US: Mass struggles and capitalist crisis on the agenda in 2013

What is more unpopular than cockroaches, traffic jams, and used car salesmen? According to a new poll, the U.S. Congress.

Looking at the train wreck of budget issues Congress has created, it is not hard to understand why. (Poll by publicpolicypolling.com, 8 Jan 2013)

The next few months will be dominated by three fiscal battles: Congressional authorization to raise the “debt ceiling” to allow the government to continue to borrow to meet its obligations, the $110 billion in automatic “sequester” spending cuts in 2013, and finally adopting a budget to fund federal government operations in 2013.

All three pose huge dangers for the U.S. and global economies. The largest threat comes if Congress fails to raise the debt ceiling, which would trigger an unprecedented U.S. default on its debt and other obligations and risk an international financial meltdown.

The Republicans were able to use the debt ceiling as leverage to demand big spending cuts in return for raising the debt limit in 2011. They are again threatening to refuse to raise the debt ceiling unless there are equivalent cuts in spending, which amounts to threatening to blow up the world economy to ram through cuts in Medicare and Social Security.

The deep structural crisis of capitalism is forcing political leaders internationally to implement deep budget cuts. Yet these cuts, far from overcoming the crisis, are deepening it by cutting already weak demand.

Here in the U.S. a growing number of capitalist economists are calling for the $110 billion in automatic cuts scheduled to go into effect on March 1 to be renegotiated since it would act as a drag on the already weak and tenuous U.S. economic recovery and, therefore actually, aggravate the deficit. Republicans are also demanding the legislation be changed to remove cuts in military spending, despite their howls over the supposed debt crisis.

Finally, there is the need for a 2013 budget agreement. If no deal is reached by March 27, when a stopgap financing law expires, the federal government will shut down. This threatens to unleash a wave of popular fury at the political system and increase economic uncertainty. Some agreement needs to be reached, but this is extremely problematic given increasingly contradictory political pressures.

Squaring the Circle

Both parties want a budget that represents the interests of big business: a reduction of the deficit and cuts to social programs. However, the Democrats fear that carrying out cuts that are too large too soon will send the economy back into a recession. For political/ideological reasons, the Republicans need to appear firm on attacking “big government,” while the Democrats want a deal that they can sell to their electoral base of progressive workers and social movements without triggering unmanageable protests and opposition.

Obama and Democratic leaders have repeatedly made clear they would favor cuts to Social Security, Medicare, and other social programs as part of a “balanced” and larger deal.

In the 2011 negotiations, Obama offered Boehner a deal which included “a gradual increase in the Medicare eligibility age to 67 and an alternative yardstick for calculating inflation that would reduce annual Social Security cost-of-living adjustments,” meaning cuts of $112 billion in Social Security and $24 billion in veterans’ disability benefits over 10 years (Bloomberg.com, 9 Nov 2012). Obama offered the same cuts to Social Security and veterans’ disability benefits in the 2012 “fiscal cliff” negotiations (Forbes.com, 18 Dec 2012).

Such proposals are deeply unpopular with the American public. A HuffPost/YouGov poll showed 54% of Americans think these cuts to Social Security benefits is a bad idea (Huffingtonpost.com, 6 Dec 2012). “Defense” spending was the most popular choice to cut, at 39 percent (Huffingtonpost.com, 20 Jan 2013).

According to a Quinnipiac poll, seven out of ten registered voters oppose cutting Medicaid spending. The poll also found 65% of registered voters support higher taxes on incomes over $250,000 per year (CNN.com, 6 Dec 2012).

The only way Obama has a chance to push through his anti-poor policies without sparking a big public backlash is if the Republicans play along and are included in a larger bipartisan deal. This would provide Obama and the Democrats political cover by allowing them to blame Republicans by claiming they compromised to avoid even more regressive policies from the Republicans.

Yet in the 2011 and 2012 negotiations Boehner and the Republicans walked away from Obama’s proposed cuts to Social Security and Medicare due to their refusal to accept any increases in tax rates for the super-rich and their demands for bigger attacks on Social Security and Medicare.

GOP Increasingly Dysfunctional

Threatening to take the U.S. economy off the fiscal cliff at the end of 2012, the majority of House Republicans even went so far as to publicly humiliate their own leader, Boehner, by rejecting his symbolic proposal to increase taxes only on millionaires!

This is a stark illustration of the dysfunctionality of the U.S. political system, and today’s Republican Party ("Grand Old Party, GOP") in particular, from the point of view of the interests of capitalism. In one of his more revealing outbursts, Obama said to bankers in 2009: “My administration is all that is between you and the pitchforks.” Yet such is their blind greed and arrogance that Wall Street and corporate America tended to support Romney over Obama in the 2012 election.

There is no mechanical law that a class always recognizes its own best interests, despite vulgar simplifications attributed to Marxism by its detractors. It is the strategists and the thinkers of the ruling class, sometimes in opposition to those that they supposedly represent, who play the role of articulating policies and tactics in the best interests of the system.

After years of Republican blunders, this is beginning to dawn on capitalist commentators. In the editorial “It’s our system on the cliff,” Washington Post columnist E.J. Dionne, Jr. tried to ring alarm bells, writing: “The United States faces a crisis in our political system because the Republican Party, particularly in the House of Representatives, is no longer a normal, governing party. The only way we will avoid a constitutional crackup is for a new, bipartisan majority to take effective control of the House and isolate those who would rather see the country fall into chaos than vote for anything that might offend their ideological sensibilities … A normal party takes into account election results. A normal party recognizes when the other side has made real concessions … By all of these measures, the Republican majority that Speaker John Boehner purports to lead is abnormal” (23 Dec 2012).

Big Struggles on the Agenda

If Obama and the Republicans can reach a broader deal that includes cuts to Social Security, Medicare, and other social programs, it will deeply anger tens of millions of progressive workers and youth and lead to growing anger at the Democrats.

This process could be delayed if the Republicans stick to an extreme position and refuse to work with Obama, as it may not be politically viable for the parties to agree on bolder measures, and more minimal steps may be cobbled together to avoid disaster by raising the debt ceiling and a federal budget.

The coming attacks on social programs and a continuing deteriorating of living standards and rights for the 99% will lead to huge protests and struggles like we saw with the Wisconsin revolt, Occupy, and the Chicago teachers’ strike – but on a higher level. This will also provide growing opportunities for independent anti-corporate challenges to the two parties of big business.

There has been a profound change in the political outlook of workers and youth between 2008 – when Obama was elected on a wave of hope and illusions – and 2012. This is marked by a deep disappointment with Obama, a hardening anti-corporate mood, and the fighting spirit of Occupy. While most progressive workers voted for Obama and the Democrats in 2012, it was largely a “defensive” vote to stop the Republicans tinged with bitterness at Obama and the Democrats.

There is massive disillusionment with the political system, as shown by record low approval ratings for Congress. The newest Gallup poll shows 39% of the country has a favorable reaction to “socialism,” up from the then record-setting 36% in 2010 (see article "Interest in Socialism on the Rise"). A concrete manifestation of this trend was the recent 29% vote for Socialist Alternative candidate Kshama Sawant in Seattle: the highest vote for a socialist since at least the early 1990s.

Obama’s relative popularity currently is not so much a measure of his political strength as a function of the discrediting and disarray of the Republicans and the lack of a credible left-wing political alternative to Obama and the Democrats.

The mood that Occupy expressed in 2011 did not disappear in 2012. The 2012 elections succeeded in putting a lid on it given that there was no credible left-wing political vehicle to express it nationally. Now, the safety valve of the elections has been removed and patience with Obama and the Democrats is running out.

Whatever exact way events unfold in the next few months, the underlying trend is toward an explosive situation of crisis, deepening radicalization, bitter struggles, and new political developments. The task of all left-wing activists and working people who recognize this is to actively prepare to seize these opportunities by being at the forefront of organizing determined resistance and independent working-class politics.

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