Global Policy
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Global Policy
An American attack on Iraq could profoundly affect the American economy, because the United States would have to pay most of the cost and bear the brunt of any oil price shock or other market disruptions, government officials, diplomats and economists say.
Eleven years ago, the Persian Gulf war, fought to roll back Iraqs invasion of Kuwait, cost the United States and its allies $60 billion and helped set off an economic recession caused in part by a spike in oil prices. For that war, the allies picked up almost 80 percent of the bill. Today, however, as the Bush administration works on plans to overthrow Saddam Hussein, the United States is confronting the likelihood that this time around it would have to pick up the tab largely by itself, diplomats said.
Unless the economic outlook brightens, the government could well find itself spending heavily on the military even as the economy recovers falteringly from last years recession. Senior administration officials said Mr. Bush and his top advisers had not begun to consider the cost of a war because they had yet to decide what kind of military operation might be necessary. Whatever choice is made, experts say, the costs are likely to be significant and therefore may ultimately influence the size, scale and tactics of any military operation.
Already, the federal budget deficit is expanding, meaning that the bill for a war would lead either to more red ink or to cutbacks in domestic programs. If consumer and investor confidence remains fragile, military action could have substantial psychological effects on the financial markets, retail spending, business investment, travel and other key elements of the economy, officials and experts said.
If oil supplies are disrupted, as they were during the 1991 gulf war, and prices rise sharply, the economic effects would be felt in the United States and around the world. All of that could present a complicated political problem for President Bush, both in the Congressional mid-term elections in November and as he manages a war and looks ahead to his re-election campaign in 2004.
Taipei Times
The direct costs of a military attack on Iraqi President Saddam Husseins regime will be minuscule in terms of total US government spending. Most analysts put the total costs of the war at less than 0.1 percent of Americas GDP, the highest at 0.2 percent of GDP. Much of that, moreover, includes the usage of munitions that already exist, implying that little or no stimulus will be provided to todays economy.
The US President George W. Bush administrations (admittedly wavering) commitment to fiscal prudence means that much, perhaps most, of the war costs will be offset by expenditure cuts elsewhere. Investments in education, health, research and the environment will almost inevitably be crowded out. Accordingly, war will be unambiguously bad in terms of what really counts — the standard of living of ordinary people.
America will thus be poorer, both now and the future. Obviously, if this military adventure were in fact necessary to maintain security or to preserve freedom, as its advocates and promoters proclaim — and if it were to prove as successful as its boosters hope — then the cost might still be worth it. But that is another matter. I want to debunk the idea that it is possible both to achieve the wars ends