Economic Effects page has been moved to the Economic Effects Blog

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

Issues and Elections

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.

"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.

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!

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

"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...