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August 22, 2010

Iraq: The War That Broke Us -- Not

By Randall Hoven
The Iraq War ends this month. The last combat brigade left August 19. Operation Iraqi Freedom, which began in 2003, will end August 31. September 1 marks the beginning of Operation New Dawn. Now that it's over, what did the Iraq War cost?
Here are examples of what some people had been saying about Iraq War costs.
"It was under Mr Bush that the deficit spiralled out of control as we fought an unnecessary and endless $3,000bn war in Iraq..."
 - James Carville, the Financial Times.

"The Iraq adventure has seriously weakened the U.S. economy, whose woes now go far beyond loose mortgage lending. You can't spend $3 trillion -- yes, $3 trillion -- on a failed war abroad and not feel the pain at home."
 - Linda J. Bilmes and Joseph E. Stiglitz, The Washington Post.

"First, the facts. Nearly the entire deficit for this year and those projected into the near and medium terms are the result of three things: the ongoing wars in Afghanistan and Iraq, the Bush tax cuts and the recession. The solution to our fiscal situation is: end the wars..." 
 - Christopher Hayes, The Nation.
The correct answer to my question, according to the Congressional Budget Office, is $709 billion. The Iraq War cost $709 billion. Why Carville, Bilmes, and Nobel-winning economist Stiglitz thought the answer was $3 trillion is anybody's guess. But what's a 323% error among friends?
The CBO breaks that cost down over the eight calendar years of 2003-2010. Below is a picture of federal deficits over those years with and without Iraq War spending.



Sources: CBO and U.S. Statistical Abstract (see below).

Just for grins, use the above chart to dissect Christopher Hayes' statement that our current and future deficits are caused by "three things: the ongoing wars in Afghanistan and Iraq, the Bush tax cuts and the recession."

Two of those three things -- the wars and tax cuts -- were in effect from 2003 through 2007. Do you see alarming deficits or trends from 2003 through 2007 in the above chart? No. In fact, the trend through 2007 is shrinking deficits. What you see is a significant upward tick in 2008, and then an explosion in 2009. Now, what might have happened between 2007 and 2008, and then 2009?

Democrats taking over both houses of Congress, and then the presidency, was what happened. Republicans wrote the budgets for the fiscal years through 2007. Congressional Democrats wrote the budgets for FY 2008 and on. When the Democrats also took over the White House, they immediately passed an $814-billion "stimulus." (The $814 billion figure is from the same CBO report as the Iraq War costs. See sources at end of article.)

The sum of all the deficits from 2003 through 2010 is $4.73 trillion. Subtract the entire Iraq War cost and you still have a sum of $4.02 trillion.

No one will say that $709 billion is not a lot of money. But first, that was spread over eight years. Secondly, let's put that in some perspective. Below are some figures for those eight years, 2003 through 2010.

  • Total federal outlays: $22,296 billion.
  • Cumulative deficit: $4,731 billion.
  • Medicare spending: $2,932 billion.
  • Iraq War spending: $709 billion.
  • The Obama stimulus: $572 billion.

There is an important note to go along with that Obama stimulus number: the stimulus did not even start until 2009. By 2019, the CBO estimates the stimulus will have cost $814 billion.

If we look only at the Iraq War years in which Bush was President (2003-2008), spending on the war was $554B. Federal spending on education over that same time period was $574B.

So the following are facts, based on the government's own figures.

  • Obama's stimulus, passed in his first month in office, will cost more than the entire Iraq War -- more than $100 billion (15%) more.
  • Just the first two years of Obama's stimulus cost more than the entire cost of the Iraq War under President Bush, or six years of that war.
  • Iraq War spending accounted for just 3.2% of all federal spending while it lasted.
  • Iraq War spending was not even one quarter of what we spent on Medicare in the same time frame.
  • Iraq War spending was not even 15% of the total deficit spending in that time frame. The cumulative deficit, 2003-2010, would have been four-point-something trillion dollars with or without the Iraq War.
  • The Iraq War accounts for less than 8% of the federal debt held by the public at the end of 2010 ($9.031 trillion).
  • During Bush's Iraq years, 2003-2008, the federal government spent more on education that it did on the Iraq War. (State and local governments spent about ten times more.)
I've written elsewhere that the Iraq War was totally justified and even executed reasonably well. But even if you believe otherwise, there is no reasonable case that can be made to say it caused grave economic woes then or now.

Not only do the critics of the Iraq War make 300% errors in their numbers, but they also contradict themselves with abandon. When Obama was pushing he stimulus, he said,

Then you get the argument, "well this is not a stimulus bill, this is a spending bill." Whaddya think a stimulus is? (Laughter.) That's the whole point. No, seriously. (Laughter.) That's the point. (Applause.)

So spending $572B in two years stimulates an economy, but spending $554B over six years ruins one?

Aren't these also the same folks who tell us how well JFK and LBJ ran the economy back in the roaring '60s? During the eight years of 1961-69, 46% of all federal spending was on national defense. During President Bush's eight years, defense spending did not even average 20% of federal outlays. Under JFK/LBJ, defense spending was 8%-9% of GDP. Under Bush, it was about 4%.

How did the economy do so well in the 1960s, and so badly in the 2000s, when less than half as much of our resources were devoted to defense in that more recent term?

The questions are rhetorical. Defense spending, and the Iraq War in particular, was not the cause of our economic problems. I don't care if you hear it from James Carville, Ron Paul, or a Nobel Prize-winning economist. It is a lie.

Randall Hoven is the creator of Graph of the Day. He can be contacted at randall.hoven@gmail.com or via his website, randallhoven.com.

[Data sources: All data for 2009 and later are from the CBO's recent budget outlook (pdf here). For an accounting of Iraq war spending, see Box 1-3 of that report. For an accounting of stimulus spending, see Box 1-2 of that report. For summary federal budget numbers in 2009 and later, see Table 1 of that report.

Federal budget figures through 2008 are from the U.S. Statistical Abstract. See Table 457 for overall spending and deficit levels, Table 458 for debt levels, and Tables 459 and 461 for spending in specific categories.]
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