Osama bin Laden may be dead but he’s still winning the economic war he started.
By Ezra Klein, Published: May 2
Did Osama bin Laden win? No. Did he succeed? Well, America is still standing, and he isn’t. So why, when I called Daveed Gartenstein-Ross, a counterterrorism expert who specializes in al-Qaeda, did he tell me that “bin Laden has been enormously successful”? There’s no caliphate. There’s no sweeping sharia law. Didn’t we win this one in a clean knockout?
Apparently not. Bin Laden, according to Gartenstein-Ross, had a strategy that we never bothered to understand, and thus that we never bothered to defend against. What he really wanted to do – and, more to the point, what he thought he could do – was bankrupt the United States of America. After all, he’d done the bankrupt-a-superpower thing before. And though it didn’t quite work out this time, it worked a lot better than most of us, in this exultant moment, are willing to admit.
Nobel laureate Joseph Stiglitz estimates that the price tag on the Iraq War alone will surpass $3 trillion. Afghanistan likely amounts to another trillion or two. Add in the build-up in homeland security spending since 9/11 and you’re looking at another trillion. And don’t forget the indirect costs of all this turmoil: The Federal Reserve, worried about a fear-induced recession, slashed interest rates after the attack on the World Trade Center, and then kept them low to combat skyrocketing oil prices, a byproduct of the war in Iraq. That decade of loose monetary policy may well have contributed to the credit bubble that crashed the economy in 2007 and 2008.
Then there’s the post-9/11 slowdown in the economy, the time wasted in airports, the foregone returns on investments we didn’t make, the rise in oil prices as a result of the Iraq War, the cost of rebuilding Ground Zero, health care for the first responders and much, much more.
By John Hanrahan
Nobel laureate economist Joseph Stiglitz wants Americans not to be diverted by much of the rhetoric in the political debate over deficits and the calls for harsh austerity from Republican members of Congress and some GOP governors.
In contrast to the austerity hawks’ proposals, Columbia University professor Stiglitz says, “There are principled ways of cutting the deficit” and reducing the nation’s overall debt while at the same time “putting Americans back to work,” making life better for the millions of Americans in precarious economic circumstances, and halting growing economic inequality where one percent of the population controls 40 percent of the wealth and takes one-fourth of the nation’s income every year.
“The deficit didn’t cause the downturn,” he said, “the downturn caused the deficit.”
A few years ago, Stiglitz and Linda Bilmes, a public policy professor at the Harvard Kennedy School, wrote a book, “The Three Trillion Dollar War,” the title a reference to what they estimated would be the ultimate cost of the Iraq and Afghanistan wars. Since then, he said, they have come to realize “we were much too conservative” in estimating the costs.
- Making sure all corporations pay their share of taxes, and requiring the nation’s wealthiest 1 percent of individuals to pay more in income taxes. Even after ending the Bush tax cuts for the wealthiest Americans, Stiglitz said, those highest-income taxpayers “would still be ahead of where they were a decade ago.”
- Imposing “moderate increases” in capital gains and estate taxes and establishing a “small financial transactions tax,” all of which could raise substantial revenue, he said.
- Stopping “government giveaways of natural resources” – oil, gas, minerals, forests – through well-structured auctions that would bring in “serious revenue.”
- Curtailing corporate welfare, “which makes our economy more inefficient and increases unemployment.”
- Increasing enforcement of federal antitrust laws. Regarding the Bowles-Simpson Commission deficit reduction recommendations, Stiglitz noted that panel’s proposal to do away with the homeowners’ mortgage deduction. He said, “Eventually, we must deal with the mortgage deduction, but not now.” Eliminating the mortgage deduction in this troubled economy “would amount to an increased tax,” hitting hardest on the already hard-hit middle-class “and would make the housing market even worse,” he said.
Even before the economic crisis hit in 2007, Stiglitz said, the vast majority of Americans “year after year were getting poorer.” Household income today, on average, is lower than it was in 1997, at the same time income and wealth inequality have became even more pronounced in the United States. Yet, he said, we “told people to pretend their income was going up and to consume more.” And people did that, going into debt while at the same time believing they were getting wealthier because of the housing bubble.
In those days before the housing bubble collapsed, “We were on artificial respiration and we didn’t even know it,” Stiglitz said.