A look at the economic cost of the war in the Middle East

19 hours ago 2

A look at the economic cost of the war in the Middle East

The team from NPR's The Indicator podcast takes a look at the economic costs of the war in the Middle East.

LEILA FADEL, HOST:

What about the economic costs of war? The Pentagon just asked for another $200 billion to fund its war on Iran. Darian Woods and Ricky Mulvey from Planet Money's The Indicator explain the running price tag.

DARIAN WOODS, BYLINE: Mark Cancian is a retired U.S. Marine colonel. He's also done budgeting for the Department of Defense.

MARK CANCIAN: The munitions mix appears to have been a little richer than we had first estimated. And the damage to the bases is higher than we had estimated.

WOODS: He's talking about the types of bombs the U.S. has been dropping and the U.S. bases that have been hit in the Gulf. And here's an interesting thing. Those bombs don't actually count in the Department of Defense's current budget.

RICKY MULVEY, BYLINE: After the U.S. drops a bomb in Iran, the military says that's not a part of our regular budget, and now we need to immediately pay to replace these bombs we just dropped.

CANCIAN: They'll need to go back to Congress to ask for more money regardless of how long the war goes.

WOODS: So one reason this war is already expensive is that many of the costs are not already budgeted for.

MULVEY: But Mark says he expects the daily cost to go down now that the U.S. has established air superiority. The military can drop cheaper bombs from airplanes versus launching long-range, precision-guided weapons.

WOODS: Still, Linda Bilmes is worried that the cost of war in Iran will not be controlled. And she thinks that the long-term costs could be dramatic. Linda has studied how the U.S. pays for post-9/11 wars as a public finance professor at the Harvard Kennedy School.

LINDA BILMES: This is very similar territory, not only to the Iraq and Afghanistan wars, but to wars dating back thousands of years, where those who initiate them tend to be optimistic about how long it will take and tend to significantly underestimate the wars.

MULVEY: Linda says we're paying billions of dollars a year to take care of veterans from the relatively short Gulf War. And these costs can go beyond health expenses. Our total obligation to veterans who've been hurt by war is in the trillions.

BILMES: The amount of accrued disability benefits, not counting health care, just disability benefits that we have already promised to veterans is $7.3 trillion.

WOODS: One of the more significant economic costs of going to war is financing.

MULVEY: Other than the Revolutionary War, the United States has financed wars with a mix of debt, higher taxes and budget cuts within the government. That changed after 9/11.

WOODS: Now America's wars are financed almost entirely through debt without higher taxes or budget cuts.

MULVEY: Linda says the way we finance war matters.

BILMES: People experience the cost of anything in a different way if they are asked to pay taxes than if they incur debt.

WOODS: And raising taxes to pay for war changes the buy-in that presidents ask from the public.

BILMES: President Truman, for example, made 206 speeches on this topic basically saying, if this is important enough that we have to go to war, then it's important enough we have to pay for it.

WOODS: Earlier this year, President Trump asked Congress to approve a $1.5 trillion military spending budget, which is more than 50% higher than its current budget.

MULVEY: And Linda worries this increased budget for defense spending will not go back down, even if the president doesn't get everything he asks for.

Ricky Mulvey.

WOODS: Darian Woods, NPR News.

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