The Bin Laden Budget
The impact of terrorism, by the numbers.

Stuart J. Sweet is president of Capitol Analysts Network, a political risk-management firm based in Chevy Chase, Md.
October 15, 2001, 8:00 a.m.

The indirect victims of terrorism, however, may be seniors who won’t get as expansive a Medicare pharmaceutical program as they thought, students in failing schools who may not get as much in additional resources as once hoped, and farmers who will have to settle for smaller federal support payments. These three groups, along with the Defense Department, were competing over the federal spoils before the World Trade Center collapsed. Washington’s decision to confront mass murderers will be expensive, and it will preempt other claimants. The Defense Department won’t be the loser.

The senior Congressional Budget Committee staff foresees that $23 billion per year, and $229 billion over ten years, will be spent responding to terrorism. No doubt these funds will be split between military operations, intelligence gathering abroad, greater federal domestic surveillance, and federalizing security details at airports and elsewhere. A less obvious source of higher federal spending, amounting to $167 billion over the next decade, comes from a loss of willpower. President Bush has decided not to open a second war front - this one with Congressional Democrats who favor higher federal spending. Consensus has led to an agreement to spend $686 billion in discretionary accounts in fiscal year 2002, $10 billion more than expected. The budget staff believes that it is unlikely that Washington will reverse the largesse it will distribute this fall in later years. They are probably right. Once claimants have federal checks in hand, they will fight very hard to keep them coming. With cost-of-living raises calculated, this $10 billion in 2002 spawns $167 billion in new spending over the next decade.

By spooking American consumers into staying home and deflating board room expectations, the terrorists have almost guaranteed there will be a recession — although it won't likely be lengthy or deep. Still, higher unemployment causes individual income and payroll taxes to fall while boosting outlays on unemployment insurance, medicaid, food stamps, and supplemental security income. Corporations facing lower sales also forward less revenue to the Treasury.

No one envisions boosting taxes to pay for these changes. Instead, budget surpluses that would have been used to retire federal debt will be diverted to fund them. Over a decade, this diversion adds up, jacking up payments on the national debt by $236 billion.

In total, never has so much damage been done, to so many , by so few.