Cost of War

"Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and not clothed."

"God help this country when someone sits in this chair who doesn't know the military as well as I do."
                                                                 --Dwight D. Eisenhower,  34th U.S. President

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The Fog of War
Watch the full length documentary







Cost of

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Prof Richard D. Wolff - Online Lectures /Classes

Eisenhower's Neglected Warning

National Insecurity: The Cost of American Militarism

The Way of the Knife: The CIA, a Secret Army, and a War at the Ends of the Earth



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Videos, audios, etc.

Melvin Goodman - Costs of militarism - 1st hour
Raoul Hinojosa Ojeda - Immigration policy @ 1:05:10

Audio from KPFA Sunday Show w/ Philip Maldari 041413

WikiLeaks Whistleblower Bradley Manning Says He Wanted to Show the Public the "True Costs of War" 030113

Military Suicide Epidemic: More U.S. Soldiers Have Killed Themselves than Died on Battlefield in 2012 061312

Robert Greenwald and Ed Schultz Discuss Panetta's Afghanistan Decision 020312

Barbara Lee - Ten Years after the Single Vote against War on Terror
John Mearsheimer - Why Leaders Lie: The Truth about Lying

Audio from KPFA Letters and Politics 091411

U.S. Wasting Billions while Tripling No-Bid Contracts after Decade of War in Iraq, Afghanistan 090211

1) Rebel Takeover of Tripoli, Libya 
2) World War I -- To End All Wars...

Audio from KPFA Letters and Politics 082211

Project Censored - Ongoing Economic Cost of the Wars
in Iraq and Afghanistan - and John Pilger on The War You Don't See

Audio from KPFA Morning Mix Show 081211

After Months of Partisan Wrangling, Wall Street & Pentagon Emerge Victorious on Debt Deal 080211

Kucinich Rallies Wisconsin 3/12/11

Obama’s $3.7 Trillion Budget Calls for Military Spending Increases and Deep Cuts to Social Service Programs 021511

Richard Wolff: Capitalism Hits the Fan

The Three Trillion Dollar War: Nobel Laureate Joseph Stiglitz and Harvard Economist Linda Bilmes on the True Cost of the US Invasion and Occupation of Iraq 022908

Noam Chomsky: The Costs of War 013108



Mark Mazzetti: A Secret Deal on Drones, Sealed in Blood 040713

The States Most Burdened by Debt 030411
James Sterngold: Casualty of War: The U.S. Economy 071705
What war funding could buy 103104
Iraq by the Numbers 062904
War tab swamps Bush’s estimate - $150 billion by 2005 050904
Could national debt be spinning out of control? 112503
Dennis Kucinich: What $87 billion will buy 092703
Jay Bookman: Cost of War Our Burden, Not Our Kids' 091503
MoveOn Bulletin: It's still the economy 071103
Military waste under fire - $1 trillion missing 051803
Dean Baker: Why the economy will go from bad to worse 050903
What a war can buy 2003
Cynthia Tucker: War's Casualty? Nation's Future 020903
The State of the Economy: MoveOn Bulletin 12/4/02
The economic price of war 102202
Military Spending and what else it could buy FY2003
Why US spend more than us? 100902



Tuesday, June 29, 2004


Based on estimates by the World Bank

$387 million - For government institutions

$7.2 billion - For health, education, employment

$24.2 billion - For infrastructure

$3 billion - For agriculture and water resources

$777 million - For private sector development:

$234 million - For mine action

Total: $35.8 billion.


850 - U.S. troop fatalities as of June 28

5,267 - U.S. troops wounded as of June 23

350 - Iraqi security forces killed since fall of Baghdad as of March 28*

182 - Iraqi security forces wounded as of Nov. 4*

138,000 - U.S. troops in Iraq as of June 21

23,000 - Other coalition troops; excluding U.S. and Iraqi

161,000 - Total number of international troops.


1,771 - Iraqi civilians killed as a result of war as of May 30

110 - Non-Iraqi civilians killed as of June 28

28-45% - Unemployment rate as of May 2004.


4,400 megawatts - Estimated prewar levels nationwide

4,293 megawatts - Levels in June nationwide.


12.9 million liters - Estimated prewar level

21.3 million liters - Level in November*.


2.8-3 million - Barrels of crude produced per day before the war

1.7-2.5 million - Barrels of crude exported per day before the war

2.8-3 million - Barrels of crude to be produced per day to meet
                      December goal

*Most recent figures available

Source: Brookings Institution

San Francisco Chronicle








Charts: Spending projection: $150 billion
by 2005

CHART (1):

The Iraq war is proving to be far costlier than initial Bush administration estimates. Adjusting for inflation, the nonpartisan Center for Strategic and Budgetary Assessments estimated the cost of major U.S. wars of the previous half-century:

Korean War, 1950-1953                                                    $418 billion
Vietnam War, 1964-1975                                                   $597 billion
Persian Gulf War*, 1990-1991                                           $  84 billion
War in Iraq
   (March 2003 projected to Sept. 30, 2004)                       $100 billion
   (March 2003 projected to Sept. 30, 2005)                       $150 billion
       *About 90 percent of these costs were paid by U.S. allies.

CHART (2):
Since Sept. 11, 2001, appropriations for the wars in Iraq and Afghanistan, homeland security and other federal anti-terrorism programs have soared. Here is an estimate by the Center for Strategic and Budgetary Assessments for the extra costs associated with those programs:

-- Response to and recovery from 9/11 terrorist attacks
Military operations related to combating terrorism,
including operations in Afghanistan and homeland security     $ 83 billion
Reconstruction and related aid to Afghanistan                       $   3 billion
Non-Defense Department homeland security
and combating terrorism                                                       $ 65 billion
Victim relief and recovery from 9/11 attacks                         $ 16 billion
Subtotal                                                                               $167 billion

-- War in Iraq and aftermath
Military operations (Defense Department)
through fiscal 2004*                                                             $105 billion
Subtotal                                                                               $105 billion

-- Other
Reconstruction and related aid to Iraq                                   $  23 billion
Foreign aid (primarily to states supporting U.S. operations
in Afghanistan and Iraq)                                                        $    7 billion
Aviation industry relief                                                           $   2 billion
Other                                                                                    $   1 billion
Subtotal                                                                                $ 33 billion

-- General Department of Defense programs
(activities unrelated to terrorism, homeland security or Iraq)   $101 billion
Subtotal                                                                               $101 billion
Total                                                                                    $407 billion

* Center for Strategic and Budgetary Assessments
   estimate of projected additional costs for Iraq and
   Afghanistan, fiscal 2005: approximately $50 billion.

Sources: Department of Defense, Office of Management and Budget,
Congressional Research Service, Congressional Budget Office

San Francisco Chronicle












What $87 billion will buy

Dennis Kucinich

This is the nail in the Iraq War's coffin for any sane, thinking individual, regardless of their political stripe. To get some perspective, here are some real-life comparisons about what $87 billion means:

$87 Billion Is More Than The Combined Total Of All State Budget Deficits in
the United States.

The Bush administration proposed absolutely zero funds to help states deal
with these deficits, despite the fact that their tax cuts drove down state
revenues. [Source: Center on Budget and Policy Priorities]

$87 Billion is enough to pay The 3.3 million people who have lost jobs under
George W. Bush $26,363 each!

The unemployment benefits extension passed by Congress at the beginning
of this year provides zero benefits to "workers who exhausted their regular,
state unemployment benefits and cannot find work." All told, two-thirds of
unemployed workers have exhausted their benefits. [Source: Center on Budget and Policy Priorities]

$87 Billion Is More Than DOUBLE The Total Amount The Government Spends On Homeland Security.

The U.S. spends about $36 billion on homeland security. Yet, Sen. Warren
Rudman (R-N.H.) wrote "America will fall approximately $98.4 billion short
of meeting critical emergency responder needs" for homeland security without
a funding increase. [Source: Council on Foreign Relations]

$87 Billion Is 87 Times The Amount The FederalGovernment Spends On After School Programs.

George W. Bush proposed a budget that reduces the $1 billion for
after-school programs to $600 million -- cutting off about 475,000 children
from the program. [Source: The Republican-dominated House Appropriations Committee]

$87 Billion Is More Than 10 Times What The Government Spends On All
Environmental Protection.

The Bush administration requested just $7.6 billion for the entire
Environmental Protection Agency. This included a 32 percent cut to water
quality grants, a 6 percent reduction in enforcement staff, and a 50 percent
cut to land acquisition and conservation. [Source: Natural Resources Defense

There you go. In black and white. A few million of you will receive this
letter. Please share the above with at least a half-dozen people today and
tomorrow. I, like you, do not want to see another approval rating over 50%.

A Personal Appeal from Dennis Kucinich:

Dear Friend,

I'm going to be blunt. My presidential campaign needs your help more than
ever. There are only a few days left in this fundraising quarter (ending
Sept. 30) and I need your support. If you saw last night's
nationally-televised debate, you know that I am speaking out for you...and
for your issues. I spoke out for bringing the troops home from Iraq, and
against the President's request for $87 billion more. I was alone in
discussing how the Iraq occupation hurts our economy.I was alone in
advocating a withdrawal from NAFTA and the WTO in favor of bilateral trade pacts that protect workers' rights and the environment.I spoke clearly about taking our healthcare system out of the hands of the insurance and
pharmaceutical companies -- and establishing nonprofit national health
insurance, Enhanced Medicare for All. I alone called for returning the
Social Security retirement age to 65. Our wealthy nation can afford
healthcare and retirement security. But we have to rescind the tax breaks for the wealthy, and as I pointed out in last night's debate, the wealthiest 1% in our country will get a majority of the Bush tax cut.To keep bringing these issues to the American people our campaign needs an infusion of funds. Please donate at

Your contribution today will be doubled through federal matching funds
arriving in a few months.I know many of you have donated as much as you can, and I thank you. But please reach out to three other people who share our values -- by forwarding this email to them.If you watched last night's
debate, you saw me call for a 15% cut in Pentagon spending and an end to tax breaks for the wealthy in order to fund childcare and education and job
creation. I spoke of my efforts to end the death penalty and to establish a
cabinet-level Department of Peace.

Sincerely,Congressman Dennis J. Kucinich

"We can conceive of peace as not simply the absence of violence but the
active presence of the capacity for a higher evolution of human awareness,
of respect, trust and integrity."

        -- Rep. Dennis Kucinich, Democratic Presidential Candidate












MoveOn Bulletin
Friday, July 11th, 2003
Co-Editors: Tai Moses and Don Hazen, AlterNet
Subscribe online at:

1. Peter Schurman: It's Still the Economy
2. Seth Sandronsky: Bush's Fiscal Policy Not Creating New Jobs
3. Holly Sklar: Poverty Wages are Toxic
4. Molly Ivins: People First
5. Earl Ofari Hutchinson: Poor Pay for States' Woes
6. Stan Cox: Wal-Mart Wages Don't Support Wal-Mart Workers
7. Joe Robinson: Washington to Nation: Drop Dead on the Job
8. William Greider: Rolling Back the 20th Century
9. James Hickey: Waging a Fight
10. Robert Scheer: Blame Bush in State Fiscal Crisis
11. About the Bulletin


MoveOn Bulletin Op-Ed
by Peter Schurman

Since America's inception, our identity has always been closely linked to our economy. Among the first writers to define our national character, Alexis de Tocqueville described Americans as hardworking and entrepreneurial -- and our country as bustling with economic activity. America's rise over the past century to global prominence has been driven not by our arms buildup, but by our economy. When our politicians assert that the United States is the greatest country on Earth, it's our economy they're trumpeting.

Today the state of our economy is perilous. Unemployment has risen to 6.4% and nearly 2.5 million jobs have been lost since President Bush took office. This summer presents college graduates with the worst job market in a decade. Many companies are slashing or eliminating pensions. State and local governments are cutting vital services to balance their budgets, under pressure from the economic slump and the cost of President Bush's tax cuts, which mainly benefit wealthy elites.

The articles in this week's bulletin provide a vivid snapshot of the American economy in trouble. They cover California's fiscal crisis, working families trying to get by in Kansas, and a citizens' group fighting for a living wage in Atlanta.

The 2004 elections may well turn on the strength of our economy, as they did in 1992. President Bush is concerned enough that he's announced plans to conduct a massive public relations campaign this summer, attempting to whitewash the economic picture and depict himself as a responsible leader. We think the facts argue otherwise, and we present them here so you can judge for yourself.


Seth Sandronsky, AlterNet
The economy is weakening; the unemployment rate is at 6.4 percent, or about 9.4 million workers; and state and local governments are facing unprecedented budget crises. Yet the Bush White House continues to focus on the economic restructuring of the nation, cutting taxes for corporations and the rich for the third time. It's becoming clear that Bush's "jobs and growth" plan is making working life more precarious for millions of Americans.


Holly Sklar, AlterNet
If your image of the typical minimum wage worker is a teenager, think again. Think of adult women working at checkout counters and in childcare, of healthcare aides taking care of your parents or grandparents -- without employer health benefits, paid sick days or paid vacation. A $5.15 minimum wage -- $10,712 a year -- just doesn't add up.


Molly Ivins, AlterNet
All this big talk about tax cuts from Washington comes down to taking away after-school programs and health clinics and firefighters. But roads, schools, prisons, courthouses, bridges, dams and sewage systems are all necessary, as are health and education. That's why we pay taxes. We pay for after-school programs and sports leagues because kids need them and get into trouble without them.


Earl Ofari Hutchinson, AlterNet
Thirty-seven states slashed their budgets by nearly $15 billion this year, balancing their budgets by making deep slashes in programs and services and hefty increases in taxes and fees. Bush claims that an improved economy and his tax cut will ignite the economic miracle that will save the states from financial ruin. If the turnaround comes, and there is much doubt when or even if it will, the poor will have already paid, and paid dearly for the state's budget woes.


Stan Cox, AlterNet
Wal-Mart is the nation's biggest employer, the low-price champion, and a seller of just about everything. But can a Kansas family whose breadwinner works at the superstore afford to supply its minimum needs by shopping there? Not even close -- even at Wal-Mart prices, even with the 10 percent employee discount, and even with employer-assisted health insurance. EITC, food stamps, Medicaid and state assistance programs are needed because corporations like Wal-Mart refuse to pay their employees a sufficient wage for the work they do.


Joe Robinson, AlterNet
Americans are already working more hours than at any time since the 1920s. Yet House Republicans have vowed to continue fighting for a bill, brazenly titled the "Family-Time Flexibility Act," that has about as much to do with families as a Vegas strip joint, yanking more parents for longer hours away from the home. Meanwhile, the Department of Labor has issued a proposal for new wage and hour regulations that would radically alter the definition of the term "salaried employee," a move likely to dramatically increase the ranks of workers who are not paid for overtime. And don't even think about taking a vacation.


William Greider, The Nation
Hard-right conservatives like George W. Bush have been advancing their ideological agenda step by step, laying the foundations for their grand transformation of American life. This 'McKinley vision' requires vast sectors of society to pay dearly, and from their own pockets. What does it look like? To begin with, slash hundreds of billions in domestic programs, especially spending for the poor, even as the Bush tax cuts kick in for the well-to-do; and hand housing aid, food stamps and other social welfare programs over to state governments.


James Hickey,
The Living Wage movement is taking hold in communities around the country. Living Wage is founded on two basic principles: that people who work fulltime should be able to support a family of three and live above the poverty level; and that employers who benefit from tax dollars should be willing to be good citizens and pay a living wage. Take a look inside the Atlanta Living Wage Coalition, a grassroots movement where the voices of working Americans are prominent and irresistibly compelling.


Robert Scheer, AlterNet
It is absurd to blame current difficulties on any state's governor, Republican or Democrat. It is the Bush administration that has mismanaged a successful economy inherited from Bill Clinton. It is the Bush administration that should bear responsibility for the difficulties being experienced by state governments -- and it should at least help California as much as it is helping our newest state, Iraq.


The MoveOn Bulletin is a free email bulletin providing information, resources, news, and action ideas on important political issues. The full text of the MoveOn Bulletin is online at; you can subscribe to it at that address. The MoveOn Bulletin is a project of is an issue-oriented, nonpartisan, nonprofit organization that gives people a voice in shaping the laws that affect their lives. engages people in the civic process, using the Internet to democratically determine a non-partisan agenda, raising public awareness of pressing issues, and coordinating grassroots advocacy campaigns to encourage sound public policies. You can help decide the direction of by participating in the discussion forum at:













....compiled by Jeremy Ross

The cost of a war in Iraq has been estimated by the Bush administration at:
$75,000,000,000.00. But what does this figure really mean? I've investigated what $75B could buy in 2003.

Here is a short list:

(1) Free health care for 50,000,000 people in the developed nations (based on current per-capita expenditures in Canada)

(2) Adequate basic health care for 5,122,950,820 people in developing nations. (based on estimates by Dr Lieve Fransen in 1997 and with 2% inflation incorporated)

(3) All undergraduate expenses (tuition and living) in America for:
- 2,709,831 private university students (4,104,416 tuition only)
- 5,840,667 4-year public university students (18,377,849 tuition only)
- 7,171,543 community college students (43,227,666 tuition only)

(4) 375,000,000 "Simputers" (cost-effective computers for developing nations)

(5) At least a 17% rise in income for each of the 1.2 billion people estimated to be living on less than one dollar a day.

(6) Habitat for Humanity homes for:
1,875,000 families in America
2,939,332 families in Hungary
3,018,959 families in Romania
29,469,548 families in the Democratic Republic of Congo
30,788,177 families in Sri Lanka
32,552,083 families in Papua New Guinea
35,714,286 families in Guatamala
41,829,336 families in India

(7) 112,570,356,500 cans of Budweiser beer

(8) 441,176,470,600 handgun bullets ($0.17/each)

(9) 75,000 Tomahawk cruise missiles

(10) 37 B-2 Sprit stealth bombers (plus change for 22 F-117 Nighthawk stealth fighters and 10 Joe Millionaires)

(11) 46,875,000,000 gallons of unleaded gasoline (Ohio, March 2003, USA)

(12) 2,616,887,648 barrels of crude oil (March 24, 2003)

(13) Hiring 688,206 top-notch U.N. weapons inspectors for a year.


Drop us a line with your calculation and sources.

(14) The average grocery bill (year 2000 data) for 14,540,520 US families.

(15 ) 40,816,326,530 free school lunches under the national school lunch program

(16) 937,500,000 pairs of white doves [source], 625,104,184 dozen white roses [source] or 2,142,857,142 pieces of dog shit, with shipping to Iraq [source]

(17) If everyone on earth were to have access to safe drinking water and sanitation facilities by 2025, it would cost an additional $75 billion a year. [source]

(18) You could use that $75 Billion to pay Enron's top 200 execs' salary for 5 years! [source]

(19) 750,000,000 Tantric Sex classes yielding the unquantifiable SHOCK and AWE of multiple orgasm. [source]

(20) 3,759,398,496 fifths of wild turkey (washington state, march 2003) or 2,145,923,000 pairs of black carhartts (swain's mercantile, port townsend, washington).

Clamor Magazine







All articles reprinted
under the Fair Use
doctrine of

copyright law
). All
copyrights belong to
original publisher.





War's casualty? Nation's future

Cynthia Tucker
February 9, 2003

President Bush has sent Congress a budget with a conspicuous omission. He declined to count the staggering costs of his war with Iraq and the occupation -- possibly a decade long -- that will follow.

It's not surprising, really, that Bush is reluctant to face up to the costs of his nation-building project in Iraq. That yawning abyss could easily suck up the hopes and dreams Americans hold for the future. By the time the United States finishes paying for the president's imperial ambitions in the Middle East, there will be little money left for schools or health care or prescription drugs for the elderly or even homeland security.

No wonder France and Germany have snubbed this war. While the United States pays the costs of invasion and nation-building, those countries will have more money for their domestic needs: schools, health care, parks and recreation and environmental cleanup. The European Union could outpace the United States because they will have had the resources to revitalize their most important infrastructure -- their citizens.

Even without counting the invasion of Iraq, the Bush budget proposes to shackle the next generation to an unconscionable burden of debt. With war and occupation, which could run into the hundreds of billions, your children's grandchildren will be paying the costs.

Some supporters of invasion argue that Iraq's oil reserves can be used to pay the costs of occupation. But funneling Iraq's oil profits into the U.S. treasury would throw another match on the Mideast tinderbox. The Arab world already believes the United States is using Saddam Hussein's tyranny as an excuse to confiscate Iraq's oil; shall we be so foolish as to prove them right?

Does it matter that this war could be quite costly? Shouldn't the nation spend generously on defense? Indeed, it should. There would be less controversy over costs if this war were likely to make the nation more secure.

Unfortunately, an invasion of Iraq could have the opposite effect, as Arab children grow up watching a Muslim nation under U.S. occupation. Even if the United States installs a friendly government, as we did in Afghanistan, it'll be clear the White House is pulling the strings. The resentment of the United States could easily breed another generation of suicide bombers.

Nor will the invasion of Iraq end the threats posed by North Korea or al-Qaida. The Central Intelligence Agency believes North Korea could produce six to ten nuclear bombs in months and offer them to the highest bidder. (Iraq, by contrast, does not currently have nuclear weapons.) Al-Qaida, meanwhile, is rebuilding in Pakistan, whose nuclear weapons program is controlled by an intelligence apparatus choked with al-Qaida sympathizers.

Meanwhile, Tom Ridge's new Department of Homeland Security gets short shrift in the Bush budget. Not only does Ridge expect to cut back on funds for airport security, but there is little money for expanding security at ports and rail stations. Currently, only about 2 percent of the cargo coming into the nation's ports is inspected. How many suitcase-sized nuclear weapons could a terrorist slip through that huge hole in homeland security? How many containers of anthrax?

The agencies that lead research into antidotes for chemical and biological threats won't see much extra money, either. The Centers for Disease Control and Prevention will have to delay replacement of dilapidated facilities. "First responders" -- local police, firefighters and paramedics -- won't get significant federal funding to prepare for another catastrophic attack. Without a large infusion of cash, they, too, may be unprepared for a crisis.

That doesn't even take into account the routine concerns that will get short shrift: the research into diseases such as Alzheimer's, Parkinson's and diabetes that will be delayed; the schools in poor neighborhoods that won't get remedial programs or building repairs; the struggling families who won't get health care.

Ultimately, the costs of this war -- political and financial -- may prove to be more than we can bear.












The State of the Economy

MoveOn Bulletin
Wednesday, December 4, 2002

Editor: Sarah Thompson
Editorial Assistant: Leah Appet
Subscribe online at:


  1)  Introduction: "Double-Dip" Recession or "Soft Patch"?
  2)  One Link: The Roaring Nineties
  3)  The Economy Now and in 2003
  4)  State Economies
  5)  Unemployment
  6)  Some Recent Good News
  7)  The Military Budget and the Threat of War
  8)  Tax Cuts
  9)  Book Recommendation
10)  Call for Submissions
11)  Credits
12)  About the MoveOn Bulletin and


The US endured a recession in 2001, but this year it seemed that the economy was slowly and steadily recovering from it. Unfortunately, this economic rebound has lost much of its momentum, and some economists and businesspeople fear that the US could slide into a "double-dip" recession, or one recession closely following another. Alan Greenspan has testified before Congress that the current downturn in the economy is only a "soft patch" that will be corrected by such actions as the cut in the Federal Reserve's main interest rate. However, it remains uncertain how much this cut will help.

There has been some recent good news. Productivity remains high, and is actually exceeding growth estimates. Americans are still buying and refinancing homes due to record-low interest rates. The stock market has appeared to recover in the past few weeks, and consumer confidence has also risen after falling to a nine-year low. These recent events have helped quell fears that a new recession is coming.

Still, there are many factors that are tempering feelings of optimism. It is uncertain how long high productivity rates and the strong numbers in housing will last. Unemployment rates are remaining stubbornly high. The states face a combined $60 billion deficit in 2003, which they will have to deal with through layoffs, tax increases, and decreased spending on everything from building roads to healthcare and education.

Then there is the threat of war with Iraq. Of all the factors that will determine the economic outlook for 2003, this is one of the most important and unpredictable. Analysts and government officials offer conflicting predictions about whether the war will help or harm the economy. The fear of an interruption in oil supply has already pushed oil prices high, and even though a US-controlled Iraq would ensure greater access to oil, an actual attack on Iraq may just force oil prices higher. The threat of war has also been blamed by some for the poor performance of the stock market, while the recent market rally has been attributed to the possibility of a diplomatic solution as a result of the return of weapons inspectors to Iraq. If an attack does happen, the new instability could once again send the stock market plunging. It's also difficult to predict how long war on Iraq would last. A short war on Iraq, which is what the Bush administration is predicting, would have a much different impact than a protracted one. If the war is not won quickly, and costs continue to rise, it may be difficult for the US economy to cope. An extended occupation could also put an unreasonable amount of strain on the nation's monetary resources.

So, while economic gurus continue to repeat the mantra that the US economy is recovering, there are probably too many variables at play to make a call one way or the other--yet. That may be cold comfort for all of the people who have recently lost their jobs and are facing cuts to essential infrastructure and services. One thing is certain--the state of the economy has become too important to ignore, even with the intense focus on Iraq.


Joseph Stiglitz was chairman of President Clinton's Council of Economic Advisors, and later, chief economist of the World Bank. After he began to question the globalization policies of the World Bank, Stiglitz was fired, but went on to win the Nobel Prize in Economics in 2001. In his "revised history" of the nineties, Stiglitz examines the economic forces at play in the world and how they have led to the current situation in the US. He critiques globalization as it has been managed so far, and contends that many of the widely accepted accounts of why the economy did what it did in the nineties are simply not true. His main point throughout is that better economic policies on the part of the US could minimize or prevent many problems, including the negative perceptions of the US prevalent throughout much of the world.

"In explaining our success in the nineties to ourselves and the world we have largely drawn on a set of myths that desperately need debunking: that deficit reduction by itself led to the economic recovery of the 1990s; that the brilliance of our economic leaders created our newfound prosperity; that deregulation and self-regulated markets are the key to sustaining that prosperity, and should thus be exported to the rest of the world; and that American-style globalization is based on high-minded principles of equality and social justice and will inevitably lead to global prosperity, benefiting not only financial markets in America but also the poor in the developing world."


Is the recession of 2001 over? The National Bureau of Economic Research (NBER), the official US body which is "the generally acknowledged arbiter of the business cycle," has yet to declare that it is. The reason may be low employment figures, since employment is generally the main variable used to determine the state of the economy. However, industrial production, wholesale retail sales and personal income have all been doing better; the author of this article argues that this should be enough to indicate that, yes, the recession is over.

The most common current fear about the US economy is that it will slip into another recession. If it did, since it would follow so closely after the 2001 recession, it would be called a "double-dip recession." This article provides a very clear overview of why the Federal Reserve, America's central bank, was originally so confident that the economy was recovering from the 2001 recession, and why that confidence has begun to erode. The author also explains that the US may now be caught in a "liquidity trap," or "a situation in which the short-term nominal interest rates the central bank controls are so low and so loosely connected to the level of aggregate demand that further reductions in interest rates are not effective ways of fighting recession"--in other words, a situation in which the government is unable to create policies that will prevent the economic situation from getting worse.

The Monetary Policy Report was released on July 16. In his testimony to Congress on the report, Alan Greenspan asserted that "while the economy has held up remarkably well," the US is still facing "[c]onsiderable uncertainties."

For the full text of the July 16, 2002 Monetary Policy Report to the Congress see:

Greenspan's testimony to Congress on November 13 still focuses on the resilience of the US economy. However, this time around, Greenspan admits that "the lengthy adjustment of capital spending, the fallout from the revelations of corporate malfeasance, the further decline in equity values, and heightened geopolitical risks" have all "taken their toll on activity." Among the many variables he examines are consumer spending, tax cuts, mortgage markets, and productivity. Greenspan concludes that the US economy has hit a "soft patch," while remaining optimistic that the measures being taken will help counteract it.

The November 27 edition of the Federal Reserve's Beige Book summarizes current economic conditions.

The White House provides a chart which lists recent economic statistics in a very easy-to-understand manner (posted Nov. 7).

Several surveys and studies indicate that members of the business community are predicting a poor economy for 2003.

According to a survey by American Express, more than two-thirds of middle-market chief financial officers (CFOs) believe that in 2003, the economy "will either will stay flat, act erratically, or decline further." In order to deal with the "cautious to negative" economic outlook for 2003, the CFOs are largely going to rely on cutting costs.

The Business Roundtable surveyed CEOs and found that most CEOs "expect weak gross domestic product (GDP) growth, declining employment, and flat capital spending in 2003."
The Organization for Economic Cooperation and Development (OECD) recently predicted that the US economy would not pick up until 2004.,5309,8256,00.html

Since the Republicans now control both House and Senate, it is almost certain that a number of Republican economic projects based on tax cuts and continued spending will now pass. This "virtually guarantees a return to the era of structural budget deficits," and eliminates any hope for a balanced budget, according to this commentator.

In a report characterized as "gloomy" by the Guardian, the International Monetary Fund (IMF) has scaled back its predictions about world economic growth and is predicting only a very slight increase over last year's growth, which was the lowest in a decade. IMF experts caution that if oil prices continue to rise, even their new predictions may prove overly optimistic.,7369,798949,00.html


New York City and State currently face a combined $15 billion deficit, and most of the other states face a similar problem (the exceptions are Hawaii and Idaho). According to Chris Hoene, research manager at the National League of Cities, "For the first time in 10 years, you have to talk about cities facing a genuine recessionary economy." As a result, after hardly mentioning the topic in recent elections, officials are now being forced to find solutions to their deficit problems, including unpopular new policies like cuts, layoffs, and tax increases. Harvey Robins, a top-ranking aide to two former New York City mayors, recently stated, "If we continued to cut taxes, we might as well turn off the lights in American cities."

State revenues dropped by 6 percent last year, the first collective decrease since World War II. In 2003, large budget shortfalls are being predicted; and while there is no total estimate as yet, the current prediction is a collective shortfall of $40 billion. In an effort to respond to this problem, the states have instituted the largest tax increases in a decade. Yet costs, such as healthcare, are continuing to outgrow tax revenue.

The most recent figures are now projecting that the states face a combined budget shortfall of $60 billion in 2003. This is especially bad news since most of the states have already exhausted their available financial resources, including rainy day funds, tobacco settlement money, and borrowed money, and will thus have to rely on cuts to infrastructure and tax increases to make up for the shortfall. The main problem is that state tax revenues have dropped severely. Nor are they expected to grow in 2003. At best, if the US economy manages to avoid sliding into a double-dip recession, if consumers continue to spend, if stock prices don't drop again, if war with Iraq is avoided or concluded quickly, and if no new terrorist attacks occur on US soil, then tax revenues will remain the same in the 2003 fiscal year with some possible growth in 2004/2005. But the outlook is much gloomier if one or more of these variables don't fulfill current hopes.


Unemployment rates reported by the Bureau of Labor Statistics have stayed almost the same, rising only a tiny percentage, from 5.6% in September to 5.7% in October.

Unemployment rates are also likely to remain high in 2003. There were more layoffs in October than in any other month this year except January. The states are also facing budget deficits (for more on this see the next section on state economies), and are likely to lay more people off in order to cut costs.

The Washington Post reports that "nearly 1 million jobless workers will almost certainly lose their federal unemployment benefits during the Christmas season." This article provides the basic facts about unemploment benefits and why they will be discontinued (since this article was published, the deadline to extend unemployment benefits to some workers did in fact pass without action.)


Investors have been cheered by the fact that consumer spending and durable goods orders both rose in October. Weekly jobless claims also fell to their lowest in 21 months. Meanwhile, the Dow Jones Industrial Index has appeared to be on the road to its eighth straight week of gains, as it "scored its fattest gain on the day before Thanksgiving ever."

Consumer confidence, which had been sliding lower and lower for the past five months, rebounded in November. It now stands at 84.1, up from a nine-year low of 79.6 in October.

Productivity has remained high, which has been "keeping a lid on inflation," according to the New York Times. The US Department of Labor recently reported that productivity grew at a rate of 5.1% in the third quarter of this year, which is higher than the 4% growth rate that experts predicted. "The reports show that the economy by no means will go into a double dip recession," according to economist Clifford Waldman of Waldman Associates. (Note: You may need to complete the free registration on the New York Times site to access this article).

This is an excellent short introduction to productivity, which explains what productivity refers to in the context of economics, how it is related to standard of living, and why there has been a recent surge in productivity.

Housing has also been considered a "bright spot" in the economy, with loan applications for the purchase of homes increasing over the summer. According to this very short article, "Without a doubt, the housing market is very strong and is helping to push the U.S. economy toward recovery. Consumers and mortgage markets are receiving a boost as the bond market benefits from the present investor uncertainty in the stock market."

Unfortunately, experts are worried that housing "bubbles" in major cities of the US could pop, especially if the economy slows any further. If these housing bubbles do pop, it could have an extremely negative impact.,2106,2098468a6026,00.html


Most of the states may be facing a deficit, but President Bush still got a $396 billion defense (military) budget for 2003. That's more than the combined military budgets of Russia, China, Iraq, Iran, North Korea, Libya, Cuba, Sudan and Syria.

The threat of war is arguably one of the most important variables in determining what the US and world economies will be like in 2003. Many economists have blamed the US push for war on Iraq for the slow recovery of the economy after the 2001 recession. Fears of an interruption in the supply of oil due to an attack on Iraq have driven oil prices up.

Yet US stock markets have appeared to rally in the last few weeks. Some economists regard this as a result of the possibility of a diplomatic solution to the problem of Iraq now that weapons inspectors are in the country. "The stock market was relieved that we might not go to war," stated William Quan, chief economist of Wall Street's Mizuho Securities USA.

And if US does go to war with Iraq? This improvement could falter, especially due to the high price tag on such an effort and the occupation that may follow. Peace, on the other hand, could benefit the economy by keeping oil prices stable and keeping the federal budget deficit (and therefore interest rates) down.

This is an excellent article about the effect that a war on Iraq would have on the economy, as much for the realistic predictions it makes as for its clear, cogent, and compelling summary of the contradictory arguments being used to push for war.

Analyst Alan Reynolds points out the obvious yet often overlooked fact that "...assurances that Iraq is a feeble military power contradict the rationale for war — namely, the assertion that Iraq is in possession of terrifying weapons. Iraq may be a dangerous predator or an easy prey, but it cannot be both."

As a result, he predicts that the Iraq war is going to be a costly one, and longer than we're being told: "My best guess is that war and its aftermath would be more costly and difficult than the optimists admit. The fact presidential adviser Larry Lindsey publicly estimates it would cost $100 billion to $200 billion implies the administration expects a second Iraq war to be 2 or 3 times more difficult than the first one."

As far as oil prices are concerned, Reynolds notes that the situation is much different now than during the first Gulf War. "Unlike 1990, oil is already fairly pricey today because (1) substantial risk of war has already been priced into the oil markets, and (2) the post-1991 'sanctions' have reduced world oil supplies while making the Iraqis more dependent on Saddam. In 1991, oil prices fell and stocks rallied when the United States attacked Iraq. But that was because pushing Iraq out of Kuwait reduced risks to world oil supplies. An attack on Iraq today would have the opposite effect."

Reynolds also notes that by focusing energy on Iraq, the US must move its attention away from Al Qaeda, thus leaving an opening for another domestic terrorist attack which could have negative effects on the economy.

Senior officials in the Bush administration are still touting war with Iraq as a solution to recent economic woes, though. Undersecretary Grant Aldonas, a senior U.S. Commerce Department official, recently stated that a war on Iraq would be good for the economy. "The combined effect may actually be positive economically because it would eliminate one of the real sources of terror and one of the real clouds hanging over the world's economy," he said. "At the same time it will open up the spigot on Iraqi oil, which would certainly have a profound effect in terms of the performance of the world economy for those countries that are manufacturers and oil consumers." Aldonas was quick to add that this was not the main reason for attacking Iraq.


The underlying assumption of President Bush's economic policies seems to be that tax cuts are a good way to stimulate the economy. In this op-ed, two experts in economics argue that government spending is a much better economic stimulus than tax cuts.

President Bush has been pushing for a vote that would make last year's tax cut, set to expire in 2010, permanent. According to the President, making the tax cut permanent will help the economy. However, Federal Reserve Chairman Alan Greenspan recently advised against a vote to make last year's tax cut permanent, saying, "I know there's a presumption that if you make those tax cuts permanent it will add stimulus to the economy. I doubt it." However, while Greenspan has expressed praise for "sunset" clauses and provisions that force periodic reassessment of tax cuts and other legislation, he has not recommended that tax cuts already enacted by the Bush administration be frozen or rolled back.

How should Democrats respond to the fiscal crisis facing the States? Should they advocate freezing the tax cuts? President Clinton's chief economic advisor says yes.

Some conservatives are now worried that low-income families aren't paying enough taxes. Why is this a problem? Because it doesn't make them angry enough at the government to support tax cuts.


One of our dedicated research volunteers, Lita Epstein, has coauthored a book called The Complete Idiot's Guide to the Federal Reserve. It is due to be published in January.

For more information:


If you are involved in peace or social justice efforts, we would like to hear from you. Just write a short essay of 500 words or less about your experiences, and what gives you hope. Please submit your essay to Susan Thompson, MoveOn Bulletin Editor, at, by December 15th. The best essays will be published in an inspirational bulletin on hope, which will come out on December 18th.


Research team:
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Jeffrey E. Garten
Interviewed by Jonathan Curiel
Tuesday, October 22, 2002

With debate now before the U.N. Security Council about a possible U.S. war with Iraq, many in the Bay Area continue to voice concern over what they perceive as a lack of adequate public discussion on the ubject. The Chronicle is featuring voices from a variety of perspectives, seeking to highlight some of the key questions and issues involved.

Jeffrey E. Garten is dean of the Yale School of Management. He is a columnist on global management for Business Week and author of several books, including "The Big Ten: The Big Emerging Markets and How They Will Change Our Lives," "A Cold Peace: America, Japan, Germany and the Struggle for Supremacy, " and his latest, "The Politics of Fortune: A New Agenda For Business Leaders. " Garten was undersecretary of commerce for international trade from 1993-1995, and was on the staffs of Secretaries of State Henry Kissinger and Cyrus Vance.

No one in the Bush administration seems to have quantified the cost of what would inevitably be a long occupation of Iraq and an effort to rebuild the country --not just financial but in terms of dissipating the prospects for international cooperation.

Foreign policy is not just about terrorism. And it's not just about weapons of mass destruction. It's also about the need for our country to have economic growth and to be able to create good-paying jobs.

All of those things are global in scope. All of the issues that are important to the U.S. economy have an international dimension. And virtually all of these issues require extensive cooperation from other countries. Our financial system is deeply enmeshed in the global financial system. About 25 percent of our gross domestic product is related to trade. About 25 percent of all U.S. dollars are held abroad.

There is an extensive network of cooperation when it comes to international currencies. The foreign exchange transactions -- dollars changed into other countries' currencies and vice versa -- amount to $1.5 trillion a day. In order for us to have a reasonable amount of financial stability, we have to maintain the financial cooperation among countries that now exists. We need other countries not only to open their markets but to play by the rules.

But the administration's approach to Iraq is so unilateral that, if continued, other countries are not going to cooperate with us on the things we want or that absolutely require their cooperation. We need multilateral agreements that are essential to create a viable global economy. For example, there are no agreed rules around the world for cooperation in cyberspace, like issues of privacy.

U.S. firms are being shut out of the European market now in trying to export genetically engineered foods. This is a huge blow to U.S. farmers. So there have got to be some multilateral rules on food safety.

The administration has this very self-centered and arrogant view that the United States doesn't need the cooperation of other nations to invade Iraq or topple Saddam Hussein, but when we need something else, these other countries have to be there.

Also, to promulgate pre-emption and unilateralism as the centerpiece of U.S.

defense policies is basically to say that we don't care about international law. We've signed the U.N. charter. It's very specific about what constitutes self-defense, and there is no right of pre-emption. The WTO (World Trade Organization) is a legal agreement. Our membership in the International Monetary Fund is a legal agreement. Ignoring international law in one area will make it much easier for other countries to do exactly the same when they're under pressure in other areas.

The oil factor. If prices go through the roof, that would increase prices across the board because oil is an ingredient in our whole industrial structure. Prices, though, could go through the floor, because with Iraqi oil flowing more freely there might be a lot more oil on the global market. That may be good for the United States in the short run, but many of our trading partners are oil exporters, and if oil prices go down so does their income.

For most of the oil exporters, that's all they have. Russia, which is just coming out of the woods and is a prospect for joining the WTO -- and this is a major goal of the United States -- all it has is oil exports. Indonesia could descend into chaos.

I'm not arguing against the importance of fighting terrorism or of containing Iraq. But I'm saying that the world is a lot more complicated than that. It is a world that requires extensive international cooperation. It's one where international law plays a huge role. And it's one where economic priorities have to be taken into account. The Bush administration's foreign policy seems much more appropriate for a bygone era.






Military spending ~~
what it could buy instead

Proposed U.S. spending for FY2003 for nuclear weapons activities totals $16,458,000,000. That equals:

2,380,755    children in Head Start programs

7,052,535    kids with healthcare

  235,114    units of affordable housing

  313,635    salaries for elementary school teachers

California's share for nuclear spending is $1,649,000,000. That equals:

  204,016    children in Head Start programs

  948,722    kids with healthcare

    23,552    units of affordable housing

    28,230    more elementary school teachers

Check your state,


U.S. Economy: A view from India          

Why US can spend more than us?

Date: Wed, 09 Oct 2002

The Japanese save a lot. They do not spend much. Also Japan exports far more than it imports. It has an annual trade surplus of over $100 billion. Yet the Japanese economy is considered weak, even collapsing.

Americans spend, save little. Also the US imports more than it exports. It has an annual trade deficit of over $400 billion. Yet, the American economy is considered strong and trusted to get stronger. Indeed a contrast. But from where do Americans get money to spend? They borrow from Japan, China and even India. Virtually, others save for the US to spend. Global savings are mostly invested in US, in dollars. India itself keeps its foreign currency assets of over $50 billion in US securities. China has sunk over $160 billion in US securities. Japan's stake in US securities is in trillions. Result: The US has taken over $5 trillion from the world. So, as the world saves for US, Americans spend freely.

Today, to keep the US consumption going, that is, for the US economy to work, other countries have to preremit $180 billion every quarter, that is $2 billion a day, to the US! Otherwise the US economy would go for a six. So will the global economy. The result will be no different if US consumers begin consuming less. A Chinese economist asked a neat question. Who has invested more, US in China, or China in US? The US has invested in China less than half of what China has invested In US. The same is the case with us. We have invested in US over $50 billion. But the US has invested less than $20 billion in India.

Why is the world after US? The secret lies in American's spending, in that they hardly save. In fact they use their credit cards to spend their future income. That the US spends is what makes it attractive to export to the US. So, the US imports more than what it exports year after year. The result? The world is dependent on US consumption for its growth. By its deepening culture of consumption, the US has habituated the world to feed on US consumption. But as the US needs money to finance its consumption, the world provides the money. It's like a shopkeeper providing the money to a customer so that the customer keeps buying from the shop. The customer will not buy, the shop won't have business, unless the shopkeeper funds him. The US is like the lucky customer. And the world is like the helpless shopkeeper financier. Who is America's biggest shopkeeper financier? Japan. Yet it is Japan which is regarded as weak. Modern economists complain that Japanese do not spend, so they do not grow. To force the Japanese to spend, he Japanese government exerted itself. Reduced the savings rates, even charged the savers. Even then the Japanese did not spend. Their traditional postal savings alone is over $1.2 billion. That is about three times the GDP of India. Thus, savings, far from being the strength of Japan, has become its pain. What is the lesson? That is, a nation cannot grow unless the people spend, not save. Not just spend, but borrow and spend.

Dr. Jagdish Bhagwati, the famous Indian-born economist in the US, told Dr. Manmohan Singh that Indians wastefully save. Ask them to spend, he said. On imported cars and, seriously, even on cosmetics! This, he counseled, will put India on a growth curve. But like the Japanese we too are not obliging. Modernists may not, but one who has read the Mahabharatha will know. A Rishi by the name of Charuvaka gave the same advice, when the Pandavas were around, which modern economists are giving today. He told the people to spend and be happy, if need be by borrowing. No need to repay, if you cannot, he counseled. No sin would attach, he assured. Fortunately his advice was rejected by us thousands of years back. That is why perhaps we are alive as a nation. Our old companions are in archives today. Now we have the very same advice. That is saving as sin, and spending as virtue. This is central to neo-economics.

Caution. Before you follow these neo-Charuvakas, get some fools to save so that you can borrow from them and spend, after you exhaust your savings. This is what the US has successfully done in last two decades.



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