This week on Facing the Future, Concord Coalition executive director Carolyn Bourdeaux and Kyle Duffy, policy analyst and field coordinator at Concord, discussed the potential cost of U.S. military operations in Iran, the President’s State of the Union Address and the real-world implications of the nation’s rising debt.
“War is expensive,” Bourdeaux said. “Once it starts, once that commitment is made to put our troops in harm’s way, we really do have to make sure that we are supporting them and being careful to ensure that they have what they need. That is why it’s a good idea to make sure that Congress and the American people are on board before we go to war. It goes back to the question of war powers and making sure that the president has the support of the people before he commits us in this way. It has an enormous fiscal impact on our budget.”
She noted that, “We often talk about how the debt-to-GDP right now is equivalent to where we were back in World War II. So, we are going into a war with a very high amount of debt. We’re approaching $40 trillion.”
Military conflicts can impose large and unpredictable costs on the federal budget. Bourdeaux noted that the administration has begun discussions with Congress about potential supplemental appropriations related to the current conflict.
Even without a large-scale ground invasion, the fiscal implications remain significant. Bourdeaux said that early estimates from the Penn Wharton Budget Model suggest the cost of military operations in Iran could range from $40 billion to $95 billion over two months. Those figures represent only direct military costs. Broader economic consequences—such as rising oil prices or renewed inflationary pressures—could also affect the federal budget and the wider economy.
Duffy noted that although Congress holds the constitutional powers to declare war and control federal spending, those responsibilities have increasingly been ceded to the executive branch of government as presidents initiate military actions while Congress later funds them through supplemental appropriations.
“There’s a reason that Congress both has the power of the purse and the power to declare war,” Duffy said. “These are things that require planning and preparation. Congress needs to ensure that our troops are protected and are funded.”
Fiscal concerns also received limited attention in the President’s recent State of the Union address. Bourdeaux noted that the speech briefly mentioned balancing the budget through reducing waste, fraud, and abuse. While addressing those problems is worthwhile, Bourdeaux said, in the “best case scenario, it’s a couple hundred billion.”
“This is not pocket change,” she continued, “this is real money. But we have a $2 trillion deficit that we have to close, and so we’re probably not going to get there just with the waste, fraud, and abuse.”
Bourdeaux also lamented that the president did not do more to explain the pending insolvency of Social Security and Medicare, and what that means for American families. “I think he had one sentence in there where he said he is going to protect Social Security and Medicare. Great, but it’s going to need some infusions of either revenues or expenditure cuts to protect those programs. Something is going to have to happen,” she said.
According to current projections, the Social Security retirement trust fund will be depleted in 2032. If Congress does not act before then, benefits would automatically be reduced by about 28 percent across the board. Medicare’s Hospital Insurance trust fund faces its own solvency challenges within the next decade.
Compounding the fiscal challenges ahead, Duffy pointed out that the fastest-growing component of the federal budget is the cost of interest on the national debt. “From 1985 to 2024,” he explained, “we averaged spending 12.3% of our revenues on servicing the debt. By the time we reach 2035, we’ll be paying 25% of our revenues towards net interest costs. That’s not paying down our debt, that’s not providing government services, that’s not roads or bridges or education or defense. That is simply continuing to service our debt. And the outlook is even more grim. In CBO’s recent long-term outlook, by the 2050s, net interest will exceed Social Security spending and really eat up a lot of our fiscal room to work with.”
Bourdeaux warned that the growth of debt has real-world consequences. “Young people are having a hard time buying homes,” she said. “One of the challenges is that interest rates on mortgages are high. If interest rates on Treasuries start to go higher – and I just point out, with this recent action in Iran, all of a sudden Treasuries are starting to creep back up – the interest rate on those is directly tied to mortgage interest rates. So it has that direct impact on all of our daily lives, whether we can afford to buy a home, whether we can afford to buy a car, whether we can afford to start a small business or expand. It is also affecting our economy overall, and how vibrant and healthy our economy is. So there are many reasons to get this situation under control quickly, but that’s certainly a central one.”
Hear more on Facing the Future. Concord Coalition Senior Advisor Bob Bixby hosts the program each week on WKXL in Concord N.H., and it is also available via podcast. Join us as The Concord Coalition team discusses issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.
