During this past August, much publicity was given to the so-called “Debt-ceiling debate/crisis”. Obama and the Democratic Party wanted to raise the debt ceiling and impose cuts to public services and other spending. The proposed cuts to public services were not considered deep enough by the Republicans, who “threatened” to not vote for the raising of the debt ceiling if more cuts were not made. After broadcasting their “fight” in the media, the two parties agreed of course to raise the debt ceiling (as it has been raised at least 100 times since the early 1900s [1], without any public raucous) and delegated the cuts to public services to a super committee.
A day after the debt ceiling was raised, the S&P downgraded the U.S. to an AA- rating and the U.S. and worldwide stock market went through some of the biggest falls since the economic recession started in 2008. The volatile U.S. and European financial markets and their deficit crises have caused anxiety to international financial institutions (i.e. IMF, World Bank [2]), multinational banks, and stock investors. Raising the debt ceiling was not enough to reassure them that something was being done to counter the bleak economic forecast and thus wanted deeper cuts to public services to insure more capital is rerouted to corporations; some were even annoyed because there were some cuts to war spending! [3]
As for the super-committee (composed of a dozen senators and Congressmen from both Democrats and Republicans), it has the power to decide the future of U.S. working-class services for the next 10 years, without any public oversight.
So why did the process of increasing the debt ceiling limit cause a commotion among the Democrats and Republicans? Why such publicity over a play played so many times?
The debt-ceiling crisis as cover for the offensive on Public Services
The truth is that the debt-ceiling crisis is being used as a cover and justification in order to cut public services that the working class and oppressed communities rely on. Also, Democrats & Republicans used the debt-ceiling crisis to blame each other in order to direct anger at the other party and not at banks, corporations and multinationals – the real culprits of the economic crisis.
Even before the issue of the debt ceiling, both Republicans and Democrats were proposing deep cuts to cover the $2.1 trillion deficit. The main difference was that Democrats were open to some tax raises to the rich, while Republicans were strong against taxing the rich and corporations, and eager to target social services, such as Social Security and Medicare – the last vestiges of social welfare in the U.S. [4] Both parties never brought up the real causes of the massive debt: the trillions of dollars that the wars in Iraq, Afghanistan and elsewhere are costing, the massive 16+ trillion bank bailouts since 2008 and the drop in federal tax revenue due to the lowest tax rates to the rich & corporations in decades. [5]
What we are really seeing here, is that the corporations and the banks, through the policies of both Democrats and Republicans, see no other way out besides attacking workers as their method to solve this economic crisis. The same banks that were bailed out with trillions of federal money are now demanding that U.S. pay its debt by extracting $2.1 trillion from social services over the next 10 years from social services that serve the working class. This is a manifestation of neo-liberalist policies at home and the first taste of the austerity policies that we are likely to see in the next period. [6]
Is There Really no Alternative?
Obama and his economists are arguing that the combo of cuts to the poor and tax reductions to the rich is “bitter medicine, but we’ve got to take it”. [6] Is there really no other way out? Let’s see what the situation of working people is today in the U.S. on the one hand and of the corporations on the other.
America’s working class and oppressed sectors, especially Blacks/Latinos and working-class women, continue to face a harsh situation characterized by high levels of unemployment, a reduction of income, higher costs in food, gas and other daily amenities, as well as record numbers of foreclosures across the nation. The latest figures of those officially unemployed, part-timers who need full time and all of the people not counted who report they want a job is 22% (i.e. one out of every six people) and it has stayed around this number for most of 2010-2011. [7] At the same time, America’s biggest multinational companies (GE, Ford, Apple, PepsiCo, etc.) and oil companies are bragging about some of the biggest profits they’ve had in years.
However, Obama’s administration has chosen to protect the ruling class that he represents – the bankers and speculators – and has continued and even intensified the attack on the working class to recuperate their lost profits since the 2008 Great Recession. This definitely was not the change that the American people had in mind when they voted for Obama in 2008.
Too little, too late for Obama?
Several polls during 2011, including the Gallup Poll, have shown that Obama’s popularity is at the lowest it’s ever been; for example, he has averaged around a 40% job approval rating in August. However, he still holds some sway over African Americans [8]. Obama’s propaganda of “change and hope” is losing its effectiveness and now that two years have passed since his election, many Americans are starting to lose faith in him keeping true to his words. His campaign promises gave the majority of the working class, especially African Americans and other people of color, a false sense of hope that he would be a “people’s president”. The use of a Black president has proved to be one of the most ingenious strategies of the American bourgeoisie to push its offensive on the working class and people of color. Moreover, it is no secret that a sector of the U.S. bourgeoisie, especially Wall Street, supported and funded Obama’s campaign and now these ties are becoming clearer.
For the moment, Obama is out in the campaign trail for his 2012 re-election and is now speaking of a jobs package to deal with the record high unemployment rate. His jobs package is a mix of tax credits to businesses, construction/ infrastructure projects and a marginal taxing plan that would include the rich. [9] These recommendations are a change of rhetoric for Obama, as he was careful not to recommend taxing the rich before.
However, his policies up to now make it clear that he is not willing to dissatisfy banks and corporations and that he will try to balance the deficit on the backs of the workers as much as he can get away with. All signs point to the next government (be it Democrats or Republicans) butchering social services as much as they can get away with. In the coming year, we are likely to see the already lackluster social welfare system of the U.S. dissolve away in the name of balancing the budget deficit. That is, if we don’t do anything about it.
Our Perspective for a Way Out
The U.S. working class is not alone against these attacks, nor in this fight. At the same time, Europe’s (especially Greece’s) ruling class is implementing austerity measures to please the financial oligarchy (i.e. IMF, World Bank, etc.). Only a powerful independent movement of workers, immigrants, people of color, unemployed and youth can force the corporations, the banks and their accomplices in government to think and act differently.
Although the U.S. working class and oppressed communities have not come out to the streets en masse like in Europe, Obama’s regime cannot count on the masses staying quiet while taking the brunt of the pain. Small bursts of struggle – the public education protests of 2009-2010, the Wisconsin fight-back in 2011, the Occupy Wall Street & its counterparts in other cities, and other mobilizations against the austerity policies- have shown glimpses of what is yet to come. These mobilizations (and those around the world) do show that there are possibilities for much larger mobilizations and victories.
The role of the revolutionary left is to help those struggles get stronger and win. The movement against the attacks to workers, oppressed communities and public services needs its own independent and democratic organizing spaces, such as fighting unions, grassroots organizations and general assemblies. The complacent role of the Democratic Party and union bureaucrats needs to be exposed through mass actions with the main message: We are not paying for the crisis!!!
We demand:
– Increase taxes for the rich and the corporations.
– Stop Wars, Occupations and other military Interventions: Bring the troops and tax dollars home
– No bank bailouts.
– Stop the government attacks on unions. No to racist attacks on Muslims, immigrants and people of color. Civil liberties for all!
– Billions for jobs, education, healthcare and public services.
[1] Richard Wolf, Democracy Now; 7-28-11 http://www.democracynow.org/2011/7/28/richard_wolff_debt_showdown_is_political
[2] For more information on International Financial Institutions, see http://en.wikipedia.org/wiki/International_financial_institutions.
[3] Ibid
[4] For a great & pedagogical analysis on Neo-liberalism and the 2008 Great Recession and what it means, see: David McNally, “Global Slump: The Economics and Politics of Crisis and Resistance”, PM Press/Spectre. December 2010
[5] Most of there were secret loans. See July 2011 Government Accountability Office report: http://sanders.senate.gov/imo/media/doc/GAO%20Fed%20Investigation.pdf
[6] Andy Sullivan, “U.S. avoids default but fails to dispel economy fears”, Reuters. 8/2/11
[7] Robert Oak, “What’s the Real Unemployment Rate?” www.economicpopulist.org; 08/10/2011; Chart Shock: The Real Unemployment Rate Is 22%”, http://dailybail.com; 9/2/11
[8] Lydia Saad, “Obama Weekly Average Approval Holds at Term-Low 40%”, www.Gallup.com 8/30/11
[9] Mike Dorning, “Obama May Back Hiring Credit, Construction Spending to Spur Jobs”, www.bloomberg.com 8/29/11
