Following the 2003 Iraq war, the Congressional Budget Office (CBO) estimated that the United States spent $500 billion directly on the conflict, but economic and policy experts Joseph Stiglitz and Linda Bilmes disagreed. in 2006 to workThey calculated that the war was actually four times more expensive than the CBO estimated, costing U.S. taxpayers more than $2 trillion by their conservative estimate. Bilmes revised the costs in 2013 and concluded: approximately $4 trillion to $6 trillion It was spent in the Afghanistan and Iraq wars.
The United States is once again locked in conflict in the Middle East, and Bilmes, a Harvard Kennedy School public policy instructor and author of “The Phantom Budget: U.S. War Spending and Fiscal Transparency,” is once again sounding the alarm about the true cost of war.
“I’m sure we will spend $1 trillion on the Iran war,” he said. report at the Harvard Kennedy School this month. “Perhaps we have already saved this amount.”
Bilmes’ 13-figure estimate dwarfs initial estimates of $1 billion a day in spending on the conflict. Pentagon says Congress has been notified of costs of first week of war approximately $11.3 billion only. If this rate of expenditure had continued, the cost of war would have been exceeded 35 billion dollars By April 1, according to the think tank American Enterprise Institute. AEI economists have suggested that the first month of the war cost every American household $260; This seems small, but there are more than 150 million tax-paying households in the United States. Bilmes estimates that the United States currently spends about $2 billion a day on war.
President Donald Trump said Wednesday that the war It may end “very soon” The United States continues to blockade the Strait of Hormuz and continues peace talks with Iran. Trump has I repeated this statement throughout the conflict. Last month, the Pentagon asked the White House to approve $200 billion in additional funding for efforts in Iran. the Washington Post reported.
Bilmes said the United States continues to underestimate how much money will be needed to finance the war and its consequences, just as it did 20 years ago. In an interview with Luck, Outlining war spending that is often overlooked and continues years after the conflict ends, he argued that these spending could further aggravate America’s $39 trillion debt.
“Wars always have a long cost,” he said Luck. “The cost of wars is more expensive than we expected. The costs of wars last longer than we expected, and some of these costs are extremely significant.”
When most people talk about the cost of war, they think of the direct costs of ammunition and combat, “which are also exaggerated,” Bilmes says.
The Center for Strategic and International Studies (CSIS), a think tank in Washington, D.C., estimated spending on the sixth day of the war at $11.3 billion for munitions alone, $1.4 billion for combat losses and infrastructure damage, and $26.5 million for operations. Approximately $16.5 billion on the 12th day. But that number increases when the cost of ammunition replacement is taken into account, which can range from 50% to nearly double the initial cost, Bilmes said. As a result of tariffs and supply chain disruptions exacerbated by the Russia-Ukraine war, some U.S. ammunition manufacturers have warned that ammunition production prices are rising. increased from 8% to 14% Since 2024.
Additional spending will depend on damage to key infrastructure in the Gulf, and some may be limited because the United States operates 19 military installations in the region. damage already in progressCSIS evaluated It cost 800 billion dollars In the first two weeks of the war.
Some US spending on war may also be disproportionate to Iran’s spending. For example, the unmanned aerial vehicles used by Iran: much less expensive That’s more than the weapons the US needs to destroy these drones. The cost of the Shahed unmanned aerial vehicle used by Iran can be between 20,000 and 50,000 dollars. ReutersThe Patriot interceptor used to shoot down the UAV could cost around $4 million because it requires much more complex technology to operate.
“We’re in this unbalanced situation where not only are the costs high, but the costs are disproportionately high compared to the cost of producing drones,” Bilmes said.
Pentagon declined to respond Luck‘s request for comment.
According to Bilmes, war spending calculations rarely address long-term expenses, especially the cost of disability benefits for veterans. Department of Veterans Affairs reported 195 billion dollars in compensation That’s an increase from $136 billion in fiscal year 2023 to more than 6.9 million veterans and their families through fiscal year 2025, according to the Government Accountability Office.
Bilmes noted that spending on veteran disability benefits increases during wartime, when more people are placed in conditions where they can be exposed to pollutants and chemicals, leading to chronic health problems. There is now approximately 60,000 US soldiers in the Middle East region. According to Bilmes, about 50 percent of veterans have received disability benefits since the Gulf War; 37 percent of Gulf war veterans received some form of lifetime disability benefits.
But Bilmes argued that the Trump administration’s efforts to increase the War Department budget amid ongoing conflicts were among the largest increases in spending. Trump has Called for adding $1.5 trillion to military budget For 2027, that’s above the $1 trillion previously proposed. He suggested that because of the war, Congress was more likely to approve a budget increase, which indirectly meant hundreds of billions of dollars in additional military spending each year as a result of the Iran war.
“Before this war, Congress was lukewarm to the idea, but the obvious depletion of a lot of stockpiles, inventories and munitions, etc., leads to an environment where the president would probably have a much larger increase in the defense budget,” Bilmes said.
Policy expert warns the lion’s share of that spending will be borrowed by the Trump administration cuts tax revenueThe Iran war will further aggravate the country’s $39 trillion national debt. Bilmes said that compared to the Iraq war in 2003, when approximately $4 trillion of the debt belonged to the public and 7 percent of the total national budget was allocated to interest payment, today approximately $31 trillion of debt is in public hands and almost 15 percent of the total budget is spent on interest.
“In this case, we borrow [at] “High rates are for things that will largely end up in the sand,” he concluded.
This story first appeared on: Fortune.com
