What Attacking Iraq Might Do To The U.S. Economy
by Seth Sandronsky
As U.S. joblessness rises and consumer confidence falls, President Bush launched a preventive war against Iraq on March 19. What are the likely economic effects of this action in America?
Nobody knows. But we can look at what is currently known.
Recently, the Bush White House went on the record with a “concrete” estimate, its first, of $60 billion to $95 billion for a U.S.-led attack to disarm Iraq’s weapons of mass destruction and “liberate” the Persian Gulf nation.
“Don't believe either number,” wrote Paul Erdman, an economist and author, February 27 on CBS.MarketWatch.com. “In the end we are going to be talking in terms of hundreds of billions of dollars.”
He is hardly a radical. This makes his view all the more notable.
According to Erdman, the administration’s estimate of an Iraq war is incomplete. The price tag fails to fully account for a U.S. postwar occupation of Iraq, plus payoffs for “support” to compliant nations (the coalition of the bullied and coerced).
In all, invading and occupying Iraq could easily double the cost for American taxpayers to $200 billion. Consider this.
If the price of war against Iraq is $100 billion, each and every American citizen would pay approximately $375. With a $200 billion bill, the cost would rises to about $750 per person in America.
Thus for an average four-person household, a U.S.-led invasion and occupation of Iraq would result in an expenditure of between $1,500-$3,000.
That’s dollars that won’t be spent in thousands of American communities on goods and services.
This trend is the opposite of economic stimulation. Even the Bush administration’s low estimate to invade and occupy Iraq will cause tens of billions of dollars to flow out of the American economy to invade, then occupy and rebuild Iraq.
The cost to the U.S. taxpayer of this imperial action would also boost the federal budget deficit from a projected $300 billion upwards to maybe a half-trillion dollars (about five percent of the U.S. gross domestic product). American taxpayers (businesses and consumers) will pay for such deficit spending in 2003 with tax hikes and spending cuts, plus the future financing of this public debt (payments for principal and interest).
So much for the GOP being fiscally conservative. In fact, the federal budget deficit is booming under Bush.
By contrast, there were federal budget surpluses during the Clinton era.
But crucially on his watch, the private debt of U.S. consumers and corporations doubled.
Could the U.S. economy grow without accumulating such debt? Just ask foreign lenders.
Currently, they fund America’s trade deficit to the tune of $1.5 billion dollars each and every day. This trend receives much less news coverage than the federal budget.
Returning to the public debt front, the Bush White House plans to use the growing federal deficit as an excuse to hold down non-military spending.
The bottom line?
American taxpayers will buy more million-dollar cruise missiles. Meanwhile, 41 million people in the U.S. have no health care.
Billions for bombs. Where are the billions for people living in the richest nation to have health care?
Meanwhile, energy costs are climbing, hammering the U.S. public.
Nationally, the cost of energy with a petroleum base jumped 6.6 percent in January and 10.2 percent in February, according to the Department of Labor.
And as U.S.-led forces strike Iraq, most every state in America is battling a budget deficit. Think of the preventive war in Iraq as federal tax dollars being spent by the White House that could have instead flowed to the nearly 50 states going broke.
Instead, current and projected spending cuts to balance state budgets are harming low- and middle-income people—kids, students, the aged and infirm.
Many of them are questioning the fairness of this situation.
And the prospect for federal tax revenues to recover from the recession that began two years ago? Such an outcome is not likely in the short-term.
Why? Besides the Iraq attack, President Bush is also pushing for more tax cuts to benefit corporations and the well-heeled at the expense of ordinary people.
In late imperial America, there’s no public budget crisis when it comes to using tax dollars to bomb Iraq into peace (pieces) or increase the bank accounts of the super rich. At the same time, more of the American public is on its own to sink or swim as the nation’s economic crisis worsens.
Will it become clearer that Bush’s preventive attack on Iraq is making life more economically precarious for the U.S. public? If so, such a recognition could well serve as a bridge for more people to join the American anti-war movement.
Seth Sandronsky is a member of Sacramento/Yolo Peace Action, and an editor with Because People Matter, Sacramento's progressive newspaper. Email: firstname.lastname@example.org