The Cost of the Iraq War

March 31, 2008

The cost of the Iraq War has become yet another element in the political debate over the war. There is no right answer to this aspect of the debate. The Burke Chair has, however, prepared an overview of the current official estimates of the cost of the war to date, and of possible future costs.

Dealing with the Administration’s Failure to Provide Meaningful Wartime Budget Data

The briefing survey’s reporting by the Department of Defense (DoD) and the State Department (SD), but relies heavily on work by the Congressional Budget Office (CBO), Congressional Research Service (CRS), and General Accountability Office (GAO). This reliance on Congressional estimates is necessary because the Administration’s past and current budget data present massive problems.

Its wartime budget submissions began badly and have steadily deteriorated in content and credibility with time. This is partly because most data lump together expenditures on the Iraq War, Afghan War, and GWOT. It is partly because of a failure to combine all civil and military costs into a single credible budget estimate, and partly because of a steadily increasing reliance on poorly explained and justified supplementals for expenditures that were clearly predictable during the drafting of the baseline budget. These supplemental have also come to include a steadily rising amount of items very uncertain relation to the war, particularly in the case of procurement.

It is also striking that by the fact that the Bush Administration has never provided any meaningful long-term strategy, plan, program, or budget for either the Iraq War or the Afghan conflict. If anything, the Administration has almost actively sought to make Afghanistan a “forgotten” war. There is no quarterly Department of Defense report similar to the one on Iraq, and no Department of State weekly status report. The Department of Defense has even removed the page on Operation Enduring Freedom from any visibility on its web site.

Moreover, much of the CBO work presented in the briefing is taken from CBO studies that shows that the Department of Defense has failed dismally to control the future cost of military manpower, operations and maintenance, and procurement, research, and development. This work strongly indicate that the next President will face a legacy of a badly managed overall defense program whose future or “outyear” costs will either force the US to spend far more on defense than Administration budget data indicate, or make major cuts in some aspect of US forces.

In broad terms, these data indicate that –regardless of the future cost of the Iraq War – the Chairman of the Joint Chiefs is correct in stating that future US defense budgets should rise to sustained levels at or above 4% of the US GDP. (For the full CBO text, which provides detailed cost estimates on probable continued rises in procurement spending not in this briefing, see “The Long-Term Implications of Current Defense Plans: Detailed Update for Fiscal Year 2008, March 20, 2008).

Putting the “Worst” and “Best” Cases in Perspective

This does not, however, mean that those who argue “worst case” estimates of the cost of the war are right. No one should ignore work like that of Joseph E. Stiglitz and Linda J. Bilemes in The Three Trillion Dollar War, but the data in the briefing indicate that any focus on worst case costs is highly political. The data provided in the briefing indicate that it is unlikely the war will reach direct costs of $1.72 trillion in a best case, or $2.68 trillion in a most probable case. In fact, the costs could drop sharply from FY2009 onwards if the US is successful in shifting to strategic overwatch and shifting future development costs to the Iraqi government.

There is no way to predict what will happen in Iraq, but the briefing shows that the CBO has examined a case where the US is successful in shifting to something approaching a strategic overwatch posture in Iraq. This work is now somewhat dated, and the lack of more current estimates highlights the problems cause by the Administration’s failure to present any plans and programs for the future. It does, however, indicate that the cost of a “best case” for Iraq, that built successfully on the progress made during 2007, would be far lower than the current costs of the fighting:

“Under the combat scenario that CBO considered, the United States would maintain a long-term presence of approximately 55,000 military personnel in Iraq, deploying military units and their associated personnel there for specific periods and then returning them to their permanent bases either in the United States or overseas. The scenario also incorporates the assumption that units deployed to Iraq would operate at the same pace and conduct the same types of missions as the forces currently deployed there. In CBO’s estimation, this scenario could have one-time costs of $4 billion to $8 billion and annual costs of approximately $25 billion. (All costs…are expressed as 2008 dollars.) “Under the non-combat scenario that CBO analyzed, the United States would maintain a long-term presence of approximately 55,000 military personnel in Iraq by indefinitely stationing specific units at established bases there in a manner similar to the current practice of assigning personnel to units based in Korea or Germany. The scenario incorporates the assumption of much less intense military operations than those under the combat scenario. Under this non-combat alternative, units stationed in Iraq would rarely, if ever, be engaged in combat operations. Up-front costs (mainly for construction) under the non-combat scenario would be approximately $8 billion, with annual costs of $10 billion or less, CBO estimates.  (For the full text, see Congressional Budget Office, “The Possible Costs to the United States of Maintaining a Long-Term Military Presence in Iraq,” September 2007.)”

Only Surveying Direct Costs

No effort is made in the brief to deal with calculations of social costs like those presented by Stiglitz and Bilemes ($295-415 billion), but it is clear from CBO projections that the trends in overall military medical costs are headed in the same unaffordable vector as civil medical entitlement programs. This is an urgent issue of national social policy, but not one that can be tied to the Iraq War.
 
Similarly, the brief does not address macroeconomic costs. All federal expenditures have some impact on the overall economy and come to some extent at the expense of the private sector. All have an opportunity cost in the sense that they come at the expense of other potential uses of the money. It makes little real sense to say that rising energy costs are a product of the Iraq War and conclude there are macroeconomic costs of up to an additional $1.9 trillion, when work by the International Energy Agency and Energy Information Agency has shown that the main causes of prices rises are increasing, Asian-driven global demand, and slower than anticipated growth in oil production capacity and exports unrelated to Iraq.

But Still, A Trillion is a Trillion

This does not mean, however, that any of the various US government estimated presented in the brief do not suggest that the ultimate direct cost of the war will not exceed $1 trillion. It also does not mean that the Administration’s reliance on supplementals mean that its current budget proposals provide anything like the base needed for credible public policy decisions or a constructive Presidential debate.
 
To put it bluntly, the Administration current wartime budget proposals fail to make a convincing or useful case to either Congress or the American people. Worse, they are not supported by any credible long-term plan, program, and budget for sustained action. Those serving in Iraq (and Afghanistan) deserve far more.