An Analysis of the Iraq War by Joseph Stiglitz

Five years ago, as the Bush administration was preparing to attack Iraq, it claimed that the war would cost $50 billion to $60 billion. We are now spending for military operations alone that amount every three months—and that sum does not even include future costs, such as disability and health benefits for returning troops.

War is always expensive, but this war is particularly expensive. It is now the nation's second longest (after Vietnam) and the second costliest (after the all-encompassing World War II). The cost per troop, even adjusted for inflation, is some eight times greater than earlier wars.

From an economic perspective, this is the first war in America's history that ordinary citizens have not been asked to make an economic sacrifice as their sons and daughters risked their lives; as we went to war, there was a huge deficit, but in spite of this, we actually cut taxes on upper-income Americans, meaning the costs are being passed on to future generations.

The war set off the rise in oil prices. Oil cost $25 a barrel before the war, and the futures markets—which already took into account the projected growth in demand by China and other emerging markets—nonetheless expected prices to remain at this level for another decade. The invasion of Iraq changed the equation, and supply did not grow to meet demand.

[Rising oil costs] transferred money out of the pockets of consumers and businesses into the coffers of oil exporters like Saudi Arabia, Venezuela, Kuwait and Russia. This money does not stimulate the U.S. economy.

Indeed, most of the money we have spent on Iraq has not stimulated the U.S. economy … paying contractors from Nepal, the Philippines and elsewhere to cook food, wash laundry, construct barracks and drive trucks in Iraq.

The contractors have done well though—just look at Halliburton Co.'s share prices, which almost tripled in value.

[Excerpt of an article by J. E. Stiglitz and Linda Bilmes, writing in The Chicago Tribune]

Bush Administration $2,940,000,000,000 off in its calculations

Back in 2002-2003, according to key officials in the Bush administration , the invasion and reconstruction of Iraq was going to cost $60 billion.

Deputy Secretary of Defense Paul Wolfowitz championed this $60 billion figure, but added that much of the cost might well be covered by Iraqi oil revenues; the country was, after all, floating on a "sea of oil." ("To assume we're going to pay for it all is just wrong," he told a congressional hearing.)

Let's take that $60 billion figure as the Bush baseline. If economists Joseph Stiglitz and Linda Bilmes are right in their recent calculations and this will turn out to be more than a $3 trillion war (not to speak of a $5-7 trillion one), then the Bush administration was at least $2,940,000,000,000 off in its calculations.

But what does money matter? After all, this administration has been spending as if there were no tomorrow.

[Excerpt of an article by Tom Engelhardt, Tomgram]