WAR’S EFFORT – WAR’S COST

How are we to fight a war in Iraq, root out Bin Laden and his henchmen, stimulate the economy and pay for it all at once? The Secretary of Defense estimates that it will be necessary to mobilize 250,000 members of the Reserve and National Guard, men and women who will be withdrawn from their economic functions for the duration. How will our economy absorb that dislocation? How will we pay for that relocation and the diversion of goods and productive capacity from the civilian economy to the military requirements of another war of conquest and the ensuing protracted occupation of two countries, Afghanistan and Iraq?

We can either borrow the money by adding to the Bush deficit, shifting the burden to our children and grandchildren or we can adopt a fiscally responsible course and pay for it ourselves. The Democratic Party should propose a tax plan to support the Second Iraqi War and the War on Terrorism to provide funds set aside for those purposes and those purposes only. Such a plan might include a 1% flat tax on all personal income from any source without deductions with only the first $8,000 of wages being exempt. The second prong would be a War Profits Tax of 75% of all corporate income in excess of 12% return on investment. The Department of the Treasury would be authorized to issue War Effort Bonds bearing 6.75% interest in denominations of $25, $50 and $100 to mature in 10 years to be repaid from the War Effort Tax. The proceeds of the Bonds, the revenue from the War Efforts Tax and the cost of operations in Iraq and Afghanistan would be accounted for separately from general budget expenditures.

The War Effort Tax would be temporary and expire when the President withdrew all American forcesfrom the occupied countries and certified to the Congress that all the War Effort Bonds have been retired.

There is an alternative to what Harry Truman called “Pay as you go”. That is the Republican course of spending with our regard to revenue, borrowing the money from the market and paying interest to the fat cat investors while shifting the burden to generations not yet born. Which may explain their concern for the “unborn”