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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

Scholars and Rogues Getting us out of Iraq can get us out of ...

Getting us out of Iraq can get us out of recession ... Economists Predicted That A Prolonged U.S. Presence In Iraq Could Lead To A Recession on January 23, ...
www.scholarsandrogues.com/2008/01/ 16/getting-us-out-of-iraq-can-get-us-out-of-recession/ - 162k - Cached - Similar pages

Economists Predicted Prolonged US Presence In Iraq Could Spark ...

well said gonnuts . . . of course the illegal war in Iraq has been the cause of this recession . . . and the tax cuts for the wealthy . . . the recession ...
www.huffingtonpost.com/_82917.html - 161k - Cached - Similar pages

Iraq War Funds Recession

Before the war, economists were predicting that oil prices at just $75 a barrel could potentially send the U.S. economy into a recession. ...
www.huffingtonpost.com/tag/iraq-war-funds-recession - 37k - Cached - Similar pages
More results from www.huffingtonpost.com 

Yahoo! Answers - Did the war in Iraq cause the recession ? does ...

I know its many trillions . how many people know h...
malaysia.answers.yahoo.com/ question/index?qid=20080213025804AAf6lB7 - Similar pages

An Iraq recession? - Paul Krugman - Op-Ed Columnist - New York ...

While this coming recession may not be *about* the Iraq War, I think there’s a good case that the ultimate impact was negative. ...
krugman.blogs.nytimes.com/2008/01/29/an-iraq-recession/ - 85k - Cached - Similar pages

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

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]

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.

--------------

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.

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. 

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”

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



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").