COMMENTARY:

Memorial Day Inspires Thinking About Costs--To All of Us

by Fred Cederholm

From the beginnings of this Republic, our Government has spent/financed a HUGE amount on warfare/defense; but We the People bear these costs. One need only look at the running tabulations of our National Debt (by year) to grasp their enormousness (and enormity) and to learn that our Government finances them in perpetuity.
I’ve been thinking about the costs of war, our National Debt, interest "capitalization," casualties, and Memorial Day 2005. Wars are expensive in so many ways---not only in terms of dollars; but more importantly, in terms of the sacrifices made by our service men and women and their families/loved ones. From the beginnings of this Republic, our Government has spent/financed a HUGE amount on warfare/defense; but We the People... bear these costs. One need only look at the running tabulations of our National Debt (by year) to grasp their enormousness (and enormity) and to learn that our Government finances them in perpetuity.

You see, our National Debt has increased at the end of every fiscal year since 1900 with the exception of 17 periods--all prior to 1961 (and 12 of those were prior to 1931). Let’s presume that Uncle $ugar pays off the oldest debt first (when these rare reductions in outstanding debt have occurred). This means that the increases to the Debt during the Gulf War years ($80.8 BILLION), the Vietnam War years ($267.3 BILLION), the Korean War years ($8.7 BILLION), the WWII years ($218.2 BILLION), the WWI years ($10.98 BILLION), the Spanish American War years ($362 MILLION), and the Civil War years ($1.1 BILLION of the original $2.6 BILLION of Civil War year increases) are STILL included in the May 23, 2005 outstanding National Debt balance of $7.77 TRILLION. What will Iraq and Afghanistan add to this tally?

There is a "time related" expense for owing money and that is called "interest." If you do the math, you realize that 7.6% of the $17.87 BILLION of interest due on the Debt for April 2005 alone (or $1.36 BILLION) relates to outstanding war debt for conflicts that "ended" between 14 an 140 years ago! You should also realize that Uncle $ugar doesn’t really "pay" interest. As the US Treasury securities mature (or are rolled over), the interest "paid" is actually added to the outstanding value of the re-issued/ replacement securities. This practice, known as "capitalization of interest," is illegal for banks/financial institutions "to book" to keep their non-performing loans "performing," but not so for our Federal Government.

Uncle $ugar doesn’t really "pay" interest. As the US Treasury securities mature (or are rolled over), the interest "paid" is actually added to the outstanding value of the re-issued/ replacement securities. This practice, known as "capitalization of interest," is illegal for banks/financial institutions "to book" to keep their non-performing loans "performing," but not so for our Federal Government.

While these financial costs are quantifiable, there are far greater human costs to consider. The Gulf War cost our armed forces 2,094 lives, Vietnam cost 90,199 lives, Korea cost 54,298 lives, WWII cost 405,399 lives, and WWI cost 116,516. (Source: US Dept. of Defense and VA) Add to these numbers, those wounded and maimed. How do We the People acknowledge these ongoing "debts" to those who have paid that price? What will Iraq and Afghanistan add to this tally?

Memorial Day holiday observances occur on Monday, May 30th, 2005. On this day we remember generations of Americans who have served this nation in times of war and times of peace. We owe our freedoms and our way of life to these service men and women. All gave of their time, of their spirit, and of their sweat. Many gave their lives. We all owe them so very much; yet they seek so very little from us. They ask only that we remember, that we give homage and that we pay our respects--even if it is but for only part of one day per year.

Our little community, like so many across America, honors the tradition of the Memorial Day observance. We celebrate the day with a special program at Woodlawn Cemetery. There is singing, there is prayer, there is the reading of the names, there are speakers, there is remembering, there is a gun salute and there is the playing of taps. There may be a guided tour walk about the cemetery, and there may also be a pot luck meal together at the cemetery; but there will always be fellowship, there will always be hugs of love, and there will always be tears.

Please take a moment to reflect on ALL the costs of war --- the financial, and particularly the human. Think about our service men and women and give them the homage, the respect, and the honors they deserve. Take the time to attend one of the Memorial Day observances in your community. If you are anywhere in our area, you are welcome to join us at Woodlawn Cemetery just North of Creston, Illinois.

I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.


Copyright 2005 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE and a forensic accountant. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at asklet@rochelle.net.

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NOTE TO READERS FROM THE EDITOR:

The author wrote the following when he submitted the article:

"I will be interested to see if our readers catch the TWO glaring discrepancies that I caught.

"(1). There are some 58,000+ names on the Vietnam Memorial Wall and the death/casualty count for that conflict has been traditionally reported as roughly 60,000. HOWEVER... the table of data provided with information from the US Dept of Defense and Veterans’ Administration (included as a link in the "AUDIT THIS COLUMN SECTION appendage) picks up another 32,000 as "service casualties--non theater. I wonder if this additional count picks up the suicide/post traumatic stress fatalities? I don’t know the real explanation for the difference, so to be consistent I’ve included the larger number for Vietnam.

"(2). The Gulf War years' increase to the National Debt shows $80.8 BILLION. This is consistent with the GROSS number of Gulf War costs that I’ve seen reported elsewhere. HOWEVER...Usually that $80 BILLION number is reduced by the $54 BILLION amount supposedly paid/reimbursed to US/us by Saudi Arabia, Kuwait, Qatar, Britain, France Germany and Japan. I find It odd that the GROSS $80 BILLION seemed to hit the Debt. My question is "where does the $54 BILLION show up? Is this just a coincidence, or what?"



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This story was published on May 29, 2005.