WASHINGTON—Credit has dried up. The stock market is disintegrating. Unless someone pours money into capital markets, everyone agrees, we could wind up like people in Baghdad, fondly remembering the day five years ago when they pushed the handle and their toilets still flushed. Only one "someone" has enough cash to fix the problem: the U.S. government.
The Bush administration and Congressional Democrats want taxpayers to pay $700 billion to bail out failing banks. Progressives would prefer to bail out homeowners facing the imminent foreclosure of their homes, as well as those in danger of being foreclosed upon during 2009, at a cost of $1.3 trillion.
Never mind which approach is better. Where will the government find the money?
There are two elephants in the room: war and Bush's 2001 and 2003 tax cuts. We can't afford either. Yet, to abuse the animal metaphor, everyone acts like they're sacred cows.
When you think about it, it's sheer madness. The city marshal is at the door, brandishing a shotgun, ready to evict you and your family for nonpayment of rent. But while your kids are screaming in terror, you're at the computer, wasting thousands on online gambling. You could pay off your landlord instead. You could make the marshal go away. All you have to do is stop. But you keep on keeping on. Click, click. More money squandered.
What the hell is wrong with you? What the hell is wrong with us?
In 2007, the nonpartisan Congressional Budget Office estimated that the final cost of our biggest national compulsion, the wars against Iraq and Afghanistan, could total $2.4 trillion, or $8,000 per man, woman and child in the country. That's twice as much as the Korean, Vietnam and Gulf Wars combined. It's also two-thirds the cost of World War II. Yet no one—not the Republicans, not the Democrats, not the media, not even the left—insists that we get out.
To paraphrase Lloyd Bentsen, I've studied World War II. World War II was a worthwhile war, one that freed millions from tyranny and set the stage for the United States to dominate the global economy and become the wealthiest nation in history. Iraq and Afghanistan? They're no World War II. As wars go, they're not as worthwhile as the invasion of Grenada.
"The CBO estimates assume that 75,000 troops will remain in both countries through 2017, including roughly 50,000 in Iraq," reported USA Today. If anything, that's a low-ball estimate. More than a half century after the fighting ceased, we still have 37,000 troops in one tiny country, South Korea. And both McCain and Obama promise to send more troops to Afghanistan. That means more taxpayer money.
Nearly two out of three Americans think invading Iraq—where the lion's share of war funding is being spent—was a mistake. The Afghan resistance is kicking our butts. Both wars have been a complete, total waste of money, effort and lives. As surely as the sun will rise in the east, we will lose both. At a total cost of at least $2.4 trillion. Ridiculous.
$2.4 trillion is nearly twice the $1.3 trillion it would take to save every home in danger of foreclosure. That would keep many banks afloat and act as the biggest economic stimulus in history. Can anyone sane tell us why we shouldn't bring our troops back home? Can anyone justify wasting $2.4 trillion at a time when the U.S. economy is staring into the abyss of total collapse?
The other national obsession is the tax cuts Bush pushed through in 2001 and 2003. "The surplus is not the government's money," Bush said at the time, apparently unaware that the economy was already in a recession. "The surplus is the people's money." Remember surpluses? Such a Clintonian word. Anyway, Democrats in Congress—still in full-on wuss mode following 9/11—went along with Bush's tax cuts. But, bless their wimpy little heads, they did manage to extract a concession: In 2011, tax rates would revert to what they'd been in 2001.
Believe a Republican once, shame on you. Believe a Republican twice, what were you thinking? Now so-called conservatives are complaining that "the largest tax increase in history" will occur in 2011 if Bush's tax cuts are allowed to expire.
Making the Bush tax cuts permanent would codify the most regressive tax change in history. "After-tax income would increase by more than 6 percent for households in the top 1 percent of the nation's income distribution, 2 percent for households in the middle 60 percent, and only 0.3 percent for households in the bottom 20 percent," found a Brookings Institution study.
Making the rich richer will cost the Treasury an arm, a leg and the better part of a torso.
"Combined with a minimal but necessary fix to the government's Alternative Minimum Tax, making the tax cuts permanent would reduce federal revenues by almost $1.8 trillion over 10 years—and that's in addition to the $1.7 trillion of revenue losses already locked into law."
$1.8 trillion. Again, allow me to remind you: $1.3 trillion is the amount we need to stave off imminent financial catastrophe.
That sound you hear is the door breaking down. The marshal is coming down the hall. Get off the computer. Fix the problem. Get out of Iraq and Afghanistan. Let the tax cuts expire.
Now a syndicated columnist and editorial cartoonist, Ted Rall was a trader at Bear, Stearns & Co. and a loan officer at the Industrial Bank of Japan during the 1980s.