The Three Trillion Dollar War

By Cernig

Thanks to Kat for bringing an interview at Democracy Now to my attention - one with Nobel laureate and former chief World Bank economist, Joseph Stiglitz, and Professor of public finance at Harvard’s Kennedy School of Government, Linda Bilmes. They say that the true cost of the Iraqi war and occupation is now somewhere in excess of $3 trillion - and that the Bush administration are keeping a second set of books to hide this from the American people.

what they claim as the cost of the Iraq war in the budget is not the full cost. There are the operational costs that everybody understands, but then there are costs hidden elsewhere in the defense budget. But then there are really some very big costs hidden elsewhere, like contractors that have been the subject of such concern. We pay their insurance through the Labor Department.

But the most important cost, budgetary cost, that we haven’t talked about publicly, that haven’t been talked about, are the costs of veterans—their disability, veterans’ healthcare—that will total hundreds of billions of dollars over the next decades. This war has had a huge number of injuries, and that will mount, the cost of caring for them, disability. 39 percent of the people fighting, the 1.6 million who have already fought, and if we continue, it will of course be more than that, are estimated will be—wind up with some form of disability.

Then you go beyond that budgetary cost to the cost of the economy. For instance, when somebody gets disabled, the disability pay is just a fraction of what the loss to their family, to the income that they could have otherwise earned. And then you go beyond that to the macroeconomic cost—the fact that the war has been associated with an increasing price of oil. We’re spending money on oil exports, Saudi Arabia, other oil-exporting countries. It’s money that’s not being spent here at home. There are a whole set of macroeconomic costs, which have depressed the economy. What’s happened is, to offset those costs, the Federal Reserve has flooded the economy with liquidity, looked the other way when you needed tighter regulation, and that’s what led to the housing bubble, the consumption boom. And we were living off of borrowed money. The war was totally financed by deficits. And eventually, a day of reckoning had to come, and now it’s come.

Go read the whole thing.