Sunday, November 23, 2014

The Price of 9/11

NEW YORK – The September 11, 2001, terror attacks by Al Qaeda were meant to harm the United States, and they did, but in ways that Osama bin Laden probably never imagined. President George W. Bush’s response to the attacks compromised America’s basic principles, undermined its economy, and weakened its security.

The attack on Afghanistan that followed the 9/11 attacks was understandable, but the subsequent invasion of Iraq was entirely unconnected to Al Qaeda – as much as Bush tried to establish a link. That war of choice quickly became very expensive – orders of magnitude beyond the $60 billion claimed at the beginning – as colossal incompetence met dishonest misrepresentation.

Indeed, when Linda Bilmes and I calculated America’s war costs three years ago, the conservative tally was $3-5 trillion. Since then, the costs have mounted further. With almost 50% of returning troops eligible to receive some level of disability payment, and more than 600,000 treated so far in veterans’ medical facilities, we now estimate that future disability payments and health-care costs will total $600-900 billion. But the social costs, reflected in veteran suicides (which have topped 18 per day in recent years) and family breakups, are incalculable.

Even if Bush could be forgiven for taking America, and much of the rest of the world, to war on false pretenses, and for misrepresenting the cost of the venture, there is no excuse for how he chose to finance it. His was the first war in history paid for entirely on credit. As America went into battle, with deficits already soaring from his 2001 tax cut, Bush decided to plunge ahead with yet another round of tax “relief” for the wealthy.

Today, America is focused on unemployment and the deficit. Both threats to America’s future can, in no small measure, be traced to the wars in Afghanistan and Iraq. Increased defense spending, together with the Bush tax cuts, is a key reason why America went from a fiscal surplus of 2% of GDP when Bush was elected to its parlous deficit and debt position today. Direct government spending on those wars so far amounts to roughly $2 trillion – $17,000 for every US household – with bills yet to be received increasing this amount by more than 50%.

Moreover, as Bilmes and I argued in our book The Three Trillion Dollar War, the wars contributed to America’s macroeconomic weaknesses, which exacerbated its deficits and debt burden. Then, as now, disruption in the Middle East led to higher oil prices, forcing Americans to spend money on oil imports that they otherwise could have spent buying goods produced in the US.

But then the US Federal Reserve hid these weaknesses by engineering a housing bubble that led to a consumption boom. It will take years to overcome the excessive indebtedness and real-estate overhang that resulted.

Ironically, the wars have undermined America’s (and the world’s) security, again in ways that Bin Laden could not have imagined. An unpopular war would have made military recruitment difficult in any circumstances. But, as Bush tried to deceive America about the wars’ costs, he underfunded the troops, refusing even basic expenditures – say, for armored and mine-resistant vehicles needed to protect American lives, or for adequate health care for returning veterans. A US court recently ruled that veterans’ rights have been violated. (Remarkably, the Obama administration claims that veterans’ right to appeal to the courts should be restricted!)

Military overreach has predictably led to nervousness about using military power, and others’ knowledge of this threatens to weaken America’s security as well. But America’s real strength, more than its military and economic power, is its “soft power,” its moral authority. And this, too, was weakened: as the US violated basic human rights like habeas corpus and the right not to be tortured, its longstanding commitment to international law was called into question.

In Afghanistan and Iraq, the US and its allies knew that long-term victory required winning hearts and minds. But mistakes in the early years of those wars complicated that already-difficult battle. The wars’ collateral damage has been massive: by some accounts, more than a million Iraqis have died, directly or indirectly, because of the war. According to some studies, at least 137,000 civilians have died violently in Afghanistan and Iraq in the last ten years; among Iraqis alone, there are 1.8 million refugees and 1.7 million internally displaced people.

Not all of the consequences were disastrous. The deficits to which America’s debt-funded wars contributed so mightily are now forcing the US to face the reality of budget constraints. America’s military spending still nearly equals that of the rest of the world combined, two decades after the end of the Cold War. Some of the increased expenditures went to the costly wars in Iraq and Afghanistan and the broader Global War on Terrorism, but much of it was wasted on weapons that don’t work against enemies that don’t exist. Now, at last, those resources are likely to be redeployed, and the US will likely get more security by paying less.

Al Qaeda, while not conquered, no longer appears to be the threat that loomed so large in the wake of the 9/11 attacks. But the price paid in getting to this point, in the US and elsewhere, has been enormous – and mostly avoidable. The legacy will be with us for a long time. It pays to think before acting.

Read more from our "Ten Years in Iraq" Focal Point.

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    1. CommentedDavid Donovan

      CommentsView/Create comment on this paragraphBut then the US Federal Reserve hid these weaknesses by engineering a housing bubble that led to a consumption boom. It will take years to overcome the excessive indebtedness and real-estate overhang that resulted.

    2. CommentedPeter Buchi

      @Mark Pitts: Why do you lump socialist governments in with totalitarian communists? Isn't that a bit disingenuous? I would hardly call Sweden a murderous country, nor most of the rest of western Europe, yet these countries are mostly socialistic in their governing, in practice, if not always in theory. It's not helpful to the debate to have people on the Right continually misusing terms like "liberal" and "socialism".

    3. Commentedjohnny mac

      The article references a "war of choice." I'd agree. It was an American war of choice. The majority of the Democrats in the House voted "Yes" for the war, as did the majority of the Democrats in the Senate. When the bill for $100 billion to fund the war came up for vote, 37 of 49 Democrats in the Senate voted "Yes". Nancy Pelosi and Hillary Clinton were among the most outspoken supporters. Years later it's laid at Bush's feet by plotting souls such as yourself, and accepted as gospel by the willingly naive. Fortunately, facts are much easier to access today than they once were, making liberal hogwash easier to dispel. We collectively share responsibility for Iraq. A country, it should be noted, that is now free from the oppression of a sadistic dictator, and that has a representative government and a growing economy. Perspective, Mr. Stiglitz. Crank up the prescription on those coke-bottle lenses and get ya some.

    4. CommentedAly Kamadia

      Excellent article!! It's a nice reminder about the catastrophic mistakes that the Bush administration made in their foreign policy, something that many Republicans have forgotten about, not to mention many public commentators and the American electorate in general. -

    5. CommentedWilliam Wallace

      "... together with the Bush tax cuts, is a key reason why America went from a fiscal surplus of 2% of GDP when Bush was elected to its parlous deficit and debt position today."

      This is the glaring truth that the GOP manages to obfuscate, and gives the lie to the ability of the current Republican Party to be fiscally responsible. Indeed, if one accesses the GAO figures for 1980-present, the so-called Reagan Revolution of no-tax-and-spend-even-more is what has massively eroded government finances. That Obama has done so well in spite of inheriting this horrid mess is a testament to the value of reason and clear thinking over extreme partisan politicking.

        CommentedMark Pitts

        Also, keep in mind that Clinton left office just before the internet bubble burst so Bush, like Obama, inherited a burst bubble and rapidly falling asset prices. Then, there was 9/11 ...

        CommentedMark Pitts

        Obama actively worked to extend the Bush tax cuts. Without his efforts, the Bush tax cuts would have expired automatically.

        The Iraqi war cost are a relatively small part of the equation.

    6. CommentedThomas Haynie

      I’m mostly a fan of Stiglitz’s work but I just started reading the “Cost of Inequality”. I’ve not finished the preface yet but something comes to mind as Stiglitz discusses the shift to embracing a value set that is devoid of a moral compass. Somewhat recent work in psychology found that the concentration of sociopaths, those who lack empathy and simply don’t feel others pain as the rest of us do, increases the higher up the corporate ladder the samples were taken. This is discussed on a “Through the Wormhole” episode on the Science channel. Allegedly at least some of this behavior is genetic. This begs the question of whether or not top execs have dumped their moral values or are simply people following their own self interest and naturally finding their way to massive wealth and power. Though, perhaps the behavior can be learned as the rewards are witnessed.

        Commentedjames durante

        To Mark Pitts: do we still get to make John Bircher logical fallacies? "It's either capitalism or the commies, boys."

        I doubt a genetic predisposition to sociopathology. Most elites run in elite circles all their lives or adapted as they climb the ladder. There are no shortage of classic capitalist texts that proclaim the necessity of dismissing all personal considerations and letting the market and strategic decisions aimed at market dominance to guide ALL thinking. The is the ideological underpinning of the amorality rampant in today's economics and economic policy-making. There is a tax deductible, charitable contribution available to any rich person or corporation who still has some concern for others.

        Anyway, as economics is a subset of politics there are all manner of overarching policy directions that might restore a sense of fair play and public good to what has become a swamp of greed.

        CommentedMark Pitts

        And history shows that "caring" socialist / communist governments are the most murderous of all (Soviet Union, China, Cambodia - murdering many more than the Nazis).

        So, what should we conclude?