"We draw our economic lessons from our politicians only at our peril."
The quotation is from Joseph Stiglitz, who has co-authored a new paper which conservatively estimates the costs of the Iraq war as exceeding one trillion U.S. dollars.
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The $1bn is the conservative estimate, but does include macroeconomic effects of increased oil prices ($5/barrel for 5 years), and the accompanying reduction in aggregate demand (people spend more on oil, less on other stuff). A die-hard bush supporter could argue that these will eventually be fixed with a friendly iraq we can suck dry at $3.50/barrel. Without these, the cost is at $839 billion, most of which is VERY hard to refute.
Keep in mind that Stiglitz has spent a lot of time at the helm of the US CEA and the World Bank, so his moderate estimate of the macroeconomic effects ($750bn) should not be given short shrift either.