REDISTRIBUTION OF WEALTH WOULD
WIPE OUT DEFICIT SPENDING
Sovereignty and discipline, legislation,
the right of sovereignty and disciplinary mechanics
are in fact the two things that constitute –
in an absolute sense – the general mechanisms of
power in our society. Truth to tell,
if we are to struggle against disciplines,
or rather against disciplinary power,
in our search for a non-disciplinary power,
we should not be turning to the old right of sovereignty;
we should be looking for a new right that is both
anti-disciplinary, and emancipated from the principle of sovereignty.
Michel Foucault, “Society Must Be Defended,” Lectures at The College de France, 1975-76, tr. David Macy, 2003.
First, the debt and the deficit need to be differentiated. Our deficit is the annual statement of insolvency of an entity whose spending outpaces its income. The saving grace for the United States is that the presumptive assets of the nation can absorb this overspending and thus preclude bankruptcy. The national debt is more troubling. The national debt is comprised of obligations incurred by the nation, which, over time, do impinge upon the calculation of our total wealth.
The debate over the national debt is clouded by anti-democratic secrecy. For the first time since the external debt incurred to finance the Revolution of 1776 was duly settled, George W. Bush became the only President to borrow money from other countries, and even from OPEC. Throughout our history, it used to be a point of pride that the United States was a “creditor,” not a “debtor,” nation. Other countries borrowed from us; we did not borrow from them. This circumstance is to be differentiated from the fact that until World War I, most capital invested in American business and industry came from Europe. It was the policy of succeeding Administrations of any party that we simply did not go begging abroad for money to pay America’s bills.
Shortly after 9/11, Congress enacted bi-partisan legislation authorizing President Bush to issue war bonds to defray the costs of the war on terrorism. Along with taxes and deficit spending, war bonds had been the means by which America financed the double war of the 1940’s in Europe and in the Pacific. I believed in 2001 and I believe now that Bush preferred to borrow from abroad, rather than to issue war bonds, especially to finance his war in Iraq, because he knew that the pretext for invading Iraq was false; there were no weapons of mass destruction. Hence, his attempt to finance the Iraq war by issuing war bonds, through which America would have owed money to Americans, would have failed once the rest of the world realized Iraq had no weapons of mass destruction and had no means to develop or acquire such weapons. Any war bonds issued would have been quickly redeemed and sales of additional war bombs would have plummeted to zero. That is why George W. Bush preferred to borrow billions from strangers.
New York Governor Al Smith once said that the cure for the problems of democracy “is more democracy.” Our keyhole view of our national debt crisis has taken us in the opposite direction. For reasons known best to the big banks and their toadies, like the outgoing Secretary of the Treasury and the megalomaniac who presently runs the Federal Reserve Bank, Americans are being asked to “debate” the issue of the national debt with no information as to the size, nature, extent, and duration of, and interest(s) on, that debt or those debts. Are the principals China, South Korea, Japan, Singapore, Brazil, the United Arab Emirates? We don’t know. What kind of paper have we issued, to whom, and on what terms? Go ahead, you tell me. If the nature and quality of debts America owes to Americans is the same as the nature and quality of debts America owes to other countries, well, you can knock me over with a girder!
The Republicans’ focus on cutting Social Security, Medicare, Medicaid and other forms of individual disaster relief not only provides no remedy for dealing with the national debt, the Republicans are merely dragging a colossal red herring across any pathway to the truth. The American economy is in trouble not because an impoverished woman is assisted in buying milk for her children or medicine for her ailing parents. The American economy is in trouble because a significant portion of whatever money the federal government does have has been otherwise committed to the banks that enable the country’s foreign debt.
Suppose that woman, I just mentioned, had to watch her children starve and her parents die prematurely: would that enhance this country’s capacity to increase capital investment? Don’t be silly.
This country no longer has a capitalist economy; at best, what we are looking at is latter day feudalism. The reason is that so much of our wealth and so many of our assets are controlled by so few parties, there is simply no marketplace where capitalism can function, let alone thrive and flourish. Capitalism is based upon two guiding precepts. The first of these is risk and reward. Agglomerations of wealth allow investors to reap gigantic profits from low risk, if low yield, products. Yes, Solly, they make it up in volume!
The second precept of capitalism is competition. Where most industries have become oligopolies, not to say outright monopolies, competition is abortive. Obstacles forestall entry of new entrepreneurs into any relevant market; and mergers, acquisitions, buyouts and Bain-style vulture tactics take care of the rest.
After the bank panic of 1893 and the ensuing Depression, Americans realized that the greatest barrier to the restoration of capitalist markets lay in the control by one-eighth of the country’s richest ne’er-do-wells of seven eighths of this country’s wealth. That recognition led to legislation and enforcement of laws against corporate and trust conduct in restraint of trade. That awareness also led to the Constitutional Amendment permitting Congress to impose progressive income taxes on individuals and those “people” lovingly called corporations. THE PURPOSE OF THE FEDERAL INCOME TAX WAS TO REDISTRIBUTE WEALTH, NOT TO STEAL FROM THE RICH BUT TO RESTORE A CAPITALIST MARKETPLACE.
It has often been observed that when the malefactors of society insist that wrong is right, good people tend to be shocked and stymied; they are rendered speechless and they can hardly respond. That is what happened when George W. Bush TWICE cut taxes for the very rich, while at the same time deficit financing two wars. He stood the purpose of the tax code on its head, and left weak-willed liberals simply out of breath. Another reason Bush did not issue war bonds was that the collapse of that effort would have revealed the crassness of his enabling the rich to simply loot the country – not to mention, the preferences they were given through no bid contracts to rebuild Iraq, whose cities, towns, and villages may well have been destroyed for that express purpose.
There is one thing everyone would have to admit about President Obama: He is a very dainty man. He has sought to beg small change of the very rich, as part of his so-called balanced approach to righting the economy. The truth is that we need to be soaking the rich, not because we seek fairness in taxation, and not out of revenge-class-warfare, but because we must recapture the wherewithal to restore our capitalist markets. What Obama fails to realize is that HE is not the issue. The issue is far greater and has to do with whether America can ever again be a great power. The rich are sitting on unused trillions of dollars in their fortress banks. That money needs to be seized, one way or another, to build the infrastructure that will enable commerce and manufacture to beckon a new prosperity! And with such new prosperity, all deficits may be vanquished.
Harvard Hollenberg is a writer and an appellate attorney in New York City.
© Copyright Harvard Hollenberg 2013. All rights reserved.