Watson Institute for International and Public Affairs
Costs of War

Economic Costs

Through Fiscal Year 2020, the United States federal government has spent or obligated $6.4 trillion dollars on the post-9/11 wars in Afghanistan, Pakistan, Iraq, and elsewhere. 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.

Public access to budget information about the post-9/11 is imperfect and incomplete. The scale of spending alone makes it hard to grasp. Public understanding of the budgetary costs of war is further limited by secrecy, faulty accounting, and the deferral of current 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 $6.5 trillion by the 2050s.

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, investment in nonmilitary public infrastructure such as roads and schools has not grown at the same rate as investment in military infrastructure. 

Finally, in addition to federal war costs, the post-9/11 wars have cost billions of dollars of state, municipal, and private funds, including dollars spent on services for returned veterans and their families and local homeland security efforts.

(Page updated as of July 2021)