Iraqi economy has been hit by substantial lost oil production, at a time when oil prices approached record (inflation adjusted) highs. From level of more than 2.5 million barrels a day in 2001, production fell to less than 1.5 million in 2003 and was less than 2 million last year. Ironically, the 2006 spike in oil prices — which raised the cost of fighting the war — was due, in part, to uncertainties about oil supplies created by the war itself.

And any final accounting will have to include the loss of life and injuries to the Iraqi people. For now, that number is unknowable.

CONTINUED: What if the government goes bankrupt?