“The $37.5 billion is just a very tiny tip of the iceberg of cost.” In late July, Secretary of Defense Pete Hegseth estimated the Iran war had cost $37.5 billion thus far and asked for an additional $67 billion in funding.
Public finance expert and HKS professor Linda Bilmes analyzes the administrations’ claims of the Iran war’s costs—whether that figure is accurate, the long term war cost considerations, and how the expense is actually being passed down to future generations.
Linda Bilmes: So the question is what does a war cost in 2026?
Jules Hurst: Approximately, at this day, we're spending about $25 billion dollars on Operation Epic Fury.
Dick Durbin: Do you have a new estimate about what the war has cost us so far?
Pete Hegseth: As of today's $37.5 billion.
Pete Aguilar: Outside reporting estimates have indicated that the war cost could be $1 billion dollars a day. Do you have any anything to share?
Bilmes: So what Secretary Hegseth is discussing is the upfront value of some of the munitions that have been spent based on historical inventory. So it's a number that we don't even take seriously. Very few people in Congress even take it seriously because first of all what matters is the replacement value. And the replacement value of most of the munitions that have been used up is double or triple the cost of when we acquired them in the inventory.
So for example, Tomahawk missiles acquired at $1 to $2 million dollars now cost $4., $5 million dollars. Patriot missiles, were acquired at $2 or $3 million dollars now cost double that. So I think that the $37.5 [billion], which even Secretary Hegseth pointed out was a sort of estimate of some but not all of the upfront costs, is just a very tiny tip of the iceberg of cost. So everyone knows that the Hegseth number is just a very small piece of it. The most important point, I think, is to understand that wars have this long tail.
So it's not what it's costing today or tomorrow, but it is the long, long tail of cost that is inevitable, but even higher today than it was previously. So, for example, we have 60,000 troops who have been stationed in the theater since at least February 28th. And of those 60,000, we know that there are some 400 or so who have been wounded and are classified as wounded. But there are at least another 15,000, 20,000 who have been exposed to toxics, contaminants, and flying debris and who have inhaled smoke when the USS Gerald Ford caught on fire and all kinds of other things for which they will be entitled to receive lifetime disability benefits and health care and so on.
And so that's a long cost considering the average age of a person deployed is about 28. I mean, we're talking about the next 70 years. And similarly, I mean, there are these long term economic costs and long term financial costs of paying off wars that are financed entirely through debt.
Now when President Truman was going around the country during the Korean War, he was absolutely adamant that we should, as he put it, and he coined the phrase, "pay as we go."
President Truman: I know taxes are high, and I know they're burdensome. If we want to keep the country on a sound financial basis and hold down inflation, we must pay this money as we go.
Bilmes: He made 206 speeches around the country around the fact that it was unfair to pass the cost of the war onto the next generation. We are not paying now. We are passing the costs, apart from the the impact at the gas pump, we're passing all of these costs on to our students. I mean, students' generation is going to pay—you are going to be paying the costs of the war. It's not really the right question to think about, well, what is it costing now? The real question is, since it's all being put on the national credit card, what are we putting on your credit card?