In U.S., Economic
Stimulation Or Liquidation?
by Seth Sandronsky
Dissident Voice
February 4, 2003
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
president’s $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.
What’s the Bush
White House really doing? It’s 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 won’t 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 can’t
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.
People’s 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 isn’t pretty for the U.S. economy.
And there’s 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: ssandron@hotmail.com