Comparing Various War Expenditures
Yesterday, we looked at the costs of various one time events versus the bailouts. It took one year of bailouts to rack up the debt totals of 206 years of war, westward expansion, space exploration, etc.
The chart we created omitted numerous conflicts (WWs, the Civil War, etc.) and I was curious as to actual costs of them, adjusted for Inflation.
Reader Ernst Mayer turned me on to this analysis by Stephen Daggett, a specialist in Defense Policy and Budgets. Daggett’s table (shown below) gives you our war spending details, but — spoiler alert – no other military engagement remotely compares to the financial costs of WWII. Total inflation adjusted spending: over 4.1 trillion dollars. That was about 36% of GDP.
Incredible.
>
| Years of War Spending | Peak Year of War Spending | ||
|---|---|---|---|
| Total Military Cost of War in Millions/Billions of Dollars | War Cost % GDP in Peak Year of War | ||
| American Revolution
Current Year $ Constant FY2008$ |
1775-1783
101 million 1,825 million |
||
| NA | |||
| War of 1812
Current Year $ Constant FY2008$ |
1812-1815
90 million 1,177 million |
1813 | |
| 2.2% | |||
| Mexican War
Current Year $ Constant FY2008$ |
1846-1849
71 million 1,801 million |
1847 | |
| 1.4% | |||
| Civil War: Union
Current Year $ Constant FY2008$ |
1861-1865
3,183 million 45,199 million |
1865 | |
| 11.3% | |||
| Civil War: Confederacy
Current Year $ Constant FY2008$ |
1861-1865
1,000 million 15,244 million |
||
| NA | |||
| Spanish American War
Current Year $ Constant FY2008$ |
1898-1899
283 million 6,848 million |
1899 | |
| 1.1% | |||
| World War I
Current Year $ Constant FY2008$ |
1917-1921
20 billion 253 billion |
1919 | |
| 13.6% | |||
| World War II
Current Year $ Constant FY2008$ |
1941-1945
296 billion 4,114 billion |
1945 | |
| 35.8% | |||
| Korea
Current Year $ Constant FY2008$ |
1950-1953
30 billion 320 billion |
1952 | |
| 4.2% | |||
| Vietnam
Current Year $ Constant FY2008$ |
1965-1975
111 billion 686 billion |
1968 | |
| 2.3% | |||
| Persian Gulf War /a/
Current Year $ Constant FY2008$ |
1990-1991
61 billion 96 billion |
1991 | |
| 0.3% | |||
| Iraq /b/
Current Year $ Constant FY2008$ |
2003-Present
616 billion 648 billion |
2008 | |
| 1.0% | |||
| Afghanistan/GWOT /b,c/
Current Year $ Constant FY2008$ |
2001-Present
159 billion 171 billion |
2007 | |
| 0.3% | |||
| Post-9/11 Domestic Security (Operation Noble Eagle) /b/
Current Year $ Constant FY2008$ |
2001-Present
28 billion 33 billion |
2003 | |
| 0.1% | |||
| Total Post-9/11–Iraq, Afghanistan/GWOT, ONE /d/
Current Year $ Constant FY2008$ |
2001-Present
809 billion 859 billion |
2008 | |
| 1.2% | |||
>
Source:
Costs of Major U.S. Wars
Stephen Daggett, Specialist in Defense Policy and Budgets
Foreign Affairs, Defense, and Trade Division
Congressional Research Service Report for Congress (RS22926)
24 July 2008
http://www.history.navy.mil/library/online/costs_of_major_us_wars.htm
June 19th, 2009 at 2:26 pm
This shows the priority of the federal govt. And we wonder why Asia is brimming with savings? We are going down the same road as the Soviet Union if we don’t put a stop to this war machine.
June 19th, 2009 at 2:27 pm
Viva la Rome Part Deux!!
June 19th, 2009 at 2:29 pm
Maybe I’m getting the math wrong (waaaay too many zeros), but if I’m not, this chart assumes our GDP was roughly $79 trillion in 2008. Somebody please correct me. If the dollar amount is correct, the spending in 2008 is more like 16.4%
June 19th, 2009 at 2:30 pm
Marcus, I’m thinking they added the GDPs for the years from 2001-2008 to get the ~80 billion number.
June 19th, 2009 at 2:31 pm
This is kinda stupid and misleading. Kinda like when I read that one congressman who was part of your conference claiming that Fed actions so far have cost us $30,000 per person. I am guessing he took that by dividing the $1 trillion expansion of the Fed balance sheet by the 300,000,000 people in the United States.
Well, does that mean when the Fed contracts its balance sheet, it makes money for each and every person in the United States??
The overall cost of this bailout, when compared to other banking bailouts in other countries through out history, as percentage of GDP is pretty much average. If you include the TARP and assume we get no money back (eventhough we already got some money back) plus the stimulus then that adds up to about $1.5trillion. I don’t consider Fed actions to be costs. So that is about 11% of GDP. Pretty unremarkable when compared to banking crises in other countries.
June 19th, 2009 at 2:39 pm
Whammer:
Maybe so, but adding all of the GDP and all of the war cost since 2001, I still come up with 2.85%. (plus, that’s not what the chart says). Must be the new accounting standards and practices.
June 19th, 2009 at 2:43 pm
is this a Federal Budget only POV?
b/c Post 9/11 ‘domestic security’ has Cost way more than ~U$D 28 Billion if one begins to consider all of the expenditures undertaken by States Localities and Businesses..
June 19th, 2009 at 2:49 pm
Machiavelli999:
The national debt — not the bailout(s) — amounts to $37K per person. Here’s the link:
http://www.brillig.com/debt_clock/
There are others.
Seems to me, you’re playing with semantics. The same way retailers, in discounting a product, say that the consumer “saved” money. 11% of GDP is huge, especially when we get nothing for it. Also, how do you know what’s actually on the Fed’s “balance sheet” (as if). For all you know, they have a freekin’ dungeon in the basement. That’s why Ron Paul is calling for an audit of the Fed.
June 19th, 2009 at 3:08 pm
@Marcus — yes, now that I look at it, it is weirder than I thought. The percentage number is “War Cost % of GDP in Peak Year of War”. So that means the numbers used to do the calc. are not in the table.
June 19th, 2009 at 3:19 pm
Whammer,
just more proof that Tufte should be taught, starting in the the 4th Grade, to Everyone..
“Charts/Graphs” are, almost, if not moreso, widely abused as Statistics..
June 19th, 2009 at 3:23 pm
Marcus Aurelius,
OK, fine lets take a look at our debt and compare it to other countries and other time periods in history. When you do that, you again find that our fiscal situation is not that remarkable. I wouldn’t say its amazing, but its not unmanageable. You have a debt to GDP ratio of about 60% right now. After all this spending on bailouts and stimulus it will rise to about 80%. Lets just say it rises to 100%.
That wouldn’t even put us in the top 5. Italy has a debt to GDP ratio of 100%. If it can service that debt then surely we can too as the world’s largest economy. Japan has a public debt of 160% of GDP!! And yet the yen is one of the most solid currencies out there.
After WWII our debt to GDP ratio was 120%! And yet we didn’t default and nothing bad happened.
June 19th, 2009 at 3:29 pm
@Mark E Hoffer,
The chart is correct. The federal numbers should give the total security picture. States and localities don’t spend their own security money. They are allocated security dollars by DHS.
June 19th, 2009 at 3:33 pm
It’s very misleading to compare just the “up front” costs of these wars. Wars fight today result in far fewer casualties but much higher long-term medical care costs then wars fought in previous periods. When those are factored in, the Iraq war’s costs zoom way up. See, for example:
The Iraq War Will Cost Us $3 Trillion, and Much More
http://www.washingtonpost.com/wp-dyn/content/article/2008/03/07/AR2008030702846.html
June 19th, 2009 at 3:35 pm
Machiavelli999 Says – Yep.
There’s some good data on this sight, but the pessimistic interpretation of it is over the top.
I’ll agree we are on a path for “less good” times for the foreseeable future. But, Japan survived, and we are basically on the same path they went down. There’s too many unknowns to even say things won’t improve substantially down the road.
I know, “what about this,” “what about that.” Face it, all the noise about how it’s different is just noise. We are Japan.
June 19th, 2009 at 3:46 pm
Obamageddon is finding a way to make things worse…
http://market-ticker.denninger.net/archives/1137-The-Dumbest-Thing-Ive-Seen-Yet.html
June 19th, 2009 at 3:46 pm
World War 1 ended in 1918, not 1921.
June 19th, 2009 at 4:01 pm
Lori…nice link, saw that reported earlier on Bloomie and nearly bit my tongue. Things just get stupider and stupider.
@laughingalltheway…this…”But, Japan survived”
It won’t if it doesn’t change, drastically, in the next decade or so. But it won’t implode…it is rapidly just fading away as its population ages and dies, with not enough babies to replace it. But that’s demography not economics. Yet I think maybe the two are interconnected.
June 19th, 2009 at 4:04 pm
As Gen Smedley Butler put it so aptly..
I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.”[
This where we piss away most of our money…on a racket where only the connected get rich and everybody else loses.
June 19th, 2009 at 4:11 pm
BR: If you want to measure the national debt impact of these wars, you might want to see the chart here to help put things in context, at least since 1830 (you’re welcome to borrow it!)
At present, the current runup in national debt to support all the various bailouts and new political spending would increase the U.S. national debt per capita to income index (or rather, the national debt burden per capita) to around 3.0, consistent with the average level set during the Great Depression. The main difference is that the debt burden (the national debt to GDP ratio), is much higher today than in the 1930s, which means that there’s much less room to successfully absorb a significant national shock (Pearl Harbor, September 11, etc.)
June 19th, 2009 at 4:14 pm
@MEH — you are right about Tufte. That guy is awesome. Plus, not to bash on Powerpoint like everyone else does, but Powerpoint does constrain methods of communicating, and that is not good.
June 19th, 2009 at 4:49 pm
@ The Prince:
Hard to make a confident statement about the Fed’s costs and how they impact us without them letting us see whats under the hood… If you are right, and these arent costs, but potential assets we’re taking ownership for, whats the harm in letting us see the balance sheet?
@ Laughing:
I’m not trying to be pessimistic, but when there is a fundamental lack of transparency on behalf of Fed and Treasury, what are we supposed to be??? Overly optimistic??? That got us real far…
Audit the bitches and let us see whats really going on and then we can build a meaningful discussion.
June 19th, 2009 at 4:55 pm
@grumpyoldvet:
Gotta love ol’ Smedley. He earned the right to say it.
June 19th, 2009 at 5:03 pm
I-Man Says-
“Audit the bitches and let us see whats really going on and then we can build a meaningful discussion”
well said- short and to the point-
agreed
June 19th, 2009 at 5:31 pm
DMR,
w/this: http://www.globalsecurity.org/military/ops/noble-eagle.htm
seems that the ‘chartist’ was referring to a specific program, different than either of our cogitations..
as well, his POV is Federal Budget– ‘cost of military operations only and do not include costs of…’
as found in Summary–through the Link above..
though, one Reason I was asking the Q: (s) ,that I did, was to allude to the Many other Costs of War, and those who bear the Burden of them..
June 19th, 2009 at 5:48 pm
@grumpyoldvet –Well put.
Korea and Vietnam were police actions. Persian Gulf, Iraq and Afghanistan were either directly related to our need to protect and/or get oil supplies or the resulting fallout from other countries in the region re: our actions. Looking at that list it seems that the only two wars that were somehow “necessary” were the American Revolution and WWII. Think of all the lives lost, resentment created and capital spent or destroyed. P.S. There should never had been a Civil War as all men (and women) are created equal.
June 19th, 2009 at 7:13 pm
Pat G.,
see: http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=prescott+bush+trading+with+the+enemy+act
and: http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Station+H+McCollum+memo
and, then, wonder whether WWII was, really, necessary, or, if it was, to whose End?
June 19th, 2009 at 9:00 pm
Thank You BR, for posting this chart and link.
ironman, your chart is also very interesting.
This is the type of scaled discussion of expenses that I was craving during the previous discussion in
http://www.ritholtz.com/blog/2009/06/bailout-costs-vs-big-historical-events/
IMO, this type of analysis, expanded to include the Louisiana Purchase and other big money Govt actions would be worth doing in detail. The Apollo program and the completion of the Panama Canal belong here too. And I wonder if a separate, parallel trend, showing the “routine” expenditures of the Govt would be useful. Perhaps Social Security, Medicare, and Fanny/Freddie should also be tracked separately but in parallel.
— — — — —
Seems like most of the people commenting on this post earlier today are determined to make it a War/Anti-War zone.
June 19th, 2009 at 11:20 pm
I prefer to rate our wars by the pile of corpses left behind.
June 20th, 2009 at 7:42 am
I do think we should get out of our current wars before considering another.
http://www.foxnews.com/politics/2009/06/19/deploys-missile-defense-hawaii/
North Korean threats to launch a missile toward Hawaii on July 4 prompts U.S. military to take defensive action.
Swatting flies is one thing, disengaging from stupid wars is another.
June 20th, 2009 at 8:51 pm
I would suggest that the “War on Drugs” has incurred a financial and social cost AT LEAST as great as WWII.