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07 Jul 2008 01:24 pm

McCain's "Peace Dividend"

A reader writes:

I think you gave McCain more credit than he deserves on that "peace dividend" in this quote from his campaign:

"The McCain administration would reserve all savings from victory in the Iraq and Afghanistan operations in the fight against Islamic extremists for reducing the deficit. Since all their costs were financed with deficit spending, all their savings must go to deficit reduction."

The latter sentence does not make fiscal sense.

It's not a peace dividend because going to zero cost (hypothetically) in Iraq/Afghanistan doesn't bring in more money.  It just means we lose less money each month because it was ALL deficit spending in the first place.  How can you set aside all those "victory" savings to reduce a deficit if all that spending was out of the deficit?  That would be like charging 10k/month solely on frivilous purchases on credit cards, then saying you'll pay off that balance with the 10k you don't spend on future frivilous purchases.

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