p Our analysis of various aspects of the US government budget and financial policy fully confirms the conclusion that the contemporary state has become a powerful and constant factor in the economic life of capitalist countries. The budget is one of the most potent instruments of state intervention in economic processes. The structure of the budget is shaped to coincide with the interests and demands of powerful influence groups and above all of Big Business. This ultimately increases disproportions in economic growth and exacerbates social contradictions.

p The inoptimal allocation of the huge money resources obtained by the American Government via taxation channels and the credit system, is most glaringly displayed in the general orientation of the budget and the system of national priorities expressed in it. The high share of the military expenditure, which after the Second World War became a permanent feature of US financial policy, is a heavy burden for the country’s economy. The influence of the big budget expenditure is exerted along many lines: it constantly affects the structure of production, money circulation and the credit system. The adverse consequences of the arms race are manifested in intensified inflation and in such a seemingly remote and specific sphere as monetary relations. In this area the United States and other capitalist countries have been harassed by chronic difficulties in recent years.

p As far as the civilian expenditure of the budget, and, 199 more specifically, expenditure for social needs, is concerned, its general increase is dictated by the specific features of economic growth, by the aggravation of the class struggle, and in no way eliminates the contradictions of American society. This is shown by the quite modest results of the vaunted programme of the “war on poverty”, the ever increasing shortage of the supply of “public goods”, and by the chronic inadequacy of spending by state and local governments. The reorientation of the budget, with a view to increasing the share of some civilian items, to making higher expenditures on education, manpower retraining, etc., is primarily designed to accelerate economic development, improve the competitiveness of the US companies in foreign markets and to increase the profits of the biggest corporations, and is by no means motivated by concern for the welfare of the working people. The same conclusion is also suggested by an analysis of tax receipts and of the process of forming the financial resources of state and local governments.

p Despite the keen opposition of radical sections of US society, the arguments and conclusions of many financial experts and realistically minded political leaders, the structure of the budget is changing very slowly. This suggests that powerful institutional and class forces in the United States are preventing any serious restructuring of government finance. This is once again proved by the latest (1973) Presidential Budget Message setting forth the main items of the federal budget for the 1973-1974 fiscal year.  [199•1 

p At the beginning of the 1970s the federal budget resulted in a big deficit. Unceasing inflation and the sharp decline of the position of the dollar in the world money markets prompted the federal government to resort to more rigid regulation of the financial system. But, the main method proposed by the Federal government of reducing the budget deficit boils down, above all, to cuts in appropriations of social needs. To this end the most primitive neo-liberalist arguments are mustered: each person must not count on government relief, but must secure an income by his own labour. But the extolling of an economic system which purportedly 200 Emacs-File-stamp: "/home/ysverdlov/leninist.biz/en/1973/USBEP201/20070405/201.tx" is capable of ensuring affluence to any energetic American seems so much more unconvincing against the background of five million unemployed, against the persistence of large “islands of poverty" and the steadily mounting cost of living. In his Message to Congress of March 2, 1973, President Nixon admitted the existence of a deep abyss between abstract “equal rights" and the concrete economic opportunities of many Americans.

p Nevertheless the federal government is out to cut the programmes of aid to the poorest sections of the population. In the face of the acute crisis of the private medical service system and of the waning accessibility of some forms of paid medical care federal support in building medical institutions and in implementing regional medical programmes is proposed to be stopped. Just as previously, a very small share (less than 1.5 per cent) of government appropriations is to be spent for the preservation of natural resources and the environment; moreover their share in the federal budget is even somewhat lower than in the mid-1960s.

p On the other hand military spending continues to grow. This expenditure, according to the projected budget, is to rise from $76,400 million in the 1973 fiscal year to $81,100 million in the 1974 fiscal year and to $85,500 million in the 1975 fiscal year. Such an expansion of these appropriations holds out the promise of new, highly profitable contracts for the largest military industrial corporations. The new budget specifically calls for the purchase of five nuclear submarines, the modernisation of three missile-carrying ships, and so forth.

p Yet the agreements between the USSR and the USA on the limitation of strategic defensive and offensive arms and the general improvement of the international climate open up a real way for a substantial reduction of military appropriations and radically altering the entire structure of government spending. The interest paid to financial institutions and to money capitalists, the owners of federal government securities, will attain astronomical sums. The total to be paid in interest in the 1974 fiscal year will reach $24,700 million as against $18,300 million in 1970. Throughout the last 20 years spending under this item grew faster than total budget expenditure.

p Another salient feature of the programme for reducing the budget deficit is the further growth of taxes paid by the population. The biggest increase, about 45 per cent in the 1973-1974 fiscal year, will be registered in one of the most regressive forms of taxation—social insurance taxes and contributions. The rates of this tax on wages were raised from 5.2 per cent to 5.85 per cent as of January 1, 1973; simultaneously the minimum wage exempted from this tax was reduced. An increase of these taxes and contributions will provide about half of the general growth in budget revenue in 1973-1974.

p In addition, receipts from the personal income tax will also go up substantially: the figure planned for the 1974 fiscal year will be almost one-fourth higher than in the 1972 fiscal year. Of all the forms of income taxation corporate taxes will rise least of all: during the period in question they will increase by about 15 per cent. The experience of preceding cyclical development shows that in the period following a recession the share of the national income appropriated by corporations in the form of net profit grows especially fast. But the burden of the bigger tax receipts in the 1973-1974 fiscal year is to be shouldered not by the private corporations, but, above all, by the main mass of the population.

The Presidential Budget Message contains a significant admission: for almost two postwar decades the US economy had been unable to achieve the goal of high employment and prosperity for American citizens without inflation and war. A financial policy which provides for a restraint or even direct cut of appropriations for social needs and for an increase in the tax burden borne by the working people can only further exacerbate socio-economic antagonisms.