Following many weeks of staged political wrangling in Congress, President Obama signed “emergency legislation” on Aug. 2 that projects more than $2 trillion in budget cuts over the next decade. The law also raises the ceiling on the government’s immediate borrowing abilities by $400 billion, with $500 billion more assured in the autumn.
Under the new law, the federal budget, which currently runs about $3.7 trillion, will be scaled down by less than 1 percent (about $21 billion) next year—with much larger cuts occurring in later years. Closed-door negotiations by a congressional committee representing the ruling rich and their twin parties, often called the Gang of 12, will have the task of recommending more budget items to cut. “Everything is on the table for that committee,” said White House Press Secretary Jay Carney.
Commentators in the media predict that over the next 10 years Social Security, Medicare, and Medicaid will be slashed by some $650 billion, along with an additional $1.2 trillion in discretionary spending cuts, many of which come out of programs that benefit working people. Undoubtedly, even more cuts will be undertaken in later negotiations, not to mention further tinkering with corporate tax rates to the advantage of the rich.
Over the course of 10 years, it is likely that eligibility for full Social Security benefits will be edged up to age 67 rather than 65, and cost-of-living adjustments will be scaled down, providing additional billions to shore up the coffers of the boss class.
Of course, the deficit could be eliminated entirely by taxing corporations and the rich, or even by eliminating the military budget, but this is a non-issue in the framework of capitalist/imperialist politics today.
This new debt level will mark another historic high, rising from the present $14.3 trillion to some $15.2 trillion. And this in turn will, until the next time, avert the default of the world’s strongest (though crisis-ridden) economy—a default that would undoubtedly unhinge the world financial system.
The new debt will be paid for by other reluctant governments and assorted financial institutions that buy U.S. bonds. That is, U.S. IOUs will be exchanged for “real” money or credit to allow American capitalism to pay its bills.
It is far from clear what nations would be interested in buying U.S. dollar-denominated debt when the massive printing of U.S. dollars, coupled by the massive issuance of Treasury certificates, has nothing to do with an increase in the production of new commodities in the United States. China, the largest U.S. debt holder at $1.5 trillion, and virtually all the major capitalist powers, have already expressed alarm about the potential for the U.S. debt they hold to rapidly lose its value.
Congressional hoopla aside, including Republican Tea Party rhetoric about a balanced budget and the limited Democratic Party protests over Obama’s “concessions,” the deal cut between Obama and Republican House Speaker John Boehner, between the ruling-class representatives of different corporate interests, was solidified quite early. The July 26 New York Times made no bones about it: “A full picture of the shelved [temporarily] compromise shows how close the two leaders were and how far each was willing to go in confronting their parties’ sacred cows—Mr. Obama on entitlement spending and Mr. Boehner on taxes. On paper about $59 billion in spending cuts separated them, a relative pittance in terms of projected spending for the decade. Most of that difference was over Medicaid; Mr. Boehner wanted $40 billion more in cuts than Mr. Obama.”
“If I were there,” declared Mickey Edwards, a House Republican leader in the Reagan and first Bush administrations, “I would say, My God, declare victory.’”
Obama and Boehner agreed on the essentials, over $2 trillion in cuts over the next 10 years. Their banking and corporate advisers are currently scouring the fine print of the tax codes wherein billions in gifts, grants, and tax exemptions for the rich are hidden from 99.999 percent of the population. While the two-party, two-bit charade players prattled on with endless press conferences and statements of fidelity to their “no tax increases” or “no more cuts to entitlements,” the serious but unseen players are all agreed that corporate America’s crisis must be borne by the working class as a whole.
The phenomenon is repeated the world over, as the world economic crisis ever more compels the corporate elite to deepen their incursions on every aspect of working-class life.
A July 22 New York Times article entitled “European Leaders Back Broad Plan to Rescue Greece” was explicit on this question: “The lack of a solution to Greece [on the verge of a catastrophic default] has also rattled financial markets, ultimately forcing European leaders to act this week. On the eve of the summit meeting, Nicolas Sarkozy of France and Angela Merkel of Germany met in Berlin along with the president of the European Central Bank, and came to a general agreement that euro zone taxpayers would have to cover the rescue costs to preserve the integrity of the single European currency. How German and French citizens will react to this is unclear.”
Just as Obama’s bipartisan policies bailed out U.S. banks and corporations to the tune of $16 trillion since the crisis began, their European counterparts rendered the same service to their corporate masters. In all cases, in every country, working people have been made to pay the price of capitalism’s failure—the failure of a system whose internal and inherent contradictions, including never-ending global competition for shrinking markets and falling profit rates, leave it no choice but to counter its downfall by squeezing the lifeblood out of workers everywhere. There is no other explanation for the massive and growing unemployment, for the obliteration of pensions, massive foreclosures, fierce attacks on public education, union busting, voiding of union contracts, degradation of the environment, and more.
Contrary to popular opinion, it is not greed that drives the capitalist system forward, but the never-ending quest to accumulate more capital or perish in the face of competitors. The latter are ever reduced in numbers, as the weaker are driven from the market place, and the remaining consolidated and increasingly monopolized behemoths battle each other on a world scale at the expense of all humanity.
In the days ahead, tax codes will be adjusted to more than compensate for what appears to be an agreement to allow the Bush-era tax breaks for the rich to expire. Nothing will be done to repatriate the trillions of dollars in profits amassed by corporations that have off-shored their multi-national operations or changed the address of their corporate headquarters to avoid taxes outright.
U.S. capitalists, who today sit on $2 trillion in cash, decline to invest in U.S. industry because they can buy cheap labor in the poor nations of the world for a fraction of the price. And even here, whatever gains are made by one corporation over its competitors by shifting production to low-wage nations are soon counteracted by the competition following suit and thus negating whatever initial gains were made.
Workers have no interest in the orchestrated congressional debates about raising the debt ceiling or not. This is a debate among the exploiters as to how best to advance their interests against ours. When the sound and fury generated by the fake debates subsides, whatever new funds raised by raising the debt ceiling of a failing capitalism will go to the corporate bullies, not to working people.
Our future rests in the ability of U.S. working people to defend their living standards through their own reconstructed institutions—i.e., a rebuilt and qualitatively expanded and democratic trade-union movement, capable of collectively challenging the bosses at the point of production. An effective fightback will require a total and absolute break with the twin parties of the ruling-class offensive.
Working people, in alliance with all the oppressed and exploited, need a mass Labor Party, based on fighting trade unions and massive mobilizations to reverse the terrible setbacks imposed by the corporate plunderers with the collaboration of the “labor lieutenants of capitalism,” that is, the union bureaucracy, whose interests are ever more intertwined with the so-called lesser-evil Democrats and divorced from those of the rank and file.
The best fighters will today be more alert than ever to working-class militants whose politics are steeped in the revolutionary socialist traditions based on class independence, solidarity with all the oppressed, and a will to struggle for a new world.
> The article above was written by Jeff Mackler. It is reprinted from the August 2011 print edition of Socialist Action newspaper.
