The voices of Tax Policy Center's researchers and staff
The political Left claims the war in Iraq is ruining the U.S. economy. At the very least, they insist, we would be using the money that is supporting the occupation for more important domestic priorities, such as reforming health care. At worst, they insist, the war is to blame for current economic slump.
Both arguments are silly. For all of its flaws, the war has nothing at all to do with the ongoing mortgage mess, which most everyone agrees is the proximate cause of our economic slump. In fact, given all we are spending on humvees, body armor, and bullets, the war is probably a net positive for growth. Wars usually are, unless the economy is running at or near capacity—hardly a problem at the moment.
What about oil prices? Hard to see how they'd be much lower if Saddam were still running the show in Iraq.
And as far as how the Iraq money would have been used in the absence of a war….Well, I suspect we would have, gasp, cut taxes some more.
Liberals are putting a lot of money and energy into this argument. A coalition of activists, including MoveOn.org and the Service Employees International Union say they'll spend $20 million this election season to tie the war (and John McCain's enthusiastic support for it) to the sluggish economy. New York Times columnist Bob Herbert quotes former Clinton Administration chief economist Joe Stiglitz as saying, "For a fraction of the cost of this war, we could have put Social Security on a sound footing for the next half-century or more."
As a matter of arithmatic, Stiglitz may be right. But does he really think that, absent the war, we would have suddenly found a political consensus to fix Social Security? Do the MoveOn-niks really believe we would have used the money to reform health care?
Here is a little thought experiment. Had there been no occupation, we would have had a balanced budget by fiscal 2007. The deficit was $162 billion, almost exactly equal to the direct cost of the war that year. Factor in other foregone costs, such as the expense of caring for wounded vets and the like, and we probably would have had a modest surplus.
And what would we have done with it? This is just speculation, of course, but if Stiglitz can do it so can I. The White House would have said, "We have balanced the budget, so let's extend the 2001 and 2003 tax cuts." Congressional Democrats would have said, "We have a balanced budget, let's extend the SCHIP child health program." And, in the end, they may very well have done a little of both. But long-term entitlement fixes? I don't think so.
If I were MoveOn, I'd probably do all I could to blame the poor economy and the lack of progress on health reform on the war too. It is probably a political winner. But it doesn't happen to be true.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.