Publication: Progressive Review
Iraq War Cost Not Close to Ballpark | |
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THE PROGRESSIVE REVIEW - March 20, 2008
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Estimates of Iraq War Cost Were Not Close to Ballpark
By David M. Herszenhorn
The New York Times
Washington - At the outset of the Iraq war, the Bush
administration predicted that it would cost $50 billion
to $60 billion to oust Saddam Hussein, restore order and
install a new government.
Five years in, the Pentagon tags the cost of the Iraq war
at roughly $600 billion and counting. Joseph E. Stiglitz,
a Nobel Prize-winning economist and critic of the war,
pegs the long-term cost at more than $4 trillion. The
Congressional Budget Office and other analysts say that
$1 trillion to $2 trillion is more realistic, depending
on troop levels and on how long the American occupation
continues.
Among economists and policymakers, the question of how to
tally the cost of the war is a matter of hot dispute. And
the costs continue to climb.
Congressional Democrats fiercely criticize the White House
over war expenditures. But it is virtually certain that the
Democrats will provide tens of billions more in a military
spending bill next month. Some Democrats are even arguing
against attaching strings, like a deadline for withdrawal,
saying the tactic will fail as it has in the past.
All of the war-price tallies include operations in the war
zone, support for troops, repair or replacement of equip-
ment, reservists' salaries, special combat pay for regular
forces and some care for wounded veterans - expenses that
typically fall outside the regular Defense Department or
Veterans Affairs budgets.
The highest estimates often include projections for future
operations, long-term health care and disability costs for
veterans, a portion of the regular, annual defense budget,
and, in some cases, wider economic effects, including a
percentage of higher oil prices and the impact of raising
the national debt to cover increased war spending.
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The debate raging on Capitol Hill, on the presidential
campaign trail, in research institutes and in academia
touches on such esoteric factors as the right inflation
index for veterans' health care costs; the monetary value
of nearly 4,000 soldiers killed; and what role, if any,
the war has had in higher oil prices.
Some economists who track the war expenses say they worry
that politicians are making mistakes similar to those made
in 2002, by failing to fully come to grips with the short-
and long-term financial costs.
"The relevant question now is: what do we do now going
forward? Because we can't do anything about the costs that
have already happened," said Scott Wallsten, an economist
and vice president of research with iGrowthGlobal, a
Washington research institute. "We still don't hear people
talking about that."
Congressional Democrats, led by Senator Charles E. Schumer
of New York, the chairman of the Joint Economic Committee,
have sought to spotlight the rising costs and limited
political progress in Iraq.
"This administration still has no clear exit strategy for
our troops, no path to political reconciliation, and no
accounting of the costs to our budget or economy," Mr.
Schumer said.
The White House press secretary, Dana M. Perino,
acknowledged that costs had risen higher than predicted,
but said the administration was committed to giving the
military everything it needed for success.
"None of these calculations take into account the cost of
failure in Iraq," Ms. Perino said. "Should Al Qaeda have
safe haven in Iraq, we are more likely to be attacked again
on our homeland. We know the cost of that."
On the campaign trail, the Democratic candidates, Senators
Barack Obama and Hillary Rodham Clinton, often say that
money for the war would be better spent at home, as Mrs.
Clinton did Tuesday when she pegged the war costs at "well
over $1 trillion."
"That is enough," she continued, "to provide health care
for all 47 million uninsured Americans and quality pre-
kindergarten for every American child, solve the housing
crisis once and for all, make college affordable for every
American student and provide tax relief to tens of millions
of middle-class families."
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But what the candidates often fail to note when making such
points is that the full cost of the war has been added to
the national debt, and that the money spent in Iraq would
not necessarily be available for other programs. And, of
course, anything short of an immediate withdrawal will
entail billions more in continuing expenses.
Debate aside, there is general consensus that Congress will
have allocated slightly more than $600 billion for Iraq
operations through the 2008 fiscal year.
And some analysts say that may be half the final price.
"Under reasonable scenarios, assuming we don't pull out
rapidly, we may only be halfway through," said Steven M.
Koziak, of the Center for Strategic and Budgetary Assess-
ment, a nonpartisan research group. "Even in direct budget-
ary costs, it's quite easy to get up on the order of
$1 trillion for Iraq alone."
Meanwhile, the five-year anniversary of the war has focused
a spotlight on the costs so far and on future projections.
In a new book, called "The Three Trillion War,"
Mr. Stiglitz, the Nobel laureate, and a co-author,
Linda J. Bilmes, a professor at Harvard, say the total
economic impact may be a staggering $4 trillion or more.
Even some economists who call themselves fans of Mr.
Stiglitz say they think that number is exaggerated; the
authors insist their projections are moderate.
Lawrence B. Lindsey, who was ousted as President Bush's
first economic adviser partly because he predicted the
war might cost $100 billion to $200 billion, also has a
new book that serves in part as an I-told-you-so.
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"Five years after the fact, I believe that one of the
reasons the administration's efforts are so unpopular
is that they chose not to engage in an open public
discussion of what the consequences of the war might
be, including its economic cost," Mr. Lindsey wrote
in an excerpt in Fortune magazine.
Mr. Lindsey insists that his projections were partly
right. "My hypothetical estimate got the annual cost
about right," he wrote. "But I misjudged an important
factor: how long we would be involved."
He was not alone.
Congressional Democrats, for instance, predicted that the
Iraq war would cost roughly $93 billion, not including
reconstruction.
Virtually every forecast was off in this way. "It's clear
that operations in Iraq and Afghanistan have gone on longer
and have been more expensive than the projections initially
suggested," Peter R. Orszag, director of the Congressional
Budget Office, said in an interview.
Only one economist, William D. Nordhaus of Yale, seems to
have come close. In a paper in December 2002, he offered
a worst-case estimate of $1.9 trillion, "if the war drags
on, occupation is lengthy, nation-building is costly."
Getting at the true costs is difficult though. Expenses
like an overall increase in troops were paid from the
base defense budget, not the war bills.
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