Iran war cost hits $38 billion, forecast to rise $3 billion a month, CBO says

The war is expected to increase inflation by 0.5% in the first three months of 2027, according to the Congressional Budget Office accounting, which totaled expenses through August 1.

The mounting costs have strained U.S. munitions stockpiles and driven up energy prices, raising concerns about the country's ability to respond to other potential conflicts and adding pressure on an already stretched federal budget.

The cost was close to the $37.5 billion that Defense Secretary Pete Hegseth reported at a Senate hearing on July 21.

The budget office said the majority of the costs stem from the rapid drawdown of munitions, estimating that it could take five years to replenish U.S. stockpiles. Reuters reported in August that the U.S. had used "virtually all" of its long-range precision missiles during the war.

The Department of Defense did not cooperate with congressional financial auditors, CBO reported.

Representatives from the White House and Department of Defense did not immediately respond to requests for comment.

The inquiry was conducted at the request of the top Democrat on the U.S. House of Representatives Budget Committee, Brendan Boyle of Pennsylvania.

“Donald Trump’s disastrous war in Iran has already taken the lives of brave American servicemembers and left others wounded," Boyle said in a statement.

"Beyond that human toll, this nonpartisan CBO report makes clear that the war has also cost American taxpayers tens of billions of dollars and counting, while continuing to drive up costs."

Eighteen U.S. military service members have died in the Iran war.

The report did not include costs of recent strikes on commercial vessels in the Strait of Hormuz and attacks on U.S. military installations in the region. It also did not factor in the borrowing expenses associated with financing the war, which could add tens of billions of dollars to the total cost.

IMPACT ON US READINESS

The CBO accounting found the war could have sprawling consequences for the U.S. defense posture and the domestic economy.

The deficit in critical munitions, including missile interceptors, risks hampering the Pentagon's response in the event of another major conflict, such as potential hostilities involving China and Taiwan, CBO said.

At the July hearing in the Senate, Hegseth pleaded for nearly $90 billion emergency funding legislation to restock munitions supplies.

“Without these funds, we face critical shortfalls,” Hegseth said.

Energy shocks caused by attacks in the Strait of Hormuz — the narrow waterway through which roughly 20% of the world's oil traveled before the war — and on energy facilities in neighboring Gulf countries have sharply increased prices for consumers and global producers.

The rising cost of the war also threatens to weigh on deteriorating U.S. fiscal health. The nation's total public debt surpassed $40 trillion in August.

Trump regularly contrasts the Iran war with the U.S. invasions of Iraq and Afghanistan that followed the September 11, 2001, attacks.

The eight-year U.S. war in Iraq, which involved more than 100,000 ground troops at its peak, cost $2 trillion, Reuters reported. The two-decade-long U.S. conflict in Afghanistan, which also involved more than 100,000 troops at its most intense,cost $2.3 trillion, according to Brown University's Costs of War project.

(Reporting by Jacob Bogage; Additional reporting by Idrees Ali; Editing by Colleen Jenkins, Don Durfee and Cynthia Osterman)