Have You Heard of the "War Is Making You Poor" Act

Rep. Alan Grayson (D-FL), has introduced a bill that "would cut the DoD's budget and use that money to make the first $35,000 each American earns tax-free."

Last week, as Congress prepared to pass yet another “emergency” spending bill to cover America’s costly operations in Iraq and Afghanistan -- to the tune of $159 billion this time around -- Rep. Alan Grayson, D-Florida, introduced a bill that would force the Pentagon to pick up the tab out of its ample regular budget.

The War Is Making You Poor Act is elegant in its simplicity. Instead of financing these longstanding conflicts outside of the regular budgeting process, where they’re not factored into deficit projections, Grayson’s bill would make the DoD work within its means, and the money would instead be used for an across-the-board tax cut that would make the first $35,000 each American earns tax-free.

“The purpose of this bill,” wrote Grayson last week, “is to connect the dots, and to show people in a real and concrete way the cost of these endless wars.” It’s not just the costs of active shooting wars; with hundreds of bases overseas, as far as the defense budget is concerned Americans have been on a permanent wartime footing, to varying degrees, since Pearl Harbor was attacked in 1941. “War is a permanent feature of our societal landscape,” wrote Grayson, “so much so that no one notices it anymore.”

Bi-Partisan Co-Sponsors

The bill already has several co-sponsors, including at least two Republicans (albeit maverick GOPers Ron Paul of Texas and Walter Jones of South Carolina). But since the Pentagon would have to take money out of its regular budget -- largely from the budget for newfangled hardware -- the DoD and influential defense contractors will no doubt fight it tooth-and-nail.

Guns over Butter

But the War Is Making You Poor Act might have a major impact on our national dialogue regardless. It highlights in a visceral way what Americans lose by privileging money for guns over butter. “The costs of the war have been rendered invisible,” wrote Grayson. “There's no draft. Instead, we take the most vulnerable elements of our population, and give them a choice between unemployment and missile fodder. Government deficits conceal the need to pay in cash for the war.” Grayson’s measure might just shine a bright light on those “opportunity costs.”

Using a Republican Talking Point

Budgeting is all about priorities, and the bill can raise public awareness of that fact. The Right has done a remarkable job convincing the American public that tax dollars used for programs that help the middle class or the poor are dollars “taken out of your pocket,” but no such consideration is given to the trillions spent on financing our military operations.

That was apparent during the recent debate over the Affordable Care Act, when Republicans, Blue Dog Democrats and most of the media focused relentlessly on the costs of the bill, and its likely impact on future deficits. No such discussion took place when the invasion of Iraq was being debated. Grayson’s bill makes the same appeal to self-interest the conservatives have used to often devastating effect to oppose everything from Medicare to public education. It says: "We can pay for these wars, or we can make them take it out of the defense contractors’ hides and get our first $35K tax-free."

The Cost of War

There’s never been a better time to educate the public about the opportunity costs of war. Virtually every mainstream voice in this country -- from Obama to the most conservative Republican to the editorial board of the New York Times -- seems to agree that we have to address our “entitlement crisis” or face budgetary doom. It’s true that if health care spending isn’t controlled, Medicare and Medicaid face very serious long-term deficits (while Social Security does not), and Americans will continue to hear all about the costs of those programs from every talking head on cable news. But far fewer will hear the perspective of economist Robert Higgs. Noting that we’re still effectively paying interest on every conflict we’ve fought since World War I, Higgs decided to see how much of our long-term public debt had accrued from unfunded conflicts in our past. He wrote:

I added up all past deficits (minus surpluses) since 1916 (when the debt was nearly zero), prorated according to each year's ratio of narrowly defined national security spending--military, veterans, and international affairs--to total federal spending, expressing everything in dollars of constant purchasing power.

Higgs’ findings should be an integral part of the debate over any “war of choice.” The sum was equal to 91.2 percent of the national debt held by the public at the end of 2006.

Last week, Grayson gave a powerful speech laying out the rationale behind this rather bold measure. Below is a transcript of the address, delivered May 21 on the floor of the House:

Mr. Speaker. Today I introduce H.R.5353: the "War Is Making You Poor Act." The "War Is Making You Poor Act" does three things: first, it requires the administration to carry out the wars in Iraq and Afghanistan with only the $549 billion set forth in the president's budget for defense spending, without the additional $159 billion the president has asked for, for the sake of these so-called emergency wars, which now stretches into nine years in one case, and seven years in the other. My view is that $549 billion is enough for these wars, and whatever wars the president plans to engage in.

Secondly, it takes the money saved from the wars' separate allocation and it uses it for a very important purpose. With the economy the way it is, people in America are suffering. It takes that money -- or 90 percent of it -- and it uses it to make $35,000 of everyone's income in America tax free, and $70,000 for married couples. Let's be clear about that; let's be clear about what I said. With the money saved from the "War Is Making You Poor Act," we could give $35,000 of every American's income tax free, and $70,000 for married couples. And in addition to that, it takes the remaining money and reduces the federal deficit and the federal debt. I think those are three things, all of which need to be done, and this bill brings them all together.

Let's start with the fact that the administration has asked for $549 billion to basically keep the lights on in the Pentagon, and beyond that asked for another $159 billion for the wars. Let's see exactly how much that means. On this chart here you can see that the U.S. military spending is as much as the entire rest of the world combined. And in fact, the ones who come in second are our NATO allies in Europe, who I don't expect to be attacking us anytime soon. Beyond that, you have to go all the way down to China to get to any country that is conceivably ever going to be a military enemy and we outspend China by almost five to one.

Beyond that, we get into our allies in East Asia and Australia and you have to go all the way down to Russia, who we outspend almost 10 to one, before you get to any country that could conceivably be a military opponent. Why is this necessary? If we're going to have military spending that amounts to this much -- half of all the military spending in the world -- do we have to have on top of that another $159 billion -- on top of that base budget -- for the wars? I think not. Particularly when people in America are suffering. So I believe that the thing we have to do is take that $159 billion the president has set aside -- I'm not saying he has to stop the wars, we're not giving a cut-off date for the war. We're just saying that you need to fund it out of the base budget of $549 billion. And we take 90 percent of that money and give it back to the American people.

And I think most people would be surprised to learn that that is so much money that we've been spending in the war in Afghanistan and the war in Iraq that every single taxpayer in America would be able to get his first, her first, $35,000 of income completely tax-free. You won't see dollar one of tax, until you make more than that. And in fact, almost a third of Americans don't make more than that, so they will simply be excused from the federal income tax system, and all we need to do is to stop separately funding the wars in Iraq and Afghanistan.

Now, I've heard many complaints from the people on the other side, and some complaints from the people on our side about the federal debt and the federal deficit. Here's something concrete that you can do. If this bill passes, we'll be able to reduce the federal deficit by 1$6 billion. You don't have to take my word for it, it's been scored by the joint committee on taxation. The joint committee on taxation staff has determined that the tax cut that's needed to give every single person in America $35,000 tax-free, would cost less than the wars, and would leave after that $16 billion. Mr. Speaker, this is an idea whose time has come. It's time for the American people to see that there is no longer any need to go beyond the base, exorbitant defense budget that's presented to us by the president, not withstanding the fact that there's a war in Afghanistan and a war in Iraq. It's simply not necessary; you can see for yourself that enough is enough.... $549 billion is plenty, especially when we're using a Chinese credit card to pay for it. So I ask for your support Mr. Speaker, and I hope the chamber will consider the h.r. 5353 "War Is Making You Poor Act." Thank you.