Note: This article was written by economist Richard D. Wolff and originally published in the Guardian on february 9th, 2011.
Federal Reserve Chairman Ben Bernanke's testimony before the House budget committee on Wednesday largely repeated what he has been saying recently. It was interesting only for its likewise repeated silences which, as so often, spoke loudly. The biggest silence concerned taxing corporations and the rich in the US.
Many sentences were devoted to the burdens of the huge deficits being run by the US government, to the need to reduce those deficits. Otherwise, Bernanke warned, lenders might one day stop providing those immense flows into the US Treasury. But not one word about reducing the deficit by taxing large corporations and the rich.
On Tuesday, Britain's chancellor of the exchequer announced a modest tax increase on banks in the UK: a "fair contribution", he said, "to our recovery". No such idea, let alone any action, in the US.
Instead, we hear pronouncements like Bernanke's that seem to believe that cutting outlays in the only way to go. The debate then becomes about which outlays to cut. Bernanke makes clear his preferred cuts lie in healthcare. Note that the US already spends more than other developed nations for poorer healthcare outcomes as measured by national health statistics. Bernanke says nothing about lowering government outlays by reducing the profits of drugmakers and healthcare providers. Nor do the possible impacts of reduced healthcare upon the wellbeing and productivity of the US workforce merit any comment or concern from Bernanke.
It is worth remembering that when the US borrows trillions of dollars to cover deficits, a significant portion of that borrowing comes from the large corporations and richest individuals who lend to the government the money that, apparently, they did not have to pay in taxes to that government. I can see the desirability for them of lending at interest rather than being taxed. The matter looks otherwise from the standpoint of the rest of us.
Silence on taxation of corporations and the rich should be exposed and opposed for the blatant ideological bias it represents.
Another deafening silence concerned the matter of states and cities. Their currently projected cuts in public services and employment will damage education, infrastructure maintenance and countless social services. Their effects will overwhelm the far smaller initiatives that Obama announced in his state of the union message and which will only be realised in part given the split political control of Congress. Like Obama, Bernanke had nothing to say or offer on the dire crisis of state and city budgets.
Last, consider the silence on unemployment. Bernanke did explain that the current rate of job creation, if maintained, would mean many more years of high unemployment. No word was uttered about even the vaguest idea of government job creation – again, a silence, as if that idea or programme did not exist (despite massive evidence to the contrary provided by FDR in the 1930s).
Of course, taxing large corporations and the rich would have its effects on the larger economy, positive and negative. In any rational debate, those effects would have to be weighed and considered against the positive and negative effects of the alternatives, including those used since this crisis began and those now projected. Instead, we have silences from Bernanke and from Obama, silences that close and narrow, rather than open and widen, discussion over the nation's crisis and future.