IRAQ WAR & U.S. ECONOMY

What effect the Iraq war has had on the United States Economy?



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, the US dollar has lost around 30 percent of its value agains the Euro in the last 12 months. 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, 2004).

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 and Heidi 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, 2001).

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, 2002).

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. The unemployment rate is also increasing because of increasing military cost that supports the war. Most firms are unable to withstand 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. Bilmes and Stiglitz further emphasize that in January 2008, 7.6 Million unemployed people in the labor force of around 154 million. This produced 4.9 percent official unemployment rate which was a sign of weakening economy. If the 2007 Iraq War budget of 138 Million dollars would have transferred to education, healthcare, infrastructure investment and energy conservation, then a net of of 1 ...