History of the Iraq War, Part XX: The Costs to American Taxpayers

 Number of Jobs Created by Category of Federal Spending (Garrett-Peltier, 2011)

 Estimated Effect of Increasing Oil Price on National GDP (Adams & Osho, 2006)

Stiglitz and Bilmes’ (2009) book-length study provides a detailed analysis of the financial cost of the Iraq War. They maintain (p. 31):

"The total cost of the war ranges from $2.7 trillion in strictly budgetary costs to $5 trillion in total economic costs. We also considered a ‘best case’ scenario in which the United States would withdraw all its combat troops by 2012 and fewer veterans would need medical care and disability pay. Even under this extremely optimistic scenario, the total economic cost of the war exceeds $2 trillion. Under the circumstances, a $3 trillion figure for the total cost strikes us as judicious, and in all likelihood errs on the low side. Needless to say, this number represents the cost only to the United States. It does not reflect the enormous cost to the rest of the world, or to Iraq."

Nor does this calculation include lost productivity, which they conservatively estimate elsewhere to be in excess of $1 trillion (Bilmes & Stiglitz, 2008). In light of conventional Keynesianism, the war produced substantial deficits prior to the 2008-2009 financial crisis and its aftermath, year, during comparably ‘good years’ when a saner policy would have resulted in more modest deficits or surplus (Feinstein, 2011, pp. 428-429).

They provide some context for these almost unfathomable numbers (2009, p. xv):

"A trillion dollars could have built 8 million additional housing units, could have hired some 15 million additional public school teachers for one years; could have paid for 120 million children to attend a year of Head Start; or insured 530 million children for health care for one year; or provided 43 million students with four-year scholarships at public universities. Now multiply those numbers by three."

The war has also substantially increased the price of oil. Bilmes and Stiglitz summarize their analysis (2009, p. 117):

"Exactly how much the war increased prices cannot by gauged with precision, so we are putting forward two estimates: a conservative one that assumes only $5 per barrel of the price increase is due to the war; and a more realistic one that assumes the figure is $10. (We have discussed these estimates with oil industry experts; and although they disagree on the relative importance of different factors in the soaring prices, they have all agreed that, if anything, we have underestimated the role of the Iraq war.) Our conservative estimate assumes the duration of these higher oil prices to be seven years; the realistic-moderate estimate eight years."

References

Adams M, Osho G. 2006. “Policy Implications of the War in Iraq and Its Influence on the Global Market: A Public Affairs Perspective.” International Business & Economics Research Journal 5(10), pp. 21-25.

Bilmes, Linda and Joseph Stiglitz. March 9, 2008. “The Iraq War Will Cost Us $3 Trillion, and Much More.” Washington Post.

Feinstein, Andrew. 2011. The Shadow World: Inside the Global Arms Trade. Farrar, Straus and Giroux.

Garrett-Peltier. Heidi. 2011. “The Job Opportunity Cost of War,” at http://costsofwar.org/article/lost-jobs. Brown University Costs of War Project. http://costsofwar.org/.

Stiglitz, Joseph and Linda Bilmes. 2009. The Three Trillion Dollar War: The True Cost of the Iraq Conflict. Penguin.