Will Obama Exploit the Unemployed as Recruits for a Ramped Up War in Afghanistan?

By Paul Craig Roberts, CounterPunch. Posted February 11, 2009.

At best, assuming Latino immigrants do not get most of the construction jobs, all Obama's stimulus program can do is to reduce the number of unemployed temporarily.

Unless U.S. corporations can be required to use American labor to produce the goods and services that they sell in American markets, there is no hope for the U.S. economy. No one in the Obama administration has the wits to address this problem. Thus, the economy will continue to implode.

Adding to the brewing disaster, Obama has been deceived by his military and neoconservative advisors into expanding the war in Afghanistan, a large, mountainous country.

Obama intends to use the draw-down of troops in Iraq to send 30,000 more to Afghanistan. This would bring the U.S. forces to 60,000 -- 600,000 fewer than Marine Corps and Army counterinsurgency guidelines define as the minimum number necessary to bring success in Afghanistan -- and less than half as many that was unable to occupy Iraq.  

The Iranians had to bail out the Bush regime by restraining its Shiite allies and encouraging them to use the ballot box to attain power and push out the Americans.

In Iraq, the U.S. troops only had to fight a small Sunni insurgency drawn from a minority of the population. Even so, the U.S. "prevailed" by putting the insurgents on the U.S. payroll and paying them not to fight. The withdrawal agreement was dictated by the Shiites. It was not what the Bush regime wanted.

One would think that the experience with the "cakewalk" in Iraq would make the U.S. hesitant to attempt to occupy Afghanistan, an undertaking that would require the U.S. to occupy parts of Pakistan.

The U.S. was hard-pressed to maintain 150,000 troops in Iraq. Where is Obama going to get a half-million more to add to the 150,000 to pacify Afghanistan?

One answer is the rapidly growing massive U.S. unemployment. Americans will sign up to go kill abroad rather than be homeless and hungry at home.

But this solves only half of the problem. Where does the money come from to support troops in the field of 650,000, 4.3 times larger than U.S. forces in Iraq, a war that has cost us $3 trillion in out-of-pocket and already incurred future costs?

This money would have to be raised in addition to the $3 trillion U.S. budget deficit that is the result of Bush's financial sector bailout, Obama's stimulus package and the rapidly failing economy.

When economies tank, as the American one is doing, tax revenues collapse. The millions of unemployed Americans are not paying Social Security, Medicare and income taxes. The stores and businesses that are closing are not paying federal and state income taxes. Consumers with no money or credit to spend are not paying sales taxes.

The Washington Morons, and morons they are, have given no thought as to how they are going to finance a fiscal year 2009 budget deficit of some $2 trillion to $3 trillion.

The U.S. government really has only two possibilities for financing its budget deficit. One is a second collapse in the stock market, which would drive the surviving investors with what they have left into "safe" U.S. Treasury bonds. The other is for the Federal Reserve to monetize the Treasury debt.

"Monetizing the debt" means that when no one is willing or able to purchase the Treasury's bonds, the Federal Reserve buys them by creating bank deposits for the Treasury's account.

In other words, the Fed "prints money" with which to buy the Treasury's bonds. Once this happens, the dollar will cease to be the reserve currency.

In addition, China, Japan and Saudi Arabia, countries that hold enormous quantities of U.S. Treasury debt, in addition to other U.S. dollar assets, will sell, hoping to get out before others. The dollar will become worthless, the currency of a banana republic.

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Paul Craig Roberts was assistant secretary of the Treasury in the Reagan administration. He is co-author of The Tyranny of Good Intentions. He can be reached at: PaulCraigRoberts@yahoo.com.

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