February 06, 2009

Republicans Spent Much More on Iraq War Than Obama Wants for Stimulus Package

After the American Century

Those who thought I was too hard on the Republican Party yesterday might want to read Paul Krugman's column today. He also feels that their proposal to substitute tax cuts for spending is a failed Bush policy.

Elsewhere in today's New York Times there is an interesting story about the Japanese economy during the 1990s, when it went into deflation. Then the Japanese government spent a great deal of money on economic stimulus, and there is considerable debate about whether this was successful or not. But one thing is clear. Not all stimulus money is equally effective. Money spent on infrastructure gave the least bang for the yen, while money spent on education was the most beneficial. The test should be whether spending will develop new skills (education), new capacities (spreading broadband more widely), or renew the population (e.g. preventive health care). Such things make the economy more resilient. The least effective way to stimulate the economy is to build more weapons. A row of tanks worth a billion dollars for the most part just sits there, and never creates any new wealth.

However, if you a Republican, then a row of tanks represents a chance to wreck not just one economy, but two, as the economic cost of the Iraq war comes to mind. According to an article in the Washington Post last March, the total cost of that conflict will be more than $1.5 trillion, perhaps even as high as $3 trillion. Thus the Republican Party gladly spent at least twice as much on that war as the Democrats want to use to stimulate the American economy. Is there any logic to Republican thinking? The Republicans have destroyed billions in resources in the deserts of the Middle East, but they will not invest in the future of their own country. They have used billions to defend access to foreign oil, but they will not spend money on green energy which could free the US from dependence on that oil.

A paranoid on the far right might think that subversives (call them economic terrorsits) who hate the United States have infiltrated the Republican Party and twisted its thinking so it will embrace policies that are destructive to the United States. Not being anywhere near that paranoid, I can only conclude that the Republicans are illogical and that they choose badly.