Iraq War Costs Less Than 1% of U.S. GDP

In measuring the cost of war, new figures suggest the Iraq war will cost the United States $3 trillion.  That is an exaggerated figure, says the Department of Defense, which estimates a presence in Iraq through 2017 at $1.7 trillion.

That sounds like a lot, and it is, but in reality it is less than 1% of the U.S. GDP (Gross Domestic Product).

Former White House economist Lawrence Lindsey wrote a brilliant chapter about the cost of the Iraq war in his book What a President Should Know…But Most Learn Too Late. Lindsey discusses the financial and human costs of the war as well as weighing the cost of going or not going to Iraq.  Below are some explanations from his book:

“The war has not been economically ruinous…future historian would likely view the entire affair as relatively minor in purely budgetary terms.”

MONETARY COST OF THE WAR/GDP 

• The liberation of Kuwait in 1991 cost the equivalent of 1% of the GDP of the time, or about $80 billion in today’s dollars.


• The Vietnam war cost between 1.5% and 2% of GDP each year during the eight years of major American commitment, or about $600 billion. At its peak we had more than 500,000 soldiers and other military in Vietnam.


• Iraq war costs of between 0.5% and 0.7% of GDP.

HUMAN COST OF THE WAR

• Iraq war: nearly 4,000 U.S. troops killed


• In the past century American military fatalities during wartime totaled about 620,000, or an average of 6,200 per year in a nation with an average population of about 165 million. In the century before that, American fatalities averaged about 3,800 per year in a country with a population that averaged only about 30 million.

THE COST OF NOT GOING TO WAR

TROOP LEVELS

• In late 2002 the U.S. had more than 60,000 troops stationed in the countries around Iraq to back up UN Security Council resolutions. Hans Blix, the UN’s weapons inspector, credited those forces as being the reason he was getting even limited co-operation from Saddam. In the congressional debate about authorizing the war, the opponents’ position was that we should continue with the UN inspection process, which required U.S. troops to stay on the scene. It was presumed that Saddam did have weapons of mass destruction (WMDs), not just by President Bush, but by the National Intelligence Estimate and the spy agencies of many other countries. It would have taken a long time to convince a skeptical world that Saddam’s noncompliance with 17 UN resolutions was innocent. Under the alternative scenario of the time American forces would have been stationed around Iraq for years, many of them in harm’s way.


• We would have still stationed half to three-fourths as many troops as we now have in Iraq in neighboring countries. The cost of stationing them there would be lower than what we now pay but would still be substantial.


• The continuous use of air power would have been necessary to police the no-fly zones established in the ceasefire of the first Iraq war.


• Increased surveillance of the Iran-Iraq and Syria-Iraq borders would have been necessary to limit terrorist migration.


• Evidence suggests Saddam would have rebuilt his WMD capability. it isplausible that not invading Iraq would probably have cost at least a third as much as we ultimately spent on deposing Saddam.

COST IN BENEFITS

• While no WMDs were found in Iraq, the U.S. demonstrated its willingness to go to war over them.


• Shortly after Saddam fell, Libya’s ruler Muammar Qadaffi decided to reveal that he had a stockpile of WMDs-along with a nuclear weapons program-and that he would like to give them up voluntarily and abide by the norms of international law. The timing of his conversion made it clear that he had learned some lessons from Saddam’s defeat.


• Iran probably suspended its nuclear weapons program in 2003, around the same time as the Libya move.


• In Iraq the war toppled an outlaw regime that not only had been flouting international law but had been a systematic abuser of human rights. It’s fair to claim that America cannot afford to liberate all the people who live under oppressive regimes, but the causes of human freedom and dignity have certainly gained by his downfall.


• Assurance Saddam or his sons would never rebuild an WMD arsenal.

THE COST OF STAYING OR GOING

• A number of significant countries in the region depend on the perception that America would block any threat to their peace and security. A precipitate American withdrawal suggesting a lack of American commitment to the region or, worse, the perception that America had been defeated, could lead to a major regional realignment. Most countries in the gulf would have to reconsider their security situation and choose either between rearmament (including the acquisition of nuclear weapons) or cooperation with Iran, which would be happy to fill the vacuum left by an American defeat or withdrawal. This would ultimately cost us in ways far beyond the ability of dollars to measure.


• On the other hand, an American success in Iraq could also change the course of history in the Middle East, where the U.S. has made huge investments in security over many decades. A stable Iraqi government selected by its own people would be a first in the Arab world. It would suggest that there is a third alternative to the current choice between repressive regimes and Islamic fundamentalism. It may have been naive to think it would happen in one or two years, and the administration can probably be faulted for not changing its occupation strategy sooner, but the initial success of the U.S. surge in troop levels shows that the decision is not yet out of our hands.
• Whether we win or lose will come down to our perseverance and our willingness to learn and adapt as a result of our mistakes. It was former Secretary of State Colin Powell who cited the so-called Pottery Barn rule in warning President Bush about America’s commitment after the invasion: “You break it, you own it.” Well, we own it. Whether or not we like the decision to have invaded in March 2003 is immaterial now. This is difficult for an economist who deals with figures all the time to admit, but when it comes to war, the dollar cost is hardly a major concern. I am not a military expert. It’s the military’s judgment that should determine whether to double our investment or take our losses and go home. If our military leaders think we can ultimately prevail, we should stay. If we ultimately cannot, we should leave. It’s as simple as that.
• This has been the case in all our wars. World War II ultimately cost about 140% of GDP. Would FDR have thought, “Well, the war is worth it at 130% of GDP, but not at 170%”? In terms of the damage it did to the American economy and the American heartland, or simply in terms of the number of dead, the Civil War dwarfed all the others. But Lincoln certainly never took a pencil to do a cost-benefit test. Nor did John F. Kennedy when he said, “We will pay any price, bear any burden … to assure the survival and the success of liberty.” Had any of these leaders done that, they would have fallen into the trap that the economics profession is so often accused of: They would know the price of everything and the value of nothing.

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Comments

[CalPatriot]

1951 (Democratic Admin) : $56 billion arms bill” that comprised “three-fourths of the whole federal budget.

Source Time Magazine, 1951.

“Pig in a Poke” [archives on-line] 20 August 1951, Time Magazine, p. 1. . (New York: Time Inc., 2007, accessed March 2008);

[robert verdi]

Very good post, democrats and the media like to paint money spent in Iraq as burnt in smoke. The first obvious point is that the number one expense is going to be the payroll of maintaining troops in a war zone tax free. Almost all of this money is funneled right back into the US economy through consumer spending or in my case a home purchase. Now considering the height of economic thinking in Congress is an economic stimulus package that gives tax rebates to increase consumer spending that is hardly wasted money. There are other factors as well, on 9/11 the us economy lost at least a trillion dollars in one day, if like me you believe the war in Iraq is destroying the Jihadist movement militarily , and politicaly across the entire middle east its money well spent. Look lets be frank, these news stories are being floated by democrats who focus grouped people and found economic anxiety, now these democrats are trying to tie that into the war, to democrats its a double win. Iraq and economic fear. I love it when democrats scream about building "fire houses" on Iraq while americans suffer. This from the party that argues we need to spend more overseas so people will like us.

[robert verdi]

Democrats and the media also need to explain how the world would be a better place with the Hussein dynasty sitting on top of the 3rd largest oil reserves with the price at 100 dollars a barrel.

[Amy Proctor]

Some people also don't seem to realize that an investment in the Middle East has dividends that are immeasurable. We've dumped billions (if not more) into AIDS prevention/care in Africa but since the morality issue cannot be contained it's funneling it down a black hole. This is tragic.

Just one example.

[CalPatriot]

I’m also glad you posted this, because talk in Nor Cal is relating the cost of Iraq is approaching WWII levels. Cannot have an argument just agreement! The crux of the argument, although not spoken is that it could go to welfare programs in the USA. I see that we are helping financially to built aqueducts in Iraq and electricity and better infrastructure that costs money. The Dems that are against this war see that as no our responsibility--- yet they call for universal color-line dissolvent—while at the same time want to live like kings in America and stay under their myth of justice. Therefore, they frame the war under terroristic policies of the White bush administration. That is what they say, that is all I’m relating.

[Terry Gain]

The costs are always overstated. In order to determine the true costs you need to deduct the taxes paid on wages paid to military peronnel and then calculate the multipier effect of such wages and deduct the taxes paid as a result of the multiplier effect. You also need to deduct the corporate taxes paid by mulitary suppliers and perform the same execise with respect to their employees and cutomers.

[Len Hart]

The assertion that the cost of the Iraq war is just one percent of GDP is just not credible on ts face! Besides --it misses the point, perhaps deliberately. The war of aggression against Iraq was and remains a war crime, a violation of Geneva and our own US Codes, Title 18, Section 2441. Read it! The significance of that federal law is that George W. Bush is subject to the death penalty for having ordered the invasion and subsequents deaths of at least six hundred thousand Iraqi civilians and quite possibly many, many more when the final tab is in.

Are you trying to say that wars of naked aggression and mass murder are acceptable if they can be done on the cheap?

If so, then I suggest you take some classes in émpathy.

Additionally, it was Dr. Gustav Gilbert who was tasked in ''interviewing'' Nazi war criminals at Nuremberg who said that evil was the ''utter lack of empathy". Similarly, Hanah Arendt, one of the founders of the prestigious New School in New York, who covered the trial of Adolph Eichmann and subsequently wrote of the "Banality of Evil". Dr. Carl Jung also stated that as much as thirty percent of any nation are 'psychopathic', that is, utterly without empathy.

It would appear that the utter lack of empathy for the plight of the civilians of a nation that was NEVER --at any time --a threat to the security of America or Americans is rampant in America.

Fact is George W. Bush violated the above citied section of US federal laws. Moreover, he is violation of the Geneva Convention and the Nuremberg principles.

Bush will lucky to be tried on in the Hague where there is no death penalty. If he is tried in the US, he could be subject to death for the capital crimes for which there is sufficient evidence to try and convict him in federal court right now!

[Amy Proctor]

Um, right, Len. War crimes. Halliburton. Oil. Blah, blah blah...

[LanceThruster]

Um, right, Len. War crimes. Halliburton. Oil. Blah, blah blah...

If by "blah, blah, blah" you mean that inconvenient truths that would make people with an internalized sense of right and wrong take notice, then yeah, blah, blah, blah.

Does that mean that you feel think the troops that died from electrocution from substandard construction performed by Halliburton subsidiary KBR are just the cost (or "savings" actually) of doing business?

Former Assistant Secretary of the Treasury in the Reagan administration, Paul Craig Roberts has written extensively on the damage the Bush regime has been doing to the US economy (as well as US integrity).

See: Nuking the Economy
Forget Iran—Americans Should be Hysterical About This

[Amy Proctor]

No truth is really inconvenient, but this is another subject. No, I believe that past wars suffered far more accidental casualties than today's war because we are growing in advancement in every area. Accidents are not only a part of war, they are the largest fatality cause for non-war time deaths among troops.

Did you read the article I linked to above? I'd recommend you do so. Economist Lawrence Lindsey examines the cost of war from every perspective.

The article you provided, with all due respect, is a political commentary hit piece without the thoughtful or thorough data provided by Mr. Lindsey. Talk about inconvenient truths.

[LanceThruster]

Lindsey's article, with all due respect, is about bean counting. The neocon architects of the war boastfully claimed the war would pay for itself (as well as the troops being greeted as liberators) and treated Lindsey as a traitor (or at least an incompetent) for thinking otherwise. Even Hermann Goering knew the formula of "guns and butter."

To compare wars of choice (illegal ones at that) with other conflicts continues with the neocon propaganda to conflate their prosecution to that level of necessity. This criminal administration continues to wage war on the cheap as it also continues to low-ball to short and long-term costs, both in dollar amount, impact on the economy, and the costs of dealing with the physically and psychologically maimed.

You want to talk numbers people can understand? How much was oil per barrel when Bush took office versus what it is now? What was the price of gas per gallon versus what it is now? What other economic indicators would you point to in order to show how rosy things are? How many Iraqis have been sacrificed for the freedom that they will never know from the grave? How many have fled their war-ravaged nation?

What hard fought freedoms are you willing to relinquish for all of us so that Halliburton can continue to electrocute troops in order that their corporate value does not diminish. For that matter, how many electrocuted troops is too many, or to put it in the only terms you seem to care about - how much extra are you willing to spend NOT to electrocute our own troops? After all, since we're hardly working up a sweat with our current spending (according to your sources), a few pennies more to keep from killing our own with the friendly fire of electricity (which is somewhat better mastered in civilian life for some reason) does not sound unreasonable.

The bottom line seems to be that even with the economy in the crapper, goopers do what they do best which is to profit heavily on the backs of others as they shift the blame to any convenient target other than themselves.

Mission A-f*cking-ccomplished!

[st]

Dear Amy,

Are innocent civilian iraqi women and children unworthy of being listed under "HUMAN COSTS OF WAR"? Just wondering why the economist whose boots you choose to lick ommited HUNDRED OF THOUSANDS of civilian Iraqi War dead under this column.

[Amy Proctor]

Lance, my husband has been to Iraq twice, once for a year in the beginning of the invasion with the 82nd ABN and this year as well. Mission is nearly accomplished there, despite the best efforts of democrats to end our involvement in the war. Rest assured, they cannot end the war... it would continue and we'd have to return at a later date.

The "mission accomplished" scenario had to do specifically with the combat mission of the USS Lincoln. This is old news.

st, the human toll of a war should be given the most consideration. The taking of innocent human life is a travesty that sets in motion a cosmic domino affect that can really never be reversed. I'm speaking to the sanctity of each individual life.

That said, don't kid yourself into believing that HUNDREDS OF THOUSANDS of Iraqis wouldn't have died under Saddam had we not gone to war. Between the years 1998-2003, 4 and 1/2 years, Human Rights Watch reports that 400,000 Iraqi children UNDER THE AGE OF 5 perished unnecessarily due to malnutrition and preventable disease because Saddam hoarded U.N. Oil for Food money and lined his toilets in gold while his people didn't have immunizations and basic services or essentials of life.

Imagine if Bush Sr. had the courage to finish the 1st Gulf War. The mindset that we'd avoid innocent civilians being killed by not taking out Saddam is an ignorant one. Following that engagment, hundreds of thousands were killed by Saddam and their lives would have been saved if we would have gone in and taken out Saddam in 1991-92. The only "benefit" was that those casualties weren't blamed on the U.S. because we left Iraq but don't kid yourself into believing that there were no civilians killed because we DIDN'T go in. The opposite is true.

The tragic unintended consequence of a war is that innocent civilians are killed. There have been far less in the 5+ years we've been in Iraq than under Saddam. In a matter of days he killed hundreds of thousands of Shia after the 1st Gulf War. I'll post a link to the video if you care to see actual footage.

So calculating what would happen to innocent civilians if we didn't go to war with Saddam was part of the equation. The problem is that when the going go tough, those who really didn't care about Iraqis supported a pull out of US troops, which would have led to even more horrific killings of civilians.

So do you care about civilians or not? If so, we did the right thing. If not, your argument makes sense.

[st]

If the deaths of civilians should be given the highest consideration then why was it not included under "HUMAN COSTS OF WAR"?

Your logic really scares me.

Were bringing them democracy at the end of a bayonet. Nevermind that the justification for this war was not to spread democracy but to eliminate an "imminent threat". Once it was conceded there were no WMD's, ( other than the WMD's the US sold to Saddam under Reagan when he gassed the Kurds) the justification became to overthrow a brutal tyrant. How convenient.

Saddam was a horrible dictator, no one will argue that, but to say that hundreds of thousands "would have" died had he been left in power is just baseless. You have absolutley no way of supporting that claim.

The fact is, from 1990-2000 U.S sanctions on Iraq killed more iraqis than Saddam ever did. Human Rights Watch reports that 400,000 Iraqi children UNDER THE AGE OF 5 perished unnecessarily due to malnutrition and preventable disease not because of his hording but because of U.S sanctions.

Its really very sad that you are willing to allow our government to murder innocent civilians because you believe they are better off with US incinerating their homes than to allow a madman the opportunity to kill his own people.

Who are you to decide that?

If a people are oppressed is it not up to them to organize and overthrow their own government like the US did with the British? Why is the US alone allowed to decide the fate of these souls?

Its very easy to sit back and say "The tragic unintended consequence of a war is that innocent civilians are killed" when you arent there to witness it first hand. And if that is true, why did we target buildings WE KNEW housed international journalists??

Imagine if some rogue nation began bombing your backyard and those responsible gave the justification that they were bringing us democracy. Tell me you wouldnt be fighting in the streets to defend your home from the occupiers.

George Bush did not go into Iraq for altruistic reasons, he went there to benefit himself, his friends, and his family. Just look at how well Halliburton, Blackwater, and big oil are doing.

Its amazing to me that there are Christians out there that think the way you do. I love America but this war is morally indefensible.

[st]

I noticed in one of your responses you wrote

"Um, right, Len. War crimes. Halliburton. Oil. Blah, blah blah..."

I suggest you look up the crime for watch the Nazis were hanged at Nuremburg:

The War Crime of Aggression.

Then again you might not think the US need follow the rule of International Law. As the worlds policeman, maybe you believe that law need not apply.

just a thought.