Now it seems fairly obvious that some of the significant economic distress we are now facing nationally (slowing employment, housing crisis, deficits) and internationally (staggering trade deficit, sinking dollar) must find their source in the massive federal spending on the war in Iraq.
What should seem obvious, though, is rarely obvious to GWB, who actually thinks that the war has helped the economy:
President Bush denied that the there's any link between the faltering U.S. economy and $10 billion a month being spent on the Iraq war. In fact, according to Bush, the war is actually helping the economy.
Now, however, a leading figure has had the presence of mind to point out that the emperor has no clothes. Professor Stiglitz, a Nobel prize winning economist and former World Bank Vice President, has noted that the Iraq War is behind the economic woes in the United States.. Perhaps now a more substantive discussion of the real cost -- both in lives and the economic vitality of the whole country -- of this tragic war can take place.
In an article in The Australian, Stiglitz notes that the real cost is much higher than the Bush government wants to place it:
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. ...
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 overall cost would be bad enough, with its impact on the deficit and the need to pay for that at some point (can you say "our children?"). But what makes Stiglitz's point particularly poignant is that he directly connects both the cost of the war and the desire by the Bush administration to hide the cost to the current bust in the domestic economy.
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.
I think the debate on Iraq and the debate on the economy should be joined. This is one of the most expensive wars the U.S. has ever waged. And it is killing our economy for no positive gain (only international distrust).
Bring this discussion on.
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Update:
The details of Stiglitz's findings will become abundantly clear next week when his book The Three Trillion Dollar War: The True Cost of the Iraq Conflict, co-authored with economist Linda J. Bilmes, a Harvard University professor, will be published. I hope many of us buy the book and mine it to support the debate as the general election moves forward.
I heard today on CNN that most think Iraq will become the main issue with McCain. I think this economic cost is a way for democratic concerns about the impact on real people -- in this case economic costs -- are NOT separate from Iraq question.