The United States is increasingly relying on debt to finance its ongoing conflict with Iran, a strategy that could saddle future generations with billions in additional costs, according to Linda Bilmes, a public finance expert at the Harvard Kennedy School. The Trump administration's approach to funding the war diverges sharply from historical precedents and risks exacerbating the nation’s already staggering $39 trillion national debt.
Bilmes notes that the cost of the Iran conflict is expected to exceed $1 trillion, far surpassing initial projections. The Pentagon reported that the first week alone cost $11.3 billion, while the American Enterprise Institute estimated daily costs at $1 billion. However, Bilmes argues these figures fail to account for long-term expenses such as veteran disability benefits and infrastructure repairs.
"The interest costs alone will add billions of dollars to the total cost of this war," Bilmes said. "And unlike the upfront costs, these are costs we are explicitly passing on to the next generation."
Historically, the U.S. has financed wars through a combination of taxes and borrowing. For example, during World War I, President Woodrow Wilson implemented a "conscription of wealth," raising income tax rates to 77%. Similarly, during the Korean War, President Harry Truman advocated for a "pay-as-you-go" policy to fund military expenditures through tax revenue.
However, the shift toward relying solely on debt began in the early 2000s under President George W. Bush, who funded the wars in Iraq and Afghanistan through borrowing while simultaneously implementing tax cuts. Bilmes and economist Joseph Stiglitz estimated the true cost of these conflicts at $2 trillion—four times higher than initial projections.
As the U.S. continues to finance the Iran conflict through debt, Bilmes warns that the long-term financial burden will only grow, further straining the nation’s fiscal health and placing undue hardship on future generations.