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Wednesday, May 12, 2004

Economic Prosperity


The other day in Iowa, the president told a crowd of supporters (remember, this president faces crowds of no other sort) that he and Dick Cheney "got a positive platform." He wanted the good people of Dubuque to get out there and remind folks that "this administration has a positive vision, a hopeful vision, an optimistic vision for everybody who lives in this country."

"I got a plan," he said (and continues to say in one form or fashion as he campaigns), "to win the war on terror and to spread peace and freedom throughout the world -- (applause) -- a plan that helps to create jobs and spreads opportunity to every corner of America; a plan that taps into the compassionate spirit of our country. Working together, we'll make this country safer and stronger and better."

You see? His plan to win the war on terror is going to create jobs and spread opportunity throughout the land. You feel better, don't you? You should. This is, after all, a war without end. Prosperity beyond your wildest imagination:

Across America, War Means Jobs

By Jonathan Weisman, Washington Post Staff Writer

FAIRFIELD, Ohio -- Along a quiet strip of gray corrugated metal buildings, across the street from a La-Z-Boy distribution center, Gary Allen and his ever-expanding crew are running one of the most urgent operations of the Iraq (news - web sites) war.

Around the clock, seven days a week, O'Gara Hess & Eisenhardt churns out heavily armored Humvees, designed for the guerrilla combat and roadside bombs bedeviling U.S. troops. Last August, a back-lot warehouse held excess inventory. Now, after a $1.5 million investment, 30 new workers on two shifts produce 500 sets of three-inch-thick bulletproof glass a week. As many as 10,000 sets are on back order.

In November, the company snapped up a 40,000-square-foot building down the road, moved its entire commercial armoring operation there and in three days, with an additional $1.5 million, it doubled the Humvee operation.

As much as it gladdens my heart to see the Humvees armored up (seriously: anything to provide the troops with more protection. this is not a country that should be holding bake sales to outfit soldiers with body armor their government hasn't provided), this is not the way to build a viable and sustainable economic turnaround.

"For us, the economy is great," said Allen, senior vice president and general manager of Armor Holdings Inc.'s Mobile Security Division. "It's a sad situation, but . . . " His voice trailed off, then he added, "I don't think anyone here is thinking about it that way."

In this corner of a critical presidential-election battleground state, the economy is surging with the urgency of a boom. But it wasn't President Bush (news - web sites)'s tax cuts, Federal Reserve (news - web sites) interest rate policies or even a general economic turnaround that did the trick. It was war.

***

There are economic downsides. In inflation-adjusted terms, the war's cost will surpass the United States' $199 billion share of World War I sometime next year. Coming on top of three major tax cuts, that spending will drive the federal budget deficit to more than $400 billion this year. That borrowing will eventually have to be repaid in higher taxes or reduced government services and benefits.

Economists have long argued that war is an inefficient use of government revenue. A dollar spent on a highway not only employs workers but also creates a lasting, broadly shared benefit for the economy. A dollar spent on military equipment is soon lost to enemy attack or the rapid wear of war. If it bought a bomb or bullet, it simply explodes.


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