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Institute for Public Accuracy (IPA): Stagflation - The Military Drain

July 16, 2008
4:59 PM

CONTACT: Institute for Public Accuracy (IPA)
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167

Stagflation - The Military Drain
WASHINGTON - July 16 -

Henwood is author of the book Wall Street and editor of Left Business Observer. He said today: "The U.S. economy continues to be dominated by the contradictory forces of stagnation and inflation -- a reincarnation of that 1970s monster, stagflation. This morning we learned that inflation is running at a 5 percent annual rate. But just yesterday, the president took the unusual step of reminding the public that bank deposits are insured up to $100,000, a bit of reassurance made necessary by the sight of depositors lining up to withdraw money from a failing bank, IndyMac. All this is the culmination of some very serious long-term problems -- the chronic trade deficit, the polarization of rich and poor, the use of debt to compensate for falling incomes. It always looked unsustainable, but somehow we managed to get by with a short-term fix or a new bubble. But now it's looking like the Bank for International Settlements, the central bankers' club, had it right when they said recently that 'the unsustainable has run its course.'"

Leaver is a research fellow at the Institute for Policy Studies. He said today: "Too little attention is being paid to one of the largest drains on the economy. The Iraq war is costing $12 billion a month. These funds could be put to use back here at home.

"Part of McCain?s plan to balance the budget includes a military draw-down in Iraq. But he's planning on increasing the size of the military, as is Obama. Both candidates are also discussing plans to send tens of thousands more troops to Afghanistan. So neither candidate is talking about relieving the largest drain on the economy -- the enormous military costs."
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