Iraq War and American Economic Collapse

Dave Lindorff: The U.S. Economy and the Costs of War

Monday, April 21, 2008 2:29 AM

Is the Iraq War to blame for America's long-term economic decline and for the current economic crisis?

Martin Neil Baily, a chair of the Council of Economic Advisers under President Bill Clinton, and now director of the business initiative at the Brookings Institution, in an opinion piece that ran Sunday in The New York Times, says no. Claiming to be opposed to the Iraq War, he nonetheless suggests the nearly $500 billion spent on Iraq to date -- all of it borrowed money -- cannot be blamed for the credit crisis, or for high oil prices.

But Baily is looking at things way too narrowly. First of all, as Joseph Stiglitz, a Nobel economist and chief economist at the World Bank, has noted that the real cost of the Iraq War is probably now closer to $3 trillion, in terms of future costs of veterans benefits, replacement of equipment, and payment on the debt that has been piling up because of the government's unwillingness to make the public pay for the war in real time. That whopping bill is in the minds of the international investors who have been deserting the dollar in droves, causing it to approach Third World status as a currency.

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