Iraq War And Afghan Conflict Harmed The Economy, Study Says
by Max J. Rosenthal
03/01/12
WASHINGTON -- Defense spending has boomed in the post-9/11 era, creating new jobs and programs to support American military operations around the world. But a new report released last week by the Institute for Economics and Peace says that war expenditures create as much of a bubble as the housing or stock markets, providing short-term gains while creating massive long-term problems.
The report compared the economic conditions for every major U.S. war since World War II. In each case, it said, "the positive effects of increased military spending were outweighed by longer term unintended negative macroeconomic consequences."
While the authors, including the institute's vice president, Michael Shank, stressed that they were not were attempting to "place value judgments" on American wars, they noted that the consequences -- higher debt, higher inflation, lower consumption and lower investment -- have harmed the long-term health of the economy even in the case of necessary conflicts.
The wars in Iraq and Afghanistan have "contributed to the U.S. having severe unsustainable structural imbalances in its government finances," the report said. While some of the financial trouble has resulted from other factors, such as rising energy prices, the current conflicts have been financed entirely by debt unlike other wars they studied, the authors noted.
Because the first wartime tax cuts in American history were imposed, the debt that resulted has created "major constraints on the economy and limited the scope of options that were available to policymakers" to address the flagging economy, the report said...
For the full article, go to:
http://www.huffingtonpost.com/2012/03/01/iraq-war-afghan-conflict-economy_n_1311717.html
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