FRFI 174 August / September 2003
As US imperialism continues its war against the Iraqi people, back at home it is waging a war against workers, the unemployed and those in poverty. The unemployment rate is 6.4%, the highest since 1994. The Federal Reserve Bank has lowered the federal funds rate to 1% – the lowest for 45 years. At the same time borrowing is at extraordinary levels. It is estimated that the federal government deficit will climb to $455 billion, compared with a forecast surplus of $334 billion, just two years ago. STEVE PALMER reports.
This is the hopeless unpredictability and anarchy of a crisis-ridden capitalism. Budget priorities are to pay for imperialist war and repression and to line the pockets of the wealthy. The cost of terrorising legislation was $37 billion in 2002, and estimated at $92 billion for 2003. Some $400 billion in expected revenue evaporated due to the recession which cut tax receipts. The other $375 billion went to the wealthy and to pay for imperialist adventures: $200 billion handed out in tax cuts to the rich – about $35,000 each; some $90 billion to pay for the attack on Iraq, with the remaining $85 billion divided between increased budget for the Pentagon, some crumbs of temporary unemployment benefits and assistance to the states.
Who is going to pay for this? Part of the money comes from increasing borrowing – taxing Americans in the future and creating further problems for US capitalism. But that’s not the only way. With the economy going nowhere, an imperialist war whose monthly costs have doubled, and the huge budget deficit, the Bush administration has launched a war of massive proportions on the poor to help pay for all this.
This involves directly rolling back workers’ gains to help increase profits and weaken resistance to reorganisation and restructuring. The Bush administration has redefined workers’ eligibility for overtime pay to exclude some eight million workers. Health and safety regulations protecting workers have been drastically revised. The only direct assistance to prevent unemployment has been given where Republican votes are at stake, such as in the steel industry.
Federal government cuts
Another prong of the attack undermines various government programmes in health, education and welfare. Part of the administration’s solution is to convert federal programmes from automatic entitlement to ‘block grant’ programmes: under current federal legislation money must be available to spend on the programmes and nothing else. In contrast, ‘block grant’ is handed over to the states to spend as they wish over seven years. The danger is that the money will be abused or squandered.
The US has no national health service. 44 million people, about 20% of the population under 65, have no health insurance. These people only get health care when they are sick enough to drag themselves to hospital emergency rooms to wait for many hours. They have no preventive health care. For example, the first time a poor or immigrant pregnant woman will see a doctor is when she delivers, with no prenatal care at all. This is the background to the Bush administration’s cuts, which target those on the borderline of the health-care system.
The Veteran’s Administration (VA) provides free health care to millions of ex-servicemen and women, invariably from the working class. The VA budget is being reduced, leading to cuts at the VA hospitals. The Bush administration’s budget included a 7.7% increase (to $27.5 billion) for VA medical care. However, the budget increase is based on fee increases of a $250 annual enrolment fee for veterans earning $24,000 annually or more, and increased outpatient primary care and prescription charges for higher income veterans. It is also based on limiting access to services. Cuts directed at middle income veterans include: denying at least 360,000 veterans access to health care; $250 annual premiums; increased pharmacy co-payments; increased (30%) primary care co-payments; and increased waiting time for a first medical appointment. According to Veterans of Foreign Wars (equivalent of British Legion), more than $2 billion is needed to meet the basic level of quality health care.
There are only two general federal health programmes: Medicare, for the elderly; and Medicaid, a means-tested entitlement programme financed by the states and the federal government, that provides long-term medical coverage for about 47 million poorer people. The Medicare budget is being cut by $300 billion over the next ten years, and doctors are threatening to drop recipients from their rolls because the new payments will not cover their costs. The Medicaid budget is now $256 billion and accounts for 43 per cent of all grant funds transferred from the federal government to the states. Medicaid is being combined with the Children’s Health Insurance programme and the Disproportionate Share Hospital programme, which subsidises hospitals with disproportionate numbers of Medicaid patients and uninsured patients. This is going to pit the elderly and the young against each other in the competition for health services. While undocumented migrants are usually excluded from these programmes, some states have gone even further: in Colorado, even legal immigrants are being blocked from Medicaid.
The ‘Head Start’ early child development programme for preschool children in low-income families is also being cut over to block grant. After-school programmes lose $400 million. Schools in the ‘No Child Left Behind’ programme will have to qualify for funds by satisfying ‘standardised testing’, forcing children to leap through the testing hoops, at the expense of developing creative skills and abilities. Naturally it will be the schools with a high proportion of black and immigrant children who will have difficulty with the culturally-biased tests and suffer the sanctions.
State budget cuts
On top of the federal budget deficit, the 50 states face combined budget deficits of approximately $100 billion. The shortfall represents 15-18% of total state spending. During the 1990s states used the temporarily increased revenues from the bubble economy to finance long-term tax cuts. In addition, the Bush administration’s terrorising legislation puts significant responsibility for homeland repression onto the states: this includes $5 billion additional spending, diversion of police from other duties, and salaries paid to state employees in the National Guard who were called up. Since most states have to balance their budgets, unlike the federal government, these handouts to the rich and better-off, and the burden of paying for imperialist adventures have to be financed by attacks on poor and working people. State reserve funds have been decimated, so the two routes out will be to increase taxes on working people, and to cut public services.
Fifteen states have increased sales taxes, which hit poorer people hardest. ‘Sin taxes’ – cigarettes, tobacco and alcohol – are also being increased in 14 states. In Alaska and Michigan motor fuel taxes are going up. With limited public transport, these expenses naturally hit working people hardest. But there are only slim pickings to be made by shaking down poor people. So cuts are the major source of funds.
Hundreds of thousands of people have already lost Medicaid coverage due to state budget cuts; with the next round of cuts, this will rise to 1.7 million. The Medicaid budget cuts reduce various health benefits – such as prescription drugs and dental, vision, home health care or mental health services – for substantial numbers of people who still qualify for the programme. In addition, a number of states are proposing to shift costs to people covered, by raising co-payments, even though many have incomes below the poverty line. A number of states are proposing to reduce or freeze payment rates for health care providers, including hospitals, physicians, and nursing homes. The cuts in reimbursement rates are exceptionally deep and may affect quality of care and encourage providers to stop treating Medicaid patients altogether. In a majority of states, these cuts are on top of substantial Medicaid budget cuts last year.
Social services are being cut. Many states are cutting childcare subsidies for poor and low income working families, making it difficult for parents, especially single parents, to remain in work. Some 23 states have reduced access to affordable childcare by tightening eligibility, increasing charges and other measures. More states are planning childcare cuts for 2004.
Elementary and secondary education is being cut viciously. California, Missouri, Oklahoma and Oregon have cut state school spending in the middle of the school year, laying off thousands of teachers. Further cuts by 18 states are anticipated, which will result in further dismissals, school closures and shortened school years. It is typical for schools to hold bake sales, but at one school the desperation runs so deep that parents at the Family School in Oregon are selling blood plasma to raise the money needed to keep one teacher. ‘The sweat and tears are not enough – now it’s got to be blood, too’ said parent Catherine Flynn-Purvis.
In higher education, most states have cut spending on colleges and universities. As with public schools, this has led to academic layoffs, axed classes and tuition hikes of between 10% and 39% in some states.
Even the police are not exempt: hundreds of California Highway Patrol officers are being cut, but only in ‘soft’ areas – road safety education, drunk driving campaigns. Yet at the same time that California education is being cut back, the prison budget will receive a 3% increase. The California prison guards union has given Democratic Governor Gray Davis $1m for his re-election fund.
So where, you ask, is the fight back? The Democratic presidential candidates murmur their dismay, as they spend their time in ‘focus groups’, Town Hall meetings and volunteer coffee mornings in pursuit of support and votes – they are far too busy to bother with the poor and working people they claim to defend.
The traditional organised labour movement, the US labour aristocracy, is even worse. It is clear that the only fightback the AFL-CIO, the US equivalent of the TUC, is supporting is within narrow electoral limits. Fresh from supporting the war against Iraq, John Sweeney, president of the AFL-CIO, instinctively channels fighting energy into vote hustling, and diverts open opposition into deal-cutting with the very politicians who have betrayed the working class for decades: ‘The more we inform members about the choices elected leaders are making today, the better equipped members will be to make their own choice in the voting booth next year.’ This includes lobbying ‘US representatives and senators, with visits and thousands of letters, faxes and e-mails…and tens of thousands of postcard ballots.’ You can see the bosses quaking in their shoes already(!) Clearly the US ruling class has nothing to fear from labour ‘leaders’ like these.
Yet everywhere resistance is sprouting at the community level: school students, teachers and parents organising in Oakland, California and a bus boycott against price hikes in Baltimore, Maryland are examples of small-scale local actions initiated by individual union locals (branches) and community organisations. The political way to make these struggles effective has been shown by the 4 July independence day rally at the new Constitution Center in Philadelphia against the war ‘at home and abroad’ – ‘We are determined to stop the never-ending series of wars in the various forms it is taking against people here and abroad. We stand with people everywhere struggling for a world which values people over profits. We stand in solidarity with people living under oppression and occupation who have nothing to celebrate on this day.’ Bush was supposed to open the centre but was too scared to face the anger of the people he attacks and scuttled off to a military base to issue more lies and bluster. The AFL-CIO leadership, busy faxing and writing its emails, was nowhere to be seen, of course. Only by resisting attempts to channel resistance into the dead-end of the polling booths, only by connecting the struggle against imperialism with the resistance to attacks on poor and working people and by engaging actively in struggle will these attacks be defeated.
This article includes material from a speech by Leilana Dowell at the ANSWER Teach-in, San Francisco.
