Counterpunch 2002: Bush's War For Economic Growth

[MrScorpio]

http://www.counterpunch.org/faruqui1004.html

The answer was always available for everyone to see.

As the Bush administration gears up to fight Iraq, it overlooks deep-rooted economic and social problems on the home front that represent "a clear and present danger to America's national security". The person on the street is more concerned about whether he or she will be employed tomorrow, and whether he would be able to earn enough to get out of debt prior to retirement, then with whether or not Iraq poses a military threat to the US.

In a statement issued prior to the meetings of the International Monetary Fund and the World Bank, US Treasury Secretary Paul O'Neill said, "I remain convinced that we are on a path to 3-3.5 percent real annual growth by the end of the year." The reality is quite different. According to Professor David Levine of the University of California, Berkeley, a tech downturn coincided with a recession for the first time last year during President's Bush tenure. In the spring of 2001, the dot-com bubble burst, dashing with it the prospects of many twenty something's who had hoped to become instant millionaires. Then came the terrorist attacks of September 11, and the accompanying hike in spending on homeland security. The $10 trillion US economy went into a recession that many said would be a V-shaped recession, but is proving to be more like a W-shaped recession. The economy grew at the anemic rate of 1.3% in the second quarter of this year.

Scared by incessant talk about fighting a multi-year war over several continents with an invisible enemy, and facing joblessness, consumer confidence has began to erode. The University of Michigan's index of consumer confidence has declined four months in a row and is at 86.1%, its lowest level since November 2001.


Snip

According to Macroeconomic Advisers, a firm based in St. Louis, if war with Iraq causes oil prices to rise to $41.50 a barrel early next year, and the stock market falls by more than six percent, the US would slip into a recession, and the jobless rate would stay above six percent for the entire year.

The impact of a war on the travel industry would be unequivocally negative. American Airlines CEO, Don Carty, says that the war would be like having an "economic anvil dropped on the industry."

The hawks in Washington disagree, and assert that the war would be short and decisive. Once a compliant regime is installed in Baghdad, it would begin pumping large volumes of oil, lowering oil prices and restoring American economic growth.