CBO says US-Iran war cost tops USD 38 billion, with no quick end in sight

A Congressional Budget Office assessment says the US war with Iran has cost more than USD 38 billion so far. The report warns the conflict could keep straining budgets and push inflation higher into 2027.

In Short

• Most spending stems from replacing munitions and equipment lost in battle
• Estimate excludes casualties, veterans' care and long-term disability compensation costs
• Disrupted oil, gas and Red Sea shipping are lifting prices

A new assessment by the nonpartisan Congressional Budget Office said the US war against Iran cost the Department of Defence more than USD 38 billion through August 1, and could continue to cost up to USD 3 billion a month or more, depending on how intense the conflict remains.

The report said the war is also expected to add to inflation into the first quarter of 2027, making inflation about 0.5 percentage points higher than earlier estimates. It said this is being driven mainly by reduced oil and natural gas shipments through the Strait of Hormuz and disruptions to shipping through the Red Sea.

The assessment was released on Tuesday in response to a request from Representative Brendan Boyle, the top Democrat on the House Budget Committee. The estimate broadly matches an earlier figure given by Defence Secretary Pete Hegseth in Senate testimony, in which he put the cost at USD 37.5 billion.

The CBO said most of the spending estimate comes from replacing munitions and equipment lost in battle. It said the figure does not include costs linked to US military personnel killed or injured in the conflict, or the longer-term cost of veterans' healthcare and disability compensation.

Boyle said that, beyond the war's human toll, "this nonpartisan CBO report makes clear that the war has also cost American taxpayers tens of billions of dollars and counting, while continuing to drive up costs." He added, "Donald Trump and Republicans have spent years telling Americans that we cannot afford to help families here at home, but apparently they can find tens of billions of dollars, and potentially much more, for a reckless war that is leaving Americans to pay the price."

The findings come as voters focus on the war and high prices ahead of the midterm elections, which will decide control of Congress. Republicans currently hold majorities in both the House and the Senate. The war began on February 28 and is now in its seventh month, with no sign of a quick end to the on-off fighting.

The White House sought USD 87.6 billion in supplemental funding in June, largely for the war effort, but Congress has not approved it. The CBO said USD 42.3 billion of that request appears to be directly tied to the conflict, about 10 per cent higher than its estimate of the Department of Defence's costs.

The Defence Department did not respond to the CBO's request for information for the report, a break from usual practice. The budget office said it relied on government databases and public reports, and that its estimates "are subject to considerable uncertainty". A Pentagon inspector general report issued on Monday said the war has led to "strategic inventory shortfalls". Overall, the CBO report said the conflict has already imposed a heavy cost on the US and is expected to keep affecting both government spending and prices in the months ahead.

With PTI Inputs

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