Information about Taxes, Government Spending and the Economy 

Fascism won acceptance, as a result of the worldwide economic depression of the 1930s.   Its depth and breadth convinced world leaders that capitalism was dead, and the rich countries’ leaders decided to use tax money to spend their nations out of the Depression.  

In the totalitarian, fascist countries governmental spending got the countries out of the Depression fairly quickly.  Elsewhere, it helped to mitigate the worst aspects of the Depression  

In the U.S, the form fascism first took was New Deal legislation enacted to combat the Depression.  But New Deal spending did not have the desired effect, and the U.S. economy remained depressed. 

The people that ran the U.S economy, during World War II, were mostly corporate executives that had been called to the capital to direct the economy for the war effort.  The U.S. economy prospered, during the war.  Industrial production nearly quadrupled and the U.S. Depression ended.  The corporate executives running the economy noticed this.

Then the war ended and those persons studying the economy expected it to slip right back into depression, because nothing fundamental had changed.  This did not happen at once, because there was much pent up consumer demand and people had money with which to buy consumer goods.  In 1947 and 1948, however, consumer demand began to drop, and it looked as if the U.S. was headed for another recession, or depression.

As a result of the World War II experience with a government-controlled economy, businessmen knew the solution was government economic stimulation.  This led to U.S. governmental spending for military purposes, which U.S. governments said this was necessary to prevent Soviet expansion, although it was well known the Soviets had no intention of invading any countries (until Afghanistan, from 1979-1989).

Fascism as security

At that time, U.S. economists, such as Paul Samuelson, said that advanced, high-tech industry “cannot survive in a competitive, unsubsidized free-enterprise economy.”  As a result of their World War II experience with a government-controlled economy, they knew the solution was government economic stimulation.  By this time the economists had Keynes theory to justify government subsidies.  Before that they had done it by instinct.

The discussions about how the government should stimulate the economy to prevent depression show there was great agreement that the government should spend for military purposes and not for social purposes.  The money given corporations is a subsidy that gives them a small, but important part of their profit.  This was not for economic efficiency, since military spending does not redistribute wealth, nor create popular constituencies.   The reason was to keep the people from trying to become involved in decisions about how tax money should be spent.

The public is not supposed to know this.  Stuart Symington, the first Secretary of the Air Force, stated this clearly, in 1948: “The word is not ‘subsidy’.  The word is ‘security’.” 

The U.S. government understood that, for as long as the public accepts that its taxes money will be spent for security and not for subsidies, it will not question.

Perpetual threats

Policy-makers have kept the U.S. public paying for the fascist economy, by continually convincing the people that there is a major foreign threat to their existence.   The Cold War and the arms race did that in the latter part of the 20^th century, and the Muslim-fundamentalist terrorist threat has now partly replaced it, even though mention is now made of new threats to the U.S. “by the rising military power of China”, to remind that aerospace and military spending must continue. 

U.S. Department of Defense (DOD) spending, through the Pentagon, was begun to give tax-subsidies to U.S. companies, so as to guarantee them profit and, thereby, ensure the economy remains healthy.  It accomplishes this for those that get this tax money.   For the DOD’s Pentagon system to function properly, however, citizens must be prevented from interfering in the decision-making process

This is the “Military-industrial complex” Pres. Dwight D. Eisenhower warned Americans to beware of.  He did little to eliminate it, in part because of the Korean War and in part because he presented the Congress with no viable alternative.

Estimates of the total tax burden of most U.S. wage earners vary, but a low average would be that an individual or family that has wage, salary, and dividend income of $40K to $100K yearly pays about 50% of its earnings in U.S. and state income taxes, property taxes, and sales taxes. 

The government does not want average Americans, the Sam and Sally Sixpacks, to try to tell it how to spend their tax money.  It prefers to have them spend their time with sports and religion, so they do not study what the government does.  It can then continue to finance the electronics industry, the aircraft industry, computers, metallurgy, machine tools, chemicals, and so on.  To keep the public satisfied with how its tax money is spent, the U.S. maintains the constant pretense of threats to the public’s safety. 

The U.S. also spends billions for crop subsidies and research to develop superior agricultural products, which will enable U.S. agri-business corporations to compete successfully in international markets.  Cotton is a good example of this situation.  Without these subsidies, U.S. agriculture, even with very cheap legal and illegal workers, could not maintain its competitive position in the world

Even better examples are the tax money shoveled into National Public Radio and PBS (“public” TV), grants to universities for research and to theaters and other “arts” organizations to pay their bills.

The attacks in the U.S., on Sept. 11, 2001 resulted from continual U.S. support of repressive, greedy, and unrepresentative governments in Muslim nations, as well as decades of U.S. support for Israel’s gradual destruction of the Palestinians and attacks on its Arab neighbors.  However, the Sept. 11th attacks created fear in the U.S. public and gave the U.S. elite the ability to enflame the public’s fears for many more decades.  It also enabled the U.S. government to spend more for “security, and through the DOD, as well as to pass legislation that enables it to spy on Americans. 

The U.S. electorate gladly accepted the new, police-state legislation and traded freedom for supposed security.  As a result, it lost more freedom, but did not gain security.  The U.S. border with Mexico remains porous.   Drugs, illegal aliens, and an unknown number of hostile aliens easily pass across it, and Pres. Bush refuses to let this to be stopped.

The need for fascism, corporatism, or state capitalism is explained only in highly specialized publications, which are not easily accessible to the general public.  It is not a subject the general-readership and general-viewership print and electronic press in the U.S., care to explain, nor is it explained in school texts.

Corporate and political leaders view the U.S. population as potential challengers of their fascist spending policies.  They do not want the profits they gain from the U.S. tax money to be challenged.  To continue to control the U.S. without internal difficulty, they want the U.S. population quiescent and obedient.  Part of the way in which this is controlled is through wholesale legal and illegal immigration into the U.S. from lands where there is either political or religious persecution or poverty.  To such immigrants, the U.S. seems like heaven, and they have been politically benign and compliant.

(Combinations of the very rich and top corporate managers, in every land, face the same problem.  In the U.S., however, effective challenges to current economic policies are exercises in futility.  Entrenched economic interests are represented by both Democrats and Republicans, and no mechanism for meaningful change exists within the constitution, except in theory.  The police power controlled by the U.S. foredooms to failure possible attempts to make changes outside the constitution.  Change will only happen, if continued fascism becomes structurally unsound, or change is imposed from outside.

Useful threats

All post-World-War-II U.S. governments have been excellent at fabricating “threats” to the U.S.   The most recent example, the Iraq invasion, is one of the more transparent threat fabrications, but it also shows the extent to which a U.S. government will lie, do what it wants to do, and then lie more to cover the initial lie.

The creation of “threats” is easily done.  When, for example, the U.S. government wanted to invade Iraq, it needed only to convince the public that Iraq threatened the U.S., and the U.S. government must defend the U.S. public by invading Iraq.  Earlier post World War II threats included Chile, El Salvador, Nicaragua, Grenada, and Viet Nam.  China is now mentioned, as a rising military power, the implication being that it has no right to arm itself even partly the way the U.S. arms itself.  While war with China may not be necessary, publicizing the thought that it challenges the U.S. is necessary, for it helps to continue public approval of the great amount of U.S. spending done for military and aero-space research, development, and products. 

Pres. Bush lied when he said Iraq posed a threat to U.S. security.  The falseness of his statements was shown when, after Iraq was conquered in three weeks, no mass destruction weapons were found there.  However, once U.S. troops were in Iraq, it did not matter what the public thought. The U.S. congress said at once, “we must support the troops”.  So, billions of tax dollars continue to be spent on the U.S. occupation of Iraq.  Almost no oppositional voices have been heard.  Along with popular support “of the troops”, most churches and civic groups have become cheering squads that urge “support our troops”.  They and pro-war politicians use this argument to cast aspersions, by implication or directly, on anyone that questions keeping the troops in Iraq, or appropriating tax money to keep them there.

(The Cuban missile crisis was real, but resulted from the over-exuberant extension of U.S. encirclement of the USSR, which included US missiles in Turkey.  Results of the crisis were the removal of Soviet missiles from Cuba, US missiles from Turkey, and an unwritten US-USSR agreement that the US would not invade Cuba.)

Spending on aero-space development and space exploration is also important in stimulating the economy.  If, however, spending for military purposes declined, it would be very difficult for U.S. governments to get U.S. taxpayers to continue to subsidize high-technology industry, as they have done for more than fifty years.  Therefore, military spending “to counter the threat” must be high, and a large number of men and women must be in uniform, so the public will see military personnel that use a little bit of what the money is spent for.

(Examples of the control of U.S. governments by businesses and corporations abound.  Very visible examples of the immense control corporations exert over states’ governors and legislatures have been happening in Georgia, since 2001 A.D.  Corporate leaders said the state flag, which honored Georgians that fought for the Confederacy, had to be changed, because it was a threat to economic growth.  The specific lie they told was that Daimler would not build a new car-making factory in Georgia, unless the flag was changed.  Daimler said the flag was not an issue, and after the flag was changed, chose South Carolina as the location for its new car-making factory. 

(The governor responsible for the initial flag change was voted out of office and the state elected the Republican party’s gubernatorial candidate gave majority’s in both houses of the Legislative Assembly to Republicans, for the first time in the state’s history.  The new governor had promised to allow the voters to state their flag preference in a referendum.  However, because of chamber of commerce and corporate pressures he reneged on his promise.

(Public boasting about its influence, in preventing the flag referendum, and getting enacted much other legislation wanted by the chambers showed the extent to which the chamber and corporations that fund it control Georgia’s government. 

(Corporate control of the governments of other U.S. states is similar and is almost total at the federal level.)

Business literature has, for more than fifty years, discussed the danger that the people might want to be involved in social and economic policy making.   These specialists know, as do economists, that spending for civilian purposes may be more efficient and more profitable than spending for military purposes.  They also know there are many more efficient ways to use tax money to subsidize high-technology industry than through the DOD.

When a government wants to stimulate the economy, it does not matter what the government spends tax money on.  The spending itself is what causes the stimulation.  The government may buy military hardware or build roads and hospitals and the economic effects will be the same. 

Even so, U.S. business leaders think spending for civilian purposes has negative side effects for them.  For one thing, it interferes with their managerial prerogatives.   Money the government gives corporations through the DOD is like a gift.  The government says it will buy what the company makes; pay for its research and development; and allow the company a profit, if it can make one.  Corporate managers say this arrangement is the best. 

They know that, if the government began to have business make products that could be sold in the commercial market that production would interfere with corporate profit making.  The production of waste, however, does not interfere, because, for example, no other company will compete with a company that makes artillery, tanks, or B-2 bombers.

Non-commercial spending