Opening Remarks

It’s Time to Rethink Counterterrorism Spending


Judged solely on outcomes, the decade-long war on terrorism has been a rousing success. Al Qaeda has been chased out of Afghanistan and Iraq. Its leader and most of his lieutenants are either captured or dead. The organization is on the brink of “strategic defeat,” according to both the U.S. Defense Secretary and the director of the CIA. Across the Middle East, support for jihadist violence has plummeted. Since Sept. 11, 2001, al Qaeda has not mounted one successful strike on American territory—and has failed even to pull off an attack against U.S. targets abroad comparable to the African embassy bombings in 1998 or the attack on the USS Cole in 2000. Brian Michael Jenkins, a terrorism expert at the RAND Corp., writes that the 10 years since Sept. 11 have been “the longest period without a major terrorist attack on the United States since the 1960s.”

That success, however, has not come cheaply. The conflict in Afghanistan is now the longest military engagement in American history. More than 6,000 service members have been killed in Iraq and Afghanistan and upwards of 40,000 seriously wounded. The Congressional Research Service estimates the price tag of the two wars to be at least $1.3 trillion and counting, not including the medical and disability costs associated with treating war veterans, the hit to the global economy caused by the 10-year spike in oil prices, or the rise in military, intelligence, and homeland security spending. Due in part to these second-order, security-related costs, the federal budget has gone from an annual surplus of $128 billion in 2001 to a deficit of more than $1 trillion. The national debt has nearly doubled in the same period, with the amount owed by the U.S. to China growing more than tenfold. And U.S. economic growth in the decade since Sept. 11 has been the slowest since the 1930s.

So was it worth it? Has the money spent by the U.S. to protect itself from terrorism been a sound investment? If the benchmark is the absence of another attack on the American homeland, then the answer is indisputably yes. For the first few years after Sept. 11, there was political near-unanimity that this was all that mattered. In 2005, after the bombings of the London subway system, President Bush sought to reassure Americans by declaring that “we’re spending unprecedented resources to protect our nation.” Any expenditure in the name of fighting terrorism was justified.

Six years later, though, it’s clear this approach is no longer sustainable. Even if the U.S. is a safer nation than it was on Sept. 11, it’s a stretch to say that it’s a stronger one. And in retrospect, the threat posed by terrorism may have been significantly less daunting than Western publics and policymakers imagined it to be.

Sept. 11 was a shock to the U.S. economy. The chaos in Lower Manhattan forced the New York Stock Exchange (NYX) to shut down for six days; when the markets reopened on Sept. 17, the Dow plunged 7 percent. The airline industry required a $10 billion bailout from the federal government. Factor in property damage, insurance payouts, productivity slowdowns, and shaken consumer confidence, and the estimates of what the attacks cost the U.S. economy range somewhere between $100 billion and $500 billion.

Even so, the financial impact of Sept. 11 was modest. The stock market quickly recovered all of the value lost on Sept. 17. Unemployment rose through the beginning of 2002, but within a year, the jobless rate was down to pre-Sept. 11 levels. In his book The Longest War, Peter L. Bergen writes that “while the costs to the U.S. economy of the Sept. 11 attacks were indeed high, [they] could be absorbed in an economy with an annual output of $10 trillion, costing America around 5 percent of her 2001 gross domestic product.”

From an economic point of view, Sept. 11 was far less consequential than the country’s reaction to it. After the destruction of the World Trade Center, the public was gripped with fears of a second attack, and the Bush Administration believed that another strike “would have been catastrophic to the economy,” says Joseph W. Hagin, then Deputy White House Chief of Staff. “People forget what it was like. … Consumer spending had declined dramatically, especially in major cities. People were afraid to get on airlines. It was pretty desperate.” In an attempt to boost confidence, Bush implored the public to go shopping, and had dinner at Morton’s The Steakhouse (MRT) in downtown Washington to “signal to the country that it was O.K. to get back out there and spend money,” Hagin says.

Politicians and pundits frequently said that al Qaeda posed an “existential threat” to the U.S. But governments can’t defend against existential threats—they can only overspend against them. And national intelligence was very late in understanding al Qaeda’s true capabilities. At its peak, al Qaeda’s ranks of hardened operatives numbered in the low hundreds—and that was before the U.S. and its allies launched a global military campaign to dismantle the network. “We made some bad assumptions right after Sept. 11 that shaped how we approached the war on terror,” says Brian Fishman, a counterterrorism research fellow at the New America Foundation. “We thought al Qaeda would run over the Middle East—they were going to take over governments and control armies. In hindsight, it’s clear that was never going to be the case. Al Qaeda was not as good as we gave them credit for.”

Yet for a decade, the government’s approach to counterterrorism has been premised in part on the idea that not only would al Qaeda attack inside the U.S. again, but its next strike would be even bigger—possibly involving unconventional weapons or even a nuclear bomb. Washington has appropriated tens of billions trying to protect against every conceivable kind of attack, no matter the scale or likelihood. To cite one example, the U.S. spends $1 billion a year to defend against domestic attacks involving improvised-explosive devices, the makeshift bombs favored by insurgents in Afghanistan. “In hindsight, the idea that post-Sept. 11 terrorism was different from pre-9/11 terrorism was wrong,” says Brian A. Jackson, a senior physical scientist at RAND. “If you honestly believed the followup to 9/11 would be a nuclear weapon, then for intellectual consistency you had to say, ‘We’ve got to prevent everything.’ We pushed for perfection, and in counterterrorism, that runs up the tab pretty fast.”

Nowhere has that profligacy been more evident than in the area of homeland security. “Things done in haste are not done particularly well,” says Jackson. As Daveed Gartenstein-Ross writes in his new book, Bin Laden’s Legacy, the creation of a homeland security apparatus has been marked by waste, bureaucracy, and cost overruns. Gartenstein-Ross cites the Transportation Security Agency’s rush to hire 60,000 airport screeners after Sept. 11, which was originally budgeted at $104 million; in the end it cost the government $867 million. The homeland security budget has also proved to be a pork barrel bonanza: In perhaps the most egregious example, the Kentucky Charitable Gaming Dept. received $36,000 to prevent terrorists from raising money at bingo halls. “If you look at the past decade and what it’s cost us, I’d say the rate of return on investment has been poor,” Gartenstein-Ross says.

A certain degree of overreaction was probably inevitable. “We had to respond the way we did because the American psyche demanded it,” says Rick “Ozzie” Nelson, a former official at the National Counterterrorism Center and a senior fellow at the Center for Strategic and International Studies. “We overreacted in some respects, but we also have a tendency to lose sight of how effective we’ve been.” Because homeland security spending involved a good deal of one-time expenditures, from securing cockpit doors to staffing new federal agencies, some costs can be amortized.

The post-Sept. 11 era has also produced improvements in intelligence, information sharing, and military preparation that will yield future dividends, Nelson says. “Our national security bureaucracies are better coordinated and operating more closely than they ever have in the history of our government,” he says. “The benefits will go beyond just fighting terrorism.”

Determining the costs and benefits of the war on terrorism ultimately will depend less on what has transpired over the last decade than what happens over the next. Wasteful security spending, exaggerations of al Qaeda’s strength, hubristic attempts to remake the Middle East—the excesses of America’s response to Sept. 11 can be excused, at least in part, by its desire to avert another trauma. But future generations will not be so charitable if we fail to learn from our mistakes, continue to put terrorism above other national priorities, and insist that every attack must be prevented, no matter the cost. “Al Qaeda is on its knees, and we’ve disrupted a lot of its activities,” Nelson says. “But now that we’ve curtailed that threat, we do need to adjust our resources in a way that is more appropriately aligned to the risks we are actually facing.” Ten years on, the wisest way for Americans to deal with the threat of another Sept. 11 is to stop obsessing about it. Otherwise, the terrorists will have won.

Ratnesar_190
Ratnesar is deputy editor of Bloomberg Businessweek.

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