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Studies: Iraq costs US $12B per month

babylon5

Golden Member
Dec 11, 2000
1,363
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Studies: Iraq costs US $12B per month

By CHARLES J. HANLEY, AP Special Correspondent


The flow of blood may be ebbing, but the flood of money into the Iraq war is steadily rising, new analyses show. In 2008, its sixth year, the war will cost approximately $12 billion a month, triple the "burn" rate of its earliest years, Nobel Prize-winning economist Joseph E. Stiglitz and co-author Linda J. Bilmes report in a new book.

Beyond 2008, working with "best-case" and "realistic-moderate" scenarios, they project the Iraq and Afghan wars, including long-term U.S. military occupations of those countries, will cost the U.S. budget between $1.7 trillion and $2.7 trillion ? or more ? by 2017.

Interest on money borrowed to pay those costs could alone add $816 billion to that bottom line, they say.

The nonpartisan Congressional Budget Office (CBO) has done its own projections and comes in lower, forecasting a cumulative cost by 2017 of $1.2 trillion to $1.7 trillion for the two wars, with Iraq generally accounting for three-quarters of the costs.

Variations in such estimates stem from the sliding scales of assumptions, scenarios and budget items that are counted. But whatever the estimate, the cost will be huge, the auditors of the Government Accountability Office say.

In a Jan. 30 report to Congress, the GAO observed that the U.S. will be committing "significant" future resources to the wars, "requiring decision makers to consider difficult trade-offs as the nation faces an increasing long-range fiscal challenge."

These numbers don't include the war's cost to the rest of the world. In Iraq itself, the 2003 U.S.-led invasion ? with its devastating air bombardments ? and the looting and arson that followed, severely damaged electricity and other utilities, the oil industry, countless factories, hospitals, schools and other underpinnings of an economy.

No one has tried to calculate the economic damage done to Iraq, said spokesman Niels Buenemann of the International Monetary Fund, which closely tracks national economies. But millions of Iraqis have been left without jobs, and hundreds of thousands of professionals, managers and other middle-class citizens have fled the country.

In their book, "The Three Trillion Dollar War," Stiglitz, of Columbia University, and Bilmes, of Harvard, report the two wars will have cost the U.S. budget $845 billion in 2007 dollars by next Sept. 30, end of fiscal year 2008, assuming Congress fully funds Bush administration requests. That counts not just military operations, but embassy costs, reconstruction and other war-related expenses.

That total far surpasses the $670 billion in 2007 dollars the Congressional Research Service says was the U.S. price tag for the 12-year Vietnam War.

Although American military and Iraqi civilian casualties have declined in recent months, the rate of spending has shot up. A fully funded 2008 war budget will be 155 percent higher than 2004's, the CBO reports.

The reasons are numerous: the "surge" of additional U.S. units into Iraq; rising fuel costs; fattened bonuses to attract re-enlistments; and particularly the need to "reset," that is, repair or replace worn-out, destroyed or damaged military equipment. Almost $17 billion is appropriated this year for advanced armored vehicles to protect troops against roadside bombs.

Looking ahead, both the CBO and Stiglitz-Bilmes construct two scenarios, one in which U.S. troop levels in Iraq and Afghanistan drop sharply and early ? to 30,000 by late 2009 for the CBO, and to 55,000 by 2012 for Stiglitz-Bilmes ? and a second in which the drawdown is more gradual.

Significantly, the two studies view different time frames, the CBO calculating possible costs met in the next 10 years, while Stiglitz and Bilmes also include costs incurred during that period but paid for later, such as equipment replaced in post-2017 budgets.

This factor figures most in the category of veterans' medical care and disability payments, where the CBO foresees $9 billion to $13 billion in costs by 2017. Stiglitz and Bilmes, meanwhile, project $422 billion to $717 billion in costs over the lifetime of soldiers who by 2017 are wounded or otherwise mentally or physically disabled by the wars.

"The CBO is only looking 10 years out on everything," Bilmes noted in an interview.

For its part, a CBO critique suggested that Bilmes and Stiglitz might be overstating the expense of treating veterans' brain injuries, a costly category.

The two economists say their calculations are conservative, because they don't encompass many "hidden" items in the U.S. budget. Their basic projections also exclude the potentially huge debt-service cost ? on which CBO approximately agrees ? and the cost to the U.S. economy of global oil prices that have quadrupled since 2003, an increase analysts blame partly on the Iraq upheaval.

Estimating all economic and social costs might push the U.S. war bill up toward $5 trillion by 2017, they say.

Their book already figures in the stay-or-leave debate over Iraq.

When Stiglitz testified on Feb. 28 before the congressional Joint Economic Committee, the ranking Republican, New Jersey's Rep. Jim Saxton, complained that such projections are too imprecise to help determine relative costs and benefits of the Iraq war.

Saxton said a rapid U.S. pullout could lead to full-scale civil war and Iranian domination of Iraq, "enormous costs" that he said should be weighed in any calculation.


LINK
 

StageLeft

No Lifer
Sep 29, 2000
70,150
2
0
The problem is the deficit is high because the economy is not strong enough. We need to cut taxes to spur economic growth. In fact, cut them to 1%. Then the economy will grow so fast that the tax revenue will increase and we can see the deficit sorted out! Yaye, trickle-down!
 

jpeyton

Moderator in SFF, Notebooks, Pre-Built/Barebones
Moderator
Aug 23, 2003
25,375
141
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Isn't it funny that we defeated Saddam so quickly...with battalions of troops, combat planes, tanks, missiles, etc...

But now we're spending significantly more money and we can't finish "the job" (whatever that may be)?
 

Stunt

Diamond Member
Jul 17, 2002
9,717
1
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I am not a war advocate, and do not support the iraq war, but I am always intrigued by the comments that $12b is lost because of the mission. That $12b is not being flushed down the toilet, it is being given to men and women who serve in the military, weapons manufacturers, military equipment manufacturers, etc...all with some form of benifit for the economy. Then there is the tertiary service industries for all those incomes and high paying, high profit industries. Look at that and the opportunity cost of a tax cut where consumer discretionary are items made in China, Taiwan, etc. I'd be interested to see a economic analysis for the opportunity cost of the military industrial park vs. reduced budget deficit or investment in healthcare, education, debt, infrastructure. There's more to this than $12b being flushed down the toilet.
 

jpeyton

Moderator in SFF, Notebooks, Pre-Built/Barebones
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Aug 23, 2003
25,375
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Originally posted by: Stunt
I am not a war advocate, and do not support the iraq war, but I am always intrigued by the comments that $12b is lost because of the mission. That $12b is not being flushed down the toilet, it is being given to men and women who serve in the military, weapons manufacturers, military equipment manufacturers, etc...all with some form of benifit for the economy. Then there is the tertiary service industries for all those incomes and high paying, high profit industries. Look at that and the opportunity cost of a tax cut where consumer discretionary are items made in China, Taiwan, etc. I'd be interested to see a economic analysis for the opportunity cost of the military industrial park vs. reduced budget deficit or investment in healthcare, education, debt, infrastructure. There's more to this than $12b being flushed down the toilet.
Actually this myth has been dispelled quite thoroughly in the book, and in prior studies on war spending. This isn't the depression era 1930s where we had high unemployment and use the war to spur economic growth...we already had a strong economy when the Iraq war began.

The opportunity cost lost by spending $12 billion per month on the war significantly outweighs any minor benefit gained by increased profits in the defense industry. Flushing a small sector of our economy with riches while charging the bill to taxpayers (with an estimated $900 billion in future interest payments alone) definitely fits my definition of throwing money down the drain.
 

event8horizon

Senior member
Nov 15, 2007
674
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0
quit thinking so shor term people-

Iraq has 115 billion barrels of known oil reserves. That is more than five times the total in the United States. And, because of its long isolation, it is the least explored of the world?s oil-rich nations. A mere two thousand wells have been drilled across the entire country; in Texas alone there are a million. It has been estimated, by the Council on Foreign Relations, that Iraq may have a further 220 billion barrels of undiscovered oil; another study puts the figure at 300 billion. If these estimates are anywhere close to the mark, US forces are now sitting on one quarter of the world?s oil resources. The value of Iraqi oil, largely light crude with low production costs, would be of the order of $30 trillion at today?s prices. For purposes of comparison, the projected total cost of the US invasion/occupation is around $1 trillion.


http://www.lrb.co.uk/v29/n20/holt01_.html

after a couple of trillion (after the war ends + all the equipment fixes) the payoff is 30 trillion.
 

jpeyton

Moderator in SFF, Notebooks, Pre-Built/Barebones
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Aug 23, 2003
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Originally posted by: event8horizon
after a couple of trillion (after the war ends + all the equipment fixes) the payoff is 30 trillion.
The Iraqis control their oil. They will profit, along with multi-national oil companies who will refine/process it; people like us will just pay them $30 trillion for it, on top of the trillions we'll pay to fight the war.

If you think every American is going to get a check in the mail from the Iraqi Oil Ministry, you're sorely mistaken.

If you think the war in Iraq will bring America cheaper gas/oil, just compare 2003 prices to today's prices.
 

event8horizon

Senior member
Nov 15, 2007
674
0
0
Originally posted by: jpeyton
Originally posted by: event8horizon
after a couple of trillion (after the war ends + all the equipment fixes) the payoff is 30 trillion.
The Iraqis control their oil. They will profit, along with multi-national oil companies who will refine/process it; people like us will just pay them $30 trillion for it, on top of the trillions we'll pay to fight the war.

If you think every American is going to get a check in the mail from the Iraqi Oil Ministry, you're sorely mistaken.

If you think the war in Iraq will bring America cheaper gas/oil, just compare 2003 prices to today's prices.

what is the "hydrocarbon bill" all about. i thought it was to denationalize iraqs oil so big oil can come in.
 

cliftonite

Diamond Member
Jul 15, 2001
6,873
44
91
Originally posted by: Stunt
I am not a war advocate, and do not support the iraq war, but I am always intrigued by the comments that $12b is lost because of the mission. That $12b is not being flushed down the toilet, it is being given to men and women who serve in the military, weapons manufacturers, military equipment manufacturers, etc...all with some form of benifit for the economy. Then there is the tertiary service industries for all those incomes and high paying, high profit industries. Look at that and the opportunity cost of a tax cut where consumer discretionary are items made in China, Taiwan, etc. I'd be interested to see a economic analysis for the opportunity cost of the military industrial park vs. reduced budget deficit or investment in healthcare, education, debt, infrastructure. There's more to this than $12b being flushed down the toilet.


If we dig up your posts from 02/03/04 I would have to say you were one of the biggest supporters of the war on these boards.
 

jpeyton

Moderator in SFF, Notebooks, Pre-Built/Barebones
Moderator
Aug 23, 2003
25,375
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Originally posted by: event8horizon
what is the "hydrocarbon bill" all about. i thought it was to denationalize iraqs oil so big oil can come in.
We'll see if that ever comes to pass. As it stands, the latest news has Congress pressing the GAO to investigate the whereabouts of hundreds of billions in Iraqi oil revenue that has not found its way towards funding reconstruction that American taxpayers are footing the bill for.
 

NoStateofMind

Diamond Member
Oct 14, 2005
9,711
6
76
It sounds as if the administration is trying to bankrupt America. Jesus H Christ already, enough is ENOUGH.
 

Rainsford

Lifer
Apr 25, 2001
17,515
0
0
Originally posted by: Stunt
I am not a war advocate, and do not support the iraq war, but I am always intrigued by the comments that $12b is lost because of the mission. That $12b is not being flushed down the toilet, it is being given to men and women who serve in the military, weapons manufacturers, military equipment manufacturers, etc...all with some form of benifit for the economy. Then there is the tertiary service industries for all those incomes and high paying, high profit industries. Look at that and the opportunity cost of a tax cut where consumer discretionary are items made in China, Taiwan, etc. I'd be interested to see a economic analysis for the opportunity cost of the military industrial park vs. reduced budget deficit or investment in healthcare, education, debt, infrastructure. There's more to this than $12b being flushed down the toilet.
I seem to remember you have some sort of business related degree, so I assume you're familiar with the broken window fallacy...and war being a benefit to the economy is really a good example of it. Some of the $12b makes it into the economy, but it's $12b that CAN'T be spent on other sectors of the economy. Further, war is an inefficient way to spend money...there are certainly sectors that benefit, but much of it is "wasted". And of course war also brings substantial costs to society as well.

Some economists would disagree, but basically it comes down to the fact that spending money on artificial tasks does not enrich the economy in the same way that spending the money on real things would. Building totally unnecessary public works projects would certainly help the economy a little bit, but not as much as building something people actually need. War works pretty much the same way, if there isn't a benefit to the actual war itself, the secondary effects of all the war spending aren't worth it.
 

Kntx

Platinum Member
Dec 11, 2000
2,270
0
71
Originally posted by: Stunt
I am not a war advocate, and do not support the iraq war, but I am always intrigued by the comments that $12b is lost because of the mission. That $12b is not being flushed down the toilet, it is being given to men and women who serve in the military, weapons manufacturers, military equipment manufacturers, etc...all with some form of benifit for the economy. Then there is the tertiary service industries for all those incomes and high paying, high profit industries. Look at that and the opportunity cost of a tax cut where consumer discretionary are items made in China, Taiwan, etc. I'd be interested to see a economic analysis for the opportunity cost of the military industrial park vs. reduced budget deficit or investment in healthcare, education, debt, infrastructure. There's more to this than $12b being flushed down the toilet.
Ok, so how about this.

Pay 150,000 people to do nothing.
Build high tech equipment and drive it into the ocean.
 

Jeff7

Lifer
Jan 4, 2001
41,599
17
81
Originally posted by: Stunt
I am not a war advocate, and do not support the iraq war, but I am always intrigued by the comments that $12b is lost because of the mission. That $12b is not being flushed down the toilet, it is being given to men and women who serve in the military, weapons manufacturers, military equipment manufacturers, etc...all with some form of benefit for the economy. Then there is the tertiary service industries for all those incomes and high paying, high profit industries. Look at that and the opportunity cost of a tax cut where consumer discretionary are items made in China, Taiwan, etc. I'd be interested to see a economic analysis for the opportunity cost of the military industrial park vs. reduced budget deficit or investment in healthcare, education, debt, infrastructure. There's more to this than $12b being flushed down the toilet.
And the fruits of this paid labor are going where, exactly? The only plausible explanation would be to secure the land covering plentiful oil deposits. I'll say it again - if Iraq's main export was goat cheese, no one in the US would know the name "Iraq." In that sense, this little adventure is little more than a costly investment to secure resources for the future - that means that eventually, the monetary investment will pay off. As for the human cost, you'd have to ask the hundreds of thousands of families affected by this, on both sides - not just those of the dead, but also of the severely injured. Ask them if it's worth it.

Money and work represent each other - do a certain amount of work for the economy, and you are given money, as credit for contributing a specific amount of value. The people in Iraq (US military personnel, and government/civilian contractors) are being paid money, but their work isn't going back into the economy - it's effectively a charitable, forced donation to the people of Iraq, funded by taxpayer dollars.
 

BoberFett

Lifer
Oct 9, 1999
37,563
9
81
Originally posted by: Stunt
I am not a war advocate, and do not support the iraq war, but I am always intrigued by the comments that $12b is lost because of the mission. That $12b is not being flushed down the toilet, it is being given to men and women who serve in the military, weapons manufacturers, military equipment manufacturers, etc...all with some form of benifit for the economy. Then there is the tertiary service industries for all those incomes and high paying, high profit industries. Look at that and the opportunity cost of a tax cut where consumer discretionary are items made in China, Taiwan, etc. I'd be interested to see a economic analysis for the opportunity cost of the military industrial park vs. reduced budget deficit or investment in healthcare, education, debt, infrastructure. There's more to this than $12b being flushed down the toilet.
You need to read about the broken window.

$12B per month would pay for a lot of things which are actually useful, while at the same time paying Americans to work just as well as the war does. Schools, hospitals, roads, things that actually benefit us. I'm pretty blowing up Iraqis does not benefit me.

Edit: Oops, I see Rainsford beat me to it. That Bastiat was a clever guy. :)
 

brandonbull

Diamond Member
May 3, 2005
5,827
738
126
That $12B/month could be put to use ensuring the US could rid itself of foreign oil dependence.
 

blackangst1

Lifer
Feb 23, 2005
20,824
804
126
Originally posted by: brandonbull
That $12B/month could be put to use ensuring the US could rid itself of foreign oil dependence.
And that would justify the debt? Public debt is OK as long as it's not for Iraq? I wonder how many poeple think that.
 

brandonbull

Diamond Member
May 3, 2005
5,827
738
126
Originally posted by: blackangst1
Originally posted by: brandonbull
That $12B/month could be put to use ensuring the US could rid itself of foreign oil dependence.
And that would justify the debt? Public debt is OK as long as it's not for Iraq? I wonder how many poeple think that.
And you think it costs more or less than $12B/month to import foreign oil? I wonder how many people think like that?

I guess some people don't wish to be a little forward thinking and help the US develop new technologies that will rid us of those ME oil leeches and be a new export source.

 

Genx87

Lifer
Apr 8, 2002
41,061
494
126
Originally posted by: Kntx
Originally posted by: Stunt
I am not a war advocate, and do not support the iraq war, but I am always intrigued by the comments that $12b is lost because of the mission. That $12b is not being flushed down the toilet, it is being given to men and women who serve in the military, weapons manufacturers, military equipment manufacturers, etc...all with some form of benifit for the economy. Then there is the tertiary service industries for all those incomes and high paying, high profit industries. Look at that and the opportunity cost of a tax cut where consumer discretionary are items made in China, Taiwan, etc. I'd be interested to see a economic analysis for the opportunity cost of the military industrial park vs. reduced budget deficit or investment in healthcare, education, debt, infrastructure. There's more to this than $12b being flushed down the toilet.
Ok, so how about this.

Pay 150,000 people to do nothing.
Build high tech equipment and drive it into the ocean.
Sounds like a typical Union job at the big three automakers.
 

Genx87

Lifer
Apr 8, 2002
41,061
494
126
Here is an even better idea. If we didnt have the war. That 12 billion could be given back to the tax payers. I bet that clenched the liberals aholes pretty tight thinking of the economic freedom alloted to the taxpayers.
 

fleshconsumed

Diamond Member
Feb 21, 2002
6,108
1,496
136
Originally posted by: Skoorb
The problem is the deficit is high because the economy is not strong enough. We need to cut taxes to spur economic growth. In fact, cut them to 1%. Then the economy will grow so fast that the tax revenue will increase and we can see the deficit sorted out! Yaye, trickle-down!
This is such an oversimplification that it borders on the line with fallacy. Let's assume that government normally collects X tax dollars a year and let's assume that for one year we cut taxes to 1%, or for simplicity sake to 0%. No taxes for entire year. What this means is that next year we would have to collect 2 * X + interest tax dollars to compensate for lost year of taxes. In order to meet this goal the economy would have to grow twice the size in just one year. Is this really realistic? Hell no. Assuming average tax rate is 33% if we abolish tax for one year it would mean people's income would increase by 50% (from 66 dollars after taxes per hundred earned to 100 dollars after non-existent taxes). You get 50% increase in income and yet you expect 100% economy growth? And in just one year? This is simply unrealistic.

I am not debating that less taxes stimulate economy, they do. But to imply that economy will grow almost indefinitely, or at least enough to cover the budget deficit if we keep the tax rate to a minimum is just plain wrong. There is a mid-point somewhere that has the best chance of reducing budget deficit while not being too taxing on the economy, but it's not at 1%, nor 2%, nor 5%.
 

blackangst1

Lifer
Feb 23, 2005
20,824
804
126
Originally posted by: brandonbull
Originally posted by: blackangst1
Originally posted by: brandonbull
That $12B/month could be put to use ensuring the US could rid itself of foreign oil dependence.
And that would justify the debt? Public debt is OK as long as it's not for Iraq? I wonder how many poeple think that.
And you think it costs more or less than $12B/month to import foreign oil? I wonder how many people think like that?

I guess some people don't wish to be a little forward thinking and help the US develop new technologies that will rid us of those ME oil leeches and be a new export source.
uh...nothing to do with MY comments, but OK. Sure some people dont want to move off of oil, but alot of people like myself DO, but also are realistic enough to know the panic about running out is bullshit, and fossil fuel is the most energy efficient on earth now. We have HUGE oil fields we havent even drilled, that we could. Hybrid cars make us FEEEELLLL good, but the fact that they take 25% more energy to make makes them inefficient, except for those who buy them.

Anyway. Back to the topic, sure 12B/month can be better spent I suppose, but only if growth and income keep up.
 

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