Miguel Afonso Caetano"The White House originally signaled that it would need an extra $200 billion to prosecute the Iran war. More recently, the administration made a defense budget request of $1.5 trillion for fiscal 2027, a roughly 40 percent boost over this year. That’s a massive $600 billion increase, or roughly $4,000 per household.
That’s just additional spending for 2027. Defense budgets rarely go down, especially today, with a lobbying army fighting to keep spigots open and Mr. Hegseth more than willing to listen. Put these numbers together, and the bill is staggering but not surprising.
Economists have long known that only a small fraction of the costs of war show up immediately in government spending accounts. What the Pentagon is doing is cash flow accounting — keeping track of the dollars flowing out of the Treasury. The economists Linda Bilmes and Joseph Stiglitz argue that we get very different — and much more realistic — estimates with accrual accounting, when you add the cost of each future obligation as you create it.
They estimated that the Iraq war cost the U.S. around $3 trillion. A huge share of those expenses came after the conflict, including the expense of lifetime medical care and disability benefits for veterans, and the higher recruitment and retention costs that follow a bloody war — all compounded by a rising interest bill.
The Pentagon’s lowball $25 billion estimate gets a lot of attention, but it’s more of a headline than a real number. The best any economist can do right now is get the order of magnitude right, and my math suggests the Iran war will cost hundreds of billions of dollars, and very possibly trillions.
War is hell. And hell comes with a hefty price tag."
