Deficits, Dollar, Federal Reserve, Game Theory, Live and Learn

The Cost of Catching Osama

Now that Osama bin Laden has been brought to justice, it must be a great feeling of closure for the victim’s families of 9/11. The news of Osama’s death has galvanized the country and served as a rallying cry. President Obama made a very gutsy call opting to send in the Navy SEALS as opposed to drones, and the SEALS went legend on us. Who would have thought Osama was hanging out in a mansion?

The whole situation feels a little strange to me (the celebration of death), even when it is a mass murderer. The country’s emotional response is understandable and predictable, but it’s time to start asking whether this mission was worth the costs; particularly as politicians line up to start taking credit for the “achievement.”

From the September 11th attacks to Osama bin Laden’s death, we started two wars in which the occupation is ongoing, endured thousands of American military and civilian casualties, and spent $1.283 trillion in the War on Terror. Actually, the total cost of catching Osama is virtually impossible to pinpoint. As my colleague Andrew Syrios touched on over two years ago, Osama bin Laden waged a war with us that was just as much an economic one as a “War on Terror.” His goal was to end the Western way of life, which began by weakening us financially.

After the attacks on 9/11, coming off of the dot.com bubble, the economy spun into a light recession. The Federal Reserve responded with low interest rates which energized a housing boom. Investors scrambled to find higher yields, opting to buy up subprime mortgage bundles. In order to churn money and create more high-yield bonds, lenders made loans to riskier and riskier borrowers. Housing prices soared and the financial crisis was waiting in the wings. So if you want to add in the costs of the financial crisis, bin Laden just made us blow $5 trillion. I think the majority of the blame for that should remain with the Federal Reserve, Fannie and Freddie, the investment bankers, the rating agencies, the lack of common sense regulation, a history of government picking winners and losers, moral hazard, and the consumers, but Osama did his part.

The $1.283 trillion figure comes from the costs of foreign operations that were launched in response to the 9/11 attacks.

According to a March 29, 2011 Congressional Research Service report, Congress has approved a total of $1.283 trillion for “military operations, base security, reconstruction, foreign aid, embassy costs, and veterans’ health care for the three operations initiated since the 9/11 attacks.” Those three operations include Operation Enduring Freedom (OEF) Afghanistan; Operation Noble Eagle (ONE), providing enhanced security at military bases; and Operation Iraqi Freedom (OIF).

The government has spent $806 billion for Iraq, $444 billion for Afghanistan, $29 billion for enhanced security and $6 billion on “unallocated” items.

Was catching Osama worth the blood and treasure? As happy as I am for the victim’s families that we got him, I have to say no.

How much safer are we as a result? It’s almost impossible for anyone outside of the CIA and select circles to know. I do know that we have incurred all of these costs while failing to even secure our own ports and borders. Catching Osama is symbolic and cathartic for some, but al Queda’s terror cells have been operating independently for ten or more years, across the world, with some Internet communication here and there. We know there are more “Osama’s” out there. These are religious fanatics and I don’t think not being able to Skype with Osama is going to deter them. If one of them orchestrates another attack on our people, should we move to invade more countries that al Queda is not residing in and spend another trillion dollars?

It’s time to look at the costs of this mission and develop a plan we can live with long-term. As long as we’re fighting a War on Terror, I hope part of the plan is securing our ports and borders first. James Madison once said, “If tyranny and oppression come to this land, it will be in the guise of fighting a foreign enemy.” There just may be some wisdom in there to extract.

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