CBO estimates US-Iran war costs reach $38 billion with severe missile interceptor shortages

The nonpartisan Congressional Budget Office (CBO) released an analytical report on Tuesday, estimating that direct operational costs incurred by the Department of Defense in the war with Iran reached approximately $38 billion as of August 1.

Prepared at the request of House Budget Committee ranking member Brendan Boyle and fellow Democratic lawmakers, the report projects that ongoing military engagements will continue to add $2 billion to $3 billion per month to federal defense expenditures.

Where is the money going, and how severe is the munition depletion?

The largest cost driver facing the Pentagon is the procurement and replacement of expended munitions, which accounted for $21.7 billion of the total through August 1. Beyond direct financial outlays, the CBO highlighted severe strategic risks stemming from depleted missile defense interceptor stockpiles.

Key inventory and economic findings from the CBO analysis include:

• Missile Interceptor Depletion: Comparing operational expenditure rates with historical procurement totals, the CBO concluded that the US military has likely expended between one-half and two-thirds of its total inventory of missile defense interceptors since June 2025. This depletion leaves American forces facing inventory constraints that could take several years to replenish.
• Inflationary Impacts: Iran’s closure of the Strait of Hormuz has caused persistent energy disruptions, driving broader economic inflation. The CBO projects that the Personal Consumption Expenditures (PCE) price index in the first quarter of 2027 will run 0.5 percentage points higher than pre-war baseline forecasts, while core inflation will increase by 0.3 percentage points.
• Interest Rate Pressures: Persistent energy price hikes and elevated government borrowing for war operations are projected to drive up yields and interest rate costs on US Treasury securities.

How does the CBO report align with Pentagon figures?

The $38 billion figure closely aligns with internal Department of Defense tracking. Defense Secretary Pete Hegseth previously disclosed in July that military operations against Iran had incurred $37.5 billion in expenses.

According to The Wall Street Journal, lawmakers across both major parties are citing the CBO findings to push for emergency supplemental defense appropriations to rebuild missile defense stockpiles, while budget analysts warn that prolonged maritime blockades in the Persian Gulf will continue to exert upward pressure on global energy prices and domestic interest rates.