2001-present War on Terror


The U.S. wars in Iraq and Afghanistan, as well as the associated increases in spending on national security that resulted from the attacks of September 11, 2001, reversed the relative fall in defense expenditures of the 1990s and contributed to the large deficits of the George W. Bush era.


The attacks of September 11, 2001 not only affected the course of American foreign policy but had a profound impact on the federal budget as well. In addition to contributing to the economic slowdown already underway, the 9/11 attacks and subsequent Global War on Terror led to significant increases in spending on national security. As the graph below shows, both relative and absolute levels of defense expenditures increased during the initial years of the 21st century, reversing the trend that had prevailed since the end of the Cold War.

Defense Spending in Billions of Dollars
Source: Congressional Budget Office and Office of Management and Budget

Much of this spending occurred "off budget." In order to avoid public scrutiny of the War on Terror, the George W. Bush administration funded major portions of the Iraq and Afghanistan Wars through supplemental rather than direct appropriations. Whereas supplemental appropriations, which are meant to provide federal agencies with additional, emergency funds during an ongoing budget cycle, constituted approximately 1% of overall budget authority during the 1990s, by 2005 supplemental appropriations had grown to over 6% of federal budget authority. The composition of supplemental funding also changed. Whereas during the 1990s most supplemental funding was for acute emergencies such as disaster, after 2002 the majority of these funds went towards the wars in Iraq and Afghanistan.

In addition to the tax cuts of 2001 and 2003, the increased spending associated with the Global War on Terror was one of the primary causes of the large deficits of the George W. Bush administration.


Amy Belasco, "The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11," Congressional Research Service (2010):

Thomas L. Hungerford, "Supplemental Appropriations: Trends and Budgetary Impacts since 1981," Congressional Research Service (2005):

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