Economists Linda Bilmes and Nobel Laureate Joseph Stiglitz have just published a National Bureau of Economic Research Working Paper in which they estimate that the cost of the Iraq war to the U.S. will exceed $1 trillion if our troops return by 2010, or $2 trillion if they stay through 2015. Bilmes and Stiglitz base this estimate, not just on budgetary costs that are officially allocated to the war, but on a comprehensive look at its long-term budgetary effects. Thus, for example, they include increased military recruitment costs and disability payouts by reason of the war, as well as the macroeconomic effects of higher energy prices.
As they note, in 2002 Rumsfeld estimated a total war cost of $50 to $60 billion, with Paul Wolfowitz saying the post-war reconstruction would be free from the U.S. standpoint due to Iraqi oil money. Bush Administration economic advisor Larry Lindsey was harshly rebuked for suggesting that the war's cost might reach $200 billion.
Large numbers are hard to grasp, so let's just put it this way. Rumsfeld's estimate was somewhere around 2 to 5 percent of the total estimated by Bilmes and Stiglitz. Lindsey's supposed over-estimation was 10 to 20 percent.