The crisis of overproduction that has now ripped to the surface in the form of world financial crisis has been burrowing underground since the 1970s. One sign of its subterranean progress has been the shifts in the US federal deficit.
In the years of Reagan and Bush senior, the deficit soared. After a brief respite under Clinton, it soared again during the war years of Bush junior, culminating in the financial crash in late 2008. Obama’s massive bailout for the banks and $787bn stimulus package sent the deficit up to $1.4tr for the fiscal year ending in autumn 2009. The deficit for the year ending this autumn is projected to be $1.5tr.
The failure of Obama’s attempted neo-Keynesian strategy to rescue the economy has put wind in the sails of Republicans itching to make a frontal assault on the conditions of existence of the mass of workers in the US. With the advent of a Republican majority in Congress in November (whilst Democrats cling on to power in the Senate), the Obama administration is defensively watering down its Keynesian ambitions with pledges of fiscal prudence.
Ironically, now that mainstream Republicans are in a stronger position to dictate policy, some of the less bone-headed are starting to doubt whether a policy of slash and burn against government spending will really save capitalist America, and are casting nervous backward glances at the Tea Party fanatics who are pushing them on from behind.
Federal budget? What federal budget?
On the campaign trail, the Republican promise was a $100bn cut to the 2011 budget. Their seats in Congress assured, the Republicans sought to revise this figure down to $32bn this year and more later. But following a revolt of newly elected Tea Party enthusiasts, the Republicans changed tack again and, on 19 February, pushed through a bill sanctioning a $60bn cut to domestic programmes, foreign aid and military projects.
The fact that, nearly half way through the fiscal year, the USA has yet to adopt a formal budget is a startling indication of just how rudderless the most powerful and wealthy imperialist country on earth has become.
When the Republicans blocked Obama’s spending plans, Congress agreed on a fudge whereby existing spending levels would carry on till 4 March. At time of writing, there has been a further two-week extension, including an extra $4bn in cuts, due to expire on 18 March.
Maybe this Two-Week Plan for US capitalism will be fudged again, or maybe not. Either way, the government is due to hit its debt limit around late spring, at which point it will be unable to borrow any more money without the say-so of Congress. And looming beyond this, of course, is the question of next year’s budget, beginning 1 October!
Wisconsin today, Washington tomorrow?
To get a sense of what government breakdown could really entail at the grass-roots level, beyond all the rival posturing of the neo-Keynesians and the Tea Party barbarians in Washington, one need only look at what is happening in Wisconsin. In that state, what for Republicans on Capitol Hill has been so far largely a partisan exercise in Democrat-baiting now finds Governor Walker courting raw and open conflict with an unprecedented wave of popular outrage and resistance.
Walker’s Bill, which has now been passed through both Houses, strips from public-sector unions the right to engage in collective bargaining over wages, conditions and pensions. Walker has pressed on with this openly repressive law in spite of – or more accurately, because of – the reluctant agreement of the unions to accept as inevitable what amounts to a 7 percent cut in take-home pay as a result of hikes in pension and health contributions from employees. The only public-sector workers exempted from the pay cuts have been the police and fire unions, both of which backed the Republicans at the election.
In the campaign to kill Walker’s Bill, crowds of up to 25,000 surrounded the legislature in Madison, banging drums, bearing placards linking with the Egyptian revolution, pitching tents and unrolling sleeping bags for the long haul. Many schools were closed down when hundreds of teachers all phoned in sick. Protesters occupied the Capitol and besieged Walker’s office, screaming “Come out, come out, wherever you are!”
Thousands of teachers, public-sector workers and students filled a square around the Capitol chanting “Kill the Bill”, denouncing Walker as a dictator and demanding his recall. Some of Walker’s coterie found that conducting a class offensive against the working class was not quite the ‘Tea Party’ they had banked on and were obliged to beg for police escorts to lead them out of the Capitol through jeering crowds.
Indeed, so great has been the public outcry that Democrat members of both the state’s legislative bodies, the Assembly and the Senate, felt impelled to exile themselves to neighbouring Illinois in an unsuccessful attempt to deprive Republicans of the quorums required for the passage of the enabling legislation.
This has led to the spectacle, in equal parts farcical and sinister, of the police being drafted in to help ‘persuade’ legislators to return to Madison and, in the governor’s phrase, “do their jobs” – ie, do a job on the working class. Walker ordered police to the home of Mark Miller, leader of the Democrat senate minority, to escort him back to Madison, but there was no answer.
This ‘principled stand’ by Democrats was eloquent testimony to the depth of popular anger aroused by Walker’s class assault, but could not conceal the hollowness of the challenge coming from this rival capitalist party. Obama’s supposed panacea of ‘cuts + growth’, or ‘Keynesianism lite’, is as full of holes as Ed Miliband and Brendan Barber’s pale imitation in Britain.
Like their UK counterparts, the Democrats like to pretend that a capitalist solution to the capitalist crisis is possible without the necessity for drastic cuts in the living standards of the masses. Whilst correctly pointing out that Governor Walker has himself exacerbated Wisconsin’s indebtedness by his earlier tax-cut profligacy, and making out a plausible case that the level of indebtedness is in any case not yet of an order as to require such deep cuts, the Democrats throw dust in workers’ eyes when they conclude from all this that Walker’s anti-worker agenda is simply an ideological vagary of the Republicans and loony Tea Party activists; simply a nightmare from which a pro-Democrat recall campaign could deliver everyone.
Organised labour has been prominent in the Wisconsin resistance, providing much of the backbone of the struggle. However, the unions suffer from their political association with the Democrats, as was evidenced by the suicidal policy of running up the white flag on the issue of the 7 percent wage cut, on the certifiable grounds that such a ‘magnanimous’ concession from the unions would be bound to make Walker ‘reconsider’ his hostility to collective bargaining.
The protesting mail-carrier from Madison who told the New York Times, “I don’t feel that you lose when you give something to gain something, that’s how democracy is supposed to work,” summed up in a nutshell the illusions that prevent opportunist unions from becoming fighting unions. (‘Unions debate what to give to save bargaining’ by Michael Cooper and Steven Greenhouse, 27 February 2011)
Conversely, the implacable cynicism of Walker’s response to the unions’ own goal – drily noting that their concessions on the 7 percent wage cut were “an interesting development, because a week ago they said that’s not acceptable” – should serve as a warning against entertaining any further such rose-tinted views of bourgeois democracy, red as it is in tooth and claw.
The bourgeoisie will come to regret having so unceremoniously pulled the rug out from under a whole history of class collaboration between opportunist unions and the capitalist bosses. The public-service tradition of relatively well paid, secure jobs with associated health guarantees and decent pensions, so roundly mocked by Walker and his Tea Party cronies, have helped form the material basis on which opportunism has flourished.
In destroying it, capitalism not only risks sparking major popular revolts like the one still rumbling on in Wisconsin, but also assisting in the disposal of those very reformist illusions that, for the moment, prevent those revolts from maturing into revolution.
> Theory: The crisis of overproduction and the price of oil – August 2004
> Marx against Keynes – Lalkar September 2009