Effect of Iraq War on US Economy

Introduction

President Bush's invasion of Iraq has severely impacted the United States economy in recent years. The value of the dollar has constantly diminished in the stock market since the offset of the war. According to Hazel Henderson in Globalist, 'In the past 12 months, the U.S. dollar has lost some 30% of its value against the European euro'. Despite this fact, the budget for the war in Iraq still remains incredibly high each year. As the American economy grows weaker in strength, there is much debate and uncertainty as to how much more money will be spent on recruiting soldiers, providing ammunition, and servicing war veterans (Gross, 89-147).

Discussion

The war on terror has negatively impacted the economy as more troops are sent to war-front, leading to higher expenditure rather than generating revenue for the nation. This has resulted in increased fiscal deficit; a situation where government's total expenditures exceed the revenue that it generates. Robert Pollin and Heidi Garrett-Peltier in The Nation reveal that: 'The federal fiscal deficit in 2007 was $244 billion, shutting down the Iraq War and using the fiscal savings to cut the deficit would mean a 57% deficit reduction' (Ellul, 20-96).

A different school of thought gave opinion on the budgetary allocation of the Iraqi war as to what the effects would be in the long run, taking a look at the issue of increased government spending during war, with the majority of the budget focusing on the military. With the military receiving so much funding from budget allocation, lack of finances towards other major sectors of the economy such as the education sector, health sector and infrastructure have dwindled. Without this war, profound concentration would be put towards building other areas of the economy without the distraction of extra funding for military recruitment and movement (Cockburn, 1-26).

According to the source, most funds required for the economic growth have been diverted to servicing the war in Iraq. Meanwhile, the American economy suffers and average laborers get eight dollars minimum wage due to lack of employment opportunities in the country. With increased military cost to support the war, the unemployment rate is also increasing. Most private firms cannot withstand the high tax rates imposed by the government, even though this is necessary to generate more revenue. The unfortunate result is to let workers go leading to lack of jobs for able citizens. With the death toll rising in Iraq and more resources being directed towards servicing veterans, a majority of Americans view the war as a major loss. Linda Bilmes and Joseph Stiglitz further emphasize, 'As of January there were 7.6 million people unemployed in a labor force of 154 million, producing an official unemployment rate of 4.9 percent. This was a significant increase over the 4.5 percent unemployment rate in mid-2007, and thus one important sign of a weakening economy. Transferring the entire 2007 Iraq War budget of $138 billion into healthcare, education, energy conservation and infrastructure investments, a net increase ...