March 29, 2013
The 4+ Trillion Dollars Wars
Below find excerpts of Harvard Professor Linda Bilmes latest analysis of the costs of the Wars in Iraq and Afghanistan. Note that the costs are now estimated to lay somewhere between $4 trillion and $6 trillion.
Find this important study at the Harvard website at and attached.
N.B. The final sentence: "In short, there will be no peace dividend, and the legacy of Iraq and Afghanistan wars will be costs that persist for decades."
It's not going to be a "peace dividend;" it is going to be a decades long and gigantic expense--in addition to the moral tragedy.
The excerpts from her cogent, well written text explain how she got to her conclusion. (The relevant page numbers are noted in parentheses.)
The Iraq and Afghanistan conflicts, taken together, will be the most expensive wars in US history - totaling somewhere between $4 to $6 trillion. This includes long-term medical care and disability compensation for service members, veterans and families, military replenishment and social and economic costs. The largest portion of that bill is yet to be paid. Since 2001, the US has expanded the quality, quantity, availability and eligibility of benefits for military personnel and veterans. This has led to unprecedented growth in the Department of Veterans Affairs and the Department of Defense budgets. (Abstract on p. 1)
The legacy of decisions taken during the Iraq and Afghanistan wars will dominate future federal budgets for decades to come. (Abstract on p. 1)
The US has already close to $2 trillion in direct outlays for expenses related to Operation Enduring Freedom (OEF), Operation Iraqi Freedom (OIF) and Operation New Dawn (OND). This includes direct combat operations, reconstruction efforts, and other direct war spending by the Department of Defense (DoD), State Department, Department of Veterans Affairs (VA) and Social Security Administration. (P. 2)
The single largest accrued liability of the wars in Iraq and Afghanistan is the cost of providing medical care and disability benefits to war veterans. Historically, the bill for these costs has come due many decades later. The peak year for paying disability compensation to World War I veterans was in 1969 - more than 50 years after Armistice. The largest expenditures for World War II veterans were in the late 1980s. Payments to Vietnam and first Gulf War veterans are still climbing. The magnitude of future expenditures will be even higher for the current conflict, which have been characterized by much higher survival rates, more generous benefits, and new, expensive medical treatments. The US has also expanded veteran's programs, made it easier to qualify for some categories of compensation, and invested in additional staff, technology, mental health care, medical research and other services designed to improve the situation of newly returning veterans. (P. 2)
Finally, the decision to finance the war operations entirely through borrowing has already added some $2 trillion to the national debt, contributing about 20% of the total national debt added between 2001 and 2012. This level of debt is thus one of the reasons the country faces calls for austerity and budget cuts, which has already had an impact on the military budget through the across-the-board cuts (the "sequester") that were allowed to take effect in 2013. The US has already paid $260 billion in interest on the war debt. This does not include the interest payable in the future, which will reach into the trillions. (P. 3)
The total interest on the war debt could reach $7 trillion, dwarfing all other costs, depending on interest rates, GDP, and the level of future borrowing. (Footnote 10 on p. 3.)
By the most conservative reckoning, the Iraq and Afghanistan conflicts will cost $4 trillion, including operations to date, accrued veterans medical and disability costs; indirect costs to the Defense Department, social costs for veterans' families and interest already paid. Any estimation of macroeconomic costs, such as the impact of higher oil prices on weakening aggregate demand, and the link between oil prices and decisions of the Federal Reserve to loosen monetary and regulatory policy prior to the financial crisis, would easily raise the cost to $5 or $6 trillion, (even if only a fraction of the "blame" is attributed to the wars). (P. 20)
What did we buy for $4 trillion? *** These decisions extend far beyond the initial choices made to invade Afghanistan; to invade Iraq and to expand US military involvement in both countries. They include the decisions to expand medical care and disability benefits for war veterans, to grow the Department of Defense medical system; to increase military pay; to mobilize the Guards and Reserves; to deploy and use up large quantities of basic equipment; to support ongoing diplomatic presence and military assistance in the region; and to finance the conflicts with debt.
The US military is reeling under the large and rapidly-growing cost of the TRICARE health care system, the supplementary military pay raises enacted during the war years and the diversion of defense budget dollars to support the requirements of veterans, which will dominate future defense spending. These commitments have already cost in the order of $700 to $800 billion, and are set to continue, unless there is a significant reversal of current policies. The base VA budget has nearly tripled during the period, with much of this growth now "baked in" to the consolidated national security budget. (PP. 20-21.)
In short, there will be no peace dividend, and the legacy of Iraq and Afghanistan wars will be costs that persist for decades. (P. 21)
The Financial Legacy of Iraq and Afghanistan: How Wartime Spending Decisions Will Constrain Future National Security Budgets by Linda J. Bilmes, Harvard University, HKS Faculty Research Working Paper Series RWP13-006, March 2013.
Director, Straus Military Reform Project, CDI at POGO, POGO
Mr. Wheeler's areas of expertise include Congress, the Defense Budget, National Security, Pentagon Reform and Weapons Systems
The goal of the Straus Military Reform Project is to secure far more effective military forces and much more ethical and professional military and civilian leadership at significantly lower budget levels.
We would like to thank Philip A. Straus Jr. and family for their generous support.