Insights & Advice


How much has 9/11 cost us?

Picture an entire fleet of brand new Nimitz-class aircraft carriers, chock full of the latest stealth aircraft that money can buy, then double it. That’s about the size of the dollar and cents differences one finds in trying to estimate the costs of 9/11. Just how large is the range?

Present estimates range from $1 trillion to $5 trillion. Why such a wide estimate? It depends on what you are counting. Some costs are straightforward. All seven of the World Trade Center site buildings were destroyed. That’s a fact. The price tag ultimately came to $4.55 billion; the amount of the insurance payout.  The yet to be completed Freedom Tower on the World Trade center site will cost another $6 billion by the time it opens in 2013. Add in another $5 billion for the deaths and health issues of first responders, those heroes who stood up and were counted when our country needed them most.

The economic cost to New York City was roughly $52 billion.  If you add in the losses in tourism, not only in New York but the rest of the country, the figure climbs by another $163 billion. It is probably more since it was only in the last year that tourism in America climbed to post 9/11 levels. Next, throw in $39 billion in property-related and business interruption insurance claims around Ground Zero. Finally, we should count the $1 billion loss to U.S. aviation when all aircraft were grounded for three days in the aftermath of the attack. 

At this point, further losses attributed to the 9/11 attack depend on what assumptions you are making and your agenda. For example, the cost of the Homeland Security sector has doubled to $540 billion since 9/11. That’s not counting what state and local governments have spent on expensive technology and security systems in local airports, bus stations, etc. Would those expenditures have happened anyway if 9/11 never happened? It depends on who you talk to.

But the real big numbers depend on whether or not we should count the costs of two wars as part of the 9/11 attacks. The price tag so far is about $1.73 trillion including large jumps in military and aid spending in both theatres of war. Would our involvement in either country have occurred without the attacks on the World Trade Center?

If you are a hawk and believe that Bush should have invaded Iraq, regardless of provocation, then you probably won’t want to include Iraq and its aftermath. Our involvement in Afghanistan is a bit iffier. Were we pursuing our war on terrorism in Afghanistan prior to 9/11 or were we solely focused on destroying the perpetrators of 9/11– al-Qaeda and Osama Bin Laden?

If you believe that both wars are the direct result of the attack, then you must include future military costs which are estimated at another $1.38 trillion. Over 50,000 Americans have been wounded in those wars and many of them will need medical care and disability insurance for 40 years into the future. They will also be entitled to free or heavily subsidized health care for the rest of their lives, and deservedly so. Remember too, that even if we pull out of both wars this year, the spending won’t stop until at least 2020. You can add in another $441 billion to wind down these wars.

So let’s say you are in the ‘9/11 caused two wars’ camp. Since we have financed both wars with debt, we would need to include both interest paid to date and future interest on that debt. The price tag for that comes to $983 billion. But all these numbers may turn out to be far too conservative. In a recent study by Brown University’s Watson Institute for International Studies, the authors argue that when all is said and done just the two wars alone will end up costing as much as $4.4 trillion.

Clearly no amount of money is going to bring back my friends at Cantor Fitzgerald who died in the Twin Towers, nor my wife’s childhood best friend, Brian Ahearn, a NYFD Lieutenant, who also lost his life and left behind a loving family that fateful morning. Yet, the next time you decry our burgeoning deficit and our out of control spending, you might remember what some of it was used for.

Posted in Macroeconomics, The Retired Advisor