Stiglitz: Iraq War costs us trillions

Stiglitz: Iraq War costs us trillions
By Carlos Lozada

THE WASHINGTON POST


Sunday, March 23, 2008

When congressional Democrats called a hearing last month to explore the costs of the Iraq war, their star witness was not some number-crunching Pentagon planner or a besieged budget official. It was Joseph Stiglitz, a Nobel Prize-winning economist.

The hearing came just days before the publication of "The Three Trillion Dollar War," co-authored by Stiglitz and Harvard University lecturer Linda Bilmes. The book looks beyond the war's official expenses and strives to estimate the full range of Iraq-related costs that the nation will face for years to come.

The time is ripe for such an inquiry. The five-year anniversary of the invasion of Iraq finds the United States on the verge of recession, and the political debate is shifting toward whether the country should continue bankrolling such a war in the face of competing priorities.

Despite their sometimes technical prose, Stiglitz and Bilmes build a compelling case that the costs of the war far exceed the $500 billion or so officially spent on it thus far. Yet by making many assumptions about the future course of the conflict — from its duration (through at least 2017, they predict) to its impact on global oil prices ($5 to $10 extra per barrel, for seven to eight years) — the authors will leave many readers unconvinced. Will the war prove extraordinarily expensive? Absolutely. But will the price tag be $2 trillion? $3 trillion? $5 trillion? It's impossible to know.

Nevertheless, the authors address the economic realities of the conflict far more fully than did the administration before the March 2003 invasion. Then-deputy defense secretary Paul Wolfowitz told Congress that Iraqi oil revenue would fully finance any postwar reconstruction, and Bush economic adviser Larry Lindsey lost his job for having the temerity to suggest that the conflict could cost $200 billion — a fraction of the funds appropriated to date.

In the book's most impassioned passages, the authors analyze the cost of veterans' care. They explain that the ratio of injuries to deaths among troops in Iraq is greater than in any past U.S. war, a development they hail as a "tribute to advances in battlefield medicine." With so many more injured troops surviving, however, veterans' disabilities and medical treatment have become "two of the most significant long-term costs of the Iraq war."

The authors also consider macroeconomic effects, assessing the impact of higher federal deficits and skyrocketing oil prices (which have gone from $25 to more than $100 per barrel since the war began) and estimating the foregone boon to the economy if even a portion of the funds spent on Iraq had gone toward schools, research, infrastructure or health care in the United States.

Stiglitz and Bilmes' final tally reaches $2.2 trillion in their "best case" scenario and $5 trillion in their "realistic-moderate" scenario — and those figures don't even count the costs to Iraq, U.S. allies and the rest of the world. Choosing to err on the conservative side (and perhaps on the side of a catchier book title), the authors settle on $3 trillion.

In their original 2006 academic paper on this topic, Stiglitz and Bilmes estimated the war's price tag at $1 trillion to $2 trillion. Now they're at $3 trillion, and Stiglitz seems comfortable going higher; he recently told Bloomberg News that the true cost is "much more like $5 trillion."

A trillion here, a trillion there — pretty soon the line between "estimate" and "guess" gets a bit blurry. On occasion, Stiglitz and Bilmes appear to overreach. They often count the wars in Iraq and Afghanistan together, and they find ways to link all manner of bad things to the U.S. invasion. For example, because solutions to global problems such as AIDS, climate change and poverty require U.S. leadership, and because the Iraq war has diminished Washington's moral standing in the world, the war is worsening AIDS, climate change and world poverty. Really?

To no one's surprise, the White House already has dismissed the book's conclusions. "People like Joe Stiglitz lack the courage to consider the cost of doing nothing and the cost of failure," White House spokesman Tony Fratto recently told reporters. "What price does Joe Stiglitz put on attacks on the homeland that have already been prevented? Or doesn't his slide rule work that way?"

Stiglitz and Bilmes should be commended — not disparaged — for their painstaking work. But war critics should weigh the numbers carefully.

The book's strongest lesson is the sheer range of costs that the authors ably identify. "In one way or another, we will be paying for these costs, today, next year, and over the coming decades — in higher taxes, in public and private investments that will have to be curtailed, in social programs that will have to be cut back," they write. "One cannot fight a war, especially a war as long and as costly as this war, without paying the price."
Stiglitz: Iraq War costs us trillions

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