Saturday, August 6, 2011

US Debt Ceiling Debate and the Alternatives

On 2 August, a few hours before the deadline for the US government to raise its debt ceiling or face default, President Barack Obama signed into law the Budget Control Act, after Congress passed it by wide margins. This debt ceiling agreement calls for over $2 trillion ($900 billion now and $1.2 trillion by the end of the year) in fiscal spending cuts spread over 10 years. These cuts are expected to only reduce GDP (gross domestic product) growth in 2012 by 0.1 per cent. However, if an agreement is not reached on the $1.2 trillion spending cuts, the debt deal contains automatic spending cuts which some estimates suggest could reduce GDP growth by 0.8 per cent in 2013. Note that current 2013 GDP growth forecast is 3 per cent. The combined impact of reduced government procurement spending, reduced government support for personal incomes and continued high levels of unemployment seems to indicate a two-year period of lower levels of GDP growth, consumption as a percentage of GDP and subsequently total non-oil imports relative to their respective levels prior to America’s financial crisis.

This kind of deficit reduction that spares the wealthy from higher taxes and protects the bloated military budget from cuts is an assault on the ordinary citizen who depends on government programmes as social safety nets.

This week, I heard extended discussions on the mainstream media about the positive aspects of socialism. One popular progressive TV anchor, Keith Olbermann, charged ordinary folks to rise up against the assault on social safety nets. Usually, such discussions on socialism are carried out by small groups of the left, away from the mainstream media. Now however it is clear from the depth of the multiple crises that people are now thinking out clearly about alternatives. Keith Olbermann called on the people to rise up. In a passionate commentary, Olbermann called for a new movement to rise up and build a protest movement against the Budget Control Act. Olbermann stated on his show:

‘Where is the outrage to come from?’

‘From you! It will do no good to wait for the politicians to suddenly atone for their sins … it will do no good to wait for the media to suddenly remember its origins as the “free press” … it will do no good to wait for the apolitical public to get a clue.’

Without a protest movement, the ‘tide’ that had brought the debt deal ‘will crush us, because those who created it are organized and unified and hell-bent. And the only response is to be organized and unified and hell-bent in return.’

Olbermann was calling for self-organisation and self-mobilisation to meet the challenges of the financial–military complex.

Drawing inspiration from the anti-war and anti-racist struggles of the past generation, Olbermann called on the US population to ‘find again the energy and the purpose of the 1960s and early 1970s and we must protest this deal and all the goddamn deals to come, in the streets.’

This is a call to non-violent arms. It was the most explicit call from the progressive side. Olbermann’s call for organisation was a far cry from those who were looking to Obama for answers or those who called the deal a defeat for progressives. The reality is that progressives have not yet begun to fully organise. They have allowed the conservative forces to dominate the debate about the debt, the dollar and the budget for war and oppression.


On 3 August 2011, the editorial of the New York Times commented that this Budget Control Act:

‘is as contrived as the artificial crisis that spawned it. The bill, like a tired opera production, is full of clumsy staging and failed gimmicks left over from previous decades. It is not only bad policy in its goals of cutting spending too much, but it is bad procedure. It allows members of Congress to avoid responsibility for their actions through a cutout committee, a spending limit and the pretense that this Congress can tell the next one what to do.’

This paper did not however explain to the readers the fact that this bad procedure was serving a clear purpose, that of ensuring the dominance of a small 2 per cent of the population. The outrage in the society from all sides had been too great, so this platform for the liberal wing of the ruling class came out with these words. While it is true that the mainstream media has been carrying the talking points and spin of the two dominant parties, there can be no hiding from the fact that millions are now paying attention to the realities of the economic crisis in the United States.

For two and a half years the Tea Party forces had seized the public political space. Loud and aggressive, these Tea Party forces of populist conservatism reproduce the values of white supremacy and militarism. It is now well documented that the financial supporters of the Tea Party are some of the crudest billionaires from the financial services sector.

These politicians thrive on progressive people’s political apathy, but the drama had been running for too long so people want the details. They want to know what it means that the Budget Control Act grants a $400 billion increase in the government's debt ceiling to stave off the threat of default, with an additional $500 billion increase available from February to be effective on the president's authority. There will be a further increase of $1.2 trillion to $1.5 trillion that will become available only if a balanced budget amendment is considered by Congress by the end of the year. Read more