The financial legacy of Afghanistan and Iraq: How wartime spending decisions will constrain future U.S. national security budgets

Linda J. Bilmes


The Afghan and Iraqi conflicts, taken together, will be the most expensive wars in United States history, totaling somewhere between US$4 to US$6 trillion. This includes long-term medical care and disability compensation for service members, veterans and families, military replenishment, and social and economic costs. The largest portion of that bill is yet to be paid. Since 2001, the U.S. has expanded the quality, quantity, availability, and eligibility of benefits for military personnel and veterans. This has led to unprecedented growth in the Department of Veterans Affairs and the Department of Defense budgets. These benefits will increase further over the next 40 years. Additional funds are committed to replacing large quantities of basic equipment used in the wars and to support ongoing diplomatic presence and military assistance in Afghanistan and Iraq. The large sums borrowed to finance war-related operations will also impose substantial long-term debt servicing costs. As a consequence of these wartime spending choices, the United States will face constraints in funding investments in personnel and diplomacy, research and development, and new military initiatives. The legacy of decisions taken during the Afghan and Iraqi wars will dominate federal budgets for decades to come.

Full Text:



Andersen, J. et al. 2010. “Association Between Posttraumatic Stress Disorder and Primary Care Provider-Diagnosed Disease Among Iraq and Afghanistan Veterans.” Psychosomatic Medicine. Vol. 72, No. 5, pp. 498-504.

Belasco, A. 2009. “The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations since 9/11.” CRS Report RL33110. Washington, D.C.: Congressional Research Service.

Bilmes, L.J. and J.E. Stiglitz. 2011. “The Long-term Costs of Conflict: The Case the Iraq War,” in D.L. Braddon and K. Hartley, eds. The Handbook on the Economics of Conflict. Cheltenham, UK: Elgar.

Bilmes, L.J. and J.E. Stiglitz. 2012..“Estimating the Costs of War: Methodological Issues, with Applications to Iraq and Afghanistan,” in M. Garfinkel and S. Skaperdas, eds. The Oxford Handbook of the Economics of Peace and Conflict. New York: Oxford University Press.

Boscarino, J.A. 2008. “A Prospective Study of PTSD and Early-Age Heart Disease Mortality Among Vietnam Veterans: Implications for Surveillance and Prevention.” Psychosomatic Medicine. Vol. 70, No. 6, pp. 68-676.

Boscarino, J.A., C.W. Forsberg, and J. Goldberg. 2010. “A Twin Study of the Association Between PTSD Symptoms and Rheumatoid Arthritis.” Psychosomatic Medicine. Vol. 72, No. 5, pp. 481-486.

Cohen, B.E., C. Marmar, L. Ren, D. Bertenthal, and K.H. Seal. 2009. “Association of Cardiovascular Risk Factors with Mental Health Diagnoses in Iraq and Afghanistan War Veterans Using VA Health Care.” Journal of the American Medical Association. Vol. 302, No. 5, pp. 489-492.

Edwards, R.D. 2010a. “U.S. War Costs: Two Parts Temporary, One Part Permanent.” NBER Working Paper 16108. Cambridge, MA: National Bureau of Economic Research.

Edwards, R.D. 2010b. “A Review of War Costs in Iraq and Afghanistan.” NBER Working Paper 16163. Cambridge, MA: National Bureau of Economic Research.

Edwards, R.D. 2011. “Post-9/11 War Spending, Debt, and the Macroeconomy.” 22 June 2011. Cost of War Project. Watson Institute. Brown University. Providence, RI: Brown University.

Fischer, H. 2013. “U.S Military Casualty Statistics: Operation New Dawn, Operation Iraqi Freedom, and Operation Enduring Freedom.” Congressional Research Service Report RS22452 (5 February 2013). Washington, D.C.: Congressional Research Service.

Hoge, C.W. et al. 2002. “Mental Disorders Among US Military Personnel in the 1990s: Association with High Levels of Health Care Utilization and Early Military Attrition.” American Journal of Psychiatry. Vol. 159, No. 9, pp. 1576-1583.

Hormats, R.D. 2007. The Price of Liberty: Paying for America’s Wars. New York: Time Books, Henry Holt and Company.

Hose, S.D. 2010. Healthcare Coverage and Disability Evaluation for Reserve Component Personnel: Research for the 11th Quadrennial Review of Military Compensation. Santa Monica, CA: RAND Corporation.

Korb, L.J., A. Rothman, and M. Hoffman. 2012. “Reforming Military Compensation: Addressing Runaway Personnel Costs Is a National Imperative.” 7 May 2012. Washington, D.C.: Center for American Progress.

[NRC] National Research Council. 2010. Returning Home from Iraq and Afghanistan: Preliminary Assessment of Readjustment Needs of Veterans, Service Members, and Their Families. Washington, D.C.: The National Academies Press.

Scott, C. 2012. “Historical Budget Authority for the Department of Veterans Affairs in Constant 2011 Dollars, FY1940-FY2012.” Congressional Research Service Report RS22897 (13 June 2012). Washington, D.C.: Congressional Research Service.

Simon, C.J. and J.T. Warner. 2007. “Managing the All-Volunteer Force in a Time of War”. The Economics of Peace and Security Journal. Vol. 2, No. 1, pp. 20-29.

Stiglitz, J.E. and L.J. Bilmes. 2008. The Three Trillion Dollar War: The True Cost of the Iraq Conflict. New York: W.W. Norton.

[VBA] Veterans Benefit Administration. Office of Performance Analysis and Integrity. 2012. “VA Benefits Activity, Veterans Deployed to the Global War on Terror.” Through September 2012. Washington, D.C.: Veterans Benefit Administration. Office of Performance Analysis and Integrity.

Viscusi, W.K. and J.E. Aldy. 2003. “The Value of Statistical Life: A Critical Review of Market Estimates Throughout the World.” Journal of Risk and Uncertainty. Vol. 27, No. 1, pp. 5-76.

Wheeler, W.T. 2011. “Unaccountable: Pentagon Spending on Post-9/11 Wars. articles/39/attachments/WheelerPentagonSpending.pdf [accessed 7 March 2014].



  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.