The Cost of War

PJ Vogt interviews Harvard Kennedy School economist Linda Bilmes on the financial costs of the ongoing US-Iran war, which began with joint US-Israeli strikes on February 28. Drawing from her research on Iraq and Afghanistan, Bilmes explains how governments obscure war expenses, making them hard for the public and Congress to grasp, and why this invisibility encourages prolonged conflicts.

Obscuring War Costs Through Budgeting

War spending evades standard scrutiny via "emergency appropriations," designed for disasters like hurricanes but used for Iraq over a decade despite 400 US bases and hundreds of thousands of troops. This hides costs from annual budgets, artificially lowers deficit projections, and suggests wars are temporary. Early Iraq estimates were lowballed—Bush officials cited $50 billion max, funded partly by Iraqi oil, while advisor Larry Lindsay's $100-600 billion guess got him fired.

The Pentagon compounds this with chronic accounting failures: it has flunked audits yearly since required, unable to track over 50% of assets despite non-secret spending dominating. Pre-9/11, Rumsfeld highlighted $2.3 trillion in untracked transactions. Bilmes started auditing after students questioned Iraq costs, revealing trillions excluded like long-term veteran care.

Shift from Taxes to Debt Financing