Housing Out of Reach
jon_flanders at compuserve.com
Thu Sep 19 06:53:08 MDT 2002
[how many hundreds of billions of dollars will the pulverization of Iraq
Cost of war put at $200bn, but that's nothing, says US adviser
Matthew Engel in Washington
Monday September 16 2002
With the insouciance about the implications of war that is now fashionable
in Washington, the president's chief economic adviser yesterday put a far
higher figure on the cost of invading Iraq than anyone had previously
mentioned. Lawrence Lindsey, head of the National Economic Council, priced
the operation at up to $200bn (163;129bn), but added: "That's nothing."
He said that, as a one-off cost, it would have little effect on the
national debt, now running at about $3.6 trillion.
Mr Lindsey also rejected hopes that the war might stimulate the economy.
"Government spending tends not to be that stimulative," he said in an
interview with the Wall Street Journal. "Building weapons and expending
them isn't the basis of sustained economic growth."
The Pentagon is believed to have estimated a cost around $50bn, but
independent economists say these kind of estimates are highly speculative,
dependent on a large number of variables, and subject to all kinds of
creative accounting possibilities.
The 1991 Gulf war is generally considered to have cost about $60bn, of
which almost $50bn was contributed by the US's allies.
Mr Lindsey's remarks followed a similarly upbeat assessment from the
chairman of the Federal Reserve, Alan Greenspan, who told a congressional
committee last week that he believed the economic effects of a short war in
Iraq would be negligible.
He added: "My general view is that issues of foreign diplomacy and military
strategy ought not to take into consideration what the impact on the
American economy is."
For western consumers, the big imponderable is the effect on oil prices.
However, US companies have been scaling back their dependence on Iraqi oil,
from a million barrels a day earlier this year to under 200,000 barrels, an
amount that could easily be covered from elsewhere.
Industry analysts say that oil prices already factor in the likelihood of
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