In the run-up to the November elections, Republicans comforted themselves by passing around an analysis by the bipartisan Congressional Budget Office showing that spending on the Iraq war so far has been “only” $709 billion.  They pointed out that President Obama’s wasteful stimulus actually cost $100 billion more.

And they touted the $709 billion number as refuting the calculation by Nobel economics laureate (and Democrat) Joseph Stiglitz that the cost of the Iraq war was much higher.  Stiglitz put forth his data in The Three Trillion Dollar War: The True Cost of the Iraq Conflict, his 2008 book written with economist Linda J. Bilmes of Harvard University’s Kennedy School of Government.

The Republicans are wrong; Stiglitz is right.  The main cause of the debilitation of the U.S. economy is the immense expense of “defense”—the Iraq war, the Afghanistan war, the vast global empire occupying more than 130 countries, and “defense” spending in general.

As Stiglitz and Bilmes explained in a September 29 conference call that included Stars and Stripes, the military’s own newspaper, their new calculations put the cost of the Iraq War as high as six trillion dollars.  “We are presenting a new paper with updated costs at the American Economic Association annual meeting in January,” Bilmes told me.

The reason the Stiglitz-Bilmes numbers are higher is that they account for such expenses as care for veterans, payments on the money borrowed from China and elsewhere to fund the wars, and the high cost of oil, which they blame directly on the war.  I think the real reason is that the Federal Reserve Board debased the currency—the dollar’s value has dropped 75 percent against gold since 2001—to pay for the war on the cheap.  The result is the same: Higher oil and gasoline costs for everyone.

Reported Stars and Stripes,

Bilmes said about 600,000 Iraq and Afghanistan veterans have already sought medical treatment from the Department of Veterans Affairs, and 500,000 have applied for disability benefits.  That’s about 30 percent higher than initial estimates for care, and could cost the department nearly $1 trillion in costs for the current wars alone.

In past wars, even Vietnam, someone with part of his head blown off would bleed out on the battlefield.  Now he’s choppered to a Combat Support Hospital (which in 2006 replaced the old MASH units), his life is saved by the world’s best medical care, and he returns home to decades hooked up to tubes.  All of which is extremely expensive.

Others with lesser wounds can still spend the rest of their lives in and out of VA care.  Given that most war supporters’ only experience with the military is watching FOX News propaganda, it’s understandable they wouldn’t include taking care of veterans as part of the cost of war.

Debt also is crucial, especially as China is getting antsy about all of the rapidly devaluing greenbacks she holds.  The CBO study calculated that the $709 billion spent on the war contributed less than 8 percent of the $9 trillion in federal debt the public held in 2010.  But if the Iraq war’s true cost is $6 trillion, then the proportion of the debt from the war zooms up to 68 percent—and more if the war in Afghanistan is included.

But the direct costs of the wars in Iraq and Afghanistan are only part of the costs of “defense” spending.  Although some military spending is necessary to defend a country, much as any good father and husband will keep several guns in good working order, too much spending on the military debilitates an economy, even one as rich as America’s.

In the 1960’s and 70’s, a scholar named Seymour Melman wrote several books on the true costs of excessive defense spending, including Pentagon Capitalism: The Political Economy of War (1970) and Our Depleted Society (1965).  In the latter, he noted how the Defense Department’s vast purchases had made the machine-tool industry “less sensitive to pressures from other customers for reducing the prices of its products.”  The result?  This industry was eclipsed by those in Europe and Japan.

I asked Bilmes if similar research is being conducted by economists today.  She said she didn’t know of any.  (This would be excellent work for young economists.  The challenge will be getting through the immense secrecy that now surrounds military production.)

Southern California, perhaps surprisingly to some, remains America’s largest industrial area, despite attempts by enviro-crazy state politicians to drive industry to Arizona.  Over the course of my 23 years in Orange County, some executives in manufacturing industries have told me that defense spending is a large part of their business.  Yet even they don’t know exactly what goes on.

Defense officials give security clearances only to engineers, scientists, and technicians working directly on a military project, which is conducted in special sealed-off areas.  The “cost-plus” payments mean there’s always a profit.  And the government’s checks always clear, unlike private contracts, where a client might go broke.

The problem for the economy at large is that all these top-level engineers, scientists, and technicians—and the military wants the best, and pays for the best—aren’t building Buicks and Fords and Chryslers.  Meanwhile, in America’s major automotive competitors—Japan, Germany, and even South Korea—where defense spending is kept artificially low by the presence of American troops, top engineers work for Toyota, Porsche, and Hyundai.  The same goes for making televisions, refrigerators, and microchips.

The September 11 Los Angeles Times featured a story, “Drone industry a boost to Southland’s aerospace industry,” which offered a rare insight into top-secret military production.  The drone industry “employs an estimated 10,000 people.  The fast-growing business is fueled by Pentagon spending—at least $20 billion since 2001—and billions more chipped in by the CIA and Congress.”

It’s a perfect government program.  The drone industry drains top talent from competitive civilian firms.  The drones blow up wedding parties in Afghanistan and Pakistan.  The enraged extended families vow jihad against America.  Future terror strikes on America engender additional U.S. retaliatory attacks on those countries and elsewhere.  This requires higher defense spending to pay for more drones.  Meanwhile, America goes broke, and her nonmilitary industrial base (which, in the end, has to be the foundation of everything) deteriorates.

Something similar happened during the Vietnam War, America’s longest until the Afghan war eclipsed it in 2010.  In Vain Hopes, Grim Realities: The Economic Consequences of the Vietnam War (1976), Robert Warren Stevens showed that, as President Lyndon Johnson escalated the war from 1965 to 1968, major areas of the civilian economy declined: residential investment, consumers’ purchases of nondurable goods, consumer services, and net exports.

The hangover from the spending bender of the Vietnam War was the “Nixon Shock” of 1971, especially going off the gold standard, leading to the stagflation of the 1970’s “malaise economy.”  But in the 70’s, the federal debt was a fraction of what it is today.  America still ran a trade surplus.  Social Security, government pensions, and other obligations were much smaller.  And personal and business debt were lower.

While cleaning up the mess in my apartment the other day, I came upon an old file labeled “SOVIETS—Empire Costs.”  Inside was an opinion piece from the November 27, 1989, Orange County Register, written by Ken Adelman, the former director of the U.S. Arms Control and Disarmament Agency in the Reagan administration.  Later, in the lead-up to President George W. Bush’s 2003 invasion of Iraq, top neocon Adelman famously guaranteed it would be a “cakewalk.”

Back in 1989, as Eastern Europe was freeing itself from the Soviet yoke, Adelman wrote of how Soviet President Mikhail Gorbachev’s

coffers pour a whopping $7 billion or so yearly into Cuba. . . . Gorbachev signs checks . . . totaling between $3 and $3.6 billion yearly—to help the Afghan Marxists cling to power . . . $500 million yearly to Nicaragua. . . . $2 billion plus worth of military equipment to Vietnam, Laos, and Cambodia and $1.5 billion in military equipment to Angola.

Adelman added it up: Inflation, declining living standards, and economic collapse were hitting the Soviets.  He quoted Gorby: “Frankly speaking, comrades, we underestimated the full depth of the deformations and stagnation.”  Two years later, the Soviet Union collapsed.

More than two decades later, the same deformations and stagnation have struck the last global empire.  The Iraq and Afghanistan wars, and the immense military-industrial complex, have robbed the best talent from our civilian industries while bleeding the country dry.  There will be no return to prosperity until the wars are ended, the empire dismantled, military spending cut sharply, and the swords turned into plowshares.