Saturday, January 12, 2013

Tallying Up the Costs of U.S. Military Operations in Iraq and Afghanistan

President Obama has indicated that U.S. active combat operations in Afghanistan will end in 2013, joining the cessation in Iraq.  This is a good time to weigh the costs of the two wars launched by President George W. Bush in Iraq in 2003 and Afghanistan in 2001 with what has been achieved.

The Brookings Institution has published a monthly index of statistics for Iraq and Afghanistan.  Here are the costs in lives, wounded, and money:

Iraq:

U.S. fatalities March 2003 to December 2011:  4487  (hostile 3526, non-hostile 961)
U.S. wounded:  31,000+
U.S. Government Budget Authority (DOD, DOS, VA):  $823.2 billion

Afghanistan:

U.S. fatalities  October 2001 to December 2012:  2160  (hostile 1741, non-hostile 176)
U.S. wounded:  18,109
U.S. Government budget authority (DOD, DOS, VA):  $557.1 billion

VA budget represents annual authority that does not take into account subsequent long-term care.

What are the consequences of U.S. military operations?

Iraq:

The overthrow of Saddam Hussein has replaced Sunni domination  of a unified Iraq with a Shia political majority that is increasingly in conflict with the Sunni minority.  The Kurds, for their part, want an autonomous, preferably independent, homeland of their own.  Over half of the 1.4 million Christians residing in Iraq in 2003 are estimated to have left the country.  Iraq has not evolved into a stable, peaceful, multicultural democratic country.

Afghanistan:

The overthrow of the Taliban has resulted in an uncertain future in which Afghanistan President Hamid Kazai and U.S. President Barack Obama have agreed that the Afghan government should enter into peace talks with the Taliban.  Some analysts fear that the Taliban will be able to overthrow the Karzai government and resume power once the remaining U.S. combat forces are withdrawn in 2013.

Once again, Thoughtful Ideas urges all those in the U.S. government along with those in the broader policy community concerned with foreign policy and the decision to go to war in ethnically divided countries should, indeed must, read Politics in Plural Societies:  A Theory of Democratic Instability.  The notion that the U.S. government can build stable democracies in the short span of a decade in a region beset with centuries of tribal, ethnic, and religious conflict epitomizes the word "chutzpah."

Monday, January 7, 2013

Supply Side Economics--Then and Now

The original focus of Supple Side Economics was on bringing down the top marginal tax rate of income tax to improve incentives to work, save, and invest.

Now the focus is on bringing down every rate but the top one.  Even Grover Norquist of Americans for Tax Reform praises Republicans for their willingness to agree to a rise in the Top Marginal Rate from 35% to 39.6% (actually higher due to phaseouts of personal exemptions and itemized deductions) because the fiscal cliff deal made permanent all other rates but the top one.

Never mind how much higher the now permanent rates are than the the two rates of 15% and 28% of President Reagan, and even the addition of the 31% rate of President George H.W. Bush.

Where have you gone Joe DiMaggio?

Sunday, January 6, 2013

Tax Reform, R.I.P.

The Simpson-Bowles Commission, which recommended lower personal income tax rates coupled with broadening of the tax base (reducing deductions), is dead and buried.

The reason is that President Obama will not accept any proposals for tax reform that lower the top rate from the new high of 39.6% that he worked so hard to achieve.  Obama has now thoroughly dismantled President Reagan's Tax Reform Act of 1986, which set the top personal rate at 28%.  (It should be remembered that President George H.W. Bush laid the foundation for its dismantling when he signed into law a higher top rate of 31%.)

Perhaps the president and Congress will do something with the corporate income tax.  Who knows?  But the comprehensive tax reform to simplify the tax code, which has been so much discussed in the prattlesphere, is nothing more than idle chatter during Obama's second term.  Indeed, expect Congress and the president to further complicate the code with any new tax legislation.

Wednesday, January 2, 2013

Liberal Think Tanks 1, Conservative Think Tanks 0

The Tax Bill, enacted into law on January 1, 2013, permanently enshrines higher tax rates on hard-working successful individuals.  The higher rates affect the top 1% of households, the so-called millionaires and billionaires whose taxable income exceeds $400,000 for individuals and $450,000 for families, who will pay higher rates on labor income, dividends, and capital gains.

Moreover, the endless prattling about the need and desire for comprehensive tax reform--a broader base in exchange for lower rates--will not be in the cards until 2017 at the earliest.  President Obama will not agree to any deal that lowers the new higher rates he achieved.

What's next in the battle of ideas between liberal and conservative think tanks?  The biggest issue is the scope and size of the public sector, whether it remains at, or even increases beyond, its current high level of 24-25% of GDP, or reducing it back to its historical level of 20%.  Ditto on curtailing annual budget deficits and stabilizing the public debt.

Will conservatives score the equalizer or fall further behind? From today's vantage point, this could be a long year for conservative thinkers, especially with a large split in the Republican ranks.