$806 Billion Spent for Hundreds of Thousands to Be Killed and Wounded: The Staggering, True Costs of the Iraq War

The war was intended to show the extent of America’s power. It succeeded only in showing its limits.

December 14, 2011  |  

 

 

 

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The United States is withdrawing the last of its troops from Iraq this month, which makes now an appropriate time to begin weighing the costs and benefits to U.S. national security from our intervention there.

On May 1, 2003, President George W. Bush stood aboard the deck of the aircraft carrier USS Abraham Lincoln and declared to the country and to the world that “Major combat operations in Iraq have ended. In the battle of Iraq, the United States and our allies have prevailed.”

As Americans would quickly find out, President Bush’s declaration of victory was severely premature. Iraq would soon be in the throes of a violent insurgency and, eventually, a full-blown sectarian civil war.

More than eight years after that speech, as President Barack Obama prepares to keep his promise to end the war, Iraq has made progress but still struggles with insecurity and deep political discord. Though the level of violence has remained down from its 2006–2007 peak—when dozens of bodies could be found on Baghdad’s streets every morning—Iraq still endures a level of violence that in any other country would be considered a crisis. Still, the end of former Iraq President Saddam Hussein’s brutal regime represents a considerable global good, and a nascent democratic Iraqi republic partnered with the United States could potentially yield benefits in the future.

But when weighing those possible benefits against the costs of the Iraq intervention, there is simply no conceivable calculus by which Operation Iraqi Freedom can be judged to have been a successful or worthwhile policy. The war was intended to show the extent of America’s power. It succeeded only in showing its limits.

The tables and charts below tell the tale. We have grouped these costs into three categories:

• The human costs, dealing with American and Iraqi casualties
• The financial costs, dealing with the expense of the war and of the continued care for its veterans
• The strategic costs, dealing with the impact of the Iraq intervention on U.S. power and influence in the Middle East and on the global stage

Before turning to those tables and charts, however, we would like to make two additional points.

First, it is critical to remember the shifting justifications for the U.S. intervention in Iraq. The Iraq invasion was sold to the American public on the basis of Saddam Hussein’s supposed possession of weapons of mass destruction and his alleged relationship with Al Qaeda. When both claims turned out to be false, the Bush administration justified the intervention on the idea that a democratic Iraq would be an ally in the “war on terror” and an inspiration for democratic reform in the Middle East. These arguments remain, at best, highly questionable.

Second, the authors would like to make clear that this analysis of the costs of the Iraq war in no way diminishes the sacrifice, courage, and honor displayed by the U.S. military in Iraq. Americans troops have served and died in Iraq at the behest of the American people and two of their commanders-in-chief. This is why it is important to draw the correct lessons from our nation’s invasion of Iraq. In order to do that, its costs must be examined honestly and rigorously.

Human costs

• Total deaths: Between 110,663 and 119,380
• Coalition deaths: 4,803
• U.S. deaths: 4,484
• U.S. wounded: 32,200
• U.S. deaths as a percentage of coalition deaths: 93.37 percent
• Iraqi Security Force, or ISF, deaths: At least 10,125
• Total coalition and ISF deaths: At least 14,926
• Iraqi civilian deaths: Between 103,674 and 113,265
• Non-Iraqi contractor deaths: At least 463
• Internally displaced persons: 1.24 million
• Refugees: More than 1.6 million

Financial costs

• Cost of Operation Iraqi Freedom: $806 billion
• Projected total cost of veterans’ health care and disability: $422 billion to $717 billion

Strategic costs

 

The foregoing costs could conceivably be justified if the Iraq intervention had improved the United States’ strategic position in the Middle East. But this is clearly not the case. The Iraq war has strengthened anti-U.S. elements and made the position of the United States and its allies more precarious.

Empowered Iran in Iraq and region. The Islamic Republic of Iran is the primary strategic beneficiary of the U.S.-led intervention in Iraq. The end of Saddam Hussein’s regime removed Iran’s most-hated enemy (with whom it fought a hugely destructive war in the 1980s) and removed the most significant check on Iran’s regional hegemonic aspirations. Many of Iraq’s key Iraqi Shia Islamist and Kurdish leaders enjoy close ties to Iran, facilitating considerable influence for Iran in the new Iraq.

Created terrorist training ground. According to the U.K. Maplecroft research group’s most recent index, Iraq is the third-most vulnerable country in the world to terrorism. The years of U.S. occupation in Iraq created not only a rallying call for violent Islamic extremists but also an environment for them to develop, test, and perfect various tactics and techniques. These tactics and techniques are now shared, both in person and via the Internet, with extremists all over the region and the world, including those fighting U.S. troops in Afghanistan.

Loss of international standing. While abuses are perhaps inevitable in any military occupation, the images and stories broadcast from Iraq into the region and around the world have done lasting damage to the United States’ reputation as a supporter of international order and human rights. Gen. David Petraeus has said that the damage done to the United States’ image by Abu Ghraib is permanent, calling it a “nonbiodegradable” event.

Diverted resources and attention from Afghanistan. Rather than stay and finish the job in Afghanistan as promised, the Bush administration turned its focus to Iraq beginning in 2002, in preparation for the 2003 invasion. Special Forces specializing in regional languages were diverted from Afghanistan to Iraq, and Predator drones were sent to support the war in Iraq instead of the hunt for Al Qaeda in Afghanistan and Pakistan.

Stifled democracy reform. While the Arab Awakening of 2011 is a potentially positive development, there’s no evidence that the Iraq war contributed to this in any positive way. A 2010 RAND study concluded that, rather than becoming a beacon of democracy, the Iraq war hobbled the cause of political reform in the Middle East. The report stated that “Iraq’s instability has become a convenient scarecrow neighboring regimes can use to delay political reform by asserting that democratization inevitably leads to insecurity.” Rather than supporting democratic forces in neighboring Syria, Iraqi Prime Minister Nouri al-Maliki has repeatedly voiced support for Syrian dictator Bashar al-Assad.

Fueled sectarianism in region. The invasion of Iraq replaced a prominent Sunni Arab State with one largely controlled by Iraq’s Arab Shia majority. While the end of the oppression of Iraq’s Shia majority is a positive thing, this shift has exacerbated regional tensions between Shia and Sunni, including in Saudi Arabia, Yemen, Lebanon, and Bahrain (where the U.S. Fifth Fleet is based). Lingering disputes in Iraq between Sunni and Shia Arabs, Kurds, and Turkmen also continue to invite exploitation by both state and non-state actors.

More detailed costs

Veterans

• Total U.S. service members who have served in Iraq or Afghanistan: More than 2 million
• Total Iraq/Afghanistan veterans eligible for VA health care: 1,250,663
• Total Iraq/Afghanistan veterans who have used VA health care since FY 2002: 625,384 (50 percent of eligible veterans)
• Total Iraq/Afghanistan veterans with PTSD: At least 168,854 (27 percent of those veterans who have used VA health care; does not include Vet Center or non-VA health care data)
• Suicide rate of Iraq/Afghanistan veterans using VA health care in FY 2008: 38 suicides per 100,000 veterans
  • National suicide rate, 2007: 11.26 per 100,000 Americans

Iraq reconstruction (as of September 30, 2011)

• Total funding: $182.27 billion
• Iraqi government funds (including Coalition Provisional Authority spending): $107.41 billion
• International funds: $13.03 billion
• U.S. funds (2003-2011): $61.83 billion
  • Total U.S. unexpended obligations: $1.66 billion
  
  
  

 

Bail-out Bombshell: Fed "Emergency" Bank Rescue Totaled $29 Trillion Over Three Years

While the 99% suffered hardship, a new study shows that the Fed propped up buddies in the banking industry and a vast shadow banking system far beyond what anyone has guessed.

December 15, 2011  |  

Speculation about the the Fed’s actions during the financial crisis has made headlines on and off again over the last several years.  The latest drama occurred on November 27 when Bloomberg published an article, “Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress," which gives an account of the news agency’s struggle to bring to light the details of the Fed’s emergency programs. Bloomberg throws out some very large numbers, revealing that as of March 2009, the Fed lent, spent, or committed $7.77 trillion worth of aid to the financial system and that banks used the low interest rates charged on these loans to make an estimated $13 billion in income. 

On December 6, the Fed struck back, issuing a four page unsigned memo intended to correct recent “egregious errors and mistakes” found in various reports of its emergency lending facilities.  The Fed argues that the “total credit outstanding under liquidity programs was never more than about $1.5 trillion.”  While Bloomberg wasn’t mentioned explicitly in the Fed memo, it was fairly clear to whom the response was directed.  The following day Bloomberg defended its reporting, and the Wall Street Journal’s David Wessel came to the Fed’s defense, characterizing Bloomberg’s methodology as a “great story,” but ultimately not “true.”

All this may sound like controversy, but it’s little more than a tempest in a teacup.

Here’s the hurricane: In reality, no less than $29.616 trillion is the total emergency assistance provided by the Fed to foreign and domestic entities during the Global Financial Crisis. Let’s repeat that: $29 trillion. This astounding number is over twice U.S. gross domestic product, the nominal value of all goods and services produced for the year 2010.  This is the total of the bailout as calculated by Nicola Matthews and myself as part of the Ford Foundation project, A Research And Policy Dialogue Project On Improving Governance Of The Government Safety Net In Financial Crisis.  We will be presenting the results of our analysis in a series of papers published by the Levy Economics Institute, the first of which, “29,000,000,000,000: A Detailed Look at the Fed’s Bailout by Funding Facility and Recipient,” is already available here.

The results we have calculated are presented below, and it is important to note that the totals are cumulative and in billions of U.S. dollars. (The numbers in parentheses indicate amounts still outstanding as of November 10, 2011).

Facility	Total	Percent of Total
Term Auction Facility	$3,818.41	12.89%
Central Bank Liquidity Swaps	10,057.4 (1.96)	33.96
Single Tranche Open Market Operations	855	2.89
Term Securities Lending Facility and Term Options Program	2,005.7	6.77
Bear Stearns Bridge Loan	12.9	0.04
Maiden Lane I	28.82 (12.98)	0.10
Primary Dealer Credit Facility	8,950.99	30.22
Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility	217.45	0.73
Commercial Paper Funding Facility	737.07	2.49
Term Asset-Backed Securities Loan Facility	71.09 (10.57)	0.24
Agency Mortgage-Backed Security Purchase Program	1,850.14 (849.26)	6.25
AIG Revolving Credit Facility	140.316	0.47
AIG Securities Borrowing Facility	802.316	2.71
Maiden Lane II	19.5 (9.33)	0.07
Maiden Lane III	24.3 (18.15)	0.08
AIA/ ALICO (AIG)	25	0.08
Totals	$29,616.4	100.0%

These are the totals of Fed lending and asset purchases actually undertaken since the bail-out began. There is no double-counting. And we do not include any credit facilities created by the Fed unless they were actually used. These figures accurately reflect the cumulative totals over the approximately three years actually used by the Fed to prop-up domestic and international banks, shadow banks, central banks, and even some non-financial institutions. Banks in the Shadows The programs above constitute the crisis prevention machinery rolled out by the Fed to combat the worst financial panic since 1929. All the programs above were designed and implemented to target domestic financial and nonfinancial corporations or foreign central banks or markets, or both. Only one of the facilities, the Term Auction Facility, can be viewed as being consistent with the Fed’s mandate to protect the commercial banking system from systemic failure. The rest are the result of the increasing relevance of the “shadow banking” to our economy—and of the Fed’s attempt to rescue the shadow banking sector. Shadow banks are highly leveraged financial institutions that perform functions historically relegated to the commercial banking system. It is important to note that these financial concerns do not have access to the conventional means of Fed support. Nor were they ever really regulated or supervised by the Fed. They engaged in extremely risky behavior that in large part led to the global financial crisis. And when it hit, the Fed spent and lent $29 trillion, much of it devoted to rescuing the shadow banking system. Thus, we see a host of unconventional programs designed to aid these institutions rather than the Fed’s traditional patrons. The information used to calculate the totals above is freely available (thanks in large part to the valiant efforts of a group of lawmakers led by Senator Bernie Sanders) as the result of an amendment inserted into the Dodd Frank bill. Moreover, this information has been freely available since December 10, 2010 on the Fed’s website. So why didn’t someone else already put the data together in this way? The Fed's Secrets Obviously, $29 trillion is much bigger than the previous estimates of $7.77 trillion (Bloomberg) or $1.5 trillion (the Fed and the Wall Street Journal). An in-depth account of each of the facilities above is a rather lengthy process as the Levy working paper attests. The main difference in our analysis is the variables we identify as essential in understanding the Fed’s response. In our paper we report three measures that we view as critical to capturing the size and magnitude of the bailout. Each of the three measures deals exclusively with programs put into place by the Fed that transcend its conventional "lender of last resort" (LOLR) function. That is, we only include the emergency facilities the Fed created. We agree with the Fed that only facilities which were actually made operational should be considered in any account of the Fed’s actions. But we take the side of Bloomberg regarding the general lack of transparency by the Fed—the Fed fought tooth and nail to keep the details of its programs secret. At any given moment inspection of the amount owed to the Fed resulting from nonconventional lender of last resort actions provides a reasonable account of what the Fed was doing in the period leading up to that time. However, looking at this number over time and in the context of the weekly amount lent provides insight into how the Fed’s efforts evolved over the run of the crisis. These two approaches to measurement (a “stock” or outstanding balance and a “flow” or cumulated amount spent and lent weekly) only provide us with details regarding the scope of the Fed’s bailout. To get a clear picture we need some account of the magnitude. We believe that this is captured by looking at the cumulative totals of all programs.

Deniers-in-Chief: How the Most Powerful Leaders in the World Just Guaranteed Us a Climate Disaster

The Durban deal -- if left unchanged -- guarantees that we will fail to avoid catastrophic and potentially irreversible climate change.

December 15, 2011  |  

 

    

A different and more dangerous breed of climate denier commanded the stage at the recently concluded international negotiations in Durban, South Africa. These were not the usual cranks blathering fossil-fuel-industry talking points about how the science is all rubbish aimed at fostering a liberty-crushing world government. No, this breed is even more frightening, precisely because its members are not wacko outsiders. Rather, they are Serious People who actually run governments, or at least negotiate on behalf of those who do. They are lawyers, diplomats and government ministers, and they would be very surprised to hear themselves described as climate deniers.

After all, men such as Todd Stern and Jonathan Pershing, the top two US negotiators in Durban, and Xie Zhenhua, who headed China's delegation, understand the basics of climate science well enough. They know that burning fossil fuels, leveling forests and other types of human activity are dangerously overheating the planet. They know that far-reaching action must be taken if their countries and humanity as a whole are to escape encroaching disaster. They even know--for they explicitly endorsed it at the last round of major climate negotiations in Copenhagen two years ago--that 2 degrees Celsius is the absolute maximum temperature rise that can be allowed if there is to be any chance of avoiding catastrophic and potentially irreversible climate change.

Yet these negotiators just made a deal in Durban that has zero chance of meeting the 2C target. In fact, the Durban deal--if left unchanged--guarantees that we will fail to reach that goal. Given that scientists are warning that the planet is already committed to a "dangerous" amount of climate change, and that crossing the 2C target will bring "extremely dangerous" climate change, what else can the Durban agreement be called but a de facto denial of climate science?

Because the decisions these negotiators--and their bosses in Washington, Beijing and other world capitals--made in Durban carry such immense consequences, and because they reflect the will of the most powerful governments on earth, the negotiators have earned themselves the title Climate Deniers in Chief. Knowingly or not, they have handed down a death sentence, especially to the billions of young people around the world who were already fated to spend the rest of their lives coping with the hottest, most volatile climate our civilization has ever experienced.

For the sake of these young people, for the sake of humanity and the countless species with whom we share this planet, the Durban agreement cannot stand. It must be rejected by citizens and superseded by the actions of state and local governments and visionary entrepreneurs throughout the world, where encouraging progress is being made, usually outside mainstream media's attention span. Beyond that, the Durban agreement must be radically strengthened through follow-up negotiations in the near future--meaning within months, not years.

Indeed, waiting years to require action is the fundamental failure of the Durban agreement: it delays obligatory cuts in greenhouse gas emissions until 2020. Absurdly, it delays even signing an agreement about such cuts until 2015. It also says nothing about how large the cuts should be--no small omission, considering that global emissions increased by a record amount in 2010, putting the planet on a trajectory toward a hellish 6C temperature rise by 2100. Yet timing remains the key poison pill. Allowing business as usual until 2020 will make it economically prohibitive, if not physically impossible, to keep temperature rise to 2C, the International Energy Agency recently warned. Likewise, leading scientists have been saying since before Copenhagen that emissions must start declining no later than 2015 if there is to be much chance of hitting the 2C target. And yes, five years of delay makes a critical difference. The inertia of the climate system--including the fact that carbon dioxide remains in the atmosphere for centuries--means that the earth is already locked in to 1.4 degrees of temperature rise. With temperatures rising by approximately 0.2C per decade, there is simply no room for delay if we wish to preserve a planet similar to the one in which our civilization has developed over the past 10,000 years.

While the deniers who crafted the Durban deal are a different breed from the conspiracy-mongers beloved by Fox News, they are by no means new. Ever since the first major global negotiations on climate change, held at the United Nations Earth Summit in 1992, politicians have repeatedly disregarded what science says in favor of what political reality supposedly allows, and many journalists and even some environmentalists have joined in the deception. Thus USA Today and NPR have hailed the Durban agreement as a "landmark" breakthrough, on the grounds that it commits, for the first time, both developed countries and emerging economies to reduce emissions. The Durban deal also extends the emission reductions pledges made by the European Union under the Kyoto Protocol. These two measures indeed required bruising, all-night negotiations, but they will deliver meaningful climate progress only if additional negotiations force the big polluters--particularly the two climate superpowers, the United States and China--to start cutting emissions posthaste. To applaud such an insufficient outcome is to confuse how politically difficult it is to reach a given agreement with how scientifically valid it is--the essence of the form of denial practiced by the Climate Deniers in Chief.

The disaster in Durban makes it clearer than ever that politicians will not save us from the fast-approaching train wreck of irreversible climate change. Salvation must come instead from the bottom up: from extending the victories citizen activism has already won, including the defeat of the Keystone XL tar sands pipeline and the de facto moratorium on new coal-fired power plants in the United States. If people of good will want to halt this train before it's too late, we can't leave it to the engineers. More and more of us will have to invade the engineer's compartment, take over the controls of the train ourselves and steer a path back to life.

The 20 Worst Wall Street Banks Funding Our Filthiest Polluters

A new study identifies the top 20 "climate killer" banks by the amount of financial support they give the coal industry.

December 13, 2011  |  

 

 

Think "climate change" and the companies that come to mind are oil giants like Exxon Mobil or BP - not JP Morgan or Bank of America.

But a new study by Urgewald, a German environmental organization, establishes a strong link between large multinational banks and the coal industry, one of the biggest contributors to climate change.

The study (.pdf), "Bankrolling Climate Change," identifies the top 20 "climate killer" banks by the amount of financial support they give the coal industry. Number one is JP Morgan Chase, followed by Citi and Bank of America. That's despite lofty rhetoric from these companies about their work to address climate change.

To learn more about the banks' role in climate change, I spoke with Heffa Schuecking, the director of Urgewald and the principal author of the new study. She recently returned from a week at the U.N. climate talks in Durban, South Africa.

What was the goal of embarking on this study?

Increasingly over the past few years, banks have begun to do a lot of climate speak. I'm from Germany, and Deutsche Bank calls itself "climate ambassador." Many U.S. companies also talk about how they are going carbon neutral in their own operations and how they want to help the world transition to a low-carbon economy. So we thought we'd take a real look into the portfolios of the banks to see if their words and their deeds matched up to each other.

The other part of it is that in 2010 we had the highest CO2 emissions since the beginning of industrialization. And there's a question of who is financing these emissions? Who is paying for the plants that are causing these emissions?

How important are banks in getting a coal plant built or a coal mine up and running?

Building a 600-megawatt coal-fired power plant - a typical size - is going to cost over $2 billion. That's not money that utilities usually have just lying around in the corner. Bank financing pays an important role, either through direct lending or banks organizing capital for utilities to pursue these projects. The two most important roles of banks are as providers of corporate loans for the coal industry and as providers of investment banking services, meaning helping the company to sell shares or bonds. In terms of our calculations of the amounts of money in the "climate killer bank" rankings, we didn't differentiate between these roles. We figured it's secondary whether a bank directly gives its own money or plays an organizing role: This is support the banks give to the coal industry.

What sort of sums of money are we talking about here?

We found $308 billion in coal financing since 2005, the year the Kyoto Protocol came into force. That includes our analysis of the 40 largest utilities operating coal-fired power plants and the 30 largest companies doing coal mining, which amounts to roughly half of the industry. We also found that since 2005, the annual amount of financing provided by banks to the coal industry has doubled. That's really worrying.

You found that the three biggest offenders are JP Morgan, Citi and Bank of America. What sort of activities are these and other banks specifically financing?

One of the worst companies in the mining sector is Coal India. It is the largest coal mining company in the world in terms of production, and almost every problem connected with the industry you find in this company. That includes use of child laborers (which is against the law in India) and huge environmental problems, including underground coal fires in a heavily populated area. People are constantly confronted with carbon monoxide and huge volumes of toxic fumes.

At the same time, you have Bank of America, Citi, Morgan Stanley and Deutsche Bank who organized an IPO for Coal India. They helped craft the prospectus for the IPO, which in 500 pages doesn't mention the word "environment" or "climate change."

What sort of rhetoric are we hearing from these banks about the environment?

Well, JP Morgan claims they are helping the world transition to a low-carbon economy. Citi calls itself on its website the most innovative bank in climate change. Bank of America calls global climate change the most formidable challenge we are facing.

Do you have proposals for how you want the banks to change their behavior?

Well, first, if you look at the overall picture, even the World Bank says that if all the new coal-fired power plants in the pipeline are built over the next 25 years, then we're going to emit more CO2 than everything that has been emitted up till now since the beginning of industrialization. It's insane. We have to quit coal. It's much more difficult to quit oil because that involves transforming the transport system - we're going to need longer for that. But substituting coal-fired power plants is a much easier thing.

As for banks, they need to start managing their portfolios and setting emissions reduction targets for their portfolios. In discussing the study with banks in Germany, for example, we found bankers actually have no idea what's in their portfolios. It's like the subprime crisis in that way - they don't know. They don't measure it. They don't count it. They don't keep track of it. There is one positive example in the U.S., which is the Overseas Private Investment Corporation (OPIC). It's a public financial institution that in 2008 made a commitment to reduce greenhouse gas emissions of their portfolio by 50 percent within 15 years. And they've begun implementing that plan.

Rich People DON'T Create Jobs: 6 Myths That Have to Be Killed for Our Economy to Live

These zombie talking points aren't just wrong; they're dangerous. If we're ever going to revive the economy, we've got to tackle them head on.

December 9, 2011  |  

 

 

In the movie Groundhog Day, Bill Murray's character is forced to relive a single day over and over and over—waking up to the same song every morning, meeting the same people, having the same conversations—until, after thousands of repetitions, he finally realizes what a shmo he's been his entire life. With that epiphany, the calendar starts to flip forward again. His life reboots, and he once again gets to hear new songs, meet new people, and have entirely new conversations.

When it comes to the economy, we're stuck in our own version of Groundhog Day—and this one doesn't seem to be coming to an end. America is in a deep and persistent slump, and unemployment is mired at more than 9 percent. Yet when you turn on the TV, all you hear are the same manufactured sound bites delivered in the same apocalyptic tones from the same pack of talking heads—over and over and over. Groundhog Day has turned into the eighth circle of hell.
Unfortunately, these zombie talking points aren't just wrong; they're dangerous. If we're ever going to revive the economy, we've got to tackle them head on. Here are six of the worst.

MYTH #1: THE STIMULUS FAILED
For the first four years of his presidency, Franklin Roosevelt tackled the Great Depression with inflation, easy monetary policy, and government spending. But in 1937, FDR's advisers persuaded him to reverse gears. After all, interest rates had been close to zero for years, commodity prices were climbing, and fear of inflation was on the rise.

Bust or Boost?

What happened next is now called the "Mistake of 1937" (PDF). Federal spending was cut and monetary policy was tightened up, with disastrous results: GDP immediately began to plummet, and industrial production fell by a third. Within a year everyone had had enough. In 1938 the austerity program was abandoned, and the economy started to grow again.
The truth is that stimulus worked in 1933 and it worked in 2009. So why is our economy still in such bad shape? For one, partly due to political considerations and partly because it was rushed through Congress, the 2009 stimulus wasn't as well designed as it could have been. It was also sold badly. If the bill passed, administration economists predicted, unemployment would peak at 8 percent and then start declining (PDF). But the recession was far worse than the White House originally thought. Unemployment peaked in the double digits, and that's made the stimulus a fat target for Republican critics ever since.
But as awkward as it is to argue that things would have been worse without the stimulus—"Not as bad as it could have been!" isn't a winning slogan—well, the truth is that things would have been a lot worse without the stimulus. Everyone from the nonpartisan Congressional Budget Office (PDF) to private-sector forecasting firms have concluded that it increased economic growth, reduced unemployment, and put millions of people back to work. It just wasn't big enough, or long-lasting enough. Unfortunately, this has given conservatives an opening to demand tighter money and lower spending—exactly the same mistake we made in 1937.

MYTH #2: THE DEFICIT IS OUR BIGGEST PROBLEM
If your credit card company offered you $30,000 interest-free to buy a car, would you take the deal? Sure you would. It's a three-way win: You replace your clunker, the auto industry keeps its assembly lines humming, and the credit card company is happy to have made a safe loan, even at no interest. Apparently, they think you're a pretty good credit risk.
The Bush Effect

This is pretty much the situation the US government is in now. If our national debt were really at dire and unsustainable levels, as conservative economists and Republican leaders have taken to arguing, nervous investors would be driving up interest rates on federal borrowing. But just the opposite has happened: As I'm writing this, 10-year real treasury yields are at 0.00 percent. The seven-year rate is actually negative. Apparently, the financial markets think we're a pretty good credit risk.
It's true that the United States needs to address its long-term deficit problem—a problem almost entirely due to Medicare and other health care expenditures. (Domestic, defense, and Social Security spending have actually decreased as a percentage of GDP over the past 40 years, and there's no reason to think that's about to change.) But that's in the long term. Right now, our problem is a sluggish economy and too many people out of work. The real answer to future deficits is to spend money now to get the economy growing again.
America's infrastructure is crumbling, there are people who could be put to work fixing it, and banks are practically begging us to take their money. A trillion dollars in infrastructure spending would be good for our economy today, good for economic growth tomorrow, and thanks to those low interest rates (and the increased revenue that would come from growth), it wouldn't even increase our debt much. As they say, only an idiot turns down free money.
Only an Idiot Turns Down Free Money





MYTH $3: LOWER TAXES ARE THE BEST WAY TO GROW THE ECONOMY
There's no greater orthodoxy in the Republican Party than unconditional fealty to tax cuts. In a recent GOP debate, when the candidates were asked whether they'd walk away from a deficit deal that included just $1 in tax increases for every $10 in spending cuts, every single hand shot up.
Taxes have been the third rail of American politics ever since the California tax revolt of 1978. Even Democrats are nervous about touching them: President Obama has famously called for letting some of the Bush tax cuts expire, but he's always careful to make it clear that he wouldn't change rates for anyone earning less than $250,000 per year. In other words, he'd repeal less than a quarter of the Bush tax cuts.
This fear is easy to understand. No one likes paying higher taxes. But do lower taxes actually spur economic growth? Bruce Bartlett, an economist in the Reagan administration, has compared tax rates in various rich countries in 1979 to each country's growth rate since then. His conclusion? There's virtually no correlation.
Recent US history backs this up too. Bill Clinton raised tax rates in 1993, and Republicans insisted it would cripple the economy. Instead, the economy boomed. In 2001 and 2003, George W. Bush lowered taxes and Republicans insisted the economy would flourish. Instead, we got the weakest expansion of the past century. Republicans are simply wrong about taxes: Within reason, high tax rates don't hinder growth, and low tax rates don't stimulate it.
But don't high taxes reduce the incentive for people to work? Actually, no: For ordinary wage earners, participation in the job force and total hours worked barely respond to taxes at all. (According to tax specialists Joel Slemrod and Jon Bakija, this is "a rare example of a question on which there is a broad consensus among economists.") The same is true for rich people. As a trio of prominent economists concluded last year after reviewing the literature, "there is no compelling evidence to date of real economic responses to tax rates" (PDF). Even capital gains rates have virtually no impact: During the past few decades, they've bounced up and down from 40 percent to their post-Depression low of 15 percent. The effect on business investment is nil.

Seven Diseases Big Pharma Hopes You Get in 2012

Supply-driven marketing not only turns the nation into pill-popping hypochondriacs, it distracts from Pharma's drought of real drugs for real medical problems.

December 6, 2011 

 It used to be joked that a consultant is someone who borrows your watch to tell you what time it is. These days, the opportunist is Big Pharma, which raises your insurance premiums and taxes while providing you "low-priced" drugs that you paid for.

How did Pharma get a good third of the United States taking antidepressants, statins, and Purple Pills, albeit at low prices? By selling the diseases of depression, high cholesterol, and gastroesophageal reflux disease, or GERD. Supply-driven marketing, also known as "Have Drug — Need Disease and Patients," not only turns the nation into pill-popping hypochondriacs, it distracts from Pharma's drought of real drugs for real medical problems.
Of course, not all diseases are Wall Street pleasers. To be a true blockbuster disease, a condition must (1) really exist but have huge diagnostic "wiggle room" and no clear-cut test, (2) be potentially serious with "silent symptoms" said to "only get worse" if untreated, (3) be "underrecognized," "underreported" with "barriers" to treatment, (4) explain hitherto vague health problems a patient has had, (5) have a catchy name — ED, ADHD, RLS, Low T or IBS — and instant medical identity, and (6) need an expensive new drug that has no generic equivalent.

Here are some potential blockbuster diseases Pharma hopes you get in 2012.
Adult ADHD
Everyday problems labeled as "depression" sailed Pharma through the last two decades. You weren't sad, mad, scared, confused, remorseful, grieving, or even exploited. You were depressed, and there was a pill for that. But depression peaked just like the Atkins Diet and the Macarena. Luckily, there is adult ADHD (Attention Deficit Hyperactivity Disorder), which has doubled in women 45 to 65 and tripled in men and women 20 to 44, according to the Wall Street Journal.
Like depression, adult ADHD is a catch-all category. "Is It ADHD or Menopause?" asks an article in Additude, a magazine devoted exclusively to ADHD. "ADD and Alzheimer's: Are These Diseases Related?" asks another article in the same magazine.
"I'm Depressed. Could it be ADHD?" says an ad in Psychiatric News, showing a pretty but pouting young woman. In the same publication, another ad titled "Broken Promises" says, "Adults with ADHD were nearly 2x more likely to have been divorced," while exhorting doctors to "screen for ADHD."
Adults with ADHD are often "less responsible, reliable, resourceful, goal-oriented, and self-confident, and they find it difficult to define, set, and pursue meaningful internal goals," says an article cowritten by Harvard child psychiatrist Dr. Joseph Biederman, who is credited with putting "pediatric bipolar disorder" on the map. They "show tendencies to being self-absorbed, intolerant, critical, unhelpful, and opportunistic," and "tend to be inconsiderate of other people's rights or feelings," says the article, describing most people's brothers-in-law.
Adults with ADHD will have trouble keeping a job and get worse without treatment, says WebMD, tapping into the second requirement of a blockbuster disease — symptoms worsen without pills. "Adults with ADHD may have difficulty following directions, remembering information, concentrating, organizing tasks, or completing work within time limits," according to the website, whose original partner was Eli Lilly.
How did Pharma get five million kids and now, maybe, their parents on ADHD meds? Ads on 26- by 20-foot screens in Times Square that ask "Can't focus? Can't sit still? Could you or your child have ADHD?" four times an hour couldn't hurt. (Bet no one had trouble focusing on that!)
Still, convincing adults they aren't sleep deficient or bored but have ADHD is only half the battle. Pharma also has to convince kids who grew up diagnosed as ADHD not to quit their meds, says Mike Cola of Shire (which makes the ADHD drugs Intuniv, Adderall XR, Vyvanse, and the Daytrana patch). "We know that we lose a significant number of patients in the late teen years, early 20s, as they kind of fall out of the system based on the fact that they no longer go to a pediatrician."
A Shire ad in Northwestern University's student paper this year takes the issue head on. "I remember being the kid with ADHD. Truth is, I still have it," says the headline splashed across a photo of Adam Levine, the lead singer of Maroon 5. "It's Your ADHD. Own It," was the tagline. (Was "Stay Sick" the runner-up?)
Of course, pushing speed on college kids (or anyone, for that matter) isn't too hard. Why else do meth dealers say, "First taste free"? But Pharma is so eager to retain its pediatric ADHD market, it has funded for-credit courses for doctors, such as "Identifying, Diagnosing, and Managing ADHD in College Students" and "ADHD in College: Seeking and Receiving Care During the Transition From Child to Adult."
To make sure no one thinks ADHD is a made-up disease, WebMD shows color-enhanced Pet scans of the brains of a normal person and an ADHD sufferer (flanked by an ad for Vyvanse). But it is doubtful the scans are really different, says psychiatrist Dr. Phillip Sinaikin, author of Psychiatryland. And even if they are, it proves nothing.
"The crux of the matter is that there is simply no definitive understanding of how neuronal activity is related to subjective consciousness, the age-old unsolved body/mind relationship," Sinaikin told AlterNet. "We have not advanced beyond phrenology, and this article in WebMD is simply the worst kind of manipulation by the drug industry to sell their overpriced products, in this case a desperate effort by Shire to maintain a market share when Adderall goes generic."

Rheumatoid Arthritis

Rheumatoid arthritis is a serious and dangerous disease. But so are Pharma's immune-suppressing biologic drugs like Remicade, Enbrel, and Humira, which are pushed to treat it. While RA attacks the body's own tissues, leading to inflammation of the joints, surrounding tissues, and organs, immune suppressors can invite cancers, lethal infections, and activate TB.
In 2008, the FDA announced that 45 people on Humira, Enbrel, Remicade, and Cimzia died from fungal diseases, and investigated Humira's links to lymphoma, leukemia, and melanoma in children. This year, the FDA warned that the drugs can cause "a rare cancer of white blood cells" in young people, and the Journal of the American Medical Association (JAMA) warned of "potentially fatal Legionella and Listeria infections."
Immune-suppressing drugs are also dangerous to the pocketbook. One injection of Remicade costs up to $2,500; a month's supply of Enbrel costs $1,500; and a year's supply of Humira costs up to $20,000.
Once upon a time, RA was diagnosed from the presence of "rheumatoid factor" and inflammation. But, thanks to Pharma's supply-driven marketing, stiffness and pain are all that are required for the diagnosis today. (Athletes and people born before 1970 — line forms to the left!)
In addition to diagnostic wiggle room and a catchy name, RA has other blockbuster disease requirements. It  will "only get worse" if untreated, says WebMD, and it is often "misdiagnosed" and underreported, says Abbott's Heather Mason, because "people often don't know what they have for a while."
So serious a disease, it costs over $20,000 a year to treat but so subtle you may not know you have it? RA sounds like a blockbuster.

Fibromyalgia

Another underreported disease is fibromyalgia, characterized by widespread. unexplained bodily pain. Fibromyalgia is "almost a textbook definition of an unmet medical need," says Ian Read of Pfizer, which makes the first drug to be approved for fibromyalgia, the seizure pill Lyrica. Pfizer gave nonprofit groups $2.1 million in 2008 to "educate" doctors about fibromyalgia and financed PSAs (pharma service announcements) depicting sufferers describing their symptoms without mentioning a drug. Lyrica now makes $3 billion a year.
Still, Lyrica has to fight Cymbalta, the first antidepressant to be approved for fibromyalgia. Eli Lilly prepositioned Cymbalta for the physical "pain" of depression in a campaign called "Depression Hurts" before the fibromyalgia approval. Treatment of a fibromyalgia patients with either Lyrica or Cymbalta hovers around $10,000, say medical journals.
Pharma and Wall Street may be happy with fibromyalgia drugs, but patients aren't. On askapatient.com, the drug-rating website, patients on Cymbalta reported chills, jaw problems, electrical "pings" in their brain, and eye problems. This year, four patients reported the urge to kill themselves, a frequently reported side effect of Cymbalta. Lyrica users on askapatient reported memory loss, confusion, extreme weight gain, hair loss, impaired driving, disorientation, twitching, and worse. Some patients take both drugs.

SLEEP DISORDERS
Middle of the Night Insomnia

Sleep disorders are a goldmine for Pharma because everyone sleeps — or watches TV when they can't. To churn the insomnia market, Pharma rolls out subcategories of insomnia, such as chronic, acute, transient, initial, delayed-onset, terminal, early-morning, menopausal, and the master category of nonrestful sleep. This fall, Pharma rolled out a new version of Ambien for "middle-of-the-night" insomnia called Intermezzo, even though Ambien is paradoxically notorious for middle-of-the-night awakenings: people "waking up" in an Ambien blackout and walking, talking, driving, making phone calls, and eating food.
Many became aware of Ambien's "lights-on-nobody-home" effect when former Rhode Island Representative Patrick Kennedy drove to Capitol Hill to "vote" at 2:45 a.m. in 2006 on Ambien and crashed his Mustang. But it was Ambien's EWI effect — eating while intoxicated — not DWIs that gave the pill its worst rap. Fit and sexy people awoke amid mountains of pizza, Krispy Kreme, and Häagen-Dazs cartons, their contents consumed by their evil twin on Ambien.

Excessive Sleepiness and Shift Work Sleep Disorder

Needless to say, people with insomnia won't be bright-eyed and bushy-tailed the following day —  whether they didn't sleep or whether they have sleeping pill residues in their system. In fact, they are actually suffering from the underrecognized and underreported epidemic of Excessive Daytime Sleepiness. The main medical causes of EDS or ES are sleep apnea and narcolepsy, but last year Pharma rolled out a lifestyle-caused "Shift Work Sleep Disorder." (No, it doesn't meant you can't sleep because your partner "shifts" in his or her sleep.) Ads for Provigil, a Schedule IV stimulant that treats EDS along with Nuvigil show a judge in his black robe, nodding out on the job, with the headline "Struggling to Fight the Fog?" ("Yo! Your Honor! I'm trying to plead!").
Of course wakefulness agents contribute to insomnia, which contributes to wakefulness problems in a kind of perpetual pharmaceutical jet lag. In fact, the sleeping pill/alertness aid habit is so common, it threatens to create a new meaning for "AA" — Adderall and Ambien!

Insomnia That Is Really Depression

Sleep disorders have also given a new lease on life to antidepressants. Doctors now prescribe more antidepressants for insomnia than they do sleeping pills, according to CNN. They also often combine them, since "insomnia and depression often occur together, but which is the cause and which is the symptom is often unclear."
WebMD agrees with doubling the drugs. "Depressed patients with insomnia who were treated with both an antidepressant and a sleep medication fared better than those treated only with antidepressants," it writes. Ka-ching!
In fact, many of the new blockbuster diseases from adult ADHD and RA to fibromyalgia are treated with new drugs piled on top of existing ones that aren't working, a Pharma contrivance called polypharmacy. It brings to mind the store owner who says, "I know that 50 percent of my advertising is wasted — I just don't know which 50 percent."