As far as economic damage goes, it is really hard to say. War provides an enormous boost to economies, as new jobs are created and the government pumps massive amounts of money into the economy. The question is whether the economy grows enough during wartime to pay off the debts down the road. In some wars, such as World War II, it does. Regardless, there should be a short-term boost. It is doubtful this war will be long enough or costly enough to make as big of a difference as a lot of people want to pretend.

As far as political consequences, if we win, it will significantly strengthen the U.S. credibility. Winning a war has a calming effect on quasi-allies as well as enemies. We can hopefully prevent future wars and prevent the destabilizing spread of nuclear, chemical, and biological weapons. Germany will be isolated by refusing to go to war, perhaps France as well, while Britain and the U.S. will get a boost in perceived power.

If we lose the war (all the Iraqis have to do is fight us to a draw), then the U.S. loses credibility and the world smells blood. We will be powerless to stop the spread of weapons of mass destruction and will actually speed the spread of world conflict. As we lose economic clout, our economy may suffer, but our relations with our allies, for engaging in an unpopular war, will suffer more. Our enemies will take advantage of our weakness. Power perceived is power achieved. We will be next to powerless to protect our interests.

As far as terrorists go, they have not launched a large successful attack in any first-world country since 9-11. If we defeat Iraq, it will give the public renewed confidence (unless Bush wants to keep hysteria high with his "terror alerts"). Terrorists will be increasingly active, especially targetted at the U.S., but I don't know how much more so than if we showed weakness by backing down from war. Terrorism in Israel might decrease from less money going to the families of suicide bombers, but it might also go up from increased antagonism.

Basically, what I'm ending up with is a mixed bag. Most of the consequences, such as Arab anger and world frustration at United States unilateralism has already been suffered and backing down isn't going to help it much while showing signs of weakness. The rest could go either way, but probably won't change too drastically.

-Biscuits