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War And the Economy: Social programs are under attack

by Adam Price |
February 1, 2003
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Unemployed worker at Honolulu unemployment office. Politicians refuse to extend unemployment benefits.

The Bush administration’s plans for war in Iraq pose a big risk to the economy. While the government claims the cost of the war will be about $50 billion, economist William Nordhaus of Yale University estimates that it could cost as much as $2 trillion, when including the costs of the war, an occupation of Iraq, and higher oil prices. This is more than one and half times as big as the entire federal government spending this year, and would lead to huge cuts in social services and other programs, as well as a massive increase in the federal deficit.

While no one knows the price of a U.S. invasion of Iraq, it is clear that the U.S. government wants to lowball the estimated cost of a war. In 1966, the Pentagon said that its war in Vietnam would be over in a year. Instead, it lasted almost ten more years and ended up costing ten times the government estimate. The cost of the war in Vietnam led to cuts in social programs, which led Dr. Martin Luther King Jr. to condemn the war, saying, “I knew that America would never invest the necessary funds or energies in rehabilitation of its poor so long as adventures like Vietnam continued to draw men and skills and money like some demonic destructive suction tube. So I was increasingly compelled to see the war as an enemy of the poor and to attack it as such.”

Already the ‘war on terrorism’ and ‘homeland defense’ along with Bush’s tax cuts for the rich, have led to cuts in social spending. While the Pentagon’s budget was increased by 10% for the current year, Congress and Bush did not renew the extended federal unemployment benefits which were set to expire on Dec. 28. Without a renewal, almost one million unemployed who have already exhausted their state benefits (which are only paid for six months) would have their benefits cut off. After Dec. 28, another 100,000 unemployed would be cut off each week as their state benefits run out.

The Bush administration is also proposing cuts in the Medicare program. This would increase the number of doctors who refuse to see poor Americans covered by the Medicare program, leaving many without medical care. The number of Americans - mostly working-class, but even some with high incomes - without any health insurance is increasing. Layoffs leave workers without affordable health insurance. Big increases in health insurance premiums are leading businesses to charge their workers more for health insurance or even to drop it altogether. Many businesses are cutting the health benefits that they promised to retirees. There is a growing crisis in our health care system, but with the attention and the monies of the government focused on the war, there is almost no talk, much less any action, on trying to find a solution.

The weak economy has increased the numbers of homeless. New York City shows record numbers of homeless people in shelters, with the number of homeless families doubling over the last three years. And instead of trying to help, the government, as part of the ‘war on terrorism,’ is cracking down on many of the urban poor, sealing off places where homeless people seek shelter. Nonprofit charities are trying to help, but many are being forced to cut back as donations fall off.

Still, it cannot be said that the government is doing nothing about the economy. In December, Bush fired the Secretary of the Treasury, Paul O’Neal and economic advisor Lawrence Lindsay, while the Federal Reserve cut interest rates another one-half of one percent. While the faces may change in the Bush administration, the policy remains the same. But why should more tax cuts for the rich and lower interest rates help the economy now, when they haven’t worked over the last year and a half?

What we really need is a cut in payroll taxes, which amount to more than income taxes for most workers. Instead of harassing the homeless, we need more affordable housing. Don’t cut Medicare - provide a health care program that covers everyone. Instead of unemployment insurance, which only covers 40% of the unemployed, we need a program that guarantees jobs or income for all who need work, an idea supported by Dr. King. And finally, we need to stand up to Bush’s plans to attack Iraq or socialist Korea under the guise of a ‘war on terror.’ Demand an end to the war on poor and working people - at home and abroad!

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