Costs of Operation Desert Shield

Abstract : The added costs of U.S. military activities in the Persian Gulf are highly uncertain. But Operation Desert Shield could add substantially to defense spending, particularly in the next year or two. These added costs are exempt from the limitations on defense spending contained in the Budget Enforcement Act of 1990. This Staff Memorandum estimates a range of potential added costs, both in the absence of war and in the event of war. The memorandum is intended as a guide to levels of added defense spending, and so focuses primarily on budgetary costs. Of course, many other factors must be considered in reaching decisions about war or peace in the Persian Gulf--including some political and moral factors that are clearly more important than budgetary costs. Several conclusions emerge from this Congressional Budget Office (CBO) analysis. First, with or without a war, the costs of Operation Desert Shield are highly uncertain. Second, the added costs could be substantial. For example, if a war started early in calendar year 1991, added costs could range from $17 billion to $35 billion in budget authority in fiscal year 1991, with large additional costs possible in later years for the replacement of lost equipment. The 1991 costs of a war are likely to be at least as large as, and probably significantly larger than, costs in the absence of hostilities. If all losses of major weapons and munitions were replaced, the total cost of a war could range between $28 billion and $86 billion.