War and Debt
Every major American war has been financed primarily by borrowing. The post-9/11 wars are unique in one respect: for the first time in history, the United States cut taxes during wartime. The result is $8 trillion in war-related debt, with interest payments that now exceed the entire federal education budget — and the bill is still growing.
The wars in Iraq and Afghanistan were put on a credit card. The generation that started them will not live to pay for them. Your grandchildren will.
By the Numbers
Estimated cost of post-9/11 wars including future obligations and interest
Brown University Costs of War Project
Interest already paid on post-9/11 war borrowing through 2023
Costs of War Project
Projected additional interest costs on war debt through 2050
CBO + Costs of War estimates
Post-9/11 wars financed by tax increases — all borrowed
Congressional Research Service
Annual federal interest payments (FY2024) — now larger than defense spending
US Treasury
Share of GDP spent on net interest (FY2024) — highest since 1992
CBO
How America Paid for Every War
From the Continental Congress printing worthless paper currency to George W. Bush putting two wars on a credit card while cutting taxes, every generation of American leaders has found a way to defer the cost of war onto someone else — usually future taxpayers who had no say in the matter.
Revolutionary War (1775–1783)
$101M ($2.4B adjusted)Continental dollar inflated 99%. "Not worth a Continental" became an idiom. Congress had no taxing power.
War of 1812 (1812–1815)
$105M ($1.8B adjusted)National debt doubled. Government nearly defaulted. Led to creation of Second Bank of the United States.
Mexican-American War (1846–1848)
$71M ($2.4B adjusted)Financed partly by existing revenue. One of the few wars that didn't cause a debt crisis.
Civil War (1861–1865)
$5.2B ($80B adjusted) — Union onlyNational debt increased 4,200%. First income tax in US history. Confederacy financed by printing money — hyperinflation destroyed their economy.
Spanish-American War (1898)
$283M ($9.6B adjusted)Short war, moderate cost. But ongoing Philippines occupation cost more than the war itself.
World War I (1917–1918)
$32B ($610B adjusted)Top income tax rate raised to 77%. Liberty Bond campaigns made buying government debt a patriotic duty.
World War II (1941–1945)
$296B ($4.1T adjusted)Top income tax rate: 94%. Number of taxpayers expanded from 4M to 43M. Debt-to-GDP peaked at 120% — a record not approached until 2020.
Korean War (1950–1953)
$30B ($341B adjusted)One of the few wars partially financed by taxes. Truman raised taxes over Republican objections. Debt-to-GDP actually fell.
Vietnam War (1965–1975)
$111B ($950B adjusted)LBJ tried to fund both the war and Great Society without raising taxes until 1968. Result: inflation that lasted a decade.
Gulf War (1990–1991)
$61B ($116B adjusted)The "paid-for" war. Saudi Arabia, Kuwait, Japan, and Germany covered 88% of costs. The last time allies actually paid up.
War on Terror (2001–present)
$8T+ (including future obligations)First time in US history that taxes were CUT during wartime. Bush passed $1.35T in tax cuts in June 2001, then $350B more in 2003 during the Iraq invasion.
The Interest Bomb: War Debt That Keeps Growing
The wars themselves may be winding down, but the interest on war debt is accelerating. By 2050, the total interest paid on post-9/11 war borrowing is projected to exceed $6.5 trillion — more than double the direct cost of the wars themselves. This is the true cost of fighting on credit: the interest compounds long after the last shot is fired.
What We Pay in Interest vs. What We Invest
In fiscal year 2024, net interest on the federal debt — $925 billion — surpassed the entire Department of Defense budget for the first time. A significant portion of that interest is attributable to war borrowing. Here's how interest compares to everything else the government does:
Net Interest on Federal Debt
Now the single largest "program" in the federal budget
Department of Defense
Interest payments now exceed the Pentagon budget
Department of Education
War interest payments are 14x the entire education budget
Department of Veterans Affairs
Cost of caring for veterans of the wars we borrowed to fight
Department of Transportation
Every bridge, highway, and airport combined
EPA
Interest on war debt could fund the EPA 77 times over
NASA
Interest on war debt could fund 37 NASAs
NIH (National Institutes of Health)
All medical research combined is 5% of annual interest payments
Cutting Taxes While Fighting Wars: A Historic First
In every previous American war, the government either raised taxes or asked citizens to buy war bonds — or both. The post-9/11 era broke this pattern completely. George W. Bush cut taxes three months before 9/11, then cut them again during the Iraq invasion. The message was unprecedented: fight two wars, sacrifice nothing, charge it to your grandchildren.
Economic Growth and Tax Relief Reconciliation Act
Signed June 7, 2001 — three months before 9/11. Reduced top income tax rate from 39.6% to 35%. When war came, taxes stayed cut.
Job Creation and Worker Assistance Act
Extended business depreciation benefits while troops were fighting in Afghanistan.
Jobs and Growth Tax Relief Reconciliation Act
Signed May 28, 2003 — two months after the Iraq invasion. Cut capital gains and dividend taxes while borrowing for a second simultaneous war.
Working Families Tax Relief Act
Extended earlier cuts. At this point US had 160,000 troops in Iraq. All financed by debt.
Tax Increase Prevention and Reconciliation Act
Extended capital gains cuts. Iraq was in full civil war. Debt climbed past $8.5 trillion.
Tax Relief, Unemployment Insurance Reauthorization Act
Obama extended Bush tax cuts for all income levels. Afghan surge ongoing with 100,000 troops deployed.
Tax Cuts and Jobs Act
Trump's tax overhaul. Reduced corporate rate from 35% to 21%. US still at war in Iraq, Afghanistan, Syria, Yemen, Somalia, Libya.
Sacrifice Then vs. Now
During World War II, the top income tax rate was 94%. Americans bought war bonds, rationed food, and collected scrap metal. During the War on Terror, the top tax rate was cut, no bonds were sold, and President Bush told Americans to “go shopping.” The contrast defines two entirely different conceptions of what it means to be at war.
World War II
Result: Debt high but economy boomed. Paid off in 20 years.
Korean War
Result: Debt-to-GDP actually fell during the war.
Vietnam War
Result: Inflation crisis. Decade of economic pain.
War on Terror
Result: $8T+ in debt. Interest exceeds education budget. Still paying.
The Generational Burden: Who Pays for Wars They Didn't Choose
War debt is a form of intergenerational wealth transfer — from the young to the old, from the future to the present, from those who had no voice to those who chose not to listen. The post-9/11 wars were started by Baby Boomers, fought by Millennials, and will be paid for by Gen Z and Gen Alpha.
Baby Boomers (born 1946–1964)
$26,000 per personStarted the wars. Received tax cuts. Will not live to pay the interest.
Gen X (born 1965–1980)
$24,000 per personFought the wars. Bore the initial costs. Watched their tax dollars go to interest.
Millennials (born 1981–1996)
$24,000 per personGrew up during the wars. Will pay the majority of interest costs. Got student debt instead of war bonds.
Gen Z (born 1997–2012)
$24,000 per personBorn after 9/11. Had no say in these wars. Will pay interest on them until 2050 and beyond.
Gen Alpha (born 2013+)
TBD — growingNot yet born when these wars started. Will inherit trillions in war debt they had no voice in creating.
What $8 Trillion Could Have Bought Instead
The opportunity cost of war debt is staggering. Here is what the United States could have done with $8 trillion if it had not borrowed it to fight wars in the Middle East:
of fully funded public education at current levels
for every man, woman, and child in the United States
320 years of NASA funding at current budget
enough to eliminate all student loan debt — four times over
of EPA funding at current levels
of NIH medical research funding
“Go Shopping”: The Bush Doctrine of Deferred Pain
On September 20, 2001, President Bush addressed the nation and told Americans that the best way to fight terrorism was to “go out and shop.” He later told reporters that Americans should “enjoy life, the way we want it to be enjoyed.” There would be no rationing. No war bonds. No draft. No tax increases. The wars would be invisible — fought by volunteers, financed by borrowing, and felt by no one except the families who sent their children to fight.
This was a deliberate political choice. The Bush administration understood that asking for sacrifice would erode public support for the wars. By making the wars painless for 99% of Americans, they ensured that the wars could continue indefinitely without significant opposition. The cost was simply deferred — charged to a credit card that future generations would have to pay off.
The strategy worked exactly as designed. The wars lasted twenty years. Trillions were spent. And most Americans couldn't tell you what we were fighting for, because they were never asked to sacrifice anything for it. A war that costs nothing feels like nothing — and a war that feels like nothing can last forever.
The Case Against War on Credit
Thomas Jefferson wrote: “The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” James Madison warned that “war is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few.”
The Founders understood something that modern politicians have forgotten: if wars must be paid for in real time — through taxes, bonds, and sacrifice — then the people will demand that wars be short, necessary, and winnable. If wars can be financed by borrowing, then there is no political cost to starting them, no pressure to end them, and no accountability for the consequences.
Deficit-financed warfare is the greatest threat to fiscal conservatism in American history. The post-9/11 wars alone added more to the national debt than the entire New Deal, Great Society, and Affordable Care Act combined. Every dollar spent on interest payments for war debt is a dollar that cannot be spent on infrastructure, education, or tax reduction.
The solution is simple and radical: require that any war be paid for in real time, through taxes or bonds, from the moment the first bomb falls. If the American people are not willing to pay for a war while it is being fought, then the war is not worth fighting. This single reform would do more to prevent unnecessary wars than any arms control treaty or UN resolution ever written.
Sources
- Brown University, Watson Institute — Costs of War Project, “U.S. Budgetary Costs and Obligations of Post-9/11 Wars” (2023)
- Congressional Budget Office, “The Budget and Economic Outlook” (FY2024)
- Congressional Research Service, “Costs of Major U.S. Wars” (RS22926)
- US Treasury Department, Monthly Treasury Statement and Debt to the Penny
- Office of Management and Budget, Historical Tables
- Tax Foundation, “Federal Tax Revenue by Source, 1934-2024”
- Robert Hormats, The Price of Liberty: Paying for America's Wars (Times Books, 2007)
- Joseph Stiglitz & Linda Bilmes, The Three Trillion Dollar War (W.W. Norton, 2008)
- National Priorities Project, Federal Budget Analysis
- Government Accountability Office, Financial Audit Reports