A deal to
raise the debt ceiling has now been reached, after weeks of incredible
fear-mongering on the part of both bosses’ parties and Wall Street, and
will reach the President’s desk by the deadline on August 2nd. The
contents of the final agreement remain rather vague, but the broad
outline is enough to make clear what it means for workers in the U.S.
A deal to
raise the debt ceiling has now been reached, after weeks of incredible
fear-mongering on the part of both bosses’ parties and Wall Street, and
will reach the President’s desk by the deadline on August 2nd. The
contents of the final agreement remain rather vague, but the broad
outline is enough to make clear what it means for workers in the U.S.
Barack Obama. Photo: The White HouseIt
includes $2.4 trillion in spending cuts. President Obama stated on the
31st of July that “everything will be on the table,” and he has
previously stated that Social Security and Medicare would not be spared
cuts (in the name of “compromise”), so we can safely assume that a large
portion of the $2.4 trillion in “savings” will be from the coffers of
these vital public programs.
It is already clear that there will
be significant cuts to student loan programs, totaling $22 billion over
the next 10 years. Tuition fees are already too high for many workers
to attend institutions of higher learning. The defenders of the deal are
already running damage control, saying that the cuts are necessary to
preserve Pell Grants to the poorest students, but why should any
students or workers have to pay for an economic situation entirely not
of their doing.
Like a boastful comic book superhero having
rescued us all from a burning building, lawmakers and party leaders on
both sides of the Big Business aisle are currently patting themselves on
the back for a job well done in “averting a national disaster.” But
these representatives are no Super-Men and -Women. The debt “crisis,”
as it was repeatedly referred to in the media, was a “manufactured
crisis” as Mark Weisbrot of the Center for Economic and Policy Research
pointed out.
As Weisbrot pointed out on TheRealNews.com,
the short term deficit problem is the product of the economic crisis,
and as we have explained elsewhere, in the current economic crisis, the
capitalists wish to push through massive cuts in social services, in
order to place the burden for recovery onto the working class. This is a
situation that is not unique to the United States, but is currently
being seen around the world. In Greece, Italy, Spain, etc., the march
of austerity has crept across Europe and has now made its way across the
Atlantic to our shores.
We saw the first symptomatic expressions
of this tendency, this tactic on the part of the most virulently
right-wing elements of the capitalist class, at the state level; first
in Madison over Walker’s anti-union bill, then in the state shutdown in
Minnesota over billions of dollars in cuts to the state budget, and
currently the debate continues in state after state, with austerity
facing the working class everywhere. At each point, these state crises
were and remain episodic brush-fires in what is in fact a developing
much larger conflagration.
The real danger that the working class
faces is the program of austerity, not the debt ceiling. The country’s
debt limit was merely a convenient excuse used by the ruling class,
stroked with misinformation and fear through the medium of its
politicians and media apparatus, much in the manner of a gun to our
heads, in order to push through the cuts that they deem necessary to
preserve the solvency of their system and the continuation of their
rule.
What is the Debt Ceiling?
The debt ceiling is set by
Congress and is the amount of money the country can borrow. It has
risen considerably from its initial cap of $11.5 billion in 1917 to its
now incredible $14.29 trillion level, but nonetheless, it has risen 74
times since 1962 and 10 times since 2001, according to the Congressional
Research Service.
The debt ceiling is raised every time a
Congress agrees to increase spending or approve a tax cut. The fact is
that spending has already occurred at the time of a budget bill, so in
actual fact, what any “debt ceiling” debate amounts to is whether or not
the US will pay its incurred bills or not.
To not do so would
badly effect the country’s “credit rating” around the world. It is a
sure bet that, as representatives of the Wall Street interests who would
also suffer losses from such an outcome, neither the Democrats nor the
Republicans would have allowed the country to “default” by not raising
the debt ceiling and paying its debts. However, the ruling class
remains steadfast at the present moment about the need for cuts in
spending. In order to push this through, it was necessary for the
Republicans, who express the needs of their class for cuts in a much
more purified form, to use the threat of default, which would also have
effects on the economy as a whole, to scare any wavering Democrats into
full-scale surrender on a program of massive cuts, free of any (however
minimal) taxation of the rich, placing the burden for their crisis
squarely on the workers.
Did the Democrats Offer an Alternative?
Now,
we have a bipartisan compromise deal, which is full of the expected
massive cuts and full-scale surrender anticipated by anyone who has
drawn the necessary conclusions from the legislative debates during the
recent period (particularly the health care debate). Many are now going
to ask if things could have gone differently. Did it have to be this
way? Why didn’t the Democrats put up a fight?
By Friday the 29th,
the House (or Republican) bill called for $2.5 trillion in largely
unspecified cuts to be recommended by a special congressional committee
and would have increased the debt ceiling by the same amount. It also
included a call for an entirely ceremonial “balanced budget amendment”
to the Constitution. At the same time, the Senate (or Democratic) bill
called for spending cuts of “only” $1.8 trillion initially, however it
proposed to increase the debt ceiling to $2.7 trillion with the promise
to increase cuts to match the increased ceiling in the final version of
the bill, a sort of classic “bait-and-switch.”
While one can make
all of points they want about how $1 trillion of the Democrats cuts
would have come from planned withdrawals from Afghanistan and Iraq, the
fact remains that $1.7 billion in other cuts would remain,
after the full balance of cuts were brought up to match the $2.7
trillion spending ceiling. On whose backs would those cuts in necessary
social services have rested? Certainly not the rich.
Even if
more cuts were not promised in the Democratic plan and if there were
only 800 billion in non-military spending cuts proposed, in a situation
where education, health care, Social Security, and other programs suffer
from under-funding, this would be 800 billion in spending cuts too many.
Obama,
the Democrats, and their media supporters tried to present themselves
as supporting a “balanced approach,” including not only cuts, but also
increased taxation of the rich. However, the reality was far
different. The bills which reached Congress on the 29th were almost
indistinguishable. The bickering, it seems, was entirely a sideshow. As
Representative Jeff Flak, a Republican from Arizona, told The Huffington Post, there was “not much difference” between the two bills.
The So-Called “People’s Budget”
If
the Democrats did not offer an alternative, then was no alternative
possible? Was the acceptance of the evil of two lessers really the only
possible outcome of the debt ceiling debate?
In fact, there was
an alternative. The current mess is a product of the economic crisis
caused fully by the capitalist class and its system. It is not the
fault of workers, and we shouldn’t have to pay for it. The full
responsibility should be placed at the feet of Wall Street and the
Fortune 500.
On this, millions of Americans actually agree. In a
recent poll, it was found that a majority of Americans actually favored a
solution to the budget problems that did not only include cuts, but
also explicitly included “tax increases,” understood to be aimed at the
wealthiest Americans. However, this should not be seen as support for
the President and the Democrats’ “balanced approach” that claims to
“share the burden” for solving the budget shortfall between ever so
slight tax increases on the wealthy combined with slashing of social
spending. Rather, presented with these two alternatives, the
Republicans’ spending-cut-only approach and the Democrats’ supposed
“balanced approach,” the vast majority of Americans favor the latter.
However,
were a bold presentation of a viable alternative on the table, such a
proposal would definitely gain massive public support. The Progressive
Caucus drew up a bill called a “People’s Budget,” which went half-way
towards this goal in many respects and actually would have gone further
towards actually “balancing the budget” than either the Democratic,
Republican, or bipartisan compromise bills, but nonetheless failed to
gain any public exposure.
The “People’s Budget” proposal would
have increased spending on construction, through a program of spending
on public works, slashed military spending by $700 billion, created the
“public option” that was removed from the final health care bill passed
last year, ended the Bush tax cuts on the wealthiest Americans, returned
the estate tax, and eliminated the Social Security loophole that allows
no further taxation towards Social Security on all income over
$100,000. The bill left a lot to be desired, e.g. military spending
could be further cut and what is needed is not a “public option,” but
Medicare for all, however, this would have been a major improvement on
the cut-cut-cut "solution" that Congress and the Senate compromised on.
It was, however, entirely ignored
by the mainstream media outlets, not least of which because it did not
even represent the view of a sizable chunk of the Democratic Party
leadership and certainly not the political goals of the party. The
mainstream coverage one could find of the "People’s Budget" was limited
to outlets such as The Huffington Post or the UK published The Economist magazine.
A Working Class Alternative
Those
Democrats who support such ideas as making the rich pay for their
crisis, providing a massive program of public works, real universal
health care, proper funding of our public schools, and an end to
imperialist wars overseas will always be largely ignored in the media.
So long as they continue to subordinate themselves to a political party
of big business they will be obscured. The Democratic Party is a party
that has as its goal not the defense of workers’ interests, but of the
interests of the wealthy and the powerful; it is a party that is used as
the "good cop" in order to squeeze more out of workers. The only class
capable of challenging the bipartisan rule of the twin parties of big
business is the working class. It is, therefore, essential that labor
break entirely with the Democrats and form its own party.
Senator
Bernie Sanders (I-VT), an “Independent” himself who nonetheless caucuses
with the Democrats in the Senate, was angered by Obama’s immediate
caving on Social Security during the course of the debt debate and has
called for "progressive" challengers to Obama in the Democratic
primary. This is not the solution, as the failure of the Progressive
Caucus’s “People’s Budget” to get any media traction clearly shows. Due
to the capitalist crisis, it is becoming increasingly difficult for the
Democratic Party to foster illusions among workers. The only role
"progressive" challengers within the Democrats can play is that of
cleverly chaining honest workers to a party that has never represented
the their interests. Inside the Democratic Party, there is nothing.
Labor
held rallies in Washington, some gathering several thousand people, in
support of a budget solution that did not include any cuts. These
rallies were at times awkward when Democratic speakers either had to
speak in opposition to their own party’s proposal or only about “taxing
the rich,” avoiding entirely the question of cuts (if, for example, they
were supporters of the Democratic majority proposal in the Senate). If
labor had its own supporters in the halls of Congress, backed by its
supporters on the streets outside, the situation could have played out
much differently.
The fact is that the money for not only
preventing cuts to, but rather increasing spending on, social programs,
exists. The means to it though is barred to either the Democrats or
Republicans, as both are constrained by the limitations of the system
that they defend. The wealthiest 1% own 42% of the wealth, while the
top 10% own 85%. The wealthiest 400 Americans average only an 18% rate
of taxation. 2/3 of U.S. corporations, 1.2 million companies, paid nothing in
taxes between 1998 and 2005, according to a report from the Government
Accountability Office, which also reported that these “no tax”
corporations made $2.5 trillions of dollars in sales. 25% of these “no
tax” corporations were “large corporations” by the GAO’s standards.
The
aforementioned Bernie Sanders has even compiled a list of large U.S.
corporations that don’t pay any taxes. They include the likes of Exxon
Mobil, Bank of America, General Electric, Chevron, Boeing, Valero
Energy, Goldman Sachs, Citigroup, ConocoPhilips, and Carnival Cruise
Lines. While this is obviously far from a comprehensive list, if one
were seriously concerned with “balancing the budget,” “averting national
crisis,” “meeting our obligations,” and “paying our debts,” the
corporations listed above should be the first to “tighten their belts.”
However, we should keep in mind that, as workers, the "national" debt
is not our debt. The Workers International League demands that
the national debt be cancelled, except for bonds held by pension funds,
workers, and poor people, which is a very limited part of the overall
debt, the rest of which is held by the rich and big banks, as well as
foreign investors (a large part of the national debt is owned by
China). It is the bosses’ debt and crisis, we should not be the ones
that have to pay!
A mass party of labor could fight for a program
for expenditures for quality health care and education for all and an
end to unemployment, through a massive program for public works that
would create jobs and improve our infrastructure, and could pay for
everything through increased taxation on the wealthy. Not only that,
through the nationalization of the commanding heights of the economy,
the top 500 corporations, we could create the basis for a new
democratically run economy, based on a rational plan of production, and
run in the interests of people and not profits. This may sound
far-fetched, but it is in fact the only realistic solution to our
current impasse. The fact is that the money and resources exists, but
they are in the hands of the capitalist class. Join the Workers
International League in the fight against austerity and for a budget
that puts workers first!
Source: Socialist Appeal (USA)
