There is a significant divide in opinion in how the US budget deficit should be cut – and this divide has been heightened in the wake of S&P’s downgrade of the US economy.
It seems the US Congress and financial institutions are more in tune with the interests of the wealthy and the large corporations (which are posting record profits) than those of ordinary Americans. Perhaps, no surprise there – as for all intents and purposes, the large corporations are the real rulers of the world, as veteran journalist John Pilger puts it.
Noam Chomsky writes for the NYT Syndicate:
For financial institutions the primary concern is the deficit. Therefore, only the deficit is under discussion. A large majority of the population favor addressing the deficit by taxing the very rich (72 percent, 27 percent opposed), reports a Washington Post-ABC News poll. Cutting health programs is opposed by overwhelming majorities (69 percent Medicaid, 78 percent Medicare). The likely outcome is therefore the opposite.
The Program on International Policy Attitudes surveyed how the public would eliminate the deficit. PIPA director Steven Kull writes, “Clearly both the administration and the Republican-led House (of Representatives) are out of step with the public’s values and priorities in regard to the budget.”
The survey illustrates the deep divide: “The biggest difference in spending is that the public favored deep cuts in defense spending, while the administration and the House propose modest increases. The public also favored more spending on job training, education and pollution control than did either the administration or the House.”
The final “compromise” – more accurately, capitulation to the far right – is the opposite throughout, and is almost certain to lead to slower growth and long-term harm to all but the rich and the corporations, which are enjoying record profits.
Not even discussed is that the deficit would be eliminated if, as economist Dean Baker has shown, the dysfunctional privatized health care system in the U.S. were replaced by one similar to other industrial societies’, which have half the per capita costs and health outcomes that are comparable or better.
The financial institutions and Big Pharma are far too powerful for such options even to be considered, though the thought seems hardly Utopian. Off the agenda for similar reasons are other economically sensible options, such as a small financial transactions tax.
Similarly, here in Malaysia, the government seems reluctant to raise taxes on the super-rich to raise revenue. Instead it prefers to raise revenue by implementing GST.
The other point that Chomsky brings out is that the financialisation of the economy (the shift to the unproductive or speculative finance, insurance, real estate sectors) and the spread of “free market doctrines” have dealt further blows to the US economy. At the same time, it has concentrated fabulous wealth in the hands of a tiny minority.