Iran War Has Cost US $38 Billion Over Five Months, CBO Says

The cost includes replacing expended munitions and equipment lost in battle, increased flying hours and increased fuel costs, the Congressional Budget Office said in a letter Tuesday to Pennsylvania Representative Brendan Boyle, the top Democrat on the House Budget Committee.

The CBO estimate is in line with Defense Secretary Pete Hegseth's testimony to Congress in July that the war had cost $37.5 billion at that point. Every additional month of conflict will cost at least $2 billion to $3 billion more. "Monthly costs could be higher still if the violence escalated further," the report said.

The report also provides the first government estimates on the effect of the war on US inflation. Due to the disruption of oil and gas shipments through the Strait of Hormuz, the CBO now projects that a key inflation measure tracked by the Federal Reserve will be 0.5 percentage point higher in early 2027 than it forecast in February.

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And core PCE - the inflation rate excluding prices for food and energy - will be 0.3 percentage point higher than originally forecast. That core inflation has been slower to materialize, but will also be stickier, CBO said.

In addition, the war has depleted stockpiles of munitions that could take five years or longer to rebuild, reducing the military's capacity to respond to another major conflict, according to the report. That echoes a study from the Pentagon's inspector general, who said Monday that the industrial base can't keep up with the munitions shortfalls.

"The shortfall would become especially problematic if a conflict arose with an opponent whose arsenal included large numbers of ballistic and cruise missiles," the CBO said, specifically citing a potential conflict between China and Taiwan.

Trump has downplayed that risk, insisting that the US has "virtually unlimited amounts" of ammunition.

The report comes as the House was set to vote on a measure that would remove US forces from hostilities without a formal declaration of war - the 18th such attempt to rein in the president's war powers in Congress this year.

Past the Midterms

"Donald Trump and Republicans have spent years telling Americans that we cannot afford to help families here at home, but apparently they can find tens of billions of dollars, and potentially much more, for a reckless war that is leaving Americans to pay the price," said Boyle, the Pennsylvania lawmaker.

Trump, who said in early March that the war was "pretty much" over, has now said the conflict could extend past the Nov. 3 midterm election. Some of his senior advisers have raised the possibility that it could extend through the end of his presidency, the Wall Street Journal reported last week, citing officials it didn't identify.

"There's a clear off-ramp here," former Secretary of State Antony Blinken told Bloomberg TV on Tuesday. "I think the president's wanted to take that off-ramp for months because he has huge pressure when it comes to markets, munitions, and their short supply, and of course the midterms. But taking the off-ramp, which means a diplomatic agreement with Iran that, by definition, gives Iran something, means it looks like a loss."

"There is not a good military way out," he added.

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Neither the White House nor the Pentagon responded to requests for comment on the report.

House Republicans advanced a budget plan in July that would funnel $73 billion toward the military and intelligence agencies for direct Iran war costs. That budget stalled in the Senate, where Majority Leader John Thune said Tuesday that it will "probably be a post-election question."

The budget bill is in addition to a separate proposal to boost the regular Pentagon budget by $350 billion in mandatory spending, partially paid for by targeting healthcare fraud. Both plans may be combined after the November elections.