US shutdown shows the system is cracking up

The shutdown of the US government by the right-wing Tea Party faction of the right-wing Republican party is a critical moment, one that reveals deepening cracks inside the capitalist state’s political system.

On the first day, 800,000 federal employees were affected by the absence of a government that could pay their wages. On the same day, many of the 32 million Americans not covered by insurance queued to sign up for access to affordable health care.

The new insurance marketplace websites which opened for business on the first day of trading are a key part of the president’s so-called “Obamacare” legislation. Overwhelmed by the demand, many websites crashed in the first hours. 

The Patient Protection and Affordable Care Act was adopted in 2010, in fulfilment of Obama’s election pledge, and Republicans have failed 50 times to block it. To their disappointment, the Supreme Court ruled that that legislation was constitutional.

In trying to place more rocks in the road of a long, tortuous, contradictory journey towards the universal provision of healthcare, Republicans led by the Tea Party have initiated the shutdown of government by denying approval to the federal budget.

So with services closing, government workers are being sent home on unpaid leave. It’s wish-fulfilment time, a dream come true for the super-rich corporate funders of the Tea Party who vehemently hate all forms of public spending.

Never mind that the massive expansion of the insurance market was a Republican model pragmatically adopted by Obama as a way to provide health care for the tens of millions who’ve been denied it in the world’s richest country.

The health industry, especially in the US, has been a feeding frenzy for Big Pharma, for the makers of ever more technologically advanced and expensive medical devices and highly profitable insurance companies.

Although US spending per head on health is 150% more than in the UK, life expectancy at birth is among the lowest of developed countries, while infant mortality is the highest. Potential years of life lost by people under the age of 70 are also far higher. It’s a health system that benefits the well off.

When the economy crashed in 2008, the turning point arrived. The status quo was unsustainable. Millions were thrown out of work, losing access to healthcare funded through insurance as part of their employment contract. Economically, socially and politically the game was up.

One thing is clear: having taken the first tentative steps towards universal access,  the current system of government looks unlikely to survive. Its problems are piling up fast. The two wings of the Congress of the 1%, for the 1%, by the 1% are in deadlock. 

Although the Republicans are trying to block Obamacare, the bigger issue looming ahead is the soaring federal government deficit. Unless Congress votes to raise the debt ceiling later this month, the US government could be staring at an international default as it won’t have the money to service interest payments.

The consequences of default by the world’s biggest capitalist economy are beyond imagination. Most analysts are saying it couldn’t happen, they’ll surely come to their senses. But the Republican Party is so divided in itself that anything is possible.

Who is to blame for all of this? Reflecting a generalised rejection of the political process, a Reuters/Ipsos poll showed about one-quarter of Americans would blame Republicans for a shutdown, 14% would hold Obama responsible and 5% Democrats in Congress, while a massive 44% said everyone would be to blame.

George Atkinson, an 82-year-old Coast Guard veteran of the Korean War was among those pushing past barricades to visit the National World War ll Memorial,  closed by the government shutdown. "The whole group ought to be replaced, top man down," he said.

Events around the world show that it’s not so much the people who are operating the system who are to blame. It’s the system itself. It’s in trouble wherever you look. The Greek government has arrested some of its own, elected, Golden Dawn representatives. Britain has a non-elected coalition. Berlusconi is singlehandedly trying to bring down the Italian government. The system is cracking up.

Gerry Gold

Economics editor

'Fiscal cliff' deal robs US workers

Given that the last-minute deal in Congress was designed to avert the US economy falling over a self-imposed “fiscal cliff”, the best way to picture the outcome is to imagine a cartoon of the two main parties locked together as they cross the precipice.

Now they’re hanging in mid-air, still pummelling each other with nothing beneath them as millions stand fearfully watching and looking over the edge. But there’s something else. The two contestants each have a hand extended, and together they’re wielding a pickaxe at the ground beneath the people’s feet.

It would be comical but for the looming inevitability of the battering facing the 99% of not only Americans, but the majority of people around the world excluded from the rich and powerful trying to rescue the system at whatever cost to the rest of us.

For more than 160 million hard-pressed Americans, the most immediate result of the agreement between the Democrats and Republicans – two sides of the same capitalist coin – automatically removes 2% of their income.

In 2010, president Obama temporarily reduced the social security payroll tax (a bit like the UK’s national insurance) from 6.2% of salary to 4.2%. The new deal doesn’t extend this part of the previous attempt at a recovery from the crash.

For the majority, it’s austerity in everything but name. Those in work will have to pay more to support those without it whilst corporate profits soar. It will get worse within weeks because at the end of February, the debt ceiling has to be resolved one way or another.

“Before you start pouring the champagne to toast the deal, remember, the minute the House vote ends, the countdown to the next crisis begins,” said David Rothkopf of Foreign Policy. The US has already hit its legal borrowing limit of $16.4 trillion but the Treasury, through what it calls “extraordinary measures”, can service the national debt for about two months more.

Obama and the Democrats have deferred spending cuts on programmes like health, social security, defence, excluding them from the deal. The Republicans split and the temporary solution was achieved. But the massive debt won’t evaporate.

The last-minute, dramatically-reduced package of tax measures agreed by the outgoing US Congress not only does nothing to reduce the already unsustainable but ballooning debt. It actually pumps an additional $4 trillion dollars into the balloon over the next ten years, according to the Congressional Budget Office.

Obama claims he’s shifting some of the burden to those 300,000 or so earning more than $400,000 dollars, but most of them will just shrug it off. Despite the controversy over the deal, only 0.7%  will be hit by the higher income tax rates on the wealthy, according to the Tax Policy Centre. But 77% of workers would face higher taxes once the ending of a payroll tax holiday and other measures were taken into account.

The unresolved “fiscal cliff” consists of several inter-related components. Some are the result of the US system of budgeting and policymaking. Then there is the fact that US capitalism is debt-driven – at federal, corporate and household levels. Other countries like China buy US debt so that the American government can keep functioning.

But by far the greater problem lies in the global web of corporations controlled by no government but determining policy decisions and actions irrespective of the wishes of the majority.

Anger is growing everywhere against Starbucks, Amazon and the rest, merging with the universal hatred of the speculative profiteering of the bankers that triggered the worldwide Occupy movement. Many, prefer to look away, hoping that the system will crumble under the weight of it own contradictions. But it won’t.

As the New Year agreement shows, those in power will bury their differences in their determination to impose the most brutal of solutions. We, the 99% need a new constitution, a concept of a different set of social relations. And a new revolution.

Gerry Gold

Economics editor

Oil spill goes global

Estimates of the quantity of oil gushing into waters of the Gulf of Mexico continue to increase. BP’S own guess was originally as low as 1,000-5,000. Then the original 5,000 barrels a day grew to 60,000.

Now, more than two weeks into the capping operation, around 45,000 barrels are still poisoning the seas, destroying wildlife and wrecking livelihoods – and there is no prospect of stopping the flow. It is on track to become the worst oil spill since the first Gulf War in 1991, which spilt around six million barrels.

This worsening catastrophe does not just symbolise the intertwined ecological, economic, social and political consequences of capitalist production and distribution. It is at the centre of the universal crisis that is now changing the way of life of every person on the planet. The explosion was by no means an unforeseeable accident. The drive for growth to sustain profits produced a global economy lubricated by increasing amounts of credit and debt and fuelled by oil. As the oil became harder to extract, costs escalated, profits were hit and corners cut.

During the Congressional hearing of the Subcommittee on Energy and the Environment, in the US House of Representatives yesterday, Chair Ed Markey dismantled attempts by the other oil companies to isolate BP. He and other House Democrats ripped into the chiefs of oil companies for filing bogus oil-safety reports before drilling new deep-sea wells, saying they are no better prepared for an offshore disaster than BP. Congressional investigators found that all five of the nation’s major oil firms filed virtually the same safety report prior to drilling new wells - right down to citing a long-dead expert who could be called in the event of an emergency.

The economic consequences are resounding around the world. The highly lucrative local fishing industry has been closed down. Tourism is melting away. BP’s market value has declined by more than 40% since the Horizon drilling rig blew up. The value of pension funds dependent on BP’s profits is dropping like a stone. The mess on Florida’s beaches is heating up the campaign to seize BP’s assets and there are indications that the global corporation is exploring ways to protect its US operation through bankruptcy proceedings.

President Obama’s speech last night, broadcast from the Oval Office, was largely about the need to wean the US off of its addiction to oil. His attempt to divert attention from his inability to do anything effective about the spill not only failed to convince anyone but, according to many commentators, actually worsened the political crisis. As the Financial Times put it ‘And there was something in it to frustrate or antagonise virtually every stakeholder who was listening.’

In his response to BP’s testimony, Ed Markey eloquently expressed the contradiction at the heart of the crisis: “BP is more concerned about minimising its ‘liability’ for the costs of the clean-up than for the ‘livability of the Gulf’ ”.

But the US Congress is no more able to act to stop the destructive actions of global corporations like BP than it is to regulate the financial institutions that arrogantly straddle the world.

The moment has arrived for a new kind of politics and a new kind of democracy based upon collective stewardship of the planet we depend upon. Now is the time for a qualitative change in our relationship with nature. Let’s begin the job of reconstructing democracy from the bottom up through the building of an international network of People’s Assemblies.

Gerry Gold
Economics editor