Should we bomb Iran to save money?

While Robb, Ross and Makovsky provide an interesting account of the economic impact of inaction, they give little attention to the economic cost of action, merely noting that “the disruption of oil flows would have significant economic repercussions.” It is impossible to know exactly what the economic impact of war would be—much depends on how both sides choose targets and tactics, and how successful their efforts are. But it is likely that oil would quickly spike to two hundred dollars per barrel and remain elevated for the duration of the war. With the United States consuming between eighteen and nineteen million barrels of oil per day, massive price increases can easily suck billions of dollars a week out of the economy.

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If a conflict were to continue for an extended period—a decision that might be made in Tehran, not in Washington—this could easily tip the country into a recession. A slowed American economy would provide lower revenues to the federal government just as it launched its third consecutive debt-funded war; halfhearted efforts to achieve a balanced and sustainable budget would face new difficulties. The impact on Europe’s ongoing economic crisis could be worse and faltering growth in China and India would also be hit.

Living with an Iranian bomb brings new and serious risks. Yet military action might not reduce any of them, and it will certainly come at a steep price of its own. “Inaction” is expensive. It is just not clear that any of the proposed alternatives are cheaper.

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