Terrorizing the Economy
The Bush administration has consistently argued that the September 11 attacks are responsible for the sluggish economy and increasing budget deficits. As recently as September 6 when president Bush discussed the economy in Indianapolis, the attacks were being blamed. Here’s what the President said:
Let me remind you of what we’ve been through. The attacks on America cost us about $80 billion. That’s a lot of money. The attacks hurt our economy at a time when we were beginning to recover from a recession. In March of 2000, the stock market started to decline. Investors began to realize, well maybe the economy wasn’t quite as strong as it had been in the past. And we were in recession in the first quarters of 2001. We had negative growth. People were beginning to look for work. Things weren’t good.
But the economy became to come back because we actually passed a really good tax bill out of the Congress. And then the enemy hit us, and it hurt. It hurt economically; it hurt the nation’s psyche to think that we were vulnerable to cold-blooded killers who could come and in one day take the lives of thousands of innocent people.
It’s not clear what was included in the $80 billion cost the President was referring to. If that’s total economic impact, then that represents about 0.4% of the GDP over the last two years. Even if he’s referring to the portion of the federal deficit over the last two fiscal years that is attributable to the attacks, then the impact on the roughly $560 billion in deficits is a relatively small 14.3%. As the Economic Policy Institute points out, the economic impact of the attacks has been relatively slight.
[UPDATE: See this link for Angry Bear's breakdown of the costs of 9/11 using numbers supplied by the CBO--ST 9/19/03]
Angry Bear has also done some calculations and come up with an estimate allocating the source of the current deficits:
Of the 80% of the deficit not related to terrorism, roughly 1/3 of the blame goes to increased spending and 2/3 to the Bush tax cuts.
According to figures gathered by Angry Bear, under president Bush federal spending is up over 20% of GDP (In Clinton’s last budget the figure was 18.6%), while revenues are down to 16%. The difference will have to be borrowed. That’s right, Republicans have become the borrow and spend party.
The Terrorizing the Economy by SharedThought, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States License.