WHAT SHALL WE DO WITH THE SURPLUS?:

[T]he U.S. involvement in the Middle East has been costly in terms of both blood and treasure. Estimates of the unfunded cost of the war in Iraq exceed $3 trillion. That is before we fully factor in care of returning military veterans. We should expect a significant reduction of military spending to continue having a positive effect on federal deficits.

The bigger issue is the role of the U.S. in the Middle East if tensions with Iran are eased. Recall that for many years, the Middle East served as a proxy battlefield for the conflict between the U.S. and the Soviet Union and many of today's hostilities evolved from those earlier confrontations.

Perhaps the biggest unknown is the role of U.S. in the Middle East as the country becomes less dependent on the region for energy. It isn't just whether cessation of hostilities and ending of sanctions against Iran will create a peace dividend, but whether the U.S. footprint in the region will be as large and as costly. If the huge amount of American spending in the region were used domestically, say on infrastructure projects, the impact in terms of the economy and quality of life would be significant.

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