As the United States gets closer to a missile strike on Syria, there's one pertinent question on many Americans' minds: How much will this cost? Considering the wars with Iraq and Afghanistan cost more than $4 trillion according to a study by Harvard's Kennedy school, and they negatively affected the economy, this is a very good question.
Millions in missiles
Before the missile strike on Syria became an issue, the Navy's USS Nimitz, and its escorts, were scheduled to return from deployment. Now, however, they've been ordered to remain within striking distance of Syria, which alone costs an estimated $25 million per week. Further, each Tomahawk cruise missile likely to be fired on Syria costs an estimated $1.5 million each to replace. That's great news for Raytheon (NYSE: RTN ) , which builds the missile, but not for the Navy's budget. Plus, if the U.S. fires missiles, that'll add an additional $30 million per week for as long as the Navy's Nimitz and Truman are engaged in combat.
Those costs may not seem like much when you factor in overall defense spending, but thanks to the nature of sequestration, the Navy, as well as the rest of the military, is hurting. For example, Chief of Naval Operations Admiral Jonathan Greenert, stated that for FY2014, the Navy needs more than a billion dollars more for "operations and maintenance" and a billion more for "procurement accounts" -- like the desperately needed DDG-51 destroyers the Navy is scheduled to acquire from General Dynamics (NYSE: GD ) , and Huntington Ingalls Industries (NYSE: HII ) .
The good news is that if the proposed missile strike lasts only for September, and there's no additional engagement requirement, the Navy believes it can handle this costs. But if the strike goes into October, or if there are additional requirements, the Navy can't afford it.
But is a U.S. missile strike on Syria likely to be quick and clean? Well, Russian President Vladimir Putin told the Associated Press that Russia will aid Syria if the U.S. attacks (although he didn't give specifics) and China warned that a Syrian strike would hurt the world economy and drive up oil prices. More pointedly, a strike on Syria could cause a ripple affect across the Middle East, as Syria has said a U.S. missile strike will be returned by attacks against Israel.
What to watch
As I've written before, before 9/11, the Congressional Budget Office stated: "Under current policies, total surpluses would accumulate to an estimated $2 trillion over the next five years and $5.6 trillion over the coming decade. Such large surpluses would be sufficient by 2006 to pay off all debt held by the public that will be available for redemption."
Clearly, that didn't happen, and the United States' national debt now sits at more than $16.9 trillion -- and climbing. In regard to Syria, the Obama administration said it only wants to send a message. However, that "message" is already costing millions, and there are many who believe a missile strike on Syria is just the beginning of a much bigger conflict. Sen. Mark Udall (D-Colo.) went so far as to say, "We are in a position with Syria where the steps that we are taking could very well have us in a war soon."
A U.S. missile strike on Syria is unpopular, not only with Russia and China, but also with the American people. According to a Pew Research study, by a 48% to 29% margin, more Americans oppose Syrian airstrikes than support them. However, such an airstrike could be the catalyst to a resolution for sequestration or, at the very least, a for supplemental spending bill.
So far, every attempt to pass a defense spending resolution has failed, and the impasse has directly affected profits for defense contractors. But if the U.S. goes to war with Syria, Congress will be forced to pass a measure to fund the war. That would be great news for defense contractors in general, in particular, the three I've mentioned, as they have a large stake in Navy readiness. But considering the costs of the Iraq and Afghanistan wars, and how much even non-engagement with Syria is already costing, let's hope the U.S. avoids a war with Syria.
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