Economist Joseph Stiglitz puts Iraq war cost at $3 trillion plus

Writing in these pages in early 2008, we put the total cost to the United States of the Iraq war at $3 trillion. This price tag dwarfed previous estimates, including the Bush administration's 2003 projections of a $50 billion to $60 billion war.

But today, as the United States ends combat in Iraq, it appears that our $3 trillion estimate (which accounted for both government expenses and the war's broader impact on the U.S. economy) was, if anything, too low. For example, the cost of diagnosing, treating and compensating disabled veterans has proved higher than we expected.

Moreover, two years on, it has become clear to us that our estimate did not capture what may have been the conflict's most sobering expenses: those in the category of "might have beens," or what economists call opportunity costs. For instance, many have wondered aloud whether, absent the Iraq invasion, we would still be stuck in Afghanistan. And this is not the only "what if" worth contemplating. We might also ask: If not for the war in Iraq, would oil prices have risen so rapidly? Would the federal debt be so high? Would the economic crisis have been so severe?

The answer to all four of these questions is probably no. The central lesson of economics is that resources -- including both money and attention -- are scarce. What was devoted to one theater, Iraq, was not available elsewhere.

The Iraq invasion diverted our attention from the Afghan war, now entering its 10th year. While "success" in Afghanistan might always have been elusive, we would probably have been able to assert more control over the Taliban, and suffered fewer casualties, if we had not been sidetracked. In 2003 -- the year we invaded Iraq -- the United States cut spending in Afghanistan to $14.7 billion (down from more than $20 billion in 2002), while we poured $53 billion into Iraq. In 2004, 2005 and 2006, we spent at least four times as much money in Iraq as in Afghanistan.

It is hard to believe that we would be embroiled in a bloody conflict in Afghanistan today if we had devoted the resources there that we instead deployed in Iraq. A troop surge in 2003 -- before the warlords and the Taliban reestablished control -- would have been much more effective than a surge in 2010.

Warren Buffet: Scrap the health care overhaul, focus on cost

Caterpillar says Obamacare would raise its health care costs more than $100 million in first year

Dow Jones Newswires

Caterpillar Inc. said the health-care overhaul legislation being considered by the U.S. House of Representatives would increase the company's health-care costs by more than $100 million in the first year alone.

In a letter Thursday to House Speaker Nancy Pelosi (D-Calif.) and House Republican Leader John Boehner of Ohio, Caterpillar urged lawmakers to vote against the plan "because of the substantial cost burdens it would place on our shareholders, employees and retirees."

Caterpillar, the world's largest construction machinery manufacturer by sales, said it's particularly opposed to provisions in the bill that would expand Medicare taxes and mandate insurance coverage. The legislation would require nearly all companies to provide health insurance for their employees or face large fines.

The Peoria-based company said these provisions would increase its insurance costs by at least 20 percent, or more than $100 million, just in the first year of the health-care overhaul program.

"We can ill-afford cost increases that place us at a disadvantage versus our global competitors," said the letter signed by Gregory Folley, vice president and chief human resources officer of Caterpillar. "We are disappointed that efforts at reform have not addressed the cost concerns we've raised throughout the year."

Business executives have long complained that the options offered for covering 32 million uninsured Americans would result in higher insurance costs for those employers that already provide coverage. Opponents have stepped up their attacks in recent days as the House moves closer toward a vote on the Senate version of the health-care legislation.

A letter Thursday to President Barack Obama and members of Congress signed by more than 130 economists predicted the legislation would discourage companies from hiring more workers and would cause reduced hours and wages for those already employed.

CBO understates real cost of Obamacare

The CBO’s most recent analysis is out, and it’s not likely to convince wavering House Democrats to jump to the Obamacare side of the fence. Even the Democrats are granting that the latest version of their proposed health care overhaul would cost $69 billion more than the previous version. According to the CBO, this version would siphon even more money out of Medicare, make even further cuts to Medicare Advantage, and levy even higher taxes and fines on the American people.

President Obama, Speaker Pelosi, and their allies, are cheerfully citing “ten year” costs of $940,000,000,000.00 — apparently believing this to be a far more palatable figure than $1 trillion. But even this colossal tally is like the introductory price quoted by a cell phone provider. It’s the price before you pay for minutes, fees, and overcharges — and before the price balloons after the introductory offer expires.

For a variety of reasons, this tally doesn’t remotely reflect the bill’s real ten-year costs. First, it includes 2010 as the initial year. As most people are well aware, 2010 has now been underway for some time. Therefore, the CBO would normally count 2011 as the first year of its analysis, just as it counted 2010 as the first year when analyzing the initial House health bill in the middle of 2009. But under strict instructions from Democratic leaders, and over strong objections from Republicans, the CBO dutifully scored 2010 as the first year of the latest version of Obamacare. If the clock were started in 2011, the first full year that the bill could possibly be in effect, the CBO says that the bill’s ten-year costs would be $1.2 trillion.