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August 1, 2010

The Financial Cost of Iraq and Afghanistan

I wrote the title the way I did to distinguish my subject from the human cost, which is an entirely different matter.

Whatever the reasons for our budgetary problems, the wars in Iraq and Afghanistan are most certainly are not part of it. More, while there may be good reasons for abandoning one or both of those countries (though I'd disagree with them), financial cost is not one of them.

From a July 24 story in the New York Times:

Cost of US Wars2

Since I can't make this any clearer, you can view the original on the Times website here.

The conclusion is that the cost of our wars in Iraq and Afghanistan is very low. The only reason it seems high and a strain is that we spend so much more on various social programs.

The wars in Afghanistan and Iraq took up 1.2 percent of GDN in 2008, whereas World War I took up 13.6 percent and World War II a whopping 35.8 percent.

History

From a post on this subject I did in April of 2009:

Some of the charts and numbers below are from Truth and Politics, and other charts from Heritage. Unfortunately most of the charts and numbers don't cover the past few years. If I can find more tomorrow I'll fill in the gaps.

My apologies that the charts are not totally clear. I could make them larger but then they'd be blurry. Follow the links to see them more clearly.

Military Spending as a Percent of GDP

First, as a chart from Truth and Politics

US military spending as a percentage of GDP, 1940--2003

This chart from Heritage is pretty up to date

Another chart from Heritage showing National Defense Spending as a Percentage of GDP, 1962-2007

Photobucket

Defense Budget as a Percent of GDP

Then, the actual numbers from Truth and Politics

After the year is the amount we spent as a percentage of GDP

1940 1.7
1941 5.6
1942 17.8
1943 37.0
1944 37.8
1945 37.5
1946 19.2
1947 5.5
1948 3.5
1949 4.8
1950 5.0
1951 7.4
1952 13.2
1953 14.2
1954 13.1
1955 10.8
1956 10.0
1957 10.1
1958 10.2
1959 10.0
1960 9.3
1961 9.4
1962 9.2
1963 8.9
1964 8.5
1965 7.4
1966 7.7
1967 8.8
1968 9.4
1969 8.7
1970 8.1
1971 7.3
1972 6.7
1973 5.8
1974 5.5
1975 5.5
1976 5.2
1977 4.9
1978 4.7
1979 4.6
1980 4.9
1981 5.1
1982 5.7
1983 6.1
1984 5.9
1985 6.1
1986 6.2
1987 6.1
1988 5.8
1989 5.6
1990 5.2
1991 4.6
1992 4.8
1993 4.4
1994 4.0
1995 3.7
1996 3.5
1997 3.3
1998 3.1
1999 3.0
2000 3.0
2001 3.0
2002 3.4
2003 3.7


So excluding World War II, spending peaked during the 1950s but has mostly fallen since.

As a Percentage of Discretionary Outlays

US military spending as a percentage of discretionary outlays, 1962--2003

First, as a chart from Truth and Politics

Photobucket

Then from Heritage

Defense v Entitlements

Wikipedia has it as

U.S. Defense Spending as a Percent of Total Budget Outlays

U.S. Defense Spending as a Percent of Total Outlays

Then, the numbers from Truth and Politics; US military spending as a percentage of discretionary spending, 1962--2003

1962 72.9
1963 71.3
1964 69.5
1965 65.6
1966 65.4
1967 67.6
1968 69.6
1969 70.5
1970 68.1
1971 64.5
1972 61.7
1973 59.1
1974 58.4
1975 55.5
1976 51.2
1977 49.5
1978 47.8
1979 48.7
1980 48.7
1981 51.3
1982 57.0
1983 59.4
1984 60.1
1985 60.9
1986 62.4
1987 63.6
1988 62.6
1989 62.2
1990 60.0
1991 59.9
1992 56.7
1993 54.2
1994 52.1
1995 50.2
1996 49.9
1997 49.6
1998 48.9
1999 48.2
2000 48.0
2001 47.1
2002 47.5
2003 49.0

Again, we see the same pattern.

Operation Iraqi Freedom as compared to past wars. The chart is via National Review and as of January 23 2006. Of course we've spent more since then but even so it wouldn't really change the chart that much.

Photobucket

Posted by Tom at August 1, 2010 8:30 PM

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Comments

snake hunter sez:

The attitudes of the general population in 1940 was opposed to 'getting involved' in another war in Europe; Against all hope, Britain's Sir Winston Churchill stubbornly stood his ground.

The Imperial Forces of Japan and Hitler's Nazi Germany were superbly prepared for war, and the U.S. was weak, just coming out of a decade of the crippling 'Great Depression' - Then Japan attacked Pearl Harbor on December 7, 1941... Now, it was all or nothing. Houswives went into the defense plants, "Rosie the Riveter" was a symbol of our resolve. United, we stood firmly, against the warlords of doom and destruction. In four bloody years, the Allied Forces totally destroyed the Axis of Evil's ability to wage war. The two A-Bombs over Hiroshima & Nagasaki quickly ended that conflict, with an estimated 50 million dead in a dozen nations.

Today, we face another suicidal enemy of one billion primitive-thinking jihad muslims, and we see our nation divided.

It's Conservatives versus "neo-Progressivism" -

The Democrat (label) vs Republican in the halls of our legislatures; blue states and red states, quibbling about war-time expenditures, as our combat troopers are doing battle with committed enemies that seek total world hegemony. Iran is close to nuclear capability, and the "good old boys" in Washington DC are asking the public for more campaign donations, for the next election!

Let's haul out the trash, establish 'Term Limits' over these career politicians...It's Now, Or Never America - November 2nd - Peace- Through Strength!

reb
___ ___

Posted by: Ralph E at August 1, 2010 11:02 PM

OK, these numbers seem convincing at first, but I have to raise some important points. The first big issue is the fact that much of the costs of these two wars were not funded through the normal military budget, they were "largely funded through supplementary spending bills outside the Federal Budget" (from the Wikipedia article on the military budget).

When I click on the link from the national review, I noticed that author wrote (in 2006) "The work is not done in Iraq, and the financial costs will grow beyond the $251 billion we have spent so far". This number is way off. Wikipedia notes the
-"Pentagon has access to black budget military spending for special programs which is not listed as Federal spending and is not included in published military spending figures. Starting in the fiscal year 2010 budget however, the wars in Iraq and Afghanistan are categorized as "Overseas Contingency Operations" and included in the budget."-

Therefore, if you find data for 2003 to the present, it will show a significant increase since we actually included the cost of the wars in the aggregate budget data, and no longer used "supplementals" to reduce the footprints of the wars on the budget.

In the "Truth and Politics" link, its point out that the data is only for "military spending" refers to "national defense" spending (budget function 050). If you click on this link, you find that Veterans benefits and services are not included in this accounting, since those are part of "budget function 700".

According to the Wikipedia entry for the Military budget, "Defense-related expenditures outside of the Department of Defense constitute between $216 billion and $361 billion in additional spending, bringing the total for defense spending to between $880 billion and $1.03 trillion in fiscal year 2010"

I don't want to quibble about the reasons for the wars, but let's not use Enron style off-sheet budgeting to make the costs of the wars more palatable. Let's be realistic when we look at the actual costs of these wars. That is not to say we shouldn't be in these countries, but we shouldn't use faulty data to make the costs seem low.

Posted by: jason at August 2, 2010 3:53 PM


Here is actual data for FY 2011:

Veterans pensions $58.4 billion
Veterans Affairs $66.2 billion
DOD spending $721.3 billion
(from Wikipedia Military budget page)

Veterans benefits and pensions (excluded in the "Truth and Politics" data), amounts to over $124 billion, or an additional 17% of the baseline DOD budget. Not including 17% of the costs (veterans benefits) in the "Truth and Politics" figures is incomplete.

From the Wikipedia US budget page:

---The DoD baseline budget, excluding supplemental funding for the wars, has grown from $297 billion in FY2001 to a budgeted $534 billion for FY2010"---

Please note that these funding figures EXCLUDE supplemental funding, which Bush used to actually fund the wars in Iraq and Afghanistan. This is Enron style accounting.

Posted by: jason at August 2, 2010 4:17 PM

I think you overstate your case, jason. For example, did you research the previous wars also? Do you assume that the figures for the Civil War, WWII, Korea, Vietnam, etc, included everything but were only left out for Iraq and Afghanistan?

Not to say you don't make good points, and I salute your dedication to research. Ok, the figures for Iraq and Afghanistan were understated.

In the end, though, I think you're missing the forest for the trees. My thesis is that 1) Iraq and Afghanistan are still pretty darn cheap compared to previous wars, and U.S. defense spending has plummeted over the past few decades (not that it shouldn't, to some extent, the Cold War being over), and 2) our current budgetary crisis is not the result of defense spending, and I think both hold up pretty darn well.

Posted by: Tom the Redhunter at August 2, 2010 8:01 PM

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