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Economists Explain: Bush Destroyed Our American Dream

by November 25, 2007 blog

3,875 soldiers dead and more than 28,000 wounded Americans, plus more than 1,000 private contractors killed and many more injured.

The costs of the invasion and occupation seem to have no end. This endless war was the result of a wrong turn. We’ve been stuck slogging through the results of the mistake for almost five years now.

How did all this happen anyway? How did President Bush move our country from a strong dollar, decent gasoline prices, a strong jobs market and a surplus in our national treasury into a situation where now we have the largest trade deficit, biggest national debt, fastest wage reductions, highest gas prices and a declining dollar?

I finally see a flickering light at the end of this long and dreary tunnel. It gives me hope. Filled with the spirit of the Thanksgiving holidays, I wish to offer gratitude to those holding up candles for us. Held up as beacons by a few brave members of our Congress, the lights at the end beckon us. So, let’s dust ourselves off and walk in their direction. On the way, of course, we can talk more about how all this happened and what we can do to prevent it from ever happening again. C’mon, come with me….

As Bush began his takeover of the White House in January 2001, the big debate in Washington was over what to do with a projected budget surplus of $2.2 trillion that President Clinton has left behind. That’s over 2.2 trillion dollars. Not billions. The surplus was trillions. Remember? That’s where we started.

Before Bush had control of our national treasury, the total budget surplus over first 10 years of this century was projected to be $4.56 trillion by the Congressional Budget Office. Man, things were different then! Before Bush, wages were on the rise, home ownership was on the rise, the dollar was strong and the job market was stable. All that has soured now.

Further down this page, we’ll talk in more detail about what happened to our surplus from 2001 to 2006, but, first, let’s fast forward to November 2007. Just this week, President Bush is seeking 196.4 billion dollars with no such strings attached to fund the continuation of his wars – almost $200 billion dollars more. This is the largest funding he has ever requested for his overseas military endeavors.

Apparently as a scare tactic to make Congress give him more money right now, Bush’s public relations team has been just lately spreading the (false) word that if Congress doesn’t give him all the money he wants right away that he will have to start laying off civilians and holding back holiday pay for active service personnel.

“This is irresponsible, absolutely irresponsible for them to say something like this,” Rep. John Murtha, D-Pa.,said.

John Murtha, a leading war critic and chairman of the House subcommittee responsible for Pentagon appropriations, said the $459 billion peacetime defense funding bill passed by Congress two weeks ago includes more than enough money to prevent the Pentagon from having to take any drastic measures to fund operations in Iraq and Afghanistan.

Let’s turn the calendar back a couple of years and remind ourselves of what Jack Murtha did and said in 2005. Exactly two years ago, Rep. Murtha came out publicly and demanded that the U.S. begin removing our troops from Iraq. As a decorated war hero himself and a veteran military man, many listened to his words but George Bush only scoffed at them.

Rep. Murtha is the Chairman of the Defense Appropriations Subcommittee, a Vietnam combat veteran and a retired Marine Corps colonel with 37 years of military service, a rare combination of experience that enables him to understand defense and military operations from every perspective.

In 2005, when he introduced a bill in Congress to begin the withdrawal from Iraq, Rep. Murtha said, “Our military has done everything that has been asked of them, the U.S. can not accomplish anything further in Iraq militarily. It is time to bring them home.”

In the two years since Rep. Murtha told us that we needed to stop fanning the flames of the civil war in Iraq, Bush has increased our troop presence there. We have incurred another 1,800 American troop deaths. Just in the two years since Murtha asked to stop the killing!

Gasoline has increased from about $2.00 a gallon to about $3.00 a gallon in the same two year period.

The price of a barrel of crude oil has gone from $60 to $100 in the same period? Why? Because the value of the U.S. dollar has continued dropping in reaction to the increasing U.S. national debt caused by the Iraq war.

There’s a direct relationship between the Iraq war and the deficit. As the war drags on, the deficit grows. As the deficit grows, the value of our own dollar on the world market plummets.

When the U.S. dollar hit a record low just this Thanksgiving week, oil also surged ahead rising to a record high. It’s been an inverse relationship. What caused this? It began with Bush’s invasion of Iraq.

He spends us into deficit. Our federal deficit causes our dollar to lose value in the world. Consequently, imports and other things we buy overseas, then, get more expensive because our dollar won’t stretch as far. Since we buy oil overseas with our now devalued American dollars – oil goes up in price. And, up and up – and up.

Hence, gasoline has almost doubled in price since Bush has been in the White House.

Here we are, four and a half years after Bush invaded Iraq and two full years after Rep. Murtha asked for a withdrawal from Iraq.

Though we are still slogging away in the mess that was created for us, we can be inspired by the fact that Rep. Murtha is still fighting for withdrawal.

Jack Murtha is one of those that stands firm at the end of our tunnel lighting our way out of this economic disaster.

He is refuting the spin coming out of the White House and insisting that the military spending in Iraq is fruitless.

Very knowledgeable about military spending and budgets, Mr. Murtha said this time the president is also to blame for the pending cuts at bases in the U.S., which will probably include closing child care centers, libraries, family and youth activity centers, and counseling services for returning troops and their families.

“Rather than working with Congress on a responsible war-spending package, this administration is executing a plan to plunder from these essential budget accounts in order to fund a continuation of the president’s misguided war,” Rep. Murtha said.
Did you know that President Bush is building a huge mega-bunker American embassy in Baghdad, ensuring that our stay there will be really expensive and entrenched?

The new American Embassy in Baghdad will be the largest, least welcoming, and most lavish embassy in the world: a $600 million massively fortified compound with 619 blast-resistant apartments and a food court fit for a shopping mall. Unfortunately, like other similarly constructed U.S. Embassies, it may already be obsolete…
The compound, which will be completed by late fall, is the largest and most expensive embassy in the world, a walled expanse the size of Vatican City, containing 21 reinforced buildings on a 104-acre site along the Tigris River, enclosed within an extension of the Green Zone which stretches toward the airport road. The new embassy cost $600 million to build, and is expected to cost another $1.2 billion a year to run–a high price even by the profligate standards of the war in Iraq…

For the most part, however, the new embassy is not about leaving Iraq, but about staying on–for whatever reason, under whatever circumstances, at whatever cost. As a result the compound is largely self-sustaining, and contains its own power generators, water wells, drinking-water treatment plant, sewage plant, fire station, irrigation system, Internet uplink, secure intranet, telephone center (Virginia area code), cell-phone network (New York area code), mail service, fuel depot, food and supply warehouses, vehicle-repair garage, and workshops. At the core stands the embassy itself, a massive exercise in the New American Bunker style, with recessed slits for windows, a filtered and pressurized air-conditioning system against chemical or biological attack, and sufficient office space for hundreds of staff. Both the ambassador and deputy ambassador have been awarded fortified residences grand enough to allow for elegant diplomatic receptions even with the possibility of mortar rounds dropping in from above. (William Langewiesche, Vanity Fair)

The US justice department is investigating the soaring building costs for a huge American embassy in Baghdad.

Postponing its scheduled opening last month, the state department said it didn’t “have an answer” as to when it would be finished:

The size and cost of the embassy is a signal of US intentions to stay in Iraq. The embassy, in Baghdad’s heavily-fortified Green Zone, will be hidden behind blast walls and have 27 separate buildings, housing 615 people.
The state department has been struggling to fill about 50 of the diplomatic posts, with many officials unwilling to serve because of the danger. The secretary of state, Condoleezza Rice, threatened to order diplomats to a country for the first time since the Vietnam war. (The Guardian, November 16, 2007)

OK, let’s go back and think about all those extra trillions of dollars we had in the surplus.

It had dwindled a little bit by 2003 but with the invasion of Iraq, the money practically disappeared over night.

Very early on, Bush emptied out that surplus completely and started spending borrowed money. He needed the money for an invasion of a country that posed no threat to our national security, bungled the rebuilding and occupation – and, began throwing more money after bad money.

Right from the start, Bush ceased requiring fair bidding for national contracts and began giving away hugely lucrative “no bid” contracts to federal contractors like Bechtel, Halliburton and Black Water.

The profits and stock prices of these “for profit” defense contractors continues to soar and their investors are making off like bandits. CEOs at top defense contractors have reaped annual pay gains of 200% to 688% in the years since the Sept. 11, 2001, terror attacks.

And, evidently, he wants to keep this destruction and mayhem up at the same reckless pace for each remaining month of his highly unpopular presidency.

In the December issue of Vanity Fair, in an article titled The Economic Consequences of Mr. Bush, economist and Nobel laureate Joseph Stiglitz lays out a thesis that few wish to talk about right now — that the next president will inherit an economic mess from President George W. Bush which will take a generation or more to clean up.

How big is that mess?

Start with the national debt rising 70 percent during the past seven years. Add in a tax code that is hideously skewed toward the rich.

Then throw in a record price of oil, a record number of bankruptcies and foreclosures and a stunning weakness of the dollar against the world’s currencies. Stiglitz tells us that the biggest problem is that…

“…after seven years of this president, the United States is less prepared than ever to face the future. We have not been educating enough engineers and scientists, people with the skills we need to compete with China and India. We have not been investing in the kinds of basic research that made us the technological powerhouse of the late 20th century. And although the president now understands — or so he says — that we must begin to wean ourselves from oil and coal, we have on his watch become even more deeply dependent on both.”
That is a frightening prospect. Clearly, the United States is on a path that is economically unsustainable. How and when will we, the Americans, begin to deal with it?

“What is required is in some ways simple to describe: it amounts to ceasing our current behavior and doing exactly the opposite,” writes Stiglitz. “It means not spending money we don’t have, increasing taxes on the rich, reducing corporate welfare, strengthening the safety net for the less well off, and making greater investment in education, technology and infrastructure.”
That’s not the path Bush has us on. While he’s created all this destruction, debt and disaster – we’ve watched him do it and we’ve suffered the consequences of his actions. He evidently thinks that because he’s gotten away with it for seven years, that we will let him just continue to destroy America for another 13 months.

Last week, Bush vetoed an essential health and education bill.

As Bush complained about the cost of that bill, which would have increased spending on these programs by only 4.3% over last year, Bush signed a $471-billion defense appropriations bill that pushed up military spending by more than 9.5%. And then he urged Congress to quickly appropriate $196 billion for his wars in Iraq and Afghanistan.

The current Democratic leadership of Congress has demonstrated its commitment to fiscal responsibility and a philosophy of “pay as you go” or PAYGO. If Bush would stop wasting money in Iraq and stop vetoing the fiscally responsible domestic bills, we would soon have our deficit under control.

In light of his actions over the last seven years, his stated concern about a 4.3% increase in health and education spending for Americans is hypocritical when he is increasingly spending so many billions of dollars in military spending overseas.

“It is patently absurd that President Bush, whose irresponsible policies instigated record budget deficits and added more than $3 trillion to the national debt, now wants to pretend that he is somehow an exemplar of fiscal responsibility,” said House Majority Leader Steny H. Hoyer (D-Md.).
The health and education bill that Bush vetoed last week would have funded the departments of Labor, Health and Human Services, and Education and contained substantial increases for Head Start, reading and math instruction, and other programs targeted at poor children. It appropriated additional money for community health centers and reversed proposed cuts in funding for medical research at the National Institutes of Health. And the bill included new money for programs for low-income Americans, including job training, home heating assistance and rural healthcare.

The House fell three votes short of winning a veto-proof margin as it sent the measure to President Bush.

So, later the day after Bush’s veto, Senate Majority Leader Harry Reid warned that congressional Democrats would not approve more money for the Iraq war this year unless Bush’s administration agrees to begin bringing U.S. troops home. Sounds right to me. Let’s get our boys and girls and men and women out of Iraq and begin putting our own country back together again.

Since the beginning of his second presidency term, Bush has gradually cut budget on the labor, health and education programs while all the while requesting and receiving (mostly from the previous Republican Congress) enormous sums of money and increasing budgets for his ill-fated occupation of Iraq.

Tyler Cowen, a professor of economics at George Mason University, wrote this in the Washington Post on Sunday:

We often think of cost simply in terms of dollars spent, but the real cost of a choice — what economists call its “opportunity cost” — consists of the forgone alternatives, of the things we could have had instead. For instance, the cost of seeing a movie is not just the dollars you plunked down for the ticket, but also the subtler cost of missing a dinner at home or a cocktail party at work.
This idea sounds simple, but if applied consistently, it requires us to rethink and, yes, raise the costs of the Iraq war.

Set aside the question of what we could have accomplished at home with the energy and resources we’ve devoted to Iraq and concentrate just on national security. Here, the hidden cost of the war, above all, is that the United States has lost much of its ability to halt nuclear proliferation.

Mr. President, when the war started, I was convinced by your arguments that we had to stop Iraq’s dictatorship from getting the bomb. No longer. Let’s look at some of the opportunity costs the United States has incurred so far:

1. We still haven’t secured our ports against nuclear terrorism. The $1 trillion we’ve probably spent on the war could have funded the annual budget of the Department of Homeland Security 28 times over.

2. The human toll of the war is dreadful: more than 3,800 U.S. soldiers dead and more than 28,000 wounded, plus more than 1,000 private contractors killed and many more injured. It’s harder to know how many Iraqis have died; some estimates claim that the war has caused a million or more Iraqi deaths, and even if that’s an overstatement, the toll is still very high. But it’s not just the lives that are gone; we’ve also lost the contributions that these people would have made to their families and to humanity at large.

3. Another major hidden cost: Many of the wounded have severe brain injuries or other traumas and will never return to “normal” life. Furthermore, Washington will find it far harder to recruit and retain quality troops and National Guardsmen in the future.

4. Don’t forget the small statistics, which are often the most striking. According to John Pike, the head of the research group, an estimated 250,000 bullets have been fired for every insurgent killed in Iraq. That’s not just a waste of ammunition; it’s also a reflection of how badly the country has been damaged and how indiscriminate some of the fighting has been. Or take another straw in the wind: The cost of a coffin in Baghdad has risen to $50-75, up from just $5-10 before the war, according to the Nation magazine.

5. Above all, governing Iraq has, so far, been a fruitless investment. According to 2006 figures, U.S. war spending came out to $3,749 per Iraqi — almost as much as the per capita income of Egypt. That staggering sum hasn’t bought a lot of leadership from Iraq, or much of a democratic model for its Arab neighbors.

In fact, Mr. President, your initial pro-war arguments offer the best path toward understanding why the conflict has been such a disaster for U.S. interests and global security.

Following your lead, Iraq hawks argued that, in a post-9/11 world, we needed to take out rogue regimes lest they give nuclear or biological weapons to al-Qaeda-linked terrorist groups. But each time the United States tries to do so and fails to restore order, it incurs a high — albeit unseen — opportunity cost in the future. Falling short makes it harder to take out, threaten or pressure a dangerous regime next time around.

Foreign governments, of course, drew the obvious lesson from our debacle — and from our choice of target. The United States invaded hapless Iraq, not nuclear-armed North Korea. To the real rogues, the fall of Baghdad was proof positive that it’s more important than ever to acquire nuclear weapons — and if the last superpower is bogged down in Iraq while its foes slink toward getting the bomb, so much the better. Iran, among others, has taken this lesson to heart. The ironic legacy of the war to end all proliferation will be more proliferation.

The bottom line is clear, Mr. President: The more you worried about the unchecked spread of doomsday weapons, the stronger you thought the case was for war in the first place. But precisely because you had a point about the need to stop nuclear proliferation, you must now realize that the costs of a failed war are far higher than you’ve acknowledged…. (Tyler Cowen, professor of economics, George Mason University, Washington Post)

We recently learned that the wars in Iraq and Afghanistan have cost the United States about 1.6 trillion U.S. dollars.

This came from a report released last Tuesday by the U.S. Congress’ Joint Economic Committee (see the full pdf report here). Remember that 2.2 trillion dollar surplus we had when Bush started his presidency? Well, we know where most of it got spent don’t we?

Bush’s occupation of Iraq is something that continues to cost us and apparently will cost us on into the future, long after Bush retires to his “ranch” in Crawford, Texas. That same committee report estimates that the total cost of the war from 2003 to 2017 will cost us 3.5 trillion dollars. Under that scenario, the tax bill for the war will cost a family of four 46,400 dollars.