A rough ride for US economy
Some facts: * The US budget deficit for 2003 is anticipated to reach US$455 billion; * The deficit for 2004 is estimated to reach US$475 billion; * The estimated budget deficit exploded by 50 percent over the last five months; * It has blown out because of the weak US economy, the Iraqi war and the tax cuts of US$350 billion promised by Bush; * Unemployment is 50 percent higher than at the time of the Clinton administration; * More than 2 million jobs have disappeared since Bush took office in January 2001; * Interest rates at 1 percent are the lowest for 45 years but have failed to stimulate the economy; * Tax revenues that make up a large proportion of government revenues are down to about the level of 1943; * The US is suffering from a huge adverse balance of trade; * The IMF warned recently that the colossal US trade deficit was a "noose around the neck of the economy" and that the dollar could collapse at any moment. The occupation of Afghanistan and Iraq, the "war on terrorism" at home incurring heavy expenditure on "homeland security" and general economic decline are all dragging the US economy down and these expenditures and difficulties are expected to increase in the future. President Bush has called on Congress to allocate an additional US$87 billion for war funding alone. In a recent poll the American people gave the thumbs down to this new expenditure. A CBS News poll found that 66 percent of Americans are opposed to the US spending US$87 billion to help rebuild Iraq with only 26 per cent in favour. Lowering interest rates As with the Japanese economists, it was assumed that the lowering of interest rates would stimulate the economy. But this tactic failed in Japan and is failing in the US as well. It was also assumed that tax cuts would increase money available to consumers who would go out and purchase more. But the US tax cuts mainly benefited the rich. Spread over the whole population it is said that the tax cuts amount to about US$1000 per person but the reality is that because of their class nature of Bush's tax cuts, about half of the taxpayers get a nominal tax cut of only about US$120 and another one third receive no benefit at all. The tax cuts mainly benefit the rich who do not spend their additional money on consumer goods of which they have no need but on building up their bank accounts and their share and property holdings. It does not create jobs. A small increase lately in US production has led to speculation that the US economy has turned the corner but much of this increased economic growth is due to a rise in productivity. This means that displaced workers are being replaced by new machinery not by re-employment. US social security expenditures, limited as they are in the US, have to be financed by outside borrowing because government revenues are not sufficient to cover costs. The US cannot sustain the present rate of military spending, tax cuts and corporate handouts without slashing and savaging already inadequate spending on education, health and social security. Military expenditures At the core of the difficulties facing the US economy are the astronomical military expenditures over a period of years. They have now become critical with the wars being waged by George Bush. That is why the US is now desperately attempting to get other nations to send troops and help pay for the destruction and disaster that they have imposed on Iraq — and on themselves. The chief economist of the IMF, Kenneth Rogoff said, "If we were looking at a poor developing country, the world gives them just enough rope to hang themselves. A country like the United States, they give them enough rope to tie the noose around their neck several times. But it does happen in the end."