The Price of Liberty: Paying for America's Wars (Hardcover)

~ (Author) "Few of the multitudes of bankers and lawyers hurrying past the forty-four-story office building that currently stands at 57 Maiden Lane, in New York's financial..." (more)
Key Phrases: war excess profits tax, wartime financing, nonmilitary spending, United States, Cold War, New York (more...)

Editorial Reviews

From Publishers Weekly

Exploring the idea that the need to pay for wars often drives financial innovation, Goldman, Sachs & Co. managing director Hormats traces the fiscal decisions made in American wars from the revolution to today's war on terror. Customs duties often fall off with hostilities, he observes, leading to increased reliance on excise and other consumption taxes. These cut civilian demand, freeing up resources for war, but may be unduly burdensome on the poor, who also do most of the dying. Taxes on businesses and the rich are more popular, he notes, but don't reduce consumption and may discourage energetic investment in war industries. Printing money is easy, but stimulates demand and inflation. Borrowing requires faith in the ability of the government to prosecute the war and its willingness to honor the debt afterwards. If broad-based, debt can cement support for the war, but if not, it can create a class of creditors with excessive political power. Hormats shows that, despite their differences, each treasury secretary seems to pick up where his predecessor left off, refining the old ideas and adding new wrinkles. Moving from history to current events, the author strongly criticizes the Bush administration for failing to adhere to the principles that have paid for 230 years of American liberty. (May 1)
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From Booklist

War marches with debt, for war typically costs more money than immediate revenue streams provide. Hormats' inquiry into this truism renders America's fiscal history both interesting to nonexperts and pertinent to paying for the country's two current wars. Continuing the federal government's fiscal incontinence begun by LBJ's refusal to address the cost of the Vietnam War, Afghanistan and Iraq are being financed by deficit spending, hope of economic growth, and sale of debt to foreigners. According to Hormats, such bipartisan profligacy departs from precedents since Alexander Hamilton restructured the debt of the Revolutionary War, which he did with a combination of taxes, emissions of IOUs, and intense political conflict with Congress. Successive wartime treasury secretaries (Albert Gallatin in the War of 1812, Salmon Chase in the Civil War, William McAdoo in World War I) all studied the techniques of their predecessors, and Hormats' assessment of their effectiveness is an exceptionally clear discourse in applied history--the author's audition to be a future treasury secretary, perhaps? Prominent in Wall Street and media, Hormats is a current-events necessity. Gilbert Taylor
Copyright © American Library Association. All rights reserved

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Product Details

• Hardcover: 368 pages
• Publisher: Times Books (May 1, 2007)
• Language: English
• ISBN-10: 0805082530
• ISBN-13: 978-0805082531
• Product Dimensions: 9.3 x 6.2 x 1.2 inches
• Shipping Weight: 1.3 pounds (View shipping rates and policies)
• Average Customer Review: 4.4 out of 5 stars  See all reviews (8 customer reviews)
• Amazon.com Sales Rank: #727,305 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

18 of 18 people found the following review helpful:

5.0 out of 5 stars It is not too late to do what is right for our country, June 16, 2007

By	J. Dougherty "Concerned American" (Cape Cod, MA.) - See all my reviews (REAL NAME)

Bob Hormats, a well known and highly regarded leader and thinker in the business and geo economic worlds, has written a hard hitting and important new book. In the long run, our nations power and security are the result of our economic vitality. Without a robust economy, we could not create the amazing military we have. Hormats goes back to the inception of our nation and looks through the telescope of how our national leaders, both executive and congressional, have dealt with the surge in expenditures that result from war. Though never easy, and fraught with controversy, in all wars except the Vietnam and the 'war on terror' of today, our leaders have either cut domestic outlays or raised taxes or both, to ensure that future generations will not be bogged down with the debt of the previous generation. We saw the results of LBJ's guns and butter, his inability to openly confront the costs of social programs and a war. We paid for that mistake for two decades. As we sit here today, President Bush's domestic spending increases for the last six years, and the high cost of the war, along with tax cuts, have created large debts our generation will pass on to our children. Hormats does an amazing job at using just the right level of detail, with stories and color, to keep the topic engaging; but, the serious of the idea can not be overlooked. Our national leaders have always behaved responsibly in times of war to protect the economic future of our nation, and we risk our national security in the future, if we don't do so now. This should be required reading for all patriotic and concerned Americans. It is not too late to do the right thing and hand future generations the fiscally sound nation they deserve. Hormats should be thanked for his efforts.

13 of 13 people found the following review helpful:

5.0 out of 5 stars Brilliant, cogent book, June 10, 2007

By	Pranay Gupte "www.pranaygupte.com" (Brooklyn, NY United States) - See all my reviews (REAL NAME)

Bob Hormats is an author of great perceptiveness and intellectual depth. For more than four decades, he has been engaged with the issue of globalization -- long before the term "globalization" became en vogue. As vice chairman of Goldman Sachs International, Hormats has had access to the corridors of high finance all around the world. As a member of several administrations in Washington, he's had access to the corridors of power in many chancelleries. Hormats writes with clarity and depth, and invites the reader to understand the pressing contemporary issues of our time. For those who especially want to understand how the American political and economic systems mesh in the policymaking zone, this book is absolutely essential reading.

11 of 12 people found the following review helpful:

4.0 out of 5 stars Seven Chapters of Historical Insight..., February 17, 2008

By	Giordano Bruno (Wherever I am, I am.) - See all my reviews (TOP 500 REVIEWER)

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This review is from: The Price of Liberty: Paying for America's Wars from the Revolution to the War on Terror (Paperback)

...followed by one chapter of evasiveness and some relatively unsurprising conclusions. The Price of Liberty is being marketed as an analysis of our current quagmire in conducting our national defense against terrorism. Good marketing, no doubt, but for this reader the chief value of the book is historiographical. Beginning with Alexander Hamilton and his brilliant schemes to pay for the Revolution after the fact, Hormats has written what amounts to a history of the American economy in terms of tax policies and the debates about taxes. Because that history is a kind of 'punctuated equilibrium', Hormats vaults from war to war, not unlike an old-fashioned high school textbook: the Revolution, the War of 1812, the Civil War, WW1, WW2, the Cold War, Vietnam, with passing references to the other events of warfare in the two centuries of American coping. But the principal actors in Hormats's military history are not generals; rather they are secretaries of the treasury, leading congressmen, and presidents often overshadowed by their own administrations. This amounts to a fresh and thought-provoking history of the United States as a whole over the 'long duration'.

Hormats begins by expounding his vision of Hamilton's Vision. It's quickly obvious that Hormats himself is Hamiltonian to the core. Hamilton was the prime advocate of strongly managerial federal powers - Big Government - employing taxation and fiscal mechanisms like his national bank to stimulate the growth of the economy, especially the manufacturing sector. Part of Hamilton's vision, Hormats, says, was to build the financial stability to support a secure national defense. The contrary vision of Thomas Jefferson - an agrarian, states' rights centered isolationism - didn't play out very successfully during Jefferson's own administration or during that of his Virginian successors, but it has never faded away. During every subsequent crisis of the federal budget in wartime, more or less the same fault lines of difference have ruptured Congress; military preparedness versus social spending, borrowing versus pay-as-you-go, sales/excise taxes versus income/property taxes, and with increasing acrimony, progressive taxation of the wealthy versus regressive taxation of the masses. Even such seemingly current notions as 'supply side economics' have had previous incarnations in Congressional debate, as Hormats amply demonstrates.

Hormats also documents the uneven success of presidents at controlling the fiscal policies of their administrations, including those whose own parties controlled Congress. The most interesting chapter in the book - chapter 5, A Righteous Might - focuses on FDR's frustrations with the coalition of Republicans and conservative Democrats who actually wrote most of the tax laws of the New Deal era. Conservatives and libertarians of the present era would do well to re-examine Roosevelt's record in light of Hormats's revelations, rather than demonizing FDR for decisions which weren't entirely his to make.

The weakest chapter in The Price of Liberty deals with the administration of Ronald Reagan. Hormats carefully exposes the naive irresponsibilty of Reagan and his economic advisors - their refusal to adjust their Reaganomic theories to the realities around them - yet he is oddly evasive about the results. Like most Reaganites, he exaggerates both the novelty and the impact of Reagan's Cold War tactics, even though he has already acknowledged the continuity of such tactics from Truman to Carter. He pays quick lip-service to Gorbachev's declaration that the USSR collapsed chiefly from internal failures, yet he credits the pressures of budgetary competition with toppling Communism. That's an odd paradox. If the Soviet Communist economic system was so dysfunctional in comparison to Capitalism, why did it take 60 years to falter? On the other hand, if it was dysfunctional, why should Reagan get credit for tipping it over? [My own opinion, lest I be accused of leftist sympathies, matches Gorbachev's - that the USSR was dysfunctional economically and socially, and suffered a well-deserved collapse of its own making.]

Hormats is distinctly positive, though less 'historical' in his approach, about the Gulf War policies of George H.W. Bush. Then, after no more than one clause of one sentence about the Clinton administration, Hormats delivers an indictment of the fiscal incapacities and blunders of the George W Bush debacle that could be read aloud as a campaign speech by any candidate of any other party.

I won't summarize Hormats's concluding recommendation for a sounder fiscal policy to prepare the US for the future. The value of this book, in my mind, is not Hormats's plan to pay for the War on Terrorism but rather his insightful historical recounting of the payments of the past. Definitely a five-star history, but I've deducted one star for slipping from history to journalistic opinion-making in its final chapters.