Democracy involves having informed citizens!
by Charlie Leck
At the end of last week, economists Joe Stiglitz and Linda Bilmes appeared on a video production for Democracy Now and answered questions posed by Joseph Gonzalez and Amy Goodman. I've had a little fun with the interview in an attempt to make the point even more dramatic and alarming than Stiglitz and Bilmes were able to do in that bland interview. Have some fun with this and enjoy it!
Last week, the Joint Economic Committee in Congress began public hearings on the cost of the war in Iraq. Senator Schumer chaired the Committee and some distinguished witnesses appeared on Thursday. Joseph Stiglitz, a Nobel Prize winner in economics, feels strongly that the war cost will reach 3 trillion dollars. Mr. Stiglitz lamented the great opportunities that our government has missed. With Harvard University economist, Linda Bilmes, Stiglitz has written a book called The Three Trillion Dollar War. Go ahead, click and find out more about this book on one of my favorite web sites. In it, they claim that the Bush administration has kept a set of secret records that indicate the real cost of the war. Publically, the White House low-balls these costs.
Stiglitz is a former chief economist for the World Bank and currently an economics professor at Columbia University.
"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."
Another distinguished witness, Robert Hormats, Vice Chairman of Goldman Sachs International, agreed. He testified that both Social Security and Medicare could have been given a solid foundation. He also pointed out that the amount spent on the war EACH DAY could enroll 58,000 children in a Head Start program for a YEAR. That daily expense could also pay the annual salaries of 11,000 new border patrol guards.
Stiglitz pointed out other hidden costs of the war; like covering the costs of health care and disability benefits for returning veterans. That's only the beginning and it will go on for decades.
Of course, the straight-talking, up front Bush administration circles around the highly scrutinized budget process and, instead, finances this war through emergency appropriations, which are watched over with less intensity. Recently, in an interview on the Today Show, Bush denied that it is the war that has so hurt our economy. Instead he claimed that "this economy is down because we built too many houses."
Okay! You got Professor Stiglitz on one side and George W. Bush on the other. They've offered opinions on what the war has done to our economy. Who are you going with?
Oh yes, Senator McCain has his hand up! Did I hear you correctly, Senator? You're siding with the President on this one?
White House spokesman, Tony Fratto, explained these economic fine points to the White House press corp.
"People like Joe Stiglitz [he calls him Joe because they're great drinking buddies] lack the courage [oops, they are probably not buddies anymore] to consider the cost of doing nothing and the cost of failure. One can't even begin to put a price tag on the cost to this nation of the attacks of 9/11."
There you have it. The well reasoned economic theory of the White House. Makes 'Joe' look sort of 'bush' league, doesn't it? Well, Tony, here's a little na, na, na-na na for you from your buddy, Joe.
"Well, I think the White House lacks the courage to engage in a national debate about the cost of the Iraq war. The Joint Economic Committee has asked the White House to come down and discuss the numbers; they've refused. Security is important, and we don't deny that. The question is whether this war has been the best way of obtaining the security. And no matter what you're going to do—you know, what you think about security, you still have to look at the cost."
When the TV journalist, Amy Goodman, asked Stiglitz how he came up with the 3 trillion dollar price tag, Stiglitz got complicated.
"Well, the way you approach this problem is basically adding."
Okay, Joe! Right! But, you see, that's complicated for this President, who runs out of fingers and toes at twenty.
From there, Joe wandered into deeper water.
"There are a whole set of macroeconomic costs, which have depressed the economy. What's happened is, to offset those costs, the Federal Reserve has flooded the economy with liquidity, looked the other way when you needed tighter regulation, and that's what led to the housing bubble, the consumption boom. And we were living off of borrowed money. The war was totally financed by deficits. And eventually, a day of reckoning had to come, and now it's come."
There you have it, Mr. President, and it's very simple: "We built too many houses!"
Is anyone talking about the cost of oil? It was about $25 per barrel before the war and now it is going beyond $100 for each little ole' barrel. What do you say to that, Joe? Last night I filled my daughter's car up at the middle-level pump and it was $3.13 per gallon. Analysts everywhere are predicting that'll we'll soon need to pay in excess of $4.
Who said that?" The President asked a reporter. He was dumb-struck – you know, that usual lost look he has! "I'm not hearing that," the President said.
What about these oil prices Joe?
"But if you look back, in 2003, futures markets, which take into account increases in demand, increases in supply—they knew that China was going to have increased demand, but they thought there would be increases in supply from the Middle East—they thought the price would remain at $25 for the next ten years or more. What changed that equation was the Iraq war. They couldn't elicit the increase of supply in the Middle East because of the turmoil that we brought there. So we think, actually, the true numbers, not the $5 or $10 that we used, because we didn't want to get in a quibble, but really a much larger fraction of the difference between $25 that it was at the time in 2003 and the $100 we face today."
Then there's the whole question of rebuilding Iraq. But don't worry; the administration is guarantying us that this won't be expensive. It positively won't cost any more than 1.7 billion dollars. Andrew Natsios, the former administrator of USAID has put his kiss upon this guaranty. On the TV show Nightline, Ted Koppel got this absolute guaranty out of Nantos.
Joe, what do you think? Oh, excuse me! Ms. Bilmes wants to respond to this stupidity.
"…the amount that we have spent in trying to rebuild Iraq has far eclipsed what Andrew Natsios had said, obviously."
You don't say! Well, you see, this gets back to what I was saying earlier about fingers and toes! Nevertheless, let's move on. Ms. Bilmes, What about this cost to us for all these serious injuries to our troops?
"And this is one of the really outrageous situations about trying to get information about this war, because even today, if you go to the official DOD website, what you will find is a number around 30,000 wounded, but that is only the wounded in combat. Now, the number of fatalities, which is approaching 4,000, is wounded in combat and non-combat. But if you want to find the non-combat wounded—and that includes, for example, soldiers who are injured when they're driving their vehicles at night, because it's unsafe to drive during the day; soldiers who are wounded when they are being transported between one place and another, who never would have been there otherwise—it's much larger. It's more than double. And that is a number which is very hard to get. We had to use the Freedom of Information Act to get access to that number. It is impossible to sort of underestimate how difficult it is to get hold of information that should be completely in the public domain."
Is that right? You guys had to use the Freedom of Information Act to get the information you wanted. It seems amazing to me that the White House wouldn't be more helpful. Yes, Joe, you want to say something.
"That's right. I mean, one of the very disturbing things is that we went to war for democracy, and yet democracy is more than just having periodic elections. It really involves informed citizens being able to have perspectives on the important decisions. But to be informed, you have to know what is really going on. And that's why it was, you know, so upsetting that we had to used the Freedom of Information Act to find out this or to find out, for instance, that while the government was saying, the President was saying, we'll supply all the equipment that the military needs, back in early 2005 there were urgent requests for MRAPs, these vehicles that will resist the IEDs, these explosive devices, and protect our soldiers, but because of wanting to keep the apparent cost down, they refused to order them.
"And, of course, the total cost—and this is one of the important points we make in our book—the total cost is not just the upfront cost, but the cost that you have to face for decades later in terms of the injuries and, of course, the cost to the families. So, being penny-wise and pound-foolish means our country is suffering because of that kind of economic decision."
That's all good and fine, Joe, but we must repeat that the President is assuring us that all of this is not pushing us into recession. Why just the other day he said: "I don't think we're headed to a recession. But, no question, we're in a slowdown."
What do you think of that, Joe?
"Well, first of all, the economy is almost surely heading into a recession. I was at the American Economic Association meetings. In the past, the probability of going into recession was fifty-fifty. The general consensus is now 75 percent probability of going into recession. But whether we go into recession or not, the real fact is that it is a major slowdown. It's going to be one of the—I think clearly the deepest downturn in the last quarter-century. The loss of output, the difference between the actual output and our potential output, will be at least one-and-a-half trillion dollars, and that's not money we're talking about in this Three Trillion Dollar War. This is a serious problem. And I think at the core of this is the war. You know, in the election campaign, people said there are two big issues: the economy and the war. I think there's one big issue, and that's the war, because the war has been directly and indirectly having a very negative effect on the economy."
Well, Joe, I have a feeling that John McCain is not going to touch that one with a ten foot pole, but let's move on. With all these huge amounts of dough President Bush expended and spread around, someone must be profiting by this war. What do you think?
"Well, actually, there are two big gainers in this war and only two: the oil companies and the defense contractors. And you see that's where the pools of wealth are being created. One of the big pools of wealth are in the Middle East, the countries that are the oil exporters. We are transferring hundreds of billions of dollars from American consumers, businesses, to the oil exporters. You can look at it as simple as that."
Joe, what countries are we talking about here, which are benefiting so from this war?
"Well, Saudia Arabia, Iran, Venezuela. You know, if you asked who were the countries that we would not want to help, many of them would be on the list that we have been helping."
Wow! Joe, this is getting complex and we've moved way beyond fingers and toes into a whole realm of complex language. I don't think our President could understand that sentence, sir. Let me try to rephrase it for him."Mr. President, we are actually helping a couple of the points of the Axis of Evil – Venezuela and Iran. Holy cow, Joe!"
"Exactly. And one of the things that—you know, as economists, we talk about 0pportunity cost, what you could have done with $3 trillion to win the hearts and minds, to advance security. One of the aspects of this—everybody talks about security. While we were focusing on weapons of mass destruction that did not exist in Iraq, another country joined the nuclear club: North Korea. And so, it shows you, you know, there's limited resources, time and effort, and we were focusing on the wrong problem. While we were focusing on Iraq, the problems in Afghanistan got worse, and the problem of security in Afghanistan is much worse than it was five years ago. So there's not only an economic opportunity cost; there's a security opportunity cost."Joe, this is mind blowing, but do you think the President can really get his brain to grasp something like this?
"Well, this was one of the big points that came up in the joint committee hearing that we were in yesterday."
Joe, you've said it all. We built too many houses! It's that simple.