It has finally happened. After many threatened “fiscal cliffs” over the past months, the deadline of Feb. 28 passed that put in motion a 10 percent cut in federal government spending on most “discretionary” budget items. In this fiscal year alone, the federal budget is to be cut by $85 billion.
It’s called a “sequester,” but in truth it’s a budget heist in which both capitalist parties have colluded to rob the workers’ money at the behest of the big banks. Yet, according to President Barack Obama’s speech of March 1, the Republicans alone were guilty of forcing these big cuts in so many areas of the budget.
It is true that the Republicans have consistently opposed bringing in more revenue by raising taxes on the rich. But the Democrats are also guilty.
Obama signed the law back in 2011 that allowed the sequester to happen. Those depending on the Democratic Party thought it was a way to force the Republicans into a compromise on the budget. They were wrong.
Millions of people will be affected. This includes federal workers as well as those who depend on federally funded programs of all sorts.
The sequester rides roughshod over union contracts. Employees of federal agencies are being notified that they must take one unpaid day off per week through the end of the year. This “furlough” amounts to a 20 percent pay cut for these workers, whose pay has already been systematically cut since 2009.
The cuts will come “primarily through reduced grants, such as for Head Start, an anti-poverty program for preschoolers, and staff furloughs (unpaid days off). Since the government must give at least 30 days’ notice of furloughs, and most agencies have not yet done so, the public may see no impact until April.” (The Economist, March 1)
The $85 billion to be cut in this fiscal year is just the first installment. The sequester mandate is designed to slice $1.2 trillion from spending over a decade. This is only the beginning.
Why did Democrats think the Republicans would compromise and stop the sequester? Partly because these across-the-board cuts affect the budgets of the Pentagon and other repressive organs of the state.
Neither party wants to be seen as weakening the grip of U.S. imperialism, either abroad or at home. In his speech after the sequester deadline, Obama emphasized that it will hit areas related to military spending and “will create a ripple effect throughout the economy.”
However, Wall Street seemed to negate his argument by taking the cuts in stride. All the markets — the S&P 500, the Dow Jones Industrial Average and the Nasdaq — ended the day up by quite a few points. The big investors do not see this as bringing down the economy.
Fabulous interest payments to banks
The big banks that dominate the economy want to be sure they can continue to rake in the fabulous interest payments they get on the national debt. Interest on the debt hit a record in fiscal year 2011, reaching $454 billion — nearly half a trillion dollars. It is expected to become the fourth-largest budget item by 2021. (useconomy.about.com)
The military-industrial complex always wants more funds. Right now, the budgets for the Pentagon, the Veterans Administration, military pensions and other war-related expenses come to more than half of all discretionary funding. Clearly, if the government is going to save any money, that budget has to be cut.
The Pentagon’s first move is to cut the jobs and/or hours of civilian employees. Of course the military-industrial lobby will look for ways to protect the lush profits generated by the sale of big-ticket items to the government.
But even generals have signaled their frustration over the huge cost of these contracts.
Lt. Gen. Christopher Bogdan of the U.S. Air Force was in Australia the week of the sequester, trying to persuade the government there to stick to its plan to buy 100 fighter planes from the U.S. Washington sees Australia as important in its aggressive “pivot” toward Asia, which means the military encirclement of China.
Bogdan complained publicly: “What I see Lockheed Martin and Pratt & Whitney doing today is behaving as if they are getting ready to sell me the very last F-35 and the very last engine and are trying to squeeze every nickel of that last F-35 and that last engine.” (New York Times, Feb. 28)
The F-35 is the Pentagon’s most expensive program. “It could cost $396 billion if the Pentagon sticks to its plan to build 2,456 jets by the late 2030s.” The general seemed to be having a hard sell getting the Australian government to buy these expensive planes. Meanwhile, the military is finding that drones are a lot cheaper.
The CEO of Lockheed Martin, which makes the F-35, earned $25 million in 2012. Multiply that by all the top officers of all the firms that get military and “homeland security” contracts and you’re talking real money.
Unemployment is the real problem
At another time, this struggle wouldn’t be happening. The Pentagon would get whatever it wanted, and the government would still be able to keep the bankers happy while funding some social programs and keeping schools, hospitals and prisons open.
But not today. The difference is a worldwide capitalist recession is going on. Despite all the talk of a recovery, the situation of the masses is deteriorating all the time.
The real unemployment statistics, which include those who are “discouraged” and can’t actively look for work and also those working far fewer hours than they need to survive, are dismal. Young people have no future except unemployment or debt slavery. Even getting a college degree (which costs a small fortune) won’t guarantee you a job, and if you get one, it can be at minimum wage.
When people aren’t working, they’re not paying income taxes or the so-called payroll taxes that fund Social Security and Medicare.
That’s the real cause of the budget crisis. And behind the unemployment is the irrational and intractable crisis of the capitalist system itself.
Basically, it boils down to this: When technology reaches the high level that it’s at now, the capitalists are forced into cut-throat competition to get the latest labor-saving technology, which means laying off workers. If they don’t keep up, they are ruined.
All the mergers taking place are meant to eliminate jobs, whether it’s Office Max merging with Office Depot or American Airlines merging with US Airways.
Take away the capitalist profit motive and labor-saving technology can put an end to drudgery so everyone has more time for living. But in the hands of the 1%, it only leads to layoffs and misery for the masses.
This is a new period — one in which the working class will no longer need to be convinced that capitalism is terrible, but will be looking for answers about how to fight the damage it inflicts and how to get rid of it.