Q: Considering that this Economic Blood Fest was instigated from the Halls & Think Tanks of Ivy League Academia, besides Profit for the authors what is the point of this Intellectual Monday morning quarterbacking? It sure as Hell doesn't matter to all the Dead nor is it going to bring the Instigators to Justice.

Submitted by Clarke Davis from Santa Rosa,Ca.

A: We have to make a decision about when and how to leave, and this kind of analysis--which should have been done before we went to war--is essential if we are to make an intelligent decision. We continue to underfund our veterans, and it is important for Americans to know this. It is a national disgrace. Finally, while we may not be able to prevent these kinds of errors in the future, we can reduce the likelihood of their occuring. It is important to understand where we went wrong. We need to learn from our mistakes.

Answered 04/07/08 11:55:57 by Joseph Stiglitz

Q: Where do we go from here?

Submitted by Bob from Portsmouth Va

A: In our book, we talk about a framework for exiting. Everyone (or almost everyone) believes we should leave, at some time. The question is only when. We try to put forward a way of thinking about that. If we leave now, there may be chaos, or things might actually get better. (Most Iraqis think things will get better.) If we leave in four years time, theremay be chaos, or things might get better. The questions we need to ask are: If there is chaos, how much less chaos will there be in four years time? If things are better when we leave, how much better will they be in four years time than now? But in either case, is the difference worth the extra money that we will have to spend between now and then--at current rates of expenditure, $12 billion a month up front, perhaps $25 billion in total, is it worth the extra $1.2 trillion or so? If not, we should withdraw as soon as possible. We should remember: staying the course is going to cost more money. The armed forces are stretched. To maintain an effective fighting force, and keep the same number of troops in Iraq, will require monthly spending that is greater than the amounts we are now spending.

Answered 04/07/08 11:53:21 by Joseph Stiglitz

Q: Many National Guardsmen sent to Iraq left behind jobs either left vacant or filled by temporary substitutes who are probably less capable than the missing Guardsmen. Is it possible to estimate the economic cost of the withdrawal of the Guardsman from the civilian labor force?

Submitted by Craig Busse from Califon, NJ

A: A standard approach taken by economists is the following: the wage (or more broadly, the total employer's compensatin, which includes benefits, including employer social security contributions) represents the value of their economic contribution (in economics jargon,it measures the value of their marginal product). If a job is left vacant, then this full compensation measures the loss in national output. In our study, we noted this loss, but did not include this number, mainly because we could not get accurate numbers. It is another reason we believe our estimates are conservative.

Answered 04/07/08 11:47:08 by Joseph Stiglitz

Q: How many years will it take for the US to pay down the cost of the war?

Submitted by Mark from Boston, MA

A: (See answer to similar question earlier) We will be passing on this debt to the next generation. At this point, there is no foreseeable date at which we will even begin to repay the debt.

Answered 04/06/08 10:23:50 by Joseph Stiglitz

Q: How many 'contractors' are in Iraq and how many have been killed so far?

Submitted by Maddie from Baltimore, MD

A: On the first question, see the answer to the previous question. More than a thousand contractors have already been killed. This provides a hint of the important role that contractors have been playing. This is the first war that we have gone so far in privatization. We explain the book why privatization makes no sense--it not only costs more, but can undermine the accomplishment of our mission. Contractors focus on minimzing costs; they do not focus on our broader goals. In the beginning of the war, for instance, it was improtant to win the hearts and minds of the Iraqi's. With 60% unemployment, we had to create jobs. The Contractors brought in Nepalese and other workers because they were cheaper. Unemplloyed young men--with guns--is an explosive mixture, and it exploded.

Answered 04/06/08 10:22:44 by Joseph Stiglitz

Q: How many 'contractors' are in Iraq and how many have been killed so far? Also, how much would it have cost if the contractors were replaced with US military personnel?

Submitted by Maddie from Baltimore, MD

A: This is another example of how the US government is trying to keep information away from the American people. There is no complete accoutning of the number of contractors in Iraq. (A full accounting would, of course, have to include contractors in, say, Kuwait servicing trooops in Iraq.And one should probably include those in the U.S. who are helping to administer the contractors in Iraq) There are at least 100,000, probably considerably more, perhaps numbers almost equivalent to the numbers of troops. We estimate that using a contractor roughly doubles the cost.

Answered 04/06/08 10:19:08 by Joseph Stiglitz

Q: Can anyone tell us what is actually happening to the Iraqi oil money.

Submitted by Gary from Tallahassee

A: The Iraqi oil money is, I believe, going to the Iraqi government. Some of it is going to maintain what little security they have. It is not going to repay the U.S. Little of it is going to rebuild the country, where infrastructure remains devastated. Electricity and water are still not back to pre-war levels--with devastating consequences for the people.

Answered 04/06/08 10:15:30 by Joseph Stiglitz

Q: If the importance of oil flowing into the industrial nations is worth the cost of a Three trillion dollar "WAR" investment, the benefit must exceed the investment. In dollar value to an average american, what is the amount gained to each of our citizens. Eliminateing politics and right or wrong arguments, was value achieved for the citizens in the short term, or long term. This is a terrible question when first asked, but I must ask it. Status quo of oil use and consumption is to be tested and changed as supplies dwindle, but the investment dollars of "WAR" in the region has made Oil availablity within reach. This is the reason for the Investment, as callous as it sounds, but has it been a profitable investment for the average american.

Submitted by Randall F. Silkey Sr from Victoria, Texas

A: The relationship between the war and oil is one of the issues we discuss in our book. Some have argued we went to war to ensure a supply of oil. If that was its objective, it failed: it was an investment with a negative return. We could have increased the supply of oil far more easily simply by expanding (and improving) the oil-for-food program in Iraq. Since the war, the price of oil has increased from $25 a barrel to $100 a barrel. Futures markets had expected the price to remain aroudn $25 a barrel for the forseeable future. they foresaw increases in demand from china and elsewhere; but they anticipated increases in supply, mainly from low cost providers in the middle east. the war changed that equation. Even if the war had gone well, in the 21st century, the winner of the war does not get the "spoils" of owning the consequered coutry's resources. It would have been Iraqi oil; and their citizens would have demanded that they get the full value of their oil. Iraqi exports are just now returning to the pre-war level.

Answered 04/06/08 10:13:04 by Joseph Stiglitz

Q: What effect will the financial turbulence have on the phenomenon of wealth concentration? Will the fat-cat Optimates absorb a disproportionate share of the unwinding, or will they manage to dodge the damage? If the latter, whom should the popluares rise up and slay?

Submitted by Patrick from Fountain Hills, AZ

A: Almost everyone, from the top to the bottom, will be affected by the turbulence. The people at the bottom will be particularly hurt--millions of Americans will lose their homes, and with it their life savings. In dollar terms, their losses will be smaller--they have very little wealth compared to those at the top. But in percentage terms, they will lose the most. The government has been bailing out those at the top. To be sure, shareholders in Bear Stearns lost a lot. But they still walked away with more than a billion dollars. And the governmemtn has been left holding considerable risk--without receiving any "insurance premium" in return. Now the Fed has extended its "lender of last resort" facility to investment banks--again without charging them a thing, and without even regulating them adequately. (There is talk of regulating them more in the future, but so far, it is mostly talk.) It is amazing to me that the Bush Administration continues to worry about "moral hazard" in doing something about poor people about to lose their homes, and yet almost ignores moral hazard when it comes to bailing out those at the top. Part of the problem lies in the so-called independent Fed. The Fed has reflected the views of the financial markets. The Fed Governor said, not to worry; if there is a bubble, and it breaks, we can manage it. There was a party, and their friends were enjoying it. He was obviously wrong about their ability to mjanage it. What he didn't say was--if it breaks, taxpayer money would be at risk. It was a heads we win, tails you lose gamble.

Answered 04/06/08 10:08:21 by Joseph Stiglitz

Q: Everyone knows about the Halliburton no bid contracts and how the price of oil per barrel has been escalated by the war in Iraq. Have you estimated the cost to taxpayers for all the "no-bid" costs of the war, not just Haliburton; and how much more Americans have paid for the war in post-invasion gasoline prices?

Submitted by Marc Walls from Oklahoma City, OK

A: We have not estimated how much extra Americans have had to pay because of the sole-sourcing no bid contracts, but it clearly has been substantial. These excessive expenditures are, of course, on top of the fact that even with competitive bidding, contractors are expensive--far more expensive for performing the same task than the government (military), with all of its alleged inefficiency. We estimate that hiring a contractor roughly doubles the cost. One of the aspects of "dishonest" accoutning that we report in the book is, on different accounts, the governmetn pays the death and disability insurance--but even though the premia are high, exlcusioins in the insurance policy for deaths and disability due to hostile action mean that the government picks up the tab for the benefits. Even with competitive bidding, some of the contracts are cost plus. So the contractors just pass on any costs to the government. there is no incentive for efficiency--on the contrary, the more they spend, the more they make. Yet, in spite of these perverse incentives (hardly the market incentives that the Bush administration talks about), the numbmer of auditors overseeing these contracts has been reduced. In short, we know that the use of contractors has cost American citizens plenty; it will take a while--probably a careful audit in the next Administratoin--to find out how much. In our book, we do estimate how much the war has cost America in additoinal spending on oil. Oil prices have increased from around $25 a barrel to more than $100 a barrel; these increases in oil prices get translated, of course, into higher gasoline prices. If only $5 of that increase is attributed to the war, then the annual cost to America is $25 billion. Obviously, if more realistic numbers are used, the costs increase proportinately. (If a third of the increase is attributedf to the war, then the annual cost is $125 billion) But the costs to American consumers are even higher. We only look at the extra spending for imported oil. American oil companies have been doing well--at the expense of American consumers.

Answered 04/06/08 09:59:44 by Joseph Stiglitz

Q: If a Democrat is elected and they begin pulling troops out of Iraq, and we finally have only minimal forces deployed there, how long do you estimate it will take us to recover from the costs of the war? How long will it take to pay off the money we borrowed for it?

Submitted by Sue Britton from Casper, WY

A: To be frank, I am very pessimistic. The problem is that even before the war we had a deficit--in part caused by tax cuts for upper income Americans that we could not afford. We had developed what economists call a structural deficit--even if the economy were to reach full employment, there would still be a deficit. But now, our economy is going into recession. In addition to the structural deficit, we have a cyclical deficit. Our deficit this year is likely to be an all time record. Making matters worse, we also have an infrastructure deficit, and other problems--most notably in our health care system. All of this costs money. The war has created a huge unfunded entitlement--paying disability compensation and health care costs for our returning veterans. Even if we were to leave tomorrow, we would have bills to pay for decades to come. Eight years of President Bush will have increased our national debt by $3 trillion dollars. If interest rates return to their more normal level of, say, 5%, paying interest on this additoinal debt will cost $150 billion a year. In short, even if we repeal the tax cuts for upper income Americans, I see no prospect of our paying off the money we borrowed for it in the foreseeable future. More likely, these are debts we will pass on to future generations.

Answered 04/06/08 09:49:23 by Joseph Stiglitz

Q: It is my understanding that most, if not all, of the appropriations for funding the Iraq War have been "off book"; i.e., they weren't included in the normal DoD budget. Can you provide a comparison for what has been expended through special appropriations and what has been expended through the normal budgetary process?

Submitted by Bo Alawine from Ocean Springs, MS

A: As you say, almost all of the spending has been through emergency appropriations, not subject to the kind of intense scrutiny that ordinary appropriates must undergo. There are two further problems. DoD accounts do not allow us to tell precisely how much of their ordinary expenditures are going towards the war. And their ordinary expenditures have themselves not passed the auditors' scrutiny. there are billions of dollars of spending this is unaccounted for. We know that defense expenditures--beyond the iraq and afghanistan wars--has gone up more than a half trillion dollars cumulatively in the last five years. We know that at least some of this increasaed spending is war related. In our book we estimate that a quarter of it is. We have to pay more, for instance, to recruit soldiers. We have to replace more equipment. Almost surely, our number represents an underestimate.

Answered 04/06/08 09:42:58 by Joseph Stiglitz

Q: We know that military spending in the late 1930's and 1940's helped bring the nation out of the great depression. Why hasn't the current tremendous spending on Iraq had an equivalent effect on our economy? It seems like there's no war-spending bump at all.

Submitted by Thomas Owen from Crescent City

A: Unlike WWI, the Iraq was has had a net negative effect on the economy. This is for several reasons. First, the money that we spend every month goes largely to operational costs (fuel, laundry, cooking, transportation, repairs ) much of which is performed by sub-contractors from the Phillipines, Nepal and other countries. So in effect, the dollars spent do not have any positive return for the US economy. Second, because we have borrowed all the money to fight the war, largely from abroad, we have added to the deficit and to the national debt, which means we have to pay more interest and adds a burden onto the economy. Third, the war has contributed to the increase in oil prices, which of course take money out of the hands of consumers, and lower business margins, and transfer it to the oil producers.

Answered 04/04/08 12:59:08 by Linda Bilmes

Q: who should get the blame for this?

Submitted by jim franck from gleneden beach or

A: There are three major mistakes that have been made. First, the decision to invade Iraq in the first place. The Administration bears the responsibility for that decision. Second is the way we have chosen to pay for the war -- entirely by borrowing the money in "emergency" supplemental approproiations, that permit little oversight, and choosing not to pay by cutting spending, raising taxes, selling war bonds, etc. For this, we are probably all to blame -- the Congress and the Administration has done it together, and we the public have not spoken out sufficiently strongly in protest. Third, there is the manner in which the war has been waged, including the strain on our troops, the use of involuntary extensions such as "stop-loss", the appalling treatment of many of our returning veterans, the failure to provide adequate body armor and MRAP vehicles for troops, the over-reliance on contractors, National Guards and reservists, the scanty Congressional oversight on how the war is being waged. There is plenty of blame to go around for this....

Answered 04/04/08 12:54:18 by Linda Bilmes

Q: How does the United States eventually pay off the debt, and at the same time maintain world leadership with a reasonable standare of living in the future?

Submitted by Dick Golob from Sunnyside, Wa 98944

A: This is a good question. Recently we have not been paying off our debt --simply borrowing more to pay off the interest. This is the equivalent of taking out a second credit card to pay off the minimum payment on the first one, and so forth. People feel that they have enjoyed a "tax cut" in recent years, but really we have just taken out a loan that we've been spending. Personally I believe that if our leaders had levelled with the public at the outset -- and explained that we had a choice of a "tax cut" paid for by borrowing money from China or a lower deficit and no "tax cut" -- I think the outcome would have been different. At this juncture, we will be forced to eventually raise taxes, fees, cut spending, restructure the defense budget and reduce entitlement benefits. Our children will bear much of the burden.

Answered 04/04/08 12:47:31 by Linda Bilmes

Q: Does the 3 trillion include the estimated interest, alone with the declining value of the US Dollar?

Submitted by Denis E Coughlin from Jensen Beach, FL

A: We have estimated the total costs both with and without interest. From a budgetary standpoint, the cost includes interest and reaches $3 trillion. From an economics perspective, the cost does not include interest (because there is an element of double-counting) but it does include the macroeconomic costs. In this method is also totals at least $3 trillion.

Answered 04/03/08 22:39:42 by Linda Bilmes

Q: Are your estimates based on a termination date for the occupation? Also, do your estimates include costs for long term treatment of casualties? Do your estimates include the construction and operation of the bases in Iraq? Are there any allowances for payments to the Iraqi people or government?

Submitted by jimmy cooper from san martin hidalgo, jalisco Mexico

A: If you read the book, you will see we have 2 scenarios in terms of the length and scale of US troop deployments. We include the cost of long-term treatment of casualties, and the costs (to the extent they can be determined) of base construction and operation. We have a chapter devoted to the costs to Iraq and other countries but it is not included in our $3 Trillion estimate.

Answered 04/03/08 22:37:04 by Linda Bilmes

Q: Question: Given that PTSD sometimes takes decades before the veterans admit to themselves they have "issues" with it as the recent past with former Senator Max Cleland waiting more than three decades before he asked the VA for mental health help in dealing with his symptoms of PTSD, unlike him I to waited intil Nov 2002 to admit I had a problem with PTSD, the stressor happened in February 1975, so 27 years later my coping mechanisms finally quit working, the VA could not get me into see a doctor until Jan almost 3 months later and in May after 4 months of interview they finally deteremined after tests and a 3 doctor panel that I was not trying to commit fraud but rather I had a classic case of severe chronic PTSD, they first awarded me a 50% award for PTSD, I even had a DAV service officer tell me I should be happy with 50% and not appeal it, needless to say since I was not capapble of working, I didn't follow his advice and appealed, a year later after review the VARO rated me 100% P&T effective Dec 2003, not from the time I sought treatment in Nov 2002, or even Jan 2003 when I first saw the doctor, the effective date was the day I finally officially filed a compensation claim nearly a year later, the government is doing everything they can to nickle and dime the veterans to death, is there any way to make Congress correct the behavior of the Veterans Administration? Thank you

Submitted by Mike Bailey from Columbia SC

A: The VA places the burden on the veteran to demonstrate that there is a problem -- this is different from many countries, including Britain, Australia, and New Zealand, where the veteran is presumed to be correct. We have argued in the book that the process, the culture, and the philosophy we have in treating veterans needs to be reformed. However in the case of PTSD, part of the work needs to be from veterans like you, and the active VSOs, helping veterans and their families to recognize symptoms and to seek help sooner rather than later.

Answered 04/03/08 22:33:09 by Linda Bilmes

Q: Can you please provide an itemized list of the actual appropriations through 2008 (including supplementals) that have been passed by congress for the Iraq war? The hard (known-known) amount of money spent, and when? It gets reported in the media in drips and drabs, and there is never context, so it's very hard to keep track and put into perspective as "x percent" of the federal budget, or of GDP. Please also say what the US defense budge is, including and excluding the war spending. Is it not true that the War is almost entirely off-budget, for calculating the budget deficit (almost like 'core inflation', it seems, defining away the problem). Thanks.

Submitted by David from Washington, DC

A: you need the buy the book! its all in there.

Answered 04/03/08 22:29:01 by Linda Bilmes

Q: Most economist (at least those whose opinions I have read) do not think that the Iraq war had anything to do with the US financial crisis or the recession it now faces. However, press reports indicate that you think otherwise, that this war triggered these events. Could you please elaborate on your thinking here and what you think others are missing? Thank you.

Submitted by David from Gaithersburg, MD

A: We do not think that the war triggered the economic crisis. What we have pointed out is that the war has weakened the economy, and thereby contributed to the economic slowdown. This is because the war has vastly increased our deficits, it has put upward pressure on oil prices, and it has not stimulated the economy -- because much of the operational spending goes to things like fuel and contractor costs in Iraq that has no benefit in the US. Moreover, now that we are in a recession or close to it, we have much less rom to maneuver because the economy is weak and we have a huge deficit. By contrast, when we went into a recession in 2001, the budget had a huge surplus, which enabled us to soften the effects and to recovwer more quickly.

Answered 04/03/08 22:28:29 by Linda Bilmes