Read it Here First: Iraq war could top $2 trillion

On the eve of War, I released a study "Not-So-Hidden Agenda: Strategic and Economic Assessments of U.S. led Invasion in the Middle East."

It detailed what I believed were "rational" reasons were for invading Iraq (complex, but not WMD related), how long it could last  (10 years) and how muich it would cost ($1 trillion dollars).

My cost projection was viewed as outsized, even ridiculous.

Turns out I may have been too conservative in my projections:

"The cost of the Iraq war could top $2 trillion after factoring in long-term healthcare for wounded US veterans, rebuilding a worn-down military, and accounting for other unforeseen bills and economic losses, according to a new analysis to be presented today in Boston.

The estimate by Columbia University economist Joseph E. Stiglitz and Harvard lecturer Linda Bilmes far exceeds projections made by the Bush administration.

The figure is more than four times what the war was expected to cost through 2006 — around $500 billion, according to congressional budget data.

The new study is billed as a detailed analysis not only of the potential costs of sustaining the operation in Iraq for at least several more years, but also the expenses likely to be incurred by taxpayers long after US troops withdraw."

Go figure . . .

Source:
Economists say cost of war could top $2 trillion
Tally exceeds White House projections
Bryan Bender
Boston Globe, January 8, 2006
http://www.boston.com/news/world/middleeast/articles/2006/01/08/
economists_say_cost_of_war_could_top_2_trillion/?p1=MEWell_Pos4

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What's been said:

Discussions found on the web:
  1. muckdog commented on Jan 11

    Maybe Arnold Schwarzenegger can include most of it on those California revenue bonds he’s proposing. Everything else seems to be included in those things.

  2. B commented on Jan 11

    I’m not sure that I disagree with the real premise behind the Iraqi war…..Which I believe to be an attempt at transformative change on human rights, individual freedom and a domino effect of pressure to create a wave of democratic reforms in the Middle East where people are typically told they live in squalor because of the great Satan………

    But, I sure as hell think we could have possibly attempted other outside of the box methods before committing to spend $2 trillion dollars. They knew it would be this much before they started.

  3. Anon commented on Jan 11

    Joe Stiglitz has a Nobel Prize in econ. I’m not saying this fact legitimizes his Iraq cost research, but it probably does mean that you can’t dismiss this junk.

  4. trendfellow commented on Jan 11

    the Chinese and Asians will finance our war.. they have no choice but to buy more of our low yielding bonds.. and Americans will be thankful at the end when there is very high inflation since they’re holding the bonds and we are holding ever rising real estate assets in America..

  5. Ned commented on Jan 11

    The problem with your high inflation scenario is who will buy all the vastly overvalued real estate? We won’t be getting raises and everything else will be more expensive as well.

  6. Blackwood commented on Jan 11

    One thing missed here (but pointed out a long time ago on strategypage.com) is that the US already was expensively occupying Iraq for twelve years.

    The US continued to maintain the “Line in the Sand” left from the 1991 Gulf War truce, which ran through the middle of a stinking desert. This involved hugely expensive equipment maintenance costs, plus trucking in every basic necessity, including water, every day, for twelve years.

    Worse, the two “no fly” zones that the US continued to maintain in Iraq were done from air bases in, if I remember correctly, Turkey. That’s a lot of travel time and fuel overhead added to every flight.

    Plus this expensive “truce” was simply being maintained with no progress towards resolution after an entire decade of negotiations.

    The final analysis from the author of “A Quick and Dirty Guide to War” was that the US would actually save money by just finishing the war and being done with it. The war would be an initial cost bump, but total costs would break even at year five and then afterwards decline compared to the alternate scenario of maintaining the Line in the Sand placement and the constant air support needed for two no fly zones in perpetuity, like the North Korean de-militarized zone still is (expensively) today.

    The take home lesson from this is, “Don’t call a truce until you’ve grabbed a good military base site with the necessary runways for air access, because you may be there another decade while the politicians stall things as much as they can.”

    End scenario is the US gets much cheaper to run military bases, along the lines of its bases in Japan and Germany (still occupied 60 years later) making the payoffs to Turkey for its airbases obsolete while also reducing its overhead expense by about ten million a month through a short term multi-year expenditure with a ROI of 5-7 years.

  7. nate commented on Jan 11

    “America failed to calculate the enormous cost of war”
    Financial Times
    by Martin Wolf
    January 11, 2006

  8. M1EK commented on Jan 11

    Blackwood,

    I’m sure that in the original plans, where by now we’d have cut our troops down to 20 or 30k and our maintenance expenses would be essentially paying Iraqis with wheelbarrows to clean up all those flower garlands out of the 1/1000th of the oil profits it would take to pay those bills and keep Chalabi in the style to which he deserves, that analysis made a hell of a lot of economic sense.

    In the world we actually live in, you know, the one in which the evil media has to be paid to print astroturfing from the military because there’s little good news out there, it has turned out to be Not Such A Great Deal.

  9. walker commented on Jan 12

    Dr. Linsay was fired for saying it could cost a couple of hundred billion. I am not sure the administration lied I just think it believed the optimistic scenerios and did not prepare for possibilities and even probabilities suggested by professionals. Thus it was “hard to imagine” that Zinni and others could be right and that hundreds of thousands of troops would be required to secure the place.

    This attitude was also reflected in the selection of intelligence data.

    In trying to make things look easy (and courting failure) the administration decided that the American people could not take sacrifice. Their notion of who we are is a people who express patriotism by buying things to show the terrorists that 9/11 doesn’t shake us.

    Many on the right consider taking the apparently easy path, then denyiing visible consequences to be “traditional values” and other approaches to be treason.

    Orwellian.

  10. Huckleberry commented on Jan 12

    In may be that in the near future, paying $2 trillion to secure one of the world’s largest oil reserves will look cheap.

    If the idea was to spread freedom and democracy on the other hand, then maybe we should have sent Bernanke over there to drop the $2 trillion from his helicopter onto the roofs of Iraqi citizens. This would have led to a far more equitable distribution of wealth than is happening now in Iraq.

  11. Larry Nusbaum, Scottsdale commented on Jan 12

    This “adventure” in Iraq can hardly be called a war. Most Americans are morons who elect morons to public office. They are the easiest to sell almost anything. As predicted by many prior to this attack,the cost would exceed anything that the administration was predicting. And, in the end, we will have a civil war there or an unfriendly government. Great job. Harry Truman: Where is your “buck” when we need it?

  12. Blackwood commented on Jan 12

    >And, in the end, we will have a civil war there or an
    >unfriendly government.

    Not with 14 very well stocked and maintained US military bases in their back yard!

    No, after the screwups of WWI that led to WWII, the US has gotten very, very good at occupying defeated enemies so that they don’t act up again. (Except Cuba, which we’ve been invading and rebuilding governments in for well over 100 years)

    So how long did the de-Nazification of Germany, which started in 1946, take? Decades, and was still in process in 1977. How long did the demilitarization of Japan take? Decades. Why has Germany, which started the last two world wars not acted up since? Multiple heavily armed US military bases already stationed and being maintained in Germany and ready to come out and kick ass at a moment’s notice.

    How long will the occupation of Iraq continue? Well into the next century, as everybody knows. And just like Japan and Germany, those US military bases (and policies to not piss off the Americans into leaving their bases again) will become a center point of their national politics. As any casual picture shows, we’re dug in and there for the long haul.

    http://strategypage.com/gallery/articles/military_photos_20049922.asp

    …because continuious occupation is cheaper than having a new war with these assholes every decade.

    Meanwhile, we now have huge airbases in the area to launch any other attacks we need, and have had in place listening centers and NSA monitoring stations for years. Most likely we already know more about Iran than their own government does.

  13. M1EK commented on Jan 12

    Blackwood, you’re a real piece of work. Bombing the crap out of Iraq every couple of years is a HELL of a lot cheaper than occupying them even for a very short time, and bombing the crap out of them was, as we all know now, doing an excellent job of keeping Saddam in his box.

  14. Anonymous commented on Jan 12

    Nice pictures Blackwood.

    Now we know where some of that $2 trillion has gone.

    I would like to point out that in both post-war Germany and Japan the vast majority of the very war-weary population supported our occupation. Personal firearms were highly regulated and U.S. forces did not leave tons of explosives unguarded. This is certainly not the case in Iraq.

    Also both Germany and Japan were essentially de-militarized after WWII. They had ample protection from outside threats due to all those U.S. forces stationed in their countries. We were not there to kick their butts, but rather to protect them from Soviet expansion. In Iraq today we see the militarization of the whole country via sectarian militias amply armed. This is a situation much more akin to the end of WWI than WWII.

    So the situation in Iraq is very different…

    But at the very least Americans can consider themselves the King of the Mid-East Junkyards.

  15. walker commented on Jan 13

    Blackwood what do you make of Hakim asserting himself? I don’t think these people are our friends.

    And why do you advocate lying. We promised to leave when the Iraqis ask. Now you say we will hold our bases no matter what.

    Do you want to convince the world we lack integrity?

  16. Brian commented on Jan 14

    So, any way I can get a piece of this $2 trillion? Two caveats:

    1) Everybody already knows about defense and energy stocks (chaos in Iraq = high oil prices) and

    2) I’m not a crony of the president or a crony of a crony or any sort of derivative crony.

  17. hafiz commented on Mar 26

    thank

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