How Would the United States Pay for Another War? Could We Even Afford It?

Commentary about business and finance.
Oct. 31 2011 8:35 PM

First, We Get a Second Mortgage for the Pentagon …

How would the U.S. pay for another war? Could we even afford it?

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Can the United States afford books and bombs?

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President Obama has accused Iran of trying to assassinate the Saudi Ambassador to the U.S. by blowing up a Washington, D.C., restaurant. The president has launched a criminal investigation, nudged European allies to step up sanctions, and leveled stern words at Iran. It’s pretty clear that a two-bit terrorist plot, shoddy enough in planning and execution that skeptics question whether Iran could have really been behind it, isn’t enough to rouse our coolheaded commander to military action.

Will Oremus Will Oremus

Will Oremus is Slate's senior technology writer.

But what if Iran, or some other country, out of hubris or desperation, did something that really threatened us? What if Obama were forced to consider a new war—not a minimalist, Libya-style intervention, but a leading-from-the-front, boots-on-the-ground invasion? Could the United States afford it? Where exactly would the money come from?

Since at least World War II, the costs of American wars have been measured in lives more than dollars. The Korean War was expensive on a scale almost unimaginable today, accounting for 14 percent of U.S. GDP. Congress eventually cut off funding for the Vietnam War, but that was because it wanted the troops home, not because it was worried about making ends meet. The Iraq and Afghanistan wars have been waged with surprisingly little thought to cost, at least until recently.

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Historically, the United States has funded wars through emergency supplemental spending for the first year or two. Then, as a conflict drags out, its cost gets integrated into the regular budgetary process. The Bush administration broke with that model in the Iraq and Afghanistan conflicts, funding them “off the books” through emergency appropriations acts year after year. Obama has continued that practice, though he has changed the war-budgeting timeline to coincide with the regular budget, drawing greater attention to the tradeoffs involved.

So what are the tradeoffs, exactly? It’s hard to get a satisfying answer, which may be one reason there haven’t been even more complaints about war spending from the media and the American public. The money comes mainly from borrowing, so no dollar spent in Afghanistan can be directly identified as a dollar that was meant to go toward someone’s Medicare. Nor would any of the current budget caps force war spending to be made up from cuts elsewhere. The Budget Control Act limits the “base” defense budget to $684 billion in 2012 and $686 billion in 2013, a slight cut from 2011 levels.* But it explicitly exempts war appropriations from its calculations.

All of which is to say that the question of cost is unlikely to elude anyone the next time the country eyes a military adventure abroad. Voters on the left and right alike now clearly link the country’s budget problems to the wars in Iraq and Afghanistan. (Perhaps more than is warranted: Though we’re spending $700 billion a year on defense and war, the Bush tax cuts and the recession contributed more to the growth of the deficit, according to the Congressional Budget Office.) Most estimates put the country’s spending on Iraq and Afghanistan over the past decade somewhere near $1.3 trillion. That sum sure could have come in handy, given that the supercommittee has deadlocked over the need for $1.2 trillion in cuts.

In his 2010 book, The Frugal Superpower, Johns Hopkins scholar Michael Mandelbaum foretold a future in which the United States’ foreign policy would be constrained by rising health care costs at home. That future may already be at hand.

Economic considerations aren’t driving Obama’s timetable for withdrawal from Iraq and Afghanistan, but experts admit they’re part of the discussion. Cost was also a factor, though not the primary one, in Obama’s Libya strategy. With no ground troops, the country spent only about $2 billion on its operations there, requiring no special appropriations. Had it cost an order of magnitude more, Obama would have had a tough time wringing the money out of Congress. And that was before this summer’s debt stalemate and S&P’s downgrade of the country’s credit rating.

Of course the U.S. will spend whatever is needed to fight an imminent or existential threat to national security. But for the first time in some 70 years, money is likely to play a significant role in our foreign policy decisions. And in marginal cases, it could tip our strategy one way or another, experts admit.

If the United States were to declare war next week, it would be financed much the same way as its two most recent wars, says Todd Harrison, a senior fellow for defense-budget studies at the nonprofit Center for Strategic and Budgetary Assessments. Congress would allocate emergency cash outside the normal budget process. That would mean more borrowing, though probably not enough to run up against the debt ceiling. It would not directly affect the supercommittee’s negotiation, though there’s little doubt it would add to the pressure, both for cuts and for possible revenue increases. It might not even cost the U.S. its triple-A bond rating, though it could mean that the other ratings agencies join S&P in a minor downgrade, depending on the political and economic climate.

In short, the United States is not too broke to make war, though it is too broke to continue to make war without at least seriously considering the financial implications. Ironically, though, we just might be too broke to make peace. The country’s foreign aid budget, at $53 billion, is less than half what it’s spending on war, but American University foreign policy professor Gordon Adams points out that it makes a more appealing target for politicians. In a recent GOP debate, Mitt Romney said the U.S. is spending “more on foreign aid than we ought to be spending,” while Rick Perry suggested defunding the United Nations. “It should be the easiest thing to cut,” Ron Paul chimed in. The American public seems to agree: In a Gallup poll earlier this year, 59 percent of respondents said they’d favor reductions in foreign aid. Just 42 percent would back military cuts.

Correction, Oct. 31, 2011: This article originally misstated the defense budgets for 2012 and 2013 as $684 million and $686 million, respectively, rather than $684 billion and $686 billion. (Return to the corrected sentence.)

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