Have you been following the editorial page of the WSJ? Bartley and co. have been arguing that Bush's tax cut can easily be absorbed as the US govt debt/GDP ratio is probably ***too low*** (!!!) at something like 35%, compared to the levels which Europe has managed (more than 50%--we'll leave aside Japan where I think interest payments now make up over half the budget!). At any rate, it's almost as if Robert Pollin and James Galbraith have seized the editorial page of the WSJ.
So after preaching fiscal austerity for the last years, the WSJ is now welcoming the return to debt financed govt spending which Bush's tax cut will bring about. You would certainly not take this to be a sign of corporatist or social democratic strategy?
I would say that it all follows from the illusions of bourgeois society.
Of course this debt will be run up largely for a rearmament program which to Bush and Rumsfeld translates into a rapid enrichment for the merchants of death. They themselves do not understand that from the perspective of total capital, state spending on its own direct productin of arms or on purchases from private contractors represents a pulverization of value, for no matter how the arms are used, their value (to the extent that they are values) will not only not be valorized (arms cannot absorb surplus labor in the production process), it will be destroyed (labor cannot preserve their value gratis in the production process)--though the state will still owe interest if it has borrowed for the purchase. Govt bonds, issued for militarization, represent fictitious capital.
Yet the state may turn to arms production as a temporary economic stimulant which seems all the more attractive since it is not immediately clear that state spending on arms represents an annihilation of value; after all, arms producers enjoy a rapid enrichment; higher levels of production can be maintained and due to multiplier effects total profits are higher than they would have otherwise been had surplus value remained uncapitalized and idle, instead of deployed through govt taxation or borrowing on the purchase of arms; and rentiers who would have had no other outlet for excess savings have amassed a portfolio of government bonds, seemingly safe and stable assets (which however are simply fictitious capital).
That an arms build up does not represent the same annihilation of value which has historically been effected by outright depressions is the fundamental illusion through which we fail to see since an arms build up can stimulate production and aggregate profits in the short run.
While the chaos and unemployment of depressions can be avoided through an arms build up, the state is left in debt and thus desperate to leverage the military assets which it has accumulated. This is an exit from crisis which will only result in greater horrors.
Yours, Rakesh