Debate in the media and Congress about how to balance the budget
has ignored the most fundamental questions: why and how did the
federal deficit and four trillion dollar national debt come about?
THE "STRATEGIC DEFICIT"
The national debt is mainly a product of the Reagan-Bush years.
Ronald Reagan ran on a pledge to balance the budget. Why did he
create a huge deficit instead?
David Stockman, Reagan's first Budget Director, admitted in a famous
interview that the administration purposely created a "strategic
deficit" to achieve Reagan's real goals. He wanted to put in
place a mechanism for gutting programs created in response to popular
movements during the previous 45 years-programs like public housing,
youth employment, child nutrition, welfare, school lunches, food
stamps, and other programs which give ordinary people some floor
to stand on in hard times.
First the Reagan Administration cut taxes on corporations and the
rich, while it increased military spending, thus creating a huge
deficit. Then it claimed that there was no money left to fund social
programs-a claim which
the Democratic Congress of the time largely echoed.
Reagan cut the social safety net to create a large pool of desperate
people, willing to accept any work at any pay, and to send a message
to those who still had a job: "Stay in line or you'll be living
on the street with them." Bush continued to build up the deficit,
and used it to justify more cuts and pain for working people.
The current Congressional budget blueprint continues the strategy.
It gives a $245 billion tax break to the rich and increases Pentagon
spending by $34 billion, while it hacks $450 billion from Medicare
The deficit and national debt were created intentionally by politicians
of both parties, to destroy social programs which give working people
some protection against unrestrained corporate power. Together with
unemployment, shipping jobs overseas, the use of temp labor, and
other devices of corporate power, the deficit was created to strike
fear in the hearts of working people and weaken their ability to
CLINTON'S USE OF THE DEFICIT
President Clinton uses the deficit in the same way as Reagan and
Bush and the Congress: to make people more vulnerable to the brutality
of the market. As soon as he took office, Clinton declared that
"the deficit is larger than we thought," and abandoned
his campaign promises of large-scale job creation. Instead he proposed
to "re-invent government" and to cut 250,000 federal jobs,
freeze the wages of federal employees, and cut Medicare and Medicaid.
He no longer pretends to disagree with the Republicans on balancing
the budget, but only on timing.
WHERE DOES OUR MONEY GO?
Who benefits from the deficit? In addition to gaining greater political
control by cutting social programs, the rich also benefit financially
from the deficit. Interest payments on the debt have amounted to
more than $220 billion each year since 1990. This money has gone
to banks and wealthy investors who purchase Treasury notes. Instead
of taxing the rich, the government now borrows from them and pays
them billions in interest. According to a recent study, "Interest
payments [on the national debt] represent the largest transfer of
wealth in this century."
We face very serious problems in our society. Inequality. Unemployment.
Crime. Destruction of the environment.
But it is important to see that, while these are serious problems
for ordinary people, for the ruling elite they are not problems
but solutions. Each of the problems we face is a source of profit
or control for the elite: inequality to divide people; unemployment
to make them afraid; crime to justify more police; an environment
raped for profit. The rulers won't solve these problems. Their power
depends on them. The deficit is a false problem designed to cover-up
the real problem of government by the rich and for the rich.
The problems in our society are not inevitable. They are caused
by the lack of real democracy. They can only be solved by democratic
revolution, to put society in the hands of ordinary working people.
Please copy this flyer and pass it on.
New Democracy works for democratic revolution. Call John Spritzler
(617)566-9637. For free literature: New Democracy, P. O. Box 427,
Boston, MA 02130, USA. E-mail: email@example.com