Iran War Has Cost U.S. Nearly $40 Billion and Fueled Inflation, CBO Finds

The war with Iran has resulted in the U.S. government spending approximately $38 billion, according to a recent analysis by the Congressional Budget Office (CBO). This figure is consistent with the Pentagon's latest accounting, which reported a cost of $37.5 billion. However, the CBO predicts that the war's expenses will continue to rise, with additional costs of $2 billion to $3 billion each month if the conflict persists.

The war has also contributed to inflation, straining the federal budget and raising concerns among Americans who rank affordability as their top issue ahead of the midterms. Despite the substantial financial burden, the CBO's estimate is lower than some early projections, providing the administration with a potential defense against critics who have warned of the war's fiscal impact.

The largest share of spending—$21.7 billion—was allocated to replacing munitions, with $13.1 billion dedicated to missile defense interceptors and $7.3 billion for land-attack cruise missiles. Other expenses include repairing or replacing military equipment, increased air operations and transportation hours, and higher fuel costs.

However, the CBO's analysis does not account for the damage to U.S. bases and facilities in the Middle East. Additionally, the Pentagon's inspector general estimated the cost of repairing physical damage to U.S. diplomatic facilities in Iraq, Kuwait, Saudi Arabia, and the UAE at around $184 million. The CBO estimates that replenishing the war-depleted stockpiles could take five years or longer, implying that the full cost of the conflict may not be known until the Pentagon addresses inventory and capability replenishment.

While the administration has denied claims of U.S. munitions shortages, the Defense Department has urged the defense industry to boost weapon production. The CBO's findings serve as an independent assessment for Congress to evaluate the Trump administration's funding requests for the military campaign in Iran. However, the CBO acknowledges that its estimates are "subject to considerable uncertainty" due to limited access to classified information and ongoing decisions about troop deployments, weapons replenishment, and base repairs.

Democrats are using the CBO's figures to argue that the funds could have been better utilized to alleviate domestic costs, while the administration contends that the direct military price of the war has been less severe than initially feared.