Debt Ceiling: Afghanistan and Iraq Could Provide Solutions

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Democrats and Republicans aren’t able to reach an agreement on budget adjustments that would pave the way for raising the debt ceiling, which is set to be passed on August 2nd.

Pulling out of Iraq and Afghanistan could provide a solution that would allow for significant budget cuts. Leveraging the debt ceiling crisis and using economic reasoning  to make such a bold move would have huge benefits.  Is Obama brave enough to offer such a dramatic move?

US spending in both countries is excessive. The logistics alone, let alone the weapons, are very costly. After may years in both countries, the advantages to national security are doubted within wide circles. The main reasoning for a slow pull out is to make it dignified and to have an orderly transition of power to stable democracies. 

The cost is just too high.

Many hours of talks in Washington are down to tens of millions of dollars. Air conditioning in Afghanistan alone costs $20 billion a year. The total expenses are in the hundreds of billion, some accounted for, and some unaccounted for.

An immediate pullback would be disorderly and perhaps the not dignified. But it could save so much money to the US, putting it on a road to a real recovery – a recovery that people can feel and not only see in statistical charts.

The pace of job gains is painfully slow, as seen in the recent Non-Farm Payrolls report. Official unemployment is above 9%. Including discouraged people sends the figure towards 16% (U-6, “real unemployment”).

The debt ceiling could even be lowered in the future, with debt being way below it. Less US debt means a stronger dollar and lower oil prices. All could help the US economy.

A stronger US economy is also better for the whole world, as the United States is often the locomotive of growth, or the locomotive of contraction, as seen in the 2008 financial crisis.

Politics

Obama can prove that he is really brave by offering a pullout out of Afghanistan and Iraq. Such a move will gain popularity among people who see the US presence in both countries as useless. It will also gain popularity from people that extremely worried about the growing US debt, that has grown during Obama’s time.

Such a move will also embarrass Republicans, that focus their desires on small details in the budget. In the face of a big offer to cut spending, they will have little choice.

Is Obama brave enough to act? There are enough people in the military and around it that have too much to lose, and I doubt if Obama will be able to face them.

What do you think? Can pulling out of Iraq and Afghanistan provide a solution to the debt ceiling issue?

Further reading: US debt-limit talks descend into acrimony

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

1 Comment

  1. Anatoly Volynets on

    I don’t see what to think about here. Numbers must talk. And if they do we see that war expenditures despite they are huge are not the main budget issue so far. The government prescription drug programs take most of the tax money. Those are really huge and they are so huge because of use of patented medications while the later never displayed considerable increase in effectiveness against generic drugs. Do the numbers.