The U.S. is once again locked in conflict in the Middle East, and Bilmes, a Harvard Kennedy School public policy lecturer and author of “The Ghost Budget: U.S. War Spending and Fiscal Transparency,” is once again sounding the alarm on the true cost of war. 

“I am certain we will spend $1 trillion for the Iran war,” she said in an interview this month at the Harvard Kennedy School. “Perhaps we have already racked up that amount.”

Bilmes’s 13-figure estimation dwarfs initial projections of spending on the conflict, at $1 billion per day. The Pentagon told Congress the first week of the war reportedly cost about $11.3 billion alone. If that rate of spending continued, the cost of the war would have exceeded $35 billion by April 1, according to think tank American Enterprise Institute. AEI economists suggested that the first month of war cost each American household $260—which seems small, but there are over 150 million taxpaying households in the United States. Currently, Bilmes estimates the U.S. is spending about $2 billion per day on the war.

President Donald Trump said on Wednesday the war could end “very soon” as the U.S. engages in peace talks with Iran as it continues to blockade the Strait of Hormuz. Trump has repeated this rhetoric over the course of the conflict. Last month, the Pentagon asked the White House to approve $200 billion in additional funding toward efforts in Iran, the Washington Post reported.

Bilmes said, just like 20 years ago, the U.S. is continuing to underestimate how much money will be required to fund the war and its aftereffects. In an interview with Fortune, she outlined the often-overlooked war spending that persists even years after the conflict is over, arguing the expenses could further burden America’s $39 trillion debt.

“Wars always have a long tail of costs,” she told Fortune. “Wars cost more than we expect. Wars take the cost to go on for longer than we expect, and some of these costs are very consequential.”

Short-term costs

When most people talk about the cost of war, they are thinking of the direct costs of munitions and combat, according to Bilmes, “which are themselves understated.” 

The Center for Strategic and International Studies (CSIS), a Washington, D.C., think tank, estimated projected spending was $11.3 billion by the sixth day of the war on munitions alone, $1.4 billion on combat loss and infrastructure damage, and $26.5 million on operations, totaling about $16.5 billion by day 12. But this number increases when considering the cost to replace munitions, which could range from 50% to nearly double the initial cost, Bilmes said. And as a result of tariffs and supply-chain disruptions exacerbated by the Russia-Ukraine war, some U.S. munitions makers have warned the price to produce ammo has increased 8% to 14% since 2024.

Additional spending will depend on damage to key infrastructure in the Gulf, and with the U.S. operating 19 military sites in the region, some have already sustained damage, which CSIS assessed to cost $800 billion within the first two weeks of the war.

Some U.S. spending on the war may also be disproportionate to Iran’s spending. For example, the drones Iran uses are much less expensive than the weapons the U.S. needs to destroy those drones. A Shahed drone used by Iran can cost between $20,000 and $50,000, according to Reuters, while a Patriot interceptor used to shoot down the drone may cost about $4 million because it requires much more sophisticated technology to function.

“Not only are the costs high, but we have these in this imbalanced situation where costs are disproportionately high compared to the cost of producing drones,” Bilmes said.

The Pentagon declined to respond to Fortune’s request for comment.

Long-term impact

According to Bilmes, war spending calculations seldom touch on long-term expenditures, particularly the cost of disability benefits to veterans. The Department of Veterans Affairs reported providing $195 billion in compensation to more than 6.9 million veterans and their families through fiscal 2025, according to the Government Accountability Office, an increase from $136 billion in fiscal year 2023.

Spending on veteran disability benefits increases in times of war, when more individuals are deployed and placed in conditions where they may be exposed to contaminants and chemicals leading to chronic health problems, Bilmes noted. There are now about 60,000 U.S. troops in the Middle East region. Since the Gulf War, about 50% of veterans claimed disability benefits, with 37% of Gulf war veterans receiving lifetime disability benefits of some kind, according to Bilmes.

But the Trump administration’s efforts to increase the Department of War budget amid the ongoing conflict presents among the greatest increase in spending, Bilmes argued. Trump has called for $1.5 trillion to be added to the military budget for 2027, up from the $1 trillion proposed earlier. Because of the war, she suggested, Congress is more likely to approve a budget increase, which likely means hundreds of billions of dollars in additional military spending each year, indirectly a result of the Iran war.

“Before this war, Congress was lukewarm toward this idea, but the obvious depletion of many, many stockpiles and inventories and munitions and so forth, is leading to an environment in which probably the president will secure a much larger increase to the defense budget,” Bilmes said.

The policy expert warned that because a lion’s share of that spending will be borrowed as the Trump administration slashes tax revenue, the Iran war will further weigh on the country’s $39 trillion national debt. Compared to the Iraq war in 2003 when nearly $4 trillion of the debt was held by the public and 7% of the total national budget was for paying interest, today about $31 trillion of debt is held by the public, with almost 15% of the total budget being spent on interest, Bilmes said.

“In this case, we’re borrowing [at] high rates, largely for things that will end up in the sand,” she concluded.