NCPA - National Center for Policy Analysis


January 19, 2006

As the toll of American dead and wounded mounts in Iraq, some economists are arguing that the war's costs, broadly measured, far outweigh its benefits.

Studies of previous wars focused on the huge outlays for military operations. That is still a big concern, along with the collateral impact on such things as oil prices, economic growth and interest on the debt run up to pay for the war. Now some economists have added in the dollar value of lives lost in combat, and that has fed antiwar sentiment.

  • In recent studies by other economists, the high-end estimates of the war's actual cost are already moving in the $1 trillion range.
  • The outlay just for military operations totaled $251 billion through December 2005, and that number is expected to double if the war runs a few more years.
  • The researchers add to this the cost of disability payments and of lifelong care in Veterans Administration hospitals for the most severely injured -- those with brain and spinal injuries, roughly 20 percent of the 16,000 wounded so far.

Scott Wallsten, a resident scholar at the conservative American Enterprise Institute, and Katrina Kosec, a research assistant, listed as benefits "no longer enforcing United Nations sanctions such as the 'no-fly zone' in northern and southern Iraq and people no longer being murdered by Saddam Hussein's regime."

Such benefits, they found, fall well short of the costs. "Another possible impact of the conflict is a change in the probability of future major terrorist attacks," they wrote. "Unfortunately, experts do not agree on whether the war has increased or decreased this probability. Clearly, whether the direct benefits of the war exceed the costs ultimately relies at least in part on the answer to that question."

Source: Louis Uchitelle, "When Talk of Guns and Butter Includes Lives Lost," New York Times, January 15, 2006; and Scott Wallsten, Katrina Kosec, "The Economic Costs of the War in Iraq," American Enterprise Institute, Working Paper 05-19, September 2005.

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