The “fiscal cliff” has its origins in the budget-ceiling debacle in 2011. In order to fund the expansion of the security state, the extension of the Bush tax cuts, and the continuation of imperialist wars overseas, President Obama requested an increase in the debt ceiling, allowing the U.S. Treasury to issue more bonds and thus finance government spending in excess of revenue from taxes.
This is ordinary practice; the debt limit has been raised 74 times since March 1962.
In 2011, however, Republicans in the House and Senate refused to authorize a debt-ceiling increase that did not include massive cuts to education, jobs, and other programs that ordinary people rely on. In grand
tradition, the solution was the
formation of a committee. Washington
The crisis was “resolved” through the passing of the Budget Control Act of 2011, which allowed for a rise in the debt ceiling, but also required that a committee be formed, the Joint Select Committee on the Budget, tasked with eliminating $1.2 trillion dollars from the federal budget. This committee was staffed with legislators from both major parties, and in order to get them to comply, a further provision was included in the bill—if the committee failed to agree on the necessary cuts, what is known as “sequestration” would occur.
This entails automatic cuts to the tune of $500 billion each over 10 years from defense spending and non-defense discretionary spending. (Non-defense discretionary spending is the money, outside of military expenditures, that the government spends from year to year. Included in this is the vast majority of education and other government services, like Head Start, housing assistance, Pell grants, national science research, and the federal highway system).
Of course, the committee did not agree on a single dollar of cuts, and so sequestration, the “fiscal cliff,” is set to go into effect on
Jan. 1, 2013.
The most important thing to remember is that this crisis is entirely manufactured. The legislation has no binding effect on future Congresses; the new legislature elected into office in November can simply decide not to enforce sequestration and the problem will be solved. The cuts themselves will do little to assuage the growth of federal debt; non-defense discretionary spending (both parties have insisted that they will resist defense cuts by any means necessary) consists of only 19% of the federal budget and the cuts would have the effect of merely slowing down the growth rate of debt, rather than any meaningful debt reduction.
The greatest driver of debt growth in the
, besides the ever-expanding
military machine, is a health-care system designed to safeguard the profits of
the insurance industry. According to the Congressional Budget Office, by 2016,
federal spending on health care will outpace discretionary spending in absolute
terms. United States
The quickest solution to the debt crisis, then, would be the immediate institution of a nationalized health-care system that provides for all based on need, rather than a predatory system that siphons off funds from the people and the public treasury to post mind-boggling profits. Instead, the most likely outcome will be a “compromise” in the Obama tradition—token tax increases along with deep cuts to social programs. It would be another step toward European-style austerity, in which the working masses of the world have to own up to the “shared responsibility” of recovering from a crisis imposed on them by the predatory capitalist system.
> The article above was written by Usman Khan Yusufzai, and is reprinted from Socialist Action newspaper.