WAR -- The Money [Part 14]

Now the economists are debating links between the Iraq war and the U. S. economy? Somehow after the last Power Point slide is projected against the back of my skull, I’m still going with the gut feeling that dollars spent in Iraq are not dollars spent in the United States.
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Economists Debate Link Between War, Credit Crisis

By Jonathan Weisman
Washington Post Staff Writer
Tuesday, April 15, 2008; A03

For House Speaker Nancy Pelosi, the connection between the Iraq conflict and the U.S. economic downturn is simple: "The president has taken us into a failed war," the California Democrat said recently. "He's taken us deeply into debt, and that debt is taking us into recession."

This assessment was put to powerful political effect in the latest congressional hearings on the war, when Democrats and Republicans alike told Army Gen. David H. Petraeus that the oil-rich Iraqi government should relieve the United States of the conflict's financial burdens. And Sen. Barack Obama (Ill.) echoed the theme yesterday at a manufacturing forum in Pittsburgh.

"If we can spend $10 billion a month rebuilding Iraq," the Democratic presidential contender declared, "we can spend $15 billion a year in our own country to put Americans back to work and strengthen the long-term competitiveness of our economy."

But this logic may have more political salience than economic validity, according to many economists, who say that the assertions linking the five-year-old conflict in Iraq to the domestic economic slide have been oversimplified. . . .

The analysis is politically powerful because people believe it. A CNN poll last month found that 71 percent of Americans say government spending in Iraq is a factor in the economic downturn.

"When you're spending over $50 to fill up your car because the price of oil is four times what it was before Iraq, you're paying a price for this war," Obama told an audience last month at the University of Charleston in West Virginia. "When Iraq is costing each household about $100 a month, you're paying a price for this war."

The analysis will drive the debate on the $108 billion in additional war spending that President Bush is now requesting. Congress is set to begin debate on war funding before the end of the month.

"I think there is a connection between the state of our economy and Iraq, and what we're spending over there," said Rep. Baron P. Hill (Ind.), a leading Democratic budget hawk. "We're limited as to what we can do to stimulate the economy. We're limited as to what we can do on health care or any other program. We need to spend more money on infrastructure, on roads and bridges that would have a stimulative effect on the economy, and we're not doing those things because of all the money we're spending in Iraq."

Go HERE for full Washington Post story.