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Waving an American flag along 5th Avenue. (Photo: Reuters/Shannon Stapleton)

Iraq and Afghanistan: The $6 Trillion Bill for America’s Longest War Is Unpaid

Linda Bilmes

On Memorial Day, we pay respects to the fallen from past wars – including the more than one million American soldiers killed in the Civil War, World Wars I and II, Korea and Vietnam.

Yet the nation’s longest and most expensive war is the one that is still going on. In addition to nearly 7,000 troops killed, the 16-year conflict in Iraq and Afghanistan will cost an estimated US$6 trillion due to its prolonged length, rapidly increasing veterans health care and disability costs and interest on war borrowing. On this Memorial Day, we should begin to confront the staggering cost and the challenge of paying for this war.

The enormous figure reflects not just the cost of fighting – like guns, trucks and fuel – but also the long-term cost of providing medical care and disability compensation for decades beyond the end of the conflict. Consider the fact that benefits for World War I veterans didn’t peak until 1969. For World War II veterans, the peak came in 1986. Payments for Vietnam-era vets are still climbing.

The high rates of injuries and increased survival rates in Iraq and Afghanistan mean that over half the 2.5 million who served there suffered some degree of disability. Their health care and disability benefits alone will easily cost $1 trillion in coming decades.

But instead of facing up to these huge costs, we have charged them to the national credit card. This means that our children will be forced to pay the bill for the wars started by our generation. Unless we set aside money today, it is likely that young people now fighting in Afghanistan will be shortchanged in the future just when they most need medical care and benefits.

A forgotten war

While most Americans are keen to “support our troops,” we aren’t currently shouldering the financial or the physical burden of our nation’s warfare. Except for a short period between the two world wars, the percentage of the general population now serving in the U.S. armed forces is at its lowest level ever.

What’s more, the war in Afghanistan barely features on our front pages. During the past two years it has not even made it into the top 10 news stories.

There is not much pain in our pocketbooks either. In past wars, taxpayers were forced to cover some of the extra spending. During Vietnam, marginal tax rates for the top 1 percent of earners were hiked to 77 percent. President Harry Truman raised tax rates as high as 92 percent during the Korean War, telling the country that “this is a contribution to our national security that every one of us should stand ready to make.” In fact, taxes were raised during every American conflict since the Revolutionary War, especially for the wealthy.

This time around we have borrowed the money instead. Thanks to the Bush-era tax cuts of 2001 and 2003, nearly all Americans now pay lower taxes than before the invasions of Afghanistan and Iraq. And unlike previous wars, Congress has paid for the post 9/11 conflicts using so-called “emergency” and “overseas contingency operations” spending bills, which bypass Congress’ own budget caps. This has allowed the government to avoid any uncomfortable national discussion on how to balance war spending against other domestic priorities.

A bipartisan effort

We cannot simply undo the trillions of dollars that have already been added to the national debt as a result of these wars, but there is an important step we can take to commemorate those who have given their lives or their health to this 16-year-long quagmire. We owe it to them to ensure that there is sufficient money set aside to pay for the benefits we have promised to them and their families.

The solution is to set up a Veterans Trust Fund. Trust funds are an established mechanism for the federal government to fund long-term commitments. We already have more than 200 of them, including the best-known, Social Security. While trust funds do not force the government to set aside money, the federal government would be required to prepare an accounting of how much money is owed to veterans’ and take steps to provide funding to pay claims as they come due.

This process has already been adopted for the Military Retirement Trust Fund, which pays pensions to career service members who retire after 20 years’ service. Since Congress established the fund in 1984, it has been amortizing the retirement benefits that are already due and transferring an annual amount into the fund to cover them. We need to adopt a similar approach for today’s all-volunteer veterans – who fight multiple, lengthy tours of duty but usually leave the military before 20 years are up.

Four members of Congress, Beto O’Rourke (D-TX), Seth Moulton (D-MA), Don Young (R-AK) and Walter Jones (R-NC), recently introduced a bipartisan Veterans Health Care Trust Fund Act. This proposal would establish a fund for veterans’ benefits, paid for in part by a small income tax surcharge. Those serving in the military and their families would be exempt from paying.

Such a fund cannot solve all the problems of today’s veterans. But on this Memorial Day, let’s not forget to provide for the men and women who have borne the brunt of the nation’s longest and most expensive war.

Linda Bilmes

Linda Bilmes

Linda J. Bilmes of Harvard University is a former Assistant Secretary of Commerce, and co-author (with Joseph Stiglitz) of "The Three Trillion Dollar War: The True Cost of the Iraq Conflict" (2008).

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