Bush Aide Says Iraq War Cost May Reach $200 Billion

President Bush's chief economic adviser estimates that the U.S. may have to spend between $100 billion and $200 billion to wage an Iraq war, but doubts hostilities would push the nation into recession or sustained inflation, the Wall Street Journal reported Monday.

Lawrence Lindsey, head of the White House's National Economic Council, projected the "upper bound" of war costs at between 1% and 2% of gross domestic product, the Journal reported.

With the U.S. GDP at about $10 trillion per year, that translates into a one-time cost of $100 billion to $200 billion, according to the Journal article. That is considerably higher than a preliminary, private Pentagon estimate of about $50 billion, according to the Journal.

In an interview in his White House office, Lindsey dismissed the economic consequences of such spending, saying it would not have an appreciable effect on interest rates or add much to the federal debt, which is already about $3.6 trillion, the Journal reported.

At the same time, he doubted that the additional spending would give the economy much of a lift, according to the Journal.

Other administration economists say that their main fear is that an Iraq war could lead to a sustained spike in prices, according to the Journal.

The past four recessions have been preceded by the price of oil jumping to above $30 a barrel, the Journal reported, citing BCA Research in Montreal.

But the White House believes that removing Iraqi oil from production during a war - which would likely lead to a short-term rise in prices - would be insufficient to tip the economy into recession.