The Seven Deadly Deficits: What the Bush Years Really Cost Us
              By Joseph Stiglitz, Mother Jones
When President George W. Bush assumed office, most of those disgruntled about the stolen election contented themselves with this thought: Given our system of checks and balances, given the gridlock in Washington, how much damage could be done? Now we know: far more than the worst pessimists could have imagined. From the war in Iraq (and Afghanistan, which has cost us TWO HUNDRED BILLION DOLLARS since 2001,) (AMEND THAT FIGURE it is now FOUR TRILLION.) to the  collapse of the credit markets, the financial losses are difficult to fathom. And behind those losses lie even greater missed opportunities: (Homes lost to Mortgage gate, where families had their life savings. Then, feeding, educating children, putting a roof over their heads, emotional security not Trauma. Then 4thousand plus GI's dead.)  Put it all together -- FOUR TRILLION of YOUR TAX DOLLARS squandered on a stupid, lie-inspired war. That war triggered a housing pyramid scheme that impoverished the nation and enriched a few, and the money lost  because of the recession -- and the gap between what we could have produced and what  we did produce will easily exceed $8 trillion. Think what that kind of money could have done to provide SINGLE PAYER health care for the uninsured, (NOT THIS BOGUS OBAMA CARE.) and the PERFECTING of our education system, the building of a PLANET-SAVING green technology, the CASH TO GIVE EVERY STUDENT with a B+ AVERAGE FREE COLLEGE OR TRADE SCHOOL.  Money to enable BUSINESS start-ups so capitalism could do what it does best, grow incrementally......The list is endless. So, the true cost of our missed opportunities is HUGE.

So, Consider the war: First  there are the funds directly allocated to it by the government (an estimated $12 billion a  month even according to the misleading accounting of the Bush administration). Much larger, as the Kennedy School's Linda Bilmes and I documented in The Three Trillion Dollar War, are the indirect costs: the salaries not earned by those wounded or killed, the economic activity displaced (from, say, spending on American hospitals to spending on Nepalese security contractors).

Such social and macroeconomic factors may account for more than $2 trillion of the war's overall cost.There is a silver lining in these clouds. If we can pull ourselves out of the malaise, if we can  think more carefully and less bogus-patriotic --ideologically --about how to make our economy stronger and   our society better, perhaps we can make progress in addressing some of our long-festering problems. As a road map for where to begin, consider the seven major shortfalls the Bush administration leaves behind.

              The values deficit: One of the strengths of America is its diversity, and there has always
              been a diversity of views even on our fundamental principles -- innocent until proven guilty,
              the writ of habeas corpus, the rule of law. But (so we thought) those who disagreed with
              these principles were a fringe, easily ignored. We have now learned that the fringe is not so
              small and includes among its numbers the president and leaders of his party. And this
              division of values could not have come at a worse time. The realization that we may have
              less in common than we thought may make it difficult to solve the problems we must
              address together.

              The climate deficit: With the help of corporate accomplices such as ExxonMobil, Bush
              tried to persuade Americans that global warming was fiction. It is not, and even the
              administration has finally admitted as much. But for eight years we did nothing, and
              America pollutes more than ever -- a delay that will cost us dearly.

              The equality deficit: In the past, even if those at the bottom saw little or any of the gains
              from economic expansion, life was viewed as a fair lottery. Up-by-your-bootstraps stories
              are part of America's sense of identity. But today, the promise of the Horatio Alger legend
              rings false. Upward mobility is becoming increasingly difficult. Growing divisions in income
              and wealth are reinforced by a tax code that rewards those who have lucked out in the
              globalization sweepstakes. As that realization sinks in, it will be even harder to find
              common cause.

              The accountability deficit: The moguls of American finance justified their astronomical
              compensation by their ingenuity and the great benefits it supposedly bestowed upon the
              country. Now the emperors have been shown to have no clothes. They did not know how
              to manage risk; rather, their actions exacerbated risk. Capital was not well allocated;
              hundreds of billions were misspent, a level of inefficiency much greater than what people
              typically attribute to government. Yet the moguls walked away with hundreds of millions of
              dollars while taxpayers, workers, and the economy as a whole were stuck with the tab.

              The trade deficit: Over the past decade, the nation has been borrowing massively
              abroad -- some $739 billion in 2007 alone. And it is easy to see why: With the
              government running up huge debts, and with Americans' household savings close to zero,
              there was nowhere else to turn. America has been living on borrowed money and
              borrowed time, and the day of reckoning had to come. We used to lecture others about
              what good economic policy meant. Now they are laughing behind our backs, and even
              occasionally lecturing us. We've had to go begging to the sovereign wealth funds -- the
              excess wealth that other governments have accumulated and can invest outside their
              borders. We recoil at the idea of our government running a bank. But we seem to accept
              the notion of foreign governments owning a major share in some of our iconic American
              banks, institutions that are critical to our economy. (So critical, in fact, we have given the
              Treasury a blank check to bail them out.)

              The budget deficit: Thanks in part to runaway military spending, in just eight short years
              our national debt has increased by two-thirds, from $5.7 trillion to more than $9.5 trillion.
              But as dramatic as they are, these numbers vastly understate the problem. Many of the
              Iraq War bills, including the cost of benefits for injured veterans, have not yet come due,
              and they could amount to more than $600 billion. The federal deficit this year is likely to
              add up to another half-trillion to the nation's debt. And all this is before the Social Security
              and Medicare bills for the baby boomers.

              The investment deficit: Government accounting is different from that in the private
              sector. A firm that borrows to make a good investment will see its balance sheet
              improved, and its leaders will be applauded. But in the public sector there is no balance
              sheet, and as a result, too many of us focus too narrowly on the deficit. In reality, wise
              government investments yield returns far higher than the interest rate the government pays
              on its debt; in the long run, investments help reduce deficits. To cut them is penny-wise but
              pound-foolish, as New Orleans' levees and Minneapolis' bridge attest.

              There are two hypotheses (besides simple incompetence) about why Republicans paid so
              little attention to the growing budget shortfall. The first is that they simply trusted in
              supply-side economics -- believing that, somehow, the economy would grow so much
              better with lower taxes that deficits would be ephemeral. That notion has been shown for
              the fantasy that it is.

              The second theory is that by letting the budget deficit balloon, Bush and his allies hoped to
              force a reduction in the size of government. Indeed, the fiscal situation has grown so scary
              that many responsible Democrats are now playing into the hands of these "starve the
              beast" Republicans and calling for drastic cuts in expenditures. But with Democrats
              worrying about appearing soft on security -- and therefore treating the military budget as
              sacrosanct -- it is hard to cut spending without slashing the investments most important to
              solving the crisis.

              The most urgent task for the new president will be to restore the economy's strength.
              Given our national debt, it is especially important to do that in ways that maximize the bang
              for our buck and help address at least one of the major deficits. Tax cuts work -- if they
              work -- by increasing consumption, but America's problem is that we have been on a
              consumption binge; prolonging that binge just postpones dealing with the deeper problems.
              States and localities are about to face real budget constraints as tax revenues plummet, and
              unless something is done, they will be forced to cut spending, deepening the downturn. At
              the federal level, we need to spend more, not less. The economy must be reconfigured to
              reflect new realities -- including global warming. We will need fast trains and more efficient
              power plants. Such expenditures stimulate the economy while providing the foundation for
              long-term sustainable growth.

              There are only two ways to pay for these investments: raise taxes or cut other
              expenditures. Upper-income Americans can well afford to pay higher taxes, and many
              countries in Europe have succeeded because of, not despite, high tax rates -- rates that
              have enabled them to invest and compete in a globalized world.

              But needless to say, there will be resistance to tax increases, and so the focus will shift to
              cuts. But our social expenditures are already so bare-bones that there is little to spare.
              Indeed, we stand out among the advanced industrial countries in the inadequacy of social
              protection. The problems with America's health care system, for example, are well
              recognized; fixing them means not only greater social justice, but greater economic
              efficiency. (Healthier workers are more productive workers.) That leaves but one major
              area in which to cut -- defense. We account for half of all the world's military expenditures,
              with 42 percent of tax dollars spent directly or indirectly on defense. Even nonwar military
              expenditures have soared. With so much money spent on weapons that don't work against
              enemies that don't exist, there is ample room to increase security at the same time that we
              cut defense expenditures.

              The good news about today's bad economic news is that we're being forced to curb our
              material consumption. If we do it in the right way, it will help limit global warming and may
              even force the realization that a truly high standard of living might entail more leisure, not
              just more material goods.

              The laws of nature and the laws of economics are unforgiving. We can abuse our
              environment, but only for a while. We can spend beyond our means, but only for a while.
              We can free ride on the investments made in the past, but only for a while. Even the richest
              country in the world ignores the laws of nature and the laws of economics at its peril.

                    *       *          *          *            *          *           *            *             *           *               *              *

              Joseph Stiglitz, a Nobel laureate, is a professor of economics at Columbia University.
Want to study under him?  COLUMBIA U without books or rent or food is 53grand a year. 
                  But you'll be a hell of a history teacher with an economics minor
when you get out, $212,000.00 later.

              2008 Mother Jones All rights reserved.
              View this story online at: 

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