363 Tons of Cash - Revisited

On February 8th of this year, I wrote an article in this blog titled 363 Tons of Cash, in which I talked about the vast amounts of money sent to Iraq in the immediate aftermath of the invasion - an amount of money so huge it was measured by weight and shipped on pallets in military cargo aircraft. I was horrified then, and remain aghast now, not just that so much money was shipped to Iraq, but that so much of it has evidently disappeared without adequate accounting.

A few days ago, John B. Taylor, Undersecretary of the Treasury from 2001 to 2005, wrote an op-ed article in the New York Times titled "Billions Over Baghdad," in which he provided a ringing defense of the cash shipment, the purposes for which it was intended, and the spectacular feat of accounting for it under difficult conditions. Some of his comments have caused me to change my original opinion; others have simply reinforced my original concern. You can read his article online at http://www.nytimes.com/2007/02/27/opinion/27taylor.html?_r=1&oref=slogin.

Mr Taylor noted, as I failed to do in my earlier post, that the 363 tons of cash was actually money that belonged to Iraq. It was withdrawn from Iraqi acounts in the United States which had been frozen after Saddam Hussein's invasion of Kuwait in 1990 and, by executive order from President Bush, shipped to Baghdad to pay Iraqi civil servants and pensioners and keep the Iraqi government running in the immediate postwar period. Mr Taylor claims that the Iraqi government had managed to maintain its payroll records despite the widespread looting at the end of the war, and that American Treasury officials who oversaw the payment process reported "a culture of good record-keeping." He goes on to claim that the introduction of the New Iraqi Dinar was a spectacular success, such that the dinar has appreciated against the dollar even during the last few months, and concludes his article with this statement: "...facts show praise rather than ridicule is appropriate: praise for the brave experts in the United States Treasury who went to Iraq in 2003 and established a working Finance Ministry and central bank, praise for the Iraqis in the Finance Ministry who carefully preserved payment records in the face of looting, praise for the American soldiers in the 336th Finance Command who safely kept found money, and yes, even praise for planning and follow-through back in the United States."

It's clear and understandable that Mr Taylor wants to put the best face on the situation, but lipstick does only so much to improve the appearance of a pig. While acknowledging the heroic efforts of some Americans and Iraqis, many other reports have cast serious doubts on the adequacy of accounting for the cash sent to Iraq and the extent to which it has actually been used to rebuild Iraq and establish a functioning government. I believe a very serious investigation is in order to determine what, in fact, actually happened.

My original point remains valid, I think – it’s bad enough that the average American can’t comprehend the enormous sums of money we are pouring down the Iraqi drain. To someone whose take-home pay is measured in the low hundreds per week or low thousands per month, figures in the millions, billions, and (soon) trillions don’t mean anything. But the idea of an amount of cash so enormous that it has to be measured in tons and transported on pallets in military aircraft adds some visual impact to the abstraction. I would like to think that, as my friend Jake thought, “10000 other people (besides me) complained about the cash,” but somehow I think it just passed by in that brief flash of indignation that, in the American public, quickly turns into the ho-hum of bad news background noise.

And, despite Mr Taylor’s depiction of a brilliant financial coup that would have been worthy of an Alexander Hamilton, I don’t think anyone really knows where all those tons of cash went.

For the tax year 2006, I owe Uncle Sam $213 above my withholding (which was already very impressive). The idea that we are spending that money on a bunch of religiously insane morons who hate us only slightly less than they hate each other is repulsive. We could be fixing our education system and rebuilding our own infrastructure with that money, instead of spending it on improvements in Iraq which are promptly attacked because it’s more important to hate Americans than to help Iraqis.

Perhaps if I act like a lunatic, the government will send me a few tons of excess cash. But I doubt it.

Have a good day. More thoughts coming this weekend.

Bilbo