Economy

What is the importance of the war in Iraq relative to other current issues? This is a question I am often asked, especially as Americans continue to become increasingly aware that something is very wrong with the economy. The difficulty with the way the question is often asked relates to the perception that we are somehow able to divide such issues, or to isolate the cost of war into arbitrarily defined areas such as national security or international relations. War is an all-encompassing governmental activity. The impact of war on our ability to defend ourselves from future attack, and upon America ’s standing in the world, is only a mere fraction of the total overall effect that war has on our nation and the policies of its government.

The cost of this particular war is enormous, and therefore its of great importance. There is no single issue that is more important at this particular time. The war has, of course, made us less safe as a nation and damaged our credibility with allies and hostile nations alike. Moreover, years of growing deficits have been spurred on by the high price tag of war, and the decision to pay that price primarily by supplemental spending rather than traditional “on-budget” accounting.

This week, as the American economy continued to suffer the effects of big government, the House attempted to pass two multibillion dollar "emergency" spending bills, one for continued spending on the war in Iraq , and one increasing spending on domestic and international welfare programs. The plan was to pass these two bills and then send them to the president as one package. Even though the House failed to pass the war spending bill, opponents of the war should not be fooled into believing this vote signals a long term change in policy. At the end of the day, those favoring continued military occupation of Iraq will receive every penny they are requesting and more as long as they agree to dramatically increase domestic and international welfare spending as well.

It is becoming harder and harder for Washington and the mainstream media to ignore the ripple effect the collapse of the housing bubble is having on the economy. Inflation is up, cost of food is up, oil and gold are up, foreclosures are up, unemployment is up, government spending is at record highs, its seems that the only thing down is the value of the dollar. The middle and lower classes are getting squeezed as prices jump and wages stay flat.

Though it is good that Washington is acknowledging the problem instead of sweeping it under the rug, I always get nervous at their ideas of solutions. A proper solution requires an honest, in-depth look at the root of the problem.

This past week in Washington there has been much talk about the economy. It seems by their actions the leadership and the Fed is finally willing to admit we have a problem, and we need to do something about the economic mess we are in. This is a good thing. However, they are still not being honest about the root cause of our impending crisis and want to deal only with symptoms, not the disease.

There are some positive aspects of the highly lauded economic stimulus package that has been negotiated. I am in favor of taxpayers getting some of their money back, however temporary tax cuts and one-time rebates will not “fix” the economy. What we desperately need right now is real deep significant tax cuts that are enabled by big spending cuts and reduction of government waste that is so rampant. Unfortunately, too many in Washington still believe we can spend our way into prosperity, which does not work and never has.

Congress is re-convening this coming week and I would like to take this opportunity to give my legislative forecast for the coming year. Here are a few things we can expect to see from Washington .

First and foremost, we will see ramped up spending for the warfare/welfare state. There is no resolution or end in sight on the Iraq occupation. While the American people try repeatedly to communicate to Washington that enough is enough, there still remains little political will in Washington to bring the troops home. The war will continue to require mountains of taxpayer and newly printed dollars, and our economy will sink under the burden. If we are manipulated into a second war, the effects on our economy will be truly devastating. Welfare and entitlement programs will also be ramped up as the economy flounders and budgets in American households are strained.

Mr. Chairman, our economy finds itself in a precarious state. Oil prices are rising, gold is nearing all-time highs, and the dollar is nearing all-time lows. The root of this crisis, as with past financial and economic crises, results from federal government intervention into the economy, not to anything endemic to the market, nor to the the actions of market participants.

The collapse of the housing market has served as a catalyst for the economy's latest bust. For years the federal government has made it one of its prime aims to encourage homeownership among people who otherwise would not be able to afford homes. Various federal mortgage programs through the FHA, Fannie Mae, and Freddie Mac have distorted the normal workings of the housing market.