The New York Times (pg. WK10)  [Printer-friendly version]
March 23, 2008

IRAQ, $5,000 PER SECOND?

By Nicholas D. Kristof

The Iraq war is now going better than expected, for a change. Most
critics of the war, myself included, blew it: we didn't anticipate the
improvements in security that are partly the result of last year's
"surge."

The improvement is real but fragile and limited. Here's what it
amounts to: We've cut our casualty rates to the unacceptable levels
that plagued us back in 2005, and we still don't have any exit plan
for years to come -- all for a bill that is accumulating at the rate
of almost $5,000 every second!

More important, while casualties in Baghdad are down, we're beginning
to take losses in Florida and California. The United States seems to
have slipped into recession; Americans are losing their homes, jobs
and health insurance; banks are struggling -- and the Iraq war appears
to have aggravated all these domestic woes.

"The present economic mess is very much related to the Iraq war," says
Joseph Stiglitz, the Nobel Prize-winning economist. "It was at least
partially responsible for soaring oil prices. ...Moreover, money spent
on Iraq did not stimulate the economy as much as the same dollars
spent at home would have done. To cover up these weaknesses in the
American economy, the Fed let forth a flood of liquidity; that,
together with lax regulations, led to a housing bubble and a
consumption boom."

Not everyone agrees that the connection between Iraq and our economic
hardships is so strong. Robert Hormats, vice chairman of Goldman Sachs
International and author of a book on how America pays for wars,
argues that the Iraq war is a negative for the economy but still only
a minor factor in the present crisis.

"Is it a significant cause of the present downturn?" Mr. Hormats
asked. "I'd say no, but could the money have been better utilized to
strengthen our economy? The answer is yes."

For all the disagreement, there appears to be at least a modest
connection between spending in Iraq and the economic difficulties at
home. So as we debate whether to bring our troops home, one central
question should be whether Iraq is really the best place to invest
$411 million every day in present spending alone.

I've argued that staying in Iraq indefinitely undermines our national
security by empowering jihadis -- just as we now know that our
military presence in Saudi Arabia in the 1990s was, in fact,
counterproductive by empowering Al Qaeda in its early days. On the
other hand, supporters of the war argue that a withdrawal from Iraq
would signal weakness and leave a vacuum that extremists would fill,
and those are legitimate concerns.

But if you believe that staying in Iraq does more good than harm, you
must answer the next question: Is that presence so valuable that it is
worth undermining our economy?

Granted, the cost estimates are squishy and controversial, partly
because the $12.5 billion a month that we're now paying for Iraq is
only a down payment. We'll still be making disability payments to Iraq
war veterans 50 years from now.

Professor Stiglitz calculates in a new book, written with Linda Bilmes
of Harvard University, that the total costs, including the long-term
bills we're incurring, amount to about $25 billion a month. That's
$330 a month for a family of four.

A Congressional study by the Joint Economic Committee found that the
sums spent on the Iraq war each day could enroll an additional 58,000
children in Head Start or give Pell Grants to 153,000 students to
attend college. Or if we're sure we want to invest in security, then a
day's Iraq spending would finance another 11,000 border patrol agents
or 9,000 police officers.

Imagine the possibilities. We could hire more police and border patrol
agents, expand Head Start and rehabilitate America's image in the
world by underwriting a global drive to slash maternal mortality,
eradicate malaria and deworm every child in Africa.

All that would consume less than one month's spending on the Iraq war.

Moreover, the Bush administration has financed this war in a way that
undermines our national security -- by borrowing. Forty percent of the
increased debt will be held by China and other foreign countries.

"This is the first major war in American history where all the
additional cost was paid for by borrowing," Mr. Hormats notes. If the
war backers believe that the Iraq war is so essential, then they
should be willing to pay for it partly with taxes rather than charging
it.

One way or another, now or later, we'll have to pay the bill.
Professor Stiglitz calculates that the eventual total cost of the war
will be about $3 trillion. For a family of five like mine, that
amounts to a bill of almost $50,000.

I don't feel that I'm getting my money's worth.