Bush Budget offers trilion for the rich, cuts for the poor

By Dave Bernt

The $2.4 trillion budget proposal announced by the White House surely brought smiles to the faces of the ruling rich of this country. The budget calls for massive increases for the military while slashing funding for domestic programs.

The proposed budget also includes a further $1.1 trillion in tax cuts by making permanent past tax reductions—which almost exclusively benefit the rich. The budget will lock in cuts that have given the average millionaire an extra $90,000 a year. Corporate tax receipts have reached their lowest point as a percentage of the GDP since the 1930s.

Spending on non-military programs would be frozen or cut. Total spending on non-military items are projected at 0.5% per year, well below the rate of inflation.

Major cuts would affect low-income housing and programs for education, water resources, parks and the environment, funding for the arts, child care, and much more. Thirty eight programs are to be eliminated altogether.

The cuts in domestic spending affect all the departments of the government and are aimed almost exclusively at programs that benefit working people. For instance, cuts in a housing voucher program will reduce the number of poor families receiving housing subsidies by 250,000. This is just one of hundreds of cuts across the board.

And these cuts are being proposed at the same time that a record high 375,000 jobless workers exhausted their unemployment benefits in January, and an estimated 2 million will be in same predicament during the first half of the year.

While programs that benefit working people are being slashed, the military will receive major increases. Total military spending will rise to $401.7 billion, a 7.1 percent increase.

That amount, and the projected deficit, do not include funding for the colonial occupations of Iraq and Afghanistan. That sum could be as high as $50 billion, according to the Bush administration.

The Department of Homeland Security will receive a 10 percent increase over last year.

While the Democrats’ initial response to the budget has been to denounce it as an anti-anti-worker, anti-poor, anti-environment proposal, the Democrats will surely end up backing the main parts of the budget.

Although the Democrats will seek to position themselves as friends of workers and the poor, especially in an election year, their past performances give us a good idea of what the Democratic Party opposition will amount to. Bush’s initial $1.35 billion tax cut passed with the help of 12 Democratic senators and 38 Democratic representatives.

It is also worth noting that under President Clinton domestic programs were similarly slashed. The combined cuts under the Clinton administration were more than the three previous Republican administrations.

One of Clinton’s proudest accomplishments was the passing and signing of the infamous 1996 welfare reform bill, which dropped 2.2 million families from the welfare rolls by the end of his administration. The Economic Policy Institute calculates that 47 percent of these families have experienced critical hardships such as going without food, shelter, or necessary medical care.

The announcement by the Bush administration that the federal government expects a budget shortfall of $521 billion for fiscal year 2005, the largest deficit ever in dollar terms, underscores the deepening economic crisis in the United States and a continuing threat to the world capitalist economy.

The reason for the shortfall is clear enough—declining revenues as a result of economic recession and trillion dollar give-aways to the rich in the form of tax cuts and military spending. As profit rates decline, the government uses the budget to boost the profits of their friends in big business. The only way to pay for this massive give-away is deficit spending. A recent report by the International Monetary Fund released on Jan. 7 warns of the potential disastrous consequences of the runaway U.S. debt.

The IMF report noted that within a few years the U.S. external debt would be equal to 40 percent of its total economy. The report warned that the debt the U.S. owed to the rest of the world could be so high that it could have a significant impact on the value of the dollar and international interest rates.

The bankers fear that a substantial rise in international lending rates would slow global investment and deepen even further the international economic crisis.

Whatever short-term benefit the ruling rich may get from Bush’s budget, they will pay for it later in continuing economic instability. All the cuts in social services, and trillion dollar tax and spending give-aways, can’t solve the fundamental contradictions in the capitalist system.

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