Estimating the Cost of Homeland Security

From WSJ:

Economists at the Federal Reserve Bank of New York weighed in on the costs of homeland security.
They point out that homeland security spending has climbed some $44 billion over the past five years, but even so remains a small fraction of the nation’s GDP.

After looking at costs to both the public and private sector as a result of the country’s increased vigilance, the economists concluded: “We find little evidence to suggest that increases in homeland security have led to far larger costs for the overall U.S. economy.”

James Carafano, senior research fellow for defense and homeland security at the Heritage Foundation, took it with a grain of salt. “I’m skeptical of anybody’s numbers,” he said. “How people account for stuff varies.” Besides, he said, the level of spending isn’t what is most important; instead, he suggested that analysts should be looking at “Where’s the bang for the buck?” Carafano noted that some homeland security measures might have led to increased efficiency in some sectors as companies better tracked goods and secured their supply chains.

The report’s authors openly acknowledged the difficulties in estimating broad homeland security costs, but said their numbers are “best thought of as an upper bound.” They made no judgments, however, on the effectiveness of the money spent. –John McCary