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# Posted 10:53 PM by Ariel David Adesnik

DOLLARS AND SENSE: Some of my anti-war friends have been hyping Yale economist William Nordhaus' estimate that a war would cost $1.6 trillion, if one takes into account its costs on stock and oil markets.

If one ignores, for the moment, indirect costs such as the impact of war on global markets, it is clear that the actual cost of fighting Saddam, including a military occupation, will come in at under $200 billion. That number reflects indepedent estimates made by the Congressional Budget Office, the Democratic staff on the House Budget Committee and the Center for Strategic and Budgetary Assessments, a non-partisan think tank.

$200 billion ain't peanuts, but if the President thinks we can afford a $670 billion tax cut, $200 billion for national security doesn't seem like such a bad idea. But what about Nordhaus? He thinks the CBO, Budget Committee and CSBA estimates are optimistic, but doesn't suggest that fighting Saddam would cost all that much more than they say.

When it comes to occupation, Nordhaus says it could cost anywhere from $75 to $500 billion. The low end figure is the cost of keeping 75,000 troops in Iraq for five years. The high end figure is for 200,000 troops over 10 years. (See page 21 of Nordhaus' report.) Considering that Nordhaus is an alarmist, those figures don't strike me as all that alarming.

Nordhaus' estimate of the war's impact on oil markets assumes the "destruction of most of Iraq?s oil-production capacity along with one-quarter of the productive capacity of other Gulf states," pushing oil prices up to $75 per barrel or $3 per gallon of gas. If that happens, it would cost the US up to $500 billion. (P.29)

Another potential cost of war is a recession similar to that of 1991, which Nordhaus estimates at a cost of $200 to $500 billion. (P.35) If all of these things go wrong at once, the total cost to the US would be about $1.6 trillion. If things go as planned, the total cost will be only $120 billion. (P.39)

Frankly, Nordhaus' numbers don't seem all that realistic. But I'm not an economist. So I'll report back when I've found someone who knows more than I do.

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