In Defence of Marxism

On Tuesday, April 22, President Bush attempted to play down recent figures that indicate the USA is in recession, claiming we are merely in a period of "slower growth". Serious economists have a different view based on the facts. Falls in manufacturing orders show that the US economy is already in recession.

The Associated Press recently published an article on the US economy under the title, "Many states appear to be in recession". Bush has tried to deny this by playing it down and claiming it is simply a question of slower growth. But the facts are stubborn things! It is worth quoting the article at length:

"The finances of many states have deteriorated so badly that they appear to be in a recession, regardless of whether that's true for the nation as a whole, a survey of all 50 state fiscal directors concludes.

"The situation looks even worse for the fiscal year that begins July 1 in most states.

" ‘Whether or not the national economy is in recession - a subject of ongoing debate - is almost beside the point for some states,' said the report to be released Friday by the National Conference of State Legislatures.

"The weakening economy is hitting tax revenue in a number of ways: People's discretionary income is being gobbled up by higher food and fuel costs, while the tanking housing market means people are spending less on furniture and appliances associated with buying a house.

"The situation is grim in Delaware, with a $69 million gap this year, and bleak in California, with a projected $16 billion budget shortfall over the next two years, the report said. Florida does not expect a rapid turnaround in revenue because of the prolonged real estate slump there.

"By mid-April, 16 states and Puerto Rico were reporting shortfalls in their current budgets as the revenue those budgets were built on - typically, taxes - fell short of estimates. That's double the number of states reporting a deficit six months ago.

"The NCSL said the news is even worse for the upcoming fiscal year, with 23 states and Puerto Rico already reporting budget shortfalls totaling $26 billion. More than two-thirds of states said they are concerned about next year's budgets.

"The results are consistent with a drumbeat of bad economic news for states that several budget groups have produced in the past few months.

"Last week, the Washington-based Center on Budget and Policy Priorities said 27 states are reporting projected budget shortfalls next year totaling at least $39 billion.

"President Bush said Tuesday that the economy was not in a recession but a period of slower growth. However, some economists have pointed to the string of declines in manufacturing orders to argue that the economy has fallen into a recession.

"Bolstering their position, the Commerce Department reported Thursday that sales of new homes plunged in March to the lowest level in 16 1/2 years. The government also reported that orders to factories for big-ticket goods fell for a third straight month in March, the longest string of declines since the 2001 recession.

"Some states ‘have declined so much that they appear to be in a recession,' the NCSL report said."

The article attempts to add a note of optimism by referring to the oil-producing states such as Alaska, and goes on to say that,

"It [the NCSL] also noted the silver lining for states where the economy is based on energy, such as North Dakota and Wyoming. Alaska is making so much money from oil that it announced an estimated surplus next year of $8 billion, almost twice the state's annual budget.

"In North Dakota, revenue is above legislative predictions by 13 percent, and in Louisiana, the oil and gas sector is robust. ‘For energy-producing states, the fiscal situation is strong and the outlook is good,' the report said.

The problem is that the increased oil revenues of these states are at the expense of all the rest and cannot avert a generalised recession affecting the whole of the United States.

The article ends on a pessimistic note listing that among other findings:

"More than half the 16 states reporting deficits this year have cut spending, including $1 billion by Florida lawmakers last year and across-the-board cuts in Nevada. At least eight states are debating raising taxes or fees, including a proposed $1-per-pack cigarette tax increase in Massachusetts to raise $175 million.

"Twelve states, including Georgia, Idaho and Illinois, reported that personal income tax collections were failing to meet estimates, and in eight of these, collections were even below a reduced forecast.

"Many states, including Alabama, Arizona, Massachusetts, Minnesota, Nevada and Wisconsin, plan to tap their rainy day funds, which contain money set aside for fiscal emergencies. Nevada may use its entire rainy day balance.

Reports like this one keep coming out. The media and especially the politicians try to play all this down, as the words of Bush indicate. When the figures clearly show that recession is with us, they say that we "appear" to be moving towards a "slow down". They are terrified of uttering the truth. They believe that by doing so they can hide the terrible reality that is already affecting the American workers. Their fear is justified. Once the American working class realises where capitalism is leading them they will rise like a sleeping giant and join their brothers and sisters around the world in the struggle to transform society. It will be the beginning of the end for this rotten system.