Fight Racism! Fight Imperialism! 232 April/May 2013
Marx wrote that ‘all great world-historic facts and personages appear, so to speak, twice… the first time as tragedy, the second time as farce’ (Eighteenth Brumaire of Louis Bonaparte, 1852). He was fortunate enough not to have to sit through the endlessly repeated episodes of ‘the budget crisis’, as staged by the US Congress. What he would have said about them is difficult to imagine, but would probably be unprintable: ‘farce’ is far too feeble a description. The latest episode in the world’s most expensive and overlong soap opera has been playing itself out as we go to press.
The inability of US capitalism to stand on its own two feet is evident from the massive cushion of federal debt propping it up – a staggering $16.7 trillion and rising, about $145,000 per household. At the end of 2007 federal debt equalled just 36% of GDP; by the end of this fiscal year it will reach 76% of GDP: federal spending on interest payments on the debt, currently at record low levels, will rise from 1.4% of GDP to some 3.4% of GDP by 2020. This interest is a large and growing diversion of the surplus-value pumped out of the workers away from the profits of industrial capitalists and into the hands of bondholders and other financial parasites.
This debt is unsustainable: the ruling class has to cut it dramatically yet is having difficulty with the consequences and has been dithering about what to do about it for the last two years. Its Congressional lackeys need to cut spending, but cannot yet bring themselves to adopt the only option workable for profit-driven capitalism: the reduction and abolition of programmes essential to the health and welfare of constituents. They will be damned if they do and damned if they don’t, so they run back and forth like headless chickens, flapping their wings, not sure what to do until the very last minute.
The previous episode of this tragi-comedy, described in the last issue of FRFI, left us with three looming deadlines: 1 March when ‘sequestration’ – $85bn in budget cuts – was due to kick in; 27 March, the renewal date for spending by government agencies; and 19 May when the ‘debt ceiling’ – a cap on federal borrowing – comes into effect.
Dire consequences were predicted if sequestration went ahead: planes would collide with one another as air traffic controllers went on short time; lengthy queues and delays would build up at airports because of cuts in security personnel; the White House Easter egg hunt would be cancelled leaving children in trauma; 700,000 jobs would disappear. But, thanks to an interim funding Act, 1 March came and went without anything apparently happening.
In fact, the cuts don’t take effect at once but take place over several months, so the consequences won’t be felt for a while. This gave our clowns some time to try to cobble together yet another of their last-minute compromises, to be enacted before funding expired on 27 March. With barely bated breath we watched the ridiculous drama unfold, which formed the ‘debate’ on what to do before said date. As we have come to expect, after weeks of grandstanding and finger-pointing our heroes managed to snatch victory from the jaws of defeat at the very last moment by passing continuing funding bills. They promptly departed for two weeks of ill-earned Easter vacation, much to the relief of a weary and exhausted audience. The legislation allows $984bn in spending, but leaves in place, slightly trimmed, the $85bn of sequestration cuts. It funds all the main departments and science agencies, but not the new healthcare and financial reform laws.
What happens next has to be decided by 19 May, which is the deadline for the debt ceiling. If the debt cap remains in place then the government will have to stop borrowing at that limit, bringing the federal government to a screeching halt. It is almost unbearable to contemplate what antics these jokers are likely to perform before agreeing on yet another last minute compromise. US capitalists will have to wait anxiously to see if their hired flunkeys will satisfy the credit ratings agencies. These organisations grade US debt and effectively determine the interest rates the government has to pay for its borrowings. Sequestration was itself a compromise and more compromises about compromises leave the agencies less than impressed because the core ‘entitlement’ programmes – Medicare and Social Security – are left intact.
The Congressional Budget Office projects that, with the sequester in place, the budget deficit will fall in the near term, but will rise from this year’s $845bn to over $1 trillion by 2023, debt will reach 77% of GDP and be back on an upward path. To really solve the problem, US capitalism needs to sharpen its blade and cut boldly, ruthlessly and viciously. Judging from recent performances, this final bloody ending is still some way off.
Steve Palmer, US correspondent
