Term Paper: Economic Impact of the War in Iraq

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Economic Impact of the War in Iraq

Because the war in Iraq continues, determining the effect of the war on the United States economy is somewhat difficult. In addition, there are several complicating factors, such as the war in Afghanistan, domestic unease with the President that is not solely linked to war-time issues, and the fact that the U.S. is still struggling to recover financially and emotionally from a devastating terrorist attack, which make it difficult to isolate the war's impact on the economy. Even more complicating is the fact that the United States has a history of economic stimulation during wars, which makes it easy for people to falsely attribute unrelated economic upswings to wartime activity. Therefore, any examination of the impact of the war in Iraq on the United States economy must be somewhat uncertain.

In January of 2003, just after the war in Iraq began, journalist John Byczkowski recognized the inherent complexities of this issue. First, he addressed the fact that the U.S. was in a recession at the time of the war. (Byczkowski). Byczkowski then interviewed a business owner, in manufacturing, and shared his belief that the war might encourage an economic recovery in the manufacturing sector. (Byczkowski). However, Byczkowski was not as confident as the man that he interviewed. While Byczkowski agreed that "a wartime increase in government spending could prop up an economy mired in a tepid, jobless recovery," he also cautioned that war spending was relatively insignificant compared to the overall deficit and that a prolonged war in Iraq could "drive up oil prices and interest rates...sending the economy into recession." (Byczkowski)

Furthermore, Byczkowski pointed to some significant differences between the war in Iraq and previous wars that might keep Iraq from having a stimulating effect on the American economy. First, he pointed out that military spending was much higher in previous wars than in the Iraq war. (Byczkowski). Therefore, the full employment enjoyed during World War I, World War II, the Korean war, and the Vietnam War, would probably not be duplicated unless the Federal government was willing to commit the same percentage of resources to wartime spending. Instead, as of 2003, many economists believed that it would be better to compare the economic effect of the war in Iraq to the experience of the Gulf War of 1990, which led to a temporary increase in oil prices and a temporary decrease in consumer spending. (Byczkowski). However, there are significant differences between the Gulf War and the war in Iraq, primarily in duration and chances of success, which make this comparison dubious, at best.

In fact, some economists have made it clear that they believe that traditional economic indicators like consumer spending and oil prices will only reveal a portion of the war's impact on the economy. First, Nordhaus points out that the United States government has typically underestimated the costs of war. (Nordhaus, 1-2). Furthermore, he points out that the economic costs of war can often be felt long after the conclusion of the war. For example, American success in the Iraqi war would give the United States de facto control over Iraq's natural resources. Because Iraq is a very oil-rich country, and has oil reserves that are estimated to be large enough to satisfy American oil import needs for the next century, the positive long-term economic impact of a victorious war could offset any short-term costs. (Nordhaus, 3-4).

Furthermore, Nordhaus makes it clear that the costs of war are not simply those costs that can be attributed directly to the war, such as increased budget expenditures for military weaponry, but also those costs that the nation incurs as a result of the war. (Nordhaus, 14). Furthermore, Nordhaus points out that many of the direct costs of the war should not be attributed to the war. (Nordhaus, 14). For example, a standing army must be paid, housed, and fed whether or not it is deployed on active duty. "Only additional costs such as the cost of transport, the combat pay, and the replacement cost of the munitions should be counted in the cost of the war." (Nordhaus, 14).

Using the criteria established by Nordhaus, Byczkowski, and others, it becomes increasingly clear that calculating the economic impact of the war in Iraq is impossible at this date. For example, the resolution of the war remains uncertain. While the United States declared victory after a relatively short period of engagement, the number of American and Iraqi casualties continues to climb. Furthermore, although the United States considers itself victorious and has taken steps to ensure self-government for Iraqis, the extent of U.S. control of Iraqi oil reserves and the economic benefits of reconstruction in Iraq for major U.S. firms is still unknown.

However, while long-term economic consequences cannot yet be determined, there are many short-term economic consequences that appear linked to the Iraq war. For example, "as of March 31, 2006, over $251 billion has been allocated by the U.S. Congress for the Iraqi war, as well as the war in Afghanistan." (Wikipedia Contributors). Military spending is a direct economic consquence of war. However, the indirect effects have been just as devestating to the domestic economy. For example, the price of oil is skyrocketing. Although experts debate whether oil prices have risen as a result of the war or as a result of oil companies' taking advantage of the war to drive up profits, the fact is that the cost of oil has long been considered a strong indicator of economic health. In addition, "by some estimates, the total costs of the Iraq War on the U.S. economy could top $2 trillion." (Wikipedia Contributors). The only real question left unresolved is whether an eventual total victory for the United States in Iraq would place the U.S. In the position to recoup some of the economic losses it incurred during the war.

Works Cited

Byczkowski, John. "Economic Impact of Iraq War Uncertain." The Cincinnati Enquirer. 25

Jan. 2003. Gannett Co. Inc. 8 Jun. 2006. http://www.enquirer.com/editions/2003/01/25/biz_warecon25.html.

Nordhaus, William. "The Economic Consequences of a War with Iraq." Econ.yale.edu. 29 Oct. 2002. Yale University. 8 Jun. 2006. http://www.econ.yale.edu/~nordhaus/iraq.pdf#search='economic%20war%20iraq'.

Wikipedia Contributors. "Iraq War." Wikipedia.org. 2006. Wikimedia Foundation, Inc. 8 Jun.

2006 http://en.wikipedia.org/wiki/Iraq_War#Financial_costs.

No Child Left Behind In his foreword to the proposed No Child Left Behind Act (NCLB), President George Bush cited several alarming statistics, which made it clear that some type of education reform was necessary. For example, he stated that:

nearly 70% of inner city fourth graders are unable to read at a basic level on national reading tests. Our high school seniors trail students in Cyprus and South Africa on international math tests. And nearly a third of our college freshmen find they must take a remedial course before they are able to even begin regular college level courses. (Bush).

The goal of the reform was to make sure that states were taking steps to ensure that students were actually receiving an education that would prepare them for participation in the workforce as adults. However, the NCLB has had mixed results, which had led to vigorous debate regarding the efficacy of the program.

It should come as no surprise that both opponents and proponents of the NCLB cite its major provisions when making their arguments. Therefore, it becomes clear that, in order to understand the arguments for and against the NCLB, one must first understand its major provisions. The first provision is that states must:

create an accountability system of assessments, graduation rates, and other indicators. Schools have to make adequate yearly progress (AYP), as determined by the state, by raising the achievement levels of subgroups of students such as African-Americans, Latinos, low-income students, and special education students to a state-determined level of proficiency. All students must be proficient by the 2013-2014 school year. An escalating set of assistance is provided to students who are in schools that repeatedly do not improve. (Wikipedia Contributors).

The second requirement is that all teachers be highly qualified, as defined by an individual state's certification and licensing requirements. (Boehner, 7). The third requirement is that students in certain grades will be subjected to standardized tests in various subjects. (Wikipedia Contributors). The fourth requirement of the NCLB seeks to increase parental involvement, by requiring states "to issue detailed report cards on the status of schools and districts. Under the law, parents must also be informed when their child is being taught by a teacher who does not meet "highly qualified" status." (Wikipedia Contributors). Schools are also required to include and involve parents in the school improvement planning process. The fifth requirement of the NCLB is that "schools are required to use 'scientifically-based research' strategies in the classroom and for professional development of staff." (Wikipedia Contributors). The final requirement is that "schools identified as needing improvement are required to provide students with the opportunity to take advantage of public school choice no later than the beginning of the school year following their identification for school improvement." (Wikipedia Contributors).

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