Hoax of the ‘fiscal cliff’: How Pentagon feasts while jobless crisis drains budget
By Deirdre Griswold
January 7, 2013
On the day that the country was supposed to fall over the “fiscal
cliff,” Congress finally voted for a bill on taxes and other measures
that kept the government solvent for another two months. The Obama
administration claimed victory over the Republican right wing.
However, even the liberals in the Democratic Party camp couldn’t claim
that the vote resolved anything. While the Bush tax cuts for the rich were
allowed to expire on those earning more than $400,000, it’s dubious how
much more they will really pay, since they can avail themselves of many tax
shelters and dodges. And even with these small increases, the rich in the U.S.
still will pay the lowest income and estate taxes in any industrialized
The struggle goes on, with the deadline for adopting a budget now being put
off until March. By voting late in the evening of Jan. 1 on taxes, the two
capitalist parties have made sure that the Pentagon’s huge slice of the
pie — estimated to be more than half of all government discretionary
spending when veterans’ benefits and war debts are factored in —
remains intact and the bond markets wouldn’t spin out of control.
Workers, of course, are rightfully relieved that the deal included keeping
their extended unemployment benefits. But the ruling class agreed to that not
because they care about the workers, who they laid off, but because the
unemployed spend every penny of that check right away, greasing the wheels of
trade and commerce. That’s unlike the very rich, who squirrel their money
away in tax-sheltered offshore accounts. Cutting off the meager incomes of many
of the unemployed could send the economy into another nosedive, and the
politicians on all sides know that.
It would also alienate more workers and push them in the direction of
Stealing from workers to pay for repression
The compromise on taxes only postpones the issue of the budget. In March, it
will all come to a head again. There will be another “cliff,” with
the most blatant lackeys of the super-rich saying that the government will
grind to a halt unless major spending cuts are made.
Of course, they could just vote to raise the debt ceiling and the government
could then go on borrowing money, as it has been doing for decades. But
they’re threatening not to do that.
So in March the same pressure will be on to find ways to steal funds from
Social Security, Medicare, Medicaid and other programs so vital to the masses,
in order to pay for the real function of the capitalist state.
And what is the state’s real function? It is to protect the interests
of the ruling class. In the U.S., this means having the most expensive military
force in the world in order to defend global capitalists’ exploitation of
resources and labor, from the Middle East to Africa, Asia, Latin America,
wherever there are superprofits to be made.
And, on the domestic side, it means spending vast sums to run the
world’s largest system of prisons, police, courts and the deliberately
misnamed “homeland security” system. It takes lots of money to
maintain a racist, anti-worker injustice system that controls 7.3 million men
and women — who are behind bars, on probation or on parole. This system
of mass incarceration is also a source of profit for the privately owned
prison-industrial complex, but the financial burden of the system remains on
the state. Millionaires profit from it, but workers’ taxes have to pay
Repression is the basic function of the capitalist state, as explained by
Marx and Lenin. The state enforces the rule of a very tiny minority of people,
the capitalist class, over the vast majority, the working class.
And today, these workers increasingly cannot find work, not just here but
all over the capitalist world. So the budget crisis is an inevitable outcome of
this era of jobless recovery, when the ability of capitalism to expand has come
to a dead end.
The budget crisis can only be understood in this context.
Jobless capitalism behind budget crisis
This ongoing, unsolvable unemployment crisis flows directly from the current
stage of capitalism. Technology has replaced workers to an unprecedented
degree. It has globalized the labor market as never before. So in this country
alone, tens of millions are either unemployed or underemployed.
This drains the government Treasury. Fewer people working on the books means
fewer taxes coming in — whether income taxes, payroll taxes or sales
This can be felt at all levels of government. Cities like Detroit,
Baltimore, Chicago, which were formerly vibrant centers of industry, are in
crisis. States, counties, villages are cutting back services and laying off
workers. The U.S. Postal Service, which goes back to the 19th century, is under
attack, with branch offices shutting down and workers eliminated.
Now comes the next step: putting on the chopping block huge federal programs
like Social Security, Medicare and Medicaid. They are a prime target of the
budget-cutters because that’s where the money is — since the ruling
class won’t consider any meaningful cuts to the bloated military, the
police/prison systems or the huge interest payments made to the banks. This
interest reflects past deficits — mostly related, again, to the huge
The money deducted from workers’ wages for Social Security and
Medicare is called “payroll taxes” and is meant to provide income
security and health coverage in workers’ old age. In fact, this money is
nothing more than deferred wages.
At the beginning of 2011, to counteract the recessionary effects of high
unemployment, Congress passed a law that lowered the payroll tax by 2 percent
in 2011 and 2012, adding an average of $1,000 to take-home pay for those years.
It also reduced the moneys going into the Social Security fund at a time when
it was under attack. In the deal signed this Jan. 1, the Social Security tax
was returned to its original 6.2 percent rate, meaning that workers’
after-tax wages this year will be about $1,000 lower than last. That loss will
be felt keenly in the working class. There’s no comparison with the few
luxuries the rich might have to forego.
Whatever the plans of the bosses regarding cuts to Social Security and
Medicare, they have to take into consideration that workers’
consciousness is changing as a result of the economic crisis. There is great
anger among the people at the 1%, the hugely rich who grow even richer while
workers are impoverished and youth have no futures. And polls show the people
don’t want trillions spent on wars that enrich only the energy companies,
the military-industrial complex and the banks.
This is where the ingenuity of capitalist democracy kicks in. This is what
the two-party system is for — to dominate the discourse, frame the
arguments and conceal what is really happening from the workers.
An across-the-board cut in all federal spending was mandated to begin on
Jan. 1 if no budget deal was reached. It would have included the Pentagon along
with all other departments.
But did anyone really believe they would cut the Pentagon? Didn’t we
all know that both capitalist parties wouldn’t let that happen?
Of course, they had a contingency plan — one that both parties hoped
would make them look good.
The Democrats succeed in having more appeal to the masses than the
Republicans — the November vote reaffirmed that. The Democratic Party won
the popular vote by a clear majority at all levels — for the presidency,
the Senate and even the House. Although, taken altogether, Democrats running
for the House got half a million more votes than Republicans, the widespread
gerrymandering of election districts allowed the Republicans to maintain a
majority of the House seats. It was a crooked election — but legal under
Having a divided Congress, however, is actually a convenient arrangement for
both parties. It allows them to blame the other for all the problems and makes
it seem that concessions are a necessary part of the process. If no concessions
and no compromise, boom, you will fall over the cliff.
There is no cliff — it’s a phony crisis, as even capitalist
liberals are pointing out. But they blame it solely on the Republicans for
refusing (as of now) to raise the government’s debt ceiling or raise more
in taxes from the rich. They leave out entirely a critique of the capitalist
system, and they reduce it merely to a problem of government policy.
That’s like saying that a person who dies at 110 years of age did so
because of this or that wrong medicine or procedure. No, the person died
because his or her body was worn out. Any palliative measures would only have
prolonged the dying.
Capitalism is a dying system — but one that still has enormous
destructive power. Its once progressive side, the rapid development of the
means of production under private ownership, has turned into an enormous
obstacle to further human development and even to life on our planet.
The budget crisis in the U.S. is but one symptom of this, but one that
rivets the workers’ attention because it so clearly impacts their lives
in so many ways.
We need to get out our revolutionary message to them: Compromising with this
or that capitalist party is no answer.
The most realistic and meaningful thing anyone can do right now is work to
build an independent, fighting movement for complete social change, based in
the class struggle of the workers and allied with all the most oppressed. This
is the only way to break the grip of the capitalist class and restructure
society on a planned, socialist basis, which will not just put a bandaid on
poverty, racism and imperialist war, but can and will eliminate these evils