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The Three Trillion Dollar War By Fortune Meriwether The Iraq Action Group and Student Health Professionals for Social Responsibility hosted a presentation by Linda Bilmes of Harvard’s Kennedy School of Government and Joseph Stiglitz of Columbia University on March 4. Bilmes (a national expert on U.S. budgeting and public finance) and Stiglitz (winner of the Nobel Prize in economics in 2001) spoke about the scale of the cost of the Iraq war to a standing-room-only audience of more than 200 members of the UCSF community. On March 19, 2008, the Iraq War will begin its sixth year and the war will be the second-longest conflict in US history. Approximately 1.65 million American troops have been deployed to Iraq, and more than 1/3 of them have served for two, three or four tours of duty – each tour of duty lasts 12-15 months. Approximately 4000 service men and women have been killed in Iraq, 500 have been killed in Afghanistan, and 70,000 have been wounded, injured or contracted serious diseases in the field. Bilmes stated that the official data from the Pentagon actually depicts a smaller number deaths by only counting the deaths that occurred during combat (i.e. Humvee directly hit by an explosive device) and not counting the deaths from non-combat injuries (i.e. the humvee that was following the humvee that encountered a direct explosion). To find all of the data, Bilmes and Stiglitz worked with Veterans groups and used the Freedom of Information Act to access a variety of sources that contain the full record of statistics. Approximately 750,000 troops have been discharged from service in Iraq and already, 1/3 of the troops have been treated for multiple health conditions such as blindness, deafness, burns, amputations, skin diseases and mental health conditions, most notably post traumatic stress disorder. Another 333,000 discharged troops are expected to be treated for health conditions that are a consequence of their service in Iraq. Approximately 228,000 returning troops have applied for disability compensation and 90 percent of the applications have been approved. Bilmes stated this information to establish a context by which she could then talk about the cost of the war. Approximately $600 billion, to date, corresponds to the cash cost of combat operations in Iraq. Of that money, only 10-50 percent is allocated to functions involving the troops. Other costs include, for example, transportation, repair of equipment, health care services, payment to contractors, and payment to the National Guard reserve troops who are very expensive to deploy to Iraq. Bilmes explained that in addition to the $600 billion, the cost of the Iraq war is supplemented by four major issues that are not accounted for in that figure. The first additional cost is that the regular defense budget has accumulated an additional $500 billion since the start of the war. Second, the United States is incurring additional costs from the Iraq war because there are long-term costs, such as paying for medical care for troops, disability compensation and the replacement of equipment to pre-war numbers. The U.S. is still paying disability benefits to troops from previous wars such as the Vietnam War and the Gulf War. This second issue is also unique to the Iraq War because the cost of the war is higher than the costs from previous wars. The reason is that the Iraq War has had higher survival rates among troops. Approximately seven soldiers or marines have been wounded in combat for every fatality and for non-combat casualties, 15 have been injured for every fatality. It is a good thing that troops are surviving their injuries but it also contributes to the cost of the War. The third issue that contributes to the cost of the Iraq War is that the U.S. will have to pay the interest for all of the money that the country has borrowed so far to fund the War. The fourth issue is the cost the U.S. will have to pay to continue combat operations in Iraq. Given these four issues that contribute the cost of the war, Bilmes estimated that the total cost of the Iraq war is actually closer to $3 trillion and that does not include the social and economic costs of the war on the U.S. economy. Stiglitz spoke after Bilmes, and he outlined the costs of the Iraq War that extend beyond just the budget for military operations; he spoke about the microeconomic and macroeconomic costs of the Iraq War. The microeconomic costs of the Iraq war affect aspects of American society such as individuals, families and businesses. The result is that the microeconomic costs have an impact on a community. To illustrate the macroeconomic costs, Stiglitz stated that Iraq War is the primary factor underlying the current weakness in the American economy. Contrary to what many people believe, wars are actually not good for the economy, and Stiglitz stated that there are more constructive ways to stimulate the economy and get the country out of a recession. With respect to the Iraq War, Stiglitz stated there are three reasons why this war is bad for the economy. The first reason is that the war has increased price of oil. Stiglitz mentioned that some people have speculated that the reason that the U.S. went to war with Iraq was to secure oil. If that is true, the plan was disaster. At the time the U.S. went to war with Iraq, oil cost $25 a barrel. Now the cost is higher than $100 a barrel. The consequence of the increase in oil is that money that could have been spent on the economy has instead been spent on oil from Saudi Arabia and other oil-exporting countries and thus the war has had the unintended consequence of benefiting the oil-exporting countries. The second reason that the Iraq war has been bad for the economy is that there has been an opportunity lost. Stiglitz explained that the money spent in Iraq does not stimulate the American economy in the same way that money spent in the United States would stimulate economy. The money that has gone into funding the War could have been used for education, funding the NIH, building bridges, etc. The third reason has to do with the debt that the U.S. has acquired to fund the War. Stiglitz explained that, in the past, when the U.S. was engaged in a war, there was a national discussion about how much of the cost of the war would be born by the current generation and how much of the cost would be born by future generations. In previous wars, the U.S. decided that there would be shared sacrifice so that the current generation bore some of the cost and did not leave the cost for future generations. Stiglitz explained that this is the first time in American history where the country has been engaged in a war and decided to cut taxes, encouraged people to buy more goods and given tax breaks to upper-income Americans tax breaks. One consequence is that Americans have not been saving so they have had to borrow a large proportion of the money from abroad. 40 percent of the money borrowed has been paid for by foreigners. Another consequence is that the Iraq War has been financed by deficit. As if two were not enough, a third consequence is that the entire war has been financed by future generations and this approach has been intentional to purposely keep the knowledge hidden about the true cost of the war. Stiglitz stated that the Bush Administration has tried to convince the American people to think that “this is a war for free.” He reminded everyone in the audience that, “There is no such thing as a free war.” All of these consequences that relate to debt from the War have weakened the economy. Stiglitz explained that the reason that the American economy has not seemed weaker during the course of the Iraq War is that the Fed has kept interest rates low and the regulators have looked the other way while people signed on to bad mortgages. The result was that the American economy was operating under a housing bubble and a consumption boom during a period because approximately 1.5 trillion dollars were withdrawn as mortgage equity and channeled into consumption. All of this occurred while American troops were fighting in Iraq and the cost of the war was escalating. According to Stiglitz, it was only a matter of time until a day of economic reckoning. Stiglitz suggested that President Bush may have wanted it to occur after 2008 but instead, the economy began to unravel in August of 2007. Now that the economy has gotten weaker, Stiglitz explained that the U.S. cannot respond to the economic downturn in the appropriate manner because of the Iraq war. When the U.S. went into recession in 2001, there was a huge surplus of money and the economy could adapt. Stiglitz pointed out that, now, with the United States in debt, there is no room for the economy to maneuver and the current economic stimulus package is too small and not properly designed. Stiglitz predicted that the country may be headed for the worst economic downturn in the last quarter century. Fortune Meriwether is a first-year medical student.
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