Bush's Class War
TOM MAERTENS
Thomas Jefferson said, "The public debt is the greatest of dangers to be feared by republican government." Yet, borrowing now pays for twenty percent of the total Federal budget.
George Bush's tax cuts are creating huge budget and current account deficits that undermine the financial stability not only of Social Security, Medicare and Medicaid, but of America's position in the world. Pete Peterson, Republican Secretary of Commerce under Reagan, has written, "...this administration and the Republican Congress have presided over the biggest, most reckless deterioration of America's finances in history."
Yet the Bush administration continues to run up the debt, following a strategy called "starve the beast" -- cutting government revenues. The purpose is to create a budget crisis that would leave Congress no alternative but to eliminate safety net programs.
The next raid on the Treasury will come in early February when the Congress tries once again to extend two more tax cuts for the wealthy. The richest one percent of the population already own 45% of the non-government assets in this country. Because of Bush's repeal of the inheritance tax, the fatcats will be able to pass those assets intact to their offspring, thus strengthening hereditary aristocracy. That's the kind of system that allows a modestly talented "C" student from the elite to use family and money connections to go through the best universities all the way to the White House.
Will noble titles be next?
The party of business has traditionally argued that if the rich do well, benefits will trickle down to the rest, and therefore it's in everyone's interest for the rich to get richer. If "trickle down" benefits everybody, then why are there 5 million more people below the poverty line in the U.S. than when Bush took office? As David Stockman, Ronald Reagan's Budget Director, once acknowledged, "trickle down" is a theory intended to justify unlimited greed. Indeed, the U.S. now has the widest inequality of wealth of any advanced country in the world, as measured by the respected Gini index.
The massive budget and current account deficits that Bush's policies created could lead to financial disaster if central banks lose confidence in the U.S. dollar. Rumors that South Korea's central bank was divesting dollar reserves caused a one-day swoon in the stock market last year. The Chinese announced this year that they will be diversifying their reserve currency. If the Japanese were to do the same, international confidence could collapse, resulting in a run on the dollar that would require a sharp rise in the interest rates demanded on federal debt. That in turn could sink the stock market, weaken banks and reduce private sector spending, creating economic chaos, according to Pete Peterson.
Despite the rhetoric, Bush's budget plan makes clear he has no intention of fixing the deficit. Instead, the government is using the temporary surpluses in the Social Security Trust Funds and off-budget spending to camouflage the true size of what we owe. Indeed, Bush still wants to make his tax cuts permanent, which would add another $2.1 trillion to the deficit over ten years. Rescinding the tax cuts, on the other hand, could guarantee the solvency of Social Security for a long time to come. But then, Bush's plan is not to rescue Social Security but to eliminate it.
As billionaire investor Warren Buffett has expressed it, "If class warfare is being waged in America, my class is clearly winning."
Thomas Jefferson said, "The public debt is the greatest of dangers to be feared by republican government." Yet, borrowing now pays for twenty percent of the total Federal budget.
George Bush's tax cuts are creating huge budget and current account deficits that undermine the financial stability not only of Social Security, Medicare and Medicaid, but of America's position in the world. Pete Peterson, Republican Secretary of Commerce under Reagan, has written, "...this administration and the Republican Congress have presided over the biggest, most reckless deterioration of America's finances in history."
Yet the Bush administration continues to run up the debt, following a strategy called "starve the beast" -- cutting government revenues. The purpose is to create a budget crisis that would leave Congress no alternative but to eliminate safety net programs.
The next raid on the Treasury will come in early February when the Congress tries once again to extend two more tax cuts for the wealthy. The richest one percent of the population already own 45% of the non-government assets in this country. Because of Bush's repeal of the inheritance tax, the fatcats will be able to pass those assets intact to their offspring, thus strengthening hereditary aristocracy. That's the kind of system that allows a modestly talented "C" student from the elite to use family and money connections to go through the best universities all the way to the White House.
Will noble titles be next?
The party of business has traditionally argued that if the rich do well, benefits will trickle down to the rest, and therefore it's in everyone's interest for the rich to get richer. If "trickle down" benefits everybody, then why are there 5 million more people below the poverty line in the U.S. than when Bush took office? As David Stockman, Ronald Reagan's Budget Director, once acknowledged, "trickle down" is a theory intended to justify unlimited greed. Indeed, the U.S. now has the widest inequality of wealth of any advanced country in the world, as measured by the respected Gini index.
The massive budget and current account deficits that Bush's policies created could lead to financial disaster if central banks lose confidence in the U.S. dollar. Rumors that South Korea's central bank was divesting dollar reserves caused a one-day swoon in the stock market last year. The Chinese announced this year that they will be diversifying their reserve currency. If the Japanese were to do the same, international confidence could collapse, resulting in a run on the dollar that would require a sharp rise in the interest rates demanded on federal debt. That in turn could sink the stock market, weaken banks and reduce private sector spending, creating economic chaos, according to Pete Peterson.
Despite the rhetoric, Bush's budget plan makes clear he has no intention of fixing the deficit. Instead, the government is using the temporary surpluses in the Social Security Trust Funds and off-budget spending to camouflage the true size of what we owe. Indeed, Bush still wants to make his tax cuts permanent, which would add another $2.1 trillion to the deficit over ten years. Rescinding the tax cuts, on the other hand, could guarantee the solvency of Social Security for a long time to come. But then, Bush's plan is not to rescue Social Security but to eliminate it.
As billionaire investor Warren Buffett has expressed it, "If class warfare is being waged in America, my class is clearly winning."
Powered by Blogger
0 Comments:
Post a Comment
<< Home