The United States may already be on track to spend more than $1 trillion in its latest Middle East conflict, according to Harvard Kennedy School economist Linda Bilmes, who cautions that early projections are significantly underestimating the true cost of war.
Bilmes, co-author of landmark studies on the financial toll of the Iraq War alongside Joseph Stiglitz, said current spending patterns mirror past miscalculations. Initial government estimates often capture only immediate battlefield costs, she argued, while ignoring long-term obligations that can multiply the final bill.
“We will spend $1 trillion for the Iran war,” Bilmes said in a recent interview, adding that the figure could already be reached depending on accounting methods.
Pentagon figures indicate the conflict’s opening phase is already costly. The first week alone reportedly required $11.3 billion, driven largely by munitions, operations, and infrastructure damage. Analysts at the American Enterprise Institute estimate that pace would push total spending past $35 billion within the first month.
Bilmes now estimates daily costs have climbed to roughly $2 billion.
A key driver is the imbalance in modern warfare economics. Iranian drones, such as the low-cost Shahed models priced between $20,000 and $50,000, are often countered by U.S. Patriot interceptor missiles costing roughly $4 million each—creating a cost disparity that rapidly inflates expenditures.
Meanwhile, the Center for Strategic and International Studies has highlighted additional burdens, including replacement of munitions—often costing up to twice their original price—and damage to U.S. military infrastructure across nearly 20 regional sites.
Bilmes’s warning echoes lessons from the 2003 Iraq War. While the Congressional Budget Office initially estimated costs at $500 billion, later research by Bilmes and Stiglitz placed the total closer to $2 trillion. Subsequent revisions expanded combined Iraq and Afghanistan war costs to as much as $6 trillion.
She argues the same undercounting is happening again.
“Wars always have a long tail of costs,” Bilmes said, pointing to expenses that persist decades after combat ends.
Among the most significant long-term costs are veteran care and disability payments. The Department of Veterans Affairs reported nearly $195 billion in compensation to veterans and their families in fiscal 2025—a figure that continues to rise with each conflict.
Historically, about half of deployed veterans file disability claims, with many receiving lifelong benefits.
At the same time, expanded defense spending is likely. President Donald Trump has proposed boosting the military budget to $1.5 trillion for 2027, citing depleted stockpiles and operational demands.
With much of the spending financed through borrowing, Bilmes warns the war could further strain the nation’s $39 trillion debt. Interest payments already consume nearly 15% of the federal budget—more than double the share during the early Iraq War years.
The headline costs of combat represent only a fraction of total war spending. As history has shown, the full financial impact unfolds over decades—through debt servicing, veteran care, and sustained military investment.
“Wars cost more than we expect—and last longer than we expect,” Bilmes said.
