Watson Institute for International and Public Affairs
Costs of War

Economic Costs

The United States federal government has spent or obligated 4.4 trillion dollars on the wars in Afghanistan, Pakistan, and Iraq. This figure includes: direct Congressional war appropriations; war-related increases to the Pentagon base budget; veterans care and disability; increases in the homeland security budget; interest payments on direct war borrowing; foreign assistance spending; and estimated future obligations for veterans’ care.

This total omits many other expenses, such as the macroeconomic costs to the US economy; the opportunity costs of not investing war dollars in alternative sectors; future interest on war borrowing; and local government and private war costs.

The current wars have been paid for almost entirely by borrowing. This borrowing has raised the US budget deficit, increased the national debt, and had other macroeconomic effects, such as raising consumer interest rates. Unless the US immediately repays the money borrowed for war, there will also be future interest payments. We estimate that interest payments could total over $7 trillion by 2053.

Spending on the wars has involved opportunity costs for the US economy. Although military spending does produce jobs, spending in other areas such as health care could produce more jobs. Additionally, while investment in military infrastructure grew, investment in other, nonmilitary, public infrastructure such as roads and schools did not grow at the same rate. 

Finally, federal war costs exclude billions of dollars of state, municipal, and private war costs across the country – dollars spent on services for returned veterans and their families, in addition to local homeland security efforts.

(Page updated as of April 2015)