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Saturday 20 November 2010

$1.21 Trillion: US Spending on the War on Terror

American banks and car manufacturers have been bailed out and rescued by the American federal government at a cost to the taxpayer running to over $800 billion, an almost unimaginable sum. The Congressional Research Service recently published figures for the American spend on the Global War on Terror since its declaration just after 9-11. The figures are staggering.

Iraq: £751 billion
Afghanistan: $336 billion
Unallocated thus far: $6 billion

The sums above include funds to bribe local militias into joining US forces in fighting insurgents, though the precise sums are unspecified. Most of the spending is incurred by the Department of Defense and represents funding over and above its normal peacetime budget.

With 94% of the budget allocated to DoD, and just 5% to the Department of State/USAID (the Agency for International Development), the answer to the question asked with greater frequency nowadays - "whatever happened to American "soft power"? - is that it just doesn't apply anymore.

Such large-scale spending over time will impact, indeed has impacted, on America's relative power, just as it did during the Vietnam War. In that case, the Japanese, South Korean and Taiwanese economies boomed as war production contracts poured in; in addition those economies began producing consumer durables which the war-oriented US economy could no longer manufacture.

And when it comes to America's problems at home, look no further than California today:

An Economy on Life Support

The depth of the crisis faced by California screams out from the cold hard data. Over one in five Californians are unemployed, underemployed, or have simply given up searching for work. Nearly another one in five lives in poverty. Low-income workers fortunate to have a job have seen their wages decline since 2006 – with middle income worker salaries remaining stagnant. 8.2 million Californians – up from 6.4 million in 2007 – lack health coverage.


Doors will slam shut this year on as many as 35,000 applicants to the California State University system. Both university systems approved 20% tuition and fee hikes since the start of 2009 – and UC Regents has just approved an additional 30% hike this year – ending too many students dreams of a higher education, and burdening too many more with high interest debt.


The news for educators is no better. More than 23,000 teachers recently received “pink slips”, unlikely to return to the classroom next fall.


Over three-quarters of a million California families were ousted from their homes in 2008 and 2009. The Center for Responsible Lending projects another 2 million foreclosures through 2012 – with nearby homes losing an average of over $50,000 in value. 2.4 million California borrowers – 35 percent of all properties with a mortgage – are currently under water (e.g. owe more on their home than it’s currently worth). By 2011, that number will increase to nearly 70 percent of homeowners.


California could use an economic stimulus package. Can America afford to spend over one trillion dollars on war when their own country is screaming for public investment?

1 comment:

  1. Those numbers probably underestimate the actual costs: Jo Stiglitz and Linda Bilmes' $3trillion War factors in such things as ongoing healthcare costs, lost productivity from funds diverted from other economic investments to war costs etc. etc.

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