Today was an interesting day. The stock market had started to calm down in the morning, only to start plummeting as news spread on the Internet that the Manhattan federal debt clock ran out of digits. (The kludge they are using to deal with the problem for now is to get rid of the dollar sign.)

What is a major cause of the expansion of the federal debt?

The Iraq War

Zfacts estimates that the war has cost over $580 billion, a number that reflects only budget authorizations for the war. I've read similar numbers elsewhere. For instance, the National Priorities Project sets the number at over $560 billion.

The Bush regime was running deficits before it started the Iraqtastrophe. Under these circumstances, all the money used to impose kleptocracy on Iraq adds to the federal debt. The most immediate problem with the war is that it is adding debt which compromises the financial integrity of the US government.

There are other problems. The borrowing used to finance the war competes with business and individuals in the larger credit market. Large investors and bankers have a larger pool of government owned and guaranteed debt, which hurts liquidity during the best of times. Now that there are problems of confidence between banks, adding to the available amounts of government investment opportunities makes bankers and the rich even less likely to take any risks they can avoid in a falling market.

Additionally, it is useful to look at the war in terms of economic output. A major portion of our nation's economic output is being sent to a dead end oversees. Adding injury to insult, this use of America's treasure and blood is being employed in a way that devastates at least one country's economy, Iraqs, and also hurts the economy of Iraq's trading partners. We are trashing our economy while weakening the global economy.

Don't forget that oil may have fallen somewhat from its peak, but it still is historically high. The Iraq War is the main reason for this, which hurts consumers, cuts corporate profits, and increases America's foreign debt.

Stopping the war won't be sufficient, by itself, to solve all of our nation's economic problems. However, stopping the war is absolutely necessary if we are going to ever go back towards prosperity.

All the rightist blather about "victory" in Iraq always was silly propaganda. Now, we are watching the Iraq war contribute seriously to an enormous economic defeat.