Over the past forty or more years I have seen our country drift further and further from the ideals expressed by our founding fathers and drift from policies that I not only cannot condone but actually abhor. I long for the America of my youth best exemplified by President Reagan as a shining light giving hope to the rest of the world. Instead we have supported carnage in Palestine for years. Almost ten years ago we mercilessly bombed an effectively defenseless Serbia committing acts against civilians that are defined as war crimes by the United Nations, while hiding the ineffectiveness of our attacks on their military. Only Spanish pilots refused to bomb civilian targets and infrastructure during attacks promulgated by our then president, Clinton. Now we have experienced the 911 tragedy. Why? Since Americans are possibly the most generous people on earth, why are others so desperate that they will sacrifice their lives to kill us. Are not we “the innocents”? Why are we hated so much that we must sacrifice not only our wealth but our freedoms of speech, association, mobility, privacy, life, liberty and pursuit of happiness? These are among the type questions we must answer.
As I have pondered these questions over the years and more intensely in recent years I have arrived at the conclusion that many of our problems are related to our support of Israel. It was obvious that the major media, whether it be television, talk and news radio and Hollywood, are so pro Israel that dissent is ignored or shut off. We are well supplied with stories of the Holocaust, the building of Israel as a flower in the desert, the industriousness of the Israelis, how they are such great allies and ample pictures of their suffering from suicide bombers. We are not told that the desert should flower with the amount of aid we have provided. Very little to nothing is reported of the curfews, infrastructure destruction and life, water and land deprivation, inflicted on the Palestinians. We hear of Israeli incursions and how many enemies were killed but are not allowed to view the carnage. The incursions are often described as battles : how can they be called battles when rag-tag group of youths , some armed with rifles, are chased by an armored division that pulverize buildings and shoot everything in sight; women and children not excluded. We see few pictures of the Palestinian suffering and for almost all we do see we have to turn to BBC World News or some other foreign source. Can we pay for such carnage and still call ourselves innocents?
Since I could not do anything about the carnage I decided it might be useful to make an estimate of the financial cost of U.S. support of Israel to show the degree of our involvement. In view of the long duration of this support it seemed best to couch the amount in terms of year 2002 dollars. I suspected that it might reach a trillion and was astonished to find a level near 3 trillion in a yet incomplete study. This amount of nearly half of our total National Debt results due to compound interest on aid to and losses due to Israel using borrowed money that simply increased our National Debt(which has only grown over time).
My approach to determining an approximation to the cost American taxpayers have paid in support of Israel is based on the necessity to convert these costs into current dollars, 2002$. Only then will people be aware of the extreme cost and will hopefully start to do something about it. This is an ongoing project which I hope others will see as a challenge improve, modify and expand. At this point a level near 3 trillion dollars is indicated and will expand with further knowledge. Even at this current level, about 1/2 the Public Debt , people should be capable of realizing how much we have paid.
I have obtained some data and references from WRMEA.org(Washington Report on Middle Eastern Affairs). Their prior analyses had no correction for inflationary factors and were near the levels of roughly 90 billion with 40-50 billion in interest. I contacted two of their writers but they could not provide detailed data used for their calculations.
My approach has been to expand and combine the direct aid with indirect aid, and consequences we have suffered as a result of providing this aid . To correct dollar values to2002$ I have used the Fed’s approach sparingly(Federal Reserve Bank of Minneapolis http:// woodrow.mpls.frb.us/economy/calc/cpihome.html) and have relied mainly on the following. Since we never pay off the debt but only add to it , I consider all government monies provided to be added the debt and to be carried at the rate of interest applicable to the Public Debt for each particular year. That is, none of this debt or the interest on it is ever paid but simply compounds. Hence I need no inflation adjustment with this approach and I avoid the Fed’s erroneous inflation data which is always low to reduce COLAs.
To estimate interest rates I used data from “www.publicdebt.treas.gov /opd/opdhisms2.htm” and “www.publicdebt.treas.gov/opd/opdint.htm” for the months of March and September from 1962-2000. I averaged data for the two months and normalized it to perfect(12 Mo.) data provided for the 1990-2000 period. For the period 1949 to1962 , I assumed a low(3%) rate for 1949 and increased it by 1%?yr. which almost matched it to the 3.37% rate for 1962. The compounded growth of debt was then calculated by multiplying the debt initiated in a year by (1+ (interest rate/100)) for that year and entering the result as the debt for the next year: etc.(i.e. compound interest). The initial debt for each year was obtained from Clyde R. Mark”Isreal:U.S. Foreign Assistance” Congressional Research Service,(May 11,2000) U.S. State Department USAID. The data are in terms of loans, aid and grants. Aid and grants get full compound interest treatment. Israel claims they have never missed an interest payment on a loan(I’m not sure they have ever made one) but have never claimed to have paid off a loan. Hence I use the Minneapolis Fed’s portal to convert the value of the principle to 2002$. Direct Aid(Low to High Totals are 359B to 665B 2002$) Loans only are 14.9B nominal$ which converts to 43.8 B 2002$ if Israel pays all interest and 102.5B if they pay no interest. Grants and Aid of 73.1B nominal$ become 196.6B 2002$. The combined low total is 240B 2002$ and the high 299B 2002$. In limited studies WRMEA has found this report to understate the aid by roughly 12%. Hence I have increased the combined totals to 269B and 335B 2002$.
Unlike people from other foreign homelands, Jews in the U.S. can contribute gifts to Israel and deduct this from their income tax. WRMEA.com has estimated the amount contributed to be 1/2 to 1 billion per year. This level appears reasonable since until the eighties contributions by high income Jews totaling a billion required an actual outlay of 230 million or less with the remaining 770 million provided by the American public. I have adjusted these costs of 1 billion/ yr. contributions for maximum IRS tax levels, compounded the interest and have found it to be 79B 2002$ if the law permitting this was passed in 1970 and 307B 2002$ if passed in 1949. Over the past 10 years we have brought 1/2 million Russian Jews to the U.S. to keep them from swamping Israel. I estimate this to have cost 11B to 23B 2002$ based on the assumptions 12500 families of 4 arriving each year and receiving from $23000 to$46000 for a period of 3 years starting in 1992. I have not yet been able to estimate a. the cost of military supplies abandoned in or gifted to Israel b. US corporate gifts or forgiven loans as tax exempt or c. technology secrets given or stolen by Israel. Thus the direct aid currently stands at 359B to 665B 2002$. Indirect Aid to Israel(Currently 148B+ 2002$) We purchased peace between Egypt and Israel in 1979 by agreeing to give Egypt 2.2B $/yr. in aid(WRMEA.com). This 52.8B in nominal$ has compounded to 136B 2002$. We have given 1.93B $ (9.75B 2002$)in military aid to Jordan from1960-1999 and 2.25B 2002$ non military aid over the past 10 years (http://papersmmaxwell.af.mil/projects/ay1999/acsc/99-157.pdf). I do not have figures for Palestine or Lebanon at this time. This aid would never have been extended were it not for Israel and is hence a form of aid to that country. Other Losses Due to Support of Israel(currently 94B 2002$ and rapidly rising) 9/11 costs: Costs I have seen in papers total 94B 2002$ and are climbing. These NYC 21B, military 40B, CIA 3B, Afgan war 20B, Bioterrorism 4.6 B, Customs 5B. Among additional costs that I have no estimates for at this time are: earlier bombing of the Trade Center, sinking and loss of life of the USS Liberty, 241 marines killed with about 100 injured in Lebanon, various embassy bombings with loss of life, losses of corporations due to 9/11, etc.. This brings the total costs to 600.6B to 906.6B 2002$ . Oil Embargo Costs(2373B 2002$ and climbing) A graph of oil price vs. time(www.eia.doe.gov/emeu/cabs/chron.html) shows two distinct jumps. The first due to the OPEC embargo in 1973 took oil from 3$/barrel to 13-15 $ and the second due to Iran(in 1979) carried it to the 35-40$ range. Following the “Iran Spike” average prices returned to about 15-16$. I maintain that the OPEC spike could have been prevented had we not supported Israel so strongly. Iran and Iraq were calling for price increases yet if not for our extreme support of Israel this price increase could have been controlled so as not to shock our economy into the worse recession since the great depression. Saudi Arabia existed only because of our might and could have supplied sufficient oil to lead to a more controlled increase to the 15-16$ level of the mid eighties. Consequently I constructed a smooth price-time curve connecting the 3$ in 73 to 15$ in 84. Using oil import data(www.eia.doe.gov/emeu/aer/ txt/tab0504.htm and www.un.org/apps/news/story.asp?NewslD=3386&Cr1=Cronology of World Oil Market Events 1970-2000), I multiplied the number of barrels imported per year by the price difference between the world price of oil and my smooth price-time curve yielding excess money we paid above that we would have expected from the smooth curve. I then assumed 10% was paid for by the federal gov. and 90% U.S. citizens. The 10% used by the government was then subjected to compound interest calculations. The 90% paid by citizens was then subjected to an “opportunity loss calculation” in which the excess money paid is considered to have been invested in government bonds at a rate of interest equal to that paid by the government year by year. The calculation is similar to that for compound interest paid by the government with the difference being the amount of interest compounded each year is reduced by 10% to simulate an average interest paid by people from zero to high income tax rates. Lastly, the amounts based on imports only were doubled since total oil usage is about double that of imported( oil companies not citizens had a windfall). The government’s excess payments amounted to 276B 2002$ and that of citizens to 2,097B 2002$ or a total of 2,373B 2002$. This oil embargo cost brings my low and high estimates in 2002$ to 2.974 and 3.280 trillion. Note that we have not included a cost for the seventy’s worse recession since the great depression or of other losses including the deliberate sinking and loss of life when Israel bombed the USS Liberty, the cost and loss of life(marines) in Lebanon, various embassy bombings, the loss of technical data and agents lives due to spying, ...etc. The final total will climb considerably with further efforts to determine these costs. Even now the cost approaching half our national debt is astounding, but that’s what compound interest can do.
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