Left Flank

As much as Heather Hurlburt talks about the "right incantations" for making security policy a domestic policy issue in the 2008 election primary season, TAP'ers Dana Goldstein and Ezra Klein just don't get the full catastrophe of the Iraq War. It's got little to do with the horserace, espcially the egregious caricatures Eli Lake uses to ridicule both ends of the partisan spectrum (the "hippies" vs. the "nationalists").

To give Klein credit, he sees within his myopia very clearly:

Foreign policy has receded has a definitional issue in the Democratic primary by virtue of the Democrats largely agreeing that Iraq is going poorly. Within that agreement there exist plenty of shaded prescriptions, from Richardson's "all troops out yesterday" to Clinton's "end the war but keep thousands of troops in Iraq to carry out combat missions," but wonks have proven unable to force those distinctions out into the open, and voters don't seem to exhibit much preference for one approach over the other. So the conversation has moved onto other issues where Edwards and Obama see more hope of drawing distinctions with Hillary.

The day the nominee is chosen, however, that ends. The space between the Democrats and the non-Ron Paul Republicans on foreign policy isn't a pothole -- it's a chasm. And the Democrat is going to do everything he or she can to push Mitt Huckabee into it. It will be defining in the general for the very reason that it's been quieted in the primary: Democrats disagree with Republicans, rather than with each other, on what to say about Iraq.

However, I think all miss how the expenditure on the Iraq War has made the conveniently, outdated division between foreign and domestic policy moot. The bank is busted, and there's not even enough largesse for one good reform.

Our analysis starts with the $500 billion that the Congressional Budget Office openly talks about, which is still ten times higher than what the administration said the war would cost. Its estimate falls so far short because the reported numbers do not even include the full budgetary costs to the government. And the budgetary costs are but a fraction of the costs to the economy as a whole.

For example, the Bush administration has been doing everything it can to hide the huge number of returning veterans who are severely wounded – 16,000 so far, including roughly 20% with serious brain and head injuries. So it is no surprise that its figure of $500 billion ignores the lifetime disability and healthcare costs that the government will have to pay for years to come.

Nor does the administration want to face up to the military's recruiting and retention problems. The result is large re-enlistment bonuses, improved benefits, and higher recruiting costs – up 20% just from 2003 to 2005. Moreover, the war is extremely wearing on equipment, some of which will have to be replaced.

These budgetary costs (exclusive of interest) amount to $652 billion in our conservative estimate and $799 billion in our moderate estimate. Arguably, since the government has not reined in other expenditures or increased taxes, the expenditures have been debt financed, and the interest costs on this debt add another $98 billion (conservative) to $385 billion (moderate) to the budgetary costs.

Of course, the brunt of the costs of injury and death is borne by soldiers and their families. But the military pays disability benefits that are markedly lower than the value of lost earnings. Similarly, payments for those who are killed amount to only $500,000, which is far less than standard estimates of the lifetime economic cost of a death, sometimes referred to as the statistical value of a life ($6.1 to $6.5 million).

But the costs don't stop there. The Bush administration once claimed that the Iraq war would be good for the economy, with one spokesperson even suggesting that it was the best way to ensure low oil prices. As in so many other ways, things have turned out differently: the oil companies are the big winners, while the American and global economies are losers. Being extremely conservative, we estimate the overall effect on the economy if only $5 or $10 of the increase is attributed to the war.

At the same time, money spent on the war could have been spent elsewhere. We estimate that if a proportion of that money had been allocated to domestic investment in roads, schools, and research, the American economy would have been stimulated more in the short run, and its growth would have been enhanced in the long run.

There are a number of other costs, some potentially quite large, although quantifying them is problematic. For instance, Americans pay some $300 billion annually for the «option value» of military preparedness – being able to fight wherever needed. That Americans are willing to pay this suggests that the option value exceeds the costs. But there is little doubt that the option value has been greatly impaired and will likely remain so for several years.

In short, even our «moderate» estimate may significantly underestimate the cost of America's involvement in Iraq. And our estimate does not include any of the costs implied by the enormous loss of life and property in Iraq itself.

I would argue the topic of the cost of security will recur in the following years as many of these costs, like soldiers' healthcare, present themselves and play out domestically. But then also politicians and voters will wonder why budget cuts become the default option because of perennial budgetary deficits, and why the money for the optimal plan is just not there handy.