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UFPPC (www.ufppc.org) Digging Deeper XLIV: March 31, 2008, 7:00 p.m.

Joseph E. Stiglitz and Linda J. Bilmes, The Three Trillion Dollar War: The True
Cost of the Iraq Conflict (New York & London: W.W. Norton, [March]
2008).

Preface. It is clear the U.S. invasion of troops” deployed to the conflict by 2017,
Iraq was “a terrible mistake” (ix). and a “realistic-moderate” scenario, with
Examining costs increases our a slower decline to 75,000 in 2012 and
understanding of war’s implications (x). 2.1 million troops by 2017 (35-37). The
The Gulf War’s costs go on (xi). U.S. claims rates used take 1991 Gulf War as
accounting methods are bad (xii). a benchmark, which is “extremely
Planning for veterans has been conservative” (37-40). Disability claims
inadequate (xiii-xiv). For the U.S., the estimate 850,000 will file (40-41).
issue is not bankruptcy, but priorities (xv- Equipment (41-43). Restoring the
xvii). This book is based on an earlier military “to its full strength” (43-44).
paper (xvii-xviii). As ardent opponents of Demobilization (44-45). Defense
the war since the start, the authors have spending was 4.2% of GDP in 2008 (3%
been conservative in their estimates, in 2001) and 51% of government
excessively so (xviii-xix). Rejection of discretionary spending (48% in 2000)
the argument that the war had “benefits” (45). The military hides war spending in
(xix-xxi). its “normal” defense budget (45-46).
Recruitment (47-48). Other difficulties in
Acknowledgments. 3 pp. Jumbled calculations (48-50). Privatizing war
listing. means costs appear as workman’s comp
(50-52). Oil and macroeconomic costs
Ch. 1: Is It Really Three Trillion? The (52-53). Interest costs (53-55). No free
Iraq war is a failure (3-5; “a humiliating lunch—we’ll pay one way or another (55-
failure” [169]). Costs have been 56). Tables of costs (57-59).
chronically underestimated (5-7). A
variety of factors has raised the cost of Ch. 3: The True Cost of Caring for
the war by 130% since 2003 (10-16). Our Veterans. Historically high 7 to 1
Many costs are hidden through ratio of wounded to dead in Iraq and
undervaluation (17-18). The DoD’s faulty Afghanistan (15 to 1 if non-combat
“cash” rather than “accrual” accounting injuries are included) (61). Disease (62).
methods disguise the true costs (18-21). Government obfuscation of statistics (62-
Budgetary oversight has been subverted 65). Injuries, focusing on traumatic brain
(21-24). Explanation of steps in injury (TBI) (65-67). Returning troops
estimating costs (24-31). Even “a ‘best- find themselves in a “limbo” between the
case’ scenario in which the United States DoD and the VA (67-71). The scandal of
would withdraw all its combat troops by disability compensation inefficiencies
2012” yields a cost of over $2 trillion (71-76), showing the urgent need to
(31). $3 trillion “represents the cost only anticipate costs (76-78). Staffing
to the United States” (31, emphasis in problem at the Veterans Benefits
original). Administration (VBA) (78-81). VA system
overstretched (81-82). PTSD “highly
Ch. 2: The Costs to the Nation’s prevalent” (82-84). The Bush
Budget. So far, $645 billion has been administration is underfunding the VA
spent (34-35). Two scenarios: “best (84-88). Estimates here are “very
case,” with decline to 55,000 non-combat conservative” (88). There is a need to
by 2012 and a total of 18 million “unique recognize veterans’ benefits as “an
additional major entitlement program” Ch. 7: Exiting Iraq. The prospect of
(89, emphasis in original). withdrawal, given failure (164-67). The
U.S. is building bases and a huge
Ch. 4: Costs of War That the embassy, preparing for a “long-term
Government Doesn’t Pay. Nature of presence” (167-68). Costs must be
social and economic costs (91-93). DoD considered in deciding the U.S.’s future
values lives lost at $500,000, instead of a role (168-70). That we can’t leave until
more accurate $7.2 million in VSL (“value the “mission is accomplished” is a
of statistical life,” which peaks at 29) (93- delusion (170-73). It is a mistake to think
96). The difficulty of estimating the cost we can define some modest, realizable
of injuries (96-98). Iraq erases the goal (173-75). Bush has extended the
traditional combat/support distinction re: U.S. commitment when he should have
injuries (98-99). The cost of mental cut losses (175-76). Unless there is
health injuries (99-101). In Oct. 2007 the some marked change before Nov. 2008,
Veterans Benefits Disability Commission “there should be a rapid withdrawal”
report found a high disparity between (176). There is good reason to think our
lost compensation and benefits (100). presence in Iraq is making things worse
Quality of life impairment (i.e. pain) goes (177-84).
uncompensated (101-02). The strain and
costs to families (102-05). The authors Ch. 8: Learning from Our Mistakes:
have been “excessively conservative” in Reforms for the Future. The U.N.
estimate of social costs (107-11). Total should provide an international check on
in estimate: $300-400 billion (111-13). U.S. actions (185-87). Recommended
reforms: Wars should not be funded
Ch. 5: The Macroeconomic Effects of through “emergency” supplementals
the Conflicts. [Shortest chapter.] It is (189). War funding should be linked to
a myth that war is good for the economy strategy reviews (189). Accurate
(114-15). The effect on the price of oil is accounting measures should be
estimated at $5-10 per barrel (116-20). instituted for defense (189-90). The
The macroeconomic effects of secretary of defense and chief financial
government war spending (120-25). The officer should be personally accountable
impact on stock prices and the “legacy of for them (190-92). The administration
household debt” are not calculated in the and the Congressional Budget Office
estimate (125-27). The macroeconomic should provide regular estimates of
costs are estimated at $1.9 billion in the micro- and macroeconomic costs of war
“realistic-moderate” scenario (127-31). (192-93). Mechanisms of freer
information (193). Reliance on private
Ch. 6: Global Consequences. Global contractors should be reviewed by
costs (132). The cost of Iraqi deaths and Congress (193-96). The National Guard
injuries, using this methodology: $8.6 should be limited to one year’s use by
trillion (138; 133-39). The cost to Iraq’s the military (196-97). There should be a
economy (139-44). The cost to the rest presumption that wars are paid for with a
of the world, including the “clash of surtax (197-98). Nine reforms favoring
civilizations” (144-45). The cost to veterans (199-205). Such reforms would
Afghanistan (145-47). The costs to the help avoid another Iraq (205-06).
U.K., about $30.6 billion, budgetarily
(147-56). The effect of higher oil prices APPENDICES
on the world (156-59). Squandering of
the U.S.’s leadership role as a cost (159- President’s Letter to the Speaker of
63). the House of Representatives on the
Emergency Appropriations Act, Oct. economic philosophy emphasizing the
17, 2001 (207-09). important, but sometimes limited, role
the government can play in the
Evolving DoD Web Sites for economy. In 1997 he joined the World
Operation Iraqi Freedom (210-15). Bank as senior vice president for
development policy and chief economist.
On Methodologies. Discussion of His difficult relationship with Treasury
“technical” issues (216-31). Secretary Lawrence Summers led to his
resignation from the World Bank in
List of Commonly Used Acronyms January 2000. He criticized the World
(232-34). Bank and the International Monetary
Fund for being dominated by market
Notes. 61 pp. fundamentalists in his 2002 book,
Globalization and Its Discontents, in
Index. 15 pp. which he said that the Seattle WTO
protests were justified and that the U.S.
[About the Authors. Joseph E. was an obstacle to just reform, and
Stiglitz was born in 1943 in Gary, argued that as a result globalization has
Indiana. After three years at Amherst, he made many worse off, giving rise to a
completed his undergraduate degree at backlash which would be “a tragedy for
M.I.T. (his degree was awarded at all of us, and especially for the billions
Amherst). He did graduate work at the who might otherwise have benefited” if it
Univ. of Chicago, then completed his prevails. In 2006 he published Making
Ph.D. at M.I.T. in 1966-1967 while Globalization Work. He has been married
simultaneously holding an assistant three times; his third wife is Anya
professorship. He was a Fulbright Schiffrin of the School of International
research fellow at the University of and Public Affairs at Columbia University.
Cambridge, then held academic positions Linda J. Bilmes is widely considered a
at Yale, Duke, Stanford, Oxford leading expert in U.S. government
University, and Princeton. He is currently finance and budgeting. She holds a B.A.
at Columbia, with appointments in the and M.B.A. from Harvard, has published
Business School, the Dept. of Economics, widely in the mainstream press, and
and the School of International and Public teaches budgeting, applied budgeting,
Affairs. Stiglitz is generally considered a and public finance at the Kennedy School
New-Keynesian, recognizing market of Government at Harvard. She has also
imperfections and debunking the notion served as assistant secretary and chief
of an “invisible hand” guiding markets to financial officer of the U.S. Dept. of
efficient outcomes. His 2001 Nobel Prize Commerce, deputy assistant secretary of
in Economics was awarded for research commerce for administration, and on a
on screening (a technique used by one number of U.S. commissions. For eight
economic agent to extract private years she worked for The Boston
information from another). Stiglitz joined Consulting Group, advising Eastern
the Clinton administration in 1992 as a European nations and Russia on
member, then chair, of the Council of industrial strategy and the transition to
Economic Advisers. He served on the market based democracy, according to
Intergovernmental Panel on Climate her faculty web site.]
Change and advanced a “third way”