Apr

22

The Economic Costs of The Iraq War: An Appraisal Three Years After the Beginning of The Conflict

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Three years ago, as America was preparing to go to war in Iraq, there were few discussions of the likely costs.  When Larry Lindsey, President Bush’s economic adviser, suggested that they might reach $200 billion, there was a quick response from the White House:  that number was a gross overestimation.(2)   Deputy Defense Secretary Paul Wolfowitz claimed that Iraq could “really finance its own reconstruction,” apparently both underestimating what was required and the debt burden facing the country.  Lindsey went on to say that “The successful prosecution of the war would be good for the economy.”(3)

Many aspects of the Iraq venture have turned out differently from what was purported before the war:  there were no weapons of mass destruction, no clear link between Al Qaeda and Iraq, no imminent danger that would warrant a pre-emptive war.  Whether Americans were greeted as liberators or not, there is evidence that that they are now viewed as occupiers.  Stability has not been established.  Clearly, the benefits of the War have been markedly different from those claimed.

So too for the costs.  It now appears that Lindsey was indeed  wrong—by grossly underestimating the costs.  Congress has already appropriated approximately $357 billion for military operations, reconstruction, embassy costs, enhanced security at US bases and foreign aid programs in Iraq and Afghanistan. This total, which covers costs through the end of November 2005, includes $251bn for military operations in Iraq, $82bn for Afghanistan and $24bn for related foreign operations, such as reconstruction, embassy safety and base security.(4)  These costs have been rising throughout the war. Since FY 2003, the monthly average cost of operations has risen from $4.4bn to $7.1 bn – the costs of operations in Iraq have grown by nearly 20% since last year (whereas Afghanistan was 8% lower than last year).(5)   The Congressional Budget Office has now estimated that in their central, mid-range scenario, the Iraq war will cost over $266 billion more in the next decade, putting the direct costs of the war in the range of $500 billion(6).

from Bilmes, Linda, and Joseph E. Stiglitz. “The Economic Costs of The IRAQ WAR:  An Appraisal Three Years After the Beginning of The Conflict.” Paper prepared for presentation at the ASSA meeting, 2006

Download the full paper here as a PDF.

Apr

22

Soldiers Returning From Iraq and Afghanistan: The Long-term Costs of Providing Veterans Medical Care and Disability Benefits

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This paper analyzes the long-term needs of veterans returning from the Iraq and Afghanistan conflicts, and the budgetary and structural consequences of these needs. The paper uses data from government sources, such as theVeterans Benefit Administration Annual Report.  The main conclusions of the analysis are that:

(a) the Veterans Health Administration(VHA) is already overwhelmed by the volume of returning veterans and the seriousness of their health care needs, and it will not be able to provide a high quality of care in a timely fashion to the large wave of returning war veterans without greater funding and increased capacity in areas such as psychiatric care;

(b) the Veterans BenefitsAdministration (VBA) is in need of structural reforms in order to deal with the high volume of pending claims; the current claims process is unable to handle even the current volume and completely inadequate to cope with the high demand of returning war veterans;  and

(c) the budgetary costs of providing disability compensation benefits and medical care to the veterans from Iraq and Afghanistan over the course of their lives will be from $350 - $700 Billion, depending on the length of deployment of US soldiers, the speed with which they claim disability benefits and the growth rate of benefits and health care inflation.

Key recommendations include: increase staffing and funding for veterans medical care particularly for mental health treatment; expand staffing and funding for the “Vet Centers,” and restructure the benefits claim process at the Veterans Benefit Administration.

from Bilmes, Linda “Soldiers Returning From Iraq and Afghanistan: The Long-term Costs of Providing Veterans Medical Care and Disability Benefits.” Paper prepared for presentation at the ASSA meeting, 2007

Download the full paper here as a PDF.

Apr

22

The Three Trillion Dollar War

Filed Under Academic Papers & Journals, Casualty Reports & FOIA, Latest News & Scandals, Podcasts, Recent Press, Veterans, Videos, War & The Economy | Leave a Comment

This website is inspired by the book The Three Trillion Dollar War and will continue to tell the story of the costs of this war. Apart from its tragic human toll, the Iraq War will be staggeringly expensive in financial terms. In The Three Trillion Dollar War, Nobel Prize winner Joseph E. Stiglitz and Harvard professor Linda J. Bilmes cast a spotlight on expense items that have been hidden from the U.S. taxpayer, including not only big-ticket items like replacing military equipment (being used up at six times the peacetime rate) but also the cost of caring for thousands of wounded veterans—for the rest of their lives. Shifting to a global focus, the authors investigate the cost in lives and economic damage within Iraq and the region. Finally, with the chilling precision of an actuary, the authors measure what the U.S. taxpayer’s money would have produced if instead it had been invested in the further growth of the U.S. economy. Written in language as simple as the details are disturbing, this book will forever change the way we think about the war.