Posted:
March 25, 2008
Editor’s note: The following is an excerpt from a story by Robert Pollin and Heidi Garre-Peltier in the March 31, 2008 edition of The Nation. Visit The Nation at www.thenation.com
To date, the government has spent more than $522 billion
on the war, with another $70 billion already allocated for 2008.
With just the amount of the Iraq budget of 2007, $138
billion, the government could instead have provided Medicaid-level health
insurance for all 45 million Americans who are uninsured. What's more, we could
have added 30,000 elementary and secondary schoolteachers and built 400 schools
in which they could teach. And we could have provided basic home weatherization
for about 1.6 million existing homes, reducing energy consumption in these
homes by 30 percent.
But the economic consequences of Iraq run even deeper
than the squandered opportunities for vital public investments. Spending on
Iraq is also a job killer. Every $1 billion spent on a combination of
education, healthcare, energy conservation and infrastructure investments
creates between 50 and 100 percent more jobs than the same money going to Iraq.
Taking the 2007 Iraq budget of $138 billion, this means that upward of 1
million jobs were lost because the Bush Administration chose the Iraq sinkhole
over public investment.
Recognizing these costs of the Iraq War is even more
crucial now that the economy is facing recession. While a recession is probably
unavoidable, its length and severity will depend on the effectiveness of the
government's stimulus initiatives. By a wide margin, the most effective
stimulus is to expand public investment projects, especially at the state and
local levels. The least effective fiscal stimulus is the one crafted by the
Bush Administration and Congress--mostly to just send out rebate checks to all
taxpayers. This is because a high proportion of the new spending encouraged by
the rebates will purchase imports rather than financing new jobs in the United
States, whereas public investment would concentrate job expansion within the
country. Combining this Bush stimulus initiative with the ongoing spending on
Iraq will only deepen the severity of the recession.
As of January there were 7.6 million people unemployed in
a labor force of 154 million, producing an official unemployment rate of 4.9
percent. This was a significant increase over the 4.5 percent unemployment rate
in mid-2007, and thus one important sign of a weakening economy. Unemployment
is likely to keep rising as the economic slowdown continues.
In our current context, what would be the overall job
effects of transferring the entire 2007 Iraq War budget of $138 billion into
healthcare, education, energy conservation and infrastructure investments? If
we assume that all else would remain equal in the labor market, a net increase
(i.e., the total expansion of jobs in public investments minus the reduction in
military jobs) in the range of 1 million jobs would therefore reduce the total
number of unemployed people to around 6.6 million. The unemployment rate would
fall to about 4.3 percent.
This is still an unacceptably high unemployment rate. But
if the public-investment-directed spending shift out of Iraq were combined with
a stimulus package of roughly the same size as the Iraq War budget--i.e., in
the range of the Bush Administration's $150 billion stimulus--the overall
impact would be a strong program to fight recession and create decent jobs.