Counterterrorism financingAnalysts question wisdom of DHS spending

Published 20 May 2011

As U.S. lawmakers battle to cut the deficit and reduce spending, some are beginning to question if the billions of dollars being poured into counter-terrorism measures are cost effective; in calculating the costs for America’s efforts to combat violent extremism both domestically and abroad, two university professors estimated that the U.S. government spent more than $1 trillion from 2002 to 2011; argues that funds allocated to enhanced security measures are a gross misallocation of resources and that DHS has not conducted proper cost-benefit analysis of projects before spending large sums of money

As U.S. lawmakers battle to cut the deficit and reduce spending, some are beginning to question if the billions of dollars being poured into counter-terrorism measures are cost effective.

In calculating the costs for America’s efforts to combat violent extremism both domestically and abroad, two university professors estimated that the U.S. government spent more than $1 trillion from 2002 to 2011.

The study, completed by John Mueller, a national security analyst and professor at Ohio State University, and Mark Stewart, a civil engineer and risk assessment expert at the University of Newcastle in New South Wales, argues that funds allocated to enhanced security measures are a gross misallocation of resources.

The two calculate that in addition to the $690 billion allocated to DHS, there are $417 billion in “opportunity costs,” which include $40 billion for terrorism risk insurance premiums, and $100 billion in passenger delays caused by airport screening and $245 billion in deadweight losses and losses in consumer welfare, through falls in economic activity and increased taxes.

In The Japan Times, Kevin Rafferty, a veteran journalist, echoes these arguments and writes that Stewart and Mueller’s calculations are a conservative estimate of how much the U.S. government has actually spent combatting terrorism.

Rafferty says that the estimate omits the cost of the wars in Iraq and Afghanistan as well as other incidental costs like “the extra fuel cost to airlines because of heavier protected flight deck doors and having to give free seats to federal air marshals.”

In particular, the Mueller and Stewart are concerned about the fact that government funds are being spent without proper analysis of risk and that much of the funds have been allocated to mitigating unlikely threats.

Rafferty adds, “Much of [DHS] spending is done under the guise of national security, meaning that money gets spent without proper questioning, let alone the sort of cost-benefit analysis that other government departments and all respectable businesses are regularly expected to do or they will go bankrupt.”

In their research, the two professors were unable to find any substantial evidence that DHS or the government had undertaken any cost-benefit analysis before making large expenditures.

In 2006, after DHS had become the largest nonmilitary agency in the government, one of its senior economists said, “We really don’t know a whole lot about the overall costs and benefits of homeland security.”

Additionally, James Thomson, the president of RAND Corporation, claimed that top department officials “manage by inbox … with little or no evaluation” of their performance or effectiveness.

In a more recent example, the two professors cite the decision to spend $1.2 billion to deploy full-body scanners at U.S. airports with no estimate of the benefits.

In measuring the risks in a previous study, Mueller and Stewart argue that terrorism hardly poses an existential threat to the United States.

Since 9/11 somewhere between 200 and 300 civilians were killed by Muslim extremists. In contrast, nearly 120,000 people died in 2007 from car accidents and in 2002, 320 people died from drowning in their bathtubs.

In closing the two say, additional security expenditures have been too “excessive” and “to be deemed cost-effective … they would have to deter, prevent, foil or protect against 1,667 otherwise successful Times-Square attacks per year, or more than four a day.”

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