Harvard Kennedy scholar says there’s something distinct about Trump’s $1 trillion Iran war and its strain on the national debt

(SeaPRwire) –   In his 1795 essay Perpetual Peace: A Philosophical Sketch, German Enlightenment thinker Immanuel Kant proposed a specific standard for how nations should handle war and debt: “National debts shall not be contracted with a view to the external friction of states.”

Simply put, to preserve peace, wars should not be paid for with borrowed money.

Now, almost 250 years later, public finance specialist Linda Bilmes cautions that the United States is repeating this error in funding the Iran conflict, adding to the already substantial $39 trillion national debt.

Bilmes, a senior lecturer at Harvard Kennedy School, states the ongoing war’s price tag is expected to surpass $1 trillion, far exceeding initial U.S. spending forecasts. The Pentagon reportedly said the first week cost approximately $11.3 billion. The American Enterprise Institute projected war costs would have exceeded $35 billion by April 1—roughly $1 billion daily. Bilmes contends daily expenses are twice that, as the government fails to account for long-term consequences like veteran disability care and repairing critical infrastructure, which could take years.

Most significantly, Bilmes observes the U.S. is depending more on debt to fund this war than in the past. During the Iraq and Afghanistan wars in the early 2000s, publicly held debt was about $4 trillion, with interest payments consuming around 7% of the federal budget, she noted. Today, publicly held debt stands at $31 trillion, and interest payments claim 15% of the national budget.

“Consequently, the interest expenses alone will increase the total cost of this war by billions,” Bilmes stated in a recent Harvard Kennedy School interview. “And unlike immediate costs, these are burdens we are directly transferring to future generations.”

Bilmes informed that while past U.S. conflicts involved borrowing, they did not always strain the national debt to this degree. She said the 21st-century war funding approaches advanced by the Trump administration worsen the country’s growing debt problem.

U.S. history of financing wars

A young United States attempted to adhere to Kant’s principles upon entering the War of 1812, enacting numerous taxes, including direct levies on land, as well as on items like sugar, auction sales, carriages, liquor distilleries, and retail alcohol licenses. This was likely due more to need than preference: The Bank of the United States’ charter expired in 1811, leaving no central institution to handle loans and bonds.

These substantial wartime taxes established a precedent for U.S. capital raising in conflicts from the Civil War to Vietnam, though the majority of funding still originated from borrowing.

In World War I, President Woodrow Wilson promoted a “conscription of wealth,” declaring that as the nation drafted men to fight, it would also draft the fortunes of its wealthiest citizens. By 1918, top marginal income tax rates reached 77%. Amid the Korean War, President Harry Truman delivered over 200 speeches pushing his “pay-as-you-go policy” to use tax income, not debt, for military costs.

This philosophy shifted at the start of the 21st century. President George W. Bush enacted tax cuts in 2001 and 2003 while initiating wars in Iraq and Afghanistan, marking the first time a U.S. war was financed entirely through borrowing instead of taxes or budget hikes. Bilmes and economist Joseph Stiglitz released a 2006 study calculating the true cost of the Iraq and Afghanistan wars at over $2 trillion—roughly four times the Congressional Budget Office’s $500 billion direct spending estimate. In 2013, Bilmes updated her analysis, determining the cost was nearer to $4 trillion to $6 trillion.

The impact of broken traditions

President Donald Trump is now perpetuating this model with Iran, Bilmes says. The administration’s One Big Beautiful Bill Act prolonged Trump’s 2017 tax cuts, reducing rates for individuals and corporations. The act states these cuts will amount to $4.5 trillion in reduced tax revenue over the coming decade.

At the same time, the Washington Post reported the White House is asking Congress for up to $100 billion in extra conflict funding. Furthermore, Trump’s fiscal 2027 budget request seeks $1.5 trillion for defense—a 44% rise from the prior year—paired with a 10% reduction in nondefense spending. This budget would be the first where defense spending outstrips all other discretionary spending. Approximately one-fourth of the U.S. budget is funded by borrowing.

“That is money that accumulates endlessly,” she explained. “It means the budgetary starting point is higher each year.”

Bilmes maintains borrowing money is not intrinsically bad. Her concern is that the administration’s emphasis on military spending will sacrifice investments in economic growth, skewing the debt-to-GDP ratio and hampering the economy. The White House did not promptly reply to ’s comment request.

“Borrowing for productive investments, such as infrastructure or education, aims to yield a return greater than the loan,” she said. “But here, we are borrowing at high interest rates, largely for endeavors that will ultimately prove futile.”