Kewl news on Obama economic advisors

Not only is Paul Krugman on the team of people advising the President-elect, but Joseph Stiglitz was asked to be part of Obama's Administration (Stiglitz declined, saying "I've gone beyond the age where I would want to be in Washington full time"), meaning that Obama takes the advice of both men quite seriously.
Krugman had to correct the NY Times for saying that no one saw the housing crisis coming.  He did, so did Dean Baker and the blog Calculated Risk. As the Economist puts it, Krugman "was, in many ways, the first economics blogger." Stiglitz wrote about the cost of the Iraq War ultimately costing the US about $3 Trillion.

Why can’t Congress limit executive pay?

Kind of amazing how things actually work out in real life as opposed to how they're presented in the newspapers:

[Washington] Post readers may ask that question given that the Post told them that: "Congress wanted to guarantee that the $700 billion financial bailout would limit the eye-popping pay of Wall Street executives."

The rest of the article explains how the bailout legislation, as approved by Congress, is not likely to impose any serious limits on executive pay. So, Congress was apparently unable to do what it wanted.

The author then notes how Congress is usually able to make legislation do what it wants, but gee, it just seems unable to limit executive pay! Not that such an inability has anything to do with campaign contributions! No, no, no, no, that couldn't be the reason!

The “higher taxes” bugaboo

We have here a fellow who's very highly motivated to find the "pulse" of the public, to seek out what concerns regular voters.

Saul Anuzis, the Michigan GOP chair who's running for chairman of the Republican National Committee, has issued a 24-page "Blueprint for a GOP Comeback" to RNC members that details his agenda and vision for returning the party to political power.
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He goes on to say that the party must "stand proudly" on its core principles. "When Democrats try to raise taxes, we’ll mobilize the American people to stop them. When the Democrat spending spree begins, we’ll end it...
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(But if these GOP ideas are winners, then why do 70% in a new Washington Post/ABC poll say that Obama should fulfill his campaign promise...
and why did just 3% say in the latest NBC/WSJ poll that taxes are the most important economic issue facing the country?)

In other words, the old saw about the Republicans "protecting" the American public from (*gasp!* *shriek!!*) higher taxes!!1!!*! is just one of the old talking points that liberals can safely disregard.

Joseph Stiglitz - Five Errors

Joseph Stiglitz identifies "five key mistakes—under Reagan, Clinton, and Bush II—and one national delusion."

The Five Errors are:

1. Firing the sensible pro-regulation Paul Volcker and hiring the Ayn Rand disciple Alan Greenspan.

2. Repealing the Glass-Steagall Act in 1999.

3. The (younger) Bush tax cuts.

4. Screwing up accountability for corporations.

5. Bungling the response to the belated realization that the economy was in "deep doo-doo."

Major, overall problem: Too much faith in free markets.

Concise explanation of energy policy

Dean Baker explains how it works.

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Note: I deleted people's ability to log on freely, as spammers were getting in and leaving all sorts of junk on the blog.

Rich Gardner

The utter waste of “Star Wars”

Since I wrote a paper on Star Wars/SDI/Missile Defense/etc. back in the late 1980s, it has been my belief that President Reagan merely restarted in 1983 what had been shut down by the 1972 Anti-Ballistic Missile Treaty. Essentially, the defense contractors who had been working on ABM technology in 1972 continued to work "on spec" until what was roughly the same program was started up again in 1983. So when we speak of Missile Defense, we're really talking about a program that began during the Eisenhower Administration, i.e., about a 50+ year-old program.
Would the program ever have produce worthwhile results? I think so. During the October 1986 Reykjavík, Iceland Summit, Reagan and the General Secretary of the CPSU, Mikhail Gorbachev appeared about to make a deal to eliminate nuclear weapons entirely. The sticking point apparently, was that the US had to surrender Missile Defense. Unfortunately, as with G.W. Bush in 2003 with Iran, Reagan proved unable to recognize when the deal was as good as it was ever going to get and to cash in his chips while the cashing in was good.
The Center for Arms Control and Non-Proliferation estimates that the US has spent about $60 billion on this worthless boondoggle since the Bush Administration took office. The program has failed test after test and shows no signs of ever passing those tests within the next few decades. Remember, this is a 50+ year-old program!!!! If there's no apparent success after all this time, we're not just talking about a few wrinkles left to be ironed out, we're talking about major, fundamental flaws. My paper in the late 1980s compared the 1943 bombing of Schweinfurt, Germany with the Missile Defense program of the time. The media was in the habit of speaking of a 99% success rate in being able to shoot missiles down. My example and comparisons showed that a 5% or 10% success rate was far more likely.
Also, the program has produced completely unnecessary tensions with Russia.
It's time to shut this program down. Permanently.

Update: The Weekly Standard composed a plea to our President-Elect to keep "Star Wars" going. I considered that to be a silly thing to do and wrote a lengthy piece in response.

The Housing Crisis

Fannie Mae & Freddie Mac are to blame for the housing crisis, say Republican conservatives. Not true, says McClatchey Newspapers:

...federal housing data reveal that the charges [against Fannie and Freddie] aren’t true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.
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Dean Baker, the co-director of the Center for Economic and Policy Research, noted that “while Fannie and Freddie, as huge actors in the mortgage market, certainly contributed to the bubble, it is absurd to point to them as principle culprits.” He pointed out that “their market share actually fell as the bubble grew to ever more dangerous levels, dropping from 50.1 percent in 2002 to just 34.8 percent at the peak of the bubble in 2006.”

A Republican Senator, desperate to avoid blame for the economy, claims that the President doesn't control anything. Bush is just a helpless victim of the economy, which is completely independent of anything Bush does.

An examination of a number of myths about the housing crisis.

Bush’s economy - a success story?

Dan Froomkin of the WaPo's White House Watch presents:

AFP reports: "Fears of a global financial collapse have cast a dark cloud over US President George W. Bush's final months in office, after years in which he claimed the US economy as a major success story."

Paul Krugman of the NY Times comments on Bush's alleged "major success story":

Looking at [the included chart], which presidents, exactly, would the Bush economic climate be the envy of? Even at its best, the Bush economy failed to deliver employment growth comparable to that under earlier presidents. And the Bush economy spent very little time at its best. Only Gerald Ford and Bush the elder failed to deliver performance better than the current occupant of the White House.

And just where has Our Glorious Leader (Bush) been during:

"What we are witnessing may be the greatest destruction of financial wealth that the world has ever seen -- paper losses measured in the trillions of dollars. Corporate wealth. Oil wealth. Real estate wealth. Bank wealth. Private-equity wealth. Hedge fund wealth. Pension wealth. . . .

"What is really going on, at the most fundamental level, is that the United States is in the process of being forced by its foreign creditors to begin living within its means."

And as our buddy Joseph Stiglitz says in the Guardian:

"Houses of cards, chickens coming home to roost - pick your cliche. The new low in the financial crisis, which has prompted comparisons with the 1929 Wall Street crash, is the fruit of a pattern of dishonesty on the part of financial institutions, and incompetence on the part of policymakers."

Well, just as during Hurricane Katrina (and 9-11, for that matter) and its aftermath, Bush has been AWOL:

Ezra Klein blogs for the American Prospect: "According to The Wall Street Journal, Bush was briefed on the rescue after it was in play. And even then, he was only 'briefed.' There's been no effort on the part of the White House to even advance the idea that Bush is an engaged participant who's actively signing off on these actions, possibly because suggesting his involvement in a crisis of this complexity would cause the stock market to run and hide in a corner."

At thinkprogress.org, Ali Frick watched MSNBC host Chris Matthews take on Rep. Eric Cantor (R-VA) last night:

"Noting that a 'normal president' would be more visible during such a crisis, Matthews compared Bush's response to the current financial turmoil to his handling of Hurricane Katrina:

"MATTHEWS: 'I'm just asking you where's the President of the United States tonight? You got Paulson out there. Where's the President? He's pulling one of these Katrinas again. Where is he? The country's worried like hell when you lose this amount of value in the wealth of this country in a matter of days. You'd think the President would come on television and explain the situation to the American people. I'm just asking where he is. That's all I'm asking.'

"CANTOR: 'Chris, you'll have to ask -- I don't know where he is. I assume he's in the White House.'"

And this was just one of those comments that make you go "Wha-a-a-a?!?!?!":

Olivier Knox writes for AFP: "The vastly unpopular president, who has not held a formal press conference since July 15th or taken questions on the economy since a September 7 television interview, worries that anything he says could become fodder in the race to the November 4 elections, explained spokeswoman Dana Perino."

Whoa! Whoa! Hold on here! In the midst of financial crisis that rivals 1929, the President is concerned about the upcoming election? The election is even a factor!?!?!

And for anybody who thought that the Iraq War had something to do with oil and other economic factors, Fred Kagan suggests that's correct and explains why Democrats are to blame:

Democratic senators intervened in Iraqi domestic politics earlier this year to prevent Iraq from signing short-term agreements with Exxon Mobil, Shell, Total, Chevron, and BP.

The Iraqi government was poised to sign no-bid contracts with those firms this summer to help make immediate and needed improvements in Iraq's oil infrastructure...

...Instead, Senators Chuck Schumer, John Kerry, and Claire McCaskill wrote a letter to Secretary of State Rice asking her "to persuade the GOI [Government of Iraq] to refrain from signing contracts with multinational oil companies until a hydrocarbon law is in effect in Iraq."

As Booman puts it:

I'd like to point out one more time for the record, that the Iraqis are not grateful for what coalition troops did to their country and that they want us to get the hell out of their country.
----------
All of this disrespect is what led Fred Kagan (panties all in a bunch) to break out his laptop and type nasties about Sens. Kerry, Schumer, and McCaskill. Why does Kagan give one rat's ass who gets the contracts in Iraq? You tell me. To blame it on the Democrats, per chance? Or maybe as a direct quid pro quo from his paymasters? [emphasis added]
Fred Kagan has been a major theoretician behind the Iraq War (no, we won't credit him with the title of "thinker").

Bush says “I told you so,” but…

Energy policy - Bush says "I told you so," but what are the two conditions for being able to say that? 1. You have to put out a set of recommendations. Check, Bush put out an energy policy very early in his first term.  2. You have to be able to say that your advice was not followed. D'oh!

Energy Secretary Samuel Bodman said, as part of an online interactive forum on March 9, 2005, “During his second week in office, the President put together a task force to address America’s energy challenges… And over the past four years, we have implemented 95 percent of those recommendations.” [emphasis added]

Bill O'Reilly is (gulp!) correct! Karl Rove claimed on O'Reilly's program that:

"This president and this administration put more into alternative energy research than any administration in history by a significant factor."

...

O’Reilly [correctly] questioned Rove’s assertion, saying “maybe that’s true and maybe it isn’t.”

No, Rove's assertion is not correct.

Since 1980, federal spending on energy research has declined, and since the mid-1990s, “R&D spending has been stagnant for renewable energy and energy efficiency.”

Bush correctly asserted in his 2006 State of the Union Address that America was addicted to oil. Unfortunately, he never followed that up by doing anything effective about it. According to the White House, the best energy policy was simply to trust the market (PDF). BTW, John McCain agrees with that idea.

Poll - Los Angeles Times/Bloomberg Poll. June 19-23, 2008. N=1,233 adults nationwide. MoE ± 3.

"Has the recent rise in gas and oil prices caused you or your family any financial hardship, or not?"
		Yes	No	Unsure
		%	%	%
	6/19-23/08	70	29	1
"Who do you think, if anyone, is to blame for the rising fuel prices: the oil companies that are making large profits, or commodities speculators, or turmoil in the Middle East, or OPEC and other foreign producers of oil, or the Bush administration, or the demand for more oil from countries such as China, or is there some other person or group that you blame for the rising fuel prices?" Up to two responses accepted.
			%
	Bush administration		29
	Oil companies		25
	Commodities speculators		13
	Countries such as China		11
	Foreign producers		9
	Middle East turmoil		8
	Other		4
	No one (vol.)		1
	Unsure		21
"Do you think the Bush administration has taken sufficient steps to control rising oil and gas prices and ease its affect on American families, or has the Bush administration not done enough?"
		Taken Sufficient Steps	Not Done Enough	Unsure
		%	%	%
	6/19-23/08	10	81	9

Iraq War vs Climate Change

Is our president careless about all money? Does he regard all money the way Mrs Howell of Gilligan's Island did ("Oh deah, it's only money")?  Ha, ha, ha! No, don't be silly!  President Bush is very concerned that the bill for fixing Climate Change might run the US as much as $6 Trillion! Oh, and get this:

"As you can imagine, our opposition to this will be quite strong and we'll be making these points throughout the week," said Keith Hennessey, director of Bush's National Economic Council.

U.S. gross domestic product could be reduced by as much as 7 percent in the year 2050 and gasoline prices -- already at record highs in the United States -- could soar by as much as 53 cents a gallon by 2030, he said. [emphases added]

Gas was an average of $1.91 a gallon between 2000 & 2006, but went to $2.80 in 2007. Price for crude oil went from $50 a barrel in 2005 to $68 in 2007. Now oil is about $140 a barrel and around $4.00 a gallon.

Of course, one of the really major problems with the economy today are the "bubbles" that arise and burst. First there was the "dot-com bubble," then the "housing market" bubble, now it looks as though we've got a "hydrocarbon bubble" in the making. Major problem that this article identifies, of course, is the extremely unequal distribution of wealth, with those at the top of the income ladder making all kinds of money and with those in the middle and bottom making much less. Wealthy people with "money to burn" are much more wasteful than are people who spend to survive and to live decent lives. Our current president, with his tax policies, is very much in favor of giving the wealthy ever more money. The Republican scuttling of the "windfall profits" tax has everything to do with Ronald Reagan's old "Reverse Robin Hood" policies of taking from the non-wealthy and giving to the wealthy.  America then gets an increasingly top-heavy economy that becomes ever more unsteady.

Price of gas - why it's going up by OPEC President Chakib Khelil. [emphases added]

OPEC president says weak dollar, Iran crisis will drive oil prices to US$170

ALGERIA. OPEC President Chakib Khelil predicted that the price of oil will climb to US$170 a barrel before the end of the year, citing the dollar's decline and political conflicts.

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The rising cost of crude is not linked to supply, Khelil told Bloomberg today. "There is more than enough oil in the market to meet the international demand," added the OPEC president.

Video - Ron Paul agrees. Price of oil linked to Iran saber-rattling.

Euro vs Dollar

A comparison of the Euro and the cost of a barrel of oil. Problem: As both have been rising,  the Euro was $1.00 when it was introduced in 1999, dropped to $0.8252 relative to the US dollar on 26 October 2000 and rose to $1.60 as of 23 April 2008, US costs for oil have risen faster than Europes' costs have.

Oil went from $35 a barrel in the fall of 2000, which was €42.41, to $118 in 2008. Because the Euro has also risen, Europe is only now paying €73.75. The US is paying a 237% increase but Europe is only paying a 74% increase.

The Iraq War vs the economy - are they two separate issues?

Iraq was originally expected to be the primary issue in the 2008 presidential election. Instead, opinion polls tend to show that it is the second most important issue, after the economy. That second place showing does not justify the decision of corporate television news to deep-six the Iraq story. It is still the number one issue for 25 percent of Americans, which is 75 million people. Moreover, as of last March 71% of Americans thought that the Iraq debacle was part of the reason for the bad economy, so when they name the latter as the most important issue a lot of them are rolling the two issues into one. [emphasis added]

So Iraq is still central to the campaign, and people are fooling themselves if they say otherwise. But it isn't playing out as expected.

Also, in the same post, we see that Obama's campaign is aligning itself with Iraqi Prime Minister Nuri al-Maliki and Grand Ayatollah Ali Sistani, who both would like to see a "calendar-based" as opposed to a "conditions-based" withdrawal of American troops from that country.

Update:

The government of Iraqi Prime Minister Nuri al-Maliki has now aligned itself with the Obama campaign.

“U.S. presidential candidate Barack Obama talks about 16 months. That, we think, would be the right timeframe for a withdrawal, with the possibility of slight changes”

Price tag

17 Mar 08: Zachary Coile writes in the San Francisco Chronicle: "The United States has poured more than $500 billion into Iraq, mostly for military operations. But that figure is just a small piece of the much larger bill that taxpayers will pay in the future.

"Because the money for the war is being borrowed, interest payments could add another $615 billion. A heavily depleted military will have to be rebuilt at a cost of $280 billion. Disability benefits and health care for Iraq war veterans, many of them severely injured, could add another half-trillion dollars over their lifetime. . . .

"The price tag in Iraq now is more than double the cost of the Korean War and a third more expensive than the Vietnam War, which lasted 12 years. . . .

"Only World War II was more expensive. That four-year war - in which 16 million U.S. troops were deployed on two fronts, fighting against Germany and Japan - cost about $5 trillion in inflation-adjusted dollars."

Dave Lindorff explains why the Iraq War is driving the deficit and price of oil and food up.

Senate report (PDF) on the role of speculation in rising oil & gas prices.

Bad Money by Kevin Phillips. Subtitle: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism. In Bad Money, Phillips describes the consequences of our misguided economic policies, our mounting debt, our collapsing housing market, our threatened oil, and the end of American domination of world markets. [emphasis added]

More considerations

 

Think Progress » FLASHBACK: Economists Predicted That A Prolonged ...

The Iraq Recession. I do hope this sticks as the label. ..... Did prolonged U.S. presence in Iraq lead us into a recession? ... thinkprogress.org/2008/01/23/iraq-recession/ - 74k - Cached - Similar pages

 

BBC NEWS | Business | War with Iraq could spark recession

Any conflict with Iraq together with a spike in oil prices, could endanger the world's economic recovery and hit consumers in the pocket. news.bbc.co.uk/1/hi/business/2240551.stm - 55k - Cached - Similar pages

 

Between the Bits: Trying the war in Iraq to the recession

Trying the war in Iraq to the recession. There are some thoughts that while war is usually good for the economy, the war in Iraq has been incredibly bad for ... johnhummel.blogspot.com/2008/ 01/trying-war-in-iraq-to-recession.html - 54k - Cached - Similar pages

 

War News Good? Let's Create A Recession | Sweetness & Light

And behold a comparison of both Google searches and news reports for the terms “Iraq War” and “recession” via Google Trends: ... sweetness-light.com/archive/ war-news-good-lets-create-a-recession - 31k - Cached - Similar pages

Issues and Elections

http://www.scholarsandrogues.com/2008/01/16/getting-us-out-of-iraq-can-get-us- out-of-recession/. The article links to every way in which our American life ...
community.aarp.org/n/pfx/forum.aspx?tsn=1& nav=messages&webtag=rp-issues&tid=53453 - 130k - Cached - Similar pages

Peace Action Coalition's summary of economic effects and further commentary on the Moratorium of March 19th

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Getting us out of Iraq can get us out of recession

http://www.scholarsandrogues.com/2008/01/16/getting-us-out-of-iraq-can-get-us-out-of-recession/

The American Prospect’s Harold Meyerson has an op-ed in the Washington Post today outlining the nature of the coming recession, and how our economic response is going to have to change if we’re to fix it.

“Wait,” you’re thinking, “is he saying we’re in recession? Surely not! I know it’s a worry, but no one’s actually said it’s official yet.”

Let’s take a look at the facts, then:

Citigroup, America’s largest bank, has been hit with a staggering $10 billion in losses this quarter. Naturally, the company is doing what all companies do as a first response to crisis–cutting thousands of jobs–and is begging foreign investors to pump cash into its reserves to keep it solvent.

Countrywide, America’s largest lender, reported spikes in delinquencies and foreclosures so severe that the company was looking at bankruptcy protection. It was hailed as a relief when Bank of America announced plans to buy the lender, but think about this–how bad is our economic state when our biggest giants in their respective industries are doing so poorly?

And what about the consumer, that bulwark of economic growth through spending? Well, thanks to a combination of collapsing home equity, high gas, energy, and food prices, and nearly insurmountable personal debt, consumers are falling behind on loan payments, credit card debt is on the rise, and retail sales are plummeting from lack of consumer spending.

If this isn’t a recession, it’s damn close, and like the wolf hungrily stalking its prey, will be upon us soon.

Back to Meyerson’s column. He accurately notes that the mazelike structures of current Wall Street investment strategies make it nigh-impossible to accurately oversee these transactions, which has led to so many billions of dollars’ worth of losses. Moreover, he also notes that without some serious infusion of jobs, cash, and direction from the government, this recession may deepen into a depression that will take years to recover from.

“Okay,” you may be asking, “but where can we get the money for such a thing? That’s going to be expensive!”

Well, here’s one simple idea–ending the war in Iraq immediately and bringing our troops home. Imagine what we could do with the influx of capital we’re wasting on a failed venture that has cost thousands of lives and tens of millions of dollars. I live in DC, so I used my own city as the basis for calculation:

Taxpayers in District Of Columbia will pay $2 billion for the cost of the Iraq War through 2007. For the same amount of money, the following could have been provided:

504,157 People with Health Care OR

3,465,229 Homes with Renewable Electricity OR

33,815 Public Safety Officers OR

33,333 Music and Arts Teachers OR

946,048 Scholarships for University Students OR

174 New Elementary Schools OR

6,801 Affordable Housing Units OR

620,958 Children with Health Care OR

266,133 Head Start Places for Children OR

33,333 Elementary School Teachers OR

29,432 Port Container Inspectors

Any one of these projects provides a golden opportunity for new jobs and economic revitalization for my city, or the even better long-term investment of raising kids with decent educations and the ability to make better lives for themselves. But we’ll never know, because that money went instead to turning a country into a protectorate of our empire just to keep the oil pumps working.

I said not long ago that in order to win, Democrats should run on the economy instead of Iraq, and I still hold to that. But I am rethinking that approach–instead of trying to push Iraq aside in people’s minds, Democrats and progressives should link the two together. Every dollar spent in Iraq, fighting a war started on a lie that has cost us immeasurably, is a dollar not spent on rebuilding our country’s prosperity, peace, and future solvency.

End the war, bring our troops home, and let’s get down to the equally painful business of rebuilding our country’s economic base and transiting us out from a system based on debt, consumption, greed, and graft. We’ve done it before, and we can do it again. We don’t have any choice in the matter.

The $3 Trillion War - Vanity Fair

After wildly lowballing the cost of the Iraq conflict at a mere $50 to $60 billion, the Bush administration has been concealing the full economic toll. The spending on military operations is merely the tip of a vast fiscal iceberg. In an excerpt from their new book, the authors calculate the grim bottom line.

by Joseph E. Stiglitz and Linda J. Bilmes April 2008

In March 19, 2008, the U.S. will have been in Iraq for five years. The Bush administration was wrong about the need for the Iraq war and about the benefits the war would bring to Iraq, to the region, and to America. It has also been wrong about the full cost of the war, and it continues to take steps to conceal that cost.

In the run-up to the war there were few public discussions of the likely price tag. When Lawrence Lindsey, President Bush’s economic adviser, suggested that it might reach $200 billion all told, Secretary of Defense Donald Rumsfeld dismissed the estimate as “baloney.” Deputy Defense Secretary Paul Wolfowitz went as far as to suggest that Iraq’s postwar reconstruction would pay for itself through increased oil revenues. Rumsfeld and Office of Management and Budget Director Mitch Daniels estimated the total cost of the war in the range of $50 to $60 billion, some of which they believed would be financed by other countries.

For fiscal year 2008 the administration has asked for nearly $200 billion to fund the wars in Iraq and Afghanistan. If Congress provides the money, as it almost certainly will, then the total appropriated for direct operations in these two countries (including reconstruction, embassy costs, enhanced base security, and foreign aid) since the wars began will come to roughly $800 billion. It is extremely difficult to disentangle the Iraq and Afghanistan numbers, but Iraq is by far the larger endeavor and accounts for about three-fourths of the total. By the administration’s own reckoning, then, the cost of the Iraq war, counting only the money officially appropriated, will soon be some $600 billion, or more than 10 times Rumsfeld’s original number.

The administration’s estimates have been low—and wrong—from the start. Some of this is the result of its shortsightedness about every aspect of the war, beginning with its nature and duration. For instance, extensive use of reservists and the National Guard avoided the need to increase the size of the armed forces or resort to a draft—but at a heavy price, including reliance on highly paid contractors, people who in other contexts would have been called mercenaries. Another factor is the soaring price of fuel caused by the increase in the price of oil—which is itself, in part, a consequence of the war.

But even the $600 billion number is disingenuous—which is to say false. The true cost of the war in Iraq, according to our calculations, will, by the time America has extricated itself, exceed $3 trillion. And this is a deliberately conservative estimate. The ultimate cost may well be much higher.

Why the huge difference between our number and the administration’s? One big reason lies in the misleading way the federal government does its accounting. Any publicly owned business, no matter how small, is required by law to use a method of accounting that takes future obligations into consideration. This is known as “accrual” accounting. But Defense Department accounting is done on a “cash” basis, which logs only what the government is actually spending day by day and ignores future obligations. In the case of the Iraq war, the future obligations are huge. They include the cost of replacing military equipment, which is being used up at 6 to 10 times the peacetime rate. They also include the cost of providing health care and disability payments for our returning troops. These costs will be especially high because of our improved ability to keep even the most horribly wounded soldiers alive.

The cash type of accounting also provides an incentive to make short-term savings. It was only in 2007, four years after the war began, and after roadside bombs had caused some 1,500 American fatalities, that the Pentagon decided to replace its vulnerable fleet of 18,000 Humvees with vehicles designed to withstand blasts from so-called improvised explosive devices (I.E.D.’s). The short-term savings have resulted in a great deal of long-term human suffering and have brought on higher-than-anticipated costs for medical care.

Another obstacle to estimating the true costs is that many of them are buried in other government accounts and therefore don’t show up in the direct appropriations for the war. Further, some war-related spending has been pushed out of the government altogether and is borne by private parties. But just because it doesn’t show up in the government ledger doesn’t mean it isn’t a cost—it means only that someone else pays it. For example, the failure to provide adequate budgetary support for the Veterans Health Administration has forced many veterans to buy private medical care. While this reduces government spending, there are no real savings for the country. Similarly, relying on the National Guard and the reserves to help fight the war removes hundreds of thousands of workers from the civilian labor force, imposing real costs on the economy as a whole—not to mention on the men and women who are suddenly called to active duty, and on their families.

Finally, we should point out that the procedure used by the administration to fund the Iraq war was chosen deliberately in order to deflect close attention. The administration has requested nearly all the money for the war in the form of “emergency” funding, which is not subject to standard budget caps or vigorous scrutiny. Emergency funding is intended for genuine crises, such as Hurricane Katrina, where the utmost speed is required to get the money to the field. The continued use of this emergency procedure—five years after the war began—is budgetary sleight of hand that makes a mockery of a democratic budget process.

The Other Surge

To understand why the true costs of the war are so much higher than the official estimates, we can start by looking at America’s veterans. No one has suffered more from the administration’s blindness and stinginess. To date, more than 1.6 million American troops have been deployed in the Iraq and Afghanistan operations. More than 4,000 have been killed. More than 65,000 have been wounded or injured, or have contracted a disease. Of the 750,000 troops who have been discharged so far, some 260,000 have been treated at veterans’ medical facilities. Nearly 100,000 have been diagnosed as having mental-health conditions. Another 200,000 have sought counseling and re-adjustment services at walk-in vet centers.

No adequate preparation was made for casualties on this scale. The Department of Veterans Affairs (V.A.) and other agencies have been overwhelmed—both by the need for immediate medical care and by the demand for disability benefits. Already, a quarter of a million returning veterans have applied for disability benefits. Not surprisingly, many disability claims are complex: the average veteran cites five separate disabling medical conditions. The least fortunate among the veterans have suffered unimaginable horrors: brain trauma, amputations, burns, blindness, and spinal damage. Because a greater number of the injured are surviving today, the relative costs of long-term care will be greater than for any previous war. This is the surge the administration doesn’t talk about.

[two more pages]

Total Economic Cost of the War

War at Any Cost? The Total Economic Cost of the War Beyond the Federal Budget
Thursday February 28th, 2008
Opening Statements:	Chairman Schumer's Opening Statement
	Congresswoman Maloney's Opening Statement
Witnesses:	Joseph Stiglitz, Columbia University, Nobel Laureate
	Robert Hormats, Vice Chairman, Goldman Sachs (International)
	Rand Beers, President, National Security Network
	Scott Wallsten, Vice President for Research and Senior Fellow at iGrowthGlobal
Charts and Graphs	The Administration Wants To spend $435 Million On Iraq Every Day, Each Year That Money Could Be Used To:
	Federal Spending on Iraq War vs. Other Priorities
	Costs Incurred and Requested for the War In Iraq (2003-2008)
	Costs Incurred and Requested for the War In Iraq (2003-2019)
	Federal Spending on Iraq Continues to Skyrocket Spending on Afghanistan Flatlines
Location:	106 Dirksen Senate Office Building
Time:	9:30 AM
Press Advisory:	WITH FIVE YEAR ANNIVERSARY OF IRAQ WAR NEARING, JOINT ECONOMIC COMMITTEE TO EXAMINE THE INCREASINGLY HIGH COSTS OF WAR
Additional Resources:	Watch the Hearing
	Read The JEC Report, "War an Any Price? the Total Economic Costs of the War Beyond the Federal Budget"

Link to Vanity Fair's excerpt of Stiglitz' book "The $3 Trillion War"

Link to Democracy Now's interview of Stiglitz

Link to Times of London article by Stiglitz


Link to FDL Book Salon interview of co-author Linda Bilmes

Bush & the governors

Robert Pear writes in the New York Times: "President Bush rebuffed appeals from the nation's governors on Monday to increase spending on roads, bridges and other public works as a way to revive the economy.

"Governors said Mr. Bush had told them at a White House meeting that he wanted to see the effects of his economic stimulus package before supporting new measures.

"A bipartisan group of governors is pushing for major road and bridge projects as a way to create jobs and foster economic development. But the White House says the money could not be spent fast enough to be of much immediate help. . . .

"Gov. Edward G. Rendell of Pennsylvania, a Democrat who is vice chairman of the National Governors Association, described the response as 'a fairly significant no.'

"'There are tens of billions of dollars of infrastructure projects ready to go,' Mr. Rendell said. 'I asked the president if he would support spending on those projects as part of a second stimulus package, and he said no.'

McCain’s view

From Juan Cole's blog Informed Comment:

Moreover, does McCain really know much about how the world works? Does he really understand Middle Eastern history?

McCain thinks when "only' 4 US troops are wounded in a single day in Iraq, or when only 15 Iraqi police are killed in mortar strikes in a single day, that is a sign of 'calm' and that the 'surge is working' in Iraq, and it is all right for us to put up with these US casualties for the next 100 years and spend $9 billion a month on this boondoggle for his friends in Houston. He is part of a successful propaganda campaign, as Tom Engelhardt points out that has made Iraq disappear as an issue even though people die there every day and the US is hemorrhaging blood and treasure for goals that remain, to say the least, murky. McCain even manages to celebrate the defeat of al-Qaeda in Iraq at the same time as he insists the US has to stay in Iraq a hundred years to fight al-Qaeda! Which is it? Either the surge has failed in its goals or it has succeeded. If it has succeeded, why do we have to stay? If it has failed, when will it succeed?



And, let's just consider the shaky dictator Pervez Musharraf, who just suffered a sharp rebuke from the Pakistani electorate, as I wrote about today in Salon.com. McCain appears never to have met a rightwing dictator he didn't like. McCain defends the dictator. Here is what McCain said about Musharraf late last December:

"Prior to Musharraf, Pakistan was a failed state," McCain said. "They had corrupt governments and they would rotate back and forth and there was corruption, and Musharraf basically restored order. So you're going to hear a lot of criticism about Musharraf that he hasn't done everything we wanted him to do, but he did agree to step down as head of the military and he did get the elections."

So in the building confrontation between democratic parties and the military dictator who trashed the rule of law, which would McCain support? What kind of relations will a president McCain have with the new prime minister of Pakistan if McCain is on record supporting the dictatorship that preceded?

[Blog post continues with detailed history of Pakistan and McCain's part in it for the past few decades. Well worth reading.]

MoveOn’s take - Iraq War and recession

As of today, we've spent over $495 billion in Iraq.¹ With the economy in the tank, think about what that money could do here at home: Cover millions of kids who don't have insurance, or help folks who're losing their jobs and homes.

Instead, it's supporting a failed occupation in Iraq .

More and more Americans are making the connection between the billions we've spent over there and the crumbling economy here at home. In fact, a new AP poll shows that most Americans think ending the war is the best way to help the economy.² But pundits still talk about the war and the economy as two unrelated things.

That's why we're launching our "Iraq/Recession" campaign—our push to make sure that politicians and pundits understand what voters already know: As long as we keep pouring that money down the drain in Iraq , we won't have the money we need to solve our economic woes.

Can you take a moment to write a letter to the editor of your local paper about how much we're spending in Iraq , while things go south here at home? By speaking out together, we can make sure the cost of war is part of the economic equation. Our tool makes writing a letter easy. Click here to get started:

http://pol.moveon.org/lte?campaign_id=88&id=12164-4052615-eBIlWA&t=83

If thousands of us write, we can get the media to stop ignoring the connection between the war and the recession. The opinion pages are the most widely read pages in the newspaper, so we can also make sure voters—who are growing increasingly concerned about the economy—know that any candidate who wants to stay in Iraq has no plan for the economy.

The ongoing occupation in Iraq is sucking up the resources we need to make our economy work again. The tradeoffs are stark: Bombs or unemployment insurance for people laid off as the economy slows? Billions for Halliburton and Blackwater, or help for people on the verge of losing their homes because of the subprime meltdown? Consider these key facts:

• The recession is going to force states to cut back their budgets. Most likely, the cuts are going to affect the services that working families need and depend on.³


• Meanwhile, the war is costing Americans more than $338 million a day. ⁴ That money could be spent to help out the folks who're hurting most now. For less than what we're spending on the war, we could pay for affordable housing for hundreds of thousands of families, health care for children, or scholarships to help folks pay for education. ⁵


• Gas prices are close to double what they were before the war began. The cost of oil is still hovering around $100 barrel. ⁶


• We're borrowing $343 million every day to finance the war in Iraq . ⁷ Our skyrocketing debt will be a bigger and bigger drag on the economy—slowing recovery and burdening future generations.

The truth is that economic forecasts are going to continue to be grim as long as we continue to dump billions into a reckless war that has no end in sight. Please write a letter to the editor of your local paper today:

http://pol.moveon.org/lte?campaign_id=88&id=12164-4052615-eBIlWA&t=84

Thanks for all you do.

–Nita, Wes, Justin, Eli, and the MoveOn.org Political Action Team
Tuesday, February 19th, 2008

1. "The War in Iraq Costs, National Priorities Project," January 2008
http://www.nationalpriorities.org/costofwar_home

2. AP Poll: Exiting Iraq would boost economy more than stimulus, Associated Press, February 9, 2008
http://www.moveon.org/r?r=3434&id=12164-4052615-eBIlWA&t=85

3. "State and Local Governments Need Fiscal Relief." AFSCME, January 29, 2008
http://www.afscme.org/press/17527.cfm

4. The Economy & The War In Iraq, Factsheet from Speaker Pelosi, February 13, 2008
http://www.speaker.gov/blog/?cat=15

5. "Federal Budget Trade-Offs, National Priorities Project," February 2008
http://www.nationalpriorities.org/tradeoffs

6. "Oil prices continue higher above 91 usd mark as possible Fed rate cut eyed," CNN, January 29, 2008
http://www.moveon.org/r?r=3354&id=12164-4052615-eBIlWA&t=86

7. "Hidden Costs to the War in Iraq ," Rep. Murtha in Huffington Post, January 28, 2008
http://www.moveon.org/r?r=3355&id=12164-4052615-eBIlWA&t=87

Support our member-driven organization: MoveOn.org Political Action is entirely funded by our 3.2 million members. We have no corporate contributors, no foundation grants, no money from unions. Our tiny staff ensures that small contributions go a long way. If you'd like to support our work, you can give now at:

http://political.moveon.org/donate/email.html?id=12164-4052615-eBIlWA&t=88

PAID FOR BY MOVEON.ORG POLITICAL ACTION, http://pol.moveon.org/
Not authorized by any candidate or candidate's committee.

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