CE Week #6: “War estimate tops $3 trillion”
Economist’s calculation subject of congressional hearing today
Kevin G. Hall
McClatchy
February 28, 2008
WASHINGTON – When U.S. troops invaded Iraq in March 2003, the Bush administration predicted that the war would be self-financing and rebuilding the nation would cost less than $2 billion.
Coming up on the five-year anniversary of the invasion, a new estimate from a Nobel laureate puts the cost of the wars in Iraq and Afghanistan at more than $3 trillion.
That estimate from Noble Prize-winning economist Joseph Stiglitz also serves as the title of his new book, “The Three Trillion Dollar War,” which hits store shelves Friday.
The book, co-authored with Harvard University professor Linda Bilmes, builds on previous research published in January 2006. The two argued then and now that the cost to America of the wars in Iraq and Afghanistan is wildly underestimated.
When other factors are added – such as interest on debt, future borrowing for war expenses, continued military presence in Iraq and lifetime health care and counseling for veterans – they think that the wars’ costs range from $5 trillion to $7 trillion.
“I think we really have learned that the long-term costs of taking care of the wounded and injured in this war and the long-term costs of rebuilding the military to its previous strength is going to far eclipse the cost of waging this war,” Bilmes said in an interview.
The book and its estimates are the subject of a hearing today by the Joint Economic Committee of Congress.
The White House doesn’t care for the estimates by Stiglitz, a former chief economist of the World Bank who’s now a professor at Columbia University.
“People like Joe Stiglitz lack the courage to consider the cost of doing nothing and the cost of failure. One can’t even begin to put a price tag on the cost to this nation of the attacks of 9/11,” said White House spokesman Tony Fratto, conceding that the costs of the war on terrorism are high while questioning the premise of Stiglitz’s research.
“It is also an investment in the future safety and security of Americans and our vital national interests. $3 trillion? What price does Joe Stiglitz put on attacks on the homeland that have already been prevented? Or doesn’t his slide rule work that way?”
Rep. John Murtha, D-Pa., a decorated Marine Corp colonel and Vietnam War veteran, welcomed the effort by Stiglitz and Bilmes to quantify the ways in which the wars will cost taxpayers.
“It’s astounding that here we are about to mark the fifth anniversary of the invasion of Iraq, and this administration still refuses to acknowledge the long-term costs of the war in Iraq,” he said.
By any estimate, the Bush administration’s predictions in March 2003 of a self-financing war have proved wildly inaccurate. Stiglitz cites operational spending to date of $646 billion for the wars in Iraq and Afghanistan, and, working off estimates from the nonpartisan Congressional Budget Office, presumes that spending on these wars over the next decade probably will amount to another $913 billion.
Pentagon officials had no immediate comment on Stiglitz’s book or his estimates.
Stiglitz and Bilmes first estimated war costs of $1 trillion in January 2006. Their research proved controversial and sparked debate about the costs of replacing equipment used by the armed forces and National Guard units. In the new book, they offer a figure of $404 billion for replacing equipment, planes and tanks and bringing military hardware back from Iraq and Afghanistan.
In an interview, Stiglitz said that too much of the public debate had been over the wars’ operational costs while the real budget strains would show up only years from now.
“The peak expenditures are way out,” he said, noting that the peak expenditures for World War II vets came in 1993.
The pair estimated that future medical, disability and Social Security costs for veterans of the conflicts in Iraq and Afghanistan range from a best-case $422 billion to what they call a more probable long-term expense of $717 billion.
It’s why the two call in the book for creating a Veterans Benefits Trust Fund to set aside money in a “lock box” to pay for future health-care needs of Iraq and Afghanistan vets. Although veterans’ health care amounts to a future promise, they said, it isn’t an entitlement and instead is funded through discretionary spending. In the future, funding for vets will compete with other government programs.
“We should not have an unfunded entitlement program like this,” Stiglitz said. “This is more like deferred compensation. … We require corporations to put money away but we don’t require the government to put money away, and we should be doing that … so when the focus turns away to some other problem, veterans aren’t given the shaft.”
This article was interesting. The entire time I thought how similar these predictions are to polls: inaccurate. The presidential candidacy exit polls, which I’m talking about, are very inaccurate. The polls, or surveys, that are conducted during primaries and even the general election asking the public how and whom they voted for. Now this concept is ridiculously smart for the media. How better to get ALL the attention than to get the actual vote before it’s officially counted? The only problem is that people lie. A small act, but it can have tremendous effects. Such as the 2000 election where the polls said Bush won, then Gore won, and then Bush had it again, and then it was too close to call. The polls suggested winners three times before they figured out that the polls are not going to work. The idea behind the polls is good, but it fails miserably. The same concept is with estimating the cost of a war. They said it would cost $2 billion dollars. Now, a couple trillion more than that, they’ve figured out that the estimation doesn’t quite work. I could have told them that. A war is very unpredictable, especially when the war is against terrorism, a near uncontrollable concept. Not only terrorism, but terrorism with rather good secrecy. We didn’t quite know how many we were fighting and exactly where. The predictions were pretty much a down payment for a very expensive war coming. And, now we know that to be true.
Also, his quote: “We should not have an unfunded entitlement program like this,” Stiglitz said. “This is more like deferred compensation. … We require corporations to put money away but we don’t require the government to put money away, and we should be doing that … so when the focus turns away to some other problem, veterans aren’t given the shaft.,” reminded me of a federal mandate—requirement that directs state/local governments to comply with federal rules under threat or penalties or as a condition of receipt of a federal grant. The only difference is that it would be a mandate of the people and veterans specifically. It’s an interesting concept, but it seemed very similar in my head.
OK, so my first question is how the Bush Administration thought the whole campaign could cost a mere 2 billion dollars? That’s less than the stealth bomber that Kautzman keeps mentioning in class. My second question, is how they thought the war could be “self financing”? I don’t get it, were we planning on talking loot back after sacking their country? Just kidding, but seriously I think that this “war” has cost the US to much, both financially, and in terms of the lives lost in the conflict. Honestly I’m not up to date on what we are spending money on, who we are actively fighting, or why exactly we invaded in the first place then chose to stay, but it seems to me it had better have been pretty darn important. I actually did like the idea of putting money away now for veterans, but I’m not really sure if it would be that beneficial, because since the federal government pays for things up front, wouldn’t the interest on the loan equal the interest on the bonds? Also, I am interested in what exactly the Joint Economic Committee (the fact that it is a joint committee simply means that it is made up of members from both the House of Representatives and the Senate) is looking into and what its findings will be.
Andrew Barnes
Reply to all:
I agree with Steph and Andrew, I don’t know HOW IN THE WORLD the Bush administration ever thouight that this war would only cost 2 billion dollars. Well, I guess this “war” started off as an “attack on terrorism” and then slowly escalated tp a full out war. I must agree with Andrew, that this war has cost the United States far to much money, and even more importantly human lives.