Funding Extended Conflicts: Korea, Vietnam, and the War on Terror

1. Many of the government systems for accounting, documentation and procedures in use today did not exist in the early 1950s.
2. Rearmament and mobilization for the Korean War was done simultaneously and concurrently with general rearmament and mobilization of the US for the heightened Cold War threat that Korea represented.
3. Looking at just the DoD spending yields an incomplete picture as to the true totality of economic impact.

Best Source on Cost of War

The Korean War Educator believes that the best source available to understand the financial aspect of the Korean War is a book entitled, Funding Extended Conflicts: Korea, Vietnam, and the War on Terror.  If KWE readers have trouble finding the book on the market, it can probably be ordered through inter-library loan from your local library.  Authored by Richard M. Miller, Jr., it was published by Praeger Security International in 2007.

The book covers the fundamentals of financing war and budgeting for war.  Chapter Three of the book is entitled, "Korean War: Fiscal Years 1951-1953."  Pages 10 through 41 provide a detailed cost and budgeting overview and takes a look at the government's fiscal year 1951, 1952, and 1953 war costs.  If ever an author did the "impossible" with regards to researching Korean War costs, it was Richard Miller.  His Korean War chapter text is backed with 72 footnotes that explain from where he derived his information.  Miller discusses incremental cost estimates, supplemental appropriations, and additional manpower costs.

Miller states on page 39:

Using the categories of direct Korea, mixed, and indirect costs, a rough approximation of the incremental costs can be made.  From FY51-53, the incremental costs in today's dollars were $678 billion, including:

• Directly linked to Korea: $390 billion
• Mixed costs (Korea & the general defense buildup): $216 billion
• Indirect/Related Costs: $72 billion

But even those costs were not the end cost of the Korean War.  Miller noted that there are three other considerations to take into account when estimating the total cost of the Korean War.  They are excess manpower (excess end strength drafted for the Korean War that extended slightly beyond FY53 before demobilization), debt serving (war costs not covered by increased tax revenues), and long-term Veterans Administration compensation and pension payments directly attributable to Korean War veterans and their dependents.  According to Miller these were:

• Excess Manpower: $156 billion
• Debt Servicing: $19 billion
• Veterans Compensation & Pensions: $148 billion (through 2000)

The total cost of the Korean War throughout Fiscal Years 1951-1953 as calculated by Commander Richard Miller was $678 billion.  Miller calculated the total cost of the Korean War throughout Fiscal Years 1951-2000 as $1,001 billion.  As the author so aptly pointed out in the summary pages of his book, "Every war has its own unique conditions.  For better or for worse, war serves as catalyst for many changes, including funding and economic challenges, with fiscal impacts that resonate far beyond the fighting.  Korea began in a time of readjustment from total war, international uncertainty, and a desire to focus on domestic concerns."

About the Author

At the time the book was published, Miller was a serving officer in the United States Navy.  He had extensive background in budget issues, and had worked as a Congressional Analyst for the chairman of the Joint Chiefs of Staff.  A distinguished graduate of the National War College and the Naval War College, Miller is a winner of the B. Franklin Reinauer Defense Economics Prize.  In addition, he was a Federal Executive Fellow in the Institute for the Study of Conflict, Ideology, and Policy at Boston University.