The Iraq war will likely cost the US between US$1 trillion and US$2 trillion, despite earlier assurances by the White House that these expenses would be manageable, according to a new study co-authored by a Nobel Prize-winning economist.
The research made public on Monday by Joseph Stiglitz of Columbia University, former chief economist at the World Bank, and economy professor Linda Bilmes of Harvard University, argues current official assessments of the war cost fail to consider key expenses likely to dog the US budget for years to come.
They include rising medical expenses to treat more than 16,000 wounded soldiers, accelerated depreciation of military hardware on the battlefield and the ripple effect on higher oil prices on the US economy, which in part can be blamed on the military venture.
"Even taking a conservative approach, we have been surprised at how large they are," Stiglitz and Bilmes wrote of the costs of the war. "We can state, with some degree of confidence, that they exceed a trillion dollars."
Lawrence Lindsey, a former chief White House economist, suggested in the run-up to the war that its costs could probably reach $US 200 billion. However, the number was immediately dismissed by other administration officials as a gross overestimation.
Throughout the study, the authors provide "conservative" and "moderate" estimates of expenses incurred by US society since the start of the war in March 2003.
According to a "conservative" assessment, the war will cost Americans at least US$1.026 trillion. Under a "moderate" assessment, the expenses will top US$1.854 trillion.
The US has already spent US$251 billion in cash on combat operations in Iraq since the invasion was launched, and continues to fund operations there at about US$ 6 billion a month, according to congressional officials.
However, argue the economists, these figures fail to take into consideration disability payments to veterans over the course of their lifetime, the cost of replacing military equipment and munitions.
In addition, the cost of recruiting new soldiers has gone up dramatically, with the Pentagon paying recruitment bonuses of up to US$40,000 for new enlistees and special bonuses and other benefits of up to US$150,000 for current troops that re-enlist.