Money Troubles
With the federal budget deficit approaching $500 billion, lawmakers are furious about the way the administration has played them for fools when it comes to paying for Iraq
NEWSWEEK WEB EXCLUSIVE
Aug. 29 — The U.S. administrator in Iraq, Paul Bremer, delivered the bad news this week. The war in Iraq will cost tens of billions of dollars, which means we’re approaching a collision between President Bush’s fiscal policy and national-security needs.
SO HOW DID Bush respond? He fired off a letter to Congress to cut the pay raise promised to federal workers. He said the country is in a state of national emergency and has been since 9/11. The pay cut saves mere pennies compared to the billions Bush needs, but bureaucrats are easy scapegoats. The public doesn’t pay much attention when a government worker gets screwed.
Here’s a suggestion: what if Bush had suspended the cut on the estate tax, calling on both workers and the wealthy to kick in their share? That would be a bit more credible. With the nonpartisan Congressional Budget Office reporting this week that the federal budget deficit is approaching a record $500 billion, lawmakers are furious about the way the administration has played them for fools when it comes to paying for Iraq. “The Iraqis ask, ‘Why can’t you turn on the lights?’ We have a George C. Marshall plan with a Grover Norquist budget,” says a Senate Republican.
Norquist is known as “Mr. Tax Cut.” He’s president of Americans for Tax Reform and the grinch who steers the GOP’s antitax movement. Cutting taxes is the holy grail for the Republican right, but draining the treasury runs counter to national security. There isn’t enough money to properly fund homeland security or pick up the pace of reconstruction in Iraq, though the administration will be back for a war “supplemental” when Congress returns next week. That’s Washington-speak for billing the taxpayers, who pay for the war with reduced government services at home.
After May 1, when Bush declared major combat operations in Iraq over, the White House with great fanfare announced it was shifting gears to focus on tax cuts. Bush pushed through his second round of tax cuts primarily benefiting the Dick Cheneys of the world, and now he’s pinching pennies on the backs of federal workers to stem the flow of red ink. Bush will get money from Congress for Iraq. No credible lawmaker proposes bailing out. But the question now is whether Bush will pay a political price for bungling the aftermath of an easy military victory and losing the peace through a combination of arrogance, naiveté and incompetence.
The plan for the aftermath was based on the assumption that the Iraqis would greet their invaders as conquering heroes, and that the oil would rapidly begin to flow, underwriting the cost of rebuilding the country. Both premises were wrong. A development consultant working with American companies has been in and out of Iraq since July. “The needs are gargantuan,” he says. “It’s a horrible place that needs everything. Bremer sees what needs to be done, but there is real resistance in Washington to coming up with the money and making the decisions.”
If the occupation had been properly handled, maybe U.S. forces could look forward to reducing their presence in six months to a year, but that no longer seems possible. Anti-American attitudes among the Iraqis are hardening and unless the administration gets hold of the situation, the country could become radicalized and pose a greater danger to the United States than Saddam Hussein. A former ambassador to the region doesn’t conceal his outrage at the administration’s ineptness. “Disbanding the Iraqi Army, allowing the looting and the way we behaved on the street—breaking into houses, frisking women and standing aside while people were robbed—it was horrendous.”
The main mission of American troops now is self-protection. They aren’t handing out candy to children or joining in impromptu soccer games. They are hunkered down hoping only to survive. “You can walk around the streets in central Baghdad and not see a single serviceman,” says the former ambassador. “We don’t look like we’re occupying anything.”
The good news for Bush is that Democrats believe that Iraq requires more money, so Bush will get additional funds. The bad news is that the added cost aggravates the fiscal situation. Still, military spending is pump-priming the economy, and that will help him in getting reelected. That plus the tax cuts may provide Bush the boost he needs. “He’ll have to pay the piper, but that won’t be ‘til the second term,” says a Senate Republican.
The mounting anxiety about Bush’s course in Iraq and at home fuels Democrat Howard Dean, the most aggressive of the president’s challengers. Party leaders worry that Dean, another liberal from a northeastern state, will consign the Democrats to four more years in the wilderness. But it’s not Dean’s views on national security or the economy that make him vulnerable. “I can tell you what [Karl] Rove will do,” says the Capitol Hill Republican, predicting ads by “Citizens for the Protection of the Sanctity of Marriage,” or somesuch group should Dean become the nominee.
That’s why as the situation in Iraq appears more dire, Democrats are buzzing about the likely entry of former NATO general Wesley Clark into the race. But it’s not Clark’s critique of Iraq that enhances his candidacy, it’s the military sense of values that he can convey. However badly Iraq goes, Democrats can’t win national elections unless they’re able to address their social and cultural weaknesses.
© 2003 Newsweek, Inc.
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