The NYT’s Bob Herbert had an important column today on a recent congressional hearing that barely generated any attention at all. The focus was on the cost of the war in Iraq, which is likely to reach $2 trillion, if not more.
On Thursday, the Joint Economic Committee, chaired by Senator Chuck Schumer, conducted a public examination of the costs of the war. The witnesses included the Nobel Prize-winning economist, Joseph Stiglitz (who believes the overall costs of the war — not just the cost to taxpayers — will reach $3 trillion), and Robert Hormats, vice chairman of Goldman Sachs International.
Both men talked about large opportunities lost because of the money poured into the war. “For a fraction of the cost of this war,” said Mr. Stiglitz, “we could have put Social Security on a sound footing for the next half-century or more.”
Mr. Hormats mentioned Social Security and Medicare, saying that both could have been put “on a more sustainable basis.” And he cited the committee’s own calculations from last fall that showed that the money spent on the war each day is enough to enroll an additional 58,000 children in Head Start for a year, or make a year of college affordable for 160,000 low-income students through Pell Grants, or pay the annual salaries of nearly 11,000 additional border patrol agents or 14,000 more police officers.
What we’re getting instead is the stuff of nightmares.
Noting this, Matt Yglesias added, “Few people seem to appreciate it, but it’s quite literally true that al-Qaeda’s strategy is to cripple the U.S. economy by dragging us into quagmires abroad. Osama bin Laden himself has said this, and it’s the only strategy that makes sense. A smallish number of people with no base of resources can’t possibly defeat us unless we shoot ourselves in the foot repeatedly as Bush and McCain propose.”
Stiglitz, in particular, has become an important voice on the issue.
The Iraq war has contributed to the U.S. economic slowdown and is impeding an economic recovery, Nobel-winning economist Joseph Stiglitz says.
Meanwhile, the U.S. government is severely underestimating the cost of the war, Stiglitz and co-author Linda Bilmes write in their book, “The Three Trillion Dollar War” (W.W. Norton), due to be published on Monday. […]
The direct costs exclude interest on the debt raised to fund the war, health care costs for veterans coming home, and replacing the destroyed hardware and degraded operational capacity caused by the war. In addition, there are costs not accounted for in the budget such as rising oil prices and social and macroeconomic costs, which the book details. […]
Asked if the war has contributed to the U.S. slowdown, Stiglitz said, “Very much so.”
“To offset that depressing effect, the Fed has flooded the economy with liquidity and the regulators looked the other way when very imprudent lending was going up,” Stiglitz said. “We were living on borrowed money and borrowed time and eventually a day of reckoning had to come, and it has now come.”
The war has also altered how the United States has reacted to its current economic troubles, he said.
“When America’s financial institutions had a problem, they had to turn to the sovereign wealth funds in the Middle East for recapitalization, for the bailout,” he said.
“The reason was obvious. The war had led to high oil prices. The war had meant that America had to borrow more money. There weren’t sources of liquid funds in the United States. The sources of the liquid funds were in the Middle East,” he said.
And John McCain has not only been a cheerleader for these policies, he wants to keep them going for years to come.
Something to keep in mind.