By Jeff Vedders

When you talk to most people, the common consensus is that the current war in Iraq may help boost the U.S. economy.  It definitely appears to be a factor in boosting defense spending.  In fact, the Bush administration announced in early February it was requesting a $399.1 billion military budget in fiscal year 2004.  This is an increase of $16.9 billion over current levels, a 4.4% increase.  These costs actually exclude those of the Iraq war, currently estimated at $75 billion. 

According to a Wall Street Journal article, the impact of war spending will make little difference to our $10 trillion-a-year economy.  Actually, the harmful effects of war which include reduced consumer confidence and unwillingness for businesses to invest will impact us far more than any benefit seen from military spending.

Interestingly, the increase in defense spending is going towards operations, which include fuel costs, supporting the troops abroad, and replenishing bombs and other weapons used in Afghanistan.  The Iraq war will be fought with the current supply of weapons.  Companies like Boeing are worried that most of the spending will be for the war and operations costs, leaving little for the development of the next generation of weapons. 


  • “War Spending Won’t Boost U.S. Economy,” Bob Davis and Greg Jaffe, Wall Street Journal Sunday, Feb. 9, 2003
  • “War Unlikely to Produce Significant Increase in St. Louis Defense Spending,” Gregory Cancelada, Knight-Ridder Tribune Business News March 25, 2003
  • The Center for Defense Information (