Morning Bell: Costs and Benefits in Iraq

Conn Carroll /

Yesterday the Associated Press reported that the last major remnants of Saddam Hussein’s nuclear program had been dismantled in Iraq. This Saturday marked the end of a top secret two-week airlift of 550 metric tons of yellowcake uranium from Baghdad to a Canadian uranium producer. Also removed earlier this year from the Tuwaitha nuclear complex 12 miles south of Baghdad were four radiation-exposure devices that experts say could be used in a nuclear weapon. The success of this operation and news from both Baghdad and Mosul that al Qaeda is being chased out of Iraq underscore just some of the major accomplishments U.S. forces have achieved.

Unfortunately, far too many analysts completely ignore all the gains our troops have made when they assess U.S. policy. The worst offender is economist Joseph Stiglitz, who claims the decision to remove Saddam from power has cost the U.S. $3 trillion. Leaving aside the fact that even Stiglitz admits his numbers may be off by as much as $2 trillion, few respected economists believe the assumptions underlying his numbers have any relation to reality at all.

Inflated Expenditures

To conjure up his “best case” scenario numbers, Stiglitz uses military cost estimates from the worst pre-surge days of the war. His numbers do not reflect the reality of the significant drop in U.S. causalities since the surge began. Heritage economist Bill Beach notes: “For example, the monthly average casualty rate in 2007 stood at 75, but that rate fell during the last three months of the year to an average of 33. During the early months of 2008, the monthly casualty rate was half that of 2007, at 40 per month. Stiglitz … assumes that the ‘rate of death and injuries per soldier continues unchanged’ over their forecast period.”

Worse, even after Stiglitz inflates the number of casualties, he still wildly overestimates what the U.S. will spend. Congressional Budget Office Deputy Assistant Director for National Security Matthew Goldberg testified that the future medical care costs, disability compensation and survivors’ benefits up to 2017 would likely range from $10 billion to $13 billion. Stiglitz pegs these costs at more than$900 billion.


Another huge slice of Stiglitz’s $3 trillion figure comes from the cost to the U.S. economy from higher oil prices. While the war has caused temporary loss of some oil supply, not only is Iraq making progress getting its fields back on line, but most experts agree that the growing economies of India and China, not the war, are the main cause of high oil prices. Beach notes: “Well before the war, during the period 1997 through 2000, oil prices as measured by the benchmark U.S. index rose three times the long-run rate of growth over the period 1965 through 2008. … Doubtless one day we will know what has caused this latest and very visible surge in petroleum price. One suspect clearly will not be in that line-up — and that’s the war in Iraq.”

The Costs of ‘Staying the Course’

Completely ignored by Stiglitz is the fact that leaving Saddam in power had its own steep costs. University of Chicago professors Steven Davis, Kevin Murphy and Robert Topel estimate that the 28,000 troops, 30 naval vessels, 200 military aircraft required to enforce sanctions and contain Saddam cost about $14.5 billion per year. Combining these costs with the potential of Saddam’s collaboration with international terrorist groups or the regimes eventual descent into chaos, and the professors estimate that the cost of staying the course on containment would end up in the range of $350 billion to $700 billion.

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