Democratic Message

Via A Tiny Revolution:

The last five of these are, I think, the worst from the point of view of their long-run implications.

Comments

[Charles]

Wait till this dollar panic ripens and add the cost of a European vacation.

Bush: objectively, the worst president ever.

[anne]

http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article3419840.ece?print=yes

February 25, 2008

The Three Trillion Dollar War
By Joseph Stiglitz and Linda Bilmes

The Bush Administration was wrong about the benefits of the war and it was wrong about the costs of the war. The president and his advisers expected a quick, inexpensive conflict. Instead, we have a war that is costing more than anyone could have imagined.

The cost of direct US military operations -- not even including long-term costs such as taking care of wounded veterans -- already exceeds the cost of the 12-year war in Vietnam and is more than double the cost of the Korean War.

And, even in the best case scenario, these costs are projected to be almost ten times the cost of the first Gulf War, almost a third more than the cost of the Vietnam War, and twice that of the First World War. The only war in our history which cost more was the Second World War, when 16.3 million U.S. troops fought in a campaign lasting four years, at a total cost (in 2007 dollars, after adjusting for inflation) of about $5 trillion. With virtually the entire armed forces committed to fighting the Germans and Japanese, the cost per troop (in today's dollars) was less than $100,000 in 2007 dollars. By contrast, the Iraq war is costing upward of $400,000 per troop.

Most Americans have yet to feel these costs. The price in blood has been paid by our voluntary military and by hired contractors. The price in treasure has, in a sense, been financed entirely by borrowing. Taxes have not been raised to pay for it -- in fact, taxes on the rich have actually fallen. Deficit spending gives the illusion that the laws of economics can be repealed, that we can have both guns and butter. But of course the laws are not repealed. The costs of the war are real even if they have been deferred, possibly to another generation.

On the eve of war, there were discussions of the likely costs. Larry Lindsey, President Bush's economic adviser and head of the National Economic Council, suggested that they might reach $200 billion. But this estimate was dismissed as "baloney" by the Defense Secretary, Donald Rumsfeld. His deputy, Paul Wolfowitz, suggested that postwar reconstruction could pay for itself through increased oil revenues. Mitch Daniels, the Office of Management and Budget director, and Secretary Rumsfeld estimated the costs in the range of $50 to $60 billion, a portion of which they believed would be financed by other countries. (Adjusting for inflation, in 2007 dollars, they were projecting costs of between $57 and $69 billion.) The tone of the entire administration was cavalier, as if the sums involved were minimal.

Even Lindsey, after noting that the war could cost $200 billion, went on to say: "The successful prosecution of the war would be good for the economy." In retrospect, Lindsey grossly underestimated both the costs of the war itself and the costs to the economy. Assuming that Congress approves the rest of the $200 billion war supplemental requested for fiscal year 2008, as this book goes to press Congress will have appropriated a total of over $845 billion for military operations, reconstruction, embassy costs, enhanced security at US bases, and foreign aid programs in Iraq and Afghanistan.

As the fifth year of the war draws to a close, operating costs (spending on the war itself, what you might call "running expenses") for 2008 are projected to exceed $12.5 billion a month for Iraq alone, up from $4.4 billion in 2003, and with Afghanistan the total is $16 billion a month. Sixteen billion dollars is equal to the annual budget of the United Nations, or of all but 13 of the US states. Even so, it does not include the $500 billion we already spend per year on the regular expenses of the Defense Department. Nor does it include other hidden expenditures, such as intelligence gathering, or funds mixed in with the budgets of other departments....

[anne]

http://www.theaustralian.news.com.au/story/0,25197,23286149-2703,00.html

February 28, 2008

Iraq war 'Caused Slowdown in the US'
By Peter Wilson

THE Iraq war has cost the US 50-60 times more than the Bush administration predicted and was a central cause of the sub-prime banking crisis threatening the world economy, according to Nobel Prize-winning economist Joseph Stiglitz.

The former World Bank vice-president yesterday said the war had, so far, cost the US something like $US3trillion ($3.3 trillion) compared with the $US50-$US60-billion predicted in 2003.

Australia also faced a real bill much greater than the $2.2billion in military spending reported last week by Australian Defence Force chief Angus Houston, Professor Stiglitz said, pointing to higher oil prices and other indirect costs of the wars.

Professor Stiglitz told the Chatham House think tank in London that the Bush White House was currently estimating the cost of the war at about $US500 billion, but that figure massively understated things such as the medical and welfare costs of US military servicemen.

The war was now the second-most expensive in US history after World War II and the second-longest after Vietnam, he said.

The spending on Iraq was a hidden cause of the current credit crunch because the US central bank responded to the massive financial drain of the war by flooding the American economy with cheap credit.

"The regulators were looking the other way and money was being lent to anybody this side of a life-support system," he said.

That led to a housing bubble and a consumption boom, and the fallout was plunging the US economy into recession and saddling the next US president with the biggest budget deficit in history, he said.

Professor Stiglitz, an academic at the Columbia Business School and a former economic adviser to president Bill Clinton, said a further $US500 billion was going to be spent on the fighting in the next two years and that could have been used more effectively to improve the security and quality of life of Americans and the rest of the world.

The money being spent on the war each week would be enough to wipe out illiteracy around the world, he said.

Just a few days' funding would be enough to provide health insurance for US children who were not covered, he said.

The public had been encouraged by the White House to ignore the costs of the war because of the belief that the war would somehow pay for itself or be paid for by Iraqi oil or US allies.

"When the Bush administration went to war in Iraq it obviously didn't focus very much on the cost. Larry Lindsey, the chief economic adviser, said the cost was going to be between $US100billion and $US200 billion - and for that slight moment of quasi-honesty he was fired.

"(Then defence secretary Donald) Rumsfeld responded and said 'baloney', and the number the administration came up with was $US50 to $US60 billion. We have calculated that the cost was more like $US3 trillion.

"Three trillion is a very conservative number, the true costs are likely to be much larger than that."

Five years after the war, the US was still spending about $US50billion every three months on direct military costs, he said.

Professor Stiglitz and another Clinton administration economist, Linda Bilmes, have produced a book, The Three Trillion Dollar War, pulling together their research on the true cost of the war, which does not include the cost to Iraq.

One of the greatest discrepancies is that the official figures do not include the long-term healthcare and social benefits for injured servicemen, who are surviving previously fatal attacks because of improved body armour.

"The ratio of injuries to fatalities in a normal war is 2:1. In this war they admitted to 7:1 but a true number is (something) like 15:1."

Some 100,000 servicemen have been diagnosed with serious psychological problems and the soldiers doing the most tours of duty have not yet returned....

[anne]

http://www.telegraph.co.uk/core/Content/displayPrintable.jhtml;jsessionid=YMOLMQ1HZT5NFQFIQMGCFGGAVCBQUIV0?xml=/money/2008/02/26/bcnstiglitz1.xml&site=1&page=0

Ferbuary 26, 2008

Stiglitz: $3tn Iraq Legacy to Hit Next President
By Emma Thelwell

[Joseph Stiglitz is estimating that 40% of the 2 million soldiers serving in Iraq will return home with disabilities. The expression used was severe disabilities. The New York Times had recorded more than 100,000 disability grants already made to returned veterans from Iraq and Afghanistan by October 2006.]

[anne]

http://www.theaustralian.news.com.au/story/0,25197,23286149-2703,00.html

One of the greatest discrepancies is that the official figures do not include the long-term healthcare and social benefits for injured servicemen, who are surviving previously fatal attacks because of improved body armour.

"The ratio of injuries to fatalities in a normal war is 2:1. In this war they admitted to 7:1 but a true number is (something) like 15:1."

Some 100,000 servicemen have been diagnosed with serious psychological problems and the soldiers doing the most tours of duty have not yet returned....

[When there was a flurry of focus from the New York and Los Angeles Times on casualties in Iraq and Afghanistan, Linda Bilmes was immediately severely criticized with a criticizing call made to a dean at Harvard from an Assistant Secretary of Defense. Then, casualty figures were cut by more than 50% on government Internet sites and subsequent reports touching on casualties have used the much reduced numbers ever since.]

[anne]

http://www.theaustralian.news.com.au/story/0,25197,23286149-2703,00.html

The spending on Iraq was a hidden cause of the current credit crunch because the US central bank responded to the massive financial drain of the war by flooding the American economy with cheap credit.

"The regulators were looking the other way and money was being lent to anybody this side of a life-support system," he said.

That led to a housing bubble and a consumption boom, and the fallout was plunging the US economy into recession and saddling the next US president with the biggest budget deficit in history, he said....

[anne]

http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article3419840.ece?print=yes

The costs to society are obviously far larger than the numbers that show up on the government's budget. Another example of hidden costs is the understating of US military casualties. The Defense Department's casualty statistics focus on casualties that result from hostile (combat) action -- as determined by the military. Yet if a soldier is injured or dies in a night-time vehicle accident, this is officially dubbed "non combat related" -- even though it may be too unsafe for soldiers to travel during daytime.

In fact, the Pentagon keeps two sets of books. The first is the official casualty list posted on the DOD website. The second, hard-to-find, set of data is available only on a different website and can be obtained under the Freedom of Information Act. This data shows that the total number of soldiers who have been wounded, injured, or suffered from disease is double the number wounded in combat. Some will argue that a percentage of these non-combat injuries might have happened even if the soldiers were not in Iraq. Our new research shows that the majority of these injuries and illnesses can be tied directly to service in the war.

[anne]

http://www.nytimes.com/2008/02/28/opinion/28cohen.html

February 28, 2008

The Long Haul in Afghanistan
By ROGER COHEN

If troops are to stay until 2013, as the NATO secretary general suggests, the alliance will need re-branding.

[Forever warring, just so we understand.]

[anne]

http://www.latimes.com/news/opinion/la-ed-warecon29jan29,0,3669183,print.story

January 29, 2008

Keynesian Trillions

President Bush cannot yet claim that he has won the Iraq war. But his final State of the Union speech made clear that he intends not to lose it. As always, he will spend whatever it takes to secure Iraq and Afghanistan -- and his legacy.

While the president's speechwriters were tweaking his address Monday, the White House announced that Bush would ask for $70 billion more for the two wars this year. A Pentagon spokesman said combat operations were costing $12 billion a month, with $9.2 billion spent in Iraq. That's just for combat operations. Including replacing equipment that's being used up and providing medical care and disability benefits for the wounded, Iraq has already cost well over $1 trillion. Back in early 2006, when war spending was running about $5 billion a month, economists Joseph Stiglitz and Linda Bilmes were sharply criticized for a study that predicted the Iraq war would cost up to $2 trillion. Their sequel, to be released next month, is titled "The Three Trillion Dollar War."

The interesting question is why the U.S. economy, beneficiary since 9/11 of the largest military spending binge in history, now requires $150 billion more in the form of a short-term stimulus package. Why hasn't the $1 trillion in defense spending, in addition to the 2001 and 2003 tax cuts, been sufficient to keep the economic boom going?

Economists will cite the sub-prime mess, of course. And then there's the price of oil, which was $25 a barrel before the U.S. invasion of Iraq and briefly hit $100 this year. That has drained the U.S. economy and increased the price of waging war, a petroleum-intensive business. Similarly, much of the military's spending goes to food, clothing and other consumables here and abroad, potentially boosting inflation more than economic growth. Still, mountains of taxpayer dollars have been paid to U.S. citizens or businesses in salaries, contracts, supplies, weapons systems, healthcare and services. Does that mean the fundamentals of our economy are weaker than we thought, and a deeper slump might have occurred without all that spending?

Washington's promised $150-billion stimulus package is designed to shock and awe the U.S. economy in a mere three to four months, and spread the money much more broadly than military spending, which must trickle down if it trickles at all. The economist John Maynard Keynes taught us in the 1930s that money spent on guns -- or butter, or even digging ditches and filling them up again -- had the same stimulative effects on a slumping economy. We've developed a more nuanced view of government spending since then, but it's still worth asking: What would Keynes say about a $3-trillion war?

[Matthias Neeracher]

I'll have to disagree with the last sentence. Foreign opinion of the US could recover quite quickly once a new president takes office. Many of the other problems are much harder to fix.

[tai]

I think that some of the economic figures are somewhat skewed. The cheap credit that Greenspan flooded the market with to ease the dot.com crash financed their own bubbles: housing, education, personal consumption, outsourcing. Compounding the problem is that much of the spending was not for immediately useful infrastructure; a new elementary school is great, but could take decades to pay off. In contrast, green energy projects would have had multiple effects: employing workers, reducing imports, decreasing manufacturing and environmental costs. But of course, such projects would have been anathema to big-energy interests. Now that we've tapped out our future, where do we turn to fuel our growth?

[Julian Elson]

Thank you, O Scalia, O'Connor, Rehnquist, Kennedy, and Thomas, for guiding us foolish, demotic commoners away from the dangerous course we had errantly pursued when we foolishly attempted to choose Al Gore as our president. Truly, your wise judgment has saved our country from the folly of the teeming masses.

[lgm]

I'm sure the conclusion we draw from the table is accurate,
but it doesn't say whether the numbers were discounted. I
think there has been about 25% inflation in the last 7 years.
Of course, this doesn't change $5.7T to $9.2T or turn negative
numbers (budget deficit) positive. Just asking.

[esb]

Bradford, my good man,

inasmuch as you are presenting inflation as a beneficial solution to the current financial "mess"

you should enter an asterisk next to the "Price of Gas," "Cost of College" and "U.S. Dollar" items so as to indicate that you consider those changes to be beneficial.

Wink.

[Mark Witte]

Hey, RJG, you going to comment on this?

[Doug]

The increase in poverty is more than the combined population of North Dakota, South Dakota, Mondana, Wyoming and Idaho. Put that into a graphic on a TV ad, make it look like a huge chunk of America has fallen into poverty while Bush was fooling around at his ranch.

[ogmb]

Afair, public opinion of the U.S. has improved over the last eight years in India, thanks to all the job creation. George W. Bush, the best U.S. President India ever had?

[Roger Bigod]

Where is the box for number of wars started as an election stunt?

[tjallen]

Apparently some Republicans like this one more:
Presidential sex scandals 1992-2000 - 3+
Presidential sex scandals since 2000 - 0