Sunday, October 08, 2006

Costs of warfighting to boost the economy in 2007

Cleaning up and recovering from the "civil quagmire" in Iraq is going to be an expensive process over the next couple of years, and that spending will give the economy a boost during that period.

An article in the NY Times by Thom Shanker and David Cloud entitled "Rumsfeld Shift Lets Army Seek Larger Budget" makes clear that military spending will need to rise to cope with the problems in Iraq. The article notes that:

... the wars in Iraq and Afghanistan would require $17.1 billion in extra spending for 2007 just to repair and replace tanks, Humvees and other gear. Money to repair and replace equipment is expected to be $13 billion in 2008 and the next five years.

And I am sure that this is probably only the tip of the iceberg. I'm sure military pay and benefits will have to rise significantly in the coming years to recruit, attract, and retain service members.

Even if the "civil quagmire" in Iraq ended today, dramatically higher spending would be needed for a number of years, simply to recover and "reshape" our military forces.

This is certainly an expense that we wished would never have been incurred, but the reality is that this spending will occur, if not even more as the extent of the need becomes even more apparent.

-- Jack Krupansky


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