>> Sonali Kolhatkar: War is expensive both in human
and financial costs, but how much money are we
actually spending.
Welcome to the Henry A. Wallace National Security Forum.
I'm Sonali Kolhatkar.
The financial costs of the US's wars are discussed in numbers
so big, it's hard to wrap your head around them
and it's not just the cost of deployments and weapons,
but the long-lasting costs of veterans' care
that many policymakers don't take into account.
Linda Bilmes is the Daniel Patrick Moynihan Senior Lecturer
in Public Policy at Harvard University and co-author
of "The Three Trillion Dollar War: The True Cost
of the Iraq Conflict."
She now joins me to dive into these numbers.
Welcome to the program, Linda.
>> Linda Bilmes: Thank you very much.
>> Sonali Kolhatkar: Well first,
when politicians tell us how much a war has cost taxpayers,
do they tell us everything?
Are there hidden costs that we don't usually see
in obvious ways?
>> Linda Bilmes: Well, there are a number of ways
of tracking costs and what congress currently votes
on are simply the short-term upfront costs of fighting a war,
so that means the military forces and weapons used
at the moment, but there're very extensive long-term costs,
particularly the cost of caring for veterans.
And veterans' costs actually go on for a very long time.
For example, the peak year for paying
for World War 1 veterans' disability benefits was in 1969
and the peak year for paying
for World War 2 veterans' disability benefits was in 1986
and the peak year for paying for Vietnam disability benefits,
we haven't reached it yet.
>> Sonali Kolhatkar: There's also the cost
of not just physical care, but mental health care, particularly
when we know soldiers are coming home with intense trauma
and incidents of PTSD.
What about the cost of mental health care?
>> Linda Bilmes: During previous wars,
those who have returned have had mental health issues
and we heard about shell shock after World War 1, for example,
but what's different this time is that you have a much,
much larger number of troops
who are returning, who are survivors.
Roughly speaking, of the half of veterans who have come home
and been approved to receive disability benefits to date,
about a third of them have been diagnosed
with mental health conditions.
>> Sonali Kolhatkar: What about the loss of productivity
from disabled veterans returning home both to the US economy
and also to individual families,
where a mean income earner might lose their income
because of disability?
>> Linda Bilmes: There're many costs that are actually born
by individuals or by communities or by families.
So for example, many of those who have fought
in the current Iraq
and Afghanistan Conflicts have been drawn from the Reserves
and from the National Guard and many of these were self employed
or were mid-career individuals who had to leave their jobs,
they came back over the past few years,
when the economy was very bad,
and their jobs were no longer there
or their small businesses went under.
Now in the case of disabled veterans per se,
those who are seriously disabled, in at least a third
of the cases, there was an individual in the family,
a parent or a spouse or someone in the family,
who leaves their employment
or leaves their full-time employment in order
to become a caregiver and all those are costs.
They're real costs.
They're just not costs that the government pays
and so the government doesn't actually calculate them.
>> Sonali Kolhatkar: What about the other aspect of the costs
of war that aren't taken into account,
which is increasing interest payments on the monies
that we borrowed to pay for war?
>> Linda Bilmes: The question
of how we finance a war is a very important question.
In previous wars, as well as during the Cold War,
taxes have been increased and there have been a series
of current use methods of financing,
which have contributed to way we pay for war.
In this case, taxes were actually cut twice, in 2001
and 2003, very significantly at the same time
that we invaded Afghanistan and then Iraq
and taxes have stayed low throughout the wars.
So that means that the entire $2 trillion or so
that has already been spent has been borrowed,
which means that we have to repay that money with interest
and this is unprecedented in the history of the United States.
The only time that we have actually borrowed
for the entire financing costs
of the war was during the Revolutionary War,
when the colonies borrowed from France.
>> Sonali Kolhatkar: Now aren't we just passing on the costs
of our current wars to the future generation?
>> Linda Bilmes: Those of us who have not fought
in the wars have not only not fought
but we also have not paid for these wars.
So I haven't paid a penny of my taxes for these wars and no one
who is currently a taxpayer has actually contributed
to the wars.
We have actually transferred the full costs of these wars,
in terms of what has already been paid as well
as what is owed in the future, to the next generation.
>> Sonali Kolhatkar: So what is the difference between the costs
that we are told say the Iraq War might have costs us
versus the real costs, when you do take
into account all of these numbers?
>> Linda Bilmes: Well, if you look at the top-line costs
of actually fighting the wars up until now, it's somewhere
between $1-1/2 and $2 trillion in the way
that the government counts it.
But if you include the long-term veterans costs
and economic costs and the structural increases
in the defense department as a result of the wars,
it's somewhere between $4 and $6 trillion.
>> Sonali Kolhatkar: Are there secondary impacts
to the US's economy from waging the war
that we are also not accounting for?
>> Linda Bilmes: Well, there are several major long-term
consequences, economic consequences, of being engaged
in a war and in this case, one of the consequences
of the invasion of Iraq in 2003 was
that at the time oil prices had been stable
at about $25 a barrel for more than 20 years and the invasion
of Iraq was one of a number of factors that contributed
to a very, very rapid rise within three years
of the oil price, which peaked four years later
at $140 a barrel, and that incredibly rapid rise
in the price of oil was one of the factors that contributed
to the Federal Reserve increasing liquidity
in the economy, which, of course, was one of the factors
that contributed to the housing crisis.
It's difficult to say that they're causal
because there are many factors that are involved, for example,
in the price of a barrel of oil.
It's a combination of supply and demand.
There are short-term and long-term issues,
but there is no doubt that at the time that we invaded Iraq,
one of the contributing factors to the very rapid price
in oil was the US invasion.
And I think that the general transfer of a huge amount
of resource into a war economy, of course, is less productive
than taking $2 trillion and investing it in those things
that have a greater multiplier for the United States
for example, infrastructure and education.
>> Sonali Kolhatkar: Now let's talk
about the military's budget.
When the Pentagon requests funding, we get the sense
that they never feel like there's enough funding,
that the Pentagon always needs more funding and
yet in those funding requests, we don't account
for the hidden costs that we've just been discussing.
How can more awareness of these hidden costs be a way to argue
that we shouldn't be diverting so much of our money into wars
and more into those constructive things we were just saying?
>> Linda Bilmes: War spending is extra
to the basic Pentagon budget.
So in addition to the $2 trillion that we spent
on the war so far and in addition to all
of the accrued veterans' costs,
trillions of dollars are still payable,
we also have a trillion dollars in the base budget
of the defense department.
It is very, very difficult to actually look
at the defense department budget.
It actually has flunked its financial audit every year
for the past 20 years and it's the only department
in the US government that routinely flunks its audit.
So you can't really look at it in terms
of the financial structure of where money goes.
It also doesn't do a robust cost accounting,
which means it's very difficult to untangle where all
of the money actually goes,
in terms of the different activities,
because the costs are buried in thousands of line items
in a very, very large and cumbersome budget.
At the same time, the defense department has actually
advocated a number of cuts
that congress has not been willing to grant them.
So you have the combination of a very poor accounting system,
a very poor system of budgeting, enormous amount of complexity,
a lack of cost accounting, and a lack of willingness in congress
to go along with cuts even
where the Pentagon actually has itemized them.
>> Sonali Kolhatkar: Linda Bilmes,
thank you so much for joining us.
>> Linda Bilmes: Thank you.
>> Sonali Kolhatkar: On the next episode
of the Henry A. Wallace National Security Forum,
Noam Chomsky will help us answer the big question:
Why does the United States seem driven to create an empire?
>> Noam Chomsky: Expansion is the path to security.
If you want to be secure, you have to control everything else.
These are the standard views of what are called statesman,
people who are committed to defending
and expanding a powerful interest,
powerful dominant domestic interest and that leads
to the thrust for empire and the justification
of that thrust as defensive.