b4bb89bc   
   XPost: rec.autos.driving, alt.society.liberalism, alt.fan.michael-moore   
   From: @daisy.mae   
      
   On 9/7/2010 9:29 AM, His Highness the TibetanMonkey & the Spirits of the   
   Jungle wrote:   
   > On Sep 7, 3:25 am, Budikka666  wrote:   
   >> On Sep 6, 12:53 pm, John Manning  wrote:   
   >>   
   >>   
   >>   
   >>> "There is no question that the Iraq war   
   >>> added substantially to the federal debt.   
   >>> This was the first time in American history   
   >>> that the government cut taxes as it went   
   >>> to war. The result: a war completely funded   
   >>> by borrowing.   
   >>   
   >>> "U.S. debt soared from $6.4 trillion in   
   >>> March 2003 to $10 trillion in 2008 (before   
   >>> the financial crisis); at least a quarter   
   >>> of that increase is directly attributable   
   >>> to the war. And that doesn't include future   
   >>> health care and disability payments for   
   >>> veterans, which will add another half-trillion   
   >>> dollars to the debt."   
   >>   
   >>> -- WRITING in these pages in early 2008, we put the total cost to the   
   >>> United States of the Iraq war at $3 trillion. This price tag dwarfed   
   >>> previous estimates, including the Bush administration's 2003 projections   
   >>> of a $50 billion to $60 billion war.   
   >>   
   >>> But today, as the United States ends combat in Iraq, it appears that our   
   >>> $3 trillion estimate (which accounted for both government expenses and   
   >>> the war's broader impact on the U.S. economy) was, if anything, too low.   
   >>> For example, the cost of diagnosing, treating and compensating disabled   
   >>> veterans has proved higher than we expected.   
   >>   
   >>> Moreover, two years on, it has become clear to us that our estimate did   
   >>> not capture what may have been the conflict's most sobering expenses:   
   >>> those in the category of "might have beens," or what economists call   
   >>> opportunity costs. For instance, many have wondered aloud whether,   
   >>> absent the Iraq invasion, we would still be stuck in Afghanistan. And   
   >>> this is not the only "what if" worth contemplating. We might also ask:   
   >>> If not for the war in Iraq, would oil prices have risen so rapidly?   
   >>> Would the federal debt be so high? Would the economic crisis have been   
   >>> so severe?   
   >>   
   >>> The answer to all four of these questions is probably no. The central   
   >>> lesson of economics is that resources -- including both money and   
   >>> attention -- are scarce. What was devoted to one theater, Iraq, was not   
   >>> available elsewhere.   
   >>   
   >>> Afghanistan   
   >>   
   >>> The Iraq invasion diverted our attention from the Afghan war, now   
   >>> entering its 10th year. While "success" in Afghanistan might always have   
   >>> been elusive, we would probably have been able to assert more control   
   >>> over the Taliban, and suffered fewer casualties, if we had not been   
   >>> sidetracked. In 2003 -- the year we invaded Iraq -- the United States   
   >>> cut spending in Afghanistan to $14.7 billion (down from more than $20   
   >>> billion in 2002), while we poured $53 billion into Iraq. In 2004, 2005   
   >>> and 2006, we spent at least four times as much money in Iraq as in   
   >>> Afghanistan.   
   >>   
   >>> It is hard to believe that we would be embroiled in a bloody conflict in   
   >>> Afghanistan today if we had devoted the resources there that we instead   
   >>> deployed in Iraq. A troop surge in 2003 -- before the warlords and the   
   >>> Taliban reestablished control -- would have been much more effective   
   >>> than a surge in 2010.   
   >>   
   >>> Oil   
   >>   
   >>> When the United States went to war in Iraq, the price of oil was less   
   >>> than $25 a barrel, and futures markets expected it to remain around that   
   >>> level.   
   >>   
   >>> With the war, prices started to soar, reaching $140 a barrel by 2008. We   
   >>> believe that the war and its impact on the Middle East, the largest   
   >>> supplier of oil in the world, were major factors. Not only was Iraqi   
   >>> production interrupted, but the instability the war brought to the   
   >>> Middle East dampened investment in the region.   
   >>   
   >>> In calculating our $3 trillion estimate two years ago, we blamed the war   
   >>> for a $5-per-barrel oil price increase. We now believe that a more   
   >>> realistic (if still conservative) estimate of the war's impact on prices   
   >>> works out to at least $10 per barrel. That would add at least $250   
   >>> billion in direct costs to our original assessment of the war's price   
   >>> tag. But the cost of this increase doesn't stop there: Higher oil prices   
   >>> had a devastating effect on the economy.   
   >>   
   >>> Federal debt   
   >>   
   >>> There is no question that the Iraq war added substantially to the   
   >>> federal debt. This was the first time in American history that the   
   >>> government cut taxes as it went to war. The result: a war completely   
   >>> funded by borrowing. U.S. debt soared from $6.4 trillion in March 2003   
   >>> to $10 trillion in 2008 (before the financial crisis); at least a   
   >>> quarter of that increase is directly attributable to the war. And that   
   >>> doesn't include future health care and disability payments for veterans,   
   >>> which will add another half-trillion dollars to the debt.   
   >>   
   >>> As a result of two costly wars funded by debt, our fiscal house was in   
   >>> dismal shape even before the financial crisis -- and those fiscal woes   
   >>> compounded the downturn.   
   >>   
   >>> The financial crisis   
   >>   
   >>> The global financial crisis was due, at least in part, to the war.   
   >>> Higher oil prices meant that money spent buying oil abroad was money not   
   >>> being spent at home. Meanwhile, war spending provided less of an   
   >>> economic boost than other forms of spending would have. Paying foreign   
   >>> contractors working in Iraq was neither an effective short-term stimulus   
   >>> (not compared with spending on education, infrastructure or technology)   
   >>> nor a basis for long-term growth.   
   >>   
   >>> Instead, loose monetary policy and lax regulations kept the economy   
   >>> going -- right up until the housing bubble burst, bringing on the   
   >>> economic freefall.   
   >>   
   >>> Saying what might have been is always difficult, especially with   
   >>> something as complex as the global financial crisis, which had many   
   >>> contributing factors. Perhaps the crisis would have happened in any   
   >>> case. But almost surely, with more spending at home, and without the   
   >>> need for such low interest rates and such soft regulation to keep the   
   >>> economy going in its absence, the bubble would have been smaller, and   
   >>> the consequences of its breaking therefore less severe. To put it more   
   >>> bluntly: The war contributed indirectly to disastrous monetary policy   
   >>> and regulations.   
   >>   
   >>> The Iraq war didn't just contribute to the severity of the financial   
   >>> crisis, though; it also kept us from responding to it effectively.   
      
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