Iraq/Recession

This sounds like an interesting initiative:

The multi-million-dollar Iraq/Recession Campaign, which launches Monday, seeks to remind voters, in the words of organizers, that, "As economic concerns weigh heavily on the minds of Americans, opposition to President Bush's reckless war in Iraq continues to grow. The massive cost of the war in Iraq – hurtling toward one trillion dollars – has increased demand for a strategy to bring U.S. troops home. The Iraq/Recession Campaign will highlight the majority of Americans who want to see leadership on investing in critical priorities at home and establishing real security throughout the world."

In addition to John and Elizabeth Edwards, those involved in launching the campaign included Service Employees International Union secretary-treasurer Anna Burger, MoveOn executive director Eli Pariser, VetsVote chairman Jon Soltz, USAction executive director Jeff Blum, Center for American Progress president John Podesta and Americans United for Change president Brad Woodhouse.

The trouble is that, as Paul Krugman has pointed out a few times, the short-term impact of the war is to serve as a form of economic stimulus. Perversely, it might be good for the economy for the war to take a turn for the worse -- an uptick in the quantity of vehicles and other military equipment destroyed in Iraq could stimulate orders for replacements.

Which isn't to say that war is good for the economy. If we could go back in time and invest the hundreds of billions spent in Iraq on something more productive, we'd be in better economic shape today. Alternatively, if we could take the vast sums we're currently spending in Iraq and somehow frictionlessly transmute that into some kind of better-designed domestic stimulus, that would help the economy over the short run. But in terms of actually available policy options (the time machine would be handy, though) bringing the war to an end, though strategically vital and good for America's long-term economic outlook, doesn't seem to me to be something likely to help the country with our short-term economic challenges.

Comments

Economic stimulus for who, though? During WWII, the economic benefits were spread far and wide. During this war, it seems to mostly be focused on independent 'security' firms and the big defense contractors. Granted, they have a wide reach, but if we diverted the money we're spending in Iraq on, say, a national effort to rebuild and improve the nation's bridges, you'd see a much wider and I think significant economic impact.

Posted by Persia | February 26, 2008 8:56 AM

Why would we have to transmute Iraq spending "frictionlessly" to domestic spending to get a short-run economic benefit?

The whole point of Iraq-spending-as-stimulus is that Iraq spending is essentially all "friction." None (or very little) of it is economically productive spending. So even if we could only transfer it to domestic stimulus with enormous "waste," that would be beneficial. Say we "waste" 90% of current Iraq spending by retargeting it -- e.g., 90% of current spending goes towards withdrawal costs -- that's still an economic improvement, since that 90% spending is no less useful a stimulus paying for withdrawal than for the war, and the remaining 10% can be allocated towards actually productive activities.

Posted by Ali Soleimani | February 26, 2008 9:01 AM

You'd get more stimulus if you pissed that money down a hole in Newark than Tikrit. Let's pick a random U.S. city and each day toss a billion dollars' worth of twenties off a roof.

Posted by phil | February 26, 2008 9:02 AM

Erhm...Matt, whats the friction? Its not like the goverment couldnt start spending like a drunken sailor domestically if it wanted to.

Krugmans argument, as I recall, was that the war was good for the shortrun economic outlook if, and only if, the alternative was not spending the money at all.

The point was that appearently the only reckless spending you could get conservatives to accept was spending on war. Hence the Keynes quote.

To stimulate the economy going forward, why no just bring home the troops, give them each a 100000 dollar debitcard from Uncle Sam to be spent before summer and station them around the country in places where the drinking is good. The economic activity generated from liquour sales, hopital stays and other derived effects would have a great multiplier effect.

Posted by Tomas | February 26, 2008 9:06 AM

The malignant effect of REPUBLICAN corrupt policies is like arterial bleeding -- the patient doesn't collapse in a sudden, TV-drama type of way -- but merely grows weaker and weaker.

But if it isn't dramatic enough for primetime TV, does that mean our New Media shouldn't cover the accumulated damage?

I've never been able to understand Democratic campaigning. There seems to be a conventional wisdom among the consultants that a DEMOCRAT should NOT criticize a REPUBLICAN for the past actions of the REPUBLICAN PARTY!!

The argument being that the Democrat MIGHT attract some Republican voters and hence shouldn't alienate those voters by using the "R" word.

This is utter bullshit , of course. The Washington DC equivalent of the Stockholm Syndrome.

The NUMBER ONE action item of the DNC should be to beat John McCain around the fucking head with the shitbag called "The Bush Cheney Administration". EVERY fucking morning, John McCain should be kicked in the nuts SIMPLY BECAUSE HE IS A REPUBLICAN. Why is that so damm hard to understand??

IF you want to suck up to Republican voters (a waste of time, IMO) , then make clear that you are criticizing the betrayal of this country by the REPUBLICAN LEADERSHIP not by the Republican voters. Point out that Bush's $4 Trillion debt hurts the common Republican voter as badly as the rest of us.

If a fucking sparrow falls out of a tree somewhere in this country, it should be blamed on the Republican Party. Every damm pothole in the road, every electrical outage, every loss of job should be pinned on the Republican Party. The voters should be aching to hang John McCain from a lamppost --simply because he is a Republican.

Posted by Don Williams | February 26, 2008 9:06 AM

"If we could go back in time and invest the hundreds of billions spent in Iraq on something more productive, we'd be in better economic shape today."

We could start a colony on the moon. Or buy a whole bunch of F22s.

Posted by cw | February 26, 2008 9:08 AM

I think MY is missing the point here. I believe the real point of this is to put the war into terms people can understand and make a case for ending US involvement. What Krugman says is correct, but when is an ad campaign ever 100% of the truth? It is another avenue to put pressure on those in Washington to end our involvement in Iraq and bring the troops home. As it is if MY's grand kids are going to be paying off our national debt, wouldn't it be better spent here, then going to waste in Iraq?

Posted by Joe Klein's conscience | February 26, 2008 9:08 AM

It's hard to describe war as a short-term stimulus when it has gone on for so many years. I'm sure there were stimulative effects in 2003, 2004, 2005 and thereabouts but at some point the drag starts to outweight the stimulus.

Posted by Joe | February 26, 2008 9:17 AM

I think the bite is, "War is good for the economy, but it is bad for standards of living."

Posted by Chuck | February 26, 2008 9:20 AM

"Alternatively, if we could take the vast sums we're currently spending in Iraq and somehow frictionlessly transmute that into some kind of better-designed domestic stimulus, that would help the economy over the short run."

Isn't most of the Iraq War money spent here though? Of all the compensation paid to troops, including five-figure reenlistment bonuses, how much do they actually spend in Iraq? Probably a negligible amount, with the rest being spent in the U.S. The WSJ had a story a while back about the local Wal-Marts near military bases having their stock of flat-screen TVs get wiped out by returning servicemen. Same story at local car dealers. As for the troops' equipment and ammo, most is manufactured here in the U.S. And U.S. airlines have been chartered to fly troops to the Mideast.

"During this war, it seems to mostly be focused on independent 'security' firms and the big defense contractors."

Remember the sort of equipment that is actually being used in Iraq. The biggest boon has gone to small companies such as Force Protection, which manufactures MRAPs (mine-resistant, ambush-protected vehicles that supplant the Humvee). Click on the link to see how the company's share price has plummeted since the surge started to reduce violence in Iraq, causing the military to reduce orders for more MRAPs.

Posted by Fred | February 26, 2008 9:29 AM

Hey, didn't the factors that led us into the current housing and financial crisis also act as sort of a "boom" for a while?

Doesn't that obviously mean we should keep doing everything that led us into the current crisis?

In fact, we should do a "surge" into sub-prime lending!

Posted by El Cid | February 26, 2008 9:33 AM

This idea that "war is good for the economy" is an absurdity and, frankly, an evil that simply must be stopped in its tracks. Government spending can be good for the economy, of course. But you can't compare war spending vs. not spending. Assuming you are willing to have the government increase spending as an economic stimulus, then the proper comparison is war spending, i.e., spending on things to be destroyed, vs. spending on productive assets -- infrastructure, research, etc.

Posted by Glenn | February 26, 2008 9:37 AM

"What Krugman says is correct, but when is an ad campaign ever 100% of the truth?"

Well, it's true that no one ever got rich overestimating the intelligence of the American people, but if enough intelligent pundits such as Matt and Krugman are honest enough to call bullshit on this, the blatant dishonesty of this campaign could backfire.

"It is another avenue to put pressure on those in Washington to end our involvement in Iraq and bring the troops home."

What happens if you win the White House in November? Won't you have raised unrealistic expectations for a withdrawal that you know neither of your candidates will go through with (at least not by the end of their first term)? How many times can you jerk your base's chain and get away with it?

"As it is if MY's grand kids are going to be paying off our national debt"

They are? You mean, the buck will stop with them? In the real world, part of their taxes will go toward paying the interest on debt racked up today, just like part of Matt's taxes go to pay interest on debt racked up by his father's generation. The impact of Iraq spending on that debt is negligible compared to the impact of entitlement spending. We are spending about $150 billion per year now on the wars in Iraq and Afghanistan while we are spending about $900 billion on Medicare, Medicaid, and Social Security. And that's before we start offering universal health care to anyone who walks across our borders.

Posted by Fred | February 26, 2008 9:44 AM

I'm reminded of a quote from American Dad: "Unborn fetuses are the only things we're not in favor of killing!" Republicans will spend any amount of money if it is to protect their masculinity by vicariously fighting a war through our troops, especially if it's only brown people getting killed.

During WWII, we were dropping small, cheap shells on Europe and Japan. The things we drop now are a lot larger (hell, we dropped the total tonnage of all of WWII's bombs on Cambodia) and more expensive. That meant that there was relatively little money lost when each bomb exploded compared to the cost. However, today's weapons are insanely expensive, so when they get used up, it puts a bigger dent in the economy. That same money could have been used to buy a house or a car that could be re-sold and reused by someone who would need it, but nooooooooooooo, Republicans have to care about their tiny dicks so much that they piss away 1 trillion dollars in the desert.

Posted by Reality Man | February 26, 2008 10:05 AM

but if we diverted the money we're spending in Iraq on, say, a national effort to rebuild and improve the nation's bridges, you'd see a much wider and I think significant economic impact.
Posted by Persia

The debate on defense spending, a small part of the GDP and a lesser fraction, though significant part of the Fed Budget can go on and on regarding opportunity costs elsewhere. But the same can be said of ANY Federal or State spending. Less or no Federal welfare programs means less welfare mammies with high birthrates because no one would be subsidizing that lifestyle which in turn would mean less crime, dysfunctional cities, failing inner city schools and less prisons - which money saved used for better opportunities like energy independence. Or less medicare would force elderly to spend their own health care against say a means test - reducing their sometimes huge estates and their affluent children's inheritance - but getting Gov't out of that subsidy and spending Medicare funds more wisely, on other things like lowered health care costs for all, freeing up more Gov't money for paying off China...

As far as Iraq goes, Saddam and the Ba'athist top officials said that they had fully expected France, Russia, and the Arab states would deliver on their bribes and end sactions by 2002 - then within 3 years Iraq would have fully reconstituted its missile and nerve gas war capacity and immediately started on a race against Iran to get nuclear bombs. Saddam and others said they had not decided on anthrax and other biowar - but were leaning against that one variety of WMD. Then Bush pushed war and screwed all that up.

We know that we got other benefits out of iraq, especially in the early days. Libya renounced nuke weapons, we got the whole intelligence trove of Iraq and dirt on several nations. We uncovered the whole AQ Kahn Nuke Bomb network from Iraq and Libya files. We got the leverage for China to join us in slowly defanging N Korea from all that dirt. The Kurds benefited enormously. We were able to end our troops being in Saudi Arabia - a key irritant in the Islamic world. And our military excelled at showing we can go in and win conventionally and win overall if we don't care to stick around and make ourselves vulnerable to bushwhackers. That is still a great intimidation -to other countries - what if we piss the Americans off so badly they just destroy us, set up us top dogs to be executed, and don't bother with occupation?

The cost benefit analysis would have to weigh that against added ME instability, the higher price of oil that the invasion triggered, the 200 billion in invasion cost, and failure to kill enough Sunni opponents in the initial war because we bypassed so many cities and used precision weapons rather than slaughter whole armies or resisting towns in the Sunni areas. And light, as war goes, casualties of only a few hundred dead.

Later Iraq phases make cost estimates and "lost opportunity" choices more problematic.

We gained some things - like the destruction of the main force of Al Qaeda and their diversion from all other attacks since 2004 to focus on Iraq, the Sunni revolt against radical Islam, Saddam swinging as a caution to other assholes that call our bluff.

We lost some things. 4,000 dead, while still extraordinarily light as war goes, was still too high when we realize how the Bush, Neocon, and Bremer stupidities added to the casualty toll. But the price of staying after 2003, now almost a trillion, is probably too high compared to what we could have done with the money by just protecting the Kurd areas and leaving the Sunni and Shia to slaughter each other.

Still, the harm done to Al Qaeda is tremendous in every way. Reputation destroyed, manpower destroyed, financial and comm networks eradicated, blown security. Hundreds of high value terrorists 8,000 miles away from Lefty and ACLU intercession - now singing away to us and interested Muslim special police. Lefties argue the only reason AQ attacked us there where no AQ existed before - was our policies. But that is the same argument & circumstance as AQ attacking us in America, where there was no AQ presence before 9/11, simply because of our policies and the fact that we were there, in NYC, enraging them.

Posted by chris ford | February 26, 2008 10:41 AM

The war does nothing for the economy. It's spending for the war that affects the economy.

Posted by cemmcs | February 26, 2008 10:42 AM

War:
Non-productive spending? check!
Inefficient distribution? check!
special middle east bonus: Higher energy prices? check!

Stagflation, how we missed you!

Posted by dukej | February 26, 2008 12:02 PM

Re Chris Ford's comment "Lefties argue the only reason AQ attacked us there where no AQ existed before - was our policies. But that is the same argument & circumstance as AQ attacking us in America, where there was no AQ presence before 9/11, simply because of our policies and the fact that we were there, in NYC, enraging them."
--------------
1) Oh, bullshit. Bin Laden gave interviews to US TV networks in 1997-1998 and clearly stated WHY Al Qaeda was going to declare war on the US. It was because they "hated our freedom" and what we were doing in New York.

2) No, the THREE reasons Bin Laden gave were that the US Government:

a) Was giving Israel advanced weapons with which to kill Muslim Palestinians (including civilians)

b) Caused the death of over 600,000 children in Iraq by destroying water plants and then blocking the import of water purification chemicals, thereby forcing the Iraqis to drink polluted water and triggering a pandemic of disease

c) Had deployed the US military in Saudi Arabia to protect the deeply corrupt House of Saud -- stealing the oil wealth of Saudi Arabia , giving kickbacks to the Saudi royal family , and condemming the people of Saudi Arabia to eternal poverty.

Posted by Don Williams | February 26, 2008 12:26 PM

Correction:
Second sentence in my post above should have read [It was NOT because they "hated our freedom" and what we were doing in New York.]

Posted by Don Williams | February 26, 2008 12:30 PM

Oh sure, war might have stimulated the economy- if we had raised taxes and bought equipment for the war.

But what we did was to draw on stores, and a lot of the extra spending that did occur went into Swiss bank accounts.

And to the extent that the Bush deficit is essentially deranged Keynesian pump-priming, that is offset by the surge in oil prices caused by the war.

Anyone who's lived in NY as long as Krugman should know that some of the old chestnuts are rotten.

Posted by serial catowner | February 26, 2008 12:31 PM

Senator Obama has proposed channeling some of the money saved from getting out of Iraq into an infrastructure rebuilding program. That would be a more efficient way to create jobs.

Posted by evan500 | February 26, 2008 1:24 PM

"Senator Obama has proposed channeling some of the money saved from getting out of Iraq into an infrastructure rebuilding program. That would be a more efficient way to create jobs."

I can think of a better way to create jobs, while making a profit for the federal government: Let domestic energy companies explore and extract gas an oil, in a responsible fashion, from federal lands (e.g., ANWR, national parks, offshore fields, etc.). That would have the added virtue of making us less dependent on foreign oil. We could use the royalty payments to finance infrastructure improvements.

Posted by Fred | February 26, 2008 1:38 PM

Fred: "Isn't most of the Iraq War money spent here though?"

Well, not the several containers of pure CASH that were airlifted into Iraq and then lost, IIRC...

How the US sent $12bn in cash to Iraq. And watched it vanish

Special flights brought in tonnes of banknotes which disappeared into the war zone

http://www.guardian.co.uk/world/2007/feb/08/usa.iraq1

Money Quotes:

The US flew nearly $12bn in shrink-wrapped $100 bills into Iraq, then distributed the cash with no proper control over who was receiving it and how it was being spent.

The staggering scale of the biggest transfer of cash in the history of the Federal Reserve has been graphically laid bare by a US congressional committee.

In the year after the invasion of Iraq in 2003 nearly 281 million notes, weighing 363 tonnes, were sent from New York to Baghdad for disbursement to Iraqi ministries and US contractors. Using C-130 planes, the deliveries took place once or twice a month with the biggest of $2,401,600,000 on June 22 2004, six days before the handover.

You can't make this stuff up, folks.

Posted by Richard Steven Hack | February 27, 2008 12:36 AM