Transcripts

The Price of The Iraq War Continues To Rise

SUSIE GHARIB: No more troop withdrawals from Iraq this summer. That's the recommendation that David Petraeus made to lawmakers today. The commanding general in Iraq wants a 45-day period of consolidation and evaluation after troops involved in the surge complete their withdrawal in July. As Darren Gersh reports, the testimony adds fuel to the debate over the costs and benefits of fighting in Iraq.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The one thing almost everyone in this room would agree on is that the war in Iraq has cost far more than almost anyone thought it would, more than $525 billion so far. And that pales in comparison to the long-term costs of the war: caring for disabled troops; the risk premium for oil; and increased borrowing from abroad to pay for it all. Add it up, and Nobel Prize- winning economist Joseph Stiglitz estimates the war conservatively costs $3 trillion, not much of which, Stiglitz argues, helps the economy.

JOSEPH STIGLITZ, ECONOMIST, COLUMBIA UNIVERSITY: Money spent to hire a Nepalese contractor working in Iraq does not stimulate the economy in the same way that money spent on a hospital in the United States or a road in the United States or a school in the United States would have stimulated the economy.

GERSH: Economists don't doubt there are better ways to spend money than fighting a war, but it is also hard to deny that war spending amounts to what economist Jared Bernstein calls military Keynesianism.

JARED BERNSTEIN, ECONOMIC POLICY INSTITUTE: The equipment that we purchase, the salaries that we pay our armed forces, those have multiplier effects in our economy and have certainly stimulated growth over the short term.

GERSH: The problem critics have with Stiglitz's estimates is he can't resist blaming everything on Iraq, from the erosion of confidence in the dollar to the sub-prime meltdown. That strikes the Center for Strategic and International Studies' Charles Freeman as overreaching. Critics of the war's cost also do not take into account the benefits Freeman says the Bush administration believes it is fighting for in Iraq.

CHARLES FREEMAN, CENTER FOR STRATEGIC & INTERNATIONAL STUDIES: Certainly, the administration would argue quite candidly that, as a result of the Iraq war, we haven't had to fight the war here at home and that has prevented a lot of costs here at home.

GERSH: So far, the financial costs of the war have been paid in a growing economy. But with a recession looking more likely, the economic pain of the conflict may soon be felt in a way it hasn't been over the last five years. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.