Can “fiscal responsibility” be thought value-neutral? And by fiscal, we ordinarily mean treasury policy, relating to taxation, public revenue, public debt, for the layman (myself included) a hidden, arcane world best left to technocrats and statisticians, who work in mysterious, hopefully inconsequential ways, as public policy itself, subject to the political process, is determined through the broadly reigning ideology and the electoral system. So much for textbook economics divorced from the real world. Here conservatives have always had the upper hand. Fiscal responsibility conjures up balanced budgets, both governmental and household, prudence, living within one’s means, all in contrast to nasty tax-and-spend liberals, profligate, wasteful, showing no respect for honesty, hard work, structural ties that bind a social order together. But what of radicals, in contradistinction to liberals? Where do they fit in? They are, for conservatives, beyond the pale altogether, repudiating fiscal responsibility as the lodestar of capitalism, and outmoded via a framework of socialism, which can order fiscal concerns not by market imperatives but societal needs and historical conditions.
I shall take the radical position, not as conservatives, or for that matter liberals, would have it, but, still value-neutral, view fiscal responsibility as a convenience by which to define and shape public policy strictly according to social needs and a humane, pacific, equalitarian worldview. In such a framework, the chief culprit of fiscal irresponsibility is capitalism itself. Why? Because in America today, the three principal areas responsible for driving up the national debt in relation to gross domestic product are military spending, health care costs, and an inequitable system of taxation—all integral to the US in its present form: imperialism-intervention-regime change-market penetration; privatization of medicine, pharmaceutical highway robbery, ditto health insurance companies; regressive to, for extreme wealth, practically nonexistent taxation. Put together, we see a legitimated framework of exploitation which, by preserving the national debt as a guillotine over the head of society, ensures the diminution of the social welfare as people’s needs remain unmet, wealth and power increasingly concentrate in fewer hands, and war, actual, potential, or made into a cultural-ideological way of life, clouds the atmosphere.
Fiscal responsibility as a capitalist shibboleth is a fraud, as a socialist—or conceivably welfare capitalist—standard, a strict and stern reminder that war and imperialism are horrendous evil, health-care needs will be satisfied as a public right, and taxation is a shared social obligation for all. There is nothing intrinsically conservative about a society keeping within its productive means: running up deficits, though ascribed to welfare programs, are, as in America, ascribable to servicing the military apparatus, subsidizing corporate advantages in domestic and world markets, and fostering through unequal wealth distribution an invidious class system. Socialism need not run up deficits because it would have the power and authority to keep everything in balance, expenditures of a humanitarian nature as well as infrastructure spending thus coming from the generation of social wealth. Welfare capitalism might have a tougher row to hoe, but the renunciation of war, a single-payer health-care system, and a steeper taxation rate on the upper tiers of wealth (along with closing the loopholes on myriad forms of tax evasion and carried interest), would at least be a useful corrective, possibly muting other areas of capitalist exploitation, including even alienation, depersonalization, and reified consumerism.
My purpose in broaching fiscal matters, in rejection of conservative orthodoxy and liberal opportunism, the first, a naked appeal to status-quo politics and structure, the second, a means of prolonging the social and cultural agonies of capitalism wrapped in the silk of progressive caring (as meanwhile war and business-government interpenetration continue), is in exposing the moral bankruptcy of America’s present and future, the current presidential race merely symptomatic of the narrowness of the political-ideological pathway to incipient fascism as militarism comes further and more fully into its own. In fact, it is precisely the failure even to recognize this factor, as we are about to see, which drives this writer up the wall. The elephant in the room: the more myopic our vision, the more likely we will be stepped on (i.e., step on ourselves) and be crushed. I refer to a reasonably authoritative piece, given the stature of the authors, reflective of sane, centrist thinking, well-intentioned, yet still myopic where it counts.
One does not have to work from a Clinton-Trump adulatory-of-America context of essentials to present a critique of current thought; instead I cite the article by two esteemed establishment figures, Paul Volcker and Peter Peterson, in the New York Times, “Ignoring the Debt Problem,” (Oct. 21), in which military spending, at the heart of the problem, is given half a sentence. If, in the vernacular, these are bourgeois economists/financial experts, they, within their framework of operation, have had distinguished careers and are not, for analytical purposes, sitting ducks. They begin on a strong note (my premise here, no-one benefits from escalating deficits): “Insults, invective and pandering [their reference to the campaign, “none as strange as this one”] have been poor substitutes for serious debate about the direction in which this country is going—or should be going. And a sound and sustainable fiscal structure is a key ingredient of any viable economic policy.” Whether we agree with the outcome, they are of course right, the two candidates having wholly ignored the issue of the deficit and fiscal structure, although the words “sound and sustainable” put one on guard because of past conservative usage and implication. Yet, by that token, socialism, observing these strictures (which is entirely possible) qualifies—my, not their contention–as viable economic policy.
Their concern is justified (the figures, incidentally, serving as useful guides): “Yes, this country can handle the nearly $600 billion federal deficit estimated for 2016. But the deficit has grown sharply this year, and will keep the national debt at about 75 percent of the gross domestic product, a ratio not seen since 1950, after the budget ballooned during World War II.” Their argument, or rather warning, as they proceed, is that the debt will be skyrocketing, so that the ratio of debt to G.D.P. will be such that the former greatly surpasses the latter, servicing the one then curtailing still further the social-welfare sector and affecting living standards. One sympathizes with their concern, for it challenges the cockiness of liberalism and liberals, in which Keynesianism, allowing for deficit spending (if not encouraging it), is somehow a magic bullet operant within existing capitalism through public spending, but therefore, without significant modification to the structure of capitalism itself. (This was partially the New Deal experience, where, through the National Recovery Administration, monopolism had increased, leaving a concentrated structural base in industry that would continue ever onward.)
In other words, Keynesianism made possible that capitalism could continue on as before. That is why, as I said above, the renunciation of war, a single-payer health-care system, and a steeper taxation rate on the upper tiers of wealth, all theoretically possible under capitalism, in America would be utterly chimerical, unrealizable, and almost as difficult to achieve as socialism. Keynesianism is an obvious palliative (moderating the tendencies toward, or the intensity of, unemployment, stagnation, structural breakdown). Our authors, Volcker and Peterson, partly see the danger, meeting it with lukewarm or warmed-over Keynesianism (they, far from being cliché-driven liberals or Neanderthal conservatives), and they observe: “Long-term, that continued growth, driven by our tax and spending policies [though still unable to transcend standard Republican rhetoric], will create the most significant fiscal challenge facing our country. The widely respected Congressional Budget Office has estimated that by midcentury our debt will rise to 140 percent of G. D. P., far above that in any previous era, even in times of war.”
Assuming the accuracy of the CBO estimate, one can sit back, business as usual (literally), call for a drastic overhaul of the welfare sector and discretionary spending, or—neither their nor Keynes’s chosen course—call for the overhaul of capitalism as a system, its replacement being socialism. As of now, the direction points rightward, the replacement, some form of fascism. To their credit, the authors criticize both Trump and Clinton (although clearly partial to the latter), one because he “has called for a combination of deep tax cuts that appear to far exceed proposed spending reductions,” the other because she “has set out more balanced and detailed proposals,” but which “would still fail to stabilize and reduce our debt burden.”
Their point is that “[w]hoever wins, the new president will eventually face fiscal realities that force him or her to develop strategies for decreasing the national debt as a share of the economy over the long term.” And my point, in their frame of reference, these strategies conserve capitalism still less serviceable to democratization perhaps even than currently, but that socialism in actuality does not benefit from, and could well eliminate, the nation’s debt burden. Debt, pace Keynes, serves no useful purpose, its elimination through if need be a thorough revolutionary democratization which eliminates all privilege, all waste, all surplus value, would, by necessity casting off capitalism, make of debt burdens a relic of the past.
Finally, we are able to smoke out enlightened bourgeois economics. A mechanistic (fatalistic?) grasp of interest rates is the tail wagging the dog: “Our current debt may be manageable at a time of unprecedentedly low interest rates. But if we let our debt grow, and interest rates normalize, the interest burden alone would choke our budget and squeeze out other essential spending.” Why my criticism? Because what follows is the only reference, indirect at that, to militarism, specifically, military expenditures, which are accepted as night follows day, not to be questioned, not to be linked to the debt burden and/or deficit spending: “There would be no room for the infrastructure programs and the defense rebuilding that today have wide support.” Instead, to make their case they turn to greener pastures, the means for stimulating capitalism: “It’s not just federal spending that would be squeezed. The projected rise in federal deficits would compete for funds in our capital markets and far outrun the private sector’s capacity to save, to finance industry and home purchases, and to invest abroad.” Heaven forfend such catastrophes, rendering Volcker and Peterson Keynesians in spite of themselves.
It is almost as though they are making a last ditch fight against socialism, either reduce the debt burden or face the abyss. “Instead,” they go on, “we’d be dependent on foreign investors’ acquiring most of our debt—making the government dependent on the ‘kindness of strangers’ who may not be so kind as the I.O.U.s mount up.” The frame of reference is fraying around the edges; time to dig in and make a stand: “We can’t let that happen—not if we want an America that is able to provide growth and stability at home while maintaining global leadership. We would risk returning with a vengeance to stagflation—the ugly combination of inflation and economic stagnation that we tasted in the 1970s.” Parenthetically, no-one seems to question “maintaining global leadership,” itself intimately connected to militarism, military allocations in relation to G.D.P., ditto the global ring of bases, interventions, regime changes, and the like.
So what is left? Nothing could be more incisively stated: “The solutions are clear enough. A realistic approach toward the major entitlement programs is required, given that they are projected to account for all of the growth of future noninterest spending.” (Add to militarism interest payments as nonnegotiable.) There have to be “gradual adjustments to the Social Security system” and “more efficient” health-care systems, “with better approaches toward cost control.” Whether capitalism or socialism, one can appreciate their concern over the latter (mine: socialism cannot afford to squander public resources): “Since health care represents 70 percent of the growth of our major entitlement programs over the next 30 years, bending the cost curve is essential to the long-term well-being of our economy.” Yes, provided of course bending the curve is not abused, as I believe here is the case, given the somewhat pious view on entitlements.
To be fair to Volcker and Peterson, while implicitly reducing the dimensions of the welfare state (even within a capitalist frame of reference, especially as a long-term proposition), they do build fiscal integrity into the system with respect to taxation, a cut above both conservative and liberal alternatives as commonly sought: “It’s no secret that our federal tax system is broken—unfair, inefficient and prone to political manipulation. It’s filled with exclusions, deductions, exemptions and preferential rates—so-called tax expenditures—that are ripe for reform.” This is not, however, a call for the redistribution of wealth via taxation (nor is that to be expected), but being serious about closing loopholes on a range of practices is no mean thing. At best, they make better what is within their frame of reference (I suppose an adequate definition of reform): “Those policies cost about $1.5 trillion each year and disproportionately benefit the well off [the closest they come to acknowledging the need for a redistribution of burden]. Tax reform could provide better incentives for economic growth, while raising more revenue, even as the code is simplified.”
Their final pitch—one grants their sincerity as persons of good will, nevertheless drawn inward in defense of capitalism: “But we face an immutable fact. Fair and responsible reforms will take years to implement. And businesses and individuals will need time to adjust.” Radicals would reject that immutableness, as an example of kicking the can down the road. Still the note of urgency they sound is far better than Panglossian liberalism, where the road never ends: “Delaying action now will make the needed changes only more painful and difficult later on, while also increasing the risk of financial crisis before the reforms are even made. That is why the real debate should begin immediately.” Criticizing both candidates in the final debate for “miss[ing] the opportunity to lay out their visions for a fiscally responsible, long-term future for our country,” they wittily close: “Take some advice from two observers who have been around for a while: The long term gets here before you know it.”
And it was Keynes himself who famously said, “In the long term we’ll all be dead.” No-one here has the final word, problematic that capitalism can transcend its limitations and contradictions. American militarism subjoined to a demiurge which demands global leadership, is an invitation to the fascistization of exceptionalism.