Studies: Iraq Costs US $12B Per Month

wallyburger · March 9th, 2008, 05:04 PM

That seems like a lot of money for a lot of nothing.

Quote:

Studies: Iraq Costs US $12B Per Month

Mar 9, 5:02 PM (ET)

By CHARLES J. HANLEY

The flow of blood may be ebbing, but the flood of money into the Iraq war is steadily rising, new analyses show. In 2008, its sixth year, the war will cost approximately $12 billion a month, triple the "burn" rate of its earliest years, Nobel Prize-winning economist Joseph E. Stiglitz and co-author Linda J. Bilmes report in a new book.

Beyond 2008, working with "best-case" and "realistic-moderate" scenarios, they project the Iraq and Afghan wars, including long-term U.S. military occupations of those countries, will cost the U.S. budget between $1.7 trillion and $2.7 trillion - or more - by 2017.

Interest on money borrowed to pay those costs could alone add $816 billion to that bottom line, they say.

The nonpartisan Congressional Budget Office (CBO) has done its own projections and comes in lower, forecasting a cumulative cost by 2017 of $1.2 trillion to $1.7 trillion for the two wars, with Iraq generally accounting for three-quarters of the costs.

Variations in such estimates stem from the sliding scales of assumptions, scenarios and budget items that are counted. But whatever the estimate, the cost will be huge, the auditors of the Government Accountability Office say.

In a Jan. 30 report to Congress, the GAO observed that the U.S. will be committing "significant" future resources to the wars, "requiring decision makers to consider difficult trade-offs as the nation faces an increasing long-range fiscal challenge."

These numbers don't include the war's cost to the rest of the world. In Iraq itself, the 2003 U.S.-led invasion - with its devastating air bombardments - and the looting and arson that followed, severely damaged electricity and other utilities, the oil industry, countless factories, hospitals, schools and other underpinnings of an economy.

No one has tried to calculate the economic damage done to Iraq, said spokesman Niels Buenemann of the International Monetary Fund, which closely tracks national economies. But millions of Iraqis have been left without jobs, and hundreds of thousands of professionals, managers and other middle-class citizens have fled the country.

In their book, "The Three Trillion Dollar War," Stiglitz, of Columbia University, and Bilmes, of Harvard, report the two wars will have cost the U.S. budget $845 billion in 2007 dollars by next Sept. 30, end of fiscal year 2008, assuming Congress fully funds Bush administration requests. That counts not just military operations, but embassy costs, reconstruction and other war-related expenses.

That total far surpasses the $670 billion in 2007 dollars the Congressional Research Service says was the U.S. price tag for the 12-year Vietnam War.

Although American military and Iraqi civilian casualties have declined in recent months, the rate of spending has shot up. A fully funded 2008 war budget will be 155 percent higher than 2004's, the CBO reports.

The reasons are numerous: the "surge" of additional U.S. units into Iraq; rising fuel costs; fattened bonuses to attract re-enlistments; and particularly the need to "reset," that is, repair or replace worn-out, destroyed or damaged military equipment. Almost $17 billion is appropriated this year for advanced armored vehicles to protect troops against roadside bombs.

Looking ahead, both the CBO and Stiglitz-Bilmes construct two scenarios, one in which U.S. troop levels in Iraq and Afghanistan drop sharply and early - to 30,000 by late 2009 for the CBO, and to 55,000 by 2012 for Stiglitz-Bilmes - and a second in which the drawdown is more gradual.

Significantly, the two studies view different time frames, the CBO calculating possible costs met in the next 10 years, while Stiglitz and Bilmes also include costs incurred during that period but paid for later, such as equipment replaced in post-2017 budgets.

This factor figures most in the category of veterans' medical care and disability payments, where the CBO foresees $9 billion to $13 billion in costs by 2017. Stiglitz and Bilmes, meanwhile, project $422 billion to $717 billion in costs over the lifetime of soldiers who by 2017 are wounded or otherwise mentally or physically disabled by the wars.

"The CBO is only looking 10 years out on everything," Bilmes noted in an interview.

For its part, a CBO critique suggested that Bilmes and Stiglitz might be overstating the expense of treating veterans' brain injuries, a costly category.

The two economists say their calculations are conservative, because they don't encompass many "hidden" items in the U.S. budget. Their basic projections also exclude the potentially huge debt-service cost - on which CBO approximately agrees - and the cost to the U.S. economy of global oil prices that have quadrupled since 2003, an increase analysts blame partly on the Iraq upheaval.

Estimating all economic and social costs might push the U.S. war bill up toward $5 trillion by 2017, they say.

Their book already figures in the stay-or-leave debate over Iraq.

When Stiglitz testified on Feb. 28 before the congressional Joint Economic Committee, the ranking Republican, New Jersey's Rep. Jim Saxton, complained that such projections are too imprecise to help determine relative costs and benefits of the Iraq war.

Saxton said a rapid U.S. pullout could lead to full-scale civil war and Iranian domination of Iraq, "enormous costs" that he said should be weighed in any calculation.

KloD · March 9th, 2008, 05:57 PM

While I agree with you about the cost of this war, I'm even more pissed about the interest. 866 billion for nothing, absolutely nothing to show for it. That's the point I was trying to make to Redstorm, it isn't just the bottom line cost per year, it's all the interest too. That this is on top of our military budget.

AZZenny · March 9th, 2008, 08:20 PM

Quote:

Originally Posted by KloD

While I agree with you about the cost of this war, I'm even more pissed about the interest. 866 billion for nothing, absolutely nothing to show for it. That's the point I was trying to make to Redstorm, it isn't just the bottom line cost per year, it's all the interest too. That this is on top of our military budget.

Well, no, that's not quite true. There's the lovely new Halliburton offices in Dubai.

KloD · March 9th, 2008, 08:59 PM

Quote:

Originally Posted by AZZenny

Well, no, that's not quite true. There's the lovely new Halliburton offices in Dubai.

Well, technically the borrowed money paid for the offices. The interest bought us the abilty to hand over that borrowed money to Haliburton for being such a swell company... that and I guess we got a tax cut since we weren't spending our own money. Thanks Dubya and friends.

This admin is worse than a college student who discovers they can get credit cards and then procedes to max them out in a matter of a few weeks knowing that their folks will bail them out later when the bills come due.

AZZenny · March 9th, 2008, 09:01 PM

Except it's our kids, not our folks.

KloD · March 9th, 2008, 11:47 PM

Quote:

Originally Posted by AZZenny

Except it's our kids, not our folks.

Exactly! But of course there are those out there that focus on a few hundred dollars now and what a great thing Bush did w/ his tax cuts. Man these folks bought this wag-the-dog hook, line, and sinker as they cheered for a small payment now only to send a much larger bill to our children down the road.

wallyburger · March 10th, 2008, 04:29 AM

When Obama or Hillary become the big bad bogeyman they can urge Congress to allow the "rich" tax cuts to expire in 2 years. I believe that will take some of the burden of debt off of the children. Hopefully.

UncleChris · March 10th, 2008, 08:22 AM

I remember back in '84 when Mondale said at the D convention, "and yes... we'll have to raise taxes." He got murdered in the election... and Ronnie-boy went on to take us further into debt than any other president up till his time. Ya gotta pay for things sometime (and we're paying 20 cents of every tax dollar to service the debt right now).

I'll gladly pay some more tax money right now to help fix this problem, but we need fiscal responsibility at the top (President/Congress) to put it all together and a some major equalization of the tax structure.

MigratingOsprey · March 11th, 2008, 11:16 AM

fiscal responsibility hasn't been a strong point in a long, long time

I can stomach defecit spending as long as it is primarily on a domestic basis to spurn economic growth

granted some of the war spending is going to war machine production - but even some of those contracts are being given to foreign enterprises

the amount of money this war has cost versus the benefits are sickening - I don't know why we feel we have all this money to spend - it's all very insane