$38 Billion Gone And Still Counting: The Hidden Price Of America’s Iran War

The US war against Iran has already cost the Department of Defence more than USD 38 billion, and the financial burden could continue to grow by as much as USD 3 billion a month or more, depending on the intensity of the conflict, according to a new assessment by the nonpartisan Congressional Budget Office.

The estimate, released Tuesday, puts the direct military cost of the conflict through August 1 at slightly above USD 38 billion. Much of the spending has gone towards replacing munitions and military equipment lost during combat.

But the bill does not capture the full cost of the war. The CBO said its estimate excludes expenses associated with US military personnel killed or wounded in the conflict, as well as longer-term costs such as veterans' healthcare and disability payments.

The economic impact is also beginning to extend beyond the battlefield. The CBO estimates that the war could keep US inflation higher than previously projected through the first quarter of 2027. It expects inflation to be about 0.5 percentage points higher than its earlier forecast, largely because of disruptions to oil and natural gas shipments through the Strait of Hormuz and shipping problems in the Red Sea.

The CBO assessment broadly matches an earlier estimate by Defence Secretary Pete Hegseth, who told senators that the conflict had cost about USD 37.5 billion.

The financial pressure comes as the White House seeks additional funding. The administration requested USD 87.6 billion in supplemental funding in June, with USD 42.3 billion of that amount appearing directly linked to the conflict, according to the CBO. Congress has yet to approve the request.

The Pentagon did not respond to the CBO's request for information, prompting the budget office to rely on government databases and public reports. It cautioned that the figures carry considerable uncertainty.

The timing adds another layer of political pressure, with US voters heading towards midterm elections amid concerns over the war and elevated prices. A Pentagon inspector general report has also warned of strategic inventory shortfalls, highlighting that the cost of the conflict is not limited to dollars already spent.

The war, which began on February 28, has now entered its seventh month with no quick resolution in sight, leaving the eventual financial and economic cost difficult to determine.