Sunday, May 06, 2007

Have the Bush Tax Cuts Helped Pay for Iraq?

In response to a recent post about John Edwards being unqualified to be President, I made a comment about Bush cutting taxes in a time of war. MByrne, the author of the post, replied that the tax cuts have actually helped pay for the war in Iraq. I don’t agree with his assessment and this post will explain why I think his assertion is false.

The whole idea behind the cuts was that American citizens and corporations would have more “disposable” income and would then reinvest it and spend it to help the economy. As with most things that have come out of this “Republican” era of government, that assertion is an oversimplification of the facts. Americans don’t like taxes so when someone says tax cuts, they salivate like Pavlov’s dog and jump on board. The question remains: have these tax rate cuts helped pay for the war in Iraq? The answer to that is no.

The tax rate cuts have increased tax revenue from about $1.7 trillion in 2003 to an estimated $2.5 trillion in 2007. Those are called receipts. Our debts, or outlays, have also increased since 2003 from about $2.1 trillion to an estimated $2.7 trillion in 2007. Our deficit was $248 billion last year and is projected to be about $244 billion this year. So, we were in the hole by $248 billion last year. There’s also this number called “on-budget,” which as the name suggests, is a number signifying how close we came to the President’s budget numbers. In 2006, we were $434.5 billion over budget. What was main cause of this discrepancy? An ugly little thing called supplemental funding for the war in Iraq. Supplemental funding is basically spending money that was not included in the budget, hence the $434.5 billion in over-budget spending. According to the Congressional Budget Office, Congress has provided over $503 billion in supplemental funding for mandatory diplomatic operations in Iraq, Afghanistan and other regions since 2003. Over 70% of that figure (352.1 billion) has been for Iraq. The current 100 billion supplemental request is being played out politically between the Democratically controlled Congress and the President. Of course, Iraq hasn’t been the only reason for supplemental funding (Katrina recovery, for example); however, it has been the primary reason since 2003.

The tax rate cuts provided more tax revenue for the government, but we still ran high deficits, so they didn’t actually pay for anything. It was funny money. We can argue whether or not it substantially stimulated the economy. It did put a little “money in people’s pockets,” but the federal minimum wage didn’t increase, corporate tax revenues as a share of profits[1] have fallen and the AMT (alternative minimum tax) will affect an estimated 23 million Americans this year (and up to 32 million by 2010). Not to mention increasing oil prices, the significant slowing down in the housing market, as well as median household income falling for the past five years. The DOW Jones and other indices are doing well, but that just means the corporations are making tons of money. 51% of Americans don’t own any stocks at all. Most of the stocks that Americans do own are tied to their retirement plans anyway. So while the economy is doing well for some (some of the few in my opinion), it is not doing so well for most and the cost of the war in Iraq sucks away billions of money (we don’t really have) per month with no tangible results.

Sources: Government Accountability Office, Congressional Budget Office, Tax Policy Center, White House Office of Management and Budget, Federal Reserve Bank of New York.




[1] Alan J. Auerback, "Why Have Corporate Tax Revenues Declined? Another Look" (January 2, 2007). Berkeley Program in Law & Economics, Working Paper Series. Paper 216.
http://repositories.cdlib.org/blewp/art216

Friday, May 04, 2007

Iraq is not Vietnam (Why we need to stay)

A quick note to all of my fellow progressives: please stop comparing Iraq to Vietnam. They are not the same, although there are some similarities. The declining will of the American people with respect to fighting the war and its increasing unpopularity are two similarities. Like Vietnam, our military is fighting an insurgency. But I think that the similarities basically stop there.

Our withdrawal from Vietnam in 1975 had no significant international ramifications. Vietnam was largely an ideological battle in the Cold War, which unfortunately cost us 58,000 souls. When South Vietnam fell to the North Vietnamese communists, it really meant nothing. North Vietnam had no regional influence, no natural resources that significantly affected world markets and no wealth to speak of. Further, there was not the threat that Vietnam would become a breeding ground for international terrorism if we left.

Our withdrawal from Iraq would open the door for one of our gravest enemies, Iran, who is already meddling in Iraqi affairs and who has directly contributed to American deaths. Iran looks to Iraq with lascivious eyes, waiting for us to leave so that they can exert their influence and use Iraq's resources to better position themselves to destroy Israel and the west.

The mistake that American progressives make is that we think that dealing with Iran today is like dealing with the Soviet Union during the cold war. It isn't. We think that "diplomacy" alone will work. It won't. The Soviet Union was controlled by secular communists. Iran is controlled by radical Islamists. The former were guided, in the end, by conventional wisdom. They after all united with the west to destroy Nazi Germany. That is the one of the reasons that MADD worked well and that most of the battles fought between the two super powers were fought by proxy or in the shadows. The latter are guided by an extremist ideology that calls for total destruction of Israel and the West. They are not opposed to acts of terrorism including the use of nuclear weapons against the civilian populace. They are not guided by conventional wisdom, but by religious hatred.

We can’t forget this. That is the single most important reason that we must remain significant in Iraq. We can’t just pick up and withdraw. We shouldn’t have invaded in the first place, but like Colin Powell said, we broke it, so we have to fix it. The democratic politicians who call for our withdrawal from Iraq are preaching dangerous rhetoric. We must find a plan that will work and the U. S. military will be a significant part of any plan.

Wednesday, May 02, 2007

Darfur News

The International Criminal Court has issued the first arrest warrants over the Darfur conflict. The charges are numerous and are for war crimes and crimes against humanity. Of course, the government rejects the warrants, but at least its progress.

Tuesday, May 01, 2007

Coalition? What Coalition?

President Bush addressed the CENTCOM Coalition today, and spoke about the war in Iraq. It is customary for the President to recognize key individuals who are present. Since this was the “Coalition Conference,” one would expect such acknowledgements to include representatives from the 21 “allied” governments who are contributing military forces in Iraq. Surely a significant representative from the United Kingdom would have been present, since they have about 7,200 troops in Iraq. Or Korea, or Australia, whose combined troop commitment numbers about 3,150 troops. Or someone from the other 19 countries who have troops in Iraq (that number combined is about 3,902 troops, which averages to be about 205 troops per country, though Poland, Romania, Denmark, El Salvador and Georgia all have more than 300 troops each). The President only acknowledged four individuals by name, three of which were U.S. Military officers. The last was the National Security Advisor to the President of Iraq. President Bush mentioned “members of the coalition who are present” and “ambassadors who have joined us.” I find that very interesting since, last I checked, ambassadors outrank national security advisors. Further, one would assume that since this is a U.S. Central Command Conference and the head of CENTCOM, a four-star Admiral would be present, as well as General Petraeus (a four-star army general and commander of the multi-national force in Iraq), and that each coalition nation would have their top military commanders attend.

We just don’t know who was there, because there is no information on the attendees other than those expressly acknowledged by the President in his opening remarks. I find that interesting, since the word “Coalition” is thrown around like candy by everyone in the Bush administration. I would think that the President would take every opportunity to put a face on who these allies really are, but that does not seem to be the case.

The United States has approximately 145,000 troops in Iraq. Of the seven major Multi-National Force Commands, five are headed by the U.S. Military. Multi-National Division- Central South, headed by Poland, is only a Division in name, since most of its coalition forces withdrew in 2006. It is officially slated to be dissolved sometime this year. Multi-National Division- South East, headed by the U.K., is comprised of nothing more than a reinforced brigade (around 7,000 trooops) and that number is expected to draw down this year. To quickly revisit the numbers, the U.S. has about 145,000 out of approximately 159,200 troops, or 91% of all troops in Iraq. Three out of 21 countries who constitute the coalition account for 72.8% of the 14,200 troops our allies are contributing. The remaining 18 countries account for less than 28% of that number and only 2.4% of total coalition forces in Iraq. Yep, that’s 2.4%. If we create a table of the top five allies in Iraq, here’s what you get:

Multi-National Force Iraq

Total Number of Troops:

159,000

Country

Number of Troops

Percent of Total Troops

U.S.A.

145,000

91.2%

United Kingdom

7,200

4.5%

South Korea

2,300

1.4%

Australia

850

0.5%

Poland

900

0.6%

Source: http://www.globalsecurity.org/military/ops/iraq_orbat_coalition.htm

Let’s take a look at another “coalition” or allied effort. During WWII, the top five contribution allies in terms of troops, were the United Kingdom, India, the United States, the U.S.S.R and France. Here is what their chart looks like (numbers are 1945 grand totals):

Allied Forces, 1945

Total Number of Troops:

35,350,000

Country

Number of Troops

Percent of Total Troops

U.S.A.

11,700,000

33.1%

U.S.S.R

11,500,000

32.5%

U.K.

5,000,000

14.1%

France

5,000,000

14.1%

India

2,150,000

6.1%

Source:http://www.euronet.nl/users/wilfried/ww2/ww2.htm

Before the pundits begin, let me say that I’m not attempting to equate one war with the other. It should be noted, however, that the United States has almost tripled its percentage of troops for Iraq in comparison to those sent in WWII, while Great Britain has halved its percentage in terms of troop commitment. What I am attempting to do by pointing out these discrepancies is establish some sort of definition for what in the heck constitutes a real coalition. Surely, someone in the Defense or State Department could come up with some sort of doctrine regarding these sorts of things. Common sense would dictate that based upon the Iraq chart, we have nothing resembling a coalition at all. In that case, it would make perfect sense not to have anyone of significance at the conference. Why should we? If we assume over ninety percent of the risk, we should call over ninety percent of the shots. Which begs the question: Why even call it a coalition? The world clearly understands that the war in Iraq is being fought by the United States. For good or bad, that’s the way it is.

The fact that President Bush and the administration are still holding to the pipe dream of a coalition is just another example of the insanity that exists in the Executive Branch. Mr. President, we’ve caught on. Just because you keep saying it doesn’t mean that we believe it anymore. As Joseph Goebbels can attest to, even the best propaganda is exposed as a lie in the end.