Debt Ceiling Crisis 2.0

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The following article was written by a comrade in North America in the midst of the US federal government shutdown and debt ceiling crisis. While the immediate crisis has now passed with another temporary deal to kick the can down the road, the underlying tensions remain, virtually ensuring that the US political system will suffer further convulsions in the period ahead.


On October 1st, the US federal government entered a “partial shutdown” after Democrats and Republicans in Congress failed to reach an agreement on a continuing budget resolution (CR) to keep the government running for another six weeks. As a result of the shutdown, 800,000 federal workers are on furlough, national parks and memorials are closed and most ”non-essential” government functions have come to a halt. As we write, federal small business loans are not being processed, student loans are on hold and money appears to be running out for many federal “safety-net” programs, such as the WIC program, which provides emergency assistance to pregnant women and those with infant children. Bourgeois economists now worry that the shutdown is costing the US economy $160 million a day. 1

At this time, there appears to be no clear end to the shutdown in sight. Republicans, whose original rationale for not agreeing to fund the government was to defund “Obamacare,” seem unlikely to surrender without extracting some sort of concession from the Democrats, while President Obama says he simply will not negotiate with Republicans at the point of a hostage-taker’s gun.

What’s worse is that the shutdown is occurring as the deadline for the United States to raise its “debt ceiling” once again approaches. If Congress does not raise the nation’s statutory borrowing limit by October 17th, the United States will shortly thereafter default on all or part of its national debt, something which most professional economists agree would be the beginning of a global economic catastrophe. While elements of the Tea Party seem to be intent on forcing the issue, there are some recent signs that the Republican Party may soften its stance on the debt ceiling and agree to a temporary increase in the nation’s borrowing limit. Still, as we write, the resolution of this crisis is far from settled, and—as numerous analysts have pointed out—whatever the real intent of the Republicans, the closer the nation gets to the October 17th deadline without raising the debt ceiling, the chances of some kind of unintentional disaster increase. As one commentator put it, “If you keep wrestling at the edge of the cliff, eventually you will go over it.” The American bourgeoisie seems locked in a game of nuclear financial chicken with itself, putting an already fragile global economy at risk of a complete meltdown.

However this situation resolves, regardless of whether or not the more rational elements of the Republican Party win out over the Tea Party wing, this episode marks yet one more step into a deepening political crisis that has rocked the American ruling class since Obama’s election in 2008. Moreover, these events are just one more embarrassment for the United States on the international stage, coming on the heels of the revelations about NSA spying this past summer. Already, the Chinese officials have publicly called for “de-Americanizing” the global economy and suggestions have been floated of creating a new global reserve currency to replace the dollar, based on the Chinese Yuan but managed in London.

While it would be a mistake to overstate the nature of the political crisis—the American state is not on the verge of collapse just yet—it would also be an error to chalk these events up to just another contentious partisan fight over how to manage the nation’s deepening economic and imperialist difficulties. More than a mere policy dispute between various bourgeois factions, these events could possibly presage a major realignment in the American political system, potentially calling into question the stability of its two party structure and division of ideological labor.

So what is the nature of this political crisis and what does it say about the position of the United States in the context of continuing global economic difficulties? How does the political crisis of the US bourgeoisie fit with the theory of capitalist decomposition? In what follows, we will explore these questions, pointing out the danger for the proletariat in falling behind any faction of the bourgeoisie, even if the Democrats appear for the moment on the surface as the embodiment of order and rationality against the ideological decomposition of the Republican Party.

Origin of the Current Crisis

Although the political difficulties of the US bourgeoisie originate from at least the failed impeachment of President Clinton in the late 1990s and the botched presidential election of 2000, the current situation of Tea Party inspired mayhem stems from the election of Barack Obama as President in 2008. As we have analyzed in previous articles, although the main factions of the US bourgeoisie were behind Obama’s meteoric rise to the Presidency as a kind of anti-Bush, his election was not greeted with universal acceptance.2 Even before he was inaugurated, conservative groups were organizing to oppose his Presidency. The Tea Party, a loosely defined marriage of grassroots conservative organizations and corporate sponsors, rode white racist resentment of the first African-American President and paranoid fears of impending socialism to reach national prominence in 2009 and 2010.

Stoked by establishment Republicans who sought to use the grassroots energy of the movement to regain control of Congress, and by corporate money in search of a low regulation, anti-union business environment, the Tea Party had become a major player in national politics in advance of the 2010 mid-term elections. Although used by the Republican establishment to further its electoral agenda, the Tea Party clearly represents an element of the US bourgeoisie that is not traditionally counted among its “main factions.” Regionally, it is based in the South with some allies elsewhere, particularly in suburban and ex-urban regions of the Mid-West and West. Sociologically, it mostly represents small bourgeois and petty bourgeois elements with local and regional power that previously did not exert much influence on the national level. These are mostly small and medium sized business people: car dealers, doctors, etc, who feel shut out by the growth of federal authority in their regions and who were resentful of the giant federal bail-outs given to Wall Street in the aftermath of the 2008 meltdown. For many of them, the mandate contained in Obamacare - that certain businesses provide health insurance to their employees - feels like an onerous intrusion of the federal government into their local and regional economies.

Politically, the Tea Party counts on the “white backlash” against mass immigration, continuing white racism against African-Americans and anti-welfare and anti-tax demagoguery to stoke up a passionate electoral base among parts of the petty bourgeoisie and white working class with their talk of resistance and no compromises with the forces they oppose with religious like fervor. Ideologically, they represent a hodge podge of libertarian, authoritarian and traditionalist themes, united by a Manichean tendency to view their struggle as a kind of crusade and their opponents as the embodiment of societal decay, treason and foreignness. While the roots of the Tea Party go back generations, even to the reaction by local white elites against the rights won by African Americans in the aftermath of the Civil War, this faction of the American bourgeoisie has not enjoyed this level of political influence at the national level since their defeat during the Civil Rights era.

It was with this faction, which had gained a new insurgent energy in the wake of Obama’s election, that the establishment Republicans made a Faustian bargain in advance the of the 2010 mid-term elections. Moreover, Wall Street used the Tea Party as a hedge against any possibility that the Obama administration and its Democratic allies may develop a taste for raising taxes and imposing too many regulations on their casino economy in the wake of the 2008 meltdown. The Republican establishment legitimated the Tea Party, while Wall Street bank rolled it all the way to a Republican take-over of the House of Representatives in the 2010 midterms.

Since the 2010 midterms, despite President Obama’s successful re-election bid in 2012, the Tea Party caucus in the House of Representative has wreacked havoc within the US bourgeoisie. Now beholden to the “radicals” in his caucus, House speaker John Boehner has had to toe their ideological line, already taking the nation close to default in 2011.3 While the weight of the Tea Party within Congress has been useful for the main factions of the bourgeoisie in pushing an austerity agenda, including the painful sequester cuts that took effect earlier this year, the Republican refusal to compromise with the President has prevented a “grand bargain” that would attack the national deficit by cutting Social Security and Medicare and raising certain taxes. Moreover, the visceral hatred felt by many in the Tea Party caucus for immigrants has prevented any deal for comprehensive immigration reform from coming to fruition, frustrating the main factions of the US bourgeoisie’s search for a solution to these burning problems for the national capital.

However, perhaps most contentious has been the attempts by the Republican Party to undue President Obama’s signature health reform legislation.4 Despite its modest effect in mitigating the drag on the national capital represented by runaway health care costs, the Republican Party has fought tooth and nail, although so far unsuccessfully, to prevent the implementation of this law, leading to the current government shutdown. This is despite the fact that the law was a brainchild of Republican think-tanks and initially implemented on the state level by the Republicans’ last Presidential candidate, Mitt Romney.

It is difficult to see the “material interests” at the level of the national capital that the Republican Party is defending with their opposition to the implementation of this law, leading many to conclude that their obstructionism is driven by the extent to which their party has been “captured” by Tea Party ideologues hell bent on repealing a law they see as a form of “socialism.” Whatever the small benefit to the national capital of Obama’s reform efforts, the implacable opposition to it from the right seems mostly to be an effect of ideological decomposition on the small bourgeoisie, enabled by the increasingly short-term political maneuvering of Wall Street and their Republican allies.5

While it may be the case that Tea Party positions are “locally rational” in the political context of their gerrymandered districts, this means little on the level of the national and global economies. In fact, one of the main features of the current crisis is the rise to power within the US ruling class of elements that appear to have no idea how a modern capitalist state must function or the requirements of remaining a hegemonic power in a globally integrated economy.

While there may be some long term “rationality” in the Tea Party’s concern about the US national debt (in the way a broken clock is right twice a day), this in no way legitimizes a seemingly suicidal opposition to raising the debt ceiling. If the US wants to maintain its global hegemony, it will simply have to continue to borrow money—such are the contradictions of a globalized decadent capitalism. Of course, the Tea Party may be right in one sense—it is indeed absurd that in order to maintain its global position the US must continue to sink further into debt. This fact only illustrates the historical bankruptcy of the entire capitalist system. Still, from the perspective of the national capital, this in no way legitimates the Tea Party’s seemingly self-destructive death wish with ending US foreign borrowing overnight, or the ridiculous obsession of the Paul family with abolishing the Federal Reserve.

Is the American State Structure Obsolete?

Now that the American political system has wound itself into a position of “governing through crisis,” passing from one deadline crisis to the next, it is reasonable to ask, just as the more sophisticated bourgeois analysts do, if there is a way out of this mess? It is in the process of addressing this question that the American media has recently discovered the work of the Spanish political scientist Juan Linz.6 Linz, recently deceased, based his career on the comparative studies of democracies, arguing for the superiority of Westminster style parliamentary democracy over the Presidential system. Indeed, in the academic field of comparative politics the question of why many Presidential systems have been prone to collapse has been a burning issue for decades, particularly in the study of Third World “democracies,” many of who adopted a Presidential system only to shortly thereafter experience political impasse and a military coup. In Presidential systems, in which it is possible for the chief executive and the majority in the legislature to be from different parties, a crisis of democratic legitimacy, it was argued, was an inherent threat to the continuity of the state as neither the President nor the legislature could claim a full “democratic” mandate.

Of course, there was always one glaring exception to the tendency towards instability in Presidential systems: The United States of America, which despite experiencing a Civil War over slavery, had maintained a functioning and stable Presidential system for over two centuries. In the United States, the “checks and balances” inherent in the separation of powers appeared to work, preventing momentary majorities from enacting radical changes to the social and economic order. However, Linz argued that the exceptional nature of the United States was due more to the character of American political parties than a unique political culture. American parties have historically not been very well sorted according to “ideology.” Both the Democratic and Republican parties have tended towards pragmatism as each represent broad coalitions, which can recognize and act on common interests with elements of the other party. Should this change and the parties develop an ideological character, the United States would be prone to the same kind of political crisis that has led to the collapse of democratic state structures in other nations.

From the perspective of the current impasse in US politics, there is much to support in Linz’s analysis, in particular the increasing tendency towards “ideological sorting” in the US political parties. In many ways this analysis fits with our own, which has described an increasing “ideological hardening” in US society. However, from a Marxist perspective this only begs the question of what is driving this ideological sorting? In our analysis, it all comes back to the forces of capitalist decomposition and their reciprocal effect on the US political structure.

However, it is important to note that this process of ideological sorting has, to this time, disproportionately affected the Republican Party. Its bargain with the Tea Party—itself a reflection of an increasing tendency towards short term thinking—has allowed the forces of ideological decay to assert themselves in such a way that today the US bourgeoisie faces a virtual civil war within one of its major political parties, between the Tea Party insurgency and the remaining figures of the Republican establishment. Earlier this year, this war was expressed in the fight over immigration reform, in which it was expected by most pundits that the Republicans—out of electoral self-interest—would cut a deal with Democrats to overhaul the immigration system. Unfortunately, for the main factions of the US bourgeoisie in both parties, this has failed to transpire, mostly out of strong resistance from the Tea Party wing of the Republican Party who simply will not allow the US state to grant anything smacking of amnesty to those who have violated the law.

Although the Tea Party caucus in the House of Representatives constitutes only a minority of members, they have been able to direct Republican policy over the past several years through the threat of a primary challenge from the right to any Republican who appears too soft in negotiations with Democrats or who fails to toe the Tea Party line on important issues. The primary threat is enabled by increasingly gerrymandered electoral districts, in which Republicans face no real competition from the left and therefore are forced to lurch ever further to the right. Moreover, the influx of unregulated campaign money, coming mostly from right-wing billionaires like the Koch Brothers, which is now allowed under recent Supreme Court decisions, makes it possible for political neophytes from the right to upset many establishment Republicans in primary elections, drawing on the energy of an increasingly radicalized activist base intent on fighting back against the demographic change symbolized by the Obama Presidency.

Nevertheless, for all the triumphant media talk following Obama’s reelection about the demographic tide that is supposed to herald a new error of Democratic political dominance, the US bourgeoisie seems unable to surmount the difficulties posed by the right wing backlash. While the Democrats may now have a natural advantage in Presidential elections, this has not yet translated to off year and down ballot races. Couple this fact with the gerrymandering carried out by Republican controlled state legislatures and the Republican Party can continue to win control of the House of Representatives. Much dismay has been heard in the bourgeois media that however much the public at large is angry with Republicans over the government shut down and threat of default, the GOP is unlikely to feel much political pain at the ballot box.

Safe in their gerrymandered districts, Republican legislators have little to fear from Democrats at the same time they face an existential threat from a right-wing primary challenger should they stray too far from right-wing orthodoxy. Others argue that the Republican Party has basically given up trying to win the Presidency, preferring to enact its agenda through other means by weakening the office of the Presidency, using whatever tactics are necessary, including holding the global economy hostage. 7

There seems to be few good ways out of this impasse for the US ruling class. Although it is certainly possible that some temporary compromise will relieve the immediate threat posed by the debt ceiling limit and the government shut down, this will unlikely do anything to transform the underlying structural problems dogging the US bourgeoisie. Once again, the best the main factions of the bourgeoisie will likely be able to do is to kick the can down the road. The US ruling class is stuck with the fact that its state structure seemingly promotes a system of “locally rational, nationally foolish” for much of the Republican Party, and the traditional means for keeping the perverse incentives towards extremism under control have mostly broken down.

Perhaps the most damaging prospect for the US bourgeoisie of this political crisis is the calling into question of its traditional two-party democratic illusion and division of ideological labor. If ideological decomposition has turned the Republicans into an openly reactionary party representing a demographically doomed constituency, the Democratic Party is itself increasingly losing its image as the “party of the working class.”

Pushed by the Republican Party’s increasing rightward lurch, the Democratic Party has been forced to try to be both the party of the labor unions and at the same time that of neo-liberal corporatism. Within the broad Democratic coalition must co-exist such diverse political stances as the furthest left of the established unions like the Service Employee’s International Union (SEIU) and the so-called urban education reformers who push charter schools, merit pay and openly demonize the teachers’ unions. More and more, while the Republican Party enacts an enforced ideological purity, the Democratic Party appears to stand for nothing, except compromise itself, elevating deal making into an end in itself. In order to appear as the rational, “grown-up” party, nothing is off the table, not even Social Security and Medicare. But how can a party that acquiesces so easily to cuts in the meager social wage serve as a buttress against any social unrest that may emerge in the future? While for now, the Democrats can use the Republican Party’s meltdown as political cover, it is unclear for how long it can keep this charade going, especially when Obama is no longer the face of the party after 2016.

It is clear that the American state system is under severe stress at this time. Its two party democratic illusion is in jeopardy: one of its major parties is experiencing a serious upheaval that could possibly result in a split, while the other is increasingly called upon to shed its image as the protector of the working class. There appears to be fewer and fewer options open to the American bourgeoisie to repair the situation within the current structures of the state. While it is impossible to predict precisely how this will play out, it is important to note that each time the punditry has predicted that the Republican Party will come out of its ideological stupor in order to protect its electoral interests, it has only tended to dig in its heels further. While this allows the Democratic Party to claim to be the rational party, workers should have no illusions about what this means. For the Democrats, rationality means compromise, with each new compromise requiring the working class to bear the brunt of the pain. We should remember that in the current fight over the government shut down, the Democratic Party has already accepted the Republicans’ painful budget numbers. The budget, which is ostensibly at the heart of the current stand-off, is only several billion dollars more than that proposed by the Republican Party’s chief of austerity Paul Ryan. With each substantive crisis, the Democrats’ opening gambit is often already a restatement of its “opponent’s” position, revealing the true nature of both parties as enemies of the proletariat.

This should leave us with few doubts that in this contest between thieves both parties have austerity for the working class in mind. Thus, however more “rational” the Democrats claim to be compared to their Republican counterparts, it is necessary to grasp the meaning of their "rationality" in context. If rationality means enacting those polices that serve the interest of the US national capital, this will ultimately mean more austerity for the working class even if a deliberate blow up of the global economy is avoided.

Compromise As An End in Itself

All the political drama and media spectacle over these crises seems to include an important message that the media has tried to reinforce: the key to the functioning of any democratic political system is that all sides must be willing to compromise. Thus, compromise is set-up as an end in itself; it becomes the litmus test for rationality and good governance. Those who take a principled stand in favor of one position or another are ultimately painted with the brush of “extremism” and are said to act outside the boundaries of “democratic norms.” As a result of its recent behavior, many analysts have decided that the Republican Party is no longer a “normal” political party, but one bent on chaos and destruction. However much this is true, we have to be clear to separate this discussion from any attempt to turn this critique back on revolutionaries.

As descendants of the communist left, we are well aquatinted with the critique of those who refuse to compromise. Many of the charges thrown around by the pundits at the Republican “radicals” today are very similar to things Lenin said to dismiss the Dutch and Italian lefts within the Comintern. The refusal to compromise is labeled “juvenile,” “absolutist” and “impractical.” Compromises are supposed to be necessary in order to avoid premature confrontations, which one is likely to lose (as appears to be fate of the Republican Party today).

While we think any attempt to associate the communist left with the kind of intransigence at work in today’s Republican Party is not historically appropriate, it may very well be the case that the media is using the current crises to transmit a broader lesson about “radicalism” to the general population. Perhaps it is not for nothing that the phrase “Tea Party radical” has gained such currency? The message appears to be that anyone who steps outside the boundaries of normal politics is simply irresponsible, if not downright crazy, and should be summarily dismissed. “Grown-ups compromise.” They don’t refuse to negotiate when the pain for not doing is mutual ruin.

From our point of view, it is one thing to hold firm to the principles that delineate the boundary of bourgeois from proletarian politics as the historic communist left did, and another altogether for one bourgeois party to threaten the blow up the global economy if it doesn’t get its way. The communist left was a reaction to the growing political degeneration of the Comintern (as a result of the failure of the world revolution to spread from it Russian bastion) and its progressive reintegration into the state apparatus of capital. Today’s Tea Party intransigence is a reflection of the decomposition of the capitalist system and its centrifugal action upon the bourgeois political apparatus, which in turn pushes the underlying economic system to the brink of catastrophe.

For the working class, the lesson in the current crisis is clear. The bourgeois political apparatus is reaching the point of breakdown. While for now this process may be affecting one party more than another, there is no reason to expect deliverance from the Democrats. While the Democrats may not be interested in provoking a national default, they will most likely avoid this through a “compromise” that includes more attacks against the working class’s standard of living.8 There is only one way out of this morass and it starts with the working class returning to the path of its own autonomous struggles outside of the control of all capitalist political parties.

Henk, 10/14/2013


1 http://www.bloomberg.com/news/2013-10-08/shutdown-costs-at-1-6-billion-with-160-million-each-day.html

2 See the series of articles we have produced since the election of 2008 in Internationalism.

3 For our analysis of the first debt ceiling crisis of 2011 see: U.S. Debt Ceiling Crisis: Political Wrangling While the Global Economy Burns http://en.internationalism.org/icconline/201108/4459/us-debt-ceiling-crisis-political-wrangling-while-global-economy-burns

4 For our analysis of “Obamacare” see Obamacare”: Political Chaos for the Bourgeoisie, Austerity for the Working Class.

5 For an analysis that attempts to find the rational interests in Tea Party antics see this blog by Michael Lind: Tea Party Radicalism is misunderstood: Meet the “Newest Right”.

 

 

 

6 See Juan Linz, The Crisis of Democratic Regimes: Crisis, Breakdown and Reequilibration (Baltimore: Johns Hopkins University Press) 1978.

 

7 Such was the analysis of MSNBC host Lawrence O’Donnell in yet another attempt to find the rationality in the Republican Party’s actions.

 

8 Of course, in the current crisis Obama and the Democrats have finally discovered that compromise has its limits. Not willing to repeat his mistake of 2011, in which he openly negotiated with hostage-takers, Obama has so far remained steadfast in his refusal to negotiate until the debt ceiling is raised and the government reopened, recognizing that do so would continue the negative precedent of rewarding economic terrorism. However, Obama and the Democrats have also been painfully clear that once the debt ceiling is raised and the government reopened, anything and everything is on the table in future budget negotiations.