The Iraq War and the US Economy

The Economy before the War

Prior to March 2003, the US economy was slowly recovering from the first deficit in the new century. In the fourth quarter of 2002, the economy was growing slowly. In previous quarters economic growth had been measured at 4%. The winter of 2002 saw increases of only 1.4%.

Experts during that time estimated that a war in Iraq would cost 79.9 billion. This figure was based on the previous 1991 conflict, and adjusted for inflation. During that previous war, Saudi Arabia, Kuwait and Japan split the total costs, which wouldn’t be the case in a new conflict. Since there was no federal surplus at the time, this money would have to come from adjusting domestic expenses.

The costs of War in Iraq

After the War was started, there were no immediate beneficial impacts felt on the US economy. Many expected oil prices, which had been steadily rising for the past year, would sink immediately after the initial attack. This plunge was expected to help boost the economy and get it out of the downward trend. However, this plunge never happened. Oil prices remained the same, and continue to increase.

Experts estimate that in 2007 dollars the Korean War cost $430 billion. The Vietnam War cost $600 billion. Current estimates show the cost of war in Iraq could exceed $1 trillion, with at least $200 million added to the tab each day.

Future Impacts on the US economy

Although the importance of the presence of US troops in Iraq is debatable, the economic impacts are not. Even staunch supporters of the war are beginning to question whether or not the costs are exceeding the benefits. There’s no arguing that the war has become an economic drain on the U.S. economy. Economists are not sure whether the economy will recover as quickly as expected, even if the war is ended within the White House’s given time frame.

Future costs of the war will include long term, although minimal, military presence in Iraq. As the country transforms from a military dictatorship to a democracy, peace keeping troops will be present to help. There are also the long-term costs of replenishing the military equipment and taking care of the so far 20,000 wounded U.S. soldiers.

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