This paper’s estimate of current and future costs of war greatly exceeds pre-‐‑war and early estimates. Indeed, optimistic assumptions and a tendency to underestimate and undercount war costs have, from the beginning, been characteristic of the estimates of the budgetary costs and the fiscal consequences of these wars.
Nowhere is this clearer than estimates of the budgetary costs of the Iraq war. In mid-‐‑ September 2002 Lawrence Lindsey, then President Bush's chief economic adviser, estimated that the "upper bound" costs of war against Iraq would be $100 to $200 billion. Overall, Lindsey suggested however that, "The successful prosecution of the war would be good for the economy."81 On 31 December 2002, Mitch Daniels, then the director of the Office of Management and Budget estimated that the costs of war with Iraq would be $50 to 60 billion.82 Daniels suggested that Lindsay's estimates were much too high, although neither official provided details for the basis of their estimates. There were other pre-‐‑war estimates for the costs of war in Iraq. For instance, in September 2002, US House of Representatives Budget Committee Democratic staff estimated costs of $48 to 60 billion, assuming 30 to 60 days of combat and a 2½ month occupation.83 The headline in The Wall Street Journal covering the Congressional estimate read, "Lindsey Overestimated Costs of Iraq War, Democrats Say."84 Later in 2002, Yale economist William Nordhaus suggested a nearly $2 trillion cost for the Iraq war if the war were to be protracted and difficult. He argued while the main component of costs could be higher oil prices ($778 billion), a long war could cost $140 billion in direct military spending and another $615 billion to pay for occupation, peacekeeping, reconstruction and nation-‐‑building, and humanitarian assistance.85 To this, Nordhaus added an estimated $391 billion in negative macroeconomic consequences. The most comprehensive estimate of the long-‐‑term budgetary costs of both wars — including direct and indirect
spending and other economic effects — is The Three Trillion Dollar War by Joseph E. Stiglitz and Linda J. Bilmes.86 The Stiglitz-‐‑Bilmes estimate was conservative in many respects. Not including the increased burden to our national debt, the costs of war have exceeded even their cautious estimates