The monetary cost of the Iraq war

Overview

The monetary cost of the Iraq war just keeps getting higher and higher, and it looks like that trend will continue for several years. I have argued in many other posts that damn near all the problems we have faced in Iraq were either known or capable of being foreseen with a high degree of certainty, and the monetary costs come within that purview. This post will examine the Bush administration's cost estimates (and lack thereof) before the war, the current total costs, and an explanation why costs--which have greatly exceeded the Bush administration's estimates--were foreseeable before the war started. That discussion is far from complete, but it should be sufficient to convey the point that the Bush administration's pre-war projections (and later refusal to provide any estimates) were purposefully disingenuous.

Last Thursday's Washington Post had an article entitled "Projected Iraq War Costs Soar," but before discussing that article, let's take a small trip in the way-back machine...

What the Bush administration said--and refused to say--before the war

Some members of the Bush administration gave some estimates while others obstinately rufused to talk about costs.

• Rumskull and the Office of Management and Budget
  

On January 20, 2003, Rumskull was interviewed on ABC's "This Week." George Stephanopolous asked what Rumskull thought the monetary and human costs of the war would be.

Rumsfeld: Well, the lesser important is the cost in dollars. Human life is a treasure. The Office of Management and Budget estimated it would be something under 50 billion dollars.

Stephanopoulos: Outside estimates say up to 300 billion.

Rumsfeld: Baloney. How much of that would be paid by the United States, how much by other countries is an open question.

(emphasis added). This is rich. Rumskull gives a figure, but he does not take responsibility for it, instead noting that it came from OMB. In this way, Rumskull could shift blame if the estimate proved grossly wrong (which it was) and also "show" he was utilizing the work of others rather than influencing any process.

• Lawrence Lindsey
  

And speaking of what other people in government said, consider the case of Lawrence Lindsey. In September 2002, he was the Assistant to the President for Economic Policy and Director of the National Economic Council at the White House. He told the Wall Street Journal that the cost of the war would be between 100 and 200 billion dollars. By December, he was basically fired. He "resigned" about the same time as Treasury Secretary Paul O'Neill. As reported by the Pittsburgh Post Gazette, sources in the White House (anonymous, so make of that what you will)

said Bush decided to get rid of Lindsey after the economist told The Wall Street Journal in mid-September that a war with Iraq could cost as much as $200 billion, at a time when Bush was not confirming that he planned any such attack. "That made it clear Larry just didn't get it," one official said.

Shortly after it was announced, the director of OMB, Mitch Daniels, called Lindsey's projection "very, very high," and then Daniels announced the "under $50 billion" estimate. Of course, history has shown that it was more likely that Daniels was "very, very high."

• Unidentified White House aides

As reported in the Washington Post,

Until now, administration officials have provided only vague estimates of the cost of a war with Iraq. President Bush's aides have said the only benchmark they could offer was the cost of the 1991 Persian Gulf War, which was $61.1 billion excluding reconstruction costs, or $82.5 billion in current dollars.

(emphasis added). 82.5 billion ain't "under 50," now is it? Moreover, that price tag did not include any costs for reconstruction!

Another thing to consider about the cost of the first Gulf War is that the U.S. paid only about 10% of the total--a fact which is discussed further below.

• Department of Defense planners
  

Back to Rumskull...Any estimate of cost stated by the Bush administration had to come in under Lindsey's; otherwise the PR and sales job might get slowed down. So, Rumskull decided to throw out the "under $50 billion" figure. Just one of the problems faced by Rumskull--and Wolfowitless--was that about four weeks later, planners in the Pentagon estimated the cost would be $60-95 billion--and that did not cover the occupation/reconstruction phase.

• Wolfowitless
  

That estimate came out right before Wolfowitless testified before the House Budget Committee on February 27, 2003. In addition to oh so wrongly denigrating Eric Shinseki, Wolfowitless was equally dismissive of the estimate from his own agency and all other cost estimates as he refused to give even a ball park figure. When pressed by committee members for some idea of what a war would cost, Wolfowitless said, "Every time we go in a briefing on the war plan, it immediately goes down six different branches of what a scenario might look like. And if we costed every single one of them, we'd maybe give you a range between $10 billion and $100 billion and you'd say that's useless and you'd be right." He went on to say that "I think it's necessary to preserve some ambiguity of exactly where the numbers are," but he nevertheless “assured” the committee that the Pentagon would provide Congress with cost ranges at an “appropriate point,” but that “we're not in a position to do that right now.”

• Review
  

Let's review the Bush administration's cost estimates before the war. First there was an estimate of $100-200 billion in September 2002, which resulted in the firing of the person making that estimate. Then almost immediately came an estimate of under $50 billion, a figure repeated by Rumskull in late January 2003. Four weeks later, planners in DoD put the figure at $60-95 billion--which did not include any reconstruction/occupation costs. Immediately after that, Wolfowitz dismissed any and all estimates and said it was not possible to make any estimate.

The bill to date...and beyond

Now it is time to examine the Washington Post article cited at the start of this post. The lead paragraph almost says it all:

The cost of the war in Iraq will reach $320 billion after the expected passage next month of an emergency spending bill currently before the Senate, and that total is likely to more than double before the war ends, the Congressional Research Service estimated this week.

I could stop here, but where is the fun in that? Here's some more good news:

Once the war spending bill is passed, military and diplomatic costs will have reached $101.8 billion this fiscal year, up from $87.3 billion in 2005, $77.3 billion in 2004 and $51 billion in 2003, the year of the invasion, congressional analysts said. Even if a gradual troop withdrawal begins this year, war costs in Iraq and Afghanistan are likely to rise by an additional $371 billion during the phaseout, the report said, citing a Congressional Budget Office study.

Not exactly under $50 billion, huh?

Now I know what some of you are thinking...the CRS report is a mere estimate.

This is largely true, but that does not get the Bush administration off the hook. As explained in the Washington Post article, the only reason that CRS could not include precise numbers in its report is that the Bush administration has never revealed what money has been spent on the Iraq war/occupation/reconstruction.

Defense specialist Amy Belasco, the CRS study's author, stressed that the price tag is only an estimate because the Defense Department has declined to break out the cost of Iraqi operations from the larger $435 billion cost of what the administration has labeled the global war on terrorism. That larger cost applies to military, diplomatic and foreign aid operations in Iraq and Afghanistan, enhanced security efforts begun after the Sept. 11, 2001, attacks and related medical costs of the Department of Veterans Affairs.

"Although DOD has a financial system that tracks funds for each operation once they are obligated -- as pay or contractual costs -- DOD has not sent Congress the semiannual reports with cumulative and current obligations for [Iraq] and [Afghanistan], or estimates for the next year, or for the next five years that are required by statute," the CRS noted.

(emphasis added). Gosh, the Bush administration not following the law? I am oh so shocked! This instance is just a continuation of a pattern: before the war DoD refused to talk about costs for Iraq, and more than three years later, DoD is still refusing to talk about costs.

Now I know what some of you are thinking..There was no way to know before the war some of the circumstances which have driven up the costs.

To this I say "Bullshit." There are many reasons why the huge costs could have been foreseen, but for now I will discuss three.

• The number of troops
  

One of the biggest factors in cost was, still is, and will be the number of troops we have in Iraq. As I have discussed in detail, before the war then Army Chief of Staff Gen. Eric Shinseki testified that that several hundred thousand troops would be needed for the occupation and reconstruction of Iraq. As I requested in Rumskull defense #2: There has to be trust, go to the Cosmic Wheel Index and read the posts listed under the heading of "Shinseki, Eric" to read why Wolfowitless and the rest of the dumbass neocons were wrong. And when I say "wrong," I mean before the war started. Anybody who studied the history and facts on the ground before the war would have seen that Shinseki was likely right. More troops = more cost, so the Bush administration was keen on giving bullshit estimates of troops needed. For instance, after Shinseki's testimony, the Washington Post reported on March 1, 2003,

Planners on the Army staff, the Joint Staff and Rumsfeld's staff are assuming that, even if 200,000 or more troops are necessary to stabilize postwar Iraq, only a relatively small percentage would come from the United States. Rumsfeld noted this week that numerous allies have indicated that they would commit troops to help stabilize postwar Iraq.

The Joint Staff is estimating that the U.S. troop presence could be between 45,000 and 60,000 soldiers for up to two years, the rough equivalent of two to three Army divisions. While a commitment of this level would put an enormous strain on the Army, which has 10 active-duty divisions, it would be far less than what one Army staff member called Shinseki's "guesstimate."

(emphasis added). 45,000 to 60,000...yeah, right. In addition to all the reasons stated in the posts referenced above, read this post, which discusses the length of and problems along the vast Iraqi borders. Basically, I take the position that any moron--well, almost any moron--would realize that border control would be essential and that such mission would require more, not fewer, troops.

• Our allies would pay for most of the cost.
  

The emphasized portion of the first excerpted paragraph immediately above and RUmskull's "Baloney" comment on "This Week" reveal the second reason why it was apparent before the war that Shinseki was right. The Bush administration seemingly expected the rest of the world to pick up the tab. Stated differently, the Bush administration thought there would be a repeat of the first Gulf War.

As reported by the Chicago Tribune in a January 23, 2003, article entitled "Generous in '91, allies reluctant to finance war," the $61.1 billion cost of the first Gulf War was mostly paid by our allies, and, according to a 1992 Defense Department report, the U.S. paid $7 billion. Moreover, as reported by USA Today on January 15, 2003, our allies had largely agreed before the war to bear that cost. That certainly did not happen the second time around, and it was highly unlikely that anyone was going to pick up the tab like they did in 1991. One of the countries that contributed heavily to the 1991 war was Saudi Arabia. In addition to providing $16.8 billion in money, the Saudis provided--free of charge--the costs of housing and repatriating Kuwaiti refugees, fuel, transport and lodging to coalition forces, and a major environmental cleanup. That was in 1991. In 2003, the Saudi public strongly opposed the Iraq war long before it happened, meaning the Saudi government was not in any position to contribute significantly to it. The lack of just Saudi help the second time around obviously meant a significant increase in the cost to the U.S.

In further contrast to the first Gulf War, prior to the Iraq war, the Bush administration was not even trying to get financial commitments from allies before the war. The Chicago Tribune article cited above offered the following from Danielle Pletka of the very pro-Bush American Enterprise Institute:

"We are not out there asking [for money] in a serious way."

She said that among the allies, the urgency of defeating Hussein is not at the same high level as it was in 1991.

"We are not saving Kuwait's bacon this time," Pletka said. "And sometimes you have got to cough up the dough to meet the responsibility of being a world leader. This is one of those times."

Gee, I wonder if the fact that a vast majority of people in the world (including Pope John Paul II) was against the war had anything to do with the lack of pre-war requests? Of course Wolfowitless saw no problem with not securing financial commitments before the war. The AP reported that at the same hearing in which he criticized Shinseki and refused to give any estimate of costs, Wolfowitless was

asked about assistance from other nations. Wolfowitz said he expects a lot of contributions after the war, including from nations that oppose military action. "It will be easier after the fact instead of before the fact," he said.

Un-freaking-believable. Look at that from a simple common-sense perspective. If you are contemplating undertaking a highly dangerous and risky venture for which you really need financial investors, would you decide to go ahead without that financial backing and then try to get other people to give you money? To do so would be to take a huge gamble, and when the venture is a war, the stakes become even greater. Moreover, for our government to take that gamble with the Iraq war was and is particularly galling. Bush, Big Dick, Rumskull, Wolfowitless, etc. were "gambling with house money." In other words, they were gambling with your and my tax money--and the money of generations to come.

And how could anyone have had a reasonable expectation that other countries would decide to pour billions of dollars into Iraq to help us clean up the mess we caused? Given the utter arrogance and ham-fisted disdain with which the Bush administration treated the rest of the world in the run up to the war, it was patently unreasonable to think that the rest of the world was going to provide significant amounts of money or troops. Need examples? As reported by the New York Times, at the February 27, 2003, hearing Wolfowitless "said that nations that oppose war with Iraq would likely sign up to help rebuild it." Well, that seemed like a reasonable and plausible thing to say, but he just did not know when to shut the hell up:

''I would expect that even countries like France will have a strong interest in assisting Iraq in reconstruction,'' Mr. Wolfowitz said.

In the 1991 Persian Gulf War, many nations agreed in advance of hostilities to help pay for a conflict that eventually cost about $61 billion. Mr. Wolfowitz said that this time around the administration was dealing with ''countries that are quite frightened of their own shadows'' in assembling a coalition to force President Saddam Hussein to disarm.

Singling out in a scornful manner one of the few countries that had economic incentive and capability to provide significant amounts of money for the reconstruction was not a good way to get that country. French companies had business contracts and interests in Iraq, and getting the country back on its feet would be in the interest of those companies and France. But hey, let's start making "freedom fries" and insult a country that could help. Then again, the fact that almost all the significant contracts for reconstruction activities were given by the U.S. to U.S. companies would have eliminated those French economic incentives anyway--and that action largely eliminated the possibility of getting other countries to help "after the fact," but that is another story for another time. And is calling countries cowards an effective way to gain their cooperation in something for which one really needs it? Here's a clue: NO.

Need more examples? Another one is Bush's basic approach of "I don't believe there's many shades of gray in this war. You're either with us or against us; you're either evil or you're good." Granted, these statements addressed the war on terror, but remember that the Bush administration made the war on terror one of the reasons for going to war with Iraq. Thus, it is accurate to say that the Bush administration used this "all or nothing" approach in regard to the Iraq war. Again, that is no way to go about building a true coalition of countries that can provide meaningful assistance. Indeed, Bush used that approach in a speech about Iraq on February 13, 2003, at Naval Station Mayport in Florida. In that speech, Bush reiterated the "facts" that Saddam had all kinds of WMD and ties to terrorism which threatened the U.S., and then he turned his attention to the United Nations:

I'm optimistic that the U.N. Security Council will rise to its responsibilities, and this time ensure enforcement of what it told Saddam Hussein he must do. See, I believe when it's all said and done, free nations will not allow the United Nations to fade into history as an ineffective, irrelevant debating society. I'm optimistic that free nations will show backbone and courage in the face of true threats to peace and freedom.

The anything-but-subtle message was that any country that would not join the U.S. in the Iraq war had no courage or backbone. Again, this was no way to get other countries to provide significant amounts of money and/or troops to the cause. A March 3, 2003, L.A. Times article summarized the problems caused by this approach:

The leaders of France, Germany, Russia and China, all nations Bush hoped to count as allies in the confrontation with Iraq, have joined to resist the president's drive toward war, with complaints over what they see as American highhandedness.

*******

And a few senior Republicans, like Sen. Richard G. Lugar of Indiana, chairman of the Senate Foreign Relations Committee, and Sen. Charles Hagel of Nebraska, have warned that the Bush administration's take-no-prisoners style risks alienating allies it needs in the long run.

"In an era when allied cooperation is essential in the war against terrorism, we cannot afford to shrug off negative public opinion overseas as uninformed or irrelevant," Lugar said at a hearing last week. "The governments of most nations respond to public opinion, whether it is demonstrated in the voting booths or in the streets."

"The responsibility of leadership is to persuade, not to impugn the motives of those who disagree with you," Hagel said. The administration is "seen as bullying people. You can't do that to democracies. You can't do that to partners and allies. It just isn't going to work."

(emphasis added). Keep in mind that not hundreds, not thousands, but millions of people across Europe took to the streets to protest going to war. In Britain and Spain--our two biggest allies in this war--the populations were overwhelmingly opposed to the war.

And let us not forget about Rumskull's "old Europe" comments. As the L.A. Times article noted,

Even staunch allies such as prime ministers Tony Blair of Britain and Jose Maria Aznar of Spain have sent word to Bush that some U.S. bravado -- like Defense Secretary Donald H. Rumsfeld's dismissal of "Old Europe" -- has done more harm than good.

Thanks, Rumskull. What a jackass.

To sum up, we managed to piss off the countries that had the resources to provide meaningful amounts of troops and money. That happened before the war, and in light of that fact, any claim by anybody that the war and reconstruction would not cost the U.S much money because other countries would pay a lot of that bill was bullshit.

• Iraqi oil will pay for the reconstruction.
  

One of the things we were told repeatedly was that we would not have to spend much of our own money to rebuild Iraq because Iraqi oil would pay for almost everything. This steaming pile was presented in spite of the fact that, as reported by the AP on March 17, 2003 (sorry, but I can't find a working link for the article),

Despite Iraq's enormous oil reserves, experts say money from the sale of Iraqi crude wouldn't cover the costs of rebuilding the country's power plants, bridges and other vital infrastructure after a war with the United States.

Twelve years of U.N. economic sanctions have crippled Iraq's oil industry, and a postwar government would need several years and billions of dollars to restore production to 1990 levels.

And who were these experts? Well, some of them came from the James A. Baker III Institute for Public Policy. That's the James A. Baker who has been a top adviser to Presidents and Secretary of State under Bush 41. Together with the Council on Foreign Relations, the Baker Institute published a report in December 2002 entitled "Guiding Principles for U.S. Post-Conflict Policy in Iraq." Here are some of the highlights from the report's section on Iraqi oil:

Oil experts acknowledge that Iraq’s oil sector is being held together by “band-aids.” War, sanctions, and political manipulation have all seriously challenged Iraq’s highly skilled oil industrialists. Further damage could result either from Iraqi sabotage or a U.S. bombing campaign.

*******

Iraq will also face high technical hurdles to reaching production of 3.5 million bpd. Even without a war, Iraq’s infrastructure is likely to be damaged and billions of dollars will be required to rehabilitate it.

*******

After two major wars and a decade of sanctions, Iraq’s oil industry is in desperate need of repair and investment. Iraq’s current sustainable oil production capacity is no higher than 2.6 to 2.8 million bpd and could slip further if hostilities result in a sudden or prolonged cessation of oil production. Prior to Operation Desert Storm, Iraq’s capacity was about 3.5 million bpd.

There is little doubt that there is great potential to expand Iraq’s oil production and export capacity, but it will require massive investment.

*******

Iraq’s export infrastructure has been badly damaged in its two wars. A rapid increase in Iraqi oil exports will not be possible given the limitations of Iraq’s production and export facilities. Even under the most favorable circumstances in which no additional damage was done to existing facilities during a U.S.-coalition military campaign, it would take Iraq at least six months and possibly longer to expand oil production and export rates from current capacity levels. The Working Group believes it will take Iraq between eighteen months and three years to return to its pre-1990 production level of 3.5 million bpd. It will cost an estimated $5 billion to repair and restore previously used facilities, in addition to an estimated $3 billion in annual operating expenses. An estimated $20 billion will be needed to restore Iraq’s pre-1990 electricity capacity. Iraq has previously stated a desire to expand its oil production capacity to 6 million bpd. This is geologically possible but would take a number of years and tens of billions of dollars in investment.

So, before the war it was well known that Iraqi oil production was not going to pay for the reconstruction and that it would take years and "tens of billions of dollars" to get the Iraqi oil industry to the point of making serious money. And yet the Bush administration kept telling us that Iraqi oil would keep the U.S. from having to pay for the reconstruction.

Conclusion

The Iraq war has cost us over $300 billion, and could end up costing between $600 and $700 billion. The Bush administration either knew or damn well should have known that the costs to the U.S. would be this high, and yet--just like they did with WMD and Iraq's terrorism ties--they told us things that simply were not true, and they made up reasons why they could not tell us the truth. And to this day, they still cannot be truthful about the amount of money that has been spent on the Iraq war--even though the law requires such disclosure.

Typical.