Niskanen Notes
The Cost of America’s Post-9/11 Wars
Tuesday marked the seventeenth anniversary of the terrorist attacks of September 11, 2001. As it should be, the day was marked by remembrances and tributes to the victims. However, it is also incumbent upon us as a country to think of the costs of the policies put in place after the attacks. Some of those costs are not quantifiable. They involve social disruption and personal and national trauma. Others are about the economic effects of the wars and military buildup that the country embarked on over more than a decade and a half after the attacks. However, one cost that should be quantifiable is the financial toll of those wars. Yet, an accurate tally remains elusive.
As Laicie Heeley of the Stimson Center wrote Tuesday at her site Inkstick,
Since the twin towers fell, spending for the “Global War on Terror,” has spread to almost every federal agency on the books, with increases not just at the Departments of Defense, State, and Homeland Security, but also at the Departments of Agriculture and Commerce. By the count of anonpartisan group of budget and counterterrorism experts, which I led, this spending comes to a grand total of $2.8 trillion.
But, we don’t really know much beyond that total, which is clouded, first and foremost, by the fact that the US does not have one consistent definition for what constitutes counterterrorism. While a broad definition is handed down to agencies by the Office of Management and Budget (OMB), those agencies are free to interpret the definition on their own. Over the years, our study group found that this method left a lot of room for inconsistencies, including internal overlap of issues, and even innate bias in the way programs are prioritized government-wide.
Last year, the Department of Defense and Internal Revenue system released an estimate of the cost of America’s post-September 11thwars as a result of provision included in the fiscal year 2017 National Defense Authorization Act by Congressman John Lewis. The total was $1.5 trillion, or $7,700 per taxpayer. In a more detailed estimate from March of this year, the Pentagon again put the cost of the wars at $1.5 trillion. However, the figures only account for the Pentagon’s portion of these wars. As the Cost of War Project at Brown University’s Watson Institute for International and Public Affairs has shown, much of the cost of these wars will come in the form of long term medical care for veterans that is paid for outside of the Pentagon’s budget (see the table below for project’s estimate).
In the introduction to a report last year discussing the fragmented nature of the data on the cost of the wars, Anthony Cordesman of the Center for Strategic and International Studies wrote, “One of the striking aspects of American military power is how little serious attention is spent on examining the key elements of its total cost by war and mission, and the linkage between the use of resources and the presence of an effective strategy.” Cordesman blamed both the executive and legislative branches for this failure. It is not surprise though that neither wants to understand the full costs of these wars, as it might constitute a first step toward accountability for them.
As I’ve written elsewhere, knowledge of the costs of America’s wars is likely insufficient to producing political accountability for them. However, it is necessary. An accurate accounting of the full costs of the country’s post-September 11th conflicts is a first step to putting in place policies that might raise the salience of war for an American public that is largely insulated from them.
Measuring The Ambition of The Market Choice Act: A Quantum Leap for Carbon Pricing
The Market Choice Act (MCA) introduced by Carlos Curbelo ended the decade long hiatus on any Republican-sponsored carbon pricing initiative, and represents an increasing prevalence of this topic in U.S. climate policy discussions. The $24 per ton tax on CO2 emissions indicates that climate change is a serious issue that deserves our attention and requires immediate action.
Although the MCA is a significant effort, from within the ranks of the GOP House Caucus, to address concerns associated with rising CO2 emissions, the bill has received muted praise from environmentalists. David Doniger and Derek Murrow, from the Natural Resources Defense Council, note in their article that Rep. Curbelo’s bill is a notable breakthrough; however, they lament that the bill’s “targets and tax rate escalation clause are not adequate to ensure that we will achieve the near and long-term emission reductions required by science.”
This criticism is understandable and might true, if you want to use science-based emissions targets to judge its ambition. We know that carbon emissions have to fall dramatically to slow global warming. But that the proposed policy may fail to meet that particular decarbonization goal is not a indication that it is unambitious. An alternative evaluation starts with where we are today (with paltry carbon pricing in the United States and internationally) and where we would be if the MCA were to become law. In short, it would be the largest and most ambitious carbon pricing scheme in the world.
In 2020, the implementation year of the MCA, the tax is expected to generate $93 billion dollars and nearly $1 trillion dollars in the first 10 years. This achievement is even more impressive when put into context of the revenue generated by all the current carbon pricing schemes around the globe. The World Bank’s 2018 report on the State and Trend of Carbon Pricing found that $33 billion of revenue was generated by all carbon pricing schemes in 2017, up from $22 billion in 2016. The MCA tax scheme alone generates almost triple the revenues in only the first year of implementation than the sum total of all carbon pricing schemes from the globe, combined.
This comparison sheds light on just how substantial an achievement the MCA would be in terms of placing a meaningful carbon price across a wide base. Murrow and Doniger voice concerns that the bill will not reduce carbon pollution enough to protect Americans from the worse effects of climate change. However, in comparing the emissions pathway of the MCA with the pathway expected under the Clean Power Plan or expanded regulatory measures, it is difficult to understand why Murrow and Doniger stipulate that Curbelo’s bill does not do enough.
Marc Halfstead provides an insightful analysis of the emissions pathway of the MCA and finds that the bill will reduce CO2 emissions in the power sector by 56 percent below 2005 levels in 2030. For comparison, the Clean Power Plan was expected to reduce emissions by 32 percent below 2005 levels. It is clear that the MCA’s estimated emissions reduction achievements are considerable relative to the current state politically feasible policy options for emissions reductions
The MCA is a novel and important proposal and should be critically evaluated. However, critiquing the bill’s tax structure and claiming it lacks ambition completely ignores the reality of climate policy today. Judging by the revenue, the MCA made law would be the most ambitious carbon pricing program in the universe. It would be a quantum leap above the rest.
More People Working Two Jobs — A Good Sign?
When the latest report on the employment situation arrived last week, most commentary focused on jobs, the unemployment rate, or wages, but beneath the surface, there were many other numbers worth watching. One was a strong uptick in the number of people holding multiple jobs. Is that a good sign, or a bad one?
The idea that multiple job holders are a sign of crisis is supported by analysists like Komal Sri-Kumar, who writes in Business Insider that:
In a robust economic recovery, the number of full-time workers should be rising, and the number of workers employed part-time or holding multiple jobs, should decline. The rise in the number of multiple job holders is troubling, and is yet another signal that there is still slack in the labor market.
Yet, if we look at the data, the rise in multiple jobholders looks less dire. Not every multiple jobholder is a hardship case. According to a BLS survey, 25.6 percent of such workers say they needed the job to meet regular expenses or pay off debt, but another 21.3 percent want the job itself, perhaps to gain experience or get a foothold in a new business. Others say they wanted the extra income without saying why, maybe just to buy a fancier car.
What’s more, it turns out that different categories of multiple jobs give different signals regarding the health of the labor market. As the following chart shows, the most numerous category – people who hold a full-time job plus a part-time job – is procyclical, rising in good years and falling in bad. The correlation with the unemployment rate is -0.5. On the other hand, workers with two or more part-time jobs show little relation to the economic cycle, having a correlation of just 0.02 with unemployment.
In short, the story of multiple job holders is a nuanced one. On the one hand, we could say that two-job workers are a sign of “hardship” in the sense that if wages everywhere were higher, maybe they would not need to run up as much debt or take second jobs to pay it off. However, it does not fit Sri-Kumar’s belief that rising FT/PT jobholders are a sign of economic weakness. Rather, the full-time/part-time pattern, at least, is a sign of strength. It is the robust labor market that gives workers a chance to pay off some debt before the next downturn comes, at which point the opportunity for a second job might disappear altogether.
Administration Supports Only Part of Texas Lawsuit Against ACA – The Scariest Part
On Wednesday, a Texas judge heard oral arguments in a case brought by state attorney generals against the Affordable Care Act (ACA). The suit aims to overturn the ACA in its entirety on the dubious grounds that since Congress has eliminated the penalty for not having insurance, a key provision of the act, it thereby invalidated the act as a whole.
The Department of Justice, which supports the lawsuit in part, wants to keep the ACA on the books but does seek elimination of one key provision – the guarantee that people will get full coverage for pre-existing conditions without paying higher premiums.
There is some cold economic rationality in linking the pre-existing conditions protection to the penalty for not having insurance. The problem with the pre-existing conditions proviso is that it invites adverse selection – healthy people will self-insure until they get sick, and only then sign up for a policy. Before the ACA, restrictions on coverage of pre-existing conditions were the way insurance companies fought back against adverse selection. The ACA, instead, chose to fight adverse selection with the penalty for not buying insurance. If you leave insurance companies entirely defenseless against adverse selection, their only recourse will be to withdraw from participation in the ACA altogether.
Economic rationality aside, though, attacking pre-existing conditions protection seems like political suicide. As a recent Kaiser Family Foundation tracking poll confirms, an overwhelming majority of Americans want to see these protections remain part of the law.
At least some Congressional Republicans recognize this. A group led by Sen. Thom Tillis (R-NC) has introduced a bill, the Ensuring Coverage for Patients with Pre-Existing Conditions Act, to make sure people who have asthma, high cholesterol, diabetes, or other such conditions can continue to buy insurance.
There is a catch, though. Larry Levitt, a Senior VP at KFF, argues in a series of tweets that the protections in the Tillis bill are illusory. People with pre-existing conditions could buy policies, but companies would not have to pay for treatments.
Fortunately, there is an election coming up. Voters, not courts, will get the last word.
Why the War in Afghanistan Won’t End
It’s been a little more than a year since President Donald Trump announced what he claimed was a major change in America’s strategy for the war in Afghanistan. The change was actually relatively minor, but the bottom line was not: the United States was staying. A year later, the war is quickly approaching its seventeenth anniversary, yet there is no end in sight. And while the outgoing U.S. commander in Afghanistan says progress is being made, events on the ground suggest otherwise.
In an essay last week for Foreign Affairs, political scientists Tanisha Fazal and Sarah Kreps explained why the war is likely to continue. They provide four reasons:
- First, the United States has become increasingly allergic to legal formalities that govern wars, bound them, ensure domestic legislative oversight; and help to end them;
- Second, the American public is isolated from the physical consequences of the war because only a small percentage of the country serves in the military;
- Third, fewer Americans who do serve are likely to be killed as advances in military medicine allows many to survive wounds that would have led to their death in previous wars; and
- Fourth, because the war has been paid for through debt rather than taxes, it has no direct financial impact on the American people.
All four reasons add up to a fairly simple fact: the war may be long, but for the American people, it’s also painless.
I’ve discussed research by both Fazal and Kreps elsewhere before—including in the wake of President Trump’s announcement a year ago—and the bottom line remains the same now as it did then. America’s political leaders do not want the war “lost” on their watch, while its military leaders—though often reluctant to start wars—tend believe in seeing the job through to its end. Meanwhile, the American people are ambivalent. They do not see the war as worthwhile, but they also do not want to withdraw from it.
As Fazal and Kreps explain, the public can indulge its ambivalence because it pays no cost for doing so. As a result, it has no incentive to put pressure on elected officials to produce some sort of resolution in the war, and in turn, political and military leaders can kick the can down the road without fear that they will be held accountable. Absent the public experiencing its cost in some tangible fashion, a year from now, we will be approaching the war’s eighteenth anniversary—meaning there will be Americans soon fighting in the war who were not yet born when it began.