Response to Comments – Round Two

Bakho: Interesting points. I agree on the minimum wage. And I also agree that some aspects of the military budget should be cut while others (e.g., bolstering our anti-terrorist quick strike special forces, our intelligence, and our support for veterans) should be increased. It is a question of the right kind of spending, which means setting priorities. On taxes, some of the cuts should be allowed to sunset, but I don’t think we should do that for cuts to lower and middle income groups. And there should be a ceiling on the size of estates that benefit from the lower inheritance tax.

To Henry Cobb. Do you really think the U.N. would take Iraq? And your recipe for Israel really shocks me. Surely you can’t be serious?

CoRev: Supplementals do skirt the budget process, because they come in so late that they do not permit tradeoffs to be made (i.e., cuts to be made in other areas of the budget, including the defense budget) to pay for the war. And they are not all for the war. Lots of extraneous programs are included in them as well, some of it political pork. It also minimizes oversight, since little scrutiny is given to what is in the supplemental request because it comes in so late in the budget process. It may appear transparent, but please look at what is actually in the bills and how little scrutiny or oversight they receive, and then let me know what you think.

K Harris: You make some excellent points. This war will be the second most expensive in history in inflation-adjusted terms by the end of this year. But as a portion of GDP, it is only 1% compared to nearly 40% for World War II, 15% for the Korean War and 10% for Vietnam. Thus, it is not a major burden on the economy. But that does not mean that the government should have no strategy for paying for it. As in past wars, it would have been appropriate at least to cut back some non-essential domestic programs and curb earmarking, and perhaps at the beginning of the war, Americans would have rallied behind that. And the outset of the war on terrorism after 9/11 would have been a great time for a bold energy policy, cuts in non-essential domestic programs, and a moratorium or earmarking to free up funds for recovery at home and the added funds which then were channeled into the military.

Dan: Very thoughtful questions. Unfortunately, as your questions suggest, much of the rhetoric that surround this is very politicized. One reason I decided to write this book is because I have served in both Republican and Democratic administrations, and continue to support candidates on both sides of the aisle. My book examines how wars have been financed in the past to enable the reader to make judgments, based on the successes and failures of the past, whether this war is being paid for in the right way. My own conclusion is that the most successful wartime leaders are the ones who have been most candid with the American people about the cost of the war, and insisted on some sacrifice at home while American troops were sacrificing on the battlefield. If you decide to read the book, I would be grateful to hear whether you think I have responded to your thoughtful concerns.

Coberly: I do not advocate cutting “entitlements” to pay for the war. The hard fact is that entitlement programs are on trajectories that will make them unsustainable over the course of coming decades. Reforms need to be carried out to make them sustainable so that they will be there for the people who will need them, not just this year and next, but for coming generations. But there is a national security element. If left unreformed, these programs will siphon off funds from the rest of the budget – including defense. But even if the defense budget were zero, entitlements would be in need of reform. Or the budget deficit would skyrocket, pushing up interest rates, probably pushing up taxes (including the payroll tax, which is very regressive), and reduce the flexibility in the budget to deal with future national emergencies (e.g., an act of terrorism, another Hurricane Katrina, or a pandemic). And be careful about arguing that politically-inspired constituency projects are paid for by these constituencies themselves. They are not. They are paid for by all citizens for the benefit of a few constituencies. Regarding a tax increase, I would fully support raising taxes on upper income citizens to pay for a war or other national emergency. Indeed, throughout my book I make the point that this was done in the Civil War, World War I and World War II. No reason not to do it if we need to again.

Dan: We have a real difference of opinion on the nature and severity of the threat to this country.

Ken Melvin: You are right that addressing terrorism needs to be done on many fronts: better intelligence, better preparations at home, and better strategy with allies.

Moses: Thank you. I really appreciate your thoughts and your analysis of the book. You are right; I genuinely tried to approach this in a non-partisan way. All I am asking for – as you cogently described it – is a dialogue on an overall, multi-year fiscal strategy that will reset budget priorities in the context of the long war on terrorism while also meeting other national objectives, such as our obligations to our elderly and those who need government support for their health care. Doing this in an ad hoc way will leave us very vulnerable – and without a sensible medium-term approach for meeting any of our priorities.

More responses to comments will be posted tomorrow.