Friday, February 15, 2008

Obama's Iraq War Spending Fantasy

A couple of days ago, Barack Obama unveiled a $60 billion economic plan which included the creation of, I believe, questionable "green collar" jobs. This is in addition to the estimated $800 billion in new spending that he has "already promised" on the campaign trail for a variety of new and "big government" programs. In defense of all this spending, he claims that the cost of his new programs will be "easily" offset by rescinding the Bush tax cuts for the rich and through the elimination of the Iraq war.

In this posting, I will simply address the $100 billion per year that is being spent in Iraq by the American taxpayer and which Barack Obama seems to think will easily go away; once we have left that country.

Barack Obama claims he would eliminate the cost of the war in Iraq and put all that money to work on rebuilding the infrastructure in this country. He would also use that money to create a bunch of "green collar" jobs that would install things like solar panels across the United States. So, the "begging" question is, would eliminating $100 billion of yearly expense in Iraq truly free up "all" that money so that an equivalent amount of spending could be made in this country to create new jobs? Not Hardly! In fact, we will probably lose more jobs than we would create.

To understand this, you must understand "where" the money is actually being spent to support that war effort in Iraq. Barack Obama, and Hillary Clinton too, don't seem to understand that most of the money that is being spent for Iraq is being used to pay "Americans" and give Americans jobs in both this country and in Iraq

Simply speaking, things like Humvees, helicopters, cruise missiles, bullets, hand grenades, bunks, sheets, pillows, (even toothpaste) and everything else in use in Iraq by our military are primarily being built in America by Americans. When we leave Iraq, those high paying American "manufacturing" jobs that are dedicated to these products will either be minimized or eliminated. As a result, our unemployment rolls will increase and the taxpayer paid unemployment compensation for those lost jobs will also increase. Additionally, we will lose tax revenues from the Americans and American companies making those products. Those lost jobs will also mean a loss in their purchasing power, and the ripple effect will be seen by other businesses that depend on "good employment" levels in this country to support the sales of their products.

Further, an estimated 100,000 highly-paid American contractors that are now in Iraq will probably be eliminated. In my mind, the abrupt departure of the United States, as planned by Barack Obama, will not leave "America" or "Americans" in "good stead" with the Iraqis. Those contractor jobs will be either eliminated or replaced with workers from other countries and not the Americans that are there, now. And, without the protection of our American troops, I would think those contractors, themselves, would not want to stay for fear of their lives. We can only assume that the majority will return to this country with the undesirable status of being unemployed. Once unemployed, they represent a loss of income tax revenues and an increase in unemployment compensation that all of us will have to pay in the form of taxes. It should also be pointed out, that many of the contractors were being employed by the Iraqi companies and by the Iraqi government and are being paid out of Iraqi oil revenues. Much of that money is coming back here, to their families or in bank accounts, to be spent by Americans in America and which will be lost and which is not include in the $100 billion a year that the United States government is spending in Iraq.

It is, also, important to note that the cost of the "base" salaries for the regular active-duty military won't go away. It will pretty much cost the same to pay, house, feed, outfit, and clothe those military personnel whether they be in Iraq or, after we leave the country, they are in some place like Omaha. Only the cost to pay, house, outfit, feed, and clothe the non-active duty personnel such as the National Guard and Reservists will actually go away when we leave Iraq.

Lastly, because of our now friendly relationship with Iraq, American companies are getting orders from the Iraqi government for industrial items that are well outside of $100 billion in annual U.S. government spending. Companies like General Electric are providing things like power generators and other infrastructure related items. Caterpillar Tractor is providing heavy equipment for road construction and the rebuilding of the country. And, the list goes on. The Iraqis, themselves, are buying American made products. And, this trade creates jobs and taxable personal and corporate income in this country. Like it or not, our current "friendly" relationship with Iraq has made us a "trading partner" with that country. It has created jobs in American for American products. If we abruptly leave Iraq and leave the country to the insurgents and Al Qaeda, I hardly think that Iraqis will be happy to trade with us, again. My guess is that Russia and France will become the big benefactors; as they were when Saddam ran the country.

For Barack Obama to "simply" say that we will save $100 billion dollars a year by getting out of Iraq is either being dishonest or being naive; and, I'm not sure which. And, don't get me wrong, I am "not" saying that we should either "go to" or "be at" or "stay in" war or wars for a purely economic reason. However, what I am saying is that, given all the intertwined factors, you can't "simply" count on a dollar being spent on Iraq, for a war, as being a dollar that could be easily spent elsewhere. And, I believe, the economic shock to this country by abruptly exiting that war is either not understood or is being blinded by Obama and his anti-war zealousness. And, surely, this financially-oriented exercise doesn't address the long-term strategic rationale of having military bases and having diplomatic and long-term economic relationships in Iraq; both of which will be lost when we "run" (and not walk) out of that country.

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