The Uncertain Cost of War(s)

October 12, 2010

The US must make hard choices over the coming year. One will be whether to try turn largely tactical victories in the Iraq War into lasting grand strategic gains by supporting an enduring strategic partnership with Iraq after US forces withdraw at the end of 2011. The other will be whether to fund the full-scale effort necessary to succeed in Afghanistan and Pakistan–an effort that–given high cost assumptions about future operations—could double the current level of casualties and raise the total operating cost of these efforts from some $455 billion through FY2010 to some $937 billion through FY2020.

The Burke Chair has developed a comparative estimate of the costs of the wars to date to the US using material drawn from the Department of Defense, Congressional Research Service, Government Accountability Office, Congressional Budget Office, and other think tanks. This material is available in a detailed quantitative briefing entitled “The Uncertain Cost(s) of War” and is available on the CSIS web site at http://csis.org/files/publication/101011_FY2011.UncertCostofWar.pdf

This briefing is not designed to support any given viewpoint about the wars. It is designed as a reference aid to help show the costs to date and to provide a range of guesstimates of the costs of pursuing each conflict. It is also important that the reader understand several aspects of the figures that are presented:

• No estimate of the cost of war can ignore the human cost in blood. These costs are shown for the US military for all US wars to date, and in detail for the US in the Afghan and Pakistan conflict and the Iraq War. These are the figures most comparable to the dollars costs of war. As such, however, they sharply understate the cost in blood. They do not include estimates of allied, enemy, or foreign civilian casualties, or deaths of US contractors, State Department and intelligence community civilians, NGOs, and the UN.

• No effort is made to provide a separate estimate of “opportunity cost.” This analysis assumes that the cost of the war to date is the most valid real world estimate of opportunity cost. It is always possible to create an idealized model of the value of alternative ways of spending the same amount of money and the government is fully capable of misusing money as well as investing it in extremely productive ways. However, trying to compare the net value of national security expenditures to health or education expenditures–and then assigning some value added to the preferred option—is a matter of political priorities and belief structures, not economic analysis.

• There are differences in the way certain US government agencies estimate the cost of war. The source material used in preparing each briefing slide references the reasons for these differences in depth, and should be consulted if they become an issue. There is, however, no one right estimate or way of measuring the cost of wars, and some data are simply missing. For example, no breakout is available of the cost of intelligence efforts, or of expenditures beyond the Department of Defense, State Department, and USAID budgets.  The reader should carefully examine the range of estimates provided to see both the level of difference in specific areas and to find the breakouts most relevant to a given analysis or policy issue.

• The data show that the burden which the wars impose on the US economy can be estimated in very different ways. Comparative cost is high relative to previous wars. It is limited, however, as a percentage of federal spending. The total burden of all defense costs on the US GDP—including wartime supplementals—is lower than the cost of “peace” during most of the Cold War.  As previous reports have also shown, pressure on the US national budget is a product of deficit spending driven almost completely by the rise in entitlements spending and the cost of measures designed to end the recent recession. The cost of recent wars may be high in dollar terms but it has not placed a major burden on the US economy by post World War II standards.

• The reporting available only covers operating costs. It does not attempt to deal with the problem of recovering readiness for other forms of combat, procuring new equipment and reconditioning/modernizing equipment worn out in war. It does not project the future cost of increases in military pay, retirement, or medical costs incurred as a result of these wars. These reset costs will probably total at least several hundred billion dollars over time.

• The section on projected costs only includes one serious US government effort to project the cost of operations into the future and that effort is by the CBO and tailored to the needs of economic forecasting—not achieving meaningful strategic results. The CBSA has provided some independent estimates, and two Burke Chair estimates are also shown in this section and at the start of this analysis. They are, however, the rawest form of guesstimates and are designed to illustrate the cost of maintaining a strategic partnership with Iraq through FY2015 and achieving some kind of lasting stability and security in the Afghan War through FY2020. An attempt was made to provide much more detailed estimates of alternative futures, but so many different futures are possible—and the unclassified data on the cost of alternative actions are so limited—that these estimates have not been included.