War's Hidden Price: $8 Trillion in Post-9/11 Conflicts Financed Through Unprecedented Budget Mechanism

The Financial Black Hole of the Middle East - YouTube

Pentagon bypassed traditional oversight for two decades using emergency appropriations that masked true costs from taxpayers

The United States has spent more than $8 trillion on military operations since the September 11 attacks, with total costs projected to reach $13.5 trillion through 2060 when interest payments are included—making these the most expensive conflicts in American history, according to Brown University's Costs of War Project.

The figure represents spending through fiscal year 2022, including approximately $5.8 trillion in direct appropriations plus an estimated $2.2 trillion to $2.5 trillion in committed future obligations for veterans' care through 2050. Interest payments on war-related borrowing have already exceeded $925 billion, with projections showing interest costs could reach $6.5 trillion through 2050.

Unlike previous American wars, these conflicts were financed almost entirely through borrowing rather than tax increases or war bonds—a departure from historical practice that has obscured the true costs from the public and shifted the burden to future generations.

Emergency Funding Becomes Permanent

For the first decade after 2001, Congress funded operations in Iraq and Afghanistan through emergency supplemental appropriations that bypassed normal budget oversight, marking what Harvard Kennedy School senior lecturer Linda Bilmes calls "the largest single deviation from standard budgetary practice in US history".

Between 1970 and 2000, emergency funding averaged approximately 2% of Pentagon spending. From 2001 through 2018, such funding through the Overseas Contingency Operations account averaged $116 billion annually—roughly 20% of total Defense Department budgets.

The funding mechanism peaked at 28% of the Pentagon budget in 2007 and 2008. By fiscal year 2008, with 187,000 troops deployed, OCO spending equated to approximately $1,000 per service member. By 2020, with roughly 14,300 troops in Afghanistan, Iraq and Syria, the $70.7 billion OCO allocation represented nearly $5 million per deployed service member.

The emergency designation exempted war funding from Budget Control Act spending caps imposed on other federal programs, leading critics to characterize OCO as a "slush fund." Former Defense Secretary Robert Gates described the result as a "culture of endless money" inside the Pentagon.

During the same period, federal tax rates declined from 18.8% of GDP in 2001 to 16.2% by 2020, even as outstanding federal debt increased from $3.5 trillion to over $20 trillion.

Contractor Payments Dominate Spending

Pentagon spending has totaled over $14 trillion since the start of the Afghanistan war, with one-third to one-half of that total—between $4 trillion and $7 trillion—going to military contractors. Contractor payments increased 164% from approximately $140 billion in 2001 to $370 billion in 2019.

By 2019, contractors outnumbered uniformed personnel by a ratio of 1.5 to 1 in the U.S. Central Command region. In Afghanistan alone, the Defense Department paid companies approximately $108 billion over 20 years for in-country work.

From 2020 to 2024, private firms received $2.4 trillion in Pentagon contracts, representing approximately 54% of the department's $4.4 trillion in discretionary spending during that period.

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SIDEBAR: The Billion-Dollar Beneficiaries

Top Defense Contractors in Post-9/11 Wars

The top five defense contractors received up to half of the approximately $14 trillion in Pentagon spending over two decades:

Lockheed Martin — The world's largest defense contractor supplied F-35 fighter jets, missiles, and advanced weapons systems throughout the conflicts.

Raytheon Technologies — Provided missiles, radar systems, and precision-guided munitions. The company has since merged with United Technologies.

Boeing — Supplied military aircraft, helicopters, and support systems.

Northrop Grumman — Manufactured unmanned systems, cyber capabilities, and advanced aircraft.

General Dynamics — Provided combat vehicles, munitions, and information technology systems.

Halliburton/KBR — Through its Kellogg, Brown & Root subsidiary, Halliburton received more than $30 billion by 2008 for base construction, troop support, and logistics. The company became synonymous with wartime contracting controversies.

L-3 Communications — Became one of the largest contractor employers in war zones, providing communications systems and intelligence services.

Bechtel — Secured major reconstruction contracts in Iraq and Afghanistan.

DynCorp International — Provided security services, police training, and logistics support.

Blackwater (later Xe Services, now Academi) — Supplied private security contractors, drawing scrutiny for civilian casualties and lack of accountability.

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The Revolving Door Spins

The defense industry's influence extends well beyond contract dollars through what critics call the "revolving door"—the movement of personnel between government positions and defense contractors.

Defense contractors spent $2.5 billion on lobbying over two decades, employing more than 700 lobbyists annually—more than one for every member of Congress. Nearly two dozen lobbyists were former Pentagon or White House officials.

The most prominent example: Dick Cheney served as Secretary of Defense under President George H.W. Bush, then became CEO of Halliburton from 1995 to 2000, before returning to government as Vice President under George W. Bush. Under his vice presidency, Halliburton received over $30 billion in Iraq and Afghanistan contracts.

Other notable cases include:

William Cohen — Defense Secretary under Clinton, later joined the board of several defense contractors and founded a consulting firm representing defense companies.

Ashton Carter — Before and after serving as Defense Secretary, Carter held positions advising defense firms and received consulting fees from contractors.

James Mattis — Served on the board of General Dynamics before becoming Defense Secretary, raising ethics concerns about his participation in decisions affecting his former employer.

Mark Esper — Worked as a lobbyist for Raytheon before becoming Defense Secretary, prompting recusals from decisions involving the company.

As of 2024, approximately 950 lobbyists work on behalf of the defense industry, using expanded tools of political influence including campaign donations, think tank funding, and participation in government advisory committees.

The pattern extends beyond political appointees. Senior military officers routinely transition to lucrative positions with contractors after retirement, raising questions about whether procurement decisions are influenced by post-retirement employment prospects.

A 2018 study found that 380 high-ranking Department of Defense officials and military officers moved to defense contractor positions between 2008 and 2018, while 204 individuals moved in the opposite direction—from industry to Pentagon positions overseeing the same companies.

This institutional entanglement has created what economists call "rent-seeking behavior"—where companies profit not through innovation or efficiency but through political influence and insider relationships.

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Waste, Fraud and Systemic Failures

The Commission on Wartime Contracting in Iraq and Afghanistan, established by Congress in 2008, documented systemic problems. The commission's 2011 final report estimated between $31 billion and $60 billion was lost to waste, fraud and abuse out of $206 billion in total contractor payments through that time.

Commission member Dov Zakheim, who served as Pentagon comptroller from 2001 to 2004, estimated that of the $60 billion upper estimate, approximately $40 billion represented waste—money spent unnecessarily—while $10 billion to $20 billion involved criminal fraud.

Examples documented by investigators included: charges of $45 for a case of soda, $100 per load of laundry, and billions spent on "ghost" projects—schools without teachers, health clinics without equipment, and security forces that existed only on paper.

The commission noted that "paying villagers for what they used to do voluntarily destroyed local initiatives and diverted project goods into Pakistan for resale". In Afghanistan, contractors received invoices from entities calling themselves "the Islamic Republic of East Afghanistan" demanding protection payments.

At least 18 service members were electrocuted by faulty wiring in bases in Iraq, with some incidents blamed on work by contractor Kellogg, Brown and Root.

Human Toll Exceeds Direct Combat Deaths

More than 940,000 people were killed by direct war violence in Afghanistan, Iraq, Syria, Yemen and Pakistan between 2001 and 2023, including over 432,000 civilians.

U.S. military deaths totaled approximately 7,000, with nearly 8,000 contractor deaths. More than 52,000 American service members were wounded, and over 40% of post-9/11 veterans are now entitled to lifetime disability payments.

The Costs of War Project estimates 3.6 million to 3.8 million additional indirect deaths from war's destruction of economies, healthcare systems, infrastructure and the environment, bringing total mortality to at least 4.5 million to 4.7 million people. Indirect deaths result from malnutrition, disease, loss of access to medical care, and economic collapse.

The conflicts displaced more than 38 million people—the second-largest forced displacement since World War II.

Strategic Outcomes Questioned

Afghanistan operations cost $2.3 trillion over 20 years. The Taliban regained control of the country in August 2021 following U.S. withdrawal. Iraq and Syria operations cost an estimated $2.89 trillion, including $1.79 trillion spent through 2023 plus $1.1 trillion in future veterans' care obligations.

The wars achieved mixed results at best. Afghanistan returned to Taliban control. Iraq, where the U.S. sought to counter Iranian influence, has become closely aligned with Tehran. The intervention in Libya contributed to ongoing civil conflict, while U.S. support for Saudi operations in Yemen failed to achieve stated objectives.

Continuing Pattern

Current military assistance to Ukraine is being funded through similar emergency supplemental mechanisms that financed Middle East operations, raising concerns that the budgetary practices that masked war costs for two decades have become institutionalized.

Expenditures for veterans' care doubled from 2.4% of the federal budget in fiscal year 2001 to 4.9% in 2020, even as the total number of living veterans from all U.S. wars declined. These costs will continue rising for decades as post-9/11 veterans age.

The Brown University researchers note that their cost estimates are conservative and do not include state and local government spending, private costs, or full opportunity costs of resources diverted from other uses.

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Sources

1. Brown University Costs of War Project - "The U.S. Budgetary Costs of the Post-9/11 Wars" (September 2021) https://watson.brown.edu/costsofwar/figures/2021/BudgetaryCosts

2. Brown University - "Costs of the 20-year war on terror: $8 trillion and 900,000 deaths" (September 1, 2021) https://www.brown.edu/news/2021-09-01/costsofwar

3. Heidi Peltier, Costs of War Project - "The Cost of Debt-financed War: Public Debt and Rising Interest for Post-9/11 War Spending" (2020) https://watson.brown.edu/costsofwar/files/cow/imce/papers/2020/Peltier%202020%20-%20The%20Cost%20of%20Debt-financed%20War.pdf

4. Congressional Budget Office - "Funding for Overseas Contingency Operations and Its Impact on Defense Spending" (October 2018) https://www.cbo.gov/publication/54219

5. Linda J. Bilmes, Harvard Kennedy School - "The 'Ghost Budget': How America Pays for Endless War," Just Security (January 3, 2024) https://www.justsecurity.org/90907/the-ghost-budget-how-america-pays-for-endless-war/

6. Commission on Wartime Contracting in Iraq and Afghanistan - Final Report to Congress (August 2011) https://cybercemetery.unt.edu/archive/cwc/

7. NPR - "Widespread Waste Found In Wartime Contracts" (August 31, 2011) https://www.npr.org/2011/08/31/140092937/panel-finds-widespread-waste-in-wartime-contracts

8. PBS NewsHour - "Study says nearly half of defense spending for 9/11 wars went to private contractors" (September 13, 2021) https://www.pbs.org/newshour/politics/study-says-nearly-half-of-defense-spending-for-9-11-wars-went-to-private-contractors

9. Brown University Costs of War Project - "Wartime Contract Spending in Afghanistan Since 2001" (2022) https://watson.brown.edu/costsofwar/papers/2022/WartimeContractSpending

10. Brown University Costs of War Project - "How Death Outlives War: The Reverberating Impact of the Post-9/11 Wars on Human Health" (May 2023) https://watson.brown.edu/costsofwar/

11. CBS News - "Americans could owe $6.5 trillion for wars in Afghanistan and Iraq — and that's just the interest" (August 18, 2021) https://www.cbsnews.com/news/afghanistan-iraq-wars-debt-6-trillion-interest/

12. The Hill - "Post-9/11 wars' death toll estimated at 4.5M" (May 16, 2023) https://thehill.com/policy/defense/4006281-post-9-11-wars-death-toll-estimated-at-4-5m/

13. Defense News - "End the Pentagon's OCO slush fund" (October 14, 2020) https://www.defensenews.com/opinion/commentary/2020/10/14/end-the-pentagons-oco-slush-fund/

14. Jacobin - "US Empire Is Lining the Pockets of Defense Contractors" (September 2021) https://jacobin.com/2021/09/united-states-war-iraq-afghanistan-profiteering-defense-contractors

15. Brown University Costs of War Project - "Corporate Power & Profiteering" https://watson.brown.edu/costsofwar/costs/social/corporate