Seminar calls Iraq conflict America’s first ‘credit card war’

The five-year-old Iraq conflict is America’s first “credit card war.” And like anyone who has run up a huge credit card bill knows, a credit card debt can turn into a crushing burden with long-term consequences. This, too, will be a legacy of the Iraq War.

That was the sobering assessment of an April 2 seminar at Harvard Kennedy School’s Center for Business and Government as presenters — who included an Iraq veteran — attempted to estimate the true cost of the Iraq War both in dollars and in human lives.

“There were two decisions in this war: one, to go into Iraq in the first place,” said Linda J. Bilmes, Kennedy School lecturer in public policy. The second was that “we would fund this war by borrowing — putting the whole thing on the credit card. This is the first war in American history that has been funded this way.”

Contrary to long-standing impressions that “wars are good for the economy,” the Iraq conflict will have multiple negative economic effects both on the micro and macro level, claimed Joseph E. Stiglitz, Columbia University economics professor and Nobel Prize winner. “This war has been a particularly bad war for the economy.” Oil prices have increased, and resources that could have been spent here went elsewhere, Stiglitz said. Moreover, “this war has been totally funded by deficits, and deficits do have consequences.”

Prewar estimates put the cost at $50 billion, but already close to $1 trillion has been spent on the conflicts in Iraq and Afghanistan with no end in sight, Stiglitz said. The real tally is reflected in the title of Stiglitz and Bilmes’ new book, “The Three Trillion Dollar War: The True Cost of the Iraq Conflict” (W.W. Norton, 2008).

Costs, they say, that don’t get national attention include long-term disability and medical care for veterans; the cost of “military reset,” that is, replenishing military equipment; and restoring military personnel to prewar strength, Bilmes said.

Additionally, there has been “almost a deliberate attempt to shift costs outside the military,” Stiglitz asserted, citing the example of body armor bought by families of soldiers. Bilmes noted that only when Secretary of Defense Donald Rumsfeld left office in 2006, did the military start the shift from Humvees to Mwraps, or armored vehicles with V-shaped bottoms that, while more expensive, were more resistant to roadside bombs.

Moreover, panelists contend, returning soldiers have not been given the financial support they should have earned. “One of the things the administration has done is to systematically underfund the Department of Veterans Affairs,” Stiglitz said. As late as 2006, the VA was basing its funding requests on prewar data. “That, of course, meant that many people weren’t getting the treatment that they had been promised.”

Paul Rieckoff, who served as an infantry platoon leader in Iraq from 2003 to 2004, spoke of veterans waiting for or denied services for physical and mental conditions. Already, about 1,000 Iraqi vets are homeless, he said.

“Not everyone coming home is missing a limb, not everyone coming home has post-traumatic stress disorder, but no one comes home unchanged,” he said.

Rieckoff, who founded the group Iraq and Afghanistan Veterans of America, said that while returning vets are personally treated with respect even by those opposing the war, “the country’s mindset was not shifted to understand this high number of folks would be coming home with issues associated with their service.”

“Do we want to repeat the mistakes of Vietnam?”

Rieckoff is pushing for a new G.I. Bill, which, he said, would cost “$4 billion. That’s what we spend in Iraq in a week.” Studies of the G.I. Bill of the post-World War II era showed that “every dollar spent returned $7 to the economy” in increased productivity, Rieckoff said.

Other war costs are difficult to access. There is, for example, the “cost of the lost economic contribution from those who have died in the conflict,” Bilmes said. And while the book concentrated on American costs, the loss of Iraqi lives should be considered, the panelists said. Other factors included the use of private security companies in Iraq, which do not further the overall American goal of winning the “hearts and minds” of the Iraqi people, Stiglitz said.

The war’s true cost should color the national debate over whether — or when — to withdraw from Iraq, particularly if chaos in Iraqi society will inevitably result, Bilmes and Stiglitz said.

During the Q&A period, Michael Brower, a retired political economic government teacher from the Massachusetts Institute of Technololgy and Brandeis, raised additional issues. “The damage to our reputation is enormous — you can’t quantify that,” he said.

James K. Hammitt, director of the Harvard Center for Risk Analysis, asked whether accurate prewar studies of the war’s cost had been made, and what could be learned from them now.

Stiglitz said that a 2002 study by William Nordhaus of Yale University did accurately identify at least some probable cost factors and that his work should have been examined in the long run-up to the Iraq invasion.