Our Phony Budget Battles Are All Smoke and Mirrors | | AlterNet
Our Phony Budget Battles Are All Smoke and Mirrors
Both parties in Washington have supported and sustained massive ongoing deficits propping up a crippled, state-dependent capitalism.
Both parties in Washington have supported and sustained massive ongoing deficits propping up a crippled, state-dependent capitalism.
Weeks of highly publicized debates - some in Congress, more in the mass media - brought Republicans and Democrats to a budget deal. To maximize public attention, they threatened a possible government shutdown. Both parties said that large government deficits and accumulated debt were "serious problems." They agreed that solving them required only spending cuts, not revenue increases. In unison, they repeated, "we" must "learn to live within our means."
In fact, both sides never actually engaged the deficit and the debt. They limited themselves to purely cosmetic, symbol-laden cuts (Republicans) and refusals to cut (Democrats). Aiming at the 2012 election, both parties used the deficit and budget debates purely to impress their voters.
Basic numbers tell the true story. The current (Fiscal Year 2011) budget spends about $3.5 trillion while receiving $2.0 trillion in tax revenues. The difference of $1.5 trillion (the equivalent of $1,500 billion) is this year's deficit. The US Treasury must borrow that from whoever will lend to the US government. After much hot air, Republicans and Democrats reached a "historic compromise," namely a spending cut of $38 billion. That will reduce this year's deficit from $1,500 billion to $1,462 billion, an economically insignificant sum. The sound and fury of Washington's debates signified nothing was to be done about the actual deficit.
