The Path to War?

Plus, your Friday fiscal news roundup By Yuval Rosenberg and Michael Rainey The Path to War? Is the U.S. on a path to war with Iran? Neither side may want it, but fears of a new war in the Middle East have surged after President Trump ordered the targeted military strike that killed Iranian Maj. Gen. Qasem Soleimani, who commanded the elite Quds Force of the Islamic Revolutionary Guards Corps and reportedly was the architect behind nearly every major Iranian intelligence and military operation over the course of two decades. “We took action last night to stop a war,” Trump [said]( Friday. “We did not take action to start a war.” He added that the U.S. is not seeking regime change in Iran. Trump and the Pentagon said the strike was aimed at deterring imminent Iranian attacks, though they did not provide further details. Army Gen. Mark A. Milley, chairman of the Joint Chiefs of Staff, reportedly said Friday that a Soleimani-planned attack against Americans “might still happen.” The Pentagon said that it will deploy about 3,000 more troops to the Middle East after Iran vowed “harsh retaliation.” Republicans and Democrats alike called Soleimani a terrorist, and Senate Minority Leader Chuck Schumer said “no one should shed a tear” over his death. But Schumer and other Democrats said that congressional leaders should have been notified about the strike. Democrats also [warned]( that the Soleimani’s killing could lead to a further escalation of hostilities that would put American lives at risk. The fiscal factor: While other considerations — human life, national security and Americans’ [faith in their government]( — all take precedence, the fiscal impact of a potential full-scale war with Iran can’t be entirely ignored. “Trump's dangerous escalation brings us closer to another disastrous war in the Middle East that could cost countless lives and trillions more dollars,” Sen. Bernie Sanders (I-VT) said. So here’s a reminder of how much the post-9/11 wars are expected to cost in the long run. According to an annual [report]( published in November by the Watson Institute for International and Public Affairs at Brown University, the U.S. will have spent $5.4 trillion by the end of this year on what was once called the “global war on terror” – a nearly two-decade conflict that has involved operations in more than 80 countries. Add another $1 trillion for the care of military veterans over the coming decades, and the total cost comes to an estimated $6.4 trillion. Former Fed Official Calls for US to Issue More Long-Term Debt In a column for Bloomberg Opinion, former Minneapolis Fed president Narayana Kocherlakota poses five big macroeconomic questions he sees for 2020 and beyond. Among them is how governments can take advantage of low interest rates: “The 30-year yield on U.S. Treasuries is just over 2% — about half what it was a decade ago and about a third of what it was two decades ago. It would seem like a lot of public investments would be profitable if financed at this remarkably low interest rate. Shouldn’t the U.S. government issue (a lot) more long-term (with maturity of 30 years or possibly even longer) bonds to finance increased subsidies to higher education? Increased subsidies to research by universities and corporations? Spending on infrastructure like roads or hospitals?” Others have made similar calls for the U.S. to issue more long-term debt and extend durations beyond 30 years, the longest it now sells, to take advantage of low interest rates. Treasury Secretary Steven Mnuchin [told CNBC]( last September that the U.S. could issue 50-year bonds as soon as this year, depending on market demand, with the aim of “derisking” the national debt, which now totals more than $23 trillion. He said that 100-year bonds could follow. The Treasury Department confirmed in October that it is exploring selling 50-year bonds. [Read Kocherlakota’s four other big questions at Bloomberg.]( Chart of the Day Are interest rates destined to move higher, increasing the cost of private and public debt? While many experts believe that higher rates are all but inevitable, historian Paul Schmelzing argues that today’s low-interest environment is consistent with a long-term trend stretching back 600 years. The chart “shows a clear historical downtrend, with rates falling about 1% every 60 years to near zero today,” [says]( Bloomberg’s Aaron Brown. “Rates do tend to revert to a mean, but that mean seems to be declining.” Your Prize for Making It Through the Week It’s great that 2019 is over, but before we get too deep into the new decade, take one more look at some of the most powerful and memorable images of the past 10 years at [The Atlantic]( [Reuters]( [Daily Beast]( and [National Geographic](. Oh, and if you’re a football fan, you’ve got [four playoff games]( to look forward to this weekend. Don't sleep on the Saints. Send your tips and feedback to yrosenberg@thefiscaltimes.com. Follow us on Twitter: [@yuvalrosenberg]( [@mdrainey]( and [@TheFiscalTimes](. And please tell your friends they can [sign up here]( for their own copy of this newsletter. News - [White House Quietly Threatened to Veto Spending Legislation Over ‘Dreamers’ Issue]( – Washington Post - [The IRS Tried to Crack Down on Rich People Using an “Abusive” Tax Deduction. It Hasn’t Gone So Well.]( – ProPublica - [Democrats Ask Supreme Court for Quick Decision on Obamacare]( – New York Times - [US Manufacturing Activity Falls to Lowest Level in a Decade]( – Associated Press - [Nine States Face Economic Contraction, Most Since 2009 Crisis]( – Bloomberg - [Warren Would End 'Subminimum' Wage in Plan to Aid Disabled U.S. Workers]( – Reuters - [One-On-One With Trump’s Medicare and Medicaid Chief: Seema Verma]( – Kaiser Health News - [Pope: Governments Must Ensure All Have Access to Health Care]( – Associated Press - [Behind the Troubling Rise of Uninsured American Kids]( – PBS NewsHour (video) Views and Analysis - [The Trump Tax Cuts in Action: Socialism for the Rich]( – Jared Bernstein, Washington Post - [Give Sanders and Warren Credit for Leaning Away From Tax Credits]( – Janet Holtzblatt, Tax Policy Center - [A Number Cruncher Told the Truth. He Became His Country’s Public Enemy No. 1]( – Catherine Rampell, Washington Post - [New Food Stamp Rules Won’t Just Hurt My Clients. They’ll Hurt Struggling Social Workers like Me]( – Elena Gormley, Vox - [Use Simple Economics to Contain Health Care Costs]( – A. Gary Shilling, Bloomberg - [Central Banks Are the Biggest Risk to the Economy in 2020]( – Jim Bianco, Bloomberg - [Time for Washington to Step up on Infrastructure]( – Stephen Stepanek, Morning Consult - [‘Mid-Level Provider’ Is a Big Miss for Everyone]( – Patricia Davidson, Morning Consult - [Latest Arctic Lease Sale Harbinger of Bad Returns for Taxpayers]( – Autumn Hanna, Morning Consult - [How the GOP Can Win on Health Care]( – Bobby Jindal, Wall Street Journal (paywall) - [Pay Is Rising Fastest for Low Earners. One Reason? Minimum Wages.]( – Ernie Tedeschi, New York Times - [Double the Federal Minimum Wage]( – New York Times Editorial Board - [Tariffs Cause Short-Term Pain — Where's the Gain?]( – Tori K. Smith, The Hill - [Public Lands Can Unite a House Divided in 2020]( – Mark Kenyon, The Hill - [The Slowdown in Medicare Spending Growth for Baby Boomers and Older Beneficiaries]( – Laura M. Keohane, Lucas Stewart and Melinda B. Buntin, Commonwealth Fund [Like Us on Facebook]( [Like Us on Facebook]( [Read Us On the Web]( [Read Us On the Web]( Copyright © 2020 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com, or through Facebook. Our mailing address is: The Fiscal Times 399 Park AvenueNew York, NY 10022 [Add us to your address book]( Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](.