Quincy Institute: American Taxpayers Bear the Cost of Expensive Missiles in Response to Houthi Attacks in the Red Sea

NYN | Reports and analyses

A report by the Quincy Institute highlighted the significant costs the U.S. is incurring to counter Houthi attacks supporting Gaza in the Red Sea, spending over $1 billion on missile defense systems in just 11 months. The institute strongly criticized this strategy, pointing out that American taxpayers are bearing the burden of these high missile costs. It also noted the rising inflation in defense program costs, emphasizing the need to reassess military spending to avoid draining resources in conflicts with adversaries using cheaper and more effective weapons.

The Quincy Institute for Responsible Statecraft, which focuses on promoting diplomatic solutions and avoiding military intervention in U.S. foreign policy, stated in its report that “the U.S. government, since committing to protect global shipping from Houthi attacks in the Red Sea—over 7,000 miles from its borders—has spent more than $1 billion on missile defense systems and bombing Houthi assets in Yemen.”

The institute pointed out that “whether or not we agree that this is a sound strategy, it has continued for 11 months with no end in sight. It’s important to study the cost to American taxpayers. When looking at the cost per missile, we can confidently conclude that American taxpayers are being exploited.”

The institute continued its analysis, stating: “The exorbitant cost citizens pay for missiles is part of a long-standing trend over decades, where taxpayers get less value for their money with each new defense budget. In stark contrast, consumers over the past 40 years have been able to purchase much greater technological capabilities for less money.”

It added: “This makes perfect sense, as consumers benefit from the market economy, which has significantly reduced the cost of technology, even as this technology has advanced remarkably.”

The report identified trends in the technology market, noting that “over the past 40 years, we’ve seen the cost of computer memory and processors drop by hundreds of thousands of percentage points, while advances in automation and robotics have dramatically reduced manufacturing costs. Moreover, the cost of composite materials, crucial to advancements in both consumer and military technology, is now a third of what it was 20 years ago.”

The institute pointed out that “the advancements seen in mobile phone technology, in terms of the value consumers get for their money, are impressive. Basic mobile phones in the 1980s cost ten times or more what consumers pay today for mid-range smartphones with far greater capabilities.”

The institute further explained: “Consumers have clearly benefited from market-driven technological innovation and cost reductions. However, the same cannot be said for the defense sector.”

The report noted that “the defense sector is dominated by a few contractors who serve a single client: the U.S. Department of Defense. Because of the undue influence these companies have over senior Pentagon officials and Congress, suppliers effectively control their customers.”

It stated: “In short, we are seeing much higher prices and less value for money.”

Speaking about missiles, the institute noted that “the missile industry provides a clear example of this situation. Israel’s much-touted Iron Dome air defense system has been adapted for use on ships, called the ‘C-Dome,’ giving Israeli ships the ability to destroy drones and missiles with radar-guided missiles costing between $40,000 and $50,000 per missile. Yes, you heard that right—$50,000 per missile!”

It added: “In comparison, the cheapest missile used by U.S. destroyers deployed in the Red Sea to destroy Houthi drones, the RIM-116 SeaRAM, costs over $900,000 per missile—about 18 times more expensive than the C-Dome missile.”

The report noted: “The C-Dome missile, also known as the Tamir interceptor, has a warhead almost identical in size to the RIM-116 (11 kg vs. 11.3 kg). In terms of size and purpose, the two missiles are almost equivalent. However, while the radar-guided Tamir missile has a range of about 43 miles, the RIM-116’s range is only 5.6 miles. Therefore, if an Arleigh Burke-class destroyer, weighing 9,500 tons and costing over $2 billion, needs to defend a civilian merchant ship 10 miles away under attack from a cheap drone costing $5,000, it won’t be able to use the short-range RIM-116. It will have to resort to using a RIM-162 Block II missile or an SM-2 missile, each costing $1.5 million and $2.5 million respectively.”

The institute elaborated: “In other words, an Israeli ship like the fully armed 2,000-ton Sa’ar 6 corvette would have the option of using a highly effective air defense missile costing under $1 million, compared to the RIM-162, or less than $2 million compared to the SM-2.”

It noted that “due to differences in range and size, the SM-2 is expected to be much more expensive than the Tamir, but should it be 50 times more expensive? The answer is a definitive ‘no.’”

The report also mentioned that “Arleigh Burke destroyers deployed in the Red Sea have been using even more expensive SM-6 missiles, which cost $4.3 million, to destroy cheap Houthi missiles and drones.”

It added: “Clearly, we cannot afford this gap.”

The report warned that “even if American taxpayers could get a missile like the Tamir for $50,000, this price is still high, considering the missile weighs less than 200 pounds, and its processing power is certainly far less than that of a modern smartphone—definitely a fraction of what’s found in a self-driving Tesla.”

It continued: “Furthermore, the number of labor hours required to assemble a 200-pound missile is likely a tiny fraction of the time needed to assemble a 4,300-pound car that costs $50,000. If produced in large quantities, the missile’s frame and moving parts should certainly cost less than $10,000, meaning the estimated cost should be well below $50,000.”

The institute warned that “the unjustified cost of these missiles poses an actual threat to American security. In any major conflict against a significant adversary, the number of missiles needed would cost tens of billions of dollars, making it difficult to afford the weapons we truly need to protect our national interests.”

It added: “Furthermore, one would be extremely naive to think that such inflated prices are limited only to missiles. Since its inception, the cost of the F-35 program has increased by 400 percent, from $338 billion in 2007 (equivalent to $508 billion in 2024 dollars) to more than $2 trillion, according to the latest report by the Government Accountability Office (GAO).”

The institute also noted: “The cost of the Zumwalt destroyer program has similarly skyrocketed. Originally intended to build 32 ships at a cost of $1.34 billion each, the price has risen to more than $9 billion per ship in 2024 dollars. This cost continues to climb as the Navy pours hundreds of millions more into these ships in an attempt to make them militarily relevant. Even more, upgrading existing nuclear bombs now costs $20 million per bomb—many millions more than a reasonable price per bomb.”

The institute concluded: “Ultimately, as U.S. defense budgets drive deeper into debt, reversing America’s military decline cannot be achieved by spending more. This can only be done by rejecting the status quo and applying pressure on the pricing of weapons systems, which ignore the fact that technology and manufacturing costs have decreased significantly over the past 40 years.”

It ended by saying: “Until then, don’t be surprised if we run out of missiles or money—or both—when facing adversaries like the Houthis, who are using cost-effective weapons in the Red Sea to drain American taxpayers and push the U.S. deeper into debt.”