Watching the minute-by-minute account of this morning’s
speech by Spanish Prime Minister Mariano Rajoy felt like looking over the
shoulder of the driver of the locomotive with his hand hard down on the
accelerator as the train heads for the buffers.
Rajoy was listing the new, more brutal round of measures to
be dealt out to the Spanish people. These are needed to pay for an additional
€30 billion handout for banks in yet another certain-to-fail measure to prevent
the debt contagion from spreading.
Rajoy says the measures will slash a further €65bn from Spain 's budget
over the next two-and-a-half-years. Only four months ago the government
announced €27bn of cuts for 2012 in what was labelled at the time as the
"most austere" budget in Spain 's history.
As he spoke, thousands of well wishers greeted hundreds of
Asturian miners marching from the north into Madrid at the end of a three-week long, 300km
protest against the consequences of the previous rounds of public spending
cuts. Miners have been exchanging rocket fire with police as they try to stop
the cuts in subsidies that will be certain to close pits throughout the region.
Unemployment in Spain is already at 24% - 50% amongst young
people - and the International Labour Organisation is warning that the number
of unemployed in the eurozone could rise from 17.5 million to 22 million in four years.
Now EU finance ministers insist that Spain slashes a further 2.7% off
spending this year in order to rescue the banking system from complete
collapse. So unemployment benefits will be cut by around 30%, VAT will rise by 3%
to 21%. Local government spending will be cut by €3.5bn, and the number of
local councillors reduced. Public sector workers will lose their end of year
bonus. Central government budgets will be cut by €600m.
Meanwhile, across the Atlantic, the members of the less than
1% who make up the global capitalist class watch anxiously as the US economy
stumbles towards the abyss known as the “fiscal cliff”.
This critical economic and political moment for the US is the result of an extraordinary
accumulation and convergence of spending cuts and tax increases due at the
start of next year which the Congressional Budget Office warns could tip the US into a
“double-dip” recession.
The scheduled tax increases result from the expiration of
tax cuts for the wealthy enacted during the Bush era from as early as 2001, and
extended by Republicans in 2010. They were denying the revenue to the Obama
administration needed to help reduce the government’s mounting deficit. Republicans
are once again demanding further massive cuts to government spending programmes
before they’ll consider agreeing to raise the $16.4tn borrowing threshold which
will be reached this year.
Automatic spending cuts set up resolve the last political
stalemate come into force on January 1 affecting both defence and domestic
government programmes and agencies. These were triggered by the failure of a
special bipartisan “super committee” of lawmakers set up to identify at least
$1.2tn in deficit reduction over the next decade, or face an equal amount of
forced reductions.
There is also a flurry of expiring tax cuts for businesses,
the expiration of emergency jobless benefits, and reductions in the reimbursement
rate for doctors participating in Medicare, the government health plan for
senior citizens.
As events across the world show, the darkening clouds of the
global capitalist contraction require that entire populations are targeted for
the most savage measures. This is austerity as oppression on a grand scale.
Resistance is growing, while the political elites are more
and more driven by events outside of their control. The challenge then is to
generalise the struggles into a challenge for power itself in order to halt the
catastrophic collapse that threatens the majority in every country.
Gerry Gold
Economics editor
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