Less than the Stimulus

SEPTEMBER 2, 2010 E-MAIL THIS PRINTER FRIENDLY

I ran across the following statement in my twitter feed this morning: “No matter how you slice it, Iraq war cost us less than Obama's stimulus. 31,234,000 are now free.” I thought it was a pretty broad statement to say that a war cost less than a piece of domestic economic policy no matter how you slice it, so I decided to investigate.

I studied the stimulus for several months, writing 16 blog posts and two op-eds on the controversial subject. By comparison, I know very little about the war in Iraq. So the first step was to look at how much these two expensive endeavors cost in nominal terms (ie dollars and cents).

As is often the case, someone else has already done some of the work for me on this one. Fox News already has a story running that our presence in Iraq for the past eight years actually cost less than two years of ARRA spending. The comparison is between the total stimulus spending of $862 billion to the still-nothing-to-sneeze-at total cost of the Iraq war, reported at $709 billion.

Nominally, the war does appear to have cost less than the stimulus act. One must wonder, however, if the stated cost of the Iraq war includes estimates of the costs that will surely arise from leaving 50,000 troops behind to train Iraqi forces until the end of 2011. Or if it is safe to assume that the timeline for full withdrawal will remain unchanged. So perhaps the true costs of both are a bit more similar than we now think.

This, however, is the only way that the two can be properly compared -- and arguably the only way that the stimulus has been more costly than the war in Iraq -- for there is much more to life than nominal costs. The stimulus has had a much smaller impact on our image internationally, has caused the death of far fewer individuals, and has the potential to create significantly less bloodshed in the future. At the same time, it very obviously did not liberate a nation.

I could go on, but I would think it is pretty clear why a debate about which cost more is irrelevant. There is very seldom a good economic reason to go to war -- such a decision must be based on a host of more important criteria. Likewise, the “successful outcome” of each must be judged by a different standard.

There are, however, several similarities. Most of us would agree that both causes were very expensive, that both contributed to our national debt, that the justification for both was hotly contested (as is whether to declare them a success or a failure), and that we will not truly know the outcome of either for some time.

Let's not forget the time-value of money.

From a pure cost comparison, even if the Iraq war expenditures equalled the $862 Billion of the so-called Stimulus, that money has been spent over a 7-year period vis a vis the 2 years of the Stimulus.

Anyone who has bought a car or a home knows that coming up with, for example, $25,000 for a new car in cash (or borrowing it with repayment in 2 years) is vastly different than paying that sum out over 7 years.

As far as trying to make comparisons beyond budgetary concerns, it is an exercise in futility and John's post reflects as much. There is no way to compare, for example, John's speculation that, "The stimulus has had a much smaller impact on our image internationally..." A good argument can be made that the Stimulus has done far greater damage to the extent that it undermines world perception of U.S. fiscal prospects.

It is impossible (and foolish to try) to value the liberation of nations, the value of allies gained (or lost), the value of an idea that spreads and changes the world.

posted by : glen on September 5, 2010 at 10:37 AM

Name *
E-mail *
Response *


* = Required

Less than the Stimulus

Post Your Comment Here

Policy Blog