9/11 and the Economy: Counting the $5 Trillion in Costs to America
Al Jazeera provided an interactive breakdown on how much 9/11 has cost to the American economy in 10 years.
I have outlined it below in short; further down is the longer version with explanation details for each main and sub-category. It is stated that many of these categories are conservative calculations and that many categories are certain to rise in cost.
Note: $5 trillion dollars is equal to 5 million millions.
Counting the Cost: $5,000,000,000,000 ($5 Trillion)
DEBT - $983 billion:
- Interest to Date.................$183 Billion
- Future Interest..................$800 Billion
MILITARY - $1.73 trillion:
- War in Iraq.........................$758 billion
- War in Afghanistan............$416 billion
- Pentagon Base Budget.....$425 billion
- State/USAID: ....................$67 billion
- Health Care........................$31 billion
- Operation Noble Eagle.....$29 billion
- Tourism .............................$163 billion
- NYC Economy...................$52 billion
- Insurance..........................$39 billion
- Property Damage.............$18 billion
- First Responders..............$5 billion
- Aviation.............................$1 billion
FUTURE MILITARY - $1.38 trillion:
- Disability............................$586 billion
- Future War Spending......$441 billion
- Future Health Care .........$348 billion
DOMESTIC - $540 billion:
- DHS Base Budget..........$311 billion
- Intelligence.....................$168 billion
- TSA..................................$57 billion
- State/Local.....................$3 billion
Counting the Cost: $5,000,000,000,000 ($5 Trillion)
DEBT - $983 billion - 20%: The US government is heavily in debt, meaning Washington has borrowed trillions of dollars to finance its spending on wars and homeland security. This category accounts for the interest on those debts related to 9/11 - war and homeland security spending, in other words. The treasury has already paid about $183 billion in interest on its debts, according to the non-partisan Congressional Budget Office. That figure will climb to nearly $1 trillion by the end of the decade, according to a study by Brown University. Higher levels of public debt could also potentially mean higher interest rates for private and corporate borrowers in the United States, but those calculations are speculative and thus omitted here.
- Interest to Date $183 Billion - This is the interest already paid on war and homeland security-related debt, according to the non-partisan Congressional Budget Office.
- Future Interest $800 Billion - This is the estimated total of interest payments through 2020, according to the Congressional Budget Office, assuming that war and homeland security spending levels remain close to current projections.
MILITARY - $1.73 trillion - 35%: By far the largest share of America's post-9/11 spending has been military-related. More than half of this category, of course, is the cost of America's ongoing wars in Afghanistan and Iraq. It is impossible to calculate the human cost of these wars, so the figures presented here focus solely on the Defense Department's expenditures. This category also includes large increases to the Pentagon's baseline budget; State Department and aid spending in the two theatres of war; and the cost of providing health care for injured soldiers. Future military expenses are presented in a separate category.
- War in Iraq $758 billion - Would the Iraq war have happened without 9/11? It's hard to say, because many senior Bush administration officials supported "regime change" in Iraq long before September 11. But the administration used the attacks to sell the war to the American public; deputy defence secretary Paul Wolfowitz started planning the invasion just days after 9/11. And the attacks made the American public much more receptive to a "preemptive war."
- Pentagon Base Budget $425 billion -The Pentagon's "base budget," which does not include spending for the wars in Afghanistan or Iraq, has also increased markedly in the years since 9/11. Between 1996 and 2001, the base budget - adjusted for inflation - increased by just 0.7%. Since 9/11, by contrast, it has increased by a staggering $163 billion per year, or 44% (again, adjusted for inflation).
- War in Afghanistan $416 billion - The war in Afghanistan, which begun less than one month after 9/11, has dragged on for nearly a decade - and will continue at least through 2014, according to US officials. Though for years it received far less attention than Iraq, Obama has tripled US troop levels in Afghanistan, and the war now costs nearly as much as Iraq did at its peak.
- State/USAID $67 billion - The State Department and aid agencies have also spent billions in connection with the wars in Iraq and Afghanistan. There is the new embassy in Baghdad, for example, built at a cost of more than one billion dollars; or the $19 billion that aid agencies have spent in Afghanistan since 2001.
- Health Care $31 billion - The United States has already spent billions to care for the more than 90,000 soldiers wounded in Iraq and Afghanistan. These costs have been steadily rising, particularly in Afghanistan, where the number of soldiers wounded per month has more than doubled over the past two years.
- Operation Noble Eagle $29 billion - The United States mobilised thousands of reserve and National Guard personnel in the days after 9/11. They were tasked with securing "high-value targets": military bases, airports and the like. This category also includes the increased Air Force patrols over the United States which followed the attacks. These patrols are ongoing - when foreign dignitaries visit, for example, or during major sporting events.
- Tourism $163 billion -The attacks had an immediate impact on tourism in New York City: Hotel occupancy, normally more than 80 per cent, plunged to below 40 per cent within one week. Thousands of employees in the tourism sector lost their jobs. Those effects were not short-lived, nor were they limited to the New York area. Industry groups estimate that foreign travel has dropped by 17 per cent since 9/11, largely because of the difficulty foreign visitors have in entering the United States. That decline translates to at least $163 billion in lost spending and tax revenues from foreign tourists.
- NYC Economy $52 billion - These figures come from the New York City Comptroller's office, which estimated the effect of 9/11 on "gross city product," New York's economic output. The primary reason for the decline is job losses, according to the comptroller's report: The city lost 83,100 jobs between September 2001 and July 2002, according to the comptroller, and those lost jobs mean less tax revenue for New York. And job losses have a ripple effect: Fewer commuters stopped for a morning coffee; fewer workers had lunch in New York restaurants.
- Insurance $39 billion-The 9/11 attacks were by far the most expensive disaster in history for American insurers. Property-related claims totaled roughly $17 billion, according to the New York City Comptroller's office, primarily from office buildings at the World Trade Center complex. The second-largest category of claims, roughly $11 billion, was for "business interruption," filed by companies whose operations were affected by the attacks. Berkshire Hathaway, Lloyd's, Swiss Re and Munich Re suffered the biggest losses, more than $2 billion each.
- Property Damage $18 billion - The total property damage incurred on 9/11 was roughly $34 billion, according to a report from the New York City Comptroller's office. Half of those damages were covered by insurance policies, so those losses are counted here under the "insurance" category. Most of these losses came from the destruction of the World Trade Center complex, with a lesser amount from damage to surrounding buildings. The attacks also caused infrastructure damage: The Port Authority estimated $2.4 billion in damages to the PATH train, which runs under the complex; and utility companies spent billions to replace phone lines and other communications infrastructure. Rebuilding the damaged sections of the Pentagon cost roughly $576 million.
- First Responders $5 billion-Thousands of first responders - police, firefighters and medics - suffer from health problems because of dust, debris and chemicals they inhaled at the World Trade Center site. According to the Centers for Disease Control, 57,914 people have enrolled in the World Trade Center Health Program, most of them in the New York area. 16,962 of them have been diagnosed with medical conditions, mostly respiratory illnesses and gastrointestinal problems. The CDC has already spent about $460 million to treat those patients. Earlier this year, President Obama signed a $4.2 billion bill to provide federal health care benefits to first responders. So the total federal cost for 9/11 health care, to date, is roughly $4.8 billion, a figure which excludes private spending by affected individuals.
- Aviation $1 billion - All aircraft in the United States were grounded for three days following the attacks. Once flights resumed, passenger traffic took an unprecedented drop: The number of passenger-miles flown plunged by 8 per cent between 2000 and 2002. A 2007 Cornell study estimated the value of that decline as $1.1 billion. Dozens of international flights were also diverted to other locations, mostly in Canada, on September 11; the airlines incurred costs to assist stranded passengers.
FUTURE MILITARY - $1.38 trillion - 28%: The wars in Iraq and Afghanistan will continue to be a drain on US taxpayers long after the last troops have been withdrawn. More than 50,000 Americans have been wounded in those two wars; some of them will need medical care and disability insurance for decades to come. Those costs could near $1 trillion over the next 40 years, according to US government estimates. And, of course, that final withdrawal hasn't happened yet. Thousands of US troops could potentially remain in Iraq after 2011; as for Afghanistan, NATO leaders have said no serious drawdown will begin before 2014.
- Disability $586 billion-Wounded veterans are entitled to apply for disability benefits after their discharge from the military. These benefits are provided by the Veterans Affairs department (VA). The amount of the benefit depends on the "disability rating," a calculation based on the injuries sustained. The higher "survival rate" for injured soldiers in Iraq and Afghanistan, and the nature of the injuries they have received, mean that hundreds of thousands will be eligible for life-long disability insurance payments. To date, more than 550,000 veterans have filed disability insurance claims, with roughly 435,000 already receiving payments - far exceeding previous estimates by the VA and leading economists. These benefits will cost up to $586 billion over the next 40 years, according to independent estimates.
- Future War Spending $441 billion - The Pentagon has requested $118 billion to pay for war spending in fiscal year 2012. Calculating the future costs of these wars is necessarily speculative. The Pentagon forecasts that annual war spending will drop to roughly $50 billion by 2013; the non-partisan Congressional Budget Office, meanwhile, predicts roughly $160 billion in war spending between 2013-2015, and a roughly similar amount between 2016-2020. Those estimates could prove to be low, if the US further slows its withdrawal from Afghanistan, or maintains a troop presence in Iraq. Even under those optimistic estimates, America's two wars will cost another $441 billion by 2020.
- Future Health Care 348 billion - US soldiers wounded in Iraq and Afghanistan are far more likely to survive their injuries than soldiers in past wars. In Afghanistan, fewer than 8 per cent of the Americans wounded in 2010 died; during the Vietnam War, by some measures, the "fatality rate" was closer to 20 per cent. These soldiers will continue to receive free or subsidised medical care for the rest of their lives. Tens of thousands suffer from injuries and conditions - brain damage, amputated limbs, post-traumatic stress disorder - which will require ongoing treatment. Caring for these veterans will cost roughly $348 billion over the next 40 years, according to Pentagon estimates.
DOMESTIC - $540 billion - 11%: Domestic security spending - the "homeland security industry" - has snowballed since 9/11. This category is mostly driven by growth in the intelligence community and the Homeland Security Department; both of their budgets have roughly doubled in the decade since 9/11. State and local governments have also spent billions on homeland security, much of it on expensive technology with questionable value for local communities. One example, reported in the Los Angeles Times last month: Keith County, Nebraska, population 8,370, spent more than $40,000 on "a Zodiac boat with side-scan sonar" to repel an imagined Al Qaeda ski boat attack.
- DHS Base Budget $311 billion - Before 9/11, homeland security spending - port security, immigration, and so on - was increasing at roughly 3 per cent per year. In the decade since 9/11, that spending has more than doubled. The figures presented here represent the increase from that pre-9/11 baseline, and exclude the TSA, which is presented separately.
- Intelligence $168 billion - The details of the US intelligence budget are classified, and it was not until 2005 that US officials revealed - inadvertently at first - the total amount of annual spending. Before 9/11, the intelligence budget was estimated to be roughly $30 billion per year; by 2011, that figure had nearly doubled, to $55 billion. The figures cited here represent increases from the pre-9/11 baseline.
- TSA $57 billion - The Transportation Security Administration, the US government agency which handles airport security, has grown steadily since its creation in 2001. Its budget has nearly doubled, to $8.2 billion annually, and it employs more than 58,000 people. The TSA is partly funded by the "September 11 Security Fee," a $2.50-per-flight segment levy imposed on passengers traveling from American airports.
- State/Local $3 billion - State and local governments have spent heavily on counterterrorism in the years since 9/11. But this spending is hard to measure, because it is spread across 50 states and thousands of counties, cities and towns. The figure cited here, $2.6 billion, is taken from a 2003 US Conference of Mayors survey which measured roughly 15 months of post-9/11 security spending in 200 cities across America. The total amount of increased security spending is almost certainly far higher.