Borrowing to pay for war
Earlier this month, the U.S. hit another economic low point: the national debt topped out at an astounding $16 trillion. The rising debt isn’t entirely due to the war in Afghanistan. But the war, which has cost over $500 billion to date, is a factor in America’s economic crisis.
In fact, the wars in Iraq and Afghanistan have raised deficits by about 1% of GDP each year since 2001. The Center for Budget and Policy Priorities finds that the deficit-financed wars are one of the main drivers of the projected debt, totaling $20 trillion by 2019 if current policies continue.
The growing debt has serious consequences for the U.S. economy. Congressional Budget Office Director Doug Elmendorf, listed some of these consequences in a recent talk: higher interest payments on the federal debt, a reduction in national saving, and increased chances of a fiscal crisis.
This has an effect on individual Americans too. The Costs of War Project, an initiative by Brown University’s Eisenhower Study Group, estimates that in 2010 the average homebuyer’s mortgage payment was $600 higher due to increased interest rates caused by war borrowing.
Some believe that all of the problems—strategic, economic—with the war in Afghanistan will go away when the U.S. withdraws its combat troops at the end of 2014. This is not true. U.S. taxpayers will continue to pay for the war long after it is officially over. And the problem will get worse if decisionmakers don’t come up with a smarter Afghanistan strategy.
If the U.S. sustains a military presence of 20,000 troops—an idea that some policymakers support—and continues to finance the Afghan security forces, war costs could exceed $25 billion each year.
$25 billion is much lower than the Afghanistan war budget for this year—over $110 billion. But $25 billion still a significant amount by any measure. Certainly it’s too much to spend on a war that many Americans want to end now.
2 Responses to Borrowing to pay for war
Your math doesn’t add up.
You write that the Afghan war has cost 500 billion to date, but you also write that it will cost over $110 billion this year.
We have been at war in Afhanistan for 10 years, which would suggest it has cost well over 1 trillion dollars.
Did the war used to cost a lot less than it costs today or is your math bad?
Thanks, joshua
Thanks for commenting, Joshua. I always appreciate the opportunity to clarify the numbers.
Annual war costs have increased significantly since the beginning of operations in Afghanistan, largely reflecting the increase in troop levels.
In fiscal years 2001 through 2006, funding for the war in Afghanistan did not exceed $20 billion per year. Funding doubled to $40 billion in FY07 and FY08, and increased significantly in each of the following years, peaking at over $120 billion in FY11, and decreasing slightly to about $110 billion in FY12.
For more, see this analysis by the National Priorities Project: http://costofwar.com/about/counters/