Socialist Worker

Who created the budget deficit?

Issue No. 2280

The Tories, like many governments around the world, are hell bent on forcing ordinary people to pay for a crisis they didn’t create. They say the budget deficit—the gap between government revenues and spending—is too high.

In Britain they blame this on “overspending” by the previous Labour government. The Tories say this has created a situation where ordinary people have to suffer for the sake of the wider national interest.

But nobody should buy a single word of this. There is no consensus among economists over what, if anything, should be done about the deficit. Some say it needs to be reduced right away, while others say the government should invest more and pay off the deficit later.

But even if we accept that the deficit is an urgent problem, it wasn’t caused by the workers. Yet they are being ordered to work longer for lower wages, or to pay more for vital public services such as healthcare and education.

The deficit ballooned as a result of the 2008 global financial crisis. That triggered a recession, which lowered the amount the government raised in taxes while increasing its expenses. And the government spent billions bailing out the banks—at public expense.

So it was the bankers and corporate executives that got us in the mess we’re in. But instead the government turns a blind eye to tax evasion and showers the rich with subsidies. Some £70 billion is lost to tax evasion each year in Britain, according to Tax Justice Network.

We’re told that firms would take their money and leave the country if the authorities seriously cracked down on tax evasion. This is just blackmail.

If the deficit is such a problem, we should pay for it by taxing the rich. It is their capitalist system that has blown up in their faces—and they should be paying the price.

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