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The politics of President Bush's Budget « Previous | |Next »
February 14, 2005

I know the imperial President's Budget is last weeks news. I was going to blog on it when in Canberra last week, but I did not get around to it. I lacked the energy to work through the figures. However, the post is justifiied because there has been little commentary in Australia and the budget's anti-welfare Republican politics is significant.

The headlines reflected the budget's rhetoric about "taking the steps necessary to achieve our deficit reduction goals", and it set a goal of reducing the deficit by half by 2008. But it omitted all spending for the wars in Iraq and Afghanistan, and had it contained even more tax cuts for the wealthy.

Brad deLong, says that not even the Republicans were impressed. Nouriel Roubini was shocked by all the voodoo magic.

From an Australian perspective the proposals to privatize social security are deeply problematic:

CartoonThompsonaph1.jpg
Mike Thompson, Barrel o'Monkeys

Bush wants tens of millions of Americans to take a loan from government (using their future social security payments as security) and use the loan to buy stocks. Paul Krugman gives us the low down on how the strategy of borrow, speculate and hope works:

Here's how it would work. First, workers with private accounts would be subject to a "clawback": in effect, they would have to mortgage their future benefits in order to put money into their accounts.

And the implication of this? Are workers better off by playing the stockmarket?

Krugman says no:

Jason Furman of the Center on Budget and Policy Priorities estimates that the guaranteed benefits left to an average worker born in 1990, after the clawback and the additional cuts, would be only 8 percent of that worker's prior earnings, compared with 35 percent today. This means that under Mr. Bush's plan, workers with private accounts that fared poorly would find themselves destitute.

If the investments go wrong, benefit cuts would leave people poorer than if they had never opened that private account.

I do remember reading about lots of cuts to domestic programes as a gesture to fiscal responsibility. I thought at the time that it was designed to undermine Roosevelt's New Deal, which was put in place to protect Americans against the extreme economic insecurity of the 1930s. Social security is a key part of the welfare state and Bush's proposals cut a big hole in its foundations.

The welfare state is on the chopping block by the Republican president. Krugman again:

..the budget proposal really does take food from the mouths of babes. One of the proposed spending cuts would make it harder for working families with children to receive food stamps, terminating aid for about 300,000 people. Another would deny child care assistance to about 300,000 children, again in low-income working families.

These savings are small change compared with the budget deficit, yet they will harm hundreds of thousands of the most vulnerable Americans.

The politics of the budget is that the welfare state of the republic has to go as part of the shift to the empire's warfare state.

| Posted by Gary Sauer-Thompson at 4:49 PM | | Comments (1)
Comments

Comments

Gary,

Its amazing how short the collective memory in the USA. This social "security" scam is just another version of the Savings & Loan scam-dal
of the 80's--all the smarties and sharks in a greed driven feeding frenzy. It will probably make the S&L scenario seem like chickenfeed. The Bush "boys" did very nicely out of the S&L scam too. John