By James Preston Allen

It has been an unfortunate but intentional fact of our history that war has been the cure for recessions. War unleashes the floodgates of deficit spending and usually pumps millions or billions into the domestic economy creating expansion, lowering unemployment and stimulating industrial manufacturing that is explosive. Yes, in a war economy much of what gets built gets blown up, destroyed, or wasted, as it were, on the unquestionable goal of winning. Losing a war is just not in our collective imagination— except for that old ghost of Vietnam that continues to haunt us even now as history is being forgotten or rewritten. But these recent wars have been different.

Afghanistan, Iraq, and let’s not forget our war on drugs in Columbia, have not saved us from economic harm, it has only drained resources that should have been invested at home.

If what we are doing now is considered “winning,” then I certainly would not want to see what losing looks like. For the last decade we have spoiled the Pentagon with trillions of dollars, and victory seems as elusive as ever. Yet the Defense Department’s own audit can’t account for some 95 percent of $9.1 billion in reconstruction funds withdrawn from the U.N. Security Council’s Development Fund for Iraq, and presumably a lot more has been lost to corruption and no bid contracts in the “fog of war.”

Few in Congress, except for Dennis Kucinich (D-Ohio) and a handful of progressive Democrats, seem to question the logic of dumping more money, more troops and more equipment into what WikiLeaks recently revealed as a questionable end result. After the exit of the American led coalition is complete, the Iraqi puppet government will once again implode into religious factionalism. We’ve already seen a preview of this given that the current government can’t even form a coalition to govern those now represented. Much the same will hold true in Afghanistan after we’re gone. In the end, trying to force-feed democracy to countries either too divided by religious sectarian strife or feudal tribalism is just not a winning scenario.

Yet we continue to try in Afghanistan with more troops and more money, never realizing that economically we are losing on two counts because we no longer are creating jobs at home due to outsourcing to private contractors–– contractors that aren’t loyal to hiring American labor and because our free trade policies have moved considerable amount of manufacturing base offshore. War is just not that profitable for Americans any more.

On the other side of this coin is the repeated admonishment from the Teabaggers and their right-wing pundits, as well as Congressional conservatives that you have to balance the budget with austerity cuts to domestic spending. “We have to balance the national checkbook just like any other family that’s paying its bills,” is the refrain. The hypocrisy to this double-speak is that they didn’t raise an objection when we invaded these other countries in the first place and barely do so now, nor did they significantly complain when banks and Wall Street were being bailed out with TARP money after President Bush stood by and watched the sub-prime mortgage market implode.

The historic mistake of spending at the top is that—contrary to the Reagan era policy—the money doesn’t trickle down. The Obama administration now needs to seed the bottom of the economy and this is far and away a different path than the austerity cuts now being offered as inevitable. Even the venerable Alan Greenspan, the former head of the Federal Reserve, who was shocked by the sub-prime meltdown opined that you can’t continue tax cuts to the wealthy on borrowed money.

Small businesses and the working class need to have access to working capital and credit for this economy to come back to life. If the American banks aren’t willing to step up to the plate to reinvigorate the economy, then perhaps it’s time for the government to force them to do it, by making them reinvest more than 5 percent in the communities from which their deposits come or by by-passing the banks and loaning directly. Some of this has started to happen with federally guaranteed SBA loans, but clearly the nation’s money lenders are sitting on the fence waiting for the train to crash, looking to pick up the pieces afterwards.

Still, the fear of a shrinking economy and the conservatives’ cries about deficit spending have done nothing but create more fear and fueled the lack of confidence from the halls of Congress in Washington D.C. all the way to City Hall here in Los Angeles. And in between we have the likes of Meg Whitman telling us to fear Jerry Brown, because he is supported by unions and that we need to run government more like a business! Is she talking about the business on Wall Street that we bailout with public money? Or is she talking about her personal business of getting elected governor? Citizens of our democracy should be wary of those who are pandering fear and unsustainable wars, both will sabotage our liberty at home and bankrupt our country. Where’s the ghost of Paul Revere when we need him? But who would he be warning us is coming this time?