There will be NO ‘Iraq savings’

Nicholas von Hoffman gives Hillary Clinton and Barack Obama a well-deserved smackdown on this issue. Instead, in and of itself, all that the end of the Iraq War will offer is a lessening of our Chinese borrowing, he says.

Even if you rescind all the Bush tax cuts, which he doesn’t number-crunch, we would be lucky, lucky indeed to get back to a balanced budget.

Imagine three well-dressed people on a sidewalk: a white-haired man in his early 70s, a woman in a pantsuit, and a young, spaghetti-thin African-American man. They are absorbed in a dispute, but they carry on in polite, moderated tones.

Across the street, a building is collapsing, another one is on fire, and a woman is jumping from the roof of a third structure. Others kneel, gasping for air near inert human forms, more dead than alive. The police, hands clapped to their heads, run to and fro like ants after a squirt of insecticide. Firefighters arrive, jump out of their glistening red machines, and attach their hoses to the hydrants. But no water comes out.

Not so many feet away, the three well-dressed people continue their disagreement, oblivious to the tumult.

Thus the presidential campaign soldiers on, all but ignoring the largest economic upheaval since the disaster of 1929. Given the chaotic state of no-longer-so-high finance in America, they have good reason to stay as far away from the daily debacle flooding out of Wall Street and, inch by foot, putting the nation under water.

But whoever wins the White House will enter it under conditions undreamed of when this long presidential season began. Long-held delusional assumptions have ceased to be tenable, owing to the catastrophic brew mixed up by Wall Street.

Now that you’ve got the intro, you know the tenor of the whole column.

Von Hoffman notes “the dollar isn’t the dollar anymore,” the next president will have to offer “the castor oil of austerity” and tell America to “man up”

As for just how bad the borrowing situation is, well foreigners are starting to get skittish, von Hoffman says:

Owing to the ever shrinking dollar bill, foreigners are ceasing to buy U.S. government securities. Last year they bought $126 billion less than in 2006.

What’s the solution?

Von Hoffman says inflation is the only likely way to get out of this — real inflation. It’s either that or a possible crash, he says.

And, the last time we used “crash” and “economy” in the same sentence to talk about America was back in October 1929.

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Iraq spending gap

GAO disagrees with State's fuzzy math

Buried on A16 of Thursday's WaPo, Walter Pincus reported of a dispute between the State Department and the Government Accountability Office on Iraq spending. Who you gonna trust? State run by Condi Rice, the enabling handmaiden of Bush, or the GAO? Follow the bouncing dollar signs (with emphasis added).

The Bush WH:

In a much-publicized September report on benchmarks in Iraq, the White House said that Iraqi ministries had spent about 24 percent of their capital budget through July 15, 2007, and that the government was making "satisfactory progress in allocating funds to ministries and provinces."

The administration touted the news "when Congress was debating fiscal 2008 funding for Iraq." Convenient timing, eh?

Now the GAO:

In a report this week, however, the GAO found that of their $6.4 billion budget for capital projects, the ministries "had spent only 4.4 percent of their investment budget as of August 2007," citing official Ministry of Finance reports. State Department officials told the GAO that they had relied on "unofficial" Ministry of Finance data that were more current.

[Keep reading...more after the jump.]

Clapping harder:

A senior State Department official said yesterday that more recent data collected in Iraq will show that the ministries spent far more than 24 percent of their budgets. "We are predicting that when the final tallies are done in a month or two from 2007, we will have hit and may have exceeded 60 percent of the capital budget," he said.

No, no, no! State is wrong said the GAO:

Joseph Christoff, the GAO official responsible for the report, said yesterday that his figures were reported by U.S. Treasury officials working with Iraq's Ministry of Finance. His latest numbers, which cover spending through October, show only a slight increase -- up to 8 percent of the total 2007 budget. He said the State Department is considering not just money spent on capital projects but also money allocated to such projects but not yet spent. "It is not just comparing GAO's apples to State's oranges," Christoff said. "State is including also bananas, apples and oranges."

"The discrepancies . . . highlight uncertainties about the sources and use of Iraq's expenditure data," the GAO report concluded. It added that the "strikingly large" gap between the different assessments required the U.S. Treasury to work with the Iraqi ministry "to reconcile these differences."...

...According to the GAO, the Bush administration reported that Iraq's Oil Ministry had spent $500 million of its $2.4 billion capital budget by mid-July. However, the GAO found that spending on oil capital projects reached only $270,000, according to Ministry of Finance data.

Seems everyone recognizes that Iraq's budgeting, purchasing, and accounting systems are flawed -- so FUBAR that it hinders capital projects from getting done. More curious: Deflecting the issue of what "spent" means, the anonymous State Dept. official claimed that projects are getting completed:

"Are we seeing the effects of these capital expenditures on the ground? And we are seeing it," he said. "Services are being delivered [and the] slow, downward spiral of worsening services has stopped and is starting to come back." Delivery of services, he said, is "our number one goal" in Iraq for 2008.

Someone's drinking a lot of Kool-Aid -- apparently not the GAO.

Is this a case of "falsifying" numbers to make a bad situation look better? Wouldn't be the first time that the administration employed a fuzzy math scam.

Condi's propaganda shop has obviously undertaken the mission to spin Iraq into a success story. Under the Bush WH, our State Department has transformed from a diplomatic corp into a public relations agency for its client, George W. Bush -- and by extension, the GOP during an election year.

The slap in the face to U.S. taxpayers: They're using our tax dollars to shine up Bush and the Iraqi quagmire.

There's more: "Iraq spending gap" >>