In U.S., Economic Stimulation Or Liquidation?
In his recent State of the Union speech, President Bush said that a fiscal policy of tax-cutting is the way to stimulate the U.S. economy.† It grew at a rate of just 0.7 percent during the last quarter of 2002, down from a growth rate of four percent the previous quarter.
Is the presidentís $674 billion proposed dividend tax cut the key to new growth?† Well, it certainly will put more capital in the hands of the well-heeled.
They will, presumably, invest in America.† Treasury secretary nominee John Snow agrees.
However, federal economic stimulation is needed now.† Take the needs of the cash-strapped state governments, most of which are going broke.
But the Bush White is turning its back on the states.† They are slashing their spending.
Such a federal policy takes money from the economy. No stimulation here.
Whatís the Bush White House really doing?† Itís not too complex.
They are pursuing a policy of economic liquidation.† This sounds harsh, and it is.
Federal government spending has for decades propped up the U.S. economy.† In sum, this policy has prevented market failure of the type that led to the Great Depression and World War II.
Today, removing money from the national treasury through tax-cutting for corporations and rich people means that there will be less of it in circulation.† Taking money from the economy means fewer dollars in people's hands with which to buy and sell goods and services.
For example, the wealthy wonít spend much of their money on necessaries.† By contrast, most working people do just that on food, rent and transport.
Such activity fuels growth.† Consumption of consumer goods and services creates jobs.
Meanwhile in the current situation of slow/no growth, more workers are chasing fewer jobs.† This reduces the cost of labor-power.
It is a big part of business spending, and typically the first to be targeted in a downturn.† Why?
Businesses canít cut the costs of purchased equipment.† It is mothballed during a recession.
But workers who operate them are terminated.† The lucky ones have their hours slashed.
Human beings suffer during an economic liquidation.† The last hired are the first fired.
Families burst apart from the stress of joblessness.† Peopleís mental and physical health is devastated.
In a recession, unprofitable businesses are liquidated.† Employees and the equipment they use are idled.
From airlines to telecoms, the picture isnít pretty for the U.S. economy.†
And thereís no end in sight.
Currently, the public could get relief from the market downturn if the Bush White House wanted to pursue a policy of economic stimulation.† But it is too busy creating the conditions to eliminate unprofitable businesses and their employees.
In this way, the business cycle can begin again.† And in the short-term, the people suffer in ways big and small.
Economic stimulation is one thing. The U.S. public is getting something else entirely.
The nature of this class war waged by Washington is becoming more transparent each day.† And the politics of how to respond to this assault is emerging, slowly.
Seth Sandronsky is an editor with Because People Matter, Sacramento's progressive newspaper. Email: email@example.com