What al-Qaeda Has to Do With Debt Downgrade
By Gary Weiss
BOSTON — With every day of market decline and economic pain, we need to face a terribly unpalatable question, and it’s not whether Standard & Poor’s is credible or if the downgrades will send the economy into a tailspin (or, perhaps, if we are already in a tailspin).
Sure, the downgrade of U.S. long-term debt by Standard & Poor’s appears to be a cynical ploy by this tarnished credit-rating agency, perhaps trying to burnish its reputation at a time when parent McGraw-Hill is in play. But there’s no question that the content of its downgrade report is correct, even if its initial arithmetic was off. The fact is that our political processes are a mess. We don’t deserve a top credit rating.
But there is, I think, a deeper reason for the misery we’re experiencing. I’ll put it in the form of a question: Is al-Qaeda winning the economic struggle?
I know, bin Laden’s dead, al-Qaeda is on the run, etc. etc. And I don’t mean that al-Qaeda has won militarily, though even that is debatable — can anyone say with confidence what will happen to Afghanistan and, of course, Iraq after a U.S. withdrawal? But I think that a strong case can be made that al-Qaeda has gone a long way toward achieving one of its primary war aims, which was to sabotage the U.S. economy. Bin Laden may be fish food, but his strategy seems to have worked. We are being bled white, thanks in large part by the war that he forced us to fight — and we have our representatives in Washington, and their ideologically driven refusal to increase taxes, to blame for this mess.
First, let’s go back to the bin Laden “we’ll bleed you” tape. This is not an urban legend, but was widely publicized at the time. In October 2004, al-Qaeda distributed a bin Laden video that contained a departure from his usual invective. Instead of inveighing against U.S. Imperialists, Jews and so on, he spent nearly 20 minutes talking not like a terrorist chieftain in a cave but the former corporate executive that he used to be, analyzing with satisfaction an objective that al-Qaeda was clearly achieving.
For every dollar al-Qaeda spent, he said, the U.S. was coughing up $1 million in war spending and economic misery. “As for the size of the economic deficit, it has reached record astronomical numbers” — over $1 trillion, bin Laden said. Actually bin Laden’s math was off — the deficit in 2004 was just over $400 billion, but his general point was correct. The deficit had reached astronomical numbers, and much of that was because of the war that he started and Congress’ stubborn refusal to pay for it by asking for sacrifice from the nation’s fat cats.
We had to fight the war in Afghanistan, but we didn’t have to mismanage the way it was financed.
Since October 2001, the war in Afghanistan has cost more than $443 billion. This year, taxpayers will pour another $118 billion into that quagmire, which is continuing to sap far too many U.S. lives, and with far too little assistance from our NATO allies. Factoring in the cost of the unnecessary war in Iraq, and the price tag of these two wars, paid for by the federal equivalent of a line of credit, has exceeded $1 trillion since 2001.
It was easy for bin Laden to ruin our economy. All he had to do was to exploit the natural tendency of the Bush administration to be incompetent. His primary Fifth Columnists are red-state congressional representatives, rock-ribbed Republicans who believe that you can fight two wars without paying for them.
Rather than raise taxes on the rich and cut loopholes to finance the war, the Bush administration let its 2001 tax cuts remain unchanged. The total cost of the tax cuts roughly approximates the cost of the Iraq and Afghanistan wars, and by some estimates is even higher — as much as $1.3 trillion.
If that estimate is correct, then simply repealing those tax cuts would have paid for the Iraq and Afghanistan wars, and we might even have had a few billion left over.
The war to destroy the economy has continued, with impressive results. Now there’s talk of cutting long-established social programs, the so-called “entitlements,” because President Obama acquiesced to a deficit-reduction program without revenue increases — and because he refused to invoke the 14th Amendment, which holds that the national debt is not to be questioned.
The result was a deal to cut spending in the middle of a looming recession and two wars. It’s nothing short of crazy. Nobody could have done a better job of mismanaging the economy — not even bin Laden himself if he had been the leader of the Congressional Tea Party Caucus, holding America hostage on behalf of an extremist ideology. Sen. John Kerry has correctly described the S&P downgrade as a product of the Tea Party movement and its allies in Congress. Do you really think that S&P would have piled on with its downgrade if Washington hadn’t gone haywire? I have a lot of respect for S&P’s integrity — I worked for another McGraw Hill subsidiary for 18 years — but I doubt it very much.
One can question the appropriateness of a credit-rating agency — any credit-rating agency — having the gall to take an action so disruptive to the markets, when one considers their squalid role in the subprime scandals. But there is no question that the U.S. government deserved the downgrade. Our legislative branch just isn’t working, that affects the creditworthiness of the nation, much as private companies run with weak corporate governance would be hard-pressed to win an AAA rating.
The events of the past few weeks have demonstrated what we’ve known for decades: that you don’t negotiate with terrorists, whether they are al-Qaeda thugs or extremist Congressmen who utilized the phony, artificial, unconstitutional “debt limit” to force their ideological agenda on an unwilling American people.
It’s sad, but true: The terrorists are winning.