Under the Bush administration, the federal debt has reached record dollar amounts. The latest budget, which claims to cut the deficit in half in five years, is a work of fiction – under the Bush program, real deficits will continue to soar.
Wall Street and the international financial community have been very accommodating of the Bush spending spree. It wasn’t always this way. In 1992, candidate Bill Clinton campaigned on a program to invest in jobs to help people recover from the first Bush recession. After he won, Wall Street gave Clinton its orders: “Forget your campaign promises. You can’t spend money for jobs – every cent has to go to pay off the debt that Reagan and Bush ran up.” Clinton did what he was told.
So, how come Wall Street didn’t object when Bush ran up deficits that reached $700 billion this year? Because the bankers and investment houses are among the biggest beneficiaries of this wholesale looting. They are confident that when the bill comes due, they will make the working class pay the price.
Throughout this recession, the labor movement, progressive political leaders, and a growing number of economists have called for different priorities, such as emergency aid to states and cities, better unemployment and health benefits for laid-off workers, a federal jobs and infrastructure program. The deficit would have been far less, working families would have benefited instead of corporate CEOs, and more jobs – probably millions more – would have been created.
Last October, the New York Times reported that Wall Street, a heavy contributor to both political parties in the past, is now Bush’s biggest donor, thanks to the administration’s “pro-investor policy.” These campaign contributions are important, but Wall Street’s control over government policy goes far beyond a few tens of millions in political donations.
The federal government owes over $4 trillion to the public – mainly to wealthy individuals, financial institutions, and the investment funds they control. Each month in 2003, $300 billion came due; to make these payments, the U.S. Treasury had to borrow $300 billion, plus another $60 billion to cover Bush’s new deficit.
Where can the government go to borrow $360 billion every month? They borrow from where the money is – Wall Street.
That’s why the financial elite has so much power over presidents. They can choke off the financing that government needs to keep operating. And they exercise that power over state and local governments, too. But despite the banks’ power, they can be beat.
In 1978, six Ohio banks forced the city of Cleveland into default because Mayor Dennis Kucinch refused to sell the city-owned electric company to a private utility. The mayor lost the next election, but the city-owned utility was saved. Fifteen years later, Kucinich began his political comeback, defeating Republicans for state senate and U.S. Congress. His campaign sign was a light bulb with the slogan, “Because he was right!” Kucinich’s record of standing up to corporate and financial power is an important part of his campaign for the Democratic presidential nomination this year.
The Bush administration policies are designed to use the huge federal debt to tie the hands of any future president, giving Wall Street veto power over government spending. That is what Reagan and the first Bush did to Clinton.
Defeating Bush and his friends in Congress is the first step to a responsible federal budget. But we need more than that – a pro-worker, pro-people budget that will tax the rich, cut the military budget, and restore and expand spending to meet basic needs and get America working again. It will take a lot of organized strength from below to oppose the power Wall Street has at the top!
There’s an old song from the Great Depression. People are suffering, it says, but “The banks are made of marble / With a guard at every door / And the vaults are stuffed with silver / That the workers sweated for.” The song ends with a call for working people to stand together: “Then we will own those banks of marble / with a guard at every door / and we’ll share the vaults of silver / that the people sweated for.”
(Note: Although New York is still the financial center of the United States, I have used the term Wall Street to represent big financial interests from all over the country.)
The author can be reached at economics@cpusa.org.
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