Iraq casualty: Your standard of living

Robert Reich

TEXT OF COMMENTARY

KAI RYSSDAL: General David Petraeus was back before Congress today. This time it was the House side. The US commander in Iraq repeated his warning against pulling troops out too soon. That wasn't necessarily the answer to lawmakers' questions, though. If you listen closely, more and more of the conversation is about the dollars and cents cost of the war.

Commentator Robert Reich says as big a number as that is right now, it's going to hurt us more in the future.


ROBERT REICH: Contrary to what some are saying, the economic cost of the War in Iraq, so far estimated to total somewhere between $1 and 3 trillion, is not directly responsible for the economic mess we're in. Wars can cause inflation when a nation's resources are already fully committed, as when Lyndon Johnson escalated the war in Vietnam at the same time he was mounting a war on poverty, but when a nation's resources are underutilized, wars have been known to get economies back on track, as we learned when Franklin D. Roosevelt took the nation to war in 1941.

The US economic expansion that began in 2001 was anemic as expansions go, so the American economy has had enough capacity to support a war in Iraq without igniting inflation. Most inflation pressures now, are coming from abroad, from higher oil and commodity prices, and while unrest in the Middle East has contributed to that inflation, defenders of the war say oil prices would be even higher, now and in the future, were we not in Iraq.

With the US economy falling into recession, we have even more unused capacity, but that's not in itself a reason for continuing to spend billions of dollars for the Iraqi War. The war is a terribly inefficient way to stimulate the US economy. A dollar spent on repairing a bridge in Iraq doesn't have nearly the multiplier effect on our economy as a dollar spent repairing a bridge here in the United States.

More to the point, a dollar spent in Iraq is a dollar we do not have to spend here, not only repairing our own bridges, roads and water and sewage systems, but also giving Americans access to health insurance and our children access to good schools, fully funding Social Security and Medicare, investing adequately in non-carbon based energy sources and green technologies and borrowing less from abroad.

In other words, the real economic cost of the Iraqi War doesn't show up in the business cycle. It will show up years from now in a standard of living that for most Americans will be significantly lower than we might have enjoyed, because we spent trillions on a war in Iraq rather than investing here in America.

RYSSDAL: Robert Reich teaches public policy at the University of California, Berkeley. His latest book is called "Supercapitalism."

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