03/20/2008 03:10 pm ET | Updated May 25, 2011

America's Economic Mess Aggravated by Iraq War

(Richard Vague and blogger/historian Juan Cole)

I am extending my Huffington Post perch to a Republican businessman with whom I have become good friends because of his thoughtful and important commentary regarding the economic costs of the Iraq War and his enlightened view about constructive American engagement in the world. Richard Vague is a moderate Republican who served as co-Founder and CEO of First USA Bank. Vague is the author of Terrorism: A Brief for Americans. He is also the chairman of American Respect, a non profit organization committed to enlightened, constructive American engagement in global problems.

The U.S. economy will not start truly getting better until we stop spending on this war. That should be page one and line one on any national agenda. Yet while congress enacts programs and candidates make promises that will at best have marginal economic impact, we continue to squander a quarter of a trillion dollars or more each year in Iraq.

The Democrats, whose job it should be to bring this war's end, are instead lulled by polls that show that the economy has surpassed the war as voters' greatest concern--thus missing the fact that our current woes stem directly from the $3 trillion being spent in total on Iraq.

This war is one of few, if any, that have been prosecuted without tax support, and it instead has proceeded in the wake of a tax cut. (Full disclosure--I loathe tax increases and instead wish the war had never been fought.) Rather, this war has been financed by a massive increase in debt and by printing reams of new money, thus bringing inflation--which Reagan rightly called the cruelest tax.

The rapid rise in energy and food prices and decline of the dollar against the world's other currencies are in part evidence of this. Any market economy is subject to intermittent economic shocks--in my lifetime there have been the S&L crisis, the oil embargo crisis, the internet bubble, and now the subprime crisis, to name just a few. The difference this time is that the war has depleted our capacity to respond, and will therefore double the financial anguish. We are now re-entering the unpleasant world of Jimmy Carter's stagflation.

This cost might be worth bearing if it had truly reduced terrorism. But all intelligence--and any reasonable theory of the causes of terrorism--point strongly to the opposite. A misplaced belief that the surge is working has lowered the war's profile. (The perceived success of the surge is largely due to the fact that, among other things, we are now paying off Sunni warriors that we were previously attacking.)

However, if the surge is genuinely working--great, let's start leaving now.

If not, let's implement the Biden-Gelb plan, which will allow departure without chaos, and then start leaving. The U.S. economy will not start truly getting better until we stop spending on this war.

-- Richard Vague