Counterterrorism Spending

The Stimson Center’s new study group report found that the federal government spent about $2.8 trillion on counterterrorism (CT) activities since 9/11.  The report seeks to account for all federal government spending on CT efforts divided into the four broad categories of defense emergency and overseas contingency operations, war-related state/USAID, other foreign aid, and government-wide Homeland Security.  The defense emergency and overseas contingency operations spending category accounts for about $1.7 trillion or over 60 percent of the $2.8 trillion spent.  War-related state/USAID and other foreign aid account for a relatively small $138 billion and $12 billion, respectively.  Government-wide Homeland Security spending makes up the rest at $978.5 billion since 9/11.

The big question the report does not attempt to answer is: Was all that spending worth it?  Did that spending result in fewer people killed by terrorists on U.S. soil?  One of the distinguished study group members is my Cato Institute colleague John Mueller who has spilled much ink trying to estimate the effectiveness of CT spending.  Mueller provides some back of the envelope estimates to answer the question of whether this CT spending was worth it in his recent panel discussion on the Stimson Center’s report.  After talking with Mueller, I decided to add some more analysis to show that an unreasonably large number of American lives would have to have been saved for the costs of CT spending to be justified.

For the costs of CT spending to equal the benefits in terms of the value of lives saved, it would have to have saved 188,740 lives, or 11,796 lives per year, since 9/11.  Narrowing down to just domestic CT spending on government-wide Homeland Security projects shows that spending on just that set of subprograms would have to have prevented the murder of 65,233 people, or 4,077 per year, to break even.  From 2002 through 2017, my latest estimate is that 172 total people were murdered on U.S. soil by all terrorists (Islamic, non-Islamic, domestic, U.S.-born, foreign-born, white supremacists, etc.).  Thus, all CT spending would have to have saved 1,097 times as many lives as were actually taken by terrorists in attacks on U.S. soil for the costs of CT spending to equal the benefits in terms of lives saved.  Focusing on just government-wide Homeland Security CT spending shows that it would have to have saved 379 times as many lives as were actually killed in terrorist attacks on U.S. soil to break even.  It is difficult to estimate a counterfactual but it would take a very creative imagination to honestly believe that post-9/11 CT spending actually saved that many lives by preventing terrorist attacks.

Methodology

The first step is estimating the value of a statistical human life to compare with the cost of CT spending.  This is an emotional and fraught way to measure human life.  As a father and a husband, I understand this emotional reaction very well but the fact remains that if the government spends more than the statistical value of life to save a life through enhanced CT, then that means that other people died because of neglected safety in other areas.  As a hypothetical example, suppose the value of a statistical life is $15 million.  If the government spends $30 million to save one life by spending on X then that means that one person, at least, died who did not have to if that money was spent where it would save more lives.  Thus, spending that amount of money on reducing the risk of X results in more deaths than otherwise would have occurred.  Although emotional and hard to calculate, estimating the statistical value of life can help policymakers save more lives.  The death of human beings is the largest and most significant cost of terrorism but not the only one as other forms of destruction are also costly but relatively minor compared to death.  For the purposes of simplicity, I will focus on the cost in terms of human life.   

As I wrote in 2016, the Department of Homeland Security (DHS) produced an initial estimate that valued each life saved from an act of terrorism at $6.5 million, then doubled that value (for unclear reasons) to $13 million per life saved.  Adjusting for inflation raises that estimate to about $7.5 million.  Hahn, Lutter, and Viscusi use data from everyday risk-reduction choices made by the American public to estimate that the value of a statistical life is $15 million.  I use $15 million in this blog post as it is the largest number.

The second step is dividing the value of CT spending by the statistical value of life estimate to see how many lives would have to have been saved for that spending to equal the benefits.  I copy this method directly from Chasing Ghosts by John Mueller and Mark Stewart and their other important work on this topic. 

The third step is comparing the above results to the number of people who were actually murdered on U.S. soil in terrorist attacks.  Using the same methods as this policy analysis and including native-born attackers reveals that there were 172 people murdered in terrorist attacks on U.S. soil from 2002 through 2017.  That includes people murdered by terrorists of every ideology including Islamists, white supremacists, environmental extremists, and others regardless of where they were born.  

Results

The first column in Table 1 shows that 188,740 lives would have to have been saved by all CT spending for the value of that spending to save an equivalent value in terms of human life.  The second column of Table 1 focuses on domestic Homeland Security CT spending, a subset of all CT spending, as it is most directly related to saving lives on U.S. soil.  To break even, domestic CT spending on Homeland Security would have to have saved 65,233 lives from 2002 through 2017 to break even (Table 1).    

 

Table 1

Number of Lives Saved for Counterterrorism Spending to Break Even

Source: Author’s calculations.

If you assume that the value of statistical lives saved is equal to the cost of all CT spending, then you must also assume that all CT spending prevented at least 99.9 percent of all deaths that would have occurred in terrorist attacks on U.S. soil after 9/11 that were prevented.  If you just focus on domestic Homeland Security spending during that time and assume that the value of statistical lives saved is equal to the cost of CT spending, then you must assume that it prevented at least 99.7 percent of all deaths that would have occurred as a result of terrorist attacks on U.S. soil that were prevented. 

To put those numbers in context, about 250,000 Americans were murdered in non-terror homicides during that time.  There would have to have been about 1.4 murders in non-terror homicides for each person killed in a terrorist attack on U.S. soil for the cost of all CT spending to equal the value of human life saved in prevented attacks.  For only Homeland Security spending, there would have to have been about 2.9 murders in non-terror homicides for each person killed in a terrorist attack on U.S. soil for the cost to break even.  Does anyone believe that CT spending saved that many lives? 

Other Costs

The new Stimson Center study group report is a marvelous attempt to measure the nearly impossible-to-gauge extent of federal CT spending after 9/11.  Although the report is a good estimate of the direct amount of federal spending on CT, it does not represent the full cost.  Here are just a few additional costs that would have to be included to estimate such a number: 

• State and local government CT spending.
• The lost economic activity that would have occurred without expensive CT regulations.
• The opportunity cost of this spending, including tax cuts or deficit reduction (the report hints at this as it mentions the death toll from opioids).
• The trade and immigration restrictions promulgated after 9/11. 
• The American military casualties in the War on Terrorism.
• The foreign casualties in the War on Terrorism.
• The increased numbers of deaths from consumers choosing riskier forms of travel rather than submit to the expensive, burdensome, and annoying demands of the TSA at airports.
• Deaths that could have been prevented by redirecting CT spending toward other safety-enhancing policies.

Conclusion

The new Stimson Center study group report found that the cost of CT spending is gargantuan.  The cost of a government program is only one metric necessary to gauge whether it should exist as we must also consider the benefits it produces.  The number of lives that would have to have been saved for the cost of CT spending to equal the benefits, whether overall or just on Homeland Security, would have to be outrageously and unreasonably high for this expenditure to make sense.  By diverting government resources from other areas that would have boosted safety, even under the most negative conditions where the marginal cost saved is equal to the statistical value of life, assumes that hundreds of thousands of Americans died because of this increased CT spending who otherwise would have lived due to improved safety elsewhere.