How To Waste $3 Trillion

Not too long ago, Nobel prizewinning economist Joseph Stiglitz calculated that the war in Iraq will have cost as much as $3 trillion before it's over. This story was recently brought to my attention again, and I was struck by just how wasteful the spending in Iraq has been:

I ask what discoveries Stiglitz found the most disturbing. He laughs, somewhat mirthlessly. "There were actually so many things - some of it we suspected, but there were a few things I couldn't believe.

" The fact that a contractor working as a security guard gets about $400,000 a year, for example, as opposed to a soldier, who might get about $40,000. That there is a discrepancy we might have guessed - but not its sheer scale, or the fact that, because it is so hard to get insurance for working in Iraq, the government pays the premiums; or the fact that, if these contractors are injured or killed, the government pays both death and injury benefits on top.

Understandably, this has forced a rise in sign-up bonuses (as has the fact that the army is so desperate for recruits that it is signing up convicted felons). "So we create a competition for ourselves. Nobody in their right mind would have done that. The Bush administration did that ... that I couldn't believe. And that's not included in the cost the government talks about."

Forget the money wasted on sole-source contracts that had no completion requirements. That was pocket change compared to the money that we spent on mercenaries and on the extra bonuses we had to pay our own soldiers to keep them from joining their ranks.

And if you really want to get angry, have a look at these figures:

$16bn
The amount the US spends on the monthly running costs of the wars in Iraq and Afghanistan - on top of regular defence spending

$138
The amount paid by every US household every month towards the current operating costs of the war

$19.3bn
The amount Halliburton has received in single-source contracts for work in Iraq

$25bn
The annual cost to the US of the rising price of oil, itself a consequence of the war

$3 trillion
A conservative estimate of the true cost - to America alone - of Bush's Iraq adventure. The rest of the world, including Britain, will shoulder about the same amount again

$5bn
Cost of 10 days' fighting in Iraq

$1 trillion
The interest America will have paid by 2017 on the money borrowed to finance the war

3%
The average drop in income of 13 African countries - a direct result of the rise in oil prices. This drop has more than offset the recent increase in foreign aid to Africa

***

Stiglitz and economist Linda Bilmes outline the way they came up with the $3 trillion figure here.

(cross posted at appletree)