The heated debate over whether the Administration lied to take us to war in Iraq or was the victim of its own mismanaged intelligence has cooled somewhat, as worries about the economy have heated up. But the two are connected; Iraq is a big part of our economic woes.
Joseph Stiglitz, a Nobel Prize-winning economist who used to be vice-president of the World Bank, recently connected those dots in a talk to a British think-tank, Chatham House.
According to Stiglitz, not only has the Iraq war already cost the United States between 50-60 times more than the Administration originally predicted, it has been a major contributor to the sub-prime banking crisis now threatening the world economy. The war has cost American taxpayers nearly 3.3 trillion dollars—not 50 billion, as the Administration predicted in 2003, and not the 500 billion they currently admit to. (According to Stiglitz, the 500 billion dollar figure “massively understates things such as the medical and welfare costs of US military servicemen.”)
Stiglitz went on to explain why spending on the Iraq war—now the second-most expensive in U.S. history after World War II and the second-longest after Vietnam—has been a major, if hidden, cause of the current credit crunch. “Because the U.S. central bank responded to the massive financial drain of the war by flooding the American economy with cheap credit. The regulators were looking the other way and money was being lent to anybody this side of a life-support system," he said. That led to a housing bubble and a consumption boom. Now the fallout is plunging the U.S. economy into recession and saddling the next president with the biggest budget deficit in history.
So in addition to all the places we could have spent that money—repairing our deteriorating infrastructure, improving our public schools, public transportation and neglected parks…we’ve thrown the American economy into a tailspin.
And what do we have to show for this massive hemorrhaging of green? What “gain” have we purchased with our pain?
We invaded a country that wasn’t responsible for the tragedy of 9/11, rather than keeping our focus on the real culprits in order to bring them to justice. We further destabilized one of the world’s least stable areas. We created an opening for Al Qaida in Iraq, where they had previously been unwelcome. We damaged our standing in the world, making it much more difficult to get the co-operation from other countries that we need in order to protect America from international terrorism. Worst of all, we’ve lost over four thousand young Americans, maimed 128,000 more, and killed untold thousands of Iraqis.
But the news isn’t bleak for everyone. According to a recent investigation by the Chicago Tribune, war profiteers are doing quite well, thank you. Recently unsealed court records detail kickbacks, graft and massive fraud that “endangered the health of American soldiers even as it lined contractors pockets.”
Where was Congress while this was going on? And the American people—where were we?