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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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