AFTER President Obama’s announcement that he intends to impose a two-year wage freeze on Federal workers, the Obama appointed US deficit commission has called for deep cuts and tax rises.
The proposals of this National Commission on Fiscal Responsibility and Reform will cut $4.1 trillion (tn) (£2.62tn) from the Federal deficit by 2020.
Their plan, called the ‘Moment of Truth’, states that ‘The solution will be painful. There is no easy way out.’
The US had a budget deficit of $1.3tn in the year to September. The panel’s revised plan envisages reducing the budget deficit to 2.3 per cent of gross domestic product by 2015, from 8.9 per cent in the last fiscal year – a figure bloated by efforts to lift the US economy out of its deepest recession since the 1930s, plus the Bush-era tax cuts and two costly wars.
One businessman on the panel, David Cote, outlined the scale of the crisis by stating: ‘If you had spent a million dollars a day since Jesus Christ was born 2,010 years ago, you would still not have spent a trillion dollars. And that will be our annual interest bill.’
The commission’s latest attempt at a report was drawn up by panel co-chairmen Alan Simpson, a former Republican senator from Wyoming, and Erskine Bowles, a former White House aide to President Bill Clinton.
• To reduce social security retirement payments and raise the retirement age and the amount of wage income subject to the social security tax.
• To reduce the budgets of the White House and Congress by 15 per cent.
• To increase petrol tax by 15 cents a gallon.
• To slash the budgets of the Medicare and Medicaid federal healthcare programmes.
• To ‘trim’ government payrolls by sacking 200,000 federal workers by 2015, saving $13.2 bn.
• To ban medical malpractice lawsuits – a top Republican target.
The deficit has been driven forward by the wars in Iraq and Afghanistan, and the massive financial crisis, plus the impact of two large tax cuts pushed through by President George W Bush and the Republicans in 2001 and 2003.
The commission’s report comes as Obama and Republicans in Congress fight over whether to extend these tax cuts for the rich, one of the top issues facing the current Congress.
Commission chairman Bowles commented: ‘The era of debt denial and the denial of its consequences is over.’
The US Federal Reserve has meanwhile named the companies that it prevented from going bust in 2008 and the amounts that they were handed.
The documents’ release was ordered by Congress and reveal that the loans include $2.2 trillion to Citigroup, $2.1tn to Merrill Lynch, $2tn to Morgan Stanley, and $1.1tn to Bank of America.
A number of British banks were the recipients of massive hand-outs.
$863bn was handed to Barclays, $446bn to the Royal Bank of Scotland, $181bn to the Bank of Scotland, and $19bn to the Abbey National.
Bank of America’s aid included a pledge by the Fed for up to $118bn (£75.7bn; 90bn euros) of assets if loans and mortgage-backed securities turned sour.
The working class of the US, and of course, the UK is now being presented with this bill for the world crisis of the capitalist system.
The US workers are now extremely angry that tens of millions of US union funds have been spent supporting Obama, only to find that the US working class is his principal target.
It is time for the US trade unions to break with the Democrats and found a Labour Party that will fight for the interests of the US working class, and that means organising to overthrow US capitalism, to go forward to socialism.