Monday, December 21, 2009

U.S. Government Policies Setting Up Grounds for Widespread Social Unrest

Not only is reckless spending of the U.S. Government careening out of control, their policy choices are setting up fertile grounds for an eventual citizens revolt. Consider this, on Saturday the U.S. Congress passed a $636 billion defense spending bill for 2010. Unlike the badly needed healthcare bill which has got mired in political bickering over the need to maintain "fiscal discipline" the defense spending bill passed with overwhelming support from both parties. Moreover the $626 billion cover only 60% of the ~$1 trillion in projected defense spending for 2010. According to a report by Joe Kishore:
[While] the bill includes some $128 billion for the wars in Iraq and Afghanistan, it does not fully fund the Obama administration’s escalation in Afghanistan, making likely further appropriations for war spending next year. The deployment of 30,000 additional US troops is expected to cost $35 to $40 billion a year. All told, US military spending in 2010 will be close to $700 billion. If one adds the hundreds of billions of dollars in military-related spending included in the budgets of other departments, the total is as much as $1 trillion.
So rather than cut discretionary defense spending (which the U.S. can afford since it is the world's sole military superpower) our Congressional brethren have begun identifying essential public programs to make the necessary spending cuts. As Joe Kishore points out in the same article:
Meanwhile, states, cities and school districts throughout the country are imposing cuts to balance budget deficits that add up to a small fraction of the military spending bill. School districts, in particular, are planning crippling cuts in preparation for the second half of the school year, beginning in January. Below are some examples of measures recently pushed through or planned:
• $550 million in K-12 education cuts in Michigan, leading school districts to lay off staff, close schools and eliminate programs.
• $300 million in cuts to K-12 education in Indiana. This amounts to an across-the-board 3-percent cut in the state’s education budget.
• $101.5 million less for public schools in South Carolina, adding to cuts of $85 million in September, along with $38.3 million in Medicaid cuts.
• $110 million in cuts to the 127,000-student Prince George County School District in Maryland, including 490 layoffs, an increase in class sizes, and teacher furloughs.
• $750 million withheld from local governments by New York Governor David Paterson, including funding cuts of between 10 percent and 30 percent for school districts.
• Plans for up to $470 million in cuts to public education in Los Angeles, California, including up to 8,000 layoffs.
The combined budget deficits for all 50 states this year was about $180 billion, less than one third of the military appropriation passed by the House.
Congress can find $1 Trillion to spend on defense for just 1 YEAR, but has no money for essential services like education? What sense does this make? And according to Joe Kishore, it does not end there, Congress is targeting ever larger spending cuts:
After authorizing the military spending by a wide margin, both the Democrats and Republicans made clear that they are planning for a year of fiscal austerity, in which non-military spending programs will be targeted. Obama is set to launch his campaign for cost-cutting in his State of the Union speech in January. One measure being considered to force through cost cuts is the establishment of an independent commission, which, according to the Times, would have “the power to recommend spending cuts and tax increases for congressional approval.”
What this "non defense" spending cuts really translates into is that, by the end of next year the panel will recommend cuts to Medicare and Social Security. Both Bernanke and Greenspan have begun to lay the groundwork for the panel by beginning to voice their "concerns" over rising Medicare and Social Security liabilities (for the first time). The rhetoric will only gain momentum going forward. Additionally by setting up an "independent" panel Democrats hope to distance themselves from a political hot potato.
Now admittedly the Medicare and Social Security liabilities are truly gargantuan (total unfunded liabilities add up to ~$91 trillion), and will most definitely need to be cut. But the timing for this could not be more inopportune. To top it off Congress has pushed our fiscal situation over the cliff, by allowing uncontrollable trillions to be spent on defense and bank bailouts. Fiscal austerity for the general public while bankers, healthcare companies and defense contractors make out like bandits. For a citizenry facing a extreme joblessness, poverty and hunger, this could very well prove to be the last salvo that could unleash widespread social unrest in the United States. No wonder lawmakers have temporarily reauthorized portions of the anti democratic Patriot Act.


bathmate said...

Interesting posting. Thanks for the info. Keep up the good work.

The Firecracker Report said...

Thank you for your support and kind feedback. We greatly appreciate your readership.

Anonymous said...

Bring the troops home = Save BIG $$$ and show we want peace.

Cut tax rate on all small business and let them create jobs, more jobs equals more paychecks, equals more taxes.