The Budget Deficit

May 21, 2009

The budget deficit is expected to rise to $1.8 trillion by September 2009.

When one stops to analyze both the causes of the budget deficit, as well as the "solutions" offered by Republicans and Democrats alike, one sees that the entire matter is a class question. The fiscal policy of the government is to turn billions of dollars over to the big capitalists while forcing the working people to foot the bill.

To begin with, just two items–military spending and interest payments on the debt–account for 55% of the federal government's expenditures. Not including money spent on the wars in Iraq and Afghanistan, more than $3 trillion went to the Pentagon arms merchants over the last 5 years (surpassing the total new national debt accumulated during the same period). During 2008, $412 billion was paid out as interest to the big bankers. Since last fall, nearly $1 trillion in bail out money has been turned over to the big bankers, insurance giant American International Group (AIG), and auto companies GM and Chrysler LLC. In order to lavish such huge sums on the big capitalists, the government has been slashing or completely eliminating expenditures on
social services–programs which help the working people keep life and limb together.

When we look at the other side of the ledger–at government revenues–we get a very different picture. On this side we see the workers bearing most of the costs, while the capitalists pay next to nothing in taxes. Over the years the tax policy has become more and more regressive. In 1943 corporate income tax accounted for nearly 40% of government revenues while the workers' share amounted to about 27%. But each successive administration has created new loopholes for the rich while raising the taxes paid by the working people. By the late 1980s, the working people were paying 75% of the total federal tax bill. In the 2000s, corporate taxes account for only 10% of the federal tax bill. In addition, the large cuts in federal monies going to states and municipalities have sparked a rise in regressive local taxes.

The "solutions" which are emerging from Obama and the Congress will only further shift the burden onto the working people. At the same time, the budget crisis is another sign that the contradictions of capitalism are intensifying.

The working people must step up the struggle. The crisis of capitalism is grinding people into the dirt–forcing tens of millions into poverty, into part-time jobs and the unemployment lines, depriving the masses of vital needs such as housing, education, health, etc. Yet our country has vast productive forces and natural wealth–more than enough to meet all the needs of the people. The people are being forced to pay only to insure ever-greater profits for the capitalist class. The solution is in the hands of the workers themselves. Only by coming out in a nation-wide struggle of class against class can we secure our basic economic rights and force the rich to pay for the crisis of their capitalist system.

We say that the first step in resolving the debt and deficit crisis is a moratorium on the debt. This would include a halt on interest payments to the big bankers. In addition, we propose an end to the militarization of the economy. These two measures alone would put the government budget immediately into surplus, and these funds should be utilized to make needed investments in social programs–in health care, education, and so forth.