STUDY SHOWS COSTS OF TERROR WAR AT $137 BILLION AND COUNTING

December 6, 2002

STUDY SHOWS COSTS OF TERROR WAR AT $137 BILLION AND COUNTING
By Martin Kady II, CQ Staff Writer

While federal budget gurus have estimated the Department of Homeland Security will cost $40 billion in fiscal 2003, the cost of the war against terrorism could be more than more than six times that figure in the coming calendar year, according to a recent study.

A Texas-based think tank has estimated that fighting terrorism and recovering from the terrorist attacks cost the country $137 billion between Sept. 11, 2001 and mid-November 2002. The costs for 2003, according to the study by International Horizons Unlimited, could be as much as $252 billion if there is a war in Iraq.

The cost estimates for the 14 months after Sept. 11, 2001 include the military offensive in Afghanistan ($40 billion), airline loan guarantees ($25 billion), terrorism insurance claims ($40 billion), bioterrorism grants ($3 billion), the creation of the Transportation Security Administration ($4.7 billion) and airport security upgrades ($7 billion).

The calculations also include costs borne by the private sector, such as rebuilding the area around the World Trade Center, upgrading security at factories, dams and power plants, and increasing security in the trucking industry.

Saul B. Wilen, president of International Horizons Unlimited, used figures from the Office of Management and Budget, General Accounting Office, and state and local budgets for homeland security to come up with the numbers. He says a staff of 60 researchers also interviewed businesses and industry groups that had been affected by terrorism.

"Our concern in doing this study is what impact is it [the cost of terrorism] having on our economy?", said Wilen, whose San Antonio-based company also offers terrorism preparedness consulting. "These numbers [in the study] are conservative. The question is - what are we getting for our money?"

Many of the numbers, such as the cost of the military action in Afghanistan, the fiscal 2003 budget estimate for the Department of Homeland Security and the airline loan guarantees have been public for several months.

In September, OMB released figures showing the terrorist attacks had cost the government nearly $100 billion.

But Wilen´s study is among the first to add the governmental costs to estimates from various private sector and state and local interests. The study paints a picture of a broad war on terrorism that could cost $252 billion in 2003 if there is a war in Iraq and if there are more insurance claims related to terrorism.

The study also assumes that companies will continue to increase spending on security, whether for physical security or cyber security.