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Home Publications Blogs Beat the Press Robert Samuelson Underestimates the Cost of War

Robert Samuelson Underestimates the Cost of War

Thursday, 05 September 2013 07:55

Robert Samuelson used his column today to dismiss the idea that the nation could be "war weary." He correctly notes that a relatively small segment of the population has either served in recent wars or has close relatives who served. However his discussion of the costs is misleading.

He tells readers:

"From 2001 to 2012, federal spending totaled $33.3 trillion; the wars were 4 percent of that. Over the same period, the American economy produced $163 trillion of goods and services. War spending equaled nine-tenths of 1 percent of that.

"As important, no special tax was ever imposed to pay war costs. They were simply added to budget deficits, so that few, if any, Americans suffered a loss of income. It’s doubtful that much other government spending was crowded out by the wars."

It is difficult to get a precise estimate of the cost of the wars over this period, but one simple approach would be to look at the path of defense spending. This had been 3.0 percent of GDP in 2000 and was trending downward. After 2001 it averaged more than 4.5 percent of GDP. This difference over 12 years comes to 18 percentage points of GDP or roughly $2.9 trillion in today's economy. This calculation ignores the timing of the expenditures, but it should be sufficient for a ballpark number. It also excludes increased spending on veterans benefits that resulted from the wars.

As a practical matter, since the economy was well below full employment for most of this period, the wars would not have imposed much of an economic burden. They would have had roughly the same economic effect as paying people to dig holes and fill them up again.

However, we live in a country with deficit and debt fixations that are pushed by people like Robert Samuelson and his newspaper. These people have been yelling frantically about the need to contain spending and get deficits down. For a long time they warned about a boogeyman who would destroy the economy if the debt to GDP ratio exceeded 90 percent.

In this context the debt that we ran up as a result of the wars has been a very large burden. This debt has been a big weapon used by those who don't want the government to take steps to stimulate the economy and put people back to work.

In short, if we were having a serious discussion about economic potentials, then Samuelson would be right that the wars have not posed much of a burden. However in the political world where we actually live, the wars have been a big factor impeding our ability to boost the economy and create jobs.

Comments (11)Add Comment
written by skeptonomist, September 05, 2013 9:16
The subject of military spending brings out hypocrisy on both sides. If spending $3T on digging holes would be good for the economy, then so would spending $3T on blowing things up (although it might actually be better for the economy to blow up excess housing inventory than things in the Middle East). Most of the time since 2001 the economy has been at less than full employment, so as Dean says presumably the excess military spending has been mostly good. If this expenditure had not been made there might be political room to spend the same amount on digging holes, but why would that be better from a strictly short-term economic point of view?

It would be better to spend the money on aid to local governments, infrastructure or developing alternate energy since these things presumably have a long-term payoff - this is where crowding out comes in - but the short-term stimulus is basically the same. Of course starting wars for economic reasons is not considered ethical even if it might be Keynesian. Also when the economy is at full employment, as during most of the Vietnam war or around 2006-7, excess government spending may be bad (inflationary) whatever it is spent on.
Well, getting involved in this will result in a lot of holes being dug., Low-rated comment [Show]
"excludes increased spending on veterans benefits that resulted from the wars"
written by Jennifer, September 05, 2013 9:36
"Direct costs for hospital care,extended care,and other medical care and services,coupled with indirect costs such as lost productivity were estimated at $60 billion annually in 2000 (CDC 2007) from http://www.publichealth.va.gov...ry-vhi.pdf

As percentages of the federal budget these numbers are small of course. But the human costs are very real, and will only grow with time as these ex-soldier's needs will grow. They are not going anywhere, in real, measureable ways anybody who is reading this be paying for the previous wars for the rest of our lives.

More importantly, these costs come from the very parts of the budget that are underfunded, social service programs (SNAP and the like) to help the victims themselves but also their families who now have to take care of them and cope without their income. This is as opposed to the defense programs which always get what they need.
environmental cost
written by Dave, September 05, 2013 10:32
An externality not figured into defense spending is the cost of environmental cleanup of polluting weapons systems. That, perversely, would add to GDP, but underestimates the cost of war.
Percentages, at last
written by Dennis, September 05, 2013 10:48
Also, note how Samuelson FINALLY starts using percentages (as you have often asked) when he's trying to minimize war costs, but never when he's talking about the big entitlement numbers.
Spacy Samuelson Covers All the Bases for War and Therefore Covers None of Them
written by Last Mover, September 05, 2013 10:48
The pain, suffering, sorrow and anguish of these and other losses are borne by a tiny sliver of Americans: those who joined the volunteer military, plus their families and close friends. There was no draft. There was no shared sacrifice, as there was in World War II, Korea and (to a lesser extent) even Vietnam. Those who have made the sacrifices have a right to feel “weary.” For the rest of us, it’s a self-indulgence.

Has Samuelson evolved into a wishy washy stupid liberal or what? This is anti-war talk invoked against war-weary talk. Since war after 9-11 was self-indulgent for most in America and failed glorified heroism for the rest due to the absence of shared sacrifice, the nation is not really war weary?

And Syria deserves the opportunity of war due to America's global leadership responsibilities? And if we would just put a price tag on it this time instead of funding it with a credit card from an unlimited black budget that never sees the light of day, self indulgent free riding on wars would be replaced by staunch upright austerian spendthrifts who understand the cost of war?

As one so obsessive of zero sum trade-offs and crowding out, please take a deep look inwards Robert Samuelson, for on the issue of war you have indeed crowded yourself out with one incoherent contradiction after another among a myriad of all possible choices thrown into the kitchen sink.

Do take your own advice, won't you? Some choices are tough because they eliminate other choices. Think about that before recommending all of them and none of them at the same time.
written by JDM, September 05, 2013 11:24
As Dennis points out, the most interesting thing here is Samuelson using the sorts of percentages he and others typically don't use on any other issues. This shows that it's a deliberate attempt to mislead.
written by JDM, September 05, 2013 11:33
I should have been clearer: I meant that the many times these percentages are used are shown by this exception to be deliberate attempts to mislead, rather than innocent (yet still foolish) mistakes.
written by JDM, September 05, 2013 11:38
And throw a "not" in front of "used" in that last comment. :)
Shorter Robert Samuelson
written by Jeffrey Stewart, September 05, 2013 1:09
I'm for war and spending on war and Social Security benefit cuts. We can afford any illegal war well, just because, but we can't afford for our seniors to live their golden years in dignity.
Samuelson never mentions the costs to the foreign "beneficiaries"
written by John Wright, September 05, 2013 2:51
Samuelson illustrates the extreme US centric bias that mentions only "sober calculation of national interest" when, if the USA is behaving or has been behaving as a good world's policeman, it should be a "sober calculation of INTERNATIONAL interest."

The costs to the foreign counties of the USA war efforts might be many times the USA costs in terms of infrastructure damage and lives lost.

And foreigner's can't sue the USA for damages.

This suggests there is an large external cost that should be justifiably levied against USA international goodwill as a result of USA's war efforts.

For if the USA is to maintain that its military actions are for the world's greater good, some accounting for the war damage in foreign lands as a result of USA actions is in order.

Samuelson has limited his data set to support his case.

His military cost numbers should be far higher to allow for loss of goodwill on the USA's balance sheet.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.