Doublethink from Clinton and Greenspan
By Barry Sheppard
Every year, the president gives a "state of the union" address to Congress. It is held in the House of Representatives. The House members enter first, and then stand to applaud the senators as they file in; the senators and representatives then applaud the nine robed reactionaries of the Supreme Court; all join in welcoming the members of the president's cabinet; and then, finally, the president enters to the applause of all.
This farce continues as the president's speech is interrupted over and over again with standing ovations.
After the dismantling of the federal welfare program in Clinton's first term, next on the agenda for Democrats and Republicans, and for the president and Congress, is to slash social security and the minimal health care the government pays for the aged and poor.
But cutting these popular programs without generating a sharp reaction is a real problem for the capitalist politicians, and Clinton avoided them in his speech, except for a brief mention of the need for "entitlement" reform.
Instead, he filled the room with vapid generalities and pious hopes, saying things like "The enemy of our time is inaction" and "Tomorrow morning there will be just over 1000 days until the year 2000" while the audience applauded wildly.
He did say that he wants to balance the government budget by 2000. How? He didn't say. He and Congress are not going to cut military spending or raise taxes on the rich. They are going to slash social security pensions and Medicaid and Medicare.
Most of his speech centred on education. He said he would launch a "crusade" that would make sure that all children can read and are computer literate, and that all 18-year-olds would have the opportunity to go to college. This pie in the sky runs directly counter to real trends, as college costs soar and the gap between the rich and poor widens.
His only concrete proposal was to set aside $51 billion in tax cuts and grants for college students to "open the doors of college education wider than ever before".
This is a fraud. The tax breaks would mainly benefit families making over $50,000 a year. Those in the lower brackets would have to rely on the grants, but even with the slight increase in grants Clinton proposes, federal grants would still be below where they were in 1980.
Clinton's proposal will make it easier for the better off, who can already afford to send their kids to college, and scarcely affect the rest.
Alan Greenspan, chair of the Federal Reserve, makes periodic reports to Congress on the economy. Since news of these reports get buried in the financial pages, he is often more candid than the politicians are. But he can get into doublethink too.
Recently, he repeated what has become a mantra for bourgeois economists, the false notion that inflation results from increases in wages. He warned that wages were starting to rise due to a decrease in unemployment — both very dangerous developments! This will lead to inflation!
The truth is the other way around. Wage increases are always behind price increases. Workers always have to play "catch up" with prices.
In the main, inflation of paper money occurs when governments spend more than they take in, paying for the difference by "printing money" that isn't backed by real commodities. Inflation has been kept relatively low in the US even though the deficit has ballooned since Reagan's massive military build-up, because the deficit has been covered by borrowing.
Greenspan joined in the doublethink put forward by a Congressional panel, which concluded that the Consumer Price Index (CPI) was calculated too high. Recalculating it to be lower would be a dandy way to cut into social security, because social security payments rise with the CPI.
That this is a humbug is shown by one of the main ways the Congressional panel proposed to "fix" the CPI: instead of using the real inflation of the price of consumer goods, use the price of other goods which workers substitute for higher priced goods.
For example, if a mother was used to making ham sandwiches for her children, but the price of ham went up so she couldn't afford it, and so bought bologna instead, use the price of bologna relative to the price of ham to calculate the CPI. In this way, you might even find that the CPI has gone down even when the price of both ham and bologna has gone up!
Then Greenspan did some straight talking. While waiting to "fix" the CPI, he urged Congress to pass a law that would cut out any increase in social security payments at all to compensate for inflation. Billions would be saved!