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Issue # 1413      03 June 2009

Obama’s budget for war

The Obama budget for 2010 is a budget for war. Defence spending is $534 billion with $130 billion for the two wars, plus $75 billion for the rest of 2009, with related spending a total nearly $1 trillion.

Overall the budget shows a 32 percent increase to $3.94 trillion. The estimate of revenue for the year is $4.381 trillion, with deficit of $1.75 trillion, nearly 12 percent of the GDP. (Figures from Professor M Chossudovsky, Centre for Research on Globalisation, Canada.)

Revenue will fall, losing tax because of rapidly increasing unemployment.

The bailouts by Bush and Obama come to $1.45 trillion. Health, education and social services have been slashed with defence and bailouts taking much of the revenue of $2,382 billion. None of the rest of the money is going to create jobs that could ease the pressure of the crisis. The defence spending create some jobs, but that will be small in comparison if the money had been used in creation of jobs for civilian productions. There are 13.3 million Americans unemployed and the numbers are growing.

To cover the deficit, the government has to get individuals, banks and companies to buy government bonds, but the market is at a standstill. It must borrow from the banks, but then they will be in a position to demand privatisation of government assets at rock bottom prices. The government wants China and Japan to buy US bonds or other ways to help US finance, but they have their own bailout problems.

The Obama budget for war cannot get US out of the crisis.

The US consumer market is a quarter of the world consumer market, and the 30 percent fall of the US market has an immediate worldwide effect. The GDP’s of Eurozone countries have fallen 2.5 percent in first quarter of 2009. Germany, the strongest economy, has fallen 3.5 percent, particularly in cars and machinery. The British economy is expected to fall 3.5 percent with unemployment at 8.5 percent. Japan, with the second biggest economy, has been hit hardest, with industrial output down 20 percent and March exports down 45 percent, with a trade deficit of $2.7 billion in January 2009.

The World Bank with its fingers on economic and financial numbers, is concerned that the world industrial production will fall 15 percent this year, and trade will have its biggest contraction since 1930.

Australia is inescapably part of the world capitalist crisis, with trade greatly dependent on Japan and China, already falling heavily. Like the US, it has increased its defence spending to $62 million a day, at the same time budgeting for a $57 billion deficit, with the likelihood it will increase with unemployment rising by 250,000, 8 percent. Of the $43 billion spent patching up the effects of the crisis, very little of it gets to the consumer market which fell 4.3 percent in May.

Such a government with such a policy will do little to help the new poor except under great mass pressure. The working class and their trade unions must fight the repressive laws in the workplaces and in the streets for better wages, to fight evictions as people’s organisations fought them in the 1930s.

Sacked workers need to build their own organisations to fight for better unemployment payments and for new jobs. To change the climate of the economy from stormy to sunny we must act now.

Next article USA: Call for “development bank” to create jobs

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