Thursday, January 12, 2006

While you were shopping

Happy new year. We made it. While you were shopping the after-Christmas sales and snoring off the last of the champagne, a Nobel-winning economist came up with the bill the United States can expect to pay for the war in Iraq. You think you've got a big post-holiday bill? Try $2 trillion.

Two trillion dollars. More money than God and Oprah combined can lay claim to. But that's the projection of the long-term costs, direct and indirect, for the Iraq conflict, according to a study released Jan. 9 by Columbia and Harvard universities. The study, written by Columbia economist Joseph E. Stiglitz -- a Nobel economics laureate in 2001 -- and Harvard lecturer Linda Bilmes included disability payments for the 16,000 U.S. soldiers wounded in the war, Reuters reported.

The study assessed a variety of ways such costs would trickle down to the average American, including higher health-care costs, the loss to the national economy from wounded veterans who can't contribute as productively, and a rise in the price of oil prices. The study concluded about 20 percent of the $25-a-barrel gain in oil prices since the war started in March 2003 was directly attributable to the war itself.

This begins to explain some of the White House talk of late about accelerating troop rotation out of Iraq; there are periodic briefings meant to establish an informal expectation of troops coming home sooner rather than later, a significant number almost certainly heading back before the November elections. Much depends, we're told, on the ability of Iraqi police and troops to fill the vacuum left by the American part of the coalition, which functionally means the coalition itself.

With the U.S. economy more than sputtering back to life -- consider the market closing above 11,000 two days running to start the year -- the exit strategy for U.S. troops from Iraq will be motivated as much by economic forces in play as by the prevailing military exigencies on the ground.

While you were shopping, the United States government got handed a bill it can't comfortably begin to pay. It's likely to be a boon for at least part of the economy; as the cost seeps down into your wallet and mine, the Credit Counselors' Full Employment Act is a shoo-in to sail through Congress, with no questions asked.

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