After the 2003 Iraq War, the Congressional Budget Office (CBO) estimated that the US spent $500 billion in direct costs of the conflict, but economics and policy experts Joseph Stiglitz and Linda Bilmes beg to differ. In a 2006 study, they calculated that the war was actually four times more expensive than the CBO calculated, costing American taxpayers more than $2 trillion in their middle estimate. In 2013, Bills revised the costs and concluded that both the Afghanistan and Iraq wars cost between $4 trillion and $6 trillion.
America is once again locked in conflict in the Middle East, and Bills, a public policy lecturer at the Harvard Kennedy School and author of “The Ghost Budget: US War Spending and Fiscal Transparency,” is once again sounding the alarm about the true costs of war.
“I’m sure we’ll spend $1 trillion on the Iran war,” he said in an interview at the Harvard Kennedy School this month. “Perhaps we have already collected that amount.”
Bilmes’ 13-figure estimate dwarfs the initial estimate of spending on the conflict, at $1 billion per day. The Pentagon told Congress that the war had cost $11.3 billion in the first week alone. If that rate of spending continues, the cost of the war will exceed $35 billion by April 1, according to the American Enterprise Institute, a think tank. AEI economists suggested that the first month of the war cost each American family $260—which seems small, but there are more than 150 million taxpaying families in the United States. Currently, Bilmes estimates that the US is spending $2 billion per day on war.
US President Donald Trump on Wednesday said the war would end “soon” as the US engages in peace talks with Iran, continuing the blockade of the Strait of Hormuz. Trump repeated this statement during the conflict. Last month, the Pentagon asked the White House to approve an additional $200 billion in funding for efforts in Iran. The Washington Post Reported.
Bills said, just like 20 years ago, America is underestimating how much money it needs for war and its consequences. In an interview with fate, She underscored the often-overlooked war spending that continues for years after a conflict ends, a cost that could further burden America’s $39 trillion debt.
“Wars always have a long tail of costs,” she said fate. “Wars cost more than we expect. Wars take longer to last than we expect, and some of these costs are more consequential.”
When most people talk about the costs of war, they’re thinking about the direct costs of weapons and combat, according to Bilmes, “which itself is undervalued.”
The Center for Strategic and International Studies (CSIS), a Washington, D.C., think tank, estimated that in just the sixth day of the war, the cost was $11.3 billion in weapons, $1.4 billion in combat losses and infrastructure damage, and $26.5 million in operations, for a total of $16.5 billion in 12 days. From 50% to almost double the initial cost, Bilmes said. And as a result of tariffs and supply-chain disruptions exacerbated by the Russia-Ukraine war, some U.S. munitions manufacturers have warned that the cost of producing ammo could rise 8% to 14% by 2024.
Additional costs will depend on damage to key infrastructure in the Gulf, and while the U.S. operates 19 military sites in the region, some have already suffered damage, which CSIS estimates will cost $800 billion within the first two weeks of the war.
Some US spending on war may also be disproportionate to Iran’s spending. For example, the drones Iran uses are much cheaper than the weapons the US needs to destroy those drones. The Shahed drone used by Iran can cost between $20,000 and $50,000, according to Reuters, while the Patriot interceptor used to shoot down drones can cost around $4 million because it requires more sophisticated technology to operate.
“Not only is the cost high, but we have this unbalanced situation where the cost is disproportionately high compared to the cost of producing the drones,” Bilmes said.
The Pentagon declined to comment fateRequest for comment.
According to Bilmes, calculations of war costs rarely touch on long-term costs, particularly the cost of disability benefits to veterans. The Department of Veterans Affairs reported providing $195 billion in compensation to more than 6.9 million veterans and their families by fiscal year 2025, up from $136 billion in fiscal year 2023, according to the Government Accountability Office.
Spending on veterans’ disability benefits increases during times of war, when many people are deployed and exposed to contaminants and chemicals that can cause long-term health problems, Bilmes noted. There are now about 60,000 US troops in the Middle East. After the Gulf War, about 50% of veterans claimed disability benefits, with 37% of Gulf War veterans receiving some form of lifetime disability benefits, according to Bilmes.
But the Trump administration’s efforts to increase the war budget have seen the biggest increase in spending amid the ongoing conflict, Bilmes argued. Trump has called for adding $1.5 trillion to the military budget for 2027, up from the $1 trillion previously proposed. Because of the war, he suggested, Congress is more likely to approve budget increases, which would mean hundreds of billions of dollars in additional military spending each year, indirectly resulting from the Iran war.
“Before this war, Congress was lukewarm to the idea, but many, many stockpiles and inventories and apparent shortages of munitions and so on are leading to an environment where the president will secure a very large increase in the defense budget,” Bilmes said.
Policy experts warned that while the Trump administration cuts tax revenue, borrowing will account for the lion’s share of that spending, adding that the Iran war will further weigh on the country’s $39 trillion national debt. Compared to the Iraq War in 2003, when about $4 trillion in debt was in the hands of the public and 7% of the total national budget was to pay interest, today there is about $31 trillion in debt in the hands of the public, with about 15% of the total budget spent on interest, Bilmes said.
“In this case, we are borrowing [at] High rates, for things that end up in the sand,” she concluded.
This story was originally featured on Fortune.com
