| February 26, 2008 | by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Ali Frick, and Benjamin Armbruster Contact Us | Tell-a-Friend | Archives | Permalink |
The Economic Costs Of War
With record oil prices, rising family debt, and a slowing housing market, Americans are now worried about the economy more than ever. Even 45 percent of economists expect a recession this year. With the Bush administration spending $10 billion a month on the war in Iraq, it is therefore not surprising that Americans increasingly view withdrawal from Iraq as a way out of this economic slump. In fact, 68 percent of the public rank pulling out of Iraq first on a list of proposed economic remedies, beating out tax cuts. Yesterday, a coalition of progressive groups -- including MoveOn, the Center for American Progress Action Fund, USAction, SEIU, VoteVets, and Americans United for Change -- announced a new "Iraq/Recession" campaign. This $15 million nationwide effort will aim to end the war by raising awareness of the domestic costs that have been neglected because of President Bush's singular focus on Iraq. "There is great concern, anxiety, and angst about economic security," former senator John Edwards told reporters yesterday. "All of these things are made worse by the war in Iraq. ... People don't understand why we're spending $500 billion and counting at the same time we have 47 million without healthcare, 37 million living in poverty."
PRE-WAR MISCALCULATIONS: The Bush administration was anxious to go to war, but not anxious to pay for it. In April 2003, then-administrator of the Agency for International Development Andrew Natsios pledged that American taxpayers would pay no more than $1.7 billion to reconstruct Iraq. In March 2003, Paul Wolfowitz infamously predicted that Iraq would be able to "finance its own reconstruction." In reality, total Iraq war requests and authorizations have amounted to $624 billion. Yet just two months after announcing the invasion of Iraq, Bush ordered the first major wartime taxcut in history. The debt was $5.7 trillion when Bush took office; it will be $10.3 trillion by the time he leaves. Economists predicted this fall-out. In 2002, Gerd Hausler, director of international capital markets at the IMF, said that "a serious conflict with Iraq would not be a very healthy development" for the financial markets. Robert Shapiro, undersecretary of commerce in the Clinton administration stated, "If the [Iraq] conflict wears on or, worse, spreads, the economic consequences become very serious." More recently, Nobel laureate Joseph Stiglitz wrote in Vanity Fair, "The soaring price of oil is clearly related to the Iraq war. The issue is not whether to blame the war for this but simply how much to blame it."
EMPLOYMENT FOR DEFENSE CONTRACTORS: Last week, President Bush stated that the Iraq war has nothing to do with the faltering economy. "I think actually the spending in the war might help with jobs...because we're buying equipment, and people are working," he said. The Iraq war has created jobs -- for the administration's defense contractor allies. Bush's most recent budget is a windfall for contractors. Between 2000 and 2005, procurement was the "fastest growing component of federal discretionary spending." Five years after the U.S. invasion of Iraq, however, national unemployment is going up. Between December 2006 and December 2007, the national unemployment rate increased by 13.6 percent in seasonally adjusted terms, from 4.4 to 5.0 percent.
NEGLECTING DOMESTIC PRIORITIES: "At a time of mounting deficits, when we are spending about $10 billion a month in Iraq, issues such as reforming the health-care system and repairing the national infrastructure are likely to remain neglected," write John Podesta and Lawrence J. Korb of the Center for American Progress and Ray Takeyh of the Council on Foreign Relations in today's Washington Post. "The United States has too many national priorities that cannot be realized if yet another beleaguered administration prolongs this costly and unpopular war." Indeed, Bush seems to deem domestic priorities as "excessive spending." He recently vetoed a bill to provide expanded health insurance for 10 million children, and then requested $172 billion more for the war. When the Senate passed a broad stimulus package that offered an extension of unemployment benefits and help for borrowers caught in subprime loans, the White House again called it unaffordable government spending.
RISING COST OF VETERANS CARE: While the Bush administration is devoting considerable resources to the conflict in Iraq, it is paying less attention to what happens when U.S. troops return home. A recent American Journal of Public Health study estimated that in 2004, "nearly 1.8 million veterans were uninsured and unable to get care in veterans' facilities." This number has jumped dramatically since 2000, when there were 290,000 uninsured veterans. Recently discharged veterans are also "having a harder time finding civilian jobs and are more likely to earn lower wages for years." These costs will only continue to grow the longer the United States remains in Iraq. VoteVets has released a new ad on conservatives' misplaced priorities here.
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