$29 billion or $1 trillion: What Iran war is costing the US

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On Tuesday, a senior Pentagon budget official told US lawmakers that the war against Iran has resulted in a total of $29 billion so far, which already exceeds the estimated budget of $25 billion that the Pentagon presented to the US Congress earlier.

However, experts suggest that these estimates are just the US War Department’s lowballing of the expenditure, with overall spending potentially going up to $1 trillion.

According to a research paper issued by Harvard Kennedy School last week, war budgeting expert Linda Bilmes states that she is certain that the cost estimates in the war against Iran can reach up to $1 trillion. She noted that around $2 billion is spent a day in short-term, upfront costs, which, according to her, was just “the tip of the iceberg”.

On Tuesday, Jay Hurst, who is performing the duties of Pentagon Comptroller, informed a House Appropriations Committee hearing that the ongoing US military campaign against the Islamic Republic has so far cost nearly $29 billion, revising upward the earlier estimate of $25 billion provided to the US Congress just two weeks ago.

According to CNN, the latest assessment reflects updated operational and equipment-related expenses.

“So, at the time of testimony from the House Armed Services Committee, it was $25 billion, but the joint staff team and the comptroller team are constantly looking at that estimate, and so now we think it is closer to 29. That is because of updated repair and replacement of equipment costs and also just general operational costs to keep people in theatre,” Hurst said.

Hurst later told a Senate Appropriations Subcommittee hearing that the $29 billion estimate still does not include the cost of damages sustained by US military bases in the region.

“We just do not have a good estimate at this time,” Hurst added.

According to CNN, previous internal assessments suggested the real financial cost of the conflict could be significantly higher once the repair of damaged infrastructure and replacement of military assets are fully accounted for. One source cited by CNN estimated the overall cost could eventually rise to between $40 billion and $50 billion.

Bilmes noted that if the long-term military, veterans’ care and defence expansion costs are included, the cost can reach the $1 trillion mark.

According to the research, the initial days of the conflict alone cost the US at least $16 billion, significantly higher than early Pentagon estimates, due to the rapid depletion of expensive missile systems and high operational spending.

“We are spending down munitions at an extraordinarily fast pace,” Bilmes said, adding that the US fired more Patriot missiles in the first four days of the Iran conflict than it had supplied to Ukraine over the past four years.

She said that the nearly $2 billion per day in short-term operational expenses includes missiles, interceptor systems, deployment of aircraft carrier strike groups, combat pay, maintenance and replacement of damaged military assets. She highlighted that the actual replacement costs are significantly higher than the values reflected in Pentagon inventory estimates.

“For example, the Tomahawk missiles being used are valued at around $2 million each in inventory, but replacing them today costs $3 to $3.5 million. Patriot missiles in the inventory were valued at $1 to $2 million, but newer versions cost $4 to $5 million each. The same is true for fuel and other supplies, where we are drawing down inventory purchased at lower prices and replacing it at much higher current prices,” she stated.

Bilmes further pointed to extensive medium-term costs, including repairs to damaged US military bases in the region and large-scale defence manufacturing contracts with companies such as Lockheed Martin and Boeing to ramp up missile and interceptor production.

The expert noted that the long-term financial burden could be even greater due to veterans’ healthcare and disability obligations under the PACT Act, especially with thousands of American troops deployed in the region.

“I am certain we will spend one trillion dollars for the Iran war. Perhaps we have already racked up that amount,” Bilmes stated.

She also warned that higher defence spending and rising borrowing costs could add significantly to the US national debt, which currently stands at around $31 trillion.