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March 11, 2008
Some time in 2005, Joseph Stiglitz and Linda Bilmes, noted that the official Congressional Budget Office estimate for the cost of the war so far was of the order of $500bn. The figure was so low, they didn't believe it, and decided to investigate. The paper they wrote together, and published in January 2006, revised the figure sharply upwards, to between $1 and $2 trillion.
Stiglitz and Bilmes dug deeper and discovered that Bush's Iraqi adventure will cost America - just America - a conservatively estimated $3 trillion. The rest of the world, including Britain, will probably account for about the same amount again. That is what is argued by Joseph Stiglitz and Linda Bilmes in their Three Trillion Dollar War book.
They argue that the Bush administration actively obfuscated actual costs, and circumvented Congressional scrutiny by the continued use of emergency powers.The core of this book's argument is that the cash accounting process the administration uses is a cheat: it counts what's being spent now, but keeps promissory notes off the books.
What have been the benefits for the five years of war? Are there any? Was the war the best way of obtaining national security? Focusing on weapons of mass destruction that did not exist in Iraq? Is this money spent intelligently?
Remember that Iraq war - whatever you think about the political casus belli - was presented to the American public as a free lunch. Bush's economic adviser Larry Lindsey said the war could cost $200 billion and "would be good for the economy". Donald Rumsfeld dismissed this as "baloney" and estimated $50 to $60 billion. Andrew Natsios of the Agency for International Development promised the construction of a democratic Iraq would at most cost the US taxpayer $1.7 billion. Paul Wolfowitz thought the whole shebang would pay for itself.
In economics there is no such thing as a free lunch. The Bush Administration was wrong about the benefits of the war and it was wrong about the costs of the war. The president and his advisers expected a quick, inexpensive conflict. Instead, we have a war that is costing more than anyone could have imagined.
In this interview at Democracy Now Stiglitz says that the American economy
is almost surely heading into a recession. I was at the American Economic Association meetings. In the past, the probability of going into recession was fifty-fifty. The general consensus is now 75 percent probability of going into recession. But whether we go into recession or not, the real fact is that it is a major slowdown. It’s going to be one of the—I think clearly the deepest downturn in the last quarter-century. The loss of output, the difference between the actual output and our potential output, will be at least one-and-a-half trillion dollars, and that’s not money we’re talking about in this Three Trillion Dollar War. This is a serious problem. And I think at the core of this is the war. You know, in the election campaign, people said there are two big issues: the economy and the war. I think there’s one big issue, and that’s the war, because the war has been directly and indirectly having a very negative effect on the economy.
There was the enormous borrowing that occurred to finance the war at the same time that the President Bush put through tax cuts and the deficits are being financed by borrowing from abroad. The war is being run on the never never, and there is a transferring of hundreds of billions of dollars from American consumers, businesses, to the oil exporters in the Middle East, where pools of wealth are being created.
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Gary,
in the above interview Juan Gonalez says: