Cost of 9/11 and its aftermath: $5 trillion

Beyond the human toll, the financial impact to the nation has been huge. Add up spending on the Iraq and Afghan wars and domestic security, long-term care for veterans and the impact on the deficit, and the total is expected to be staggering.

By RPrichard Sep 7, 2011 12:51PM

By Merrill Goozner, The Fiscal Times

 

The U.S. launched a global war on terror after the 9/11 terror attacks on the World Trade Center and the Pentagon, the most deadly strikes against domestic targets by foreigners in U.S. history. Beyond the incalculable human cost of nearly 3,000 civilian lives and the subsequent deaths of more than 6,000 soldiers, 2,300 contractors and hundreds of thousands of Afghan and Iraqi soldiers, policemen and civilians, the fateful choices made after the attacks had profound ramifications for the U.S. government and continue to be a major contributor to its fiscal woes.

 

If you include both the next decade's interest payments on the debt-financed wars and future veterans' benefits, the total cost of the wars in Iraq and Afghanistan is now estimated to reach more than $5 trillion.

 

The human and emotional costs of 9/11 can never be measured. What price does one put on the nearly 3,000 innocent lives lost, or the hundreds of thousands of soldiers, contractors and civilians who died or were maimed during a decade of war triggered by the suicidal assaults by 19 Al-Qaeda terrorists, who bore nothing more deadly than box cutters?

 

Then there are the intangible costs. What monetary value does one put on the erosion of national confidence, the restrictions on civil liberties or the psychic dread of a seemingly endless war on terror? What would you pay for the right to board an airplane in peace?

 

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The price of a war on terror

But some costs can be measured. They are largely government costs, the ones that flowed directly from the policy decisions made in the weeks and months after the most deadly foreign-led assault on U.S. soil in the nation's history. They included the decision to halt the police-like action in the mountains of Tora Bora that might have immediately captured or killed Osama bin Laden, Al-Qaeda's ringleader.

 

The decision to launch a wider war on terror, which included the claim that Iraq's dictator, Saddam Hussein, harbored hidden Al-Qaeda cells and was building weapons of mass destruction, entailed huge social and economic costs. That illusory accusation led to an eight-year war that is only now coming to a close.

 

The unleashing of the U.S. military abroad also triggered a tidal wave of funding for the traditional military-industrial complex. Before 9/11, Defense Secretary Donald Rumsfeld had promised a leaner, meaner war-fighting machine, with fewer soldiers bearing better high-tech weapons at lower cost. That vision was replaced quickly with the biggest buildup of military hardware since the 1980s as the Pentagon's budget more than doubled to nearly $700 billion -- about as much as it spends on Social Security -- in less than a decade.

 

The expansive overseas war on terror was coupled with its domestic equivalent -- an explosion in domestic spending on anti-terror activities. It included beefed-up federal bureaucracies to protect homeland security and massive spending on contractors to provide services such as protecting computers from hackers, protecting ports from smugglers and protecting air travelers from hijackers. It also included, at least for a time, hefty grants to state and local governments for first responders in local police and fire departments, which was doled out, as federal grants often are, to every congressional district in the country, with only passing regard to the ones most likely to face a terrorist threat.

 

The deficit impact

The final and more enduring cost of the war on terror was the decision to put the entire enterprise on the national credit card. Not only did the Bush administration and Republican Congress reject raising taxes to pay for the new war spending, but it pushed for and won huge tax breaks for the well-to-do and the middle class. The Bush administration even had its own version of guns and butter, successfully giving Medicare beneficiaries an unfunded drug benefit that helped cement President George W. Bush's re-election victory in 2004.

 

In the last four budget years of President Bill Clinton's term in office (fiscal years 1998 through 2001), the U.S. ran a $559.3 billion surplus. In the succeeding eight years (fiscal years 2002 through 2009), the U.S. ran a $3.5 trillion deficit. Even if you exclude the $1.4 trillion deficit of 2009, when the economy was in free fall from the financial crisis, the Bush administration racked up more than $2 trillion in deficits despite unemployment's falling below 5%, thanks to the housing bubble.

 

About the time President Bush was declaring "mission accomplished" and Rumsfeld was estimating the war in Iraq would cost $60 billion at most, Columbia University economics professor Joseph Stiglitz, who later won the Nobel Prize, estimated the wars in Iraq and Afghanistan would eventually cost more than $1 trillion. Although he was vilified by the administration, Stiglitz vastly underestimated the eventual toll.

 

Pentagon spending, including special appropriations for wars, went from $305 billion in 2001 to $694 billion in 2010. If you take that 2001 spending and hold it steady (allowing for increases in inflation and economic growth so the military stayed at the same share of the national economy as before 9/11), there would have been $1.6 trillion less in military spending in the past decade. As it was, military spending of all federal outlays over the decade rose from 15.6% to 19.3%.

 

The total costs

Looking only at the past in calculating the costs of 9/11 and not the future costs of the ongoing conflicts, especially in terms of veteran support and benefits, is a myopic view. Three years ago, Stiglitz estimated the wars' final costs at $3 trillion to $5 trillion. Last week, he wrote that latter estimate was probably substantially underestimated.

 

"With almost 50% of returning troops eligible to receive some level of disability payment, and more than 600,000 treated so far in veterans medical facilities, we now estimate that future disability payments and health care costs" will total $600 billion to $900 billion, he wrote. "But the social costs reflected in veteran suicides (which have topped 18 per day in recent years) and family breakups are incalculable."

 

Stiglitz's estimates were recently corroborated by a study conducted by the Watson Institute for International Studies at Brown University, which concluded the total cost of the two wars to date at $3.2 trillion to $4 trillion, including future veteran benefits. However, it didn't include an estimated half trillion dollars in additional war spending over the next few years, or another $1 trillion in interest payments on the increase in the national debt.

 

The cost-of-war authors also cautioned that future veteran benefits may be underestimated. Beyond the 6,000 U.S. troops and 2,300 contractors who have died in Afghanistan and Iraq, nearly 70,000 allied troops have been wounded.

 

While the high ratio of wounded soldiers to deaths is testimony to the remarkable battlefield medicine capabilities of the U.S. military, those successes have also left behind large populations of severely disabled veterans who will likely need special medical, psychological and social support throughout their lives. As of fall 2010, there had already been 550,000 disability claims registered with the Veterans Administration, and a recent RAND study found 26% of returning troops had mental health problems.

 

The costs are already skyrocketing. Claims for veteran benefits and health care have more than tripled in the past decade, rising to an estimated $141 billion this year. The rate of increase -- 9.7% per year on average -- compares with just a 4.2% annual average increase in the 1990s, when government agencies had to deal with the aftermath of the much shorter and less deadly first Iraq war.

 

Homeland security budgets have seen a similar increase, more than tripling in the past decade to an estimated $48.1 billion this year. This includes $5.5 billion for the Transportation Security Administration, which didn't exist before 9/11. The U.S. has spent more than $600 billion on homeland security in the past decade, according to Chris Hellman of the National Priorities Project.

 

International aid and humanitarian assistance have also jumped sharply in the past decade, reaching $19 billion in 2010, or nearly three times the level spent during Clinton's last years in office. Some of the increased spending can be attributed to the Bush administration's stepped-up efforts to combat deadly diseases in the developing world, such as AIDS, tuberculosis and malaria. But the government, including the Obama administration, also spent more than $5 billion in economic assistance to Afghanistan last year and plans to spend even more this year as the U.S. seeks to wind down its military presence.

 

"The choice the U.S. walked through after 9/11 was the door to war," said Neta Crawford, a professor of political science at Boston University, who coordinated the war cost project. "The U.S. saw it as an act of war. But international law sees it as a crime. To treat terrorism as a crime would have entailed a much more intensified law enforcement response.

 

"It wouldn't have been cheap," Crawford said. "But it would not have cost as much in dollars, and certainly not in lives."

 

More from The Fiscal Times

 

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74Comments
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In my opinion, the terrorists got what they wanted.  Right after 9/11 we all came together to prove we were one, but look at everyone now, 10 years later, I see so much hate, racism, bigotry, homophobia, and just plain meanness, I feel so sad.  I see in the government, people who don't care about those that elected them, all they care about is making fools of the other party and I see disrespect for the president they were elected to work with.  I don't know where the united states of america have gone and the togetherness we had after 9/11 went.  I would say, if this continues, the terrorists have won.  And It makes me so sad.

Sep 8, 2011 7:45PM
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BIn Laden did to us what we did to the USSR: tricked in an endless spending spree that will break us as it did the Soviet. when you think 9/11 was done for a few hundred thousand dollars! and we blew 5 trillions in response, every time an alleged terrorist farts we spend a billion on gas masks... it's really sad. I actually think that he had no idea that it would have such an impact.
Sep 8, 2011 8:40PM
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Well its about time someone wrote this article. Now do we understand why we are 14 trillion in the hole? Why don't we admit that the terrorists accomplished their mission and took us broke?

 

Why can't every American band together and get US outta this mess? Why must we blame each other instead of pulling together to show them and the world we can't be beat?

 

And while I am ranting, America, why are 8 cylinder cars still on the road, why are so many homes uninsulated and why isn't nuclear, solar and wind power king? The first energy crisis was in the 70s for God sake. Are we really that stupid?

 

If we are we deserve our fate...

 

 

Sep 8, 2011 7:23PM
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Hate to say it but I guess we walked right into it.  Look at what a handful of nutcases was able to do to our nation. Universal healthcare and free college education wouldn't have cost near this amount. The illusion of security is what we have purchased instead. Our fear was effectively used to divide us and deplete our resources. Hooray for our side, the home of the brave; let's not let this happen again.
Sep 8, 2011 7:53PM
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Iraq had nothing to do with 911 or the war on terror. Iraq was cheney and bush's private agenda. Deduct what? 3 trillion?
Sep 8, 2011 7:33PM
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I don't believe America will ever learn how much 9/11 has truly cost or for our minds and hearts probably couldn't take it.  It would perhaps take some of the oldest and wisest of nations to measure how much we've truly lost.  We are young, powerful and has a tendency to extend past our limits.  We are foolish at times and don't want to listen to anyone else and set our own examples and follow no others.
We've spent far too much on fighting the impossible, lost more blood of our citizens than were taken by the terrorists in 9/11 and have spilled more foreign blood then the human mind could ever imagine.  This doesn't even include the fact that the government was so obsessed with compensating for our incompetency that made 9/11 possible that it neglected thieves from within our country that committed damn near fatal fraud upon our residential housing industry.
Someone mentioned earlier in another post that our freedom isn't free. That is true - but many of us Americans tend to talk about it more than we act.  As a military retired veteran I'm oftentimes told, "Thank you for protecting our freedom."  I take it gracefully but ask myself, "What do they really mean?  Do they know what they're saying?"  America is the ONLY country on the planet that seems to believe we must fight and die just to enjoy our freedom.  I've traveled the world over and other people seem to enjoy theirs just as much without lifting a finger against another country.  Why does it seem that America must be respected above all others?  Why can't we just get along with others without controlling them?  Do we believe it's possible for America to be controlled by another power?  If we do it to others, why do we fear it happening to us so much?  Just some of the questions that rest on my mind as I see my country slipping steadily down a slope of despair and there is no-one out there to save us.
Perhaps we've simply over-spent our time, energy and dollars trying to save others.  Now we're broke.  That's the ultimate cost - and I pray we can survive it.

Sep 8, 2011 10:25PM
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WELL DONE. Let's continue to wallow in EXACTLY how successful these jokers really were so they can be encouraged for the future. America doesn't just honor it's heroes, remember the fallen and move on to a brighter future; we LOVE to swim endlessly in the misery.

 

Consider this for your next 9/11 pity party:  China is ramping up its military might. It has 1.2 million more soldiers than any army on earth already. They are building FIVE new super carriers. They OWN most of our production/manufactu​ring capacity. You do the math if you really want to wallow in something... They'll wait a few years until we're thoroughly divided "God fearing Tea Partiers versus 'Libs and Dems' and then they'll hit Taiwan. Hard. Then maybe Japan - all while knowing we are toothless due to our squabbling and lack of production facilities and a TAX base to ramp up defenses. A few smelly camel lovers smashing into towers will seem small potatoes...

 

P.S. even that American flag you're waving furiously while avoiding the real issues...was made in China. Wake up people. Honor the Fallen, then move on to looking to our future... NOW

Sep 8, 2011 10:53PM
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The attack on the World Trade Centers was intended as an attack on our financial hub and was a victory for Osama Bin Laden as it has continued to be a financial drain to our economy long after. As long as we continue to think we can  spend countless amounts of money and continue to put the lives of our Military at risk in an endless war on terror his plan continues to be a success.

 

Bring our troops home to protect our own borders and let other countries protect their own. If other countries continue to harbor terrorists with impunity, let them be the ones to suffer the consequences.

Sep 8, 2011 10:41PM
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Top three ways to reign in this absurd spending and deficit:

 

1. End ALL foreign aid, NOW!!!  No military aid, no humanitarian aid, not another cent.  We  have people starving and living in tents in this country.

2. End both wars, NOW!!!  No gradual drawdown, no tens of thousands of troops committed indefinitely.  Afghanistan has had ten years to get a functioning government going, and Iraq has had eight.  If they can't stand on their own by now, they never will.

3. Close every U.S. military base that isn't on U.S. soil, NOW!!!  For 60+ years, we have provided security for wealthy European nations at enormous costs.  It's past time to let the rest of the world deal with its own problems.  If we really need to project power from time to time, we have 11 aircraft carrier groups that will work nicely.

 

Savings could be a 750 billion to one trillion a year, maybe more.

Sep 8, 2011 8:23PM
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The price tag doesn't include all the $$$$ GW wasted by creating DHS and TSA, when all the responsibility for not keeping track of the individuals that crashed the planes was INS' job.  As soon as they dropped out of school they should have been immediately arrested and deported as required by law.  Part of the fault goes to the CIA and FBI for not talking to each other about those individuals.
Sep 8, 2011 8:23PM
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Since the congress has passed all the laws that have given them the benefits in the first place, fat chance they are going to repeal any of them.  Is there NO way that those laws can be put before the voting American public, as maybe on a special (or demanded) ballot, to let us be the ones to decide whether or not they should be lifetime recepients of benefits that the general population is not entitled to.  Our congress(wo)men will do anything to get into office if for only one term... Egads!!!  Look at he lifetime benefits they receive.  When Social Security was robbed and moved into the General Fund, it opened our purse to all the fraud, military spending, congressional benefits they voted for themselves.  You can bet that the part of the General Fund that goes broke will not include their graff.  The 'gift' that just keeps on giving.
Sep 7, 2011 4:23PM
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Well, I for one saw it coming, Bush needed something for the people(sheep) to rally behind while they systematically picked our pockets. It's funny how everyone is afraid of the big bad terrorists, to the point that they have forgotten how much is being wasted all the time. The sad news is; it's not going to get any better, the machine is broken and I don't think the masses will realize it before it's too late. The policy makers of this country are too afraid to let things just settle back to normal. The only good news here is that if you are rich, you are doing pretty good.
Sep 8, 2011 9:57PM
Sep 8, 2011 7:24PM
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So,.....Who winning the war on terror??? Its not who you think ! 5 trillion! not counting the pricesless cost of human life !
Sep 8, 2011 7:51PM
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About the time President Bush was declaring "mission accomplished" and Rumsfeld was estimating the war in Iraq would cost $60 billion at most, Columbia University economics professor Joseph Stiglitz, who later won the Nobel Prize, estimated the wars in Iraq and Afghanistan would eventually cost more than $1 trillion. Although he was vilified by the administration, Stiglitz vastly underestimated the eventual toll.-Merrill Goozner

Sep 8, 2011 10:21PM
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So far, although now dead, Osama Bin Laden is still winning his war against USA in the sense that his purpose was not simply terrorizing USA but to make our economy crumble. After the 9/11 terror attacks our economy changed from surplus to almost defaulting our obligations. On top of that, rather than being united as we are made to believe we are after the attacks, our society is showing divisive fissures as wide open as never seen before.
Sep 8, 2011 10:46PM
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So far, although now dead, Osama Bin Laden is still winning his war against USA in the sense that his purpose was not simply terrorizing USA but to make our economy crumble. After the 9/11 terror attacks our economy changed from surplus to almost defaulting our obligations. On top of that, rather than being united as we are made to believe we are after the attacks, our society is showing divisive fissures as wide open as never seen before.
 
Maybe so, but the Monster was attacked and murdered by the US and that makes me thrilled!
 
 
Sep 8, 2011 9:07PM
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and long-term care for veterans,  small price to pay for them putting their lives on the line for this country, and the lives that was lost fighting the war that is getting our boys and girls disabled or killed for nothing........
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Cost for us = gain for others.

 

Gainers: Lockheed Martin, Northrup Grumman, and other DoD Contractors, the military,  and other opportunists.

 

Gainers: One enterprising institutional investor purchased between 9/5/2001-9/10-2001 an unusually high volume of PUT OPTIONS in Morgan Stanley Dean Whitter (occupied the upper 22 floors of the WTC), American Airlines, and United Airlines.

 

Gainers: Politicians who became famous, the 9/11/2001 parasites who charged people to play a round of golf with them ($40,000) and speaking engagements because he did a good job (what was he supposed to do? A bad job?).

 

Losers: the approx. 600 (!) people who jumped from the upper floors to the concrete below.

Sep 9, 2011 3:25AM
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Not only did it cost us money we don't have, we also lost "rights and freedoms" we will never get back !!! Are we STUPID or what.
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