Bush and Obama, Wars and Economy: Power and People in an Age of Limits and Loss 571arguably the most dangerous country in the world today. Yet it receives billions
of dollars in U.S. aid as well as high-tech weapons and political support.
1929, The Sequel? Tax Cuts, Wars, and Housing Bubbles
As if the wars in the Middle East were not causing enough distress, the U.S.
faced an economic crisis in 2008 that rivaled the Great Depression for the
initial shocks it imposed on the economy. There were several factors leading
to the crash of 2008, but a few stand out: a round of tax cuts that benefitted
the rich and raised public debt during the Bush years; the ongoing and costly
wars in Iraq and Afghanistan along with the costs of “homeland security”; and
a housing bubble that popped with great ferocity. While it fortunately did not
get as deep or last as long, the crash of 2008 was catastrophic to tens of mil-
lions of Americans. It has been a major factor in increasing the federal defi-
cit to over $17 trillion, or $55,000 per person, thus reducing public services,
and it has, even more than in the Reagan years, redistributed wealth upwards
and we now have the greatest gaps in wealth distribution since the Gilded
Age. A good part of this maldistribution of wealth resulted from the wars in
the Middle East. When Bush invaded Afghanistan and Iraq, his financial offi-
cials assured Americans the conflict would be brief and relatively inexpensive,
a few hundred billion dollars or so. Now, over a decade in, the dollar amounts
are much higher. The Nobel Prize-winning economist Joseph Stiglitz and his
co-author Linda Bilmes estimate that the costs of Afghanistan and Iraq are
approaching the $3 trillion area. When one figures in the domestic costs
associated with the so-called global war on terror like airport security and
more surveillance, the numbers rise about $10 trillion.
Worse, President George Bush came to office with a commitment to cut
taxes that would eventually make Ronald Reagan seem like a left-liberal.
Bush got Congress to pass 2 major tax cuts, in 2001 and 2003, and when they
expired his successor Barack Obama extended them and made 82 percent of
the cuts permanent. Their impact has been forceful and long-lasting.
Projected debts for 2013-2015 are about $1 trillion a year; of that amount,
about half, or $500,000 billion, is due to revenues not collected due to the
Bush-Obama tax cuts. The situation is likely to worsen, as estimates for 2018-
2019 suggest that the cost of the tax cuts will rise to $700,000 billion yearly.
The cuts not only made the deficit balloon, but were an element of class