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Why Estimates of the Cost of the War in Iraq Have Been Rising

11/25/2007 07:01 pm ET | Updated May 25, 2011

I received an email attributing to Rep. Ron Paul a $3.5 trillion estimate for the cost of the war in Iraq. His source was the Joint Economic Committee Democratic majority, headed by Senator Chuck Schumer (D-NY) and Rep. Carolyn Maloney (D-NY). Here, for my friend and you, is a guide to the sometimes confusing evolution of these cost estimates.

Naturally, advocates of the war wish to lower the fiscal stakes, whereas opponents wish to raise them. But cost estimates follow certain broad rules of logic and convention. Estimates differ along with definitions of scope and because of new information. Here are six reasons cost estimates for the Iraq war have varied and keep rising:
- The cost of invasion is a down payment. The cost of exit continues for years.
- If the war is financed by borrowing, some estimates may add interest costs.
- Costs are borne by the U.S. taxpayer, but also by others. Costs may be added relating to costs borne by individuals, especially military personnel, or by the economy.
- War is cruel and combatants bear the brunt of it. Unexpected new costs can emerge, such as undiagnosed physical damage among returning vets.
- Like life expectancies, cost estimates usually rise as the war continues. When the first estimates were prepared, the war was projected to last ten years at most. Now, five years later, the war is still being projected to last 10 more years, i.e., 15 years altogether.
- Some estimates include the war in Afghanistan or worldwide anti-terrorism costs.

The following time line of estimates is documented more fully here:

Baseline 2002: $50 billion. The Pentagon estimates the cost of a war in Iraq at about $50 billion. Michael O'Hanlon of Brookings agrees with this number as the cost of invasion, but adds that a U.S. occupation could add costs of $5-$20 billion more per year.

September 15, 2002: $200 billion. Lawrence B. Lindsey, Assistant to the President for Economic Policy, estimates the cost of the war would be $100-$200 billion. The Democratic Caucus of the House Budget Committee concurs, using a 10-year end date (2012).

October 29, 2002: $1.6 trillion. Professor William D. Nordhaus estimates the cost of war in Iraq at $120 billion-$1.6 trillion through 2012. On December 31, 2002, the Budget Director reaffirms the cost of the war at $50-$60 billion. On March 20, 2003, the United States invades Iraq. On May 1, President Bush, on the deck of the USS Abraham Lincoln, announces the end of combat operations in Iraq. On June 27, 2003, the Pentagon raises its estimate to $60-$95 billion. In the same month, Nordhaus narrows his estimate to $500-$600 billion over 10 years. On May 19, 2005, the Congressional Budget Office estimates the cost of the war at $600 billion through 2010.

January 8, 2006: $2+ trillion. Professors Linda Bilmes and Joseph Stiglitz say the Iraq war could cost the economy more than $2 trillion through 2010; a month later the data are published as a working paper. The Congressional Research Service estimates the Iraq war costs nearly $2 billion a week and subsequently $12 billion a month. In an article in December 2006, Bilmes and Stiglitz specify $2-$2.267 trillion as the cost of the Iraq war through 2016. On October 24, 2007, the Congressional Budget Office estimates the cost at $1.2-$1.7 trillion through 2017; its report covers both the Iraq and Afghanistan wars and other anti-terrorism activities.

November 13, 2007: $3.5 trillion. The Democratic majority on the Joint Economic Committee announce a new estimate of $1.6-$3.5 trillion. The cost of the Iraq and Afghanistan wars so far (2002-2008) is estimated at $1.6 trillion. Based on projections through 2017, the cost is $3.5 trillion.