NPR’s Debbie Elliot speaks with Linda Bilmes, professor at the Harvard Kennedy School and expert of budgeting and public finance, about why the war between the U.S. and Iran has become so expensive.
Transcript
DEBBIE ELLIOTT, HOST:
This week, Pentagon Chief Pete Hegseth updated the cost of war with Iran at a tense congressional hearing. So far, he says, it’s close to $40 billion.
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PETE HEGSETH: This is a regime hell-bent on nuclear ambitions, and…
JOHN KENNEDY: Guys, we need straight answers.
HEGSETH: President Trump’s been willing to go after this.
KENNEDY: We need straight answers.
ELLIOTT: Hegseth is trying to get more money to pay for the continuing hostilities, which have taken the lives of at least 18 U.S. service members and thousands of civilians in Lebanon, Israel and Iran so far. But how accurate are Hegseth’s numbers? And what exactly is driving the cost up? To answer some of these questions, we’ve called up Linda Bilmes. She’s a professor at the Harvard Kennedy School and an expert on budgeting and public finance. Hi there. Welcome to the program.
LINDA BILMES: Thank you very much.
ELLIOTT: So what do you make of that whopping $37 1/2 billion number from Hegseth?
BILMES: Well, when I think about the war costs, there are four categories. There’s the very up-front short-term operations, then the medium-term costs, the long-term costs and the economic costs. And the 37 billion that Secretary Hegseth cited is just the very tippy-tippy-tip of the cusp – iceberg. So Mr. Hegseth is basing this figure primarily on the historical cost of the ammunitions that have been used up. But in fact, the replacement cost is at least 50% higher.
For example, the Patriot interceptors that we have used up cost about 2 to 3 million each when we bought them, but the new ones, the replacements, cost 4 to 6 million. And the old Tomahawk missiles cost 1 million to 2 million, but the replacements cost 3 to 4 million.
ELLIOTT: So that’s kind of like, let’s say, you have to rebuild your house, and you don’t have enough insurance to rebuild it because you’ve insured your house for what you paid 10 years ago to build it, right?
BILMES: Yeah, that’s right. But in this case, it’s even more extreme because of the fact that we also pay a significant surcharge to defense manufacturers because we’re asking them to vastly expedite the new orders because we’ve used up our existing inventory at such a fast clip.
ELLIOTT: So what would you say a more accurate figure might be for the cost of this war?
BILMES: According to my analysis, the very up-front, short-term costs are, to date, about 120 billion. But that doesn’t include another 250 billion for rebuilding the hundreds of U.S. facilities across the Middle East that have been destroyed or damaged. And then there are long-term costs and economic costs, which are the sort of base of the iceberg, and they are much larger.
ELLIOTT: Such as, like, caring for veterans? Is that what you’re talking?
BILMES: I mean, one of the significant costs is caring for veterans, and here again, the administration has lowballed what we can expect in terms of cost. It has mentioned the several hundred troops who have been wounded in action, but it hasn’t mentioned the 15-, 16-, 17,000 troops who have been exposed to contaminants and toxins and will be receiving lifetime disability benefits for breathing difficulties.
It hasn’t mentioned the several hundred troops that have been exposed to fire and inhaled smoke and were treated on the USS Gerald Ford when it had a huge fire. I mean, there are a whole series of costs related to veterans over their lifetimes. And remember that these veterans have an average age of 28.
ELLIOTT: But wouldn’t the Pentagon be taking some of these factors into consideration as it presents its estimates to Congress?
BILMES: I mean, the Pentagon and, I think, countries throughout history tend not to think about the long-term costs. What is really the kicker here? I mean, countries throughout history tend to be optimistic. They think the war will be over faster than it is. They think it’s going to cost less than it is. And what’s very important to understand is that all of this money – the 37 billion that Hegseth is talking about, the 67 billion that has been requested, the 150 billion that was emergency money – all of this is being borrowed. And we also have to pay interest on the debt.
This whole approach of paying for wars entirely through debt is entirely new in U.S. history after 2001. In all previous U.S. wars – the War of 1812, the Civil War, World War I, World War II, the Spanish-American War, the Korean War, the Vietnam War – we raised taxes a lot to pay for wars. But since 2001, we have borrowed all the money. But now what’s different even than during Iraq and Afghanistan is that, as everyone who has borrowed any money knows, we are borrowing at much higher interest rates.
ELLIOTT: So I’m curious what you would say to American people who are in support of the war with Iran, those who might say, of course war is expensive, but it’s worth fighting because we’re trying to make the world a safer place or achieve an important foreign policy goal.
BILMES: Well, President Wilson when we went into World War I, President Roosevelt when we went into World War II, President Truman when we went into the Korean War, President Johnson in Vietnam – all of them went to the public and made speeches about the fact that we should not pass on the cost of the war to our children, that if this war was so important that we should be fighting it now, that we should pay for it now. And they raised taxes up to 92% top marginal rates, I mean, in order to ensure that we really felt the pain and so that the public felt and understood whether they felt it really was worth it.
ELLIOTT: That’s Linda Bilmes. She’s the author of the forthcoming book “The Ghost Budget: Paying For America’s Wars.” Thanks so much for speaking with us.
BILMES: Thank you, Debbie.
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