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Blackmail In Washington

By Serge Halimi

08 August, 2011
Le Monde diplomatique

The squabbles between President Obama and the Republican majority in Congress over US debt obscure the main point: under covert pressure from his opponents, Obama has agreed without further ado that $3,000bn, more than three-quarters of the budget reduction he wants for the next ten years, will be covered by cuts in social services. Not content with this victory, the US right wants more — even if its unrelenting demands are likely to be unpopular with voters.

Bowing to the Republicans in Congress, Obama first agreed in December 2010 to extend for a further two years the hugely inequitable tax cuts introduced by his predecessor, George W Bush. Four months later, taking his cue this time from Ronald Reagan, Obama cheerfully announced “the largest annual spending cut in our history”. He then embarked on a series of negotiations with Republican members of the House, adding: “I am prepared to take on significant heat from my party to get something done.” The result: further concessions from the White House.

The US right is dead set against raising taxes to reduce the debt. This may seem odd in a country where, as a result of the tax concessions showered on the super-rich, overall tax rates are the lowest in 50 years. But, quite apart from their manic attack on public spending, the Republicans’ real aim is to “starve the beast” — that is, to quote a Republican strategist, to “cut government down to the size where we can drown it in the bathtub”.

What are the real reasons for the recent increase in the US public debt? First, the economic crisis resulting from financial deregulation in recent decades; then the regular extension of the tax reductions voted in 2001 (revenue loss: $2,000bn); and last the post-9/11 wars in Afghanistan and Iraq (cost: $1,300bn). Yet the party of Reagan and Bush aims to solve the problem by protecting the super-rich as “job creators”, and the Pentagon budget, which has increased by 67% (in real terms) over the past ten years.

Paul Ryan, chairman of the House of Representatives Budget Committee, explained the Republican plans for coming decades in detail on 5 April. Public expenditure, currently 24% of gross domestic product, would amount to only 14.75% of GDP in 2050, and the maximum tax rate would be reduced from 35% to 25% (the lowest rate since 1931). All the special tax concessions would be maintained, while reimbursement of health charges paid by the old and the poor would be frozen at their current level, despite escalating costs. If Obama continues to back down, US public services will soon look like that drowned body in the bathtub.

Translated by Barbara Wilson

 

 



 


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