Thursday, July 28, 2011

The American Debt Ceiling Debate: A Symptom of Class Warfare


The United States public debt limit stands at US$14.3 trillion dollars. This was an increase from US$12.394 trillion by the Democratically-controlled Congress on 12 February 2010. This US$14.3 trillion represents the most amount of money that the Unites States government can borrow without receiving additional authorisation from the Congress. Under US law, when the national debt reaches a certain limit or ceiling, the Congress must authorise the raising of the debt to a higher limit in order for the government to continue to borrow more money. The United States’ actual accrued debt exceeded the US$14.3 trillion mark in May 2011. The current debt as of 27 July 2011 is US14,349,973,387.96.

The United States Department of the Treasury (equivalent to a Ministry of Finance) is authorised by Congress to issue such debt as is needed to fund government operations (per each federal budget) as long as the total debt does not exceed the statutory ceiling. Since 1979, the House of Representatives without debate has automatically raised the debt ceiling when passing a budget, except when the House votes to waive or repeal this rule. During the profligate military spending of the Reagan administration 1981-1988, the debt ceiling was raised 18 times. George W. Bush raised the debt ceiling seven times in order to fight against peoples of Afghanistan and Iraq. Article I Section 8 of the United States Constitution gives the Congress the sole power to borrow money on the credit of the United States. More importantly, the 14th amendment of the US Constitution states simply that, ‘The validity of the public debt of the United States…..shall not be questioned.’

The Obama administration wants to raise the debt ceiling to US$16 trillion. When the US economy went into a recession in 2008, as a result of the financial crisis on Wall Street and the subsequent bailout it received, President Obama attempted to assist the real economy by increasing fiscal spending to help maintain levels of domestic demand. These acts coupled with formal inclusion (in the budget) of the US$10 billion per month that the US government is spending on two wars have increased the debt. These expenditures along with the maintenance of the tax cuts enacted by President Bush are the primary reasons why President Obama’s administration has sought an increase in the debt ceiling. However, for the first time in decades the conservative forces of the US are using this debt ceiling debate to create a false sense of fiscal crisis and thus, use the false fiscal crisis to pursue their desire to force greater cuts to Social Security, Medicare and Medicaid. These are entitlement programmes for the majority of the population, particular for the poor and elderly. Read more