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Tilting at Windmills

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December 17, 2009

AGAIN WITH THE WAR BONDS?.... Maybe this polls well, or maybe there's some hidden policy value that eludes me, but this talk about war bonds continues to seem misplaced.

Lawmakers in both houses of Congress have introduced legislation to pay for the wars in Afghanistan and Iraq by using a method that's a throwback to prior U.S. conflicts: war bonds.

Saying that it would "promote national shared sacrifice and responsibility," Rep. Kendrick Meek, D-Fla., introduced a bill Wednesday in the House of Representatives that would authorize the treasury secretary to issue and sell war bonds to Americans to fund the wars.

Sen. Ben Nelson, D-Neb., filed companion legislation in the Senate earlier this week.

Atrios added, "I have no idea how people voluntarily buying rate-earning war bonds is 'shared sacrifice.'" Neither do I.

We already finance our debt through selling bonds. Calling a bond a "war bond," like calling fried strips of potatoes "freedom fries," is a gimmick, not a policy.

Alex Koppelman's recent explanation was nice and simple: "The problem with this logic is that bonds -- even war bonds -- aren't free money. At some point, those who invested expect to be paid back, and with interest. In order to accomplish that, the government has to use money it gets from ... well, from tax dollars."

Steve Benen 10:50 AM Permalink | Trackbacks | Comments (26)

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So, when the teaparty crowd and the wingnut base find reason NOT to invest in such like, it'll provide support for the position that their blather is just so much sunshine patriotism and that they are all talk.

Where's the downside?

Posted by: J. Barrett Wolf on December 17, 2009 at 10:59 AM | PERMALINK

I don't think they seriously expect the bonds to become law. They just want to make the point that those who claim to support hewar should be willing to step up and pay for it. It's kabuki designed to embarrass Repbulicans in Congress.

I'd prefer a tax on Republicans to pay for their contribution during the Bush years tot he deficit but one can't have everyothing.

Posted by: woonkie on December 17, 2009 at 11:00 AM | PERMALINK

"I have no idea how people voluntarily buying rate-earning war bonds is 'shared sacrifice.'"

Well, the rich people who the government serves buy the bonds, then we all sacrifice by paying increased taxes to pay them back.

Posted by: doubtful on December 17, 2009 at 11:03 AM | PERMALINK

it is the new idea of sacrifice in this country...not real sacrifice... just the simulation... like the simulation of family values, patriotism, integrity, statesmanship -- you name it -- perfect senate clown car reasoning...

Posted by: neill on December 17, 2009 at 11:12 AM | PERMALINK

a better proposal would be to some sort of cleverly titled "war donation" - OK it would need a more clever name than that, but something along these lines. it would be much more of a shared sacrifice than earning interest off foreign wars.

ask the supporters of the war effort to just give money to fund the military endeavors without need of a payback with interest.

there is already a market for this. people donate to the USO and other charities that provide care packages for soldiers/marines/airmen/sailors. why not donate directly to the pentagon?

Posted by: cjdquest on December 17, 2009 at 11:13 AM | PERMALINK

I'm going to give a pass to Kendrick Meek, because he is running for the Senate in FL and he needs all the help he can get, and this kind of empty, sentimental romanticism will appeal to a large constituency with gauzy memories of sitting in a moviehouse watching Donald Duck tell them to save their pennies to buy war bonds to help their daddies defeat Hitler.

But yes, this is an incredibly stupid idea that should highlight for anyone paying attention the intellectual shallowness of Very Serious Deficit Hawks like Nelson and Bayh.

Posted by: Jim on December 17, 2009 at 11:15 AM | PERMALINK

So let's come back with an even better argument. The war should be financed entirely by "war gifts." Those who want the war should give money to the government, and it should be conducted only with those funds. This has the enormous advantage that no taxes ever have to be raise to pay interest on the gifts or to return principal to the givers.

Posted by: David in NY on December 17, 2009 at 11:16 AM | PERMALINK

You know, they're on to something, but I have a better idea for them.

At different times during the year, when checking out at a grocery store or department store, I'm often asked if I'd like to buy a little sign in the shape of something relevant to the season, and write my name on it and hang it up somewhere, all to benefit a charity.

I've seen Easter bunnies or eggs, Chrsitmas trees, etc.

Well, now, we should be able to buy a dead Arab. That's right, for just $1.00 you can sign your name to a little paper dead Arab and show that you've done your part to support the War For More Oil.

Posted by: doubtful on December 17, 2009 at 11:18 AM | PERMALINK

The idea behind this gimmick is that it is a "voluntary" way for people to chip in and pay for the war - as opposed to taxes, which are involuntary. Plus, the right has always financed the Iraq and Afghanistan conflicts out of debt ... and they are probably scared that raising taxes to pay for them at this point will further reduce the public's support.

So - a brilliant gimmick! The financing for the Iraq and Afghanistan conflicts is turned into the equivalent of a bake sale, for which freedom-loving Americans will pony up and purchase debt domestically, instead of borrowing money from China, in return for some cold, hard cash. As a bonus, those same freedom-loving Americans will realize a nice return when they cash in their bonds down the road.

Sort of a classic combination of fiscal fecklessness and "what's in it for me" fair-weather patriotism.

Posted by: Bokonon on December 17, 2009 at 11:19 AM | PERMALINK

Well, I for one would buy a bond if it earned as much as a World War I Liberty Loan (3-1/2% to 4-1/4", depending on series)!

Posted by: K in VA on December 17, 2009 at 11:20 AM | PERMALINK

Cripes, cjdquest beat me to it by three minutes.

Posted by: David in NY on December 17, 2009 at 11:20 AM | PERMALINK

Isn't the idea of "war bonds" that they pay considerably less interest than an ordinary treasury bond for the same amount would?

Posted by: John on December 17, 2009 at 11:20 AM | PERMALINK

The people pushing war bonds fail to understand more than that a bond is a bond. They also don't understand why war bonds were introduced in the first place. They were *not* a mechanism for financing the war, at least not the two world wars. The were a device to soak up extra cash in the economy. The purpose was to prevent runaway inflation.

In a mobilized war economy, wages go up because of a simultaneous increase in demand for labor to build war material and a decrease in the supply of labor since your sending a large chunk of it off to fight. At the same time that wages are going up, the amount of stuff people can actually buy goes down, since a significant chunk of industrial capacity is devoted to producing goods that have no economic value and can't be purchased by domestic consumers. Absent some other piece to the puzzle, prices skyrocket.

One of the things that the US and Britain did much better during the two world wars than did the Germans was to soak up this excess cash and prevent inflation. The biggest pieces were increased taxes, which the Germans (and particularly the Austrians during the first war) were too scared of their citizens to impose. War bonds played a major role, too, essentially getting citizens to delay the consumption of their increased wages until after the war. This had the secondary effect of producing a demand overhang to try to diminish the deflationary shock of the end of the war, though the effectiveness of this end was not so clear.

Different wars led to different economic conditions. Right now, we don't have huge inflationary pressures to stave off, so we don't need to soak up excess income. This is a dumb idea.

Posted by: J. Michael Neal on December 17, 2009 at 11:21 AM | PERMALINK

"Don't need to soak up excess income" my ass. There is plenty of excess for the top crust, unprecedented ly higher slice for them since the 1920s. We need to get rid of cap gains rate cuts, tax securities trades, etc.

Posted by: neil b on December 17, 2009 at 11:32 AM | PERMALINK

"into the equivalent of a bake sale" - Bokonon

exactly. making the pentagon hold a bake sale to buy bombers has been a liberal dream for years. ever read "Addicted to War"?


so hold that bake sale. but remember, the people that will actually donate money probably don't want a slice of mom's apple pie in return- so sent them a "certificate of war sacrifice", small businesses that donate can post it on the wall/window next to the "i support the troops" sign. Hell, give them a damn medal if someone ponies up a million bucks. Put the costs of the war next to the donated dollar amounts.

1 million dollars = 1 Army Ranger in Afghanistan for 1 year (or something)
$1000 = 100 MRE's for fighting Marines.

I bet people would give.

Posted by: cjdquest on December 17, 2009 at 11:44 AM | PERMALINK

Wait a minute, here. What's wrong with the idea of folks here at home buying all the bonds rather than Chinese?

It's got my vote.

Posted by: Pauline May on December 17, 2009 at 11:47 AM | PERMALINK

Once upon a time I think this would have been a good idea -- in that gauzy, hard-to-recall time immediately after 9/11, I think war bonds would have been an easy sell. And yes, people do expect them to be paid back, but I'm not prepared to issue a blanket indictment of investment by individual Americans.

Now? Almost a decade late and a couple billion dollars short. There's just no market -- if you'll pardon the metaphor -- for patriotic investment (as it was called back then) in wars no one wants.

Posted by: Professor Burgos on December 17, 2009 at 11:52 AM | PERMALINK

If the idea is shared sacrafice, then bring back the draft without deferments!

That should account for the Cheneys among us who wish not to share anything that might put them in harm's way, while having no problem sending in volunteers to the field of battle they choose, whether justly or illegally! -Kevo

Posted by: kevo on December 17, 2009 at 12:04 PM | PERMALINK

John asks, "Isn't the idea of "war bonds" that they pay considerably less interest than an ordinary treasury bond for the same amount would?" In today's low interest environment, this may not work, but the war bonds could be a "stupid tax" for jingoists.

Maybe we could save some interest costs by offering lower interest rates and marketing the hell out of these bonds on Fox and talk radio.

Posted by: danimal on December 17, 2009 at 12:11 PM | PERMALINK

I, for one, think that these politicians are onto something!

The key to this is to sell a few trillion dollars of 'war bonds' that we will treat like the bonds issued to the Social Security Trust Fund. In fact, $2.5+ Trillion sounds about right. Consistent with what we have planned all along for the Social Security Trust Fund $2.5+ Trillion, we can even default on these bonds at the same time.

Among the keys to this being successful is to make sure that the 'war bonds' are purchased by the same working class suckers that have contributed to the $2.5+ Trillion in excess payments to the Trust Fund. Think about it, $5+ Trillion defaulted on at once, with only the working class peons hurt! What a great idea. Plus, we could work this so that it would cover at least a third of the federal debt!

We can make this work!!! For further information about how, using what we plan to do to Social Security, we can make this a great thing for wealthy republicans, read:


Posted by: RepublicanPointOfView on December 17, 2009 at 12:14 PM | PERMALINK

Shared sacrifice?!? Shared burdens? Hell no! That's socialism! And fascism! Just gimme mine, and I'll give back what I feel like giving ... voluntarily. And only for the parts of government that I personally approve.

I wonder if the wingers have considered how dangerous this anarcho-libertarian position is to certain things that they hold dear - like the military budget.

Posted by: Bokonon on December 17, 2009 at 12:16 PM | PERMALINK

"The only good bug is a dead bug, are you ready to do your part? Purchase War bonds!"

It is all to Starship Troopers for me.

Posted by: Frank Chow on December 17, 2009 at 12:43 PM | PERMALINK

I don't see what's so stupid about it. Yes, it's a gimmick, but some gimmicks actually work. No one has to buy them, after all, and it would be nice to be able to use them rhetorically against Republicans, who would probably buy them in equal measure to Democrats (ie, low.) Honestly, is there any real downside to Democrats here?

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