THE COST OF THE WAR IN IRAQ KEEPS CLIMBING, AND IT THREATENS THE STABILITY OF THE U.S. ECONOMY
Thank You Madam President,
Last June, I stood on this floor and talked about the cost of the war in Iraq, which at that point had reached $288 billion. Projections by two economists, one a Nobel Prize winner and the other from Harvard, estimated that the true cost would eventually reach $2 trillion.
The stock market drop two weeks ago prompted me to check if those estimates had been updated. While I have not seen a new estimate on the eventual total cost, I did learn that we have now spent about $405 billion in actual appropriated dollars, according to the National Priorities Project, which keeps a running tally.
So with the cost growing, I think it is fair to say that the true long-term price tag, which includes things such as treatment of the wounded for the rest of their lives, will exceed $2 trillion.
Amazingly, I also learned that the war is currently costing about $2 billion per week, which is nearly twice as much as we spent in the first year after the invasion.
These are hard dollars used on military personnel, equipment and operations. And they represent only the incremental costs of the war, and do not include the amount that we would ordinarily spend for the upkeep of our military if we were not engaged in Iraq. We must keep in mind, however, that there are other financial costs that are also very real, even though they might not be precisely measurable at this hour.
As the Nobel laureate economist, Joseph Stiglitz, phrased it: “The budgetary costs are but a fraction of the costs to the economy as a whole.”
The 500-point drop that the stock market experienced two weeks ago was the largest percentage decline since the war began, and the largest point loss since the week following 9/11. While there are always multiple reasons for big movements in the stock market, one reason for its current trouble – indeed for our entire economy’s trouble – is the weak dollar. At the end of 2006, it had fallen to a 20-year low against the Euro.
The weak dollar, and our deficit that is largely financed nowadays by China, are among the reasons that Wall Street reacted so strongly to a drop in the Chinese market. As the dollar value drops and interest rates increase, investors will move their money away from stocks to bonds or even to other international markets to avoid the depreciating dollar. It was bound to happen, and it would not surprise me to see it trigger an even bigger drop sometime in the future.
Americans are about to learn once again that you don’t get something for nothing. You don’t fight a war without paying a price for it, one way or another. You can’t pay for it by telling people to go to the shopping mall, and you can’t pay for it by cutting taxes for the wealthy while building huge deficits.
Tom Friedman of the New York Times last week included this quote from Franklin Delano Roosevelt in his column. In 1942, FDR told the American people: “War costs money. That means taxes and bonds and bonds and taxes. It means cutting luxuries and other nonessentials. In a word, it means an all-out war by individual effort and family effort in a united country.” Friedman goes on to ask, “Ever heard Bush talk that way?”
If you try to do it Bush’s way, you wind up paying a bigger price with difficult financial problems in the future. The many facets of our economy are interconnected, and a war that sucks up our resources and increases our deficit costs us money, one way or another.
To cite one example, at the time of the invasion, oil cost $25 a barrel. It is now $60. Maybe the entire increase isn’t attributable to the Iraq war, but much of it is. Demand is up in India and China, but the supply hasn’t risen to meet the demand, mainly because of the Middle Eastern instability caused by our invasion of Iraq. And that is driving up prices. So just imagine how much more the American consumer is paying in fuel prices alone because of this war.
A white paper issued late last year by the International Institute of Management cites many other examples. Here are just two more:
The Iraq war has increased anti-American sentiments and increased the threat of terrorism around the world, which adds additional risk to the U.S. economy in both domestic and international judgment.
The war has led to a deterioration of relations, including economic relations, between the U.S. and Arab countries, even those that are or once were friendly toward us. Arab nations are more willing now to do business with European and Chinese companies instead of American businesses, and rich Arab families and tourists are favoring Europe over the United States.
Three years ago, a report by the International Monetary Fund warned that the U.S. budget deficits as well as our growing trade imbalance threatened the stability of the world economy.
A report written for the Council on Foreign Relations in 2005 by Menzie Chinn, an expert on international financial issues for the president's Council of Economic Advisers during both the Clinton and George W. Bush administrations, warned that even if the United States avoids a precipitous collapse in the dollar and an economic recession, the nation faces serious challenges. America's continued descent into greater and greater indebtedness threatens an important source of its influence: the dollar's role as the critical global currency.
" If the United States does not address its budget and current account deficits, we likely will see economic growth slow and trade friction escalate. America's political and economic influence will decline," Chinn said.
And yet we continue to spend on this unnecessary war, to run up a bigger deficit, and to push the cost off to our children.
It could drive our country, and perhaps even the world, into a recession.
In any financial calamity, the poor get hurt first and worst. Seniors could suffer, too, because pension funds get hurt. Pretty soon, even if Bush and other Republicans want to keep cutting taxes, they aren’t going to be able to do it, because in the end, the bills come due and you have to pay the piper.
We are beginning to see the problem already. We hear Bush and his pro-war crowd shouting that that those who favor withdrawal from Iraq “Don’t Support the Troops.”
Then we see reports like those from Walter Reed Army hospital, where horribly wounded veterans are living in squalor, and we find out exactly who it is that doesn’t support the troops. And then we look at the Bush’s Administration’s new budget, which once again proposes less money for veterans, and we find out exactly who it is that doesn’t support the troops. And we think back to the early days of the war when our young men and women were sent into combat without proper body armor, and we find out exactly who it is that doesn’t support the troops. And we realize that the men and women in uniform, now young, will face financial hardships later in life here at home because of this nation’s current fiscal policies, and we find out exactly who it is that doesn’t support the troops. It is George W. Bush.
Superseding all of that, of course is the human cost. We continue to bear that burden in our state. I would ask that we all now remember two more Pennsylvania soldiers killed in the line of duty in Iraq. They are:
Sergeant First Class Daniel A. Brozovich , 42, of Greenville, Pa., who died October 18 in Ashraf , Iraq, from injuries suffered when an improvised explosive device detonated near his Armored Security Vehicle while on combat patrol. Sergeant Brozovich was assigned to the 1st Battalion, 213th Air Defense Artillery.
Sergeant First Class Tony L. Knier, 31, of Sabinsville, Pa., who died October 21 in Bayji, Iraq, from injuries suffered when an improvised explosive device detonated near his vehicle. Sergeant Knier was assigned to the 1st Battalion, 505th Parachute Infantry Regiment, 3rd Brigade Combat Team, 82nd Airborne Division.
They are among the 3,195 American military fatalities in Iraq to date. Another 23,417 of our soldiers have been wounded.
Thank You Madam President.
Copyright 2000 Sen. Vincent J. Fumo