Iraq War Will Cost More-than-$2-Trillion
From Information Clearinghouse
Two scholars, one a Nobel Prize winner, revisit their estimate of the true cost of the Iraq war – and find that $2 trillion was too low. They consider not only the current and future budgetary costs, but the economic impact of lives lost, jobs interrupted and oil prices driven higher by political uncertainty in the Middle East.
By Linda Bilmes and Joseph E. Stiglitz
11/03/06 "Milken Institute Review" -- In January, we estimated that the true cost of the Iraq war could reach $2 trillion, a figure that seemed shockingly high. But since that time, the cost of the war – in both blood and money – has risen even faster than our projections anticipated. More than 2,500 American troops have died and close to 20,000 have been wounded since Operation Iraqi Freedom began. And the $2 trillion number – the sum of the current and future budgetary costs along with the economic impact of lives lost, jobs interrupted and oil prices driven higher by political uncertainty in the Middle East – now seems low.
One source of difficulty in getting an accurate picture of the direct cost of prosecuting the war is the way the government does its accounting. With “cash accounting,” income and expenses are recorded when payments are actually made – for example, what you pay off on your credit card today – not the amount outstanding. By contrast, with “accrual accounting,” income and expenses are recorded when the commitment is made. But, as Representative Jim Cooper, Democrat of Tennessee, notes, “The budget of the United States uses cash accounting, and only the tiniest businesses in America are even allowed to use cash accounting. Why? Because it gives you a very distorted picture.”
The distortion is particularly acute in the case of the Iraq war. The cash costs of feeding, housing, transporting and equipping U.S. troops, paying for reconstruction costs, repairs and replacement parts and training Iraqi forces are just the tip of an enormous iceberg. Costs incurred, but not yet paid, dwarf what is being spent now – even when future anticipated outlays are converted back into 2006 dollars.
Our Debt to Veterans
A major contributor to this long-term cost is the medical care and disability benefits provided to veterans. More than one million U.S. troops have now served in Iraq. And once they leave, each is entitled to a long list of benefits for the remainder of his or her life. Veterans can apply for compensation for any disabling injury or disease (physical or mental) that occurred on active duty or any existing condition that was made worse by military service. Benefits are based on the extent of the disability, ranging from 10 percent to 100 percent. And, because some medical problems do not become apparent right away, claims are likely to be filed for years after the war is over.
There are 2.6 million veterans currently receiving disability pay, including a sobering 40 percent of the soldiers who served during the four-week-long Gulf War in 1991. Accrued liabilities for U.S. federal employees’ and veterans’ benefits now total $4.5 trillion. Indeed, our debt for veterans’ health and disability payments has risen by $228 billion in the past year alone.
These numbers are unlikely to fall. More than half of the troops in Iraq have served two or three tours of duty under grueling conditions. Moreover, depleted uranium, used in armor-piercing artillery shells because it is hard, heavy and cheap, was implicated in many of the medical claims by soldiers from the first Gulf War. And the same radioactive material was used in the toppling of Saddam Hussein.
Note, too, that improvements in body armor mean that an unusually high number of soldiers are surviving major injuries, but ending up disabled. About 20 percent of survivors have suffered major head or spinal injuries, 18 percent incurred serious wounds and an additional 6 percent are amputees. The estimated 7,000 veterans with severe brain, spinal, amputation and other serious injuries will require a lifetime of round-the-clock care.
Government medical facilities are currently overwhelmed by the needs of soldiers injured in Iraq. Some 144,000 of them sought care from the VA in the first quarter of 2006 – 23 percent more than the Bush administration had estimated for the entire year! Similarly, the government projected that 18,000 returning soldiers would seek treatment for posttraumatic stress disorder in 2006 – but the VA treated 20,638 Iraqi war veterans for PTSD in the first quarter alone. All told, in the past year, the VA has added 250,000 new beneficiaries and still has a backlog of more than 400,000 pending claims.
(The rest is here.)
Two scholars, one a Nobel Prize winner, revisit their estimate of the true cost of the Iraq war – and find that $2 trillion was too low. They consider not only the current and future budgetary costs, but the economic impact of lives lost, jobs interrupted and oil prices driven higher by political uncertainty in the Middle East.
By Linda Bilmes and Joseph E. Stiglitz
11/03/06 "Milken Institute Review" -- In January, we estimated that the true cost of the Iraq war could reach $2 trillion, a figure that seemed shockingly high. But since that time, the cost of the war – in both blood and money – has risen even faster than our projections anticipated. More than 2,500 American troops have died and close to 20,000 have been wounded since Operation Iraqi Freedom began. And the $2 trillion number – the sum of the current and future budgetary costs along with the economic impact of lives lost, jobs interrupted and oil prices driven higher by political uncertainty in the Middle East – now seems low.
One source of difficulty in getting an accurate picture of the direct cost of prosecuting the war is the way the government does its accounting. With “cash accounting,” income and expenses are recorded when payments are actually made – for example, what you pay off on your credit card today – not the amount outstanding. By contrast, with “accrual accounting,” income and expenses are recorded when the commitment is made. But, as Representative Jim Cooper, Democrat of Tennessee, notes, “The budget of the United States uses cash accounting, and only the tiniest businesses in America are even allowed to use cash accounting. Why? Because it gives you a very distorted picture.”
The distortion is particularly acute in the case of the Iraq war. The cash costs of feeding, housing, transporting and equipping U.S. troops, paying for reconstruction costs, repairs and replacement parts and training Iraqi forces are just the tip of an enormous iceberg. Costs incurred, but not yet paid, dwarf what is being spent now – even when future anticipated outlays are converted back into 2006 dollars.
Our Debt to Veterans
A major contributor to this long-term cost is the medical care and disability benefits provided to veterans. More than one million U.S. troops have now served in Iraq. And once they leave, each is entitled to a long list of benefits for the remainder of his or her life. Veterans can apply for compensation for any disabling injury or disease (physical or mental) that occurred on active duty or any existing condition that was made worse by military service. Benefits are based on the extent of the disability, ranging from 10 percent to 100 percent. And, because some medical problems do not become apparent right away, claims are likely to be filed for years after the war is over.
There are 2.6 million veterans currently receiving disability pay, including a sobering 40 percent of the soldiers who served during the four-week-long Gulf War in 1991. Accrued liabilities for U.S. federal employees’ and veterans’ benefits now total $4.5 trillion. Indeed, our debt for veterans’ health and disability payments has risen by $228 billion in the past year alone.
These numbers are unlikely to fall. More than half of the troops in Iraq have served two or three tours of duty under grueling conditions. Moreover, depleted uranium, used in armor-piercing artillery shells because it is hard, heavy and cheap, was implicated in many of the medical claims by soldiers from the first Gulf War. And the same radioactive material was used in the toppling of Saddam Hussein.
Note, too, that improvements in body armor mean that an unusually high number of soldiers are surviving major injuries, but ending up disabled. About 20 percent of survivors have suffered major head or spinal injuries, 18 percent incurred serious wounds and an additional 6 percent are amputees. The estimated 7,000 veterans with severe brain, spinal, amputation and other serious injuries will require a lifetime of round-the-clock care.
Government medical facilities are currently overwhelmed by the needs of soldiers injured in Iraq. Some 144,000 of them sought care from the VA in the first quarter of 2006 – 23 percent more than the Bush administration had estimated for the entire year! Similarly, the government projected that 18,000 returning soldiers would seek treatment for posttraumatic stress disorder in 2006 – but the VA treated 20,638 Iraqi war veterans for PTSD in the first quarter alone. All told, in the past year, the VA has added 250,000 new beneficiaries and still has a backlog of more than 400,000 pending claims.
(The rest is here.)
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2 Comments:
Ilend my voice yours with this message. As a veteran of 2 tours in Vietnam and 36 years in the Defense Industrial Complex, I have some credibility. I have been there. Please see "Odyssey of Armaments" at my blog, which orginiates from a Minnesota Veteran's Home.
I have fought in this type of war and I worked in the Defense Industrial Complex for 36 years hoping this type of thing could be avoided. As I retire I am disappointed and believe we must get out. Please see "Odyssey of Armaments" at my blog
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