Economic Consequences of the War on Drugs

How much does the drug war cost American taxpayers?

$40 billion per year and climbing. In 2000, the National Drug Control budget exceeds $18 billion(1) and the states will spend upwards of $20 billion more.(2) This is a dramatic increase since 1980, when federal spending was roughly $1 billion and state spending just a few times that.(3) Between FY1991 and FY2000 more than $140 billion(4) has been spent at the federal level to curtail drug abuse, yet drugs remain cheap, easy to obtain and with higher purity levels than before the war on drugs was initiated.

What competes with the drug war for budget money?

Education. Because prisons and universities generally occupy the portion of a state's budget that is neither mandated by federal requirements nor driven by population, they often must "fight it out" for funding. As state governments sink millions into corrections to house America's exploding population of incarcerated drug law violators - now nearly 500,000 nationally(5) - education loses.

• From 1987 to 1998 state spending on corrections increased by 30% while spending on higher education decreased by 18.2%.(6)
• State prison budgets are growing twice as fast as spending on public colleges and universities.(7)

By the government's own standards, are we winning the drug war?

No. Despite the exponential growth in spending on the drug war, illicit drugs are cheaper and purer than they were two decades ago,(8) and continue to be readily available. In addition, according to White House estimates, 57% of Americans in need of drug treatment do not receive it, in spite of its proven cost effectiveness in reducing drug use.(9)

• Between 1981 and 1998, the price of heroin and cocaine dropped sharply while their levels of purity rose.(10)
• According to a 1999 survey by the U.S. Department of Health and Human Services, drugs continue to be widely available to America's high school students. Almost 90% of twelfth graders participating in the survey said that marijuana was "very easy" or "fairly easy" to get, over 47% said cocaine was "very easy" or "fairly easy" to get and more than 32% said that heroin was "very easy" or "fairly easy" to get.(11)

What has been proven to be the most cost effective method of decreasing drug abuse and related societal costs?

Treatment.

• A study by the RAND Drug Policy Research Center found that treatment is 10 times more cost effective than interdiction in reducing the use of cocaine in the United States.(12)
• The same study found that every additional dollar invested in substance abuse treatment saves taxpayers more than $7 in societal costs, and that additional domestic law enforcement costs 15 times as much as treatment to achieve the same reduction in societal costs.(13)

Who really profits from drug prohibition?

Organized Crime. According to the United Nations, drug trafficking is a $400 billion per year industry, equaling 8% of the world's trade.(14) By empowering organized criminals with enormous profits, prohibition stimulates violence, corrupts governments at all levels, and erodes community order.

Arms manufacturers, the prison industry, and other special interest groups.

• Anti-drug aid to other nations often comes in the form of military assistance. This year's National Drug Control Budget, for example, includes $452 million to provide Blackhawk helicopters to the Colombian military to fight coca cultivation.(15) Sikorsky Aircraft Corp., the exclusive manufacturer of the helicopters, lobbied heavily in favor of an escalation of aid to Colombia.(16)
• With the overall prison population at roughly 2 million, nearly 500,000 of whom are drug law violators,(17) federal and state governments have been forced to build an ever increasing number of prisons to house what former drug czar Barry McCaffrey has called "America's internal gulag."(18)
• Drug testing is a lucrative industry with a strong interest in perpetuating drug war hysteria. It is estimated that the United States spends $1 billion annually to drug test about 20 million of our workers,(19) in spite of research demonstrating the high cost and low effectiveness of this assault on American privacy.(20)

Corrupt Law Enforcement.

• A 1998 report by the General Accounting Office notes:
  …several studies and investigations of drug-related police corruption found on-duty police officers engaged in serious criminal activities such as (1) conducting unconstitutional searches and seizures; (2) stealing money and/or drugs from drug dealers; (3) selling stolen drugs; (4) protecting drug operations; (5) providing false testimony; and (6) submitting false crime reports.
• The same study found that on average, half of all police officers convicted as a result of FBI-led corruption cases between 1993 and 1997 were convicted for drug-related offenses.(21)

NOTES:

1. National Drug Control Strategy FY 2001 Budget Summary, Page 2, Office of National Drug Control Policy, 2000
2. State and Local Spending on Drug Control Activities, Page 3, Office of National Drug Control Policy, October 1993; the most recent available government figures are from 1991 when state and local governments spent over $15.9 billion on drug control activities, a 13% increase over the previous year.
3. Federal Strategy for Prevention of Drug Abuse and Drug Trafficking 1982, Page 73, Drug Abuse Policy Office, 1982
4. Department of Justice. "Sourcebook of Criminal Justice Statistics 1999". Bureau of Justice Statistics. Washington, D.C. 2000. See table 1.12.
5. Sourcebook of Criminal Justice Statistics 1998, Page 462, Bureau of Justice Statistics, 1999
6. National Association of State Budget Officers (NASBO), (April 1996), 1995 State Expenditures Report, Page 55.
7. David Phinney, "Prison Funding Explodes in Growth," ABCNEWS.com, July 9, 1999.
8. Drug Data Summary, Office of National Drug Control Policy, Page 4, April 1999
9. National Drug Control Policy Strategy Report 2000, Office of National Drug Control Policy
10. Monitoring the Future, National Results on Adolescent Drug Abuse, Overview of key Findings 1999, U.S. Department of Health and Human Services, Page 48.
11. Monitoring the Future, National Results on Adolescent Drug Abuse, Overview of key Findings 1999, U.S. Department of Health and Human Services, Page 48.
12. Rydell, C.P. & Everingham, S.S., Controlling Cocaine, Prepared for Office of National Drug Control Policy, RAND (1994), p.xvi.
13. Rydell, C.P. & Everingham, S.S., Controlling Cocaine, Prepared for Office of National Drug Control Policy, RAND (1994), p.xvi.
14. Associated Press, "U.N. Estimates Drug Business Equal to 8 Percent of World Trade," (1997, June 26).
15. National Drug Control Strategy 2000 Annual Report, Office of National Drug Control Policy, page 17, February 2000.
16. Sam Lowenberg, "Big Guns Back Aid To Colombia: Well-Financed U.S. Lobby Seeks Relief From Drug Wars," Legal Times, February 21, 2000.
17. Sourcebook of Criminal Justice Statistics 1998, Page 462, Bureau of Justice Statistics, 1999.
18. Timothy Egan, "The Nation: Hard Time; Less Crime, More Criminals," The New York Times, March 7, 1999.
19. Shepard, Edward M., and Thomas J. Clifton, Drug Testing and Labor Productivity: Estimates Applying a Production Function Model, Institute of Industrial Relations, Research Paper No. 18, Le Moyne University, Syracuse, NY (1998), Page 8.
20. Drug Testing: A Bad Investment, American Civil Liberties Union, September, 1999.
21. Government Accounting Office, Report to the Honorable Charles B. Rangel, House of Representatives, Law Enforcement: Information on Drug-Related Police Corruption, May 1998, Page 8.