The most important things in life like life itself are priceless. But that doesn’t mean that issues involving the preservation of life (or a way of life), like defense, should not be subjected to cool, hard economic analysis.
Shortly before the current Iraq war, when Bush administration economist Larry Lindsey suggested that the costs might range between $100 and $200 billion, other officials quickly demurred. For example, Office of Management and Budget Director Mitch Daniels put the number at $60 billion. It now appears that Lindsey’s numbers were a gross underestimate.
Concerned that the Bush administration might be misleading everyone about the Iraq war’s costs, just as it had about Iraq’s weapons of mass destruction and connection with Al Qaida, I teamed up with Linda Bilmes, a budget expert at Harvard, to examine the issue. Even we, as opponents of the war, were staggered by what we found, with conservative to moderate estimates ranging from slightly less than a trillion dollars to more than $2 trillion.
Our analysis starts with the $500 billion that the Congressional Budget Office openly talks about, which is still ten times higher than what the administration said the war would cost. Its estimate falls so far short because the reported numbers do not even include the full budgetary costs to the government. And the budgetary costs are but a fraction of the costs to the economy as a whole.