[Congressional Record (Bound Edition), Volume 154 (2008), Part 3]
[Senate]
[Pages 3795-3796]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     THE TRUE COSTS OF THE IRAQ WAR

  Mr. LEAHY. Mr. President, the economists Linda Bilmes and Joseph 
Stiglitz recently produced an illuminating analysis of the real costs 
of the war in Iraq, which was published last Sunday in The Washington 
Post.
  As the war grinds on toward its fifth year, and as the war continues 
to warp our Nation's priorities at home and abroad, this is an analysis 
that every American deserves to see. I also commend it to the attention 
of the Members of the Senate.
  I ask unanimous consent it be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the Washington Post, Mar. 9, 2008]

          The Iraq War Will Cost Us $3 Trillion, and Much More

              (By Linda J. Bilmes and Joseph E. Stiglitz)

       There is no such thing as a free lunch, and there is no 
     such thing as a free war. The Iraq adventure has seriously 
     weakened the U.S. economy, whose woes now go far beyond loose 
     mortgage lending. You can't spend $3 trillion--yes, $3 
     trillion--on a failed war abroad and not feel the pain at 
     home.
       Some people will scoff at that number, but we've done the 
     math. Senior Bush administration aides certainly pooh-poohed 
     worrisome estimates in the run-up to the war. Former White 
     House economic adviser Lawrence Lindsey reckoned that the 
     conflict would cost $100 billion to $200 billion; Defense 
     Secretary Donald H. Rumsfeld later called his estimate 
     ``baloney.'' Administration officials insisted that the costs 
     would be more like $50 billion to $60 billion. In April 2003, 
     Andrew S. Natsios, the thoughtful head of the U.S. Agency for 
     International Development, said on ``Nightline'' that 
     reconstructing Iraq would cost the American taxpayer just 
     $1.7 billion. Ted Koppel, in disbelief, pressed Natsios on 
     the question, but Natsios stuck to his guns. Others in the 
     administration, such as Deputy Defense Secretary Paul D. 
     Wolfowitz, hoped that U.S. partners would chip in, as they 
     had in the 1991 Persian Gulf War, or that Iraq's oil would 
     pay for the damages.
       The end result of all this wishful thinking? As we approach 
     the fifth anniversary of the invasion, Iraq is not only the 
     second longest war in U.S. history (after Vietnam), it is 
     also the second most costly--surpassed only by World War II.
       Why doesn't the public understand the staggering scale of 
     our expenditures? In part because the administration talks 
     only about the upfront costs, which are mostly handled by 
     emergency appropriations. (Iraq funding is apparently still 
     an emergency five years after the war began.) These costs, by 
     our calculations, are now running at $12 billion a month--$16 
     billion if you include Afghanistan. By the time you add in 
     the costs hidden in the defense budget, the money we'll have 
     to spend to help future veterans, and money to refurbish a 
     military whose equipment and materiel have been greatly 
     depleted, the total tab to the federal government will almost 
     surely exceed $1.5 trillion.
       But the costs to our society and economy are far greater. 
     When a young soldier is killed in Iraq or Afghanistan, his or 
     her family will receive a U.S. government check for just 
     $500,000 (combining life insurance with a ``death 
     gratuity'')--far less than the typical amount paid by 
     insurance companies for the death of a young person in a car 
     accident. The stark ``budgetary cost'' of $500,000 is clearly 
     only a fraction of the total cost society pays for the loss 
     of life--and no one can ever really compensate the families. 
     Moreover, disability pay seldom provides adequate 
     compensation for wounded troops or their families. Indeed, in 
     one out of five cases of seriously injured soldiers, someone 
     in their family has to give up a job to take care of them.
       But beyond this is the cost to the already sputtering U.S. 
     economy. All told, the bill for the Iraq war is likely to top 
     $3 trillion. And that's a conservative estimate.
       President Bush tried to sell the American people on the 
     idea that we could have a war with little or no economic 
     sacrifice. Even after the United States went to war, Bush and 
     Congress cut taxes, especially on the rich--even though the 
     United States already had a massive deficit. So the war had 
     to be funded by more borrowing. By the end of the Bush 
     administration, the cost of the wars in Iraq and Afghanistan, 
     plus the cumulative interest on the increased borrowing used 
     to fund them, will have added about $1 trillion to the 
     national debt.
       The long-term burden of paying for the conflicts will 
     curtail the country's ability to tackle other urgent 
     problems, no matter who wins the presidency in November. Our 
     vast and growing indebtedness inevitably makes it harder to 
     afford new health-care plans, make large-scale repairs to 
     crumbling roads and bridges, or build better-equipped 
     schools. Already, the escalating cost of the wars has crowded 
     out spending on virtually all other discretionary federal 
     programs, including the National Institutes of Health, the 
     Food and Drug Administration, the Environmental Protection 
     Agency, and federal aid to states and cities, all of which 
     have been scaled back significantly since the invasion of 
     Iraq.
       To make matters worse, the U.S. economy is facing a 
     recession. But our ability to implement a truly effective 
     economic-stimulus package is crimped by expenditures of close 
     to $200 billion on the two wars this year alone and by a 
     skyrocketing national debt.
       The United States is a rich and strong country, but even 
     rich and strong countries squander trillions of dollars at 
     their peril. Think what a difference $3 trillion could make 
     for so many of the United States'--or the world's--problems. 
     We could have had a Marshall Plan to help desperately poor 
     countries, winning the hearts and maybe the minds of Muslim 
     nations now gripped by anti-Americanism. In a world with 
     millions of illiterate children, we could have achieved 
     literacy for all--for less than the price of a month's combat 
     in Iraq. We worry about China's growing influence in Africa, 
     but the upfront cost of a month of fighting in Iraq would pay 
     for more than doubling our annual current aid spending on 
     Africa.
       Closer to home, we could have funded countless schools to 
     give children locked in the underclass a shot at decent 
     lives. Or we could have tackled the massive problem of Social 
     Security, which Bush began his second term hoping to address; 
     for far, far less than the cost of the war, we could have 
     ensured the solvency of Social Security for the next half a 
     century or more.
       Economists used to think that wars were good for the 
     economy, a notion born out of memories of how the massive 
     spending of World War II helped bring the United States and 
     the world out of the Great Depression. But we now know far 
     better ways to stimulate an economy--ways that quickly 
     improve citizens' well-being and lay the foundations for 
     future growth. But money spent paying Nepalese workers in 
     Iraq (or even Iraqi ones) doesn't stimulate the U.S. economy 
     the way that money spent at home would--and it certainly 
     doesn't provide the basis for long-term growth the way 
     investments in research, education or infrastructure would.

[[Page 3796]]

       Another worry: This war has been particularly hard on the 
     economy because it led to a spike in oil prices. Before the 
     2003 invasion, oil cost less than $25 a barrel, and futures 
     markets expected it to remain around there. (Yes, China and 
     India were growing by leaps and bounds, but cheap supplies 
     from the Middle East were expected to meet their demands.) 
     The war changed that equation, and oil prices recently topped 
     $100 per barrel.
       While Washington has been spending well beyond its means, 
     others have been saving--including the oil-rich countries 
     that, like the oil companies, have been among the few winners 
     of this war. No wonder, then, that China, Singapore and many 
     Persian Gulf emirates have become lenders of last resort for 
     troubled Wall Street banks, plowing in billions of dollars to 
     shore up Citigroup, Merrill Lynch and other firms that burned 
     their fingers on subprime mortgages. How long will it be 
     before the huge sovereign wealth funds controlled by these 
     countries begin buying up large shares of other U.S. assets?
       The Bush team, then, is not merely handing over the war to 
     the next administration; it is also bequeathing deep economic 
     problems that have been seriously exacerbated by reckless war 
     financing. We face an economic downturn that's likely to be 
     the worst in more than a quarter-century.
       Until recently, many marveled at the way the United States 
     could spend hundreds of billions of dollars on oil and blow 
     through hundreds of billions more in Iraq with what seemed to 
     be strikingly little short-run impact on the economy. But 
     there's no great mystery here. The economy's weaknesses were 
     concealed by the Federal Reserve, which pumped in liquidity, 
     and by regulators that looked away as loans were handed out 
     well beyond borrowers' ability to repay them. Meanwhile, 
     banks and credit-rating agencies pretended that financial 
     alchemy could convert bad mortgages into AAA assets, and the 
     Fed looked the other way as the U.S. household-savings rate 
     plummeted to zero.
       It's a bleak picture. The total loss from this economic 
     downturn--measured by the disparity between the economy's 
     actual output and its potential output--is likely to be the 
     greatest since the Great Depression. That total, itself well 
     in excess of $1 trillion, is not included in our estimated $3 
     trillion cost of the war.
       Others will have to work out the geopolitics, but the 
     economics here are clear. Ending the war, or at least moving 
     rapidly to wind it down, would yield major economic 
     dividends.
       As we head toward November, opinion polls say that voters' 
     main worry is now the economy, not the war. But there's no 
     way to disentangle the two. The United States will be paying 
     the price of Iraq for decades to come. The price tag will be 
     all the greater because we tried to ignore the laws of 
     economics--and the cost will grow the longer we remain.

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