NCPA - National Center for Policy Analysis


August 16, 2006

Terrorism has not crippled economic growth, nor has it frustrated the spread of globalization.  Not yet, anyway, says columnist Robert J. Samuelson.

  • Since 2001 the world economy has expanded more than 20 percent.
  • For the United States, the gain is almost 15 percent; for developing countries, more than 30 percent.
  • World trade -- exports and imports -- has risen by more than 30 percent.
  • Outstanding international debt securities have jumped almost 90 percent, to $13.6 trillion (through the third quarter of 2005).

Even when huge, terrorism's costs can get lost in a $13 trillion economy, says Samuelson:

  • At last count, Congress had committed $432 billion to the wars in Iraq and Afghanistan -- a far cry from informal estimates of $50 billion to $200 billion before the Iraq war.
  • The Congressional Budget Office now projects that those costs could easily exceed $800 billion by 2016.
  • A study by Linda Bilmes of Harvard and Joseph Stiglitz of Columbia puts the war's ultimate budget costs even higher, at a minimum of $1.1 trillion in present value.
  • Still, this spending is a tiny share of all federal spending, estimated at $47 trillion from 2001 to 2016.

Source: Robert J. Samuelson, "The Economics of Fear," Washington Post, August 16, 2006.

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