On February 11, the Congressional Budget Office released its closely-watched, 10-year projections for the U.S. budget, this addition covering FYs 2026 to 2035. As expected, the numbers were extremely dire, positing deficits and debt that by the decade’s close respectively each 6.5% of GDP and 120% of GDP. The sundry economists and think tanks that evaluated the numbers, and members of Congress on both sides of the aisle, called the forecast extremely dire and our current course unsustainable. The trend sounding the loudest alarm: An explosion in interest costs that even today account for almost one-fifth of all U.S. spending.
Then came the war in Iran.
The conflict is pushing the accelerator on a train that already risked hopping the tracks. Though the conflict’s costs over its first ten days are immense, the budget burden would be relatively light were it to end in, say, the next few days, or a week. In his Florida press conference on March 9th, President Trump avowed that “the war is very complete” and stop conclude “soon.” But should the the U.S. and Israel’s joint campaign to crush Iran’s nuclear program and crush its capacity to fire ballistic missiles and “kamikaze” drones drag on for even several more weeks, the damage to America’s fragile finances will prove substantial. Especially when you add a second blow that fell a week before the onslaught on Iran—the probable lost revenue arising from the Supreme Court’s decision to scotch the Trump tariffs.
The staggering costs for the early days are in, and now the bill is mounting at nearly $1 billion a day
In one of the earliest estimates, the Center for Strategic and International Studies reckoned that the U.S. in the war’s first 100 hours spent a total of $3.7 billion, including $3.1 billion on replacing munitions—and that 95% of that number wasn’t budgeted, hence amounting to an added expense for taxpayers. But on March 5th, Congressional sources told MS Now that the Pentagon put the number for the first 48 hours at $5.6 billion, a bill that covered only munitions replacement and didn’t include the operating costs for the likes of aircraft and destroyers. Using the CSIS analysis, it would appear that the additional costs reached several hundred million dollars.
Ken Smutters, faculty director of the Penn Wharton Budget Model, told CNN that daily costs fell substantially following the initial shock and awe. He forecasts that the meter is now running at roughly $800 million a day. Other estimates, including that advanced by John Phillips, a British safety, security and risk advisor, put the daily tab at $1 billion. Smutters told Fortune that if the conflict rages for a total of two months, or seven more weeks, that it will inflict net new expense on U.S. taxpayers of $65 billion.
An even moderately-long war makes a big situation significantly worse
In its February 11 report, the CBO projected a gap between expenditures and revenue for FY 2026 of $1.853 billion. The U.S. gets there by spending 33% more than the Treasury collects in taxes. An Iran war that lasts 60 days would hiked the deficit by that $65 billion plus $1.4 billion in interest, or around $66.4 billion. That’s an increase of 3.6% that would raise the shortfall’s share of GDP from the forecast 5.8% to 6.0%. The $66.4 billion would get tacked onto the deficit, and raises the amount we need to borrow, plus interest, year after year.
But it’s best not to look at the war impact in isolation. Just days before the first attack, the SCOTUS also dealt a blow to the budget by nixing the Trump tariffs. The Committee for a Responsible Federal Budget estimates that if Trump replaces the former border duties with a 10% blanket rate, the U.S would collect $74 billion less this year than under the previous regime. Add that $74 billion to the $65 billion in spending, and the budget hammering almost doubles to $139 billion, raising the CBO-projected deficit by 7.5%.
A leathery former Senate leader used to quip that spending billions here and billions there eventually added up to real money. The lengthy war in Iran may be a Nobel quest, but it will also mean “real money.”
This story was originally featured on Fortune.com
