"There will be no peace dividend": The cost of the wars in Iraq and Afghanistan will be drawn out through welfare and interest payments. Photo: Reuters
The cost to America of the wars in Iraq and Afghanistan could now reach as much as $US6 trillion ($5.8 trillion) - or $US75,000 for every household, a study from Harvard University has concluded.
The calculation, which includes the cost of spiralling veterans' care bills and the future interest on war loans, paints a grim picture of how America's future at home and abroad has been mortgaged to the two conflicts entered into by George W. Bush in 2001 and 2003.
''There will be no peace dividend'', is the stark conclusion from the 22-page report from the Kennedy School of Government, ''and the legacy of Iraq and Afghanistan wars will be costs that persist for decades''.
The US is preparing for a final withdrawal from Afghanistan, a decision that Barack Obama trumpeted in his State of the Union address as a sign that the US was finally moving forward after a sapping decade of war.
However, the working paper by Linda Bilmes makes clear that the true legacy of the two conflicts - which have cost $US2 trillion in actual outlay to date - has not yet begun to be appreciated.
''There's a sense that we are turning the corner but, unfortunately, the legacy of these wars, because of decision about the way we fought and funded these wars, means we will be paying the costs for a long time to come,'' Professor Bilmes said. ''We may be mentally turning the page but we are certainly not from a budgetary and financial perspective.''
The report highlights the rise in the long-term cost of treating veterans who both survive in greater numbers and seek treatment for a wider selection of ailments.
''More than half of the 1.56 million troops who have been discharged to date have received medical treatment … and been granted benefits for the rest of their lives,'' the report said. It also said the real bills would not fall due for decades to come.
The second major hidden cost of the two conflicts would be servicing the debts incurred as a result of the ''unprecedented'' decision to pay for the wars entirely from debt while cutting taxes during wartime.
The cost estimates dwarf the initial projections.