Aug 1, 2011
After weeks of agonizing debate about the budget deficit and scare stories about a government default, the two parties finally sat down to do what they had been going to do all along – use this melodrama to push through a range of attacks on the standard of living of the population.
Certainly, if the U.S. defaulted, it would set off a massive hurricane rushing through global financial markets, making the financial collapse of 2008 seem like a light summer storm.
The U.S. government debt – about 14.3 trillion dollars – is the biggest in the world – bigger than the total debt owed by all 18 of the European countries put together.
If the U.S. stopped paying out to its bondholders, some of the biggest banks in the world would quickly collapse. And countries around the world, stuck with hundreds of billions of dollars in U.S. bonds, would be pulled down in the maelstrom also. Not to mention what would happen to funds the U.S. government supposedly holds in trust: Social Security for example, to which the government owes 2.7 trillion dollars; or cities and states, to which the federal government owes a half trillion dollars.
Given the predominant role played by the dollar in the world’s financial activities, economic activity would grind to a halt.
But the Democrats and Republicans were not going to make the U.S. default. And everyone knew it. Not because they care about the catastrophe a default would cause to the population, but because their goal was to appease global financial markets so the U.S. government could go on borrowing, adding to its debt.
That debt exists today because the U.S. government, for decades, has financed profits for its biggest financial and industrial groups by floating loans.
The big “bail-out” during the financial crisis of 2008-09 was only the latest in a long string of “bail-outs” for big business and big banking – that is, big capital. Before the “gifting” was done in 2008-09, the U.S. government – through the Treasury and the Federal Reserve – had provided the big banks and other financial companies with a total of 14 trillion dollars in gifts, loans, reserves, credit guarantees. To give so much money so quickly, the government itself had to take out big loans – from some of the big banks to which it gave the money!!!!
Now, some of those loans are coming due. And – according to the two parties – the population is supposed to pay.
It’s obvious that if the goal were to reduce the government’s debt, the two parties would have cut off all funding to the banks. First thing!
Second, they would have reinstated the tax code to the way it was in 1940, when individuals paid only 40% of all taxes and corporations and the banks paid 60%. (Today, it’s reversed – more than reversed: individuals pay 80%, while corporations pay only 20%).
Third, they would have revised the rate on individual taxes, putting it back to the way it was in 1940 – when the wealthiest paid almost all the individual taxes.
None of that would overcome the deeply entrenched problems of a foundering capitalist economy. But at least, they would take us a giant step forward, toward removing the weight that the capitalists have imposed on the rest of society.
But the politicians didn’t propose that, did they? That’s enough to show who they represent – and it’s not us!
Well, let them get their dirty hands off Medicare! Hands off Social Security! Hands off unemployment benefits, off Medicaid, off the highways, off the schools!