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Apocalyptic crisis budgeting

August 12, 2011

Edmund Pries

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Stephen Harper and Rob Ford are among many right-wing leaders who believe in crisis budgeting to cut down the size of government. (Aug. 3, 2011)

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The headlines have been apocalyptic and relentless. Unless the U.S. cuts trillions in social spending, it will go bankrupt. Unless Canada cuts billions in federal spending, our economy will go bust. Unless Toronto cuts more than $700 million in program spending, the city will collapse. We live in an age of apocalyptic crisis budgeting. Unless the most drastic social spending cuts are implemented, the world as we know it will sink into the quicksand of debt, never to reappear again. How could this happen?

During the Reagan era, a friend and former colleague, a professor of American history, was invited to the deliberations of a Washington think-tank that provided policy direction for the Republican Party. As they discussed growing the debt and increasing the deficit, he was flabbergasted: “Are you not the party of balanced budgets and debt elimination?” The reply was unequivocal, “Our goal is to grow the deficit as much as possible in order to create political space to eliminate government-funded programming. Until then, we want high deficits while lobbying for a balanced budget — and promoting social program cuts as the only solution.”

To create this useful deficit, tax cuts to wealthy individuals and corporate sectors would be dramatically increased, especially to the banking, energy and military segments. In short, one would implement a transfer of the state’s revenue supply obligations from the wealthiest to the poor and middle classes in order to permit an even greater transfer of wealth from the middle classes to the rich thereafter.

The only trick was to convince the poor and middle classes to “buy in” via a mixture of patriotism and structural necessity so that they would vote in favour of cutting the very programs that benefitted them.

Canadians have had front row seats to observe this structural engineering over the past two decades. After years of sky-high deficits, Bill Clinton’s Democrats balanced the budget and produced a surplus. Then George W. Bush granted tax relief for the wealthiest and went to war in Afghanistan and Iraq to create the largest deficit in American history. As Bush exited from office and Obama entered, trillions of dollars were transferred by the government (funded mostly by middle-class Americans) to the banks. As a thank you, the banks foreclosed on the homes of more people than at any other time in history. The recent debt ceiling settlement follows the pattern as additional social spending cuts are implemented without cancelling Bush’s tax cuts to the very rich.

Like Clinton in the U.S., the federal Liberals left office with a budgetary surplus. The Conservatives created the largest deficit in Canadian history and, unbelievably, ran an election campaign on financial management savvy! Of course, they created the deficit in part by implementing tax cuts and engaging in discretionary spending designed to produce the deficit which, we are told, now needs to be eliminated by cutting programs.

The same approach has now come to Toronto and is being mimicked by Rob Ford. He, too, was left a surplus by his predecessor. Nevertheless, the agenda marches on. First, create the crisis by reducing the revenue base through tax cuts and then take the budget knife to Toronto’s city-wide programs. Instead of articulating a vision for building a great city, it is simply a slash and burn approach to a manufactured crisis.

Some have pretended that the budgetary crisis is real and not manufactured. Let us be clear: our relative wealth is greater than at any time in our history. Our collective ability to build a strong, caring and inclusive society in which everyone can participate has never been greater. This also holds true for the community of nations: we have the capacity to build a just global society.

Our preparedness to do so, however, seems utterly lacking, for an extreme individualism has taken over the mindset of many. We believe, falsely, that we are best served by hoarding as many resources as possible and letting others fend for themselves. The opposite is true. We are best served when we build a society together where all, including each reader of this article, can benefit through the building of community-wide programs.

In many 16th century European cities, each citizen was required to swear an annual citizenship oath to the city (or community) in which they resided. In it citizens affirmed, among other things, their commitment to “support the well-being of their neighbour” and “promote the common good.” Toronto’s early history as a community, like Canada’s as a country, speaks of similar goals and aspirations.

Have we really lost our sense of the common good? Or is each person now on his or her own? There is no apocalyptic budgetary crisis other than of our own making. The crisis is in our orientation.

Edmund Pries teaches in the department of global studies at Wilfrid Laurier University

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2 Responses to “one of the most important articles you will ever read”

  1. Lyn says:

    Thanks for sharing this on your blog Beth. I cringe to think that the very foundation of social consciousness upon which our Canadian society is built is being trampled. Don't we all want to live in a kinder, gentler community in which our value is measured by the manner in which we care for our most vulnerable members; and in which we value the arts and social programs that nurture them; and in which we all give a little so everyone can have something …

    This article clarifies the mechanics around deficit creation and the politic motives around it. We have to wake up and fight for the community/society/values we want to preserve.

  2. beth says:

    Absolutely, Lyn. What I like so much about this article is that it makes clear exactly how reactionary economic doctrine was shoved down our throats. Though I'm not very savvy politically, even way back in Reagan's time, I couldn't understand how cutting taxes for the wealthy was going to help anyone but the wealthy – and yet the world bought it.

    Now we have a new mantra: What Would Jack Do?

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