The $2 Trillion Dollar War

[Jcrowley]

The $2 Trillion Dollar War

A leading economist says the true cost of Iraq is far higher than President Bush claims -- and America will pay the price for decades to come.

By Charles M. Young

<snip>

How did you arrive at the $2 trillion figure?
There were three parts to the calculations that I made with Linda Bilmes, a professor of public finance at Harvard. The first part is based on actual expenditures -- the impact on the federal budget. But the budget doesn't include a lot of expenditures we will be making in the future as a result of the war today, like paying for the health care and disability benefits of all the people who have been injured. These are lifetime expenditures, but they aren't included in the $600 million a year the Defense Department expects to spend on Iraq. They're just talking about the hardware of war.

The second part of our calculations estimates future expenditures to replace what we lose in the war. The budget includes spending for new ammunition, but not the wear and tear on weapons systems. Eventually the weapons must be replaced, but the administration doesn't count that as part of the projected cost of the war.

A third important category is a little more hidden. The defense budget has gone way up, beyond the money earmarked for Iraq. You have to ask why. It's not like the Cold War has broken out again. We infer that they are hiding a lot of the Iraq expenditures in the defense budget. We only attribute a small fraction of the increase to Iraq, but it would be hard to explain them any other way than the war.

You also examine the cost beyond the impact on the federal budget.
Yes. We look at where the budget underestimates the social cost of the war. Take disability pay. If you're wounded, the government pays you only twenty percent of what you would have earned if you could work. The disability payment is a budget cost, but the economy misses the salary you would have been making now that you're not able to do anything.

<snip>

http://www.rollingstone.com/news/story/12855294/national_affairs_the_2_trillion_dollar_war

[nealmhughes]

1. 2 Billion at 300 Million people comes out at $6666.67 per capita.

[rollopollo]

2. Expense

The Iraq will certainly be expensive and many hundreds of billions more than we thought. I'm not sure whether the $2T figure is accurate or even based on sound assumptions. I did some back of the envelope on the veterans cost and his assumption costs 2X the annual budget of the entire Veterans Affairs...despite the fact that Iraq veterans will make up less than 10% of all veterans. The economic cost of lost employment also ended up as a few billion but not hundreds of billions.

Well, he's the Nobel Prize Economist so he may know what he's talking about. Whether or not its $2T, when the bill comes due, there will be sticker shock amongst the American people.