Study: True Costs of Iraq War Could Top $2 Trillion

The cost of the U.S.-led invasion and continued occupation of Iraq could top $2 trillion, according to a new academic study — a sum far larger than any estimates by the Bush administration. The study factors in the long-term costs, such as replacing worn or destroyed military equipment, paying interest on the debt used to finance the war and providing lifetime care for disabled veterans.

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MADELEINE BRAND, host:

This is DAY TO DAY. I'm Madeleine Brand.

A new study suggests that the cost of the Iraq War could be a lot higher than the Bush administration projected. The study factors in long-term expenses such as the price of lifetime care for thousands of veterans disabled in the war. NPR's Corey Flintoff reports.

COREY FLINTOFF reporting:

The independent study was prepared by Linda Bilmes, a lecturer at Harvard, and by Joseph Stiglitz, a Nobel economics laureate who teaches at Columbia University.

Mr. JOSEPH STIGLITZ (Columbia University): We estimate conservatively the number is between $1 and $2 trillion, but quite honestly, those numbers are quite conservative so it could actually go considerably above that.

FLINTOFF: Linda Bilmes says the cost figures normally heard in Washington are the cost of operations, the approximately $250 billion that's already been spent in Iraq.

Ms. LINDA BILMES (Harvard University): What they do not include is the long-term costs of caring for veterans, the long-term cost of rebuilding the military, replacing all of the weapons, the munitions systems, the Bradley Fighting Vehicles and so on that are being used up at a very rapid rate in Iraq.

FLINTOFF: The economists also included the cost of interest on the borrowed money that finances the war and, most difficult to quantify, the value of a lost life. Bilmes says government agencies such as the Department of Transportation have come up with a figure of about $6 million in lost earnings and lost economic value from a person who's killed in the prime of life. And while the US military has been able to keep the death rate in Iraq lower than it was in Vietnam, the survival of wounded veterans poses other costs.

Ms. BILMES: What is different about this war is that, ironically, due to improved body armor, there are more casualties that are catastrophic in terms of injuries to the head and spinal area and amputations. Many of those injuries require a lifetime of care.

FLINTOFF: Joseph Stiglitz notes that the US is currently paying about $2 billion a year to veterans of the Gulf War, which lasted only 30 days and produced few casualties. White House spokesman Mark Fifley(ph) said the study fails to account for the value of the Iraq War in preventing another attack like the 9/11 attacks, which by some estimates may have inflicted as much as a trillion dollars worth of damage on the US economy. Mike O'Hanlon is a senior fellow at The Brooking Institution. He says Stiglitz and Bilmes are right to ask the big question about the broader economic effects of the war, but he cautions that it appears to be based on a big assumption.

Mr. MIKE O'HANLON (The Brookings Institution): The relatively happy state of affairs we had in 2002 would have continued indefinitely even though sanctions were fraying inside Iraq, even though Saddam was believed, even by German intelligence, to have long-term ambitions to have a nuclear weapon, even though he still had his eyes on Kuwait, even though his sons were waiting in the wings to succeed him.

FLINTOFF: O'Hanlon says it's conceivable that the situation could have been worse and economically more costly if the US hadn't ousted Saddam.

Mr. O'HANLON: And I think the paper, therefore, is somewhat misleading in its assumption that, again, a peaceful, low energy cost sort of Persian Gulf environment would have continued indefinitely absent the war.

FLINTOFF: Both Bilmes and Stiglitz say their study is not a judgment on the rightness or the wrongness of the war, but an effort to be realistic about its true costs.

Mr. STIGLITZ: Typically before we undertake any project of a significant size, we try to do a cost-benefit analysis. I think what's so disturbing about the Iraq War is that it's very clear that there was not a good cost estimate. The administration actually came up with numbers like $60 billion.

FLINTOFF: President Bush is expected to preview his request for additional funding for the Iraq War when he presents the next fiscal year's budget early next month.

Corey Flintoff, NPR News, Washington.

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