How much is the Iran war costing us?

Summary

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The Indicator from Planet Money

Episode Summary: “How much is the Iran war costing us?”

Date: March 18, 2026
Hosts: Ricky Mulvey & Darian Woods
Guests: Linda Bilmez (Harvard Kennedy School), Mark Cancian (retired Marine Colonel), Nita Crawford (Costs of War Project)

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Overview

This episode examines the multifaceted and often underestimated economic costs of the ongoing U.S. conflict with Iran, known as Operation Epic Fury. The hosts, joined by experts in defense spending, war finance, and public budgeting, break down why war expenses are so difficult to track in real time, the lessons learned from past conflicts (especially post-9/11), and the numerous long-term financial burdens that extend far beyond the battlefield.

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Key Discussion Points & Insights

1. Estimating the Daily Cost of War

• Initial Estimates:
  • The Center for Strategic and International Studies originally estimated the daily cost of Operation Epic Fury at around $900 million ([00:25]).
  • More recent Pentagon estimates have doubled that figure to approximately $1.9 billion per day (Darian Woods, [00:39]).
  • Quote:

    “These estimates are the tip of an ice—”
    —Linda Bilmez, [00:52]

• Why Estimates Change:
  • The type and volume of munitions used were greater than expected, and more damage to U.S. bases increased expenses (Mark Cancian, summarized by hosts, [02:09]).
• Budgetary Workarounds:
  • Munitions are not part of the current Department of Defense recurring budget; after ordnance is used, the military must request additional funding from Congress (Ricky Mulvey, [02:32]).
  • Quote:

    “After the US drops a bomb in Iran, the military says that's not a part of our regular budget and now we need to immediately pay to replace these bombs...”
    —Ricky Mulvey, [02:32]

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2. Long-term and Underestimated Costs

• Historical Underestimation:
  • War costs are nearly always underestimated at the outset due to optimism about duration and outcomes (Linda Bilmez, [03:25]).
  • Past Example:
    • The Iraq war was initially estimated by the Bush administration at $50 billion, but the real spending was closer to $3 trillion (Nita Crawford, [03:48]).
• Veterans’ Care:
  • Caring for service members post-conflict is a “staggering” cost that often exceeds initial expectations (Linda Bilmez, [04:04]).
  • Quote:

    “The amount of accrued disability benefits, not counting health care, just disability benefits that we have already promised to veterans is $7.3 trillion.”
    —Linda Bilmez, [04:39])

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3. Environmental Costs

• Military Emissions:
  • The U.S. Department of Defense emitted the equivalent of 47 million metric tons of CO2 in 2024—more than many countries’ annual totals (Linda Bilmez, [05:03]).
  • Operational Impact:
    • Moving fleets, aircraft, and strikes on oil facilities have significant and lasting environmental consequences (Nita Crawford & hosts, [05:17]–[05:24]).
  • Quote:

    “Bombing oil facilities creates long-term environmental damage.”
    —Ricky Mulvey, [05:24])

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4. How the U.S. Funds War Today

• Debt-Financed Conflicts:
  • Unlike pre-9/11, the U.S. now borrows almost entirely to finance wars, rather than raising taxes or cutting government spending ([05:55]).
  • Future Burden:
    • This debt carries interest, shifting the fiscal burden to future generations (Linda Bilmez, [06:01]).
  • Economic Debate:
    • Mark Cancian notes that some economic theories (Ricardian equivalence) see no practical difference between funding via debt or taxes ([06:07]).
    • Linda Bilmez disagrees, arguing taxes make the cost more visible to citizens and help shape democratic “buy-in” ([06:31]).
    • Quote:

      “People experience the cost of anything in a different way if they are asked to pay taxes than if they incur debt.”
      —Linda Bilmez, [06:31]

    • Historical example:
      • President Truman emphasized tax payments to support wars, linking fiscal responsibility directly to national commitment ([06:54]).
      • Quote:

        “If this is important enough that we have to go to war, then it's important enough we have to pay for it.”
        —recalls President Truman, Linda Bilmez, [06:54])

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5. Enduring Fiscal Effects: Military Budget Expansion

• Ratcheting Up Base Budgets:
  • Wars are followed by large increases to Pentagon base budgets that are rarely reduced, even after the conflict ([08:05]).
  • Example: President Trump recently requested a $1.5 trillion military budget—a 50%+ increase ([07:25]).
  • Quote:

    “Once that gets added into the Pentagon's annual budget, it stays there pretty much forever.”
    —Linda Bilmez, [08:05])

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Notable Quotes & Moments

• “These estimates are the tip of an ice—”
  —Linda Bilmez, [00:52]
• “After the US drops a bomb in Iran, the military says that's not a part of our regular budget and now we need to immediately pay to replace these bombs...”
  —Ricky Mulvey, [02:32]
• “The amount of accrued disability benefits, not counting health care, just disability benefits that we have already promised to veterans is $7.3 trillion.”
  —Linda Bilmez, [04:39]
• “Bombing oil facilities creates long-term environmental damage.”
  —Ricky Mulvey, [05:24]
• “People experience the cost of anything in a different way if they are asked to pay taxes than if they incur debt.”
  —Linda Bilmez, [06:31]
• “If this is important enough that we have to go to war, then it's important enough we have to pay for it.”
  —recalls President Truman, Linda Bilmez, [06:54]
• “Once that gets added into the Pentagon's annual budget, it stays there pretty much forever.”
  —Linda Bilmez, [08:05]

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Important Timestamps

• [00:25] – Initial $900 million/day cost estimate for Operation Epic Fury
• [00:39] – Pentagon revises daily cost to ~$1.9 billion
• [03:43] – Historical context: Iraq war initial vs. real cost
• [04:39] – Veterans' disability obligations reach $7.3 trillion
• [05:03] – Environmental emissions from the Department of Defense
• [05:55] – Shift to debt-financed wars
• [07:25] – Proposal for $1.5 trillion military budget
• [08:05] – Explanation of “ratcheting” Pentagon budgets

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Tone

Informative and brisk, the conversation is accessible but grounded in data and expert analysis, emphasizing the complexity and far-reaching consequences of wartime fiscal decisions for American taxpayers.

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Episode Takeaway

The economic impact of war is far greater than the daily headlines suggest. Costs extend well beyond bombs and planes to include ballooning veterans’ obligations, environmental fallout, and future interest payments—burdens that shape American life for generations. Even when war spending seems “temporary,” it often permanently expands the footprint of U.S. defense budgets.

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Next episode teaser: A deep dive into the economics of drone warfare and lessons learned from Iran.

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Transcript

[Linda Bilmez]

Npr.

[Ricky Mulvey]

This is the Indicator from Planet Money. I'm Ricky Mulvey.

[Darian Woods]

And I'm Darian Woods. Lately on the show, we've been discussing some of the broader economic costs of the US Israel war with Iran, and those expenses vary day by day.

[Ricky Mulvey]

Yeah, finding out how much money war costs is a difficult task in the moment. The center for Strategic and International Studies first estimated that the early days of Operation Epic Fury cost roughly $900 million per day.

[Darian Woods]

More recently, the New York Times reported that Pentagon officials estimated the cost to be more than twice that number, about $1.9 billion per day. And even these numbers don't tell the whole story.

[Linda Bilmez]

These estimates are the tip of an ice

[Ricky Mulvey]

Today on the show, we're looking at the costs of Operation epic fury. Why post 911 wars have cost trillions of dollars more than early estimates suggested and the underestimated expenses that American taxpayers will be paying now and far into the future.

[Darian Woods]

That's all after the break.

[Sponsor/Announcer]

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[Ricky Mulvey]

Wars are expensive and it's difficult to find out just how much one costs in the middle of it.

[Darian Woods]

Mark Gantzian is a retired U.S. marine colonel. He's also done budgeting for the Department of Defence and helped come up with that daily $900 million or so estimate. But that number is already significantly higher.

[Ricky Mulvey]

The munitions mix appears to have been a little richer than we had first estimated, and the damage to the bases is higher than we had estimated.

[Darian Woods]

He's talking about the types of bombs the US has been dropping and the US bases that have been hit in the Gulf. And here's an interesting bombs don't actually count in the Department of Defense's current budget.

[Ricky Mulvey]

After the US drops a bomb in Iran, the military says that's not a part of our regular budget and now we need to immediately pay to replace these bombs we just dropped. They'll need to go back to Congress to ask for more money regardless of how long the war goes.

[Darian Woods]

So one reason this war is already expensive is that many of the costs are not already budgeted for.

[Ricky Mulvey]

But Mark says that while the costs of the first days in Iran were high. He expects the daily cost to go down. Now that the US has established air superiority, the military can drop cheaper bombs from airplanes versus launching long range precision guided weapons.

[Darian Woods]

Still, Linda Bilmez is worried that the cost of war in Iran will not be controlled and she thinks that the long term costs could be dramatic. Linda has studied how the US pays for post 911 wars as a public finance professor at the Harvard Kennedy School.

[Linda Bilmez]

This is very similar territory not only to the Iraq and Afghanistan wars, but to wars dating back thousands of years where those who initiate them tend to be optimistic about how long it will take and tend to significantly underestimate the wars.

[Ricky Mulvey]

The Bush administration's initial public estimate for the Iraq war was about $50 billion.

[Darian Woods]

Nita Crawford Co founded the Costs of War project at Brown University. Nita estimated that the real number for Iraq and Syria closer to $3 trillion. And she believes that we should consider long term expenses of going to war.

[Linda Bilmez]

Most importantly, perhaps the cost of veterans care. There are tens of thousands of US soldiers and Air Force officers and other service members and many Navy personnel involved in this war.

[Ricky Mulvey]

Caring for veterans is expensive long after the conflict ends. Linda says we're paying billions of dollars a year to take care of veterans from the relatively short Gulf War. And these costs can go beyond health expenses. Our total obligation to veterans who have been hurt by war is in the trillions.

[Linda Bilmez]

The amount of accrued disability benefits, not counting health care, just disability benefits that we have already promised to veterans is $7.3 trillion.

[Darian Woods]

This is the money we pay to veterans who were hurt through injury or illness during their service.

[Ricky Mulvey]

Anita adds there's one other long term cost she's concerned about the cost of war on the environment.

[Linda Bilmez]

Let's say we look at 2024's military emissions for the Department of Defense they were 47 million metric tons CO2 equivalent, okay, larger than many countries annual emissions.

[Darian Woods]

Nita says these emissions are from moving large planes and ships around. Fighter jets flying faster than the speed of sou.

[Ricky Mulvey]

Plus this war has included strikes on oil facilities. Iran reportedly bombed a Saudi oil refinery though the Iranian regime denies responsibility. And the US Israel joint strikes have hit oil facilities in Iran. Regardless, bombing oil facilities creates long term environmental damage.

[Darian Woods]

One of the more significant economic costs of going to war is financing other

[Ricky Mulvey]

than the Revolutionary War. The United States has financed wars with a mix of debt, higher taxes and budget cuts within the government. That changed after 9 11.

[Darian Woods]

Now America's wars are financed almost entirely through debt. Without higher taxes or budget cuts.

[Linda Bilmez]

All of the money that we're spending is being borrowed, so there is interest that we will have to repay.

[Ricky Mulvey]

Mark Cancian says that cost is a concern, but not how the US Finances it. I think from an economics point of view, it's a wash. Mark is talking

[Darian Woods]

about an economic theory called Ricardian equivalence, which says that spending through raising taxes or increasing deficits have similar effects on the economy. Linda disagrees and says the way we finance war matters.

[Linda Bilmez]

There have been many studies on this and show that people experience the cost of anything in a different way if they are asked to pay taxes than if they incur debt.

[Ricky Mulvey]

She believes financing war through debt shifts the burden to future generations.

[Darian Woods]

And raising taxes to pay for war changes the buy in that presidents ask from the public.

[Linda Bilmez]

President Truman, for example, made 206 speeches on this topic, basically saying if this is important enough that we have to go to war, then it's important enough we have to pay for it.

[Ricky Mulvey]

So the costs of war aren't the only expenses of dropping bombs or fueling airplanes. They go on long after the war is over through health care, disability benefits, environmental costs and interest payments. She also believes it sets the stage for increased military spending, which is already a significant chunk of federal spending.

[Darian Woods]

Earlier this year, President Trump asked Congress to approve a $1.5 trillion military spending budget, which is more than 50% higher than its current budget.

[Linda Bilmez]

Although Congress is kind of lukewarm to this idea, the backdrop of a live act of war and all of this discussion around using up of munitions and supporting our troops and so on is going to enable President Trump to secure a much larger amount of like base increase to the Pentagon budget.

[Ricky Mulvey]

And Linda worries this increased budget for defense spending will not go back down even if the President doesn't get everything he asks for.

[Linda Bilmez]

Once that gets added into the Pentagon's annual budget, it stays there pretty much forever. So that every year you have a higher base that you start from.

[Darian Woods]

Precise economic figures can provide certainty in an uncertain time. But the chaos of war is precisely what makes those numbers so uncertain. The economic costs of war, like the physical damage, are not daily figures. They go on long after the conflict is over. Tomorrow we dig deeper into this issue with a look at drone warfare economics and how the the US is learning a lesson from Iran. This episode was produced by Corey Bridges with engineering by Robert Rodriguez who's fact checked by Sarah Juarez Cake and can it edits the show and the indicator is a production of NPR.

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[Linda Bilmez]

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