“It costs money to kill bad guys,” America’s Secretary of War Pete Hegseth stated during a press conference last week. The Pentagon, with an annual budget exceeding one trillion dollars, is reportedly seeking an additional $200 billion in appropriations from Congress. The scale of the request, even by American standards, prompted concern from Democratic Senator Chuck Schumer: “Let me be clear: if Trump wants $200 billion, he apparently believes we could be in a very, very long war with Iran.” Secretary Hegseth offered a more measured assessment, suggesting the figure could be lower.
The mathematics of this asymmetric conflict with Iran, even though, are proving difficult to ignore. Ukrainian President Volodymyr Zelenskyy recently calculated to the British Parliament that “one Iranian Shahed drone costs around $50,000. To shoot it down, countries often employ missiles that cost up to four million dollars.”
The current demand from the Pentagon comes as the American federal budget faces significant strain. The Supreme Court’s recent ruling declaring the so-called Liberation Day tariffs unconstitutional has eliminated a key revenue source. The Congressional Budget Office (CBO) estimates the federal government overcollected roughly $150 billion from importers, many of whom are now pursuing refunds with interest. The new tariffs enacted by Trump to offset these losses are also facing legal challenges – from the same legal team that overturned the Liberation Day tariffs.
The economic pressure is visible at the pump, with the average price for a gallon of gasoline nearing $4, approximately $1 higher than a month ago. West Texas Intermediate (WTI) crude oil traded at $96 per barrel on Friday, roughly a third higher than before the initial military strikes. Brent crude, the European benchmark, is trading even higher at $105 per barrel.
American oil companies are benefiting from the increased prices. Since 2023, the U.S. Has been a net exporter of oil and liquefied natural gas, a shift driven by the fracking revolution, the construction of export terminals, and the lifting of a long-standing ban on energy commodity exports. While consumers are feeling the pinch, American producers are seeing their stock prices rise by approximately 20 percent since the start of the conflict.
the U.S. – like most leading industrialized nations – is less reliant on oil than it was during the energy crises of the 1970s. Increased energy efficiency in industry and transportation, coupled with a declining share of energy-intensive sectors in the economy, have lessened the impact of price fluctuations. Wall Street analysts estimate the current increase in energy prices will reduce the U.S. Gross Domestic Product by less than half a percentage point in the second quarter. By comparison, the six-week government shutdown last fall cost the American economy more in terms of growth.
Currently, the U.S. Economy is growing at around two percent. Trump’s economic advisor, Kevin Hassett, expressed relative calm: “If the war were to widen or lengthen, it would probably not significantly impact the American economy overall. Consumers would suffer, and we would have to figure out what to do about that. But that is really our least concern at the moment.”
The calculation changes, however, if the war persists for a significantly longer duration or energy prices rise dramatically. In 2002, then-Defense Secretary Donald Rumsfeld famously distinguished between “known knowns,” “known unknowns,” and “unknown unknowns” – things we don’t know we don’t know. Acting Federal Reserve Chairman Jerome Powell offered a similar sentiment this week, stating: “The economic effects could be larger, they could be smaller, they could be significantly smaller or significantly larger. We just don’t know – and frankly, nobody does.”
Senator Schumer, facing criticism for his own attacks on Secretary Hegseth regarding Pentagon spending, has highlighted the $93 billion spent in a single month, including $2 million on Alaskan King Crab. He labeled Hegseth a “grifter” on social media. Governor Gavin Newsom’s office shared an image mocking Hegseth, depicting him surrounded by luxury items. The Department of War has not yet responded to requests for comment.
