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What Bush cost America

September 5, 2011 - Harry Eagar
Economist Joseph Stiglitz has a list, a very incomplete list, of the economic errors of the Bush administration. The whole thing is worth reading, but I want to concentrate on one item: Going to war on the cuff.

Nut graf: "Even if Bush could be forgiven for taking America, and much of the rest of the world, to war on false pretenses, and for misrepresenting the cost of the venture, there is no excuse for how he chose to finance it. His was the first war in history paid for entirely on credit. As America went into battle, with deficits already soaring from his 2001 tax cut, Bush decided to plunge ahead with yet another round of tax 'relief' for the wealthy."

No country pays for war out of current account, which ought to giver pause to the fanatics who want sa balsnced budget ame4ndsment. Johnson managed a 10% personal income tax surcharge during the Vietnam war, which wass niowhere near adequate.

The shortfall contributed to the inflation and stagflation of the '70s. You'd have thought the Republicans would have considered that in the '00s, but the Bush Republicans were the most ignorant group our country has ever had.

Not only are we losing the Iraq and Afghanistan wars on the cuff, it isn't even our cuff.

During World War II, war deficits were covered by borrowing from Americans. By the end, Americans held $140 billion in bonds -- a large amount, considering that the cost of the war in its most expensive year, 1944, was $244 billion.

It was feared at the time that the Hoover depression would resume with peace, but the consumer spending unleashed by cashing in the bonds really set off the biggest boom in history. So that's part of the explanation why there is no recovery now; or, rather, it's happening in China.

It was also the case in 1942-45 that workers had little choice about saving. Production of consumer goods was restricted. The rich had the option of bidding up fixed assets, houses and the like, but ordinary people could either buy booze, hide it in a mattress or support the war by buying bonds.

They patriotically bought bonds. The rich, as usual, bought fixed assets.

In the '00s, Americans were never asked to contribute savings toward the expense of war, and there was no shortage of consumeer goods to buy.

Ordinary workers bought the consumer goods, and the rich, as usual, accumulated fixed assets, which helps explain the bubbles in residential and commercial real estate.


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