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US debt deal: Obama betrays his electorate

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The debt deal being passed by Congress may have saved the US government from shut down, but it will destroy the lives of millions of Americans, writes Simon Hardy

The US Congress agreement to raise the debt ceiling normally passes through American politics as a matter-of-course, with no more thought given to it. Rarely does it provoke so much media coverage or threaten to shut down the US government. But this year is different: After the election of a new generation of hard-right “libertarians” to the Republican party, all of them Tea-Party movement endorsed, the GOP decided to pick a fight and soon had Obama on the ropes.

The clash surfaced last December ostensibly over the relation between future public-service cuts and potential new taxes. But the actual debate went much deeper and revealed far more about the trajectory of the United States as the world's current sole superpower.

The argument was not simply about how much to cut; both sides agreed quite early on in the debate that roughly $2.5 trillion should be cut from US spending over the next ten years. The argument centred around whether it was even conceivable to help cover expenses by raising tax rates on the wealthy and corporations at all. Obama and the Democrats couched this in the language of creating “new revenue streams” and seemed to many Americans a very reasonable proposal. After all, if the poor are getting their social services cut, should not the rich pay a bit more on their wealth to help even things out?

But most of the US political establishment decided it was impossible to raise new revenue streams. Intransigence from the far right in the Republicans forced a terrible deal from the Senate Democrats, led by Harry Reid, which proposed the huge spending cuts. The Congress and the President backed a deal that will see money slashed from government spending and the rich substantially let off the hook.

In fact the current huge deficit budgets stretch as far back to the George W. Bush years when he slashed taxes on the rich (in 2001, 2003, and 2005); and it was Bush who set the trillions flowing into the banks. The increase in military spending and the prosecution of the “War on Terror” in Iraq and Afghanistan under his administration made US finances even more unstable. The capitalist crisis – the massive loss of taxable revenue caused by the shutting of business and the proliferation of unemployment insurance – amalgamated these elements and fueled a perfect storm that, essentially, was the straw that broke the camel's back.

In reality, for all their talk of “fiscal responsibility” and “living within one's means,” it is the Republicans via their policies that systematically create debt – the foundation for which began in earnest under Reagan. The essence of the Republican program for the past 20 years is to secure and finance American economic expansion with massive tax cuts for corporations and the rich along with more aggressive militarism and any associated spending. The deficits created would be made up with loans, thus avoiding the immediate need to fundamentally attack welfare programs: Social Security, Medicare, and Medicaid. This is principally how the Republicans have been able to continue swinging votes from workers and other sectors of the population who are also, at the same time, some the greatest victims of such policies.

These contradictions, now readily apparent, that burst into public consciousness over the past month or so, have spiraled out of control. Now the GOP is scrambling to reconcile the discord – and they are doing so in the interests of the capitalist class. The social-safety net that millions of working people depend on as a result of Republican policy is in the cross-hairs.

Barack Obama has continued these policies of buying off the rich – when he says that taxation of the wealthy “is at its lowest level in half a century,” he is partly responsible. Economist Joseph Stiglitz pointed out that in the last decade the income of the top 1% of US society has risen by 18%, while that of blue-collar male workers has fallen by 12%. This represents a historic shift of wealth away from the working poor and towards the rich.

So faced with such a vile assault on the poor, where are the “friends of Labor” in the Democratic Party? Why is the intransigence in such plentiful supply amongst the Republican right? Leading Democrat in the House Nancy Pelosi referred to the deal as a "sugar-coated Satan sandwich.” Many people will be left wondering where does he think it is sugar coated? Bernie Saunders, who describes himself as a “socialist” (the only one in the senate), said the deal "balances the budget on the backs of struggling Americans while not requiring one penny of sacrifice from the wealthiest people in our country.”

Yes, indeed! Economist Paul Krugman has gone even further; "those demanding spending cuts now are like medieval doctors who treated the sick by bleeding them, and thereby made them even sicker." The Republicans want to increase unemployment and cause a slump in the economy, casting social conditions back for millions of Americans in the next few years.

Now a sub-committee will be set up to decide whether the bulk of the cuts will fall on Medicaid and Medicare or on the US military. While the deal struck so far pledges $350 billion to be cut from military spending, this still has to be finalised and agreed in subsequent negotiations. This is, however, merely a formality; it is clear in the current political climate that most of the cuts will fall on social spending that affects the poor. If the US does not maintain its vast spending on the military-industrial complex, then it will be in an even worse shape as a global super power. Once again the advantage is with the right.

All of this has to be seen in the context of two things. Firstly the bank bailout that was initiated under the Bush administration and completed by Obama failed to get the economy back on track. The result was exactly the same as countries like Britain: it helped keep the financial district afloat, but it had no impact on the real economy. The rich were bailed out, and the poor got sold out. In this situation the capitalists feel emboldened and confident that they can get away with socialising any losses they incur. It indicates clearly a weakness on the side of the working class that the politicians have served their masters in Wall Street so well without more opposition.

But the second is just as important: the defeat of the movement in Madison, Wisconsin. The mass movement which emerged to defend labor rights in that state acted as a beacon of hope across the country and gave the US left and working class a new voice. They mounted a spirited and courageous defense in the face of outrageous attacks on their union rights (in this case the right to strike) and over deep cuts to the public sector. But the union leaders refused to build a mass-strike, and there was simply not enough rank-and-file organisation and class-conscious leadership to make it happen independently of them. The victory of governor Walker set the movement back and strengthened the right wing further.

Democrats staring into the abyss

The debt-ceiling deal represents a complete collapse for the Democrats. The Republicans consolidated their position, remain on the offensive, and now hold all the cards. This is despite the fact that they only control the House of Representatives. Obama, the president of change and hope, now looks weak and pitiful – a man with no integrity and who cannot stand up to the thugs of the Tea-Party movement.

Obama's presidency has been one of constant let down for his supporters, many of whom harbored deep illusions in his rhetoric during the election campaign. His much-vaunted health-care reform was gutted and beaten to a pulp by the Senate and lobbyists from the insurance companies before limping over the finishing line with a deal that satisfied nobody. Now the number of Americans without health insurance has actually increased to 52 million, a sure sign that something has gone wrong in the much hoped for reform programme.

The much-vaunted Employee Free-Choice Act, which the labor movement was pushing for in 2008 to make it easier to join and organize unions across the US workforce, died ignominiously in congress as the mood shifted to the right after 2009. No further gains were made on behalf of labor by Congress.

The economy is in a dire state: 9.2% unemployed and sluggish growth reported in the last quarter. Millions of Americans are in a desperate situation. One in seven Americans rely on food stamps or nutritional-assistance programs to meet their daily dietary requirements. These are particularly clustered in the south west along the Mississippi river states – i.e., the old homeland of Jim Crow, of US Apartheid.

On other progressive issues Obama’s administration is actually worse than Bush's. For instance, more immigrants have been deported under Obama three years in office than by any other president in US history. Obama might criticise the racist legislation passed in Arizona, but compared to the number of deportations by his government, his words are just liberal noise covering over a reactionary policy.

Obama continued and intensified the unpopular war in Afghanistan, conducted an illegal bombing campaign in Yemen (weeks after receiving the Nobel Peace Prize), and played a key role in the attack on Libya. The number of countries the US is at war with has increased under his rule. During the Middle-East revolutions, Obama dithered and prevaricated over Ben Ali in Tunisia and Hosni Mubarak in Egypt, continuing to authorise military aid to a country that was trying to suppress its own peoples' struggle for democracy. He only came out against Mubarak when it was clear that the tables had turned on him. Now his administration is central to providing legitimacy for the military government in Cairo. On Israel his policies have been clearly pro-Zionist and anti-Palestinian. He has already made it clear that the US will vote against and try and veto any attempts to declare Palestinian statehood at the UN in September.

The looming elections

At this rate Obama is facing defeat in 2012. He has betrayed his voter base amongst unionized workers, black and Latino people, and social progressives by his vacillations and compromises that have only strengthened the right. The Democratic policy of triangulation, where both sides start off at opposing poles and end up somewhere in the middle, has seen the point of connection swing further to the right each time.

He cannot appease the right with his right-wing policies, because he is not one of them. While he is busy playing up to big business, the US Chamber of Commerce, and undemocratic regimes across the world, he is alienating the progressive voters who would otherwise endorse him. Such is the crisis of US liberalism today.

The fact that the working class and progressive middle class find themselves reduced to voting for Obama and the Democrats by default shows the political bankruptcy of the “ lesser of two evils argument,” which has been always used to block the creation of a working class, anti-capitalist party. It rests on the naive belief that the Democrats are at least inconsistently a right-wing party of big capital and within the gaps created by that inconsistency the left can hope to achieve a few progressive reforms. But the balance sheet of Obama's presidency reveals those gaps are not just narrow but virtually non-existent, so right wing is the mainstream US polity.

The debt-ceiling issue could well be a turning point for the country. Certainly the Democrats look politically exhausted and short on ideas as they head into the summer recess.

The crisis of the US left is amply demonstrated by the debt ceiling Congressional war. The Republican's are willing and able to respond to their right-wing populist backers in the Tea Party. They have swung to the right and are being rewarded for it. But the unions and progressive-campaign groups on the left find no such support in Congress in “their” party: the Democrats.

This is caused by the historic collapse of liberalism and Social Democracy, which is occurring across the entire Western world in the face of an onslaught by capital. It finds its genuine expression in the growth of reactionary right-wing policies. In the face of this the so-called “left of center parties” (Democrats in the US, Liberal Democrats in Britain, Social Democracy across Europe) have no alternative and simply follow the cutting and austerity-championing right-wing.

Because the ruling classes of the world demand cuts, the slashing of work protection and union rights, the “freeing up the labor market”(cheap labor), “liberals” and “socialists alike” follow suit. The space for even a reformist alternative in parliaments and congresses is remorselessly closed down.

What can be done?

But parliaments and elections were never the real launching pad for the movements which won workers or black people their social and political rights. These struggles began on the streets and in the workplaces. What is needed now is a new movement on the streets just as vocal in its demand for vastly higher taxes on corporations and the rich; one which intransigently rejects all cuts in welfare, jobs, and wages. It can put demands on the Democrats in power but must stop viewing them as strategic allies or part of the same movement. The Democrats are political representatives of big capital and will always ultimately act in its interests. They only appeal to the interests of the poor to win votes and then they betray them shamelessly and cynically as they have just done once again.

The union leaders and the leadership of the Black and Latino communities know this well enough, yet they continue to fake the belief that this time things will be different. Obama’s bankable promises were thin on the ground, but he used his potential to be America’s first black president to fire up hopes. They turned out to be total illusions. He was always as right-wing a corporate Democrat as you could hope to find. He disorganized and de-mobilized his base of support just as soon as he came to office.

The US now faces a decade of austerity and cutbacks. It faces 10 years of Republican rule built on the back of the ruins of the candidate of hope who turned out to be a “zero and not a hero” as far as his electorate was concerned. The danger now is that everyone gets sucked into the electoral game of desperately trying to keep a far-right libertarian like Michelle Bachmann out of the Oval office and they loose sight of the bigger picture.

What we need is a progressive alliance of youth, immigrants, and labor fighting up and down the country using mass demonstrations, direct action, and strikes to turn the tide. Such a movement can slow and block the implementation of the cuts with mass strikes and militant direct action. No more must people put any faith in the Democrats. Now is the time for a new workers' party to be built, one that fights for an alternative to capitalism in crisis and decay. And there is such an alternative: an economy of hope and sustainable progress designed to meet the needs of all – socialism.

Socialism might still be a dirty word in the US, but after what the political elites are planning for the country, it will be possible to prove in action that it is capitalism that is the source of misery and degradation; that it is capitalism that has to go.

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