Linda Bilmes

It's as if we had a credit card with an expanding limit at lower and lower and lower rates.

So we could borrow at almost zero after the 2008 financial crisis.

So this made it really, really convenient to keep borrowing the money.

Well, they were really low, and so people didn't feel the effect of this rising debt.

So when we went into Iraq in 2003, at that time, the national debt held by the public was less than $4 trillion.

And now that number is $31 trillion.

And we borrowed a lot of money at low rates that we are now paying back at much, much higher rates.

So...

We paid at that time about 6%, 7% of our total budget on interest, and now we're paying 15% of the budget on interest.

That's not all because of the wars, but a lot of it is because of the combination of tax cuts at the same time that we were increasing spending.

But that kind of set the tone of...

being able to pay for these wars through debt, in addition to the low interest rates and in addition to the budgetary dysfunction, there were a number of reasons internally within the Defense Department that made it very advantageous for them

to have money that was provided in this way.

First of all, the money went into a more flexible account, so they got more discretion over how to spend it.

This was happening at the same time that the department and the country was increasing its reliance on contractors.

So we had far, far, far more contractors involved in the Iraq and Afghanistan wars than we had in any previous wars.

It was much easier to pay the contractors and so forth with this funding.

It also meant that it was more protected from the budgetary dysfunction.

So if there was a shutdown or an almost shutdown or, you know, some other budgetary crisis, it could continue to pay contractors who often don't get paid during government funding lapses.

Well, Joe Stiglitz, my co-author on the $3 trillion war, and I, we had estimated it in 2008 that the absolute minimum that the Iraq war could cost was $3 trillion.