U.S. Representative Ron Paul

With the election behind us, our country turns hopeful eyes to the future.  I have a few hopes of my own. 

I congratulate our first African-American president-elect.  Martin Luther King, Jr. certainly would be proud to see this day.  We are stronger for embracing diversity, and I am hopeful that we can continue working through the tensions and wrongs of the past and become a more just and colorblind society.  I hope this new administration will help bring us together, and not further divide us.  I have always found that freedom is the best way to break down barriers.  A free society emphasizes the importance of individuals, and not because they are part of a certain group.  That’s the only way equal justice can be achieved.

We will face more tough economic problems during this new administration.  In fact, the worst is yet to come.  A vast amount of problematic mortgages have not begun to reset their variable interest rates and go into default.   We already have unprecedented deficits, spending is out of control, and more big industries are coming to government with their hands out.  My hope is that this administration will handle this economic crisis better than the interventionists and big government spenders of the 1930’s, the bureaucrats that prolonged the Depression.  I hope that new government programs and spiderwebs of red tape do not pop up to interfere with American productivity, and that we can quickly get our financial footing again.  We have to understand that an economic correction needs to take place and the only way out of the coming recession is to go through it.  Efforts to avoid it can only prolong it.  I hope we can somehow find our way back to sound money and reject corporate cronyism.

We cannot address our budget problems at home without changing our disastrous foreign policy abroad.  I am hopeful that the new administration can take on the mantle of peace and diplomacy in foreign policy that many Americans feel they were promised.  Many other nations also have this hope, which exudes from their congratulatory sentiments offered after the election.  They hope that national sovereignty will be respected.  They hope that through diplomacy violence and war can be averted.  I hope so too.  One thing is unquestionable: our aggressive foreign policy of the past has been costly, in blood and in treasure.  Our treasure is running out, and fewer volunteers are stepping up to enable that foreign policy.  So for these reasons, if we are to continue to have an all-volunteer military, and see prosperity again in the future, I have every reason to hope our foreign policy will change.  In order for it to remain the same, mandatory military service would have to return, as well as accelerated theft through debt and inflation to pay for it.  I have a hard time imagining popular support for these policies, simply for the sake of war and conquest, when we clearly want peace.

I have many hopes for the future in this time of transition.  But I have seen this country face many forks in the road, and sadly take the wrong one too many times.  We have heard a lot of talk, and it remains to be seen what actions and specific policies that talk will translate into.  So while I may be hopeful, I remain deeply concerned about our future.

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Posted in Civil Liberties, Foreign Policy, Monetary Policy | 87 Comments | Permalink

With news this week that Congress is poised to consider a new stimulus package, I am forced to again ask a question that seems silly in Washington:  How will we pay for this?

While a few Members of Congress have raised the issue, it certainly was not the primary concern of the House Budget Committee when they interviewed Ben Bernanke on Monday.  And, when they did direct this question to the Chairman of the Federal Reserve, his answer was the standard rhetoric about how Congress needed to make tough choices.  Needless to say, not many specifics were discussed.

One of the most liberal members of the House, Barney Frank, has at least volunteered something of a suggestion: “We can let Iraq take care of itself.”  This, of course, goes in the right direction, but hardly far enough.

We need to declare the facts and their obvious consequences.  The deficit of the United States is now spiraling out of control, and the recent bailout package has only made it worse.  Our crushing federal debt is one key reason behind our current economic turbulence.

As Congress begins to consider the third “stimulus package” of the year, we need to realize it is time to start setting priorities.  Priority number one should be cutting spending in foreign countries. This does not simply mean Iraq, but everywhere.

The next stimulus package is likely to include money for infrastructure.  While these investments are, constitutionally speaking, supposed to be made by state and local governments, it is not likely that Congress will suddenly begin to pay heed to the document we are all sworn to uphold.  Still, we need to acknowledge the fact that the current Congress and Administration are rushing the nation toward bankruptcy.

This being the case, we could hope they would at least come to their senses regarding our debt and foreign spending sprees.  Our nation’s foreign-held debt is at record highs and moving ever higher.  Continuing to borrow money from Red China and others in order to pay “dues” to the United Nations and run “Plan Colombia” makes no sense at all.

Our whole carrot-and-stick approach to foreign policy makes no sense.  The US government simultaneously gives money to Israel, and to Egypt.  We send AIDS money to Africa while AIDS clinics in America shut down.  “Millennium challenge” funding goes to countries which enact “market based reforms” as we push our own country further and further into a centrally planned economy.

Economic recovery will only come through financial prudence, savings and getting back to producing things of value again.  But it seems to be a foregone conclusion that we are about to enact another government initiative to “stimulate the economy.”   Instead, there should be some serious talk about cutting all of these foreign giveaway programs.  But, alas and again, we should not hold our breath.  Congress is still not close to being serious about ending its addiction to debt and spending, and is again faced with the deadly temptation to attempt to spend us out of a recession.  We should not forget that in the 1930’s those types of efforts gave us the Great Depression. 

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Posted in Foreign Policy, Monetary Policy | 117 Comments | Permalink

On September 10, 2002  I asked 35 questions regarding war with Iraq. The war resolution passed on October 16, 2002.  Now today, as some of my colleagues try to reestablish credentials regarding spending restraint, I want to call attention to my 18th question from six years ago:

“Are we willing to bear the economic burden of a 100 billion dollar war against Iraq, with oil prices expected to skyrocket and further rattle an already shaky American economy?  How about an estimated 30 year occupation of Iraq that some have deemed necessary to "build democracy" there?”

Many scoffed at my “radical” predictions at the time, regarding them as hyperbole.  Six years later, I am forced to admit that I was wrong.  My “radical” predictions were in fact, not “radical” enough. 

I warned of a draining 30-year occupation.  Now, politicians glibly talk about a 100-year occupation as if it is no big deal.  On cost, according to estimates from the Congressional Research Service, we have already burned through around $550 billion in Iraq, at a rate of about $2 billion per week.  Economist Joseph Stiglitz’s estimates are even higher, at $12 billion a month.  It is a total price tag quickly heading into the trillions, if we don’t stop bombing and rebuilding bridges in Iraq that lead us nowhere but bankruptcy!  Bridges in this country are crumbling along with our economy, while some howl about earmarks.  Earmarks are a drop in the bucket compared to war and occupation.

Yes, I was wrong about Iraq.  I knew it would be bad.  I didn’t know it would be this bad.

The American people deserve better.  Being asked to endorse such a farce is beyond insulting.  Clearly, the rosy predictions of the neo-Conservatives from before the war are not coming true.  Far from it!  With a straight face, one official estimated the TOTAL cost of reconstruction in Iraq would be just $1.7 billion.  Turns out that we spend more than that in ONE WEEK.  Our friends are not pitching in to cover the cost.  Expenses are not being covered by oil from a grateful and liberated Iraqi people.  Rather, big corporate interests are benefitting, the price of oil has more than quadrupled, and the American economy is on its knees and sinking fast.

No one predicted the exact course of this war before it started.  But to continue to listen to the foreign policy advice of those that were the MOST offbase will only lead to more foreign policy disasters.  We need to keep this in mind as we think about Russia, Iran, Cuba and other countries.  Keep in mind - the doomsday predictions on the Iraq War from six years ago, sound like a cakewalk today.  While what leaders in the administration had predicted, reads like a fairytale.  Ask yourself, when listening to the same foreign policy “experts” explaining situations around the world and suggesting policy positions: In light of the facts of today, and the predictions of yesterday, how expert have they shown themselves to be? 

Passing HR 2605 to sunset authorization for the use of force in Iraq is the first step to stopping this bloody war, and the consequent bleeding of our treasuries.  Serious fiscal conservatives will support it, as will those who have been paying attention to foreign policy predictions and reality.

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Posted in Foreign Policy | 148 Comments | Permalink

We've heard how the value of the dollar affects gas prices – and indeed the price of everything.  I was pleased that my request for a hearing on such was granted by the Financial Services committee and we were able to hear some very informative testimony.  Certainly domestic policies, regarding off-shore oil drilling bans, ethanol mandates, refining capacity, and CAFE standards are interventionist and harmful enough in the energy market.

But how does foreign policy affect gas prices?  One important factor is that oil on the world market has been priced in dollars exclusively since 1973.  Only two leaders have gone against this arrangement - Saddam Hussein in 2000 and more recently Mahmoud Ahmadinejad with the recently opened Iranian Oil Bourse which trades in non-dollar currencies.  But since oil is otherwise exclusively traded in dollars, this means that oil producers have vast amounts of assets held in dollars.  Especially since the War on Terror and the PATRIOT Act, many oil-producing nations and banks are concerned the US government may freeze assets based on flimsy pretexts.  This fear contributes to dollar weakness, and therefore also high oil prices.

Recently I and other members of Congress spoke out against H Con Res 362 and exposed this seemingly innocuous bill for what it really is – a call for a blockade and a build up to war with Iran.  Thankfully it has not come to the floor for a vote as I had fully expected it would.  But to even propose legislation like this, and get an alarming 261 cosponsors, makes the oil markets jittery and encourages more capital flight from the dollar.  We only isolate ourselves on the world stage with actions and attitudes like this.  After all, how can it be wise for the rest of the world to bank on America, when we tend to freeze assets and blockade entire countries for no good reason?

Another major factor is our intervention in international military conflicts.  These conflicts are often much more complicated, and have more to do with oil than our own leaders are willing to acknowledge.  Too often the side we support points our weapons right back at us down the road.  The best policy is always free trade with all and entangling alliances with none, but instead we isolate ourselves by picking sides and making enemies out of our friends or potential friends.  In the recent conflict with Russia and Georgia, it appears that once again the administration is going to pick sides and send taxpayer money, when we are in a deep recession here at home.  There is no good reason for us to put a dog in every fight around the world.

The contributing factors in the price of oil are complicated and legion.  The fact is, it is an immensely valuable resource, and, as our demand for this resource is great, our relationships with world leaders who control it should be handled with reason and intelligence.  However, our interventionist mindset when it comes to foreign policy never ceases to get us into sticky situations, for which we pay a premium at the gas pump.

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Posted in Foreign Policy | 95 Comments | Permalink

What will it take to get our troops out of Iraq?   The roughly 70 percent of Americans who are firmly against the war often ask this question.  Those in power are reluctant to give conditions, but when they do and those conditions are met, the goal post is quietly moved.

Voters were promised, passionately and vehemently, that the new Congress would bring our troops home.  Many were explicitly elected in 2006 under that banner.  But our troops are still overseas, funding has been increased even beyond the administration's wish list, and troop withdrawal has been negotiated away.

When things are going badly in Iraq, they say we must stay until the situation improves.  When things improve, they tell us we must stay because our gains cannot be jeopardized.

We are told that we must establish a functioning democracy there, and train Iraqi armed forces so they can keep order in our absence.  Iraq now has a Constitution, an elected parliament, and hundreds of thousands of security forces.  The problem now is that their troops are supposedly not trained quite well enough, and that could take many more years.  Defining an adequate training level for Iraqi troops is highly nebulous and its anyone's guess when or how that criteria could be satisfied. 

The latest outrage came last week.  For years we heard the administration claim over and over that the Iraqi government wants us there, and is begging us to stay.  On the other hand, all they had to do was ask and we would respect their wishes and leave.  That also has now happened.  Al-Maliki perhaps took his cue from his challenger, al-Sadr, who has been clamouring for us to leave for years.  Popular opinion in Iraq now mirrors that in the United States, with about 70percent of Iraqis wishing us to leave.

At the end of the year, our Status of Forces Agreement expires.  Without a new agreement and understanding with the Iraqi government regarding our presence there, we officially become occupiers.

Eventually our troops will leave Iraq.  The overwhelming will of the people, in both countries, can't seem to get them out.  Things going well can't get them out.  Things going badly can't get them out.  Iraqis telling us to leave can't get them out.  Perhaps not even the UN can get them out.  My hope is that it does not take the complete collapse of our financial system, but if we don't leave under any other circumstances, economic chaos is inevitable, and will make it impossible to fund the war, even through debt and inflation.

We have been financing this war through inflation, and attempting to paper over reality with misleading economic indicators.  The government has changed the methodology of calculating things like CPI and GDP to hide the bad news.  They won't even publish M3, the total money supply statistic anymore.  But reality is hitting the American people at gas pumps and grocery stores, sending more Americans into foreclosure and unemployment lines.  More are hurting while Washington keeps forgetting its promises.  Eventually, this will all come to a head.

Perhaps an even greater fear is that even if our financial trouble doesn't get our troops out of Iraq, moving them over to fight a new war in Iran, will.  Washington should be crystal clear on this very important point – just getting the troops out of Iraq means nothing.  Bringing them HOME means everything, and that is what the people in both countries demand.

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Posted in Foreign Policy | 122 Comments | Permalink

June 16, 2008

What is the importance of the war in Iraq relative to other current issues?  This is a question I am often asked, especially as Americans continue to become increasingly aware that something is very wrong with the economy.   The difficulty with the way the question is often asked relates to the perception that we are somehow able to divide such issues, or to isolate the cost of war into arbitrarily defined areas such as national security or international relations.   War is an all-encompassing governmental activity.  The impact of war on our ability to defend ourselves from future attack, and upon America ’s standing in the world, is only a mere fraction of the total overall effect that war has on our nation and the policies of its government.

The cost of this particular war is enormous, and therefore its of great importance.  There is no single issue that is more important at this particular time.   The war has, of course, made us less safe as a nation and damaged our credibility with allies and hostile nations alike.  Moreover, years of growing deficits have been spurred on by the high price tag of war, and the decision to pay that price primarily by supplemental spending rather than traditional “on-budget” accounting.

War takes what would otherwise be productive economic capacity and transfers both that capacity, and the wealth it would generate in normal, peaceful, times into far less economically viable activities.  It also impacts budget priorities in ways that are detrimental to our nation.  I have often pointed to the fact that we are building bridges in Iraq while they are collapsing in the United States .

All war, but most particularly war funded by monetary inflation, bleeds a country in multiple ways.  Obviously, many of the young people who are in the military literally give their blood, and sometimes their lives, fighting in wars of this type.  Meanwhile, those who do not fight the war, but fund it, are forced to pay both the immediate costs, as well as seeing their long term purchasing power erode, as the twin pillars of debt and inflation are foisted upon the backs of current taxpayers and future generations.  Neither conspiracy nor coincidence explains steep increases in the price of gas as the war drags on.  No, this is simply a reality of the inflationary policies that, among other things, make this war possible.

As people are continually asked to choose whether our nation’s teetering economy or the failed foreign policy of the past several decades is most important as we look forward, it is well for those of us who understand that these two issues are closely linked, to continue to explain this fact to our fellow citizens.  To fix the problem requires a proper diagnosis.

Posted in Foreign Policy, Monetary Policy | 4 Comments | Permalink