With “affordability” the Democrats’ watchword of the moment, I’m surprised more haven’t pointed out that President Donald Trump’s undeclared war on Iran costs more than Americans can afford. By this I don’t mean American soldiers killed (seven thus far), which of course is the greatest concern. Nor do I mean how many other people will be killed (1663 so far, according to The Independent, including 175 at a girls’ school struck by one of our Tomahawks and another 83 children in Lebanon, according to that country’s health ministry).
Rather, I’m thinking about the secondary but nonetheless urgent matter of dollars and cents.
Five days before the war began I pointed out that Trump’s Treasury was, as Kris Kristofferson would say, busted flat in Baton Rouge. Already Trump’s “big, beautiful” reconciliation bill had pissed away $4.5 trillion in tax cuts over 10 years, nearly doubling the budget deficit. The Supreme Court’s cancellation of Trump’s illegal 10 percent tariffs on all foreign products meant Trump might end up tripling the budget deficit over the next decade. Trump is trying to recoup his tariff losses by imposing temporary tariffs under Section 122 of the 1974 Trade Act. But Trump’s own lawyers have argued in court that such an application is illegal, a conclusion with which 24 Democratically-controlled states agreed in a lawsuit filed March 5.
Worries about the budget deficit already had the bond market raising the cost of government borrowing. The outbreak of war pushed the 10-year yield on Treasuries even higher as the price of oil shot past $100 per barrel thanks to the closing of the Strait of Hormuz. This is a president, you may recall, who won in 2024 on the strength of his promise to lower inflation. Instead, we’re getting an oil-driven inflation spike. On top of that, last week the Bureau of Labor Statistics released an unexpectedly poor jobs report showing the loss of 92,000 jobs in February. The simultaneous occurrence of an oil-price spike and a possibly-faltering economy means we may get our first serious bout of stagflation since the 1970s.
Did I mention the stock market has been tanking since the war began? So much for Pam Bondi’s “The Dow is 50,000” deflection. The Dow closed Monday at 47,740.80.
All these economic setbacks argue powerfully that Trump will follow the Venezuela playbook in Iran by cutting military intervention well short of accomplishing regime change. In Venezuela, Trump has nothing to show for January’s invasion except theoretical control over some oil fields that United States energy companies demonstrate no interest in developing (though one ironic consequence of our Iran bombing campaign is that it’s lifted petroleum prices to a level where refining Venezuela’s “dirty” oil might make better economic sense). But if Trump follows the same strategy in Iran, he’ll be able to claim (as he couldn’t in Venezuela) that his bombing campaign weakened a military threat against other nations. And certainly Iran’s offensive capabilities, including its nuclear program, are weakened considerably already, especially against Israel.
On the other hand: Over the past week and a half the Iranian theocracy’s fury at the United States and Israel surely increased one thousandfold. Iran has long been the world’s leader in state-sponsored terrorism—and terror attacks demand relatively little in the way of sophisticated or expensive technology. Meanwhile, the United States Department of Homeland Security, created in response to the 9/11 attacks, has
—as the terror expert Bruce Hoffman recently pointed out—diverted its resources away from fighting terror and toward expelling undocumented immigrants. Will Trump want to take the risk that leaving Ayatollah Khamenei fils in charge will leave Americans vulnerable to a possible terror attack?
Trump’s cynical rejection of former Secretary of State Colin Powell’s famous Pottery Barn rule (“You break it you own it”) may not carry the day. Events could well dictate a longer-term military commitment in Iran not unlike the one President George W. Bush stumbled into in Iraq. Recall that Dubya, like Trump, campaigned in 2000 against nation-building and “overcommitting our military around the world.” Between Dubya’s tax cuts and his military commitments, the younger Bush ended up turning a $128 billion budget surplus bequeathed by President Bill Clinton into a $1.5 trillion budget deficit, a 1204 percent change in the wrong direction.
When the Iraq War began, calculating its monetary cost was considered so very unpatriotic that poor Lawrence Lindsey, director of Dubya’s National Economic Council, got himself cashiered for telling Congress it might be as high as $200 billion. At the time, the Pentagon line was that it would cost $50 billion. The actual cost of the Iraq War was, by 2008, an estimated $3 trillion according to Columbia’s Joseph Stiglitz and Harvard’s Linda Bilmes. When I spoke to Bilmes on Monday, she said she now puts the cost “somewhere probably around $6 trillion.” And that war, Bilmes pointed out, began when interest rates were much lower than they are today. Using a different methodology, Brown University researchers concluded five years ago that the Iraq War cost $8 trillion, a figure Bilmes does not judge unreasonable.
Prior to the Iraq War, presidents and Congress actually tried to pay for their wars by floating war bonds and, yes, raising taxes. The 1991 Persian Gulf War was largely funded by United States allies. Bush the Younger broke this pattern, inspiring the journalist Ronald Brownstein to write in 2003: “Old question: What did you do in the war, Daddy? New answer: I pocketed a large tax cut, honey.”
Trump is following the same reckless model. Even if, as Trump has pledged, he ends the war in “four to five weeks,” Bilmes figures the Iran War will run up a tab of $50 to $75 billion. The carrier groups sent to the region each cost about $9 million per day. There’s three of them, so that’s $27 million per day. The three F-15s we’ve lost so far cost about $350 million. Munitions, according to a March 5 analysis by the Center for Strategic and International Affairs, cost about $775 million per day, and so on. Bilmes told me she wasn’t figuring in the increased likelihood that Trump, who’s asked for a 50 percent increase in the Pentagon budget, will get that request taken more seriously because of the Iran war. Say that, instead of the $500 billion increase Trump wants, Congress agrees to give him a $150 billion hike. Over ten years, Bilmes noted, that will be well over $1 trillion.
If Trump commits ground troops—an option he’s lately giving serious thought to, according to NBC News—then the war’s duration will be much greater. It isn’t hard to imagine a rerun of the Iraq War: Swift victory followed by two decades’ fighting off insurgent attacks. If the Iran War follows that template, expect it to cost (following Bilmes’s Iraq calculation) $3 trillion per decade.
Even the more hopeful scenario of a short-term war is more than the United States can afford. The longer-term scenario is so much more prohibitive that a tax increase will become inevitable. The good news is that by then Trump will be so unpopular that Democrats will easily retake Congress and the White House. The bad news is that Democrats will be so busy cleaning up the GOP’s ungodly mess that there may not be much left over to address the country’s other festering problems.
