Vol. 76/No. 47      December 24, 2012

Underneath the sharp tactical debate is bipartisan agreement to press ahead with some type of “austerity” measures to make working people pay for rising government debt, just as the capitalists make us pay for every other aspect of their crisis.

The “fiscal cliff,” a term coined by Federal Reserve Chairman Ben Bernanke, refers to Congress’ decision to automatically enact deep spending cuts and tax raises on Jan. 1, 2013, if it fails to reach agreement on a series of budget-cutting measures that include cuts to Social Security, Medicare and other programs.

Congress set the deadline after gridlock between the two parties led to adoption of the Budget Control Act of 2011, which also authorized increasing the federal debt and enacted $900 billion in “stopgap” cuts in “discretionary spending” measures. The latter included social programs, government agency budgets and some military spending.

Both parties agree the interests of the ruling class necessitate their reining in a rising national debt amid stagnant production to avoid currency and credit problems. Raising taxes on themselves is an option they want to minimize, to varying degrees, as it adds to downward pressure to capitalists’ profit rates. Spending cuts can have their own contracting effect on the economy. Additionally, they worry about working-class resistance if they push too hard too fast.

Like their counterparts in much of Europe, the U.S. rulers find themselves marching, out of step, down a road many are fearful of, with sharp disagreements on how to approach it.

President Obama and legislators have spent the last month posturing and jockeying with each other.

CNBC ran a full-page ad in the Dec. 11 Wall Street Journal for “Mission Critical,” promising “special coverage all day today” about “America’s economy on the brink.”

The role of this barrage is to convince workers to believe we have a stake in the government’s debt problems and must prepare to sacrifice for the good of “the country.”

The capitalists’ fiscal problems are not the causes of their crisis. They are among the results and symptoms of a more fundamental and longer-term slowdown in worldwide capitalist production and trade. And this crisis cannot be fixed by financial, monetary or fiscal fiddling.

The financial crisis stems from a decades-long squeeze on industrial rates of profit, leading capitalists to shift their investment from production to speculative ventures in search of greater gain. “Trillions of dollars were being sucked out of industrial America and turned into ‘financial instruments’ and new, exotic forms of wealth,” Steve Fraser wrote in the Dec. 3 American Conservative.

“Financial engineers,” Fraser said, thought they could “turn money into more money (while bypassing the messiness of producing anything).” This can appear to work for a time. But inevitably no longer does.

President Obama paints his proposals to avoid the ‘cliff’ with a populist brush, pushing for $1.6 trillion in increased revenues over the next 10 years. He says these would come from tax increases on the 2 percent in the country who take in more than $250,000 a year and from changes in the tax code.

He also pushes for $400 billion in cuts from Medicare and other programs.

Republican Speaker of the House John Boehner countered with proposals for $800 billion in additional revenue from taxes over the next decade, coupled with $600 billion from deeper cuts in Medicare, including raising the eligibility age from 65 to 67, and cutting Social Security payments by lowering cost-of-living increases.

Behind the public face of partisan shock and disdain, both camps have leaked willingness to compromise.

The leaks report plans for a “two-step deal.” The first would lock in “an initial round of spending cuts” and “changes to the tax code” in January. This would put off the “fiscal cliff” until August, when Obama and Congress would pursue a more far-reaching “overhaul of the tax code and entitlement programs,” the Dec. 3 Wall Street Journal reported.

Those in on the negotiations suggest replacing the term “fiscal cliff” with “fallback” or “backstop.”

Whatever they call it, it represents one more way in which the U.S. rulers are preparing to push workers to the wall.
 
 
Related articles:
Gov’t jobless stats increasingly out of step with workers’ reality  
 
 
Front page (for this issue) | Home | Text-version home