WASHINGTON, Dec. 26 (UPI) -- The UPI think tank wrap-up is a daily digest covering opinion pieces, reactions to recent news events and position statements released by various think tanks.
The National Center for Policy Analysis
(NCPA is a non-profit, non-partisan public policy research organization whose goal is to develop and promote private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector.)
DALLAS, Tex. -- Potential Cost of War with Iraq
In September National Economic Council Director Lawrence Lindsey estimated that war with Iraq would cost $100 billion to $200 billion.
Although Lindsey has not offered any supporting evidence, it appears he might have speculated that war would cost 1 percent to 2 percent of the U.S. gross domestic product of about $10 trillion. Based on comparable wars, such as the Gulf War or the Spanish-American War, Lindsey's estimate is reasonable.
Several detailed efforts have been made to measure the cost of an Iraq war.
Based mainly on the Gulf War, the House Budget Committee's Democratic staff reckoned the immediate military cost at $48 billion to $93 billion.
The Congressional Budget Office figured the incremental cost of deploying forces to the Persian Gulf would be between $9 billion and $13 billion, plus another $6 billion to $9 billion per month as long as the war lasts.
Returning our troops home after hostilities end would cost $5 billion to $7 billion, with another $1 to $4 billion per month for occupation forces.
The direct out-of-pocket costs of war are only a small part of the overall cost, which economist William Nordhaus of Yale University has tried to add up. He figures the total cost of a war with Iraq over 10 years could vary between $99 billion and $1.9 trillion.
If Saddam Hussein thoroughly destroys Iraq's oil producing facilities and the price of oil rises to $80 per barrel because OPEC fails to increase production, slower growth will cost Americans $1.2 trillion.
However, the fear of terrorist attack imposes a very real economic cost now. And if Saddam uses weapons of mass destruction, the cost of doing nothing could be much greater than the cost of a preemptive strike.
(Bruce Bartlett is a senior fellow at the National Center for Policy Analysis.)
