Cost of Iraq war could top $2 trillion - study

Reuters

Mon Jan 9, 2006 8:05 PM ET

By Jason Szep

BOSTON, Jan 9 (Reuters) - The cost of the Iraq war could top $2 trillion, far above the White House's pre-war projections, when long-term costs such as lifetime health care for thousands of wounded U.S. soldiers are included, a study said on Monday.

Columbia University economist Joseph E. Stiglitz and Harvard lecturer Linda Bilmes included in their study disability payments for the 16,000 wounded U.S. soldiers, about 20 percent of whom suffer serious brain or spinal injuries.

They said U.S. taxpayers will be burdened with costs that linger long after U.S. troops withdraw.

"Even taking a conservative approach, we have been surprised at how large they are," said the study, referring to total war costs. "We can state, with some degree of confidence, that they exceed a trillion dollars."

Before the invasion, then-White House budget director Mitch Daniels predicted Iraq would be "an affordable endeavor" and rejected an estimate by then-White House economic adviser Lawrence Lindsey of total Iraq war costs at $100 billion to $200 billion as "very, very high."

Unforeseen costs include recruiting to replenish a military drained by multiple tours of duty, slower long-term U.S. economic growth and health-care bills for treating long-term mental illness suffered by war veterans.

They said about 30 percent of U.S. troops had developed mental-health problems within three to four months of returning from Iraq as of July 2005, citing Army statistics.

Stiglitz, who won the Nobel Prize in Economics in 2001 and has been an outspoken critic of the Bush administration's Iraq policy, and Bilmes based their projections partly on past wars and included the economic cost of higher oil prices, a bigger U.S. budget deficit and greater global insecurity caused by the Iraq war.

They said a portion of the rise in oil prices -- about 20 percent of the $25 a barrel gain in oil prices since the war began -- could be attributed directly to the conflict and that this had already cost the United States about $25 billion.

"Americans are, in a sense, poorer by that amount," they said, describing that estimate as conservative.

The projection of a total cost of $2 trillion assumes U.S. troops stay in Iraq until 2010 but with steadily declining numbers each year. They projected the number of troops there in 2006 at about 136,000. Currently, the United States has 153,000 troops in Iraq.

HIGHER COSTS

Marine Corps Lt. Col. Roseann Lynch, a Pentagon spokeswoman, said on Monday that the Iraq war was costing the United States $4.5 billion monthly in military "operating costs" not including procurement of new weapons and equipment.

Lynch said the war in Iraq had cost $173 billion to date.

Another unforeseen cost, the study said, is the loss to the U.S. economy from injured veterans who cannot contribute as productively as they otherwise would and costs related to American civilian contractors and journalists killed in Iraq.

Death benefits to military families and bonuses paid to soldiers to re-enlist and to sign up new recruits are additional long-term costs, it said.

Stiglitz was an adviser to U.S. President Bill Clinton and also served as chief economist at the World Bank. (Additional reporting by Charles Aldinger in Washington)

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