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An Economy Destroyed -- The Enemy Is Washington

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Recently, the bond rating agencies that gave junk derivatives triple-A ratings threatened to downgrade US Treasury bonds if the White House and Congress did not reach a deficit reduction deal and debt ceiling increase. The downgrade threat is not credible, and neither is the default threat. Both are make-believe crises that are being hyped in order to force cutbacks in Medicare, Medicaid, and Social Security.

If the rating agencies downgraded Treasuries, the company executives would be arrested for the fraudulent ratings that they gave to the junk that Wall Street peddled to the rest of the world. The companies would be destroyed and their ratings discredited. The US government will never default on its bonds, because the bonds, unlike those of Greece, Spain, and Ireland, are payable in its own currency. Regardless of whether the debt ceiling is raised, the Federal Reserve will continue to purchase the Treasury's debt. If Goldman Sachs is too big to fail, then so is the US government.

There is no budget focus on the illegal wars and military occupations that the US government has underway in at least six countries, or the 66-year old US occupations of Japan and Germany and the ring of military bases being constructed around Russia. The total military/security budget is in the vicinity of $1.1-$1.2 trillion, or 70% -75% of the federal budget deficit.

In contrast, Social Security is solvent. Medicare expenditures are coming close to exceeding the 2.3% payroll tax that funds Medicare, but it is dishonest for politicians and pundits to blame the US budget deficit on "entitlement programs."  

Entitlements are funded with a payroll tax. Wars are not funded. The criminal Bush regime lied to Americans and claimed that the Iraq war would only cost $70 billion at the most and would be paid for with Iraq oil revenues. When Bush's chief economic adviser, Larry Lindsay, said the Iraq invasion would cost $200 billion, the White House Moron fired him. In fact, Lindsay was off by a factor of 20. Economic and budget experts have calculated that the Iraq and Afghanistan wars have consumed $4,000 billion in out-of-pocket and already incurred future costs. In other words, the ongoing wars and occupations have already eaten up the $4 trillion by which Obama hopes to cut federal spending over the next 10 years. Bomb now, pay later.

As taxing the rich is not part of the political solution, the focus is on rewarding the insurance companies by privatizing Medicare at some future date with government subsidized insurance premiums, by capping Medicaid, and by loading the diminishing middle class with additional Social Security tax.

Washington's priorities and those of its presstitutes could not be clearer. President Obama, like George W. Bush before him, both parties in Congress, the print and TV media, and National Public Radio have made it clear that war is a far more important priority than health care and old age pensions for Americans.

The American people and their wants and needs are not represented in Washington. Washington serves powerful interest groups, such as the military/security complex, Wall Street and the banksters, agribusiness, the oil companies, the insurance companies, pharmaceuticals, and the mining and timber industries. Washington endows these interests with excess profits by committing war crimes and terrorizing foreign populations with bombs, drones, and invasions; by deregulating the financial sector and bailing it out of its greed-driven mistakes after it has stolen Americans' pensions, homes, and jobs; by refusing to protect the land, air, water, oceans and wildlife from polluters and despoilers, and by constructing a health-care system with the highest costs and highest profits in the world.

The way to reduce health care costs is to take out gobs of costs and profits with a single-payer system. A private health-care system can continue to operate alongside for those who can afford it.

The way to get the budget under control is to stop the gratuitous hegemonic wars, wars that will end in a nuclear confrontation.

The US economy is in a deepening recession from which recovery is not possible, because American middle class jobs in manufacturing and professional services have been offshored and given to foreigners. US GDP, consumer purchasing power, and tax base have been handed over to China, India, and Indonesia in order that Wall Street, shareholders, and corporate CEOs can earn more. 

When the goods and services produced offshore come back into America, they arrive as imports. The trade balance worsens, the US dollar declines further in exchange value, and prices rise for Americans, whose incomes are stagnant or falling.

This is economic destruction. It always occurs when an oligarchy seizes control of a government. The short-run profits of the powerful are maximized at the expense of the viability of the economy.

The US economy is driven by consumer demand, but with 22.3% unemployment, stagnant and declining wages and salaries, and consumer debt burdens so high that consumers cannot borrow to spend, there is nothing to drive the economy.

Washington's response to this dilemma is to increase the austerity! Cutting back Medicare, Medicaid, and Social Security, forcing down wages by destroying unions and offshoring jobs (which results in a labor surplus and lower wages), and driving up the prices of food and energy by depreciating the dollar further erodes consumer purchasing power. The Federal Reserve can print money to rescue the crooked financial institutions, but it cannot rescue the American consumer.

As a final point, confront the fact that you are even lied to about "deficit reduction." Even if Obama gets his $4 trillion "deficit reduction" over the next decade, it does not mean that the current national debt will be $4 trillion less than it currently is. The "reduction" merely means that the growth in the national debt will be $4 trillion less than otherwise.  Regardless of any "deficit reduction," the national debt 10 years from now will be much higher than it presently is. 

 

http://www.paulcraigroberts.org/

Dr. Roberts was Assistant Secretary of the US Treasury for Economic Policy in the Reagan Administration. He was associate editor and columnist with the Wall Street Journal, columnist for Business Week and the Scripps Howard News Service. He is a contributing editor to Gerald Celente's Trends Journal. He has had numerous university appointments. His book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is available here. His latest book,  How America Was Lost, has just been released and can be ordered here.

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If I was to ask someone to read only one analysis ... by Lewis Yang on Friday, Jul 22, 2011 at 1:02:05 AM
Tonight I gave a 30 minute power point presentatio... by Elizabeth Hanson on Friday, Jul 22, 2011 at 2:06:37 AM
That's great you are speaking to Republicans. Ther... by Nancy Lewis on Saturday, Jul 23, 2011 at 7:54:41 AM
Why is it that no one is talking about the entity ... by Steven Berry on Friday, Jul 22, 2011 at 4:20:03 AM
"special relationship" means. It applies to the "s... by bogi666 on Friday, Jul 22, 2011 at 5:07:35 AM
Mr. Berry has misread the Grace Commission Report.... by Paul Craig Roberts on Friday, Jul 22, 2011 at 7:04:31 AM
keep up the good work.... by bogi666 on Friday, Jul 22, 2011 at 9:54:06 AM
 Mr. Roberts,  from the background sourc... by cosmic J. on Saturday, Jul 23, 2011 at 11:23:49 AM
A person can wallow in myths or learn the facts. &... by Paul Craig Roberts on Saturday, Jul 23, 2011 at 11:40:57 AM
What would happen if Congress took back their auth... by Vernon Huffman on Saturday, Jul 23, 2011 at 5:47:25 PM
Vernon, if the US government dispensed with taxing... by Paul Craig Roberts on Saturday, Jul 23, 2011 at 7:07:16 PM
My respect for you is greater than any disagreemen... by cosmic J. on Sunday, Jul 24, 2011 at 12:13:48 PM
How stupid are Americans? The TV set has finally m... by Jack Heart on Friday, Jul 22, 2011 at 5:31:46 AM
Want to do something about our miserable governmen... by Lester Shepherd on Friday, Jul 22, 2011 at 6:12:47 AM
I Will Be There... by Jack Heart on Friday, Jul 22, 2011 at 6:29:19 AM
And hopefully paul craig roberts will be there als... by Jack Heart on Friday, Jul 22, 2011 at 8:19:53 AM
"The total military/security budget is in the vi... by mrk * on Friday, Jul 22, 2011 at 6:44:34 AM
Shooting barefoot woman and children from armored ... by Jack Heart on Friday, Jul 22, 2011 at 8:10:39 AM
Presstitutes! Thar's a good one Mr. Roberts, the d... by Donald on Friday, Jul 22, 2011 at 7:34:02 AM
I wish I had thought of it, too. Presstitutes was ... by Paul Craig Roberts on Friday, Jul 22, 2011 at 7:36:31 AM
things are going just as planned.poppy bush called... by tim mcghie on Friday, Jul 22, 2011 at 8:34:19 AM
This article is an amazing concentration of truth ... by Ernie Messerschmidt on Friday, Jul 22, 2011 at 8:55:22 AM
It's imperative to identify and engage lobbyists f... by Lewis Yang on Friday, Jul 22, 2011 at 10:27:45 AM
That one is overdue.It would state that the number... by crispy on Saturday, Jul 23, 2011 at 2:12:47 PM
Yes! Perhaps the best article I have read explaini... by Jillian Barclay on Friday, Jul 22, 2011 at 4:19:29 PM
The U.S. Federal Reserve gave out $16.1 trillion i... by 911TRUTH on Friday, Jul 22, 2011 at 10:59:17 PM
"The way to reduce health care costs is to take o... by Rixar13 on Saturday, Jul 23, 2011 at 6:52:44 AM
There's no doubt about it that we do not live in a... by Nancy Lewis on Saturday, Jul 23, 2011 at 7:31:21 AM
Excellent article.  Yes, war is the most impo... by jbnewport on Saturday, Jul 23, 2011 at 12:42:13 PM
war and all of it's entities are what drive the mi... by nativenezperce on Tuesday, Jul 26, 2011 at 2:08:54 PM