Iraq: The Three Trillion Dollar War

by: Paul Rosenberg

Sat Mar 01, 2008 at 10:30

The Bush Administration was wrong about the benefits of the war and it was wrong about the costs of the war. The president and his advisers expected a quick, inexpensive conflict. Instead, we have a war that is costing more than anyone could have imagined.

The cost of direct US military operations - not even including long-term costs such as taking care of wounded veterans - already exceeds the cost of the 12-year war in Vietnam and is more than double the cost of the Korean War.

Indeed, it is, they go on to say, more expensive than any other war we've ever fought, except for World War II.

There are so, so many lies surrounding the Iraq War, that it's hardly surprising the cost itself should be so wildly misrepresented. It's not just that the operating costs are excluded from the normal budget process, or even that so much of the costs are deferred to the future in the form of caring for tens of thousands of military personel who will live out their lives with grave and costly injuries. It's also, quite simply, that this war, unlike earlier ones, was designed from the start to appear utterly costless--look ma, no taxes!--when in fact it was anything but. And that is why the truth about the cost of the war is anything but an incidental concern, but instead cuts to the very heart of the evil enterprise that Congress has yet to confront.

As Juan Gonzales reported on Democracy Now! yesterday, the Bush White House push-back has begun in earnest:

In response to the $3 trillion price estimate, the White House has gone on the offensive. White House spokesperson Tony Fratto told reporters, "People like Joe Stiglitz lack the courage to consider the cost of doing nothing and the cost of failure. One can't even begin to put a price tag on the cost to this nation of the attacks of 9/11."

So, in response to the truth about what the war cost, we get yet another re-telling of the lie that Iraq had anything at all to do with 9/11.  Well, at least now we can do away with calling these "cheap lies."  They are, no doubt, shoddy beyond all belief.  But no one can call them, "cheap".

And, even in the best case scenario, these costs are projected to be almost ten times the cost of the first Gulf War, almost a third more than the cost of the Vietnam War, and twice that of the First World War. The only war in our history which cost more was the Second World War, when 16.3 million U.S. troops fought in a campaign lasting four years, at a total cost (in 2007 dollars, after adjusting for inflation) of about $5 trillion (that's $5 million million, or £2.5 million million). With virtually the entire armed forces committed to fighting the Germans and Japanese, the cost per troop (in today's dollars) was less than $100,000 in 2007 dollars. By contrast, the Iraq war is costing upward of $400,000 per troop.

Aside: Four times the cost per troop of WWII?  What ever happened to "faster, cheaper, better?"

Most Americans have yet to feel these costs. The price in blood has been paid by our voluntary military and by hired contractors. The price in treasure has, in a sense, been financed entirely by borrowing. Taxes have not been raised to pay for it - in fact, taxes on the rich have actually fallen. Deficit spending gives the illusion that the laws of economics can be repealed, that we can have both guns and butter. But of course the laws are not repealed. The costs of the war are real even if they have been deferred, possibly to another generation.

"Let the kids pay!"  Now, there's a conservative family value for you!

Generational warfare?  Are you kidding?  These guys invented it!

Okay, reality-based geekoids, here's an early portion of the Democracy Now! interview, in which the methodology is broadly described, just to pique your interest in the tantalizing possibility of nerd-porn details still to come....

[AMY GOODMAN]: We welcome you both to Democracy Now! Joseph Stiglitz, how did you come up with that price tag, $3 trillion?

JOSEPH STIGLITZ: Well, the way you approach this problem is basically adding. You begin with the budgetary numbers. But what they claim as the cost of the Iraq war in the budget is not the full cost. There are the operational costs that everybody understands, but then there are costs hidden elsewhere in the defense budget. But then there are really some very big costs hidden elsewhere, like contractors that have been the subject of such concern. We pay their insurance through the Labor Department.

But the most important cost, budgetary cost, that we haven't talked about publicly, that haven't been talked about, are the costs of veterans-their disability, veterans' healthcare-that will total hundreds of billions of dollars over the next decades. This war has had a huge number of injuries, and that will mount, the cost of caring for them, disability. 39 percent of the people fighting, the 1.6 million who have already fought, and if we continue, it will of course be more than that, are estimated will be-wind up with some form of disability.

Then you go beyond that budgetary cost to the cost of the economy. For instance, when somebody gets disabled, the disability pay is just a fraction of what the loss to their family, to the income that they could have otherwise earned. And then you go beyond that to the macroeconomic cost-the fact that the war has been associated with an increasing price of oil. We're spending money on oil exports, Saudi Arabia, other oil-exporting countries. It's money that's not being spent here at home.

There are a whole set of macroeconomic costs, which have depressed the economy. What's happened is, to offset those costs, the Federal Reserve has flooded the economy with liquidity, looked the other way when you needed tighter regulation, and that's what led to the housing bubble, the consumption boom. And we were living off of borrowed money. The war was totally financed by deficits. And eventually, a day of reckoning had to come, and now it's come.

The war?  A cause of the worsening economy?  Oh, no!  We can't have that!  From a bit earlier in the piece, actually part of the set-up for the interview:

JUAN GONZALEZ: We turn now to take an in-depth look at the cost of the Iraq war. Last week, President Bush rejected charges that the war in Iraq has hurt the US economy. He addressed the issue during an interview with Ann Curry on the Today Show.

ANN CURRY: Some Americans believe that they feel they're carrying the burden because of this economy.

PRESIDENT GEORGE W. BUSH: Yeah, well-

ANN CURRY: The economy, they say, is suffering because of this war.

PRESIDENT GEORGE W. BUSH: I don't agree with that.

ANN CURRY: You don't agree with that? It has nothing to do with the economy, the war, the spending on the war?

PRESIDENT GEORGE W. BUSH: I don't think so. I think, actually, the spending on the war might help with jobs.

ANN CURRY: Oh, yeah?

PRESIDENT GEORGE W. BUSH: Yeah, because we're buying equipment, and people are working. I think this economy is down because we built too many houses.

All lies, all the time.

Back to the interview:

JUAN GONZALEZ: We're going to get into quite a few of those, but I'd like to ask you about the oil, in particular, because obviously many critics initially, when the war began, criticized it as a war to dominate Iraq's oil. But as you point out, the price of oil has skyrocketed from about $25 a barrel to $100 a barrel since the war began. And what portion of that rise-you also try to attribute to the actual Iraq war, right?

JOSEPH STIGLITZ: Well, we were very conservative in our book. When we say $3 trillion, that's really an underestimate. We attributed, in our book, only $5 to $10 to the war itself. But if you look back, in 2003, futures markets, which take into account increases in demand, increases in supply-they knew that China was going to have increased demand, but they thought there would be increases in supply from the Middle East-they thought the price would remain at $25 for the next ten years or more.

What changed that equation was the Iraq war. They couldn't elicit the increase of supply in the Middle East because of the turmoil that we brought there. So we think, actually, the true numbers, not the $5 or $10 that we used, because we didn't want to get in a quibble, but really a much larger fraction of the difference between $25 that it was at the time in 2003 and the $100 we face today.

Next, Stiglitz responds to the White House calumny:

AMY GOODMAN: Joseph Stiglitz, the White House press spokesperson, Tony Fratto, said yesterday, "People like Joe Stiglitz lack the courage to consider the cost of doing nothing and the cost of failure. One can't even begin to put a price tag on the cost to this nation of the attacks of 9/11."

JOSEPH STIGLITZ: Well, I think the White House lacks the courage to engage in a national debate about the cost of the Iraq war. The Joint Economic Committee has asked the White House to come down and discuss the numbers; they've refused.

Security is important, and we don't deny that. The question is whether this war has been the best way of obtaining the security. And no matter what you're going to do-you know, what you think about security, you still have to look at the cost. The costs have been important, even for the way we've waged the war.

The reason the administration presumably did not buy, for instance, the MRAPs, these special vehicles that would have reduced the number of deaths by a very large fraction, is economics. So, you know, no matter what one says, economics is important, and the American people have the right to have an understanding of what those costs are. When we went to war, they said it was going to cost $50 billion. We are now spending that money upfront every three months, and that's not even including the cost of veterans' healthcare and disability down the line.

And a little flash-back action, recalling the lies that were told:

AMY GOODMAN: We turn to a clip of Andrew Natsios, the former administrator of USAID, the Agency for International Development. During an appearance on Nightline with Ted Koppel in April of 2003, Natsios predicted it would cost the United States $1.7 billion to rebuild Iraq.

TED KOPPEL: I think you'll agree, this is a much bigger project than any that's been talked about. Indeed, I understand that more money is expected to be spent on this than was spent on the entire Marshall Plan for the rebuilding of Europe after World War II.

ANDREW NATSIOS: No, no, no, no. This doesn't even compare remotely with the size of the Marshall Plan.

TED KOPPEL: The Marshall Plan was $97 billion.

ANDREW NATSIOS: This is $1.7 billion. There have been-

TED KOPPEL: Alright, this is the first. I mean, when you talk about 1.7, you're not suggesting that the rebuilding of Iraq is going to be done for $1.7 billion.

ANDREW NATSIOS: Well, in terms of the American taxpayers' contribution, I do. This is it for the US. The rest of the rebuilding of Iraq will be done by other countries who have already made pledges-Britain, Germany, Norway, Japan, Canada-and Iraqi oil revenues. Eventually, in several years, when it's up and running and there's a new government that's been democratically elected, will finish the job with their own revenues. They're going to get in $20 billion a year in oil revenues. But the American part of this will be $1.7 billion. We have no plans for any further-on funding for this.

TED KOPPEL: I want to be sure that I understood you correctly. You're saying that the top cost for the US taxpayer will be $1.7 billion, no more than that?

ANDREW NATSIOS: For the reconstruction. And then there's $700 million in the supplemental budget for humanitarian relief, which we don't competitively bid, because it's charities that get that money.

TED KOPPEL: I understand. But as far as reconstruction goes, the American taxpayer will not be hit for more than $1.7 billion no matter how long the process takes?

ANDREW NATSIOS: That is correct. That is the plan, and that is our intention. And these figures of these outlandish figures I've seen, I have to say, there's a little bit of hoopla involved in this.

AMY GOODMAN: That was Andrew Natsios in 2003. He, at the time, was head of USAID, the Agency for International Development.

Demn!  Where's the Memory Hole when you really need it?  Oh, on network, cable and corporate press news, of course!  How silly of me to ask....

[AMY GOODMAN]: Linda Bilmes, your response to Andrew Natsios?

LINDA BILMES: Well, we have actually spent now three times per-we spent three times per Iraqi what we spent per European in the Marshall Plan. And the amount that we have spent in trying to rebuild Iraq has far eclipsed what Andrew Natsios had said, obviously. But I think that the whole story about what happened in the reconstruction is one of the many, many tragedies of the Iraq situation.

Next, Bilmes takes what I can only call a very strange tack:

[LINDA BILMES:] Here, you had a situation where President Bush tried to do the right thing. I mean, he went to a very reluctant Congress, and he said, "Look, we have to have the money to rebuild Iraq." And this was in the summer of 2003. Congress said, "Why don't we loan it?" or whatever, and he said, "No, no, have to have the money."

The money was enacted, and then $19 billion was allocated for the reconstruction of Iraq, available in September 2003, which then mostly was not spent. It was not spent, because for the next six months, Secretary Rumsfeld essentially refused to sign a letter to the Congress guaranteeing that the contracts would be let by competitive bidding. And there was, you know, a ridiculous kind of hold up in the Congress about this issue of the competitive bidding, which meant that by the next summer, very little of the money had been spent. The Office of Management and Budget had rolled back a lot of the money.

And by that time, we had lost the hearts and minds of Iraqis. By that time-it was now a year later-electricity was far down, all the things that that rebuilding money was supposed to be for-rebuilding schools, replenishing electricity and basic services-was gone. So it was an enormous, enormously bungled and missed opportunity.

So, as I read it, Congress wanted basic accountability, and Rumsfeld said, "Screw Iraq if you want to interfere with our gravy train."

So Iraq was screwed. Again.