If a war costs trillions of dollars, and no one pays for it, what is its true cost? Since the 9/11 attacks, America has poured $3.2 trillion into its wars, according to a new study from Brown University’s Watson Institute for International and Public Affairs. The estimate includes what the U.S. government has spent or pledged to spend through 2016 on homeland security, medical and disability care for wounded veterans, and the military and diplomatic campaigns against terrorism in Afghanistan, Pakistan, Iraq, and Syria.

When you factor in the interest America owes on the money it has borrowed to finance these wars, the number rises to almost $3.7 trillion. When you add in likely expenses for 2017 and spending obligations to veterans over the next four decades, the total increases to nearly $4.8 trillion.

It’s not just that America’s post-9/11 wars include some of the longest wars in U.S. history. Taken together, they’re also currently the second-most expensiveafter World World II, though defense spending as a percentage of the U.S. economy is lower today than it was during many previous conflicts.

And for 15 years now, the United States has been putting these wars on a credit card. Past U.S. wars were largely “pay as you go” affairs for which the government raised taxes, slashed non-military spending, borrowed money from the American public by selling war bonds, or chose some combination of these and other options, according to Neta Crawford, the author of the study and a political scientist at Boston University. The George W. Bush administration, by contrast, cut taxes in 2003, engaged in deficit spending after using up a budget surplus that it inherited from the Clinton administration, and sold only a small number of war bonds. (The Obama administration has taken a similar approach, though taxes have risen for people earning more than $400,000.)

U.S. leaders are essentially bankrolling the wars with debt, in the form of purchases of U.S. Treasury bonds by U.S.-based entities like pension funds and state and local governments, and by countries like China and Japan. This unusual arrangement, Crawford argues, has influenced how these wars have been conducted and perceived by the public.

Congress initially funded the wars in Afghanistan and Iraq through emergency appropriations, Crawford told me. But then it never determined “how to regularize the income stream” for the conflicts. Today’s wars are “operating on this emergency footing … but they really aren’t emergencies. They’re not new. They’re not unforeseen.”

 Harvard’s Linda Bilmes has noted that this approach—financing a war entirely with debt while cutting taxes—is unprecedented in U.S. history, with the only comparable case occurring during the Revolutionary War, when the U.S. colonies borrowed money from France and the Netherlands. After that conflict, U.S. Treasury Secretary Alexander Hamilton justified the loans as “the price of liberty” for a cash-strapped country confronting an emergency. But he also said it was vital to promptly repay the debt and assert America’s creditworthiness—a goal the young nation soon achieved. “[I]t is easy to conceive how immensely the expences of a nation, in a course of time, will be augmented by an unsound state of the public credit,” Hamilton wrote.

Crawford’s study offers a glimpse of how immense those expenses can get. Spending on the wars in Iraq and Afghanistan peaked in 2008 and 2011, respectively, she points out. But the same can’t be said for the country’s borrowing costs. “Over the next several decades, assuming no more military spending on these wars, but also no additional tax increases or spending cuts, cumulated interest costs on borrowing to pay for the wars will ultimately rise to dwarf the $1.5 trillion of direct military spending from 2001-2013,” Crawford writes. “Thus, although military spending may not continue to rise over the next 40 years, interest costs will surpass total war costs unless Congress devises another plan to pay for the wars.”

This is an urgent problem, Crawford argues, because “unfinanced war spending has played a significant role in raising the US national debt, and it has few of the benefits associated with other measures that have raised the debt, such as reductions in taxes and increases in spending, which were policies intended to combat the recession.”
A World War II-era war-bonds poster (Wikimedia)
Crawford and other scholars have issued several such cost estimates in recent years—all in the trillions of dollars—and it’s a squishy science. How, when you’ve been at war for a decade and a half, do you distinguish between the parts of the Pentagon’s regular budget that are related to war versus standard operations? How do you precisely forecast the cost of veterans’ care and interest expenses, when the state of the U.S. economy or U.S. military deployments could change substantially in the future?

Still, the exercise Crawford has undertaken is an important reminder—as the United States continues to prosecute its wars against ISIS, al-Qaeda, and the Taliban—of the hidden price of conflict, whether measured in interest accrued by 2020 or veterans’ medical bills in 2050. The costs of war can linger long after the fighting ends. (Crawford chose not to calculate the economic toll of the wars for other countries, and she and her colleagues have estimated the staggering human costs of the conflicts in separate reports.)

Sometimes—when, for instance, buying a house or paying for a child’s education—taking on debt is a prudent investment, she added. But that doesn’t apply to the way America has funded its fight against terrorism: “It’s like my car: I need it to get to work. I might get into a little bit of debt to have this thing. But it’s as if I keep borrowing and borrowing and borrowing, and I never pay, so I never really get rid of that debt. And then I’m going to pass that debt on to my child. What we’ve done with this deficit financing is we’ve passed the debt on to future generations.”

The government is acting as if this debt can be passed on indefinitely, she said, but it could actually constrain the government in the future from providing basic services and responding to emergencies. As Alan Viard, an economist who served in the Bush administration, once put it, “When you borrow to pay for the war, you feel it less. But if you do borrow, it may be future needs you’re sacrificing. There’s always a sacrifice.”

The Bush administration’s decision may also have stemmed from “hubris,” Crawford said. The mentality in the administration in the years immediately after 9/11 was, “We can go kick their butts, kill them, remake their societies, hopefully have other people pay for it, remake the Middle East, promote democracy, people will be safer, and we’re going to give you a tax break!”

“If we hadn’t had such low interest rates, and Congress had moved, for example, to raise taxes instead of cut them, the public would have paid attention to these wars in a different way,” Crawford added.

Today’s debates over government spending typically revolve around whether a particular government program is wasteful or appropriate or effective, not whether the nation’s leaders have made the right tradeoffs between defense and non-defense spending. “We have this sense of scarcity and distress and outrage about the deficit,” Crawford said, “but we don’t connect the dots to war spending or military spending in general,” which accounts for more than 50 percent of federal discretionary spending.

Some claim that it would be unrealistic or unwise for the U.S. government to try and modify how it currently pays for wars—that, say, there’s far less tolerancetoday for tax increases than there was before the Second World War, or that encouraging Americans to buy war bonds would damage a modern U.S. economy that depends more on consumer spending than personal savings. But Crawford isn’t convinced. “Whether or not [those options are] politically feasible right now, I think if we understood as a society the urgency of the need to change the way we pay for these wars, I think we would find the way,” she said.

“I’d also like us to really evaluate whether or not perpetual war is making us safer,” she continued. “If all of this actually made us safer, then maybe I’d have less of a problem with it.” It’s not clear, she said, that this is the case.

Crawford compared contemporary war financing to the shift in America from a conscript to a volunteer military: The burdens of war are present, but not perceived by most of the population. (For those without experience of the wars, either direct or through family and friends who have participated, those burdens can be subtle; in 2011, the economist Ryan Edwards calculated that deficit spending on the wars had increased interest rates, which in turn had raised the mortgage payments of homeowners.) As a result, the post-9/11 wars don’t receive as much public scrutiny as they should given their expense.
When Crawford mentioned Boston’s Big Dig highway-building fiasco as an example of a smaller-scale expenditure that received more attention than expenditures for America’s current wars, I asked whether that was because Bostonians had experienced the Big Dig personally—by passing construction sites on their daily commute or getting stuck in traffic—in contrast to the country’s faraway wars.  

She said the explanation was plausible, but she also took issue with the notion that America’s wars, and the costs they have exacted, are far away. “If you look at the maimed soldiers, the people who’ve lost major limbs, who have traumatic brain injury, who have skeletal defects, who have difficulty breathing, those wars have come home,” she said. “They’re in homes all across the country.”

“The costs of these wars [are] actually all around us if we look at it that way,” Crawford argued. “It’s like putting on a different pair of glasses. You will see: Here are the veterans. Here are the families of the veterans. Here are the infrastructure projects that we could have built. ... Here are the investments in alternative energy that we could have used to decrease greenhouse gases.”

“Here,” she added, “is the world we could have made better.”

There’s no such thing, in other words, as no one paying for a multitrillion-dollar war. Americans have paid dearly—in blood and treasure, opportunity costs and costs deferred—and the toll of war will outlast the fighting.


https://www.theatlantic.com/international/archive/2016/09/cost-wars-iraq-afghanistan/499007/