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Sunday, April 13, 2008

Answering Representative Yarmuth

During this weekend's Democratic response, Representative Yarmuth had this to say...

The growing cost to the United States of fighting the war in Iraq "is not only linked to our economic skid, but is a leading cause of it,"

Now, there are several problems with this statement in my opinion. First, while our economy has no doubt softened, I don't believe it is a given that it is in a recession as Yarmuth suggests. Second, the costs of the Iraq war must be put into some context. The war costs roughly 100 billion dollars yearly. That seems to be a lot however let's put that number into context. Our economy, as measured by the GDP, is about 13 trillion dollars. That means the war costs about one third of one percent of our overall economy. While opponents try and paint the war as a major drain on our economy, it really is a fairly small portion.

Second, and most importantly, if anything is to be blamed for our economic woes it is the real estate crisis. That was triggered by the sub prime crisis and that has since spread. As a member of the industry, there is no doubt that the industry is in significant crisis. Real estate prices have dropped by as much as 30% in some places, and foreclosures have nearly doubled, so for. How much effect it will have on the economy as a whole is still unclear, however it is simply factually inaccurate to blame any economic woes we have on anything but the real estate crisis.

Now, unless the war in Iraq caused bankers and brokers to lend foolishly and borrowers to do the same, the link between the war in Iraq and whatever economic woes we have is a fantasy. The war on Iraq is a strain on our military. Any long war is. It has caused instability in the Middle East, and for some time it emboldened our enemies. It may even have some links to the rising oil prices, though those links aren't necessarily that clear. Yet, blaming it for our economic woes is another example of war opponents taking their criticism way too far. Of course, most importantly, victory, and victory alone, will alleviate any and all of the woes, real and imagined, that mentioned.

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