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The Three Trillion Dollar War


Fri, Apr 11th, 2008
Posted in Commentary

A new book, by Nobel economist Joseph Stiglitz and Linda Blimes, a public policy professor at the Kennedy School of Government at Harvard, called The Three Trillion Dollar War - the true cost of the Iraq conflict challenges the Bush administration's accounting of the costs of the Iraq War.

On the eve of the war, Larry Lindsey, President Bush's economic adviser, estimated that the cost of carrying out the war in Iraq might cost $200 billion.

Defense Secretary Donald Rumsfeld called this estimate "baloney" and suggested that the costs would be in the $50 to $60 billion range. Rumsfeld's deputy, Paul Wolfowitz further suggested that post-war reconstruction would pay for itself in increased oil revenues.

But Stiglitz and Blimes, who both worked in the Clinton Administration, argue that it is not just the money spent to date that needs to be counted, but the long-term commitments the government has taken on in its involvement in the war. This includes interest payments, future disability payments to veterans, the cost of replacing equipment and munitions to pre-war levels, as well as lost opportunity costs.

The Costs of the War

• Costs of combat operations to date: $526 billion; accumulating at $435 million per day.

• Future costs of disability benefits and health care for Iraq war veterans: $590 billion.

• Costs of interest on money borrowed to pay for the war: $615 billion.

• Costs of replacing equipment and restoring U.S. military to pre-war strength: $280 billion.

• Costs of increased oil prices related to the Iraq war: $274 billion (from $25 per barrel in 2003 to more than $100 per barrel in 2008).

• Estimated costs of combat in Afghanistan and Iraq for a ten year period ending in 2017: $1.2 to $1.7 trillion.

• Cost of lost earning potential of 4000 dead servicemen killed in Iraq: $28 billion.

"The figure we arrive at is more than $3 trillion. Our calculations are based on conservative assumptions," Stiglitz wrote in the Times of London recently.

According to Stiglitz and Blimes, the costs of the Iraq War are projected to be 10 times the cost of the first Gulf War and almost a third more than the cost of the Vietnam War, which lasted twelve years. The only war that has been more costly is World War II, which, adjusted for 2007 dollars, was $5 trillion.

* * * * *

According to a report by the U.S. Institute for Peace, the same group who advised the Iraq Study Group, the United States is no closer to achieving its goals in Iraq than it was a year ago. But the report concludes that a quick military withdrawal could lead to chaos and even genocide. The report, which was released two days prior to General David Petraeus' and Ambassador Ryan Crocker's testimony before Congress, cited security improvements associated with the "surge" but noted the lack of political progress in the country as a whole.

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