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Newsmaker Interviews

The 3 Trillion $ War
By Bill Steigerwald


April 15 2008

What's the true cost of the war in Iraq? The total, long-term cost of everything from tanks and jet fuel and the interest on the money Washington is borrowing to the cost of caring for a double amputee for 40 years? It's probably a lot higher than you think, but try about $3 trillion. That's the round, stunning figure economist Joseph Stiglitz and Harvard public finance professor Linda Bilmes came up with after several years of digging up and crunching the official government numbers, which were buried or scattered in the Pentagon's impossibly sloppy accounting books. The gruesome details can be found in their new book, "The Three Trillion Dollar War." I talked to Professor Bilmes on Wednesday by phone from Boston:

Q: What is your 60-second synopsis of your book and why did you write it?

A: We basically wrote the book for two reasons. First was to explain the full costs of the war, including the costs that are yet to come. Secondly, we wrote the book to show how the veterans have been shortchanged and to offer recommendations that would fix that. We really go through in the book the major cost categories and show how the war is affecting the economy. This is a book about the budgetary and economic costs of the war. But we also have three chapters about veterans' issues, which I have been deeply involved in.

Q: What does that $3 trillion price tag include?

A: It includes the cash costs of the war, which is the $600 billion that people are familiar with, which is basically the cost that we have spent to date of operations, as well as the long-term cost that we would have to spend even if we were to withdraw quickly; those include the cost of taking care of veterans, both the medical care and disability compensation over their lives; the cost of military reset, which includes both the cost of replacing all of the military and National Guard equipment and the cost of restoring the personnel forces to their prewar strength; and the cost of the interest on all of the money which we have borrowed, which is all the money paying interest on the debt.

Q: What are some of the big-ticket items that particularly surprised, shocked or enraged you?

A: Well, I'd say that pretty much every week we were working on this book we had one of those kinds of moments where there would be something unbelievable. Some of the things that stunned us, in no particular order, were the fact that we now pay enlistment bonuses of $25,000 to $40,000 for new recruits and up to $150,000 for re-enlistment bonuses. We found that if you were injured during your enlistment period, you were asked to repay your enlistment bonus on a prorated basis. So somebody who comes back without a leg is then asked to repay their bonus.

Another thing that stunned us was the fact that KBR, which is the largest contractor in Iraq, has been evading hundreds of millions of dollars a year in payroll taxes -- Social Security and Medicare taxes -- by employing its contractors through shell companies in the Cayman Islands.

But overall, the thing that really struck me was simply the scale of the war. There have already been 1.7 million service men and women deployed, which I think is not really understood, because people tend to think about the 140,000 who are serving at this point in time. And the scale of the injuries and the survival rates are much higher now than in previous wars. The number of people who have actually been treated already in VA hospitals and clinics is already 300,000. The number of wounded, if you include the battlefield and the non-battlefield, is over 70,000 people who have been evacuated from the theater for medical problems.

So simply understanding just how much larger the scale is than we had realized was I think the thing that surprised me the most -- and the fact that the government has really tried very hard to conceal this scale of injuries by suppressing the availability of the information about how many injuries there are and by making it very difficult to get hold of the information to basically understand all of this.

Q: What recommendations do you make in your book?

A: Many of the recommendations are about improving the government accounting system. Some of the reason why it is so difficult to understand the war is because of the way the government keeps its books. But -- and there's a very big but -- in every area there have been particular shortcomings in the way the budgeting has been done. On the veterans side, even in 2005 and 2006 you had the budgeting for the VA being done on the basis of projections made in 2001, before the war even started. You really had an unsurprising outcome that for three years in a row the VA completely ran out of money.

Now in the Pentagon you have the fact that this is an utterly dysfunctional financial system which has flunked its financial audit every year for the last 10 years; where no one has any idea where money is going and where the fact that you have tens of billions of dollars of which -- in Pentagon-speak -- they've "lost visibility," is a direct result of the fact that they are incapable of tracking and imposing financial discipline.

The government in the CFO Act of 1990 required all government agencies to have clean financial accounts. Everybody else in the government, with a huge amount of effort, has managed to do this. It's not just me, but the Controller General and the Inspector General for the Pentagon and the auditors -- every year a chorus of all of us complain about the fact that it is not possible to execute the Pentagon budget, and that's one of the reasons it is so difficult to track where the money is being spent.

Q: Can you describe what your politics are and whether you were for or against the war in Iraq?

A: I was against the war in Iraq, and Joe Stiglitz, my co-author, was against the war in Iraq at the outset, which we state clearly in the book. But I am also a professor of public finance. I teach budgeting and budget-accountability. I worked in the department of Commerce. I worked for many years around these issues. I really do believe this is a good-government issue. I really, really believe there should be accountability for where our tax dollars are spent and that it has been highly irresponsible -- not only the war in and of itself but the way that the war has been financed; the way that funding for the war has been concealed; the way that the money has not been available in a timely fashion to take care of the veterans' needs and so forth. I honestly feel this is a good-government issue.

Q: Beyond the staggering human and financial cost of the war, what did you learn from doing your book that you did not already know about war?

A: What we really learned is that there is no such thing as a free war. Contrary to the conventional wisdom, wars are not good for the economy. And this war in particular has had a seriously weakening effect on the economy.



Bill Steigerwald is a columnist at the Pittsburgh Tribune-Review.
E-mail Bill at
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