More than just an unnecessary and costly departure from addressing the real causes of terrorism, the Iraq war is also contributing to an impending economic crisis. Tax cuts (overwhelmingly for the wealthy), a burgeoning defense budget and unanticipated war costs, combined with a sluggish economy, have produced massive deficits and a total debt of over $7 trillion. Optimistic projections of additional deficits are estimated at more than $2 trillion over the next 10 years. President Bush is currently requesting another $70-plus billion for the war, a trend which will likely increase as the insurgency escalates.
The deadly combination of rising deficits together with decades of trade imbalances now threatens a significant devaluation of the dollar. It seems that the Saudis, Japanese and others who typically finance our chronic overspending are growing skeptical of our ability to repay our debts.
Partly because of its historical stability, the dollar has also been the primary reserve currency of the global market. This status could change in literally a moment. There is little standing in the way of a shift toward the Euro and there are mounting pressures for this to occur. The results, which I increasingly view as more a matter of "when" rather than "if," will be devastating.
It would be unfair to blame this impending crisis entirely on Bush who inherited a virtual recession, long standing trade imbalances and a massive debt, but he has done nothing to slow the avalanche of contributing factors. In fact, a wide range of Bush policies have now pushed the situation toward an increasingly certain crisis. My personal assessment is that we will not continue on the current path, with existing trends, for more than eight more years.
Robert J. Polack Ph.D
Southeast Missouri State University