Socialist Alternative

Capitalism’’s Dysfunction: Budget Reckoning Approaches

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““With just days remaining until a cascade of economic events crash onto Washington, the budget showdown between Congressional Republicans, Senate Democrats and President Obama is growing only more tangled.” ”

–New York Times (9/26/13)

This upcoming Tuesday, October 1, is the deadline for a budget deal and raising the government’s borrowing limit. The raising of the debt ceiling used to be a routine practice in U.S. capitalist governments for decades. However, with the onset of the economic crisis and increased political polarization, nothing is routine in the halls of power anymore as each party tries to blame the other for a crisis inherent in the system itself.

Rather than agreeing to Obama’s proposed “grand bargain” of long-term cuts in Medicare and Social Security, linked to small increase in taxes on the wealthy, Democrats and Republicans tried to agree to a stop-gap measure of budget cuts last year. Their failure led to the imposition of “sequestration,” i.e. across-the-board percentage cuts in government programs and military spending. Now, full of posturing and blaming, the two parties of big business are engaged in a new battle to impose their versions of a corporate agenda, threatening to run the economy towards the cliff of a government shutdown. The sequester cuts led to real cuts in jobs and services and a slowing of the economy; a government shutdown would be far worse.

Dysfunctional Republicans

The budget debates are exposing the divisions in the Republican Party. Many GOP leaders remain responsible loyal servants of capitalism who want to avoid a shutdown. However, we’re heading into an election year, and a mid-term election year at that, when right-wing posturing reaches an all-time high to reach a conservative base in gerrymandered districts.

The Tea Party wing of the Republicans, led by Senator Ted Cruz of Texas, is leveraging every ounce of its House majority to block funding for Obama’s Affordable Care Act (ACA). Their current tactics risk either a government shutdown, which happened in the 1990s, or even a U.S. government default, which has never happened.

The Tea Party’s overarching goal, wrapped in the language of “freedom” and the needs of the “entrepreneur,” is to defend corporate interests and fight any restrictions on the right to make profit at the expense of workers and the environment. In particular, they want to block any expansion of health care for workers and defeat laws that would require business to provide health care to its workers. In essence, by preventing any change whatsoever to the status quo, they support the continued situation of record corporate profits and wealth inequality.

Unabashed Congressional gerrymandering, combined with infusions of corporate cash (e.g. from the Koch brothers) and a heavy dose of barely-concealed race-baiting against the nation’s first black president have provided the Tea Party its leverage in the House. Thus, working-class Americans are presented with a miserable choice: a flawed healthcare law that will hobble union gains and leave millions uninsured while boosting HMO profits, or no change at all to a broken healthcare system plus a government shutdown or default, both of which will yield layoffs, service cuts, and an erosion of workers’ living standards.

Democrats’ Corporate Agenda

Meanwhile, Obama and the Democrats look to place blame on the Republicans and hide from the light of day what they’re doing in the budget debate. Obama is actually proposing a reduction in taxes paid by corporations. A reduction! As wages remain stagnant, low-wage jobs become more prominent, and services are under attack while millions are chronically unemployed. And Obama, without any urging from Republicans in this direction, wants to lower the corporate tax rates.

While Obama serves the 1% with proposals to lower corporate tax rates, he also poses as a tough guy, refusing to negotiate with the Republican House leaders. Many will see this as a courageous stand, since Republican politicians are so increasingly out-of-step with policies preferred by ordinary working people and youth. As Republicans posture to draw up a “laundry list” compromise and threaten the possibility of debt default, Obama could look like the victor in this debate.

In the next few days we can expect to see big business and corporate leaders look to reign in the Tea Partiers. A government shutdown could spook international markets, leading to downgrading of the U.S. credit rating and a spike in U.S. interest rates. However, this will not change the nature of the fight we face – to confront and defeat a corporate agenda that seeks to make workers and the poor pay for this crisis.

Roots of the Current Crisis

The current government crisis, which is developing almost by the hour, has its immediate roots in the technicalities of the Congressional budget process. Both chambers of Congress have until September 30 to agree on a resolution that would continue funding the agencies and functions of the federal government. If they fail to do so, a government shutdown will ensue, in which many federal workers will be sent on unpaid furloughs, while those in essential functions, partially determined by the president, remain on the job, but may face delays in pay. The last time this happened was in December 1995, when then-President Bill Clinton vetoed a budget plan sent to him by a Republican-dominated Congress that failed to fund key aspects of Medicare, public education, and public health programs.

The second date of importance, however, appears to be October 17. This is the date when the Treasury Department estimates it will run out of money to pay back the government’s debt and will be constrained from borrowing more by the statutory debt limit, or “ceiling,” which can only be raised by an act of Congress. Congressional Republicans, towed along, sometimes reluctantly, by their arch-reactionary Tea Party wing, are also threatening to withhold their consent to raising the debt ceiling unless Obamacare is defunded and several other corporate projects are approved: construction of the Keystone XL pipeline, expansion of off-shore oil and gas drilling, and similarly ludicrous efforts to enrich energy-company stockholders by further destroying the environment.

One might ask: How can the Tea Party exercise such leverage over the whole government process? Hasn’t this astro-turf so-called “movement” been on the decline since its brief rise to fame in 2010, before being cut-off by the emergence of mass struggle in Wisconsin and Occupy Wall Street? Indeed, the Tea Party is a distinct minority within Congress and even among Congressional Republicans. Out of 233 Republican House representatives, who have the majority over 200 Democrats, only 49 are members of the Tea Party Caucus; in the Senate, where Democrats control 53 out of 100 seats, only 5 Republicans identify with the Tea Party. Furthermore, the most recent Pew Center poll shows that “[a]mong the public generally, 50% oppose the House Republicans’ proposal to cut off funding for the 2010 health care law as part of any budget agreement, while 38% favor this proposal” (“Blame for Both Sides as Possible Government Shutdown Approaches”).

The answer to this conundrum of the ultraconservatives’ ongoing influence is their open threat to oust any “mainstream” Republican who votes against them in the next election cycle, backed up by the mega-cash of Koch Industries’ Koch brothers. House Speaker Boehner, for instance, may soon be forced to accept or reject a Senate bill that fully funds Obamacare. If he accepts, “it would be devastating to [his] support,” according to more hardline Republican Richard Hudson (NY Times, 9/27/13: “Shutdown Looms as Senate Passes Budget Bill”).

The Dominance of Corporate Politics

The ultimate reason for the ongoing dysfunction of American politics is the deep structural crisis of capitalism. This is demonstrated in the widening divide between the top one percent and everybody else, continuing high unemployment five years after the 2008 economic collapse, a decades-long decline in workers’ real wages, the evaporation of living-wage jobs, and the massive indebtedness of the 99%.

Both political parties receive the lion’s share of their election funding either directly from corporate interests or from corporate-affiliated Political Action Committees (PACs). Furthermore, recent research shows nearly half the members of Congress to be out-and-out millionaires (“113th Congress“), a fact which puts them, quite literally, among the top one percent of American households. Is it then any surprise that, down the line, we only get laws that overwhelmingly benefit the rich and corporations?

Despite their very public disagreement on budget issues over the past two-and-a-half years, both parties agreed to wring additional billions out of social programs (see “Obama’s Historical Sellout – Social Security and Medicare Attacked by Both Parties,” and “Reverse the Sequester Budget Cuts — Build a Political Alternative for Working People and the Poor”).

Herein lies the real root of the choice facing American workers in the present budget crisis – the only options on offer are flawed. Republicans want to slash Medicare and Medicaid and defund any positive aspects of Obama’s health care bill in order to boost corporate profits. But Obama’s Affordable Care Act was designed to protect – and even enhance – the interests of the wildly inefficient private U.S. healthcare industry. All hope of a single-payer healthcare system, or even an expanded “public option,” which Obama supported on the campaign trail in 2008, were ditched once the support of unions and working-class people were secured on Election Day.

The Democrats, from Carter and Clinton to Obama and beyond, have been actively involved in the deregulation of finance, the expansion of “free trade” areas, the slashing of welfare, the privatization of education, and the sabotage of meaningful healthcare reform. Once in office, the Democrats rarely fail to pay their corporate pipers, though show no scruples in discarding their erstwhile grassroots supporters.

However, more and more people are beginning to see both political parties as not only dysfunctional but also representatives of the super-rich. Pitched political battles in Washington rarely reflect the daily battles of workers, the poor, women, people of color, and youth.

A Socialist Response

In the current debacle over the funding of Obamacare, socialists recognize that the working class —the vast majority of U.S. society — has no clear side and is being asked to (passively) choose between a rock and a hard place.

For instance, a real budget debate would include demands to put people back to work. Millions of jobs could be created through an emergency public works program for green jobs, public transportation, infrastructure development, guaranteed health care, and improved public education. This could address not only the economic crisis but also the ongoing degradation of the environment. These services could be paid for by increasing taxes on the super-rich and corporations. If the wealthy threaten to take the resources they own out of the country, then their businesses should be taken into public ownership under democratic control, run for the good of society.

Nobody, whether it’s the government or an individual, should be in debt to the large shareholders of big banks who helped create this crisis. Debt, from student loans and credit cards to state and federal government debts, should be forgiven through taking the big banks into public ownership, with compensation given to small shareholders on the basis of proven need. The banks got bailed out while workers got sold out; we need to seize their wealth and use it for the public good.

We demand a publicly-funded healthcare program which would unequivocally provide free heath care at point of use for everyone. But that is not on offer. While we support the expansion of Medicaid to the poor and other positive aspects of Obama’s health care bill, his so-called Affordable Care Act is completely flawed.

For a Political Alternative to the Two Parties

Working Americans and their unions should not be tricked into giving support to Democrats who promise and then fail to deliver. Instead, we should do everything in our power to build a unified resistance to the politics of austerity and privatization, fighting at the national, regional, and local levels. Socialist Alternative supports the creation of a new political party of the 99% who are shut out of the two-party corporate duopoly.

This fall, Socialist Alternative members are running grassroots campaigns for City Council positions in Boston, Minneapolis, and Seattle (see “Why We Run Socialist Candidates”). In Seattle, Kshama Sawant won 35% of the vote in the city council primary. We hope this can convince others on the left to run independent dynamic electoral challenges to the Democrats and Republicans in 2014. We believe that electoral campaigns, when tied to mass movements of working people, can mobilize the massive anger at the two corporate parties.

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