Dems cave to right in debt-ceiling clash
Workers must fight for jobs, human needs
By
Fred Goldstein
Published Aug 3, 2011 8:38 PM
The resolution of the debt-ceiling crisis shows the growing strength of the
right wing in capitalist politics and the bankruptcy of President Barack Obama
and the Democratic Party leadership. It also guarantees that the economic
crisis of the workers and the people in general will get worse at a time when
capitalism is sliding toward a new crisis.
With a jobs crisis raging and the rich piling up more wealth than ever, the
settlement projects cutting up to $2.4 trillion in government spending over the
next 10 years, yet does not take one more penny from the millionaires and
billionaires in taxes.
The announced highlights of the complicated, two-stage deal are very
vague:
• $917 billion of cuts in government spending over 10 years,
beginning Oct. 1. What those cuts are has not been revealed, except for reports
that the Pentagon will be cut. But immediate Pentagon cuts will be minimal.
What is not reported is that the Pentagon was already planning $400 billion in
cuts.
• Social Security, Medicaid and Medicare are temporarily exempted
from this phase of the cuts.
• There are no increases in taxes on the rich and no closing of
corporate or individual tax loopholes.
• In return, the debt ceiling will be raised by $900 billion —
$400 billion now and $500 billion in September.
• By Nov. 23 a special 12-member commission of six Democrats and six
Republicans will recommend up to $1.5 trillion more in cuts to be made over the
next 10 years. If the commission comes up with a plan, it will be voted up or
down in Congress, and there will be a $1.5 trillion increase in the debt
ceiling. If it is not passed, there will be only a $1.2 trillion addition to
the debt ceiling.
• Failure to agree triggers automatic spending cuts of $1.2
trillion, half in military spending, half in domestic spending. Social Security
and Medicaid have been exempted but not Medicare.
So far the details of the deal have not been disclosed. Many of the
specifics probably have to be worked out. This is ominous because of the
present political situation.
Sharp shift to right in capitalist politics
This struggle has revealed that the relationship of forces in capitalist
politics has shifted further to the right. The more mainstream reactionary
forces in the ruling class, who have been pushing for cuts in spending on the
people, have been in a bloc with the ultra-right Tea Party forces during most
of the debt-ceiling struggle.
Wall Street broke with the extremist ideologues of the Tea Party after Obama
made huge concessions on cuts in entitlements. However, the Tea Party
ideologues refused to accept victory. Instead, they pressed toward default.
After the lobbyists of the financial industry were rejected by the extremist
forces, the bankers, including JPMorgan Chase CEO James Dimon, went personally
to Capitol Hill to talk directly to the politicians.
In the end, Wall Street got its way. The Tea Party forces split in the final
vote, with only 66 Republicans holding out against the deal out of 140 or so
Tea Party-associated or Tea Party-endorsed members.
The U.S. ruling class suffered a considerable setback over its financial
dealings with the world by this display of political instability. Nevertheless,
the financiers won tactically in several ways. They avoided default. They got
cuts in spending for the masses and the promise of even more spending cuts. And
they stopped any new taxes on the rich and the corporations.
There were sharp differences in the Democratic Party during this struggle.
President Obama was ready to put Social Security, Medicaid and Medicare on the
table during negotiations with Republican House Speaker John Boehner. In the
final settlement, House Minority leader Nancy Pelosi, the Congressional Black
Caucus, Latino/a members and the Progressive Caucus held out to keep Social
Security, Medicaid and Medicare exempt from cuts at the early stage.
But the entire Democratic Party leadership and most of the rank and file
accepted the debt-ceiling frenzy and the deficit-cutting fever generated by not
only the Republicans but the ruling class as a whole.
The Democratic Party leadership did not demand the hundreds of billions needed
for a government jobs program. They did not demand funds to stop hunger in this
country, although 50 million people struggle with so-called “food
insufficiency.” The Democrats did not demand money to put the millions
back in their homes who have been fleeced by mortgage bankers, brokers and
wheeling-and-dealing lenders. They did not even demand the extension of
emergency unemployment insurance, which is slated to expire this year.
In short, the Democratic Party has promoted the line that the deficit
“must be brought under control.”
Banks are full of money
But how do you bring the deficit under control?
As the famous bank robber Willie Sutton supposedly said, when asked why he
robbed banks: “That’s where the money is.”
It is in the banks, the hedge funds, the private equity funds, the
military-industrial complex, the Pentagon, Big Oil with its tens of billions in
profits, and the manufacturing corporations that are sitting on $2 trillion in
cash but won’t create jobs. That’s where the money is. It is money
that belongs to the workers who created all the wealth in the first place. And
it should be used for workers’ needs.
The Democrats are a capitalist party. That means that at the top they are tied
to big capital. It is not for nothing that Obama’s chief of staff,
William Daley, is from JPMorgan Chase, or that the head of Obama’s jobs
creation panel is Jeffrey Imelt, CEO of General Electric, which has laid off
hundreds of thousands of workers in recent decades and pays no taxes.
The deficit that the bosses and their mouthpieces are crying about is the
deficit of the ruling class.
The bankers fear for their interest payments. The military contractors worry
about the flow of their profits. The Pentagon worries about keeping its war
machine up to date in order to bring death and occupation around the globe. The
corporations worry about staying on the government gravy train.
To the ruling class, the Treasury is a source of enrichment for millionaires
and billionaires. They want the debt ceiling lifted so that the government can
keep handing money out to the wealthy.
Not one word has been said in this entire debate over the debt ceiling
regarding the great deficit of the broad masses of people. The workers’
deficit is in the day-to-day struggle to survive. The workers and the oppressed
have a jobs deficit, a housing deficit, a health care deficit, an education
deficit and, for the tens of millions getting low wages, a paycheck
deficit.
The debt-ceiling sellout of the interests of the workers comes at a very
dangerous time. Cutting government spending — except for the $200 billion
in annual interest to the bondholders — means more government workers and
others who depend upon government spending are bound to be laid off. Government
services are bound to be cut back.
So the argument between the Republicans and Democrats was really over just how
much suffering to inflict on the people.
Capitalist economy sliding toward crisis
The deal came at the very moment that the government announced a rise in
unemployment, a slowdown in economic growth and a drop in manufacturing.
Economic growth was up only 1.3 percent in the second quarter, according to the
government’s Bureau of Economic Analysis. Revised figures also brought
first-quarter growth down from 1.8 percent to 0.4 percent.
Furthermore, this capitalist economic slowdown is spreading to Germany, Italy
and the entire eurozone.
In other words, the two big-business parties made a deal to cut back spending
at precisely the moment when capitalism is sliding toward a deeper crisis and
the prospect is for more suffering.
Move to right after collapse of USSR
This lurch to the right by Obama, leading the Democrats, is a continuation of a
trend that began with Ronald Reagan in the 1980s but accelerated after the
collapse of the Soviet Union and Eastern Europe. In the absence of a militant
working-class movement in the U.S., once the capitalist class in the U.S. did
not have to compete with a rival socialist system, the bosses and bankers began
to shed all restraints.
This was reflected in the destruction of welfare by President Bill Clinton, who
also instituted NAFTA, stepped up the death penalty, authorized the first
so-called “anti-terrorism” laws and signed other reactionary
measures. Eight years of George W. Bush pushed everything further to the right,
with two wars, domestic spying, huge tax cuts for the rich and so on.
The rise of the Tea Party, with tens of millions of dollars in funding and
endless publicity in the capitalist media, is a further reflection of this
trend. Obama and the Democrats are floating along on this right-wing tide
dictated by the giant capitalists who rule this country.
Workers must organize independently as a class
If this debt-ceiling struggle proves anything, it is that the working class
must organize independently, as a class fighting for its own interests. The
labor leadership has tied organized labor to the capitalist Democratic Party,
and the results have been disastrous: 30 million unemployed or underemployed,
millions homeless and hungry, with things getting worse by the week.
This is no time for gloom and doom. This is the time for independent
working-class political and economic organization. The time for mass
mobilization in the streets, for struggle in the workplaces, and for the
workers to speak in their own name is now.
We must speak boldly as an exploited and dispossessed class, with our own
political program that reflects our own needs as a class in opposition to the
greedy, exploiting, profit-seeking capitalist class that lives off our
labor.
The struggle must be against the huge deficits caused when capitalists lay us
off, kick us out of our homes, lower our wages, and divide us with racism,
sexism, homophobia and anti-immigrant prejudice.
We are told we must follow the Democrats; otherwise we will get the Republicans
and the right wing. Well, the workers have followed the Democrats and got
— the Republicans and the right wing.
No capitalist party will fight our battles for us. We must organize and fight
on our own.
Articles copyright 1995-2012 Workers World.
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