
The “fiscal
cliff” has its origins in the budget-ceiling debacle in 2011. In order to fund
the expansion of the security state, the extension of the Bush tax cuts, and
the continuation of imperialist wars overseas, President Obama requested an
increase in the debt ceiling, allowing the U.S. Treasury to issue more bonds
and thus finance government spending in excess of revenue from taxes.
This is
ordinary practice; the debt limit has been raised 74 times since March 1962.
In 2011,
however, Republicans in the House and Senate refused to authorize a
debt-ceiling increase that did not include massive cuts to education, jobs, and
other programs that ordinary people rely on. In grand Washington tradition, the solution was the
formation of a committee.
The crisis
was “resolved” through the passing of the Budget Control Act of 2011, which
allowed for a rise in the debt ceiling, but also required that a committee be
formed, the Joint Select Committee on the Budget, tasked with eliminating $1.2
trillion dollars from the federal budget. This committee was staffed with
legislators from both major parties, and in order to get them to comply, a
further provision was included in the bill—if the committee failed to agree on
the necessary cuts, what is known as “sequestration” would occur.
This
entails automatic cuts to the tune of $500 billion each over 10 years from
defense spending and non-defense discretionary spending. (Non-defense
discretionary spending is the money, outside of military expenditures, that the
government spends from year to year. Included in this is the vast majority of
education and other government services, like Head Start, housing assistance,
Pell grants, national science research, and the federal highway system).
Of course,
the committee did not agree on a single dollar of cuts, and so sequestration,
the “fiscal cliff,” is set to go into effect on Jan. 1, 2013 .
The most
important thing to remember is that this crisis is entirely manufactured.
The legislation has no binding effect on future Congresses; the new legislature
elected into office in November can simply decide not to enforce sequestration
and the problem will be solved. The cuts themselves will do little to assuage
the growth of federal debt; non-defense discretionary spending (both parties
have insisted that they will resist defense cuts by any means necessary)
consists of only 19% of the federal budget and the cuts would have the effect
of merely slowing down the growth rate of debt, rather than any meaningful debt
reduction.
The
greatest driver of debt growth in the United States , besides the ever-expanding
military machine, is a health-care system designed to safeguard the profits of
the insurance industry. According to the Congressional Budget Office, by 2016,
federal spending on health care will outpace discretionary spending in absolute
terms.
The
quickest solution to the debt crisis, then, would be the immediate institution
of a nationalized health-care system that provides for all based on need,
rather than a predatory system that siphons off funds from the people and the
public treasury to post mind-boggling profits. Instead, the most likely outcome
will be a “compromise” in the Obama tradition—token tax increases along with
deep cuts to social programs. It would be another step toward European-style
austerity, in which the working masses of the world have to own up to the
“shared responsibility” of recovering from a crisis imposed on them by the
predatory capitalist system.
> The
article above was written by Usman Khan Yusufzai, and is reprinted from
Socialist Action newspaper.
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