1. The Cost of Debt-financed War: Public Debt and Rising Interest for Post-9/11 War Spending
- Author:
- Heidi Peltier
- Publication Date:
- 01-2020
- Content Type:
- Working Paper
- Institution:
- Watson Institute for International and Public Affairs at Brown University
- Abstract:
- Throughout the 18 years the U.S. has been engaged in the “Global War on Terror,” mainly in Iraq and Afghanistan, the government has financed this war by borrowing funds rather than through alternative means such as raising taxes or issuing war bonds. Thus, the costs of the post-9/11 wars include not only the expenses incurred for operations, equipment, and personnel, but also the interest costs on this debt. Since 2001 these interest payments have been growing, resulting in more and more taxpayer dollars being wasted on interest payments rather than being channeled to more productive uses. This paper calculates that the debt incurred for $2 trillion in direct war-related spending by the Department of Defense and State Department has already resulted in cumulative interest payments of $925 billion. Even if military interventions ceased immediately, interest payments would continue to rise, and will grow further as the U.S. continues its current military operations. War is expensive — in terms of lives lost, physical damage to people and property, mental trauma to soldiers and war-zone inhabitants, and in terms of money. The expense of war is not restricted to the annual budgetary costs of the war spending itself, but also depends upon the way in which war is financed. When war is financed through debt, the costs are much greater than when it is financed through taxation or other revenues, since interest payments must be made as long as the debt is outstanding. In fact, interest payments can sometimes grow to beyond the level of the debt itself, as will likely be the case with the post-9/11 wars. If war spending ceased immediately, interest payments on the $2 trillion of existing war debt would rise to over $2 trillion by 2030 and to $6.5 trillion by 2050. These interest payments will grow larger as the U.S. continues its post-9/11 military interventions and continues amassing debt to pay for the costs of war.
- Topic:
- Debt, War, Armed Forces, and Military Spending
- Political Geography:
- North America and United States of America