Is the Iraq War Worsening the Recession?

Americans recently expressed in an AP poll that rather than having a huge economic stimulus package to help with our nation's pending recession, they would rather stop waging an expensive war in Iraq.

Getting out of Iraq was tops in the list of remedies for economic problems, along with spending more on domestic programs and cutting tax rates. The most recent Congressional idea of giving rebates to the poor in hopes that they spend the money was at the bottom of the list.

The economic stimulus package has a cost of $168 Billion and will give rebates to taxpayers of between $600 and $1200. Only 19% of those polled stated that they planned to spend the money, as the government hopes they will do. Financial personality Suzie Orman, on Larry King Live, said that she hopes Americans will not spend the money.

Others tend to agree.

"Let's stop paying for this war," said Hilda Sanchez of Waterford, Calif. "There are a lot of people who are struggling. We can use the money to pay for medical care and help people who were put out of their homes."

Currently 65% of Democrats think the U.S. should leave Iraq, with only 18% of Republicans agreeing. 61% of all Americans think that the U.S. is already in the middle of a recession.

Dr. Boyce Watkins, Finance Professor at Syracuse University, says the recession was a long-time coming.

"When you consider that Americans have been spending their money like drunken sailors for the past few years, the recession was a long time coming," says Dr. Watkins, a regular CNN contributor. "The sub-prime lending crisis was a clear sign that many Americans are in financial trouble."

According to the National Priorities Project, a group that studies the Iraq War, the cost of the war has nearly reached a half trillion dollars. While American contractors have benefited financially, the average American has not. Millions of Americans have no health insurance and the public school system has been considered disgracefully inadequate.

The Federal Reserve has contributed to the economic stimulus package by aggressively lowering interest rates. Federal Reserve Chairman Ben Bernanke has been called "Bold Ben" by some who charge that he pushes too hard to reduce interest rates when the economy is struggling.

Some question whether the government's policies are good for consumers.

"What is good for the economy as a whole — spending a rebate — is not the best idea at an individual household level if you are buried in debt," said Greg McBride, senior financial analyst at Bankrate.com. "Issuing rebate checks to give a boost to consumer spending amounts to a Band-Aid over the much bigger problem of consumer debt burdens," he said.

Dr. Watkins also argues that in addition to the economic crisis set for the short-term, America should prepare itself for a pending retirement crisis.

"The perfect storm for a retirement crisis has been created," says Watkins, author of 'Financial Lovemaking 101'. "Americans are not saving, pension plans are disappearing, social security is dying, people are living longer and the cost of health care is rising. Something has got to give."