The Bush administration has come forward with a $2.4 trillion budget, which includes a $521 billion official budget deficit, and a $401 billion military budget that doesn’t count the cost of the occupation of Iraq, “balanced” by significant cuts in funding for the Environmental Protection Agency and social services. With a straight face, Bush also calls for 50 percent budget deficit reduction over the next five years and boasts that tax cuts will spur large job growth.

John Podesta, former Clinton chief of staff who now heads the Center for American Progress, a moderate liberal think tank, called Bush’s statement that he would cut the deficit in half “simply laughable.” Goldman Sachs, the Concord Coalition, and the Committee for Economic Development – all ruling-class institutions – project deficits of about $5 trillion over the next decade, “assuming strong growth.” Podesta noted the huge net job loss and concluded that even if Bush’s figures are correct, “it will not be until May 2007 that this president would have created his first net job. President Bush is well on his way to having the worst job creation record since the Great Depression.”

Actually, the $5 trillion deficit projection is quite conservative. Bush has already broken the previous record for the largest single-year deficit, and will break his own record this year. It is also a very safe bet that a second-term Bush administration would, like the first, see a large net loss in jobs and an even higher loss in skilled, well-paying jobs.

While deficit financing often makes sense in federal social investments in education, housing, health care and other social protections, raising overall living standards and creating a more productive labor force, the spectacular rise in the federal deficit associated with the Reagan and two Bush administrations since 1981 has been connected with sharp reductions in vital social services and has become a material force in undermining American living standards.

Working people should understand that the bigger the federal deficit becomes, the more their tax money goes to interest payments. Further, the most important cause of escalating deficits has been destructive, parasitic military spending, not constructive social spending.

In 1940, the federal deficit was only around $50 billion, even after all the New Deal social welfare reforms. When World War II ended in 1945, it was around $250 billion. When Ronald Reagan became president in 1981, the deficit had multiplied four times to $1 trillion, due in part to the large inflation of the 1970s.

Reagan launched a policy that George Bush I, when he opposed Reagan for the Republican presidential nomination in 1980, called “voodoo economics.” This policy involved huge increases in military spending with huge tax cuts for corporations and the rich, and incantations about the need to pass a “balanced budget constitutional amendment.”

When Bush I became president in 1989, he continued the voodoo. Four years later, the deficit had reached $4 trillion. Whatever one may think of Bill Clinton, his failure to restore spending for social programs and infrastructure slashed in the Reagan-Bush I years was at least in part a result of this crippling deficit. Some right-wing pundits even boasted that escalating deficits would ensure that there would never be any money for national health care, public housing, serious federal aid to education, environmental protection and labor law reform.

While the Clinton administration ran budget surpluses in the late 1990s, George W. Bush’s cynical use of the Sept. 11 attacks to provide a blank check for the military, and his tax cuts for the rich, have burdened Americans today with a deficit of $7 trillion and rising.

A recent International Monetary Fund study, lightly reported in the corporate-controlled media, made the point that the Bush deficits potentially threaten international capitalist money markets and the global capitalist investment system. U.S. newspapers skimmed over the IMF assertion that “an immediate and permanent federal tax increase of 60 percent or a 50 percent reduction in Social Security and Medicare benefits” might be needed in the future to control deficits – the kind of austerity policies that the IMF routinely imposes on Third World countries.

Bush’s neo-voodoo economics means that more and more of people’s federal taxes will go to interest payments to finance capital. His policies can only lead to continuing and escalating reduction in U.S. living standards, either through economic stagnation or via austerity policies like those the IMF suggested.

The American people don’t have to limit themselves to a choice between Bush’s robber baron war budget and the regressive policies advocated by the IMF. Once this administration is defeated, it will be possible to roll back deficits by enacting the kind of progressive tax reform legislation already introduced in Congress by Reps. Dennis Kucinich, Barbara Lee, and Bernard Sanders, which re-taxes corporations and the rich. It will also be possible to massively cut the military budget and use the hundreds of billions saved for productive social investments, which will increase our living standards and incomes and further reduce deficits in a positive way.

But the first and necessary step is to get Bush out in 2004!

Norman Markowitz is a history professor at Rutgers University. He can be reached at pww@pww.org.