It’s television news teaser material that on June 1, the U.S. government will run out of money to pay its debts — everything from wages for its vast global armies and civilian government workers, to Social Security checks and interest payments on Treasury bonds.
According to President Joe Biden’s Treasury Secretary Janet Yellen, what happens depends on whether Biden and the Republicans — who control the U.S. House of Representatives — will agree to avoid catastrophe for the global capitalist system, by increasing the $31.4 trillion legal “debt ceiling.” Such a “bipartisan compromise” will no doubt involve slashing the federal budget.
Since January 2023, Yellen has unilaterally halted payments to retired federal employees’ pension funds, although these are required by union contracts. In bankers’ lingo, that step is part of “employing extraordinary measures” — which jeopardizes the income of millions of current retirees, from postal workers to national park rangers.
It also punishes future generations of federal workers. While pensions are threatened, the feds have no trouble finding money to finance the bank bailouts, bloated interest payments on the federal debt and the exploding Pentagon war budget.
Biden already oversaw massive budget cuts for social services, when on May 11 he declared an end to the COVID-19 pandemic-era Public Health Emergency survival programs. This included cutting food and housing stipends, eviction protections and expanded unemployment and Medicaid benefits. It even defunded infection-control programs, such as virus testing and hospital masking for tens of millions of workers and poor people still at risk of contracting COVID-19.
Biden has announced he is perfectly willing to negotiate — with the faction of Republican bigots and MAGA-fascists led by House Speaker Kevin McCarthy — about slashing more funds from workers’ safety-net programs, even possibly increasing the retirement age for Social Security.
The president’s only demand is that the Republicans let him legally clip more coins by invoking “constitutional executive powers” to increase the ballooning debt limit on which JPMorgan Chase’s rapid banking-monopoly growth feeds.
The capitalist class, represented by Republicans and Democrats alike, has declared a bipartisan war, complete with troops on the borders to stop the immigration of workers into the U.S. Police in every U.S. city continue to shoot, kill and lock up workers, especially oppressed workers of color, at historic numbers.
There appears to be bipartisan agreement to give the Pentagon $842 billion for the military’s 2024 budget, $25 billion more than in 2023. Military spending jumps past $886 billion when the Energy Department’s nuclear-weapons and other federal projects are included in what the Biden administration and defense officials are calling the “largest, nominal-dollar peacetime budget ever” for the Pentagon.
When it comes to war spending, there’s no ceiling.
Record interest payment on the debt
Then there are the interest payments to the banks like JPMorgan Chase and others. A big portion of the ballooning debt is due to the Federal Reserve raising interest rates by 4.25% between March and December 2022 and another quarter point in February.
In the last quarter of 2022, the Treasury Department paid a record $213 billion in interest payments on the national debt. This was up $63 billion from the same period a year earlier and nearly $30 billion more than in the prior quarter — the largest quarterly increase on record. (CNN, Feb. 14)
Interest costs, expected to triple to over $3 billion per day by 2032, are on track to become the biggest federal budget item, surpassing Social Security and Medicare, which are funded through payroll deductions.
Workers are already paying for the bankers’ greed through inflated costs of food, medicine and other consumer goods. We cannot afford more cuts, especially to essential safety-net benefits for low-income and oppressed communities, disabled and elderly people, or social programs essential to the multinational working class.
We refuse to sacrifice any more through proposed cuts in social programs to pay back the interest to the banks.
Defund the bloated military budget
As a party of, by and for working people, including both employed and unemployed, Workers World Party says the answer to the debt ceiling “crisis” seems obvious to us — refuse to pay back the bankers’ inflated interest! And while we are at it — defund the bloated military budget! Defund all forms of state repression, designed to keep workers from fighting back and taking control of society away from the greedy, parasitic class of capitalists and Wall Street bankers.
Betsey Piette contributed to this article.