The High Price of War with Iran: $10 Gas and the Collapse of the U.S. Economy

Netanyahu's government is going down and he wants to take America with him.

Israel is currently in turmoil, marked by widespread protests demanding Netanyahu's resignation. Critics accuse him of prolonging war for political gain, while his dismissal of top security officials and ongoing attacks on the judiciary have further intensified the unrest.

Meanwhile, Washington DC’s drumbeat for war never stops. It’s always at the expense of a decent and secure standard of living for people in this country and abroad.

The Trump Administration, after the series of heady airstrikes against Yemen, is at this moment being beseeched by Netanyahu and his associates to prepare for a seemingly consequence-free nuclear strike against Iran, completing the trifecta of Netanyahu’s long-standing dream.

I have consistently warned against the consequences of an attack on Iran, delivering 155 speeches to the House, 63 presentations alone in the 109^th Congress, between 2005 and 2007, when the Bush Administration deliberated using nuclear “bunker-busters” as a means of bringing Iran to heel.

I understood the politics then and I understand them today. I warned hundreds of times that it was not in America’s interests to go to war against Netanyahu’s hit list: Iraq, Iran, Libya...

IRAQ

In 2002, the Bush Administration caused Americans grieving over 9/11 to believe Iraq had a direct role in the attacks which took over 3,000 lives. Except, Iraq had nothing to do with 9/11.

Bush claimed Iraq was pursuing nuclear weapons and other “Weapons of Mass Destruction” (WMDs) and was an imminent threat to the U.S. Iraq did not have WMD’s. Iraq was not a threat to the U.S. Iraq had no ability to attack America. Didn’t matter.

The war against Iraq began 22 years ago and lasted eight years. One million innocent Iraqi men, women and children perished because of lies. They were killed in relentless bombings and aggressive ground operations.

At least 4,443 U.S. servicemen and women were killed, and an estimated 32,000 wounded during “Operation Iraqi Freedom,” because of lies.

The lies cost U.S. taxpayers at least $3 trillion. Three trillion hard-earned tax dollars of the American people were spent to pay for the destruction of the people of Iraq while Americans struggled to pay bills for housing, health care, and education and the nation went further into debt.

Remember this diabolical playbook: Create a pretext. Lie to the American people about a threat. Hype the threat. Create irrational fear. Tell them military action is needed to eliminate the threat, and their fears. Bombs away.

On September 12, 2002, as a Member of Congress, I grilled then-former Israeli Prime Minister Benjamin Netanyahu during a congressional hearing entitled, “An Israeli Perspective on Conflict with Iraq” (video and transcript link below). Despite evidence to the contrary, he testified that Iraq and its leader, Saddam Hussein, were a direct threat to America due to an alleged pursuit of WMDs including a nuclear weapon. He urged the U.S. to take military action against Iraq.

I inquired of him who else he would have the United States attack.

“Iran and Libya,” he said.

I spoke to Mr. Netanyahu outside the hearing room and asked him that if he was so convinced those countries were a threat, why didn’t Israel commence the attacks?

“Oh no,” he responded. “We need you to do it.”

On October 10, 2002, the House of Representatives, by a vote of 296-133, authorized the use of military force against Iraq. I led the opposition. The war bill passed the Senate the next day, 77-23, and was signed into law by President Bush on October 16, 2002.

On March 20, 2003, the President describing Iraq as part of an “Axis of Evil,” commenced a “Shock and Awe” onslaught by American warships, aircraft and submarines, launching cruise missiles and “precision guided bombs” roundly murdering people in Baghdad. Iraq was destroyed. Saddam was deposed, captured and hung.

Libya

On March 19, 2011, despite lacking formal congressional authorization, President Barack Obama authorized an attack on Libya to depose Muammar Gaddafi. I led the opposition. Hillary Clinton’s State Department, the EU, NATO, the UK and France to name but a few, lobbied Congress hard to accelerate actions against Libya.

That country’s leaders were dumbfounded as to why, considering that they had done everything America had asked, such as open markets to foreign investment. I held up the bombing for some time by building a bi-partisan coalition of Members of Congress to vote no.

Alas, Obama and the Clinton State Department prevailed. Republican Speaker of the House John Boehner negotiated a redraft of the authorization bill and the Republicans fell in line.

The U.S., with NATO allies, joined forces, wreaking destruction and havoc upon Libya. Gaddafi was deposed, captured and killed, at an estimated cost of over a billion dollars. Obama admitted years later that this was the worst decision of his Presidency.

Iran

On July 25, 2024, Prime Minister Netanyahu, (while under a criminal investigation by the Israeli judiciary), addressed the U.S. Congress concerning Iran, which he characterized as not only a deadly enemy of Israel, but also of the United States.

“Iran’s axis of terror confronts America, Israel and our Arab friends,” Netanyahu declared.

The interests of Israel and America were and are inseparable, he proclaimed - to 58 standing ovations. One could take that heroic reception as rubberstamping an authorization for war. As Netanyahu had told me years ago, “…we need you [the U.S.] to do it.”

Today, the Houthis of Yemen continue their attacks on Israeli shipping interests in the Red Sea, in protest to the Netanyahu government’s genocidal attack on Gaza.

President Trump, ever sensitive to and allegiant to Israel, views the Houthis as proxies of Iran. The President directed America’s air forces to rain down fire and brimstone upon Yemen, a nation of teenagers. The median age in Yemen is 18.4 years. The country spends about 1/1000 of the U.S. military budget for its own defense.

Trump threatened the Iranian government: “Every shot fired by the Houthis will be looked upon from this point forward, as being a shot fired from the weapons and leadership of IRAN (his emphasis). And IRAN will be held responsible, and suffer the consequences, and those consequences will be dire.”

The Administration followed up with Executive Order (E.O.) 13902, which, according to the U.S. Treasury Department was part of a “campaign of maximum pressure” which “targets Iran’s petroleum and petrochemical sectors and marks the fourth round of sanctions targeting Iranian oil sales….”

The first Trump Administration withdrew from a Joint Plan of Action agreement (JCPOA) which provided Iran relief from sanctions in exchange for accepting limitations which would preclude nuclear weaponization.

President Trump ordered the assassination by drone strike of Iranian General Qasem Soleimani, considered the second most powerful person in Iran, at the Baghdad airport, underscoring his determination to strike at Iran.

Iran has consistently asserted its nuclear research is for peaceful purposes. There has been a long-standing formal prohibition in Islamic law, a fatwa, issued by Ayatollah Ali Khamenei, the Supreme Leader of Iran, against the development or use of nuclear weapons.

Recently, President Trump said he would love a deal to prevent Iran from having a nuclear weapon, “I would love to make a deal with them without bombing them.”

At the same time, U.S. B-52 bombers, capable of delivering nuclear bunker-busting bombs, were engaged in joint exercises with the Israeli Air Force, in preparation for a potential strike at Iran’s underground nuclear sites.

These joint maneuvers were reminiscent of the cooperation and interoperability exercises that took place between the UK and French forces in preparation for a real-world offensive against Libya in 2011.

Ayatollah Khamenei replied “…threats will get them (the Americans) nowhere,” and refused talks under such conditions as “deceptive.” Iranian Brigadier General Kiumars Heidari added, for emphasis, “Iran is ready to crush its enemies if it makes mistakes.”

The dialectic of conflict is escalating.

It was not in America’s interest then, nor is it now, to go to war with Iran, a nation of 90 million people, a technologically advanced society, with nearly a million-person army.

President Trump should not be misled. War with Iran would be the end of his presidency. Here is why:

Iran supplies 3% of the world’s oil. If the U.S. goes to war with Iran, crude oil prices per barrel (currently ranging from $68.86 (West Texas Intermediate) - $72.28 (Brent Crude), could rise to $200 per barrel.

The Strait of Hormuz, a major conduit for the transport of oil would be disrupted. Iran has the capability retaliate by targeting Gulf oil infrastructure, including Saudi Arabia. Market panic would ensue.

The price of a gallon of gas, currently averaging $3.13, would double, approach $7 a gallon, and in some cases, reach $10 a gallon, in states with higher fuel taxes. (This is based on historical data which calculates that every $1 increase in crude oil per barrel translates to about a 2 to 3 cent increase per gallon at the pump).

Attempts to manage supply disruptions and market distortions through the release of oil from the Strategic Petroleum Reserve would do little to offset panic buying and stockpiling by consumers. Nor would an increase in U.S. domestic drilling be sufficient to offset lost Middle East oil supplies, due to supply shortage, infrastructure constraints and limitations on refining capacity.

Major disruptions, including high inflation, recession risks, and market instability would hit the US economy. Consumer retail spending would sink while prices rose for food and other goods, as energy costs for manufacturing, agriculture and transportation spiraled out of control.

Slower economic growth would push the U.S. into a recession, with the Fed forced to try to maintain control over inflation by hiking interest rates well beyond the current 4.25% – 4.50 % range.

Auto sales would take a hit. Corporate profits in transportation, airlines, trucking would nosedive. The Dow Jones and S& P 500 would be in shock, with major selloffs. America would arrive at stagflation, high inflation rates and negative growth as it did during the 1973 Oil Embargo.

The multiple economic impacts of the 2008 subprime meltdown and subsequent financial crash which cost the US economy $16 to $20 trillion dollars would become the morbid benchmark for the descent of the American economy.

Now contemplate this concatenation: War with Iran, reciprocal high tariffs, massive cuts in the federal workforce and domestic federal spending and you have an economy in a tailspin, with high inflation, rising unemployment, falling consumer spending, leading to an economic contraction requiring a system of government intervention which is currently being dismantled. Then there is the permanent restructuring of the tax code to accelerate wealth upwards. These conditions create political combustibility.

In the end, Iran will never crush Donald Trump. The U.S. will crush itself trying to wipe out Iran.

The economic effects of war with Iran could spell the end, not only of the viability of the Trump Presidency, but of the Republican House and Senate, a political turnaround the likes of which has not been seen in American politics since the 1932 sweep led by Franklin Delano Roosevelt and the New Deal.

In 1928 Republican Herbert Hoover took 58.2% of the popular vote and defeated Democrat Al Smith 444-87 in the Electoral College. Amidst a complete rejection of Republican economic policies and the Depression, Roosevelt took 57.4% of the popular vote in 1932 and defeated Hoover in the Electoral College 472-59.

The 270-164 advantage which House Republicans held in 1928 evaporated in 1932 as Democrats crushed Republicans with a 313-117 majority.

There has not been another turnaround like this in American political history and it was driven by the economic forces which overwhelmed a Republican Administration, followed by a program of promised reform which the new Administration delivered.

While the Administration is at the fullness of its expression of unbridled power, it faces a fateful decision regarding Iran which will determine whether the mandate received by Trump in 2024 evaporates as quickly as did Hoover’s in 1932.

Israel itself is in turmoil, with mass protests calling for Netanyahu’s resignation, charges he is prolonging the war for his political benefit, his firing of top security officials and his attacks on the judiciary.

Netanyahu is on shaky ground, pummeled by his fellow countrymen and women who worry, far from ensuring the future of Israel, his deadly policies threaten it.

One could imagine Trump, considering his own and America’s interests, could call Netanyahu and say, “Bibi, we are friends ‘til the end. This is the end.”

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Links: 2002 Congressional Hearing “Conflict in Iraq: An Israeli Perspective” video and transcript