The politicians and financiers are trying to con us. Claiming economic necessity, they want workers to support “reducing the deficit” – a cull that has no economic validity and will only weaken and impoverish us. They want us to back financial plans that are intended to impoverish workers while making bankers richer.
The con is summed up in the weasel words, “We must reduce the deficit!” On the ground this transmutes into “We must cut public sector jobs and services.” Already, almost a quarter of a million public sector jobs have gone in the coalition government’s first year of office. Calculations indicate that more than 600,000 public sector jobs will end up destroyed between 2010-2011 and 2015-16 – if there isn’t a complete change in direction.
To understand the con we have to be clear about the differences between the annual budget deficit and the overall public expenditure net debt (carried forward from year to year, and affected by such things as interest payments) and about where both are heading.
The truth is that the government’s proposed reductions in public expenditure will not reduce public indebtedness but increase it, because tax revenues will drop and social security payments will rise with the fall in employment and trade. That’s what’s happening in Greece, where even with a cutback of 16 per cent in public wages and a rise in VAT to 23 per cent, public indebtedness will reach 140 per cent of GDP by 2014. In Britain, public sector net debt is set to rise every year between now and 2014-15, from £932 billion to nearly £1.3 trillion, almost twice the government’s entire annual revenues, even if annual budgets are slashed by 25 to 40 per cent.
Paradoxically, while the annual deficit is coming down, total interest charges on accumulated debt are estimated to rise over the next five years from £44 billion to £63 billion, which is equivalent to half of our NHS costs. Avaricious financiers will pocket fortunes as they lecture us to do without essential jobs and services! Finance capitalism is quite content to live with these staggering levels of public expenditure net debt without any sign of anxiety. It seems only the budget deficit creates a crisis mentality and stirs traumas of the “end of the world is nigh” variety.
We should wise up. The whole public expenditure cuts agenda is simply engineered to enable politicians to shout crisis and shrink the socially necessary parts of the state such as health and education, the bedrock for survival and prosperity, while their friends cash in on privatisations. Meanwhile, the government, shield of finance capitalism, will let the rest of the state apparatus grow without a murmur of disagreement.
Total government outlay is forecast to increase every year to 2014-15, according to the Office for Budget Responsibility. It estimates the figures will increase from £696 billion in 2010-11 to £737 billion in 2014-15 because of the “collective” debt and colossal interest charges being paid to Britain’s creditors, the banks and finance capitalists. Taxpayers’ money doled out in ever-bigger amounts to financiers is fine and never questioned. Taxpayers’ money paid out to public service workers such as teachers, civil servants and social workers is constantly condemned.
The savage public expenditure cuts will not reduce indebtedness and were never intended to. These measures were enacted in order to shift the balance of power between the two opposing classes in Britain. The finance capitalists want to destroy those aspects of society essential to workers. Simultaneously they want to preserve an economic environment where they enrich themselves on interest repayments.
The budget deficit is a smokescreen to hide capitalism’s naked class interests and hatred of working people.
We must change course! Stop the job reductions. Default on the debts. Don’t squander more on bankers. Use our national assets to Rebuild Britain! ■