US spent $38b in 5 months on Iran war, CBO finds

The United States spent approximately $38 billion over five months on the war with Iran, averaging about $246 million a day, according to a new report by the Congressional Budget Office. The CBO also warned that if the conflict continues, costs could climb by as much as $3 billion per month, and that it could take at least five years to replenish depleted missile defense stockpiles.

The CBO, Congress's nonpartisan budget analysis office, estimated in a report released Tuesday (local time) that the Defense Department had spent roughly $38 billion on the armed conflict with Iran as of Aug. 1. The figure covers the cost of replacing ammunition expended and equipment lost in combat, increased flight hours, other operational expenses and fuel costs. It excludes costs already built into the federal budget — such as baseline operating expenses for deployed units — as well as costs borne by other agencies, including higher fuel bills at the US Postal Service stemming from rising energy prices.

The CBO's estimate is broadly in line with the $37.5 billion in Iran war-related costs that Defense Secretary Pete Hegseth cited in July.

A separate report — the Senior Inspector General's Report to Congress on Operation Epic Fury, submitted by the Trump administration on Monday and covering military and diplomatic facility losses — estimated that $33.4 billion in costs had been incurred through June 29 of this year. That report is the first official comprehensive analysis of the economic toll the war has taken on the US military.

The CBO projected that Defense Department spending will continue to rise as the Iran conflict drags on. If fighting persists at the low intensity seen in May and June, costs would increase by $2 billion per month; if it escalates to the level seen in July, the monthly addition would reach $3 billion. Should the conflict intensify further, monthly costs could climb even higher, the CBO said.

The office cautioned, however, that its estimates carry significant uncertainty because the Defense Department did not respond to requests for data. The CBO projected that US missile defense interceptor stockpiles, heavily drawn down by military operations against Iran, will remain depleted for years.

The Defense Department has not disclosed the size of its ammunition reserves.

Based on interceptor spending records and procurement volumes to date, the United States is estimated to have consumed between half and as much as two-thirds of its related stockpiles since June of last year. A large share of that drawdown is attributed to supporting Israel's defense against Iranian attacks.

The CBO said it would take the Defense Department at least five years to replenish its interceptor missile stocks, warning that "this shortage could become particularly serious in the event of a conflict with an adversary possessing large numbers of ballistic and cruise missiles."

The office added that China holds exactly such missile capabilities, and that those weapons could play a significant role in any military conflict over Taiwan. The CBO also found that rising energy prices stemming from the Iran conflict have placed considerable pressure on US inflation.

Reduced oil and natural gas shipments through the Strait of Hormuz have pushed energy prices higher, driving up the cost of gasoline, diesel and jet fuel, and indirectly raising prices for other products and services through higher transportation costs.

As a result, the CBO projected that the personal consumption expenditures price index in the first quarter of next year will run 0.5 percentage points higher than it forecast in February. Core PCE inflation, which strips out food and energy, is expected to come in 0.3 percentage points above the earlier projection.

Rep. Brendan Boyle of Pennsylvania, who leads the Democratic Party's side on the House Budget Committee and requested the report, criticized the findings. "President Trump and Republicans have said for years that we can't afford to support American families, but apparently we can spend tens of billions — maybe far more — on a reckless war that is making Americans pay the price," he said.