Comparing the Costs of Iraq & ARRA
Recently, H.M. Stuart highlighted an op-ed by one Mark Tapscott, which draws a comparison between the costs associated with the Iraq War (on the one hand), and Obama’s stimulus program (on the other), and alleges that the latter cost more than the former. The Tapscott piece in question cites a Randall Hoven piece on the American Thinker website, which in turn cites for authority a report from the Congressional Budget Office. The report in question appears to be CBO’s August 2010 update to its Budget & Economic Outlook. If my math is right – a proposition admittedly open to question – then it appears Hoven drew his numbers from pp. 13 & 15 of the aforementioned report. I’ve reproduced the relevant tables below:
1. On a strict apples-to-apples comparison, the headline of the Tapscott piece – which implies (to me) that ARRA (the Obama stimulus) has already cost more than Iraq – is incorrect. Per CBO, direct costs of the Iraq war did indeed total $709 bn from 2001-2010. However, ARRA to date cost $180 bn in 2009, and $392 bn in 2010, for a total of $572 bn.
2. Of course, ARRA is slated to continue expending cash for some time, to the tune of $242 bn from 2011-2019, for a total of $814 bn. It is this number that Hoven & Tapscott are concerned with. However, if one is counting future expenditures, ISTM one should also consider similar expenditures for Iraq. Alas, the aforementioned table only goes to 2010; for 2011-2020, p. 25 of the CBO report only estimates the combined costs of Iraq & Afghanistan, w/o providing a breakdown of said projections for the two theaters. Note that it would require annual Iraq expenditures of only $12 bn/yr to make Iraq’s overall budgetary cost (through 2019) higher than that of ARRA.
3. The reason why CBO’s Iraq War expenditures are so much lower than Stiglitz et al is that the latter, in arriving at their $3 trillion figure, also appear to have tacked on indirect costs of the war – e.g., loss of productive capacity on the part of dead or injured military personnel, or macroeconomic problems resulting from effects (e.g., higher oil prices) potentially attributable to the war. See here for a paper presenting an early version of their analysis, estimating a $2 trillion total cost. (FWIW, Tyler Cowen deems the Stigliz & Blimes’ macroeconomic cost estimates “speculative”; I’m inclined to agree.)
4. From where I stand, it’s a bit early to declare the stimulus a success or failure. One problem with such pronouncements is our unfortunate lack of an alternate universe in which we can run controlled experiments. We can guestimate the probable effects of stimulus using economic models. I leave the question of said models’ reliability as an exercise for the reader.
5. To some extent, this isn’t a question of numbers, so much as one’s opinions re. Iraq & the stimulus. If one thinks Iraq justified and the stimulus ineffective, then of course the former was worth the expenditure & the latter a big waste of $. And vice-versa.