The Congressional Budget Office released a new analysis Tuesday showing that U.S. military operations in Iran have surpassed $40 billion in costs, with projections indicating taxpayers will continue to absorb between $2 billion and $3 billion monthly.
Why It Matters
The escalating financial burden of the conflict raises significant concerns about federal budget stability and potential inflationary pressures. As military stockpiles dwindle and emergency funding requests stall in Congress, the long-term economic impact on American households and national defense readiness remains a critical policy question.
What Happened
The CBO report, requested by House Budget Committee ranking member Brendan Boyle in March, details the financial trajectory of the bombing campaign launched by President Donald Trump alongside Israeli forces in February. The analysis indicates that the conflict has significantly depleted American military weapons stockpiles. Phillip L. Swagel, a CBO economist, noted that “the main opportunity cost of the conflict thus far has been the large expenditure of missile defense interceptors,” which will reduce inventory levels for several years.
The Defense Department did not respond to the CBO’s requests for specific information, forcing analysts to rely on government databases and public reports. Consequently, the agency warned that its estimates are subject to considerable uncertainty. The report explicitly excludes costs associated with killed or injured personnel, future veterans’ health care, disability compensation, and equipment repairs.
Earlier this week, inspectors general from the Defense, State, and U.S. Agency for International Development released a separate report estimating costs at $33.4 billion through June 29. That figure excluded expenses incurred after that date and military construction for damaged infrastructure. The CBO stated it was unable to estimate damage to U.S. bases due to the lack of Department of Defense information regarding asset values and repair plans.
By the Numbers
$40 billion — Total cost of U.S. military operations in Iran exceeded this amount according to CBO analysis.
$2 billion to $3 billion — Projected monthly cost to taxpayers for ongoing operations.
0.5 percentage points — Expected increase in inflation during the first quarter of 2027, driven largely by increased danger navigating the Strait of Hormuz.
$33.4 billion — Cost estimated by inspectors general through June 29.
$87.6 billion — Total emergency funding requested by the Trump administration in June.
Funding Request Stalls
In June, the Trump administration asked Congress for $87.6 billion in emergency funding to support ongoing operations and replenish depleted resources. The supplemental request included $67.15 billion for the Defense Department, $3.36 billion for the State Department, and $2.03 billion for the U.S. Coast Guard. Smaller allocations were proposed for the FBI ($40.26 million), the Treasury Department’s office of terrorism and financial intelligence ($36.18 million), and Homeland Security operations ($13.1 million).
Congress has not approved additional spending, and lawmakers are unlikely to act before the midterm elections in November. Defense Secretary Pete Hegseth testified before the Senate Appropriations Committee in July, warning that the military faces “critical shortfalls that threaten” operational capabilities without extra money. Due to the lack of dedicated war funding, the Defense Department has been using base budget funds intended for standard operational activities.
Zoom Out
The CBO’s projection of a 0.5 percentage point increase in inflation highlights the broader economic risks of prolonged military engagement without clear legislative funding mechanisms. The depletion of missile defense interceptors represents a strategic vulnerability that extends beyond immediate fiscal concerns, potentially affecting national security posture for years to come. This situation mirrors historical precedents where unauthorized or underfunded conflicts strain federal resources and complicate long-term defense planning.
What’s Next
Lawmakers must decide whether to approve the requested emergency funding before the end of the fiscal year. The CBO’s analysis provides a baseline for future cost projections, but actual expenses may vary depending on the duration and intensity of operations.