As the United States enters day four of Operation Epic Fury—its sweeping military campaign against Iran, launched in partnership with Israel—the financial toll on American taxpayers is beginning to come into focus for budget watchers on the Beltway and in academia. According to Kent Smetters, director of the Penn Wharton Budget Model (PWBM) and one of the nation’s foremost fiscal analysts, the total economic cost of the strikes could reach as high as $210 billion.
The smallest number he gave to Fortune when asked about the cost of Epic Fury to taxpayers was $40 billion, for the smallest estimate of the direct budgetary cost, in a range that goes up to $95 billion. He said PWBM assumes more upside risk in the Epic Fury scenario, so a $65 billion direct hit to taxpayers is the likely cost for direct military operations as well as the replacement of equipment, munitions, and other supplies. “If the war lasts more than two months, then this number goes up,” he added.
On top of direct military expenditures, Smetters projected an additional economic loss to the United States alone of approximately $115 billion, with a wide band of uncertainty stretching from $50 billion all the way to $210 billion. “Again, [there’s] more uncertainty at the top end,” he noted, flagging that the upside risk is greater than the downside. That broader economic impact accounts for disruptions to trade, energy markets, and financial conditions that a sustained conflict in the Middle East typically triggers.
The figures do not include the cost of the administration’s IEEPA tariff regime, which PWBM has pegged at a separate $179 billion. This amount will likely need to be refunded to American companies, if not taxpayers, after the Supreme Court ruling on the legality of IEEPA tariffs.
Trump framed the operation as a necessary response to what he called Iran’s “imminent nuclear threat,” saying the U.S. had exhausted diplomatic options after Iran “rejected every opportunity to renounce their nuclear ambitions.” The White House described the strikes as “precise” and “overwhelming,” with Trump vowing to “dismantle Iran’s missile capabilities” and ensure Iran would “never acquire a nuclear weapon.”
Smetters offered one note of caution about how war costs are typically framed. “One problem I have with cost-of-war calculations is that they really do ignore the counterfactual,” he said in a bit of an understatement. “If Iran really did get a nuclear weapon, then we might have spent a lot more on military and even repair of cities later on.”
