The Cost of the War

James Joyner provides a good evaluation of the Cost of Iraq and Afghanistan, relating it to previous Wars, then explaining how Bush financed the current War without massive strain on the American economy. The buildup of Federal Debt, though, may be the hidden adverse agent which is not documented adequately. The extensive Round of Federal borrowing has shifted the Debt overseas, providing the Assets necessary to maintain the Trade imbalance. This extension of Trade instruments remains the key component keeping Imports Pricing low. The undervaluation of Imports pushes the Trade imbalance growth. There are Means with which to alter this degrading financial situation, but would place alternate strain on the economy.

The method I favor stands particularly Socialistic in nature, and probably be opposed by most Economists. It would be the elimination of all Business Tax credits and Exemptions, unless 50% of their value was invested in U.S. Treasuries. Such Treasuries would have to be held for at least 3 years past the Tax Year of Tax remission. Current Tax remissions are directed to promote Business investment, but hard Capital investment has shifted overseas as well, to take advantage of lower Production Costs; a circumstance which leaves the domestic economy denuded of Treasury subscription potential. This Mandate would force at least one form of domestic investment to occur. The increased draft of Treasuries would absorb massive amounts of the Debt, lower the Interest rates of the Treasuries, grant Business both an active capitalization with a steady rate of Return, and raise the Cost of Imports in the long-run.

I would discuss another aspect of the War. This is in terms of Killed and Wounded. Iraq and Afghanistan has suffered many fewer KIAs and WIAs solely because of a strategy which functionally isolated U.S. military personnel from on-th-ground interaction with the domestic population. Military troops were confined to safe area bases, or concentrated in Combined Arms formations like Convoys or Unit assaults. The current Surge policy is a new redirected policy of placing U.S. troops in close proximity with the domestic population without immediate Combined Arms support. It will lead to increased levels of Casualties, and a level much higher than the influx of troops from the Surge ( in terms of Killed and Wounded per Thousand). The War is getting more expensive in more ways than financial Cost. lgl