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Three Trillion and Counting

Joseph Stiglitz and Linda Bilmes, The Three Trillion Dollar War: The True Cost of the Iraq Conflict (W.W. Norton, 2008)

As the boondoggle in Baghdad grinds into another year of disaster, Americans have lost interest in exploring the vast warehouses of Bush administration deceit. With economic meltdown looming on the horizon and Democratic self-destruction playing out in prime time, the criminally incompetent White House has been largely relegated to the quickly closing book on Bush presidency politics. But before the final page of the Bush era turns, Joseph Stiglitz and Linda Bilmes have taken a final stab at holding the administration to account. Their new book, The Three Trillion Dollar War, stands as the most clinically trenchant critique of Bush and company’s mishandling of Iraq to date.
Stiglitz and Bilmes set their sights on the government’s negligent accounting regarding the cost of the war. The White House did an excellent job before the invasion of and frontloading its projected balance sheet with a host of benefits offered by Saddam Hussein’s overthrow. When it came to assessing the expected costs of such an endeavor, however, the Bush team proved less adept. According to some within the administration, democracy in Iraq, peace in the Middle East, the removal of a cruel dictator, and the elimination of his scary weapons, could all be had for the bargain basement price of roughly $50 billion.
After the battle for Iraq transitioned from conventional warfare to guerilla resistance and civil conflict, it became clear that the administration’s early estimates were wildly off the mark. Stiglitz and Bilmes began investigating the war’s actual cost and issued their first study–of which The Three Trillion Dollar War is an updated and expanded version–in 2006. At the time, their review produced an approximated cost totaling roughly $1 trillion. In answer to this unrequested audit, the White House shot back with claims that the pair had failed to provide a fully reflective cost-benefit analysis. Stiglitz and Bilmes agreed, and revised the study accordingly. To their horror, they found that the Bush administration was right: the numbers were off by over $2 trillion.

That their original calculations substantially low-balled Iraq’s considerable costs in no way undermines the pair’s credibility. Indeed, the authors make a formidable team. Stiglitz boasts an especially impressive resume, including stints as chief economist at the World Bank, economic advisor to the Clinton administration, and Nobel Laureate in Economics. More recently, however, he has stationed himself as a popular critic of the neoliberal economic agenda. Bilmes is no less famous within the world of Washington politics. Another veteran of the Clinton cabinet, she has proved a persistent source of headache for the Bush administration. From her post at Harvard’s Kennedy School of Government, Bilmes has repeatedly raised the hackles of Defense Department officials with a steady stream of scathing reports outlining the Pentagon’s disregard for veterans returning from Iraq and Afghanistan.
Together, Stiglitz and Bilmes lay out a simple and straightforward agenda: to establish an accurate price tag for the American war on Iraq. Of course, the incalculable costs are easily tallied. In five years of fighting, the United States has lost over 4,000 young men and women of its armed services. Violence in Iraq has sent another 60,000 American troops home maimed and injured. The ghastly conditions there have left over 100,000 vets with serious mental disorders and rendered hundreds of thousands more in need of psychological counseling. And these figures do not begin to account for the untold numbers of Iraqis killed, injured, and displaced by half a decade of brutal chaos.
But following the money, as the authors make clear, is far more difficult. American spending in Iraq has mushroomed to mindboggling heights. Number-crunchers at the Congressional Research Service find that Iraq eats up $4,000 per minute, an appetite that issues a hefty $10.3 billion invoice to the United States at the close of each month. Yet these numbers, Stiglitz and Bilmes contend, obscure the true economic cost. After systematically demonstrating that the accounting practices of the U.S. Defense Department are antiquated, sloppy, and egregiously misleading, Stiglitz and Bilmes set about constructing a ledger for spending that more precisely captures the consequences of the conflict.
In order to gain traction in the muddy terrain of Bush administration war accounts, the authors begin by collecting the various appropriations requested by the President from Congress for the war. Next, they add the war’s hidden budget, concealed within silos vaguely labeled “operational expenditures.” After adjusting for inflation, Stiglitz and Bilmes tack on projected spending estimates for the next four years to the total. They then attach projected costs of disability and health care for returning veterans, before considering the price of restoring the American armed forces to their prewar conditions. Finally, they add the budgetary responsibilities of war’s aftermath that fall to other arms of the government beyond the Defense Department. In total, they arrive at their book’s title: three trillion dollars.
But they don’t stop there. Since almost the entirety of war monies spent have been on loan, Stiglitz and Bilmes persuasively argue that any true reckoning of Iraq’s cost should include interest accrued. Adding to the pile of bills already assembled, they take stock of interest payments made on existing loans; unpaid interest currently mounting on those loans; and interest that will stem from future loans necessary to finance the war. Once these amounts have been identified, Stiglitz and Bilmes conclude with thumbnail sketches of Iraq’s macroeconomic impact on both the United States and the world. The final bill, if the authors are correct, will arrive on the next President’s desk in excess of five trillion dollars.

While Stiglitz and Bilmes sometimes lose their footing on the slippery slope of trying to popularize otherwise dry academic research, The Three Trillion Dollar War is punctuated with enough jaw-dropping reminders of White House corruption to keep readers interested. Of particular note, they expose the previously unreported costs associated with the government’s reliance on private armies in Iraq. As it turns out, not only has the administration doled out hundreds of millions of dollars in contracts to cronies running corporate military outfits, but it also picks up their insurance premiums for operations in Iraq. According to Stiglitz and Bilmes:
“It is difficult to estimate how much the government spends on insurance premiums, because no agency regulates the premiums, and no one tracks the overall costs. Insurance premiums are estimated to cost between 10-21 percent of salaries. That would mean that the U.S. government would pay $10,000 to $21,000 in insurance for a private security guard earning $100,000 annually…But even assuming we paid only 15 percent of a weekly wage of $1,000 for 100,000 contractors this adds another $780 million to the government’s annual costs.”
And this acutely conservative estimate covers just the premiums. As Stiglitz and Bilmes point out, “if the contractors are killed or injured in an ‘act of war’ (whether or not the injury occurred during work hours), the U.S. taxpayer is also responsible for paying disability, medical and death benefits.” The companies themselves, of course, pay nothing. Compared with the government’s shameful subsidization of prosperous private military groups, the paltry sums set aside to cover health care costs for disabled vets are cast in painfully high relief. These disgraces are further compounded by the fact that a number of contractors currently employed in Iraq earned their chops as Chilean “disappearers” under Pinochet. Apparently, the government deems war criminals more suitable for insurance protections and post-war health care than members of its own armed forces.
There is little question that private contractors have enjoyed the Bush administration’s addiction to deficit spending. The average American, however, has been less fortunate. Indeed, as Stiglitz and Bilmes argue, had monies spent in Iraq been directed to public investment, the rising tide of recession could have been in part counteracted. “A trillion dollars could have built 8 million additional housing units, could have hired some 15 million additional public school teachers for one year; could have paid for 120 million children to attend a year of Head Start; or insured 530 million children for health care for one year; or provided 43 million students with four-year scholarships at public universities. Now multiply those numbers by three.”
Meanwhile, Iraq remains in heartbreaking disarray, a bleak sinkhole swallowing countless lives. That many of them are Americans seems not to have fully registered with a largely apathetic and insulated public in the United States. As coverage of Iraq migrates further from the front page with each passing day, The Three Trillion Dollar War serves as a cage-rattling reminder that “war is about men and women brutally killing and maiming other men and women. The costs live on long after the last shot has been fired.” Unfortunately, with the cowardly lions in Congress refusing to get serious about withdrawal, Democratic infighting threatening the party’s chances of winning the White House, and John McCain licking his lips at the prospect of a century’s more fighting in Iraq, that day appears nowhere close at hand.


Michael Busch

Michael Busch is a Ph.D. student in International Relations at the CUNY Graduate Center.


The Brooklyn Rail

MAY 2008

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