Warren Buffett, Chairman of Berkshire Hathaway, said Osama bin Laden's death won't reduce risk to the insurance industry, or for that matter affect the economy much at all. In an interview with Fox News, Buffett said that costs associated with terrorism will continue despite the elimination of the head of al-Qaeda. He applauded Congress for finally making the budget deficit a top priority -- something that will help the economy in the long run.
But, in a strange way, Osama bin Laden's death and the budget deficit are related. Here's how. Two-thirds of the budget ( $3.7 trillion for FY 2010) comes from three areas: Defense-related security ($881 billion), Social Security ($761 billion) and Medicare/Medicaid ($737 billion). Deficit spending has created a $14 trillion debt that depresses the dollar, inflates oil, gas and food costs, and decreases the government's ability to address other issues, like unemployment and depressed home values.
Osama bin Laden was eliminated in 40 minutes by a special ops force of two helicopters carrying Navy Seals. The CIA had found him in a $1 million security compound built 5 years ago just for that purpose. For ten years, Bin Laden eluded the U.S. military forces that invaded Afghanistan in the War on Terror. Although costs estimates weren't given, it's clear that the special ops that achieved the War on Terror's primary objective cost much, much less than the $1.3 trillion spent on the War on Terror (supplementary budget alone!), including the wars in Afghanistan and Iraq.
Perhaps it's time to do a cost/benefit analysis on military spending. Perhaps less should be spent on weapons, research, and development (8.8% of the budget) and more on intelligence (.3%). Use the savings to reduce the deficit, or even boost the economy out of recession, reduce unemployment and jumpstart the housing industry.
By the way, Buffet believes the economy is on a slow, but steady, mend. In fact, he added, natural disasters, such as Hurricane Katrina and Japan's earthquake, have a greater economic impact than terrorism. Perhaps the Sage of Omaha would agree that a War on Global Warming, which the UN says causes increased natural disasters would be a better use of Federal funds than a War on Terror.
Where Does the $3.7 Trillion Go?
The compound where Osama bin Laden was killed by U.S. special forces. Source: U.S. government