Workers Pay for Bosses’ Wars, Crises
The class of big businessmen (the owners and managers of Wall Street firms and major corporations like GM, GE, ExxonMobil and Microsoft), along with the politicians and generals who do their bidding, constitute a ruling class in the U.S. Their tremendous wealth and power enables them to control — and rule —government policy. However, divisions within this class, along with infighting between the two major capitalist parties, have made it very difficult to obtain changes in federal taxes and spending vital to their maintaining U.S. capitalism’s world dominance.
Federal government spending is now 23% of the gross domestic product (GDP), while federal tax revenues are only 16% of GDP. Thus the government runs a huge annual deficit and must borrow to pay for it. The total federal debt is now over $16 trillion dollars, requiring payment of more than $220 billion in interest last year. In 2012, the deficit was $1.1 trillion, the fourth consecutive year the deficit exceeded one trillion dollars.
The rulers recognize the problem and have gone to great lengths to try to solve it. So far they’ve failed. In 2009, Obama appointed a bi-partisan Commission on Fiscal Responsibility and Reform (CFRR), headed by ex-Senator Simpson (Republican), and ex-chief of Staff Bowles (Democrat). The CFRR’s top concern was to push back rising U.S. competitors. Their report concluded: (1) high interest rates make U.S. businesses uncompetitive; (2) deficits make it harder to finance “emergency needs such as wars and recessions”; (3) China, “a nation that may not share our country’s aspirations and strategic interests,” is a huge holder of U.S. debt; and (4) investors could lose confidence in the U.S. ability to repay its debt, “triggering a debt crisis” and forcing the government “to implement the most stringent of austerity measures.”
The CFRR plan demanded slashing spending on Social Security, Medicare and other social programs and lowering corporate taxes while insulating war spending from cuts.
Like all bosses, U.S. rulers fight among themselves through the political parties they control. Those squabbles have so far derailed the CFRR’s plan. The recently passed fiscal deal will do virtually nothing to reduce the deficit. It will increase tax rates on the very rich to 39.6%, which is still historically low (the rate was 91% under Eisenhower and 70% under Nixon). Payroll taxes workers pay for Social Security and Medicare will rise while cutting a few exemptions and deductions for high-income earners. But this entire tax deal will net just $620 billion in revenue over 10 years, not enough to cover even the $1 trillion annual deficit.
That section of the ruling class whose profits depend on having a powerful U.S. world presence, from the Middle East to Asia — which includes big Wall Street banks, oil and gas companies like Exxon-Mobil, weapons manufacturers like Boeing and other multi-nationals — is clearly alarmed by these big deficits. As the CFRR report says, they fret that huge deficits endanger the big increases in military spending required to meet the challenges posed by U.S. rivals. According to Admiral Mike Mullen, the national debt is the “[U.S.] biggest security threat.”
Although the U.S. has been increasing military spending 9% a year (mostly for its wars in Iraq and Afghanistan), China has been increasing its military spending by 13% a year for the past 15 years, mostly for new weapons, ships and submarines. Though the U.S. still has the world’s most powerful military, China is catching up. It has aggressively pursued its territorial claims in the South China and East China Seas. China will surpass the U.S. as the world’s largest economy within the decade. It is vigorously contesting U.S. economic dominance in region after region, from Latin America to Japan and Korea to Egypt, whose new president Morsi recently went to Beijing seeking more trade and investment.
To counter China’s rising power, the Obama administration announced it will increase U.S. military presence in the Pacific. It has also vowed to contain Iran and not allow it to obtain nuclear weapons. Either one of these conflicts could lead to war and would require trillions of dollars in military spending immediately.
The ruling class won’t surrender until its power is crushed by masses of revolutionary workers. It is working overtime to win workers to fascist ideas — sacrificing for the “national interest” and supporting fascist tactics like torture (portrayed in the new movie “Zero Dark Thirty”). Groups like Fix the Debt (run by billionaire hedge fund manager Pete Peterson, with Simpson and Bowles of the CFRR as key members) plot to convince millions of people, from retirees to veterans, to accept a lower standard of living.
The next “cliff” will be March 1, the deadline for negotiations over raising the debt ceiling. To stimulate the war fever necessary to cut social programs and maintain their top-dog position, the rulers will undertake whatever they think necessary, including orchestrating a 9/11-type incident or provoking a military confrontation in the Persian Gulf or the Pacific.
A system that cannot survive without imperialist wars and massive attacks on workers’ standard of living must be destroyed. That’s why every CHALLENGE reader should consider joining PLP and organizing to smash capitalism now.
Latest Scheme Not Enough
Ruling-class spokesmen sharply attacked the fiscal deal for failing to provide the revenues necessary to maintain U.S. supremacy. Richard Haas, president of the Rockefeller-led Council on Foreign Relations, complained: “There’s a sense that we’ve been playing roulette with our position, and this deal does nothing to stop that.” New York Times’ columnist David Brooks scolds Congress and Obama for failing to slash Medicare now, saying the U.S. must choose between being a “global military power” and a “welfare state,” and can’t be both (1/8/13).
In case anyone missed the point, David Sanger, the Times’ chief Washington correspondent summarized: “With economic growth harder to come by, the only obvious way to make major cuts in the budget is to go after Social Security, Medicare and [the] $1 trillion national security budget — which includes the military, intelligence, diplomacy and development. And whenever the United States decides not to engage in some part of the world, countries look to a new source of investment and aid: China” (NYT, 1/4/13).
