Misunderestimating the Price of Iraq

Once upon a time, White House economic adviser Larry Lindsey estimated that the cost of going to war in Iraq might be as much as $200 billion. For daring to voice such an opinion, he was rebuked by Mitch Daniels – then director of the White House budget office – who called Lindsey’s estimate “very, very high” and “the upper end of hypothetical.” Lindsey resigned three months later. In contrast, former Secretary of Defense Donald Rumsfeld – citing Office of Management and Budget estimates – thought the Iraq war would cost “something under $50 billion.” And let’s not forget that former Deputy Defense Secretary Paul Wolfowitz believed that Iraqi oil revenues of $50-$100 billion, not U.S. taxpayer dollars, would pay for the occupation and reconstruction.

In other words, we were led to believe the Iraq war could be prosecuted on the cheap (or at least at a cost comparable to the first Gulf War, which was about $60 billion). But such claims were – like so much else about the Iraq war – wishful thinking.

The National Priorities Project, a nonpartisan research organization that analyzes and clarifies federal data so that people can understand and influence how their tax dollars are spent, estimates spending for the Iraq war as follows:

“FY2003 Supplemental: Operation Iraqi Freedom, made in March 2003, was for $74.8 billion. Passed within a month of the request, the final allocation amounted to $78.5 billion, at least $54.4 billion of which was for the war in Iraq.

“FY2004 Supplemental: Iraq and Afghanistan Ongoing Operations/Reconstruction, for $87 billion, was submitted in September 2003 and passed Congress in November 2003. The final allocation amounted to $87.5 billion, of which $70.6 billion was for Iraq.

“Budget Amendment: $25 Billion Emergency Reserve Fund (Department of Defense – Iraq Freedom Fund) was made in May 2004 and was passed by Congress as part of the Department of Defense appropriations bill in July 2004. Based on Iraq War spending, of the $25 billion appropriated, about $21.5 billion was for the war in Iraq.

“Emergency Supplemental (various agencies): Ongoing Military Operations in the War on Terror, Reconstruction Activities in Afghanistan, Tsunami Relief and Reconstruction, and Other Purposes was made in February 2005 and passed by Congress in April 2005. The final allocation amounted to $82 billion, of which about $58 billion was for the Iraq War.

“Department of Defense appropriations for fiscal year 2006 (i.e., war funding not initiated by a supplemental request) included $50 billion in a ‘bridge fund’ for war funding. Based on past Iraq War spending, approximately $40 billion of that can be counted for the Iraq War.

“FY2006 Emergency Supplemental (various agencies): Ongoing Military, Diplomatic, and Intelligence Operations in the Global War on Terror; Stabilization and Counter-Insurgency Activities in Iraq and Afghanistan; and Other Humanitarian Assistance in February 2006 was for $72.4 billion, of which about $60 billion war for the Iraq War.

“Defense appropriations for FY2007 includes $70 billion in war-related spending, most of which we estimated would be for the Iraq War, based on past spending patterns.”

According to the National Priorities Project, the cost of the Iraq war is currently more than twice Lindsey’s “upper end of hypothetical” estimate: $456 billion and counting, which includes nearly $100 billion in supplemental funding for fiscal year 2007, most of which is for the Iraq War, based on past spending patterns. (The NPP estimate was made before the recent 92-3 Senate vote to approve $150 billion for military operations in Iraq and Afghanistan.)

And there is no end in sight for how much the war will end up costing. In 2002, the Congressional Budget Office estimated that prosecuting a war in Iraq would cost $6-$9 billion a month. Since the three leading Democratic presidential hopefuls have all gone on record that, if elected, they could not guarantee withdrawing all U.S. troops from Iraq by the end of their first presidential term, we are potentially looking at another $360-$540 billion to pay for the war in Iraq for the next five years.

So the $1 trillion estimated by some economists is not out of the question (however, these estimates include both direct military and indirect economic costs – whereas the above figures are only direct military spending). But $1 trillion is a far cry from original White House estimates of $50-$60 billion.

If we were engaged in a war of national survival, the monetary cost of war would be a less relevant issue. For example, the United States is estimated to have spent $341 billion for World War II. But Iraq is hardly a war of national survival. Saddam Hussein was a phantom menace – neither a military threat (as evidenced by how quickly U.S. forces were able to defeat Iraq’s military on the battlefield) nor a terrorist threat (Saddam was not in bed with bin Laden, and al-Qaeda in Iraq came into being as a direct result of the U.S. decision to depose Hussein).

And perhaps more importantly, the $456 billion already spent and the $1 trillion it may end up costing in Iraq will, ultimately, make us less safe. How Muslims around the world view the war in Iraq cannot be ignored – the United States attacked a Muslim country without military provocation, and the Bush administration’s claims of WMDs and al-Qaeda links were false. And they see through the rhetoric of the United States seeking to establish democracy in Iraq while continuing to provide unqualified support for an autocratic and oppressive theocracy in neighboring Saudi Arabia. All of which is easy fodder for radical Islamists to convince other Muslims to target America.

Author: Charles V. Peña

Charles V. Peña is a senior fellow at the Independent Institute, a senior fellow with the Coalition for a Realistic Foreign Policy, a former senior fellow with the George Washington University Homeland Security
Policy Institute
, an adviser to the Straus Military Reform Project, and an analyst for MSNBC television. Peña is the co-author of Exiting Iraq: Why the U.S. Must End the Military Occupation and Renew the War Against al-Qaeda and author of Winning the Un-War: A New Strategy for the War on Terrorism.