Using an obscure, impersonal term — “sequester” — U.S. finance capital is trying to put over European-style, across-the-board budget cuts at the federal level. Shielded by the fog of political gridlock, the bankers and financiers are testing the waters to see how far they can go.
If things don’t work out, Congress and President Barack Obama will get the blame, while Wall Street sits back and acts like an innocent bystander.
If Wall Street is able to get away with the cuts, then the rich will make their way directly to the bank with money stolen in the form of lost wages of federal workers; lost health care; lost Medicare payments to hospitals and doctors; lost funding for the Women, Infants and Children program; lost support for school lunches; cuts to the National Health Service, airline safety, food safety and environmental protection; and hundreds of other cuts.
Note that interest payments on the federal debt to the bankers (over $450 billion) are tightly shielded from the “sequester.” Every penny in interest payments will go to the super-rich, who were recently bailed out by the government to the tune of trillions of dollars during 2008-2009.
Full protection during this storm of austerity for the masses will be provided to those who brought about the financial crisis, the foreclosure crisis, the student loan crisis and gorged themselves on usurious interest rates, excessive fees and unscrupulous penalties, among other things.
Washington-Wall St. dangerous maneuver
The most important thing for workers to keep their eyes on is the dangerous maneuver that is going on between Washington and Wall Street. The financiers have long been trying to get major cuts in federal spending. Most of the cuts since the economic crisis began in 2007 have been at the state and local level. The big target is the federal budget.
Everyone in the capitalist media is pointing to the political gridlock between the Democratic Party and President Obama on one side and the Republicans and Speaker of the House John Boehner on the other.
Until the two parties agree on the federal budget, the cuts must go through, all because of an agreement that Obama signed into law in 2011 on “sequestering” $1.2 trillion out of the federal budget with across-the-board cuts. At the time it was signed, it was supposed to be a mechanism to spur agreement on raising the federal debt ceiling.
These cuts were so severe and so arbitrary that at the time it seemed unthinkable that they would actually be put into practice. A deal would be made to find a way out. So the official culprit has become political “gridlock” in Washington.
To be sure, there is gridlock. The two big capitalist parties want to put the blame for the cuts on each other and are intransigent about seeking political advantage. However, to put this crisis down to political gridlock alone is to overlook the relationship between the ruling class and its political establishment — that is, to mistake the servant for the master. One would have to believe that the bankers and the bosses have lost complete control over their political apparatus.
Gridlock and TARP bank bailout
The fact is that Wall Street is quite experienced and adept at dealing with political gridlock when its basic financial interests are at stake. One only has to look back at the debate over TARP — the so-called Troubled Asset Relief Program — in September and October of 2008 at the height of the financial crisis.
At stake was an immediate $700 billion government expenditure to bail out the very banks that had brought about the financial crisis, through marketing worthless mortgage-backed securities and other fraudulent or reckless financial maneuvers. The idea of Congress handing them $700 billion of public money to cover their losses was outrageous and wildly unpopular. But a bill to do it was put before both the Senate and the House.
Despite the entreaties of the Bush administration, then-Secretary of the Treasury Henry Paulson, and a host of other government and financial officials, the House voted it down on Sept. 29, 2008, by a vote of 205-228. The next day the Dow Jones Industrial Average dropped 777 points.
Wall Street turned up the heat. The first vote was completely disregarded by the legislative leadership. The bill was tweaked and a new vote was scheduled. On Oct. 3 the House reversed itself and voted up the $700 billion for the bankers by a vote of 263-171.
Similar, if less dramatic, deadlocks have been broken recently when Wall Street took a fierce interest. During the debt ceiling debate, the Republican ideological right wing — the so-called Tea Party caucus — refused to raise the debt ceiling, holding out the prospect of the federal government defaulting on payments to the bankers. Any default of this magnitude could trigger an unforeseen financial collapse.
The bankers forced the Republicans and John Boehner to relent and agree to the “sequester” in order to break the deadlock. The default was supposed to take place on Jan. 1, 2011. But the government brushed past that, and the debt ceiling was raised in time to pay the bankers in full on Jan. 3.
During the current “sequester” crisis, however, the bankers and the capitalist media have been relatively calm about things. There have been no screaming headlines or campaigns to force the political parties into an agreement.
On the contrary, the atmosphere on Wall Street and in the corporate board rooms has been fairly relaxed. That is because it is the workers and the oppressed communities that are under the gun, facing layoffs and cutbacks. If anything, the financial oligarchy stands to gain if they can pull off this trial run of a new austerity program.
Economic crisis behind drive for ‘austerity’
The setting for this campaign to cut the federal budget is the economic crisis and mass unemployment and underemployment. With millions of long-term unemployed and underemployed workers, government treasuries are losing revenue. In addition, the wages and salaries of the workers have been steadily falling. The U.S. has become a low-wage society. This further depresses tax revenues.
Finally, as the crisis produces growing impoverishment, the need to give support to the casualties of the capitalist crisis — the long-term unemployed — grows ever greater.
Knowing all this, the bankers see the prospect of shrinking funds in the treasury and want to ensure that funds going to them keep flowing. They know that the government cannot borrow forever to pay for services and the interest on the debt, plus huge corporate and military handouts. Thus the steady drumbeat to reduce the money for the masses, including services for the people and wages for government workers, under various disguises — “fiscal cliff,” “sequester,” etc.
This is akin to what the International Monetary Fund, the European Central Bank, the European Union and the Bank of London are doing in Europe. They are forcing member governments to commit to fixed, across-the-board budget cuts in order to ensure that the money is there to pay the interest on their debts to the banks and bondholders.
And like in Europe, these agreements are used to override union contracts, pension rights and social protections that had been written into law. They create all manner of violations of the rights of the masses.
Poor People’s March on Washington in May
The term “gridlock” is an attempt to create a shock effect by making it look as if nothing can be done about the cuts. With the tone of the media and politicians having been lowered, it can appear that the cuts are only temporary. The crisis atmosphere has been reduced. And word is spread that the effect of the cuts may have been exaggerated by both sides for political purposes.
But any attempt at relaxation should be soundly rejected by the workers and the oppressed.
The movement should take a lesson from the time Reagan tried to cut Social Security in 1981 and the labor movement called Solidarity Day. It was only when half a million workers came out to demonstrate in Washington, D.C., that Reagan quickly withdrew his proposal.
Right now, the progressive social movements as well as the unions, community organizations and student groups all have a great opportunity to fight back by joining the upcoming Poor People’s March on Washington, D.C., planned to begin in Baltimore on May 11. The campaign, initiated by the People’s Power Assembly of Baltimore, is picking up grassroots support from around the country. The plan is to march from Baltimore to Washington in the spirit of the 1968 Poor People’s March planned by the Rev. Dr. Martin Luther King Jr. before he was assassinated.
This is a great opportunity to give a resounding answer to Wall Street’s trial run and stop it in its tracks. That is the only answer to the “sequester” that can fend off this vicious attack by the rich. n