[Marxism] Obama's debt ceiling deal within the framework of the international capitalist economy

Louis Proyect lnp3 at panix.com
Thu Aug 4 08:07:12 MDT 2011

(An excellent analysis.)

Counterpunch August 4, 2011
Why Obama Played the Tea Party Game
Disaster Politics


As pundits and the American People digest the Debt-Budget Deal 
many have concluded that the White House miscalculated or simply 
blew it. John Stewart and others suggested that the President 
could have avoided the entire scenario by simply conditioning 
renewal of the Bush tax cuts on raising the debt ceiling. Others 
say the White House should have demanded a clean debt ceiling 
bill. Either of those explanations requires assuming that the 
Obama White House is naïve or stupid or both.

Don’t believe it. President Obama and his advisors were playing a 
different game. They decided they could use a debt crisis created 
by Republicans to push through cuts to Social Security and 
Medicare in a manner that would provide the President with 
plausible deniability. In other words, Obama could claim “They 
made me do it!” while achieving what his Wall Street backers want 
– maintaining Global Capital’s police force on the backs of 
working folks, the middle class and the poor.

Most readers will be familiar with Naomi Klein’s Shock Doctrine 
and her book of the same name. Klein describes Disaster 
Capitalism: how Global Capital – operating through governments, 
the International Monetary Fund and other international 
institutions - uses political crises to impose structural economic 
and government changes which invariably function to transfer 
wealth from workers and the middle classes to international banks 
and capitalists. We have seen this strategy migrate from the 
Global South – the so-called “Developing World” – to the North; 
workers in Greece, Ireland, Portugal, Spain and Great Britain are 
now also paying the price. When one strips away the rhetoric, it 
becomes clear that the Obama Administration has brought the same 
approach home to America.

Why this has happened

At the close of World War Two the United States controlled 60% of 
global wealth. It was an artifact of war - the productive 
capacities of Europe and much of East Asia had been destroyed. 
Led by Europe and Japan, the destroyed infrastructure would be 
rebuilt, economies would rise again, global wealth would be 
redistributed and the United States would once again face fierce 

The architects of post-war US government policy recognized that 
the US could not control 60% of global wealth forever.  The US 
would help Europe and East Asia rebuild their economies because 
global capital demanded stability and needed places to invest. 
And that would inevitably lead to a redistribution of global 
wealth.  Under those circumstances  - and as expressed by George 
Kenan, one of its chief architects - the raison d’etre of American 
foreign and economic policy during the second half of the 20th 
century would be to maintain the wealth gap – to delay as long as 
possible the inevitable redistribution of global wealth.

We are now in the 21st century. The US no longer controls 60% of 
global wealth and capital has abandoned its national character. As 
a consequence of trade agreements, capital is free to move over 
most of the globe in search of higher profits.  But while capital 
has become international, the United States military continues to 
function as capital’s chief global cop.

The difference is that the US no longer controls enough of the 
world’s wealth to maintain both the empire’s cop function - a 
world safe for Global Capital - and the US standard of living, 
i.e. the American Dream. Something has to change: either the 
empire will be scaled back or some Americans will have to sustain 
a cut in living standard.

Global Capital needs the empire but it does not want to pay for 
it. Wealthy Americans also refuse to bear the burden. That 
necessitates transferring the cost of empire to US workers, the 
poor and middle class. Obama is committed to maintaining the 
empire and its police force – the US Military.

While he would prefer that rich American’s share the burden, when 
push comes to shove he will sacrifice fairness to the interests of 
his Wall Street backers.  Obama is the instrument by which Global 
Capital hopes to secure cuts in Social Security and Medicare 
necessary if working, poor and middle class folks are going to be 
made to pay for the empire.

One indication of global capital’s agenda is what President Obama 
and Congress have done with the military budget. While claiming 
that he wants to end wars which have produced 15-25% of US debt 
and which do not make Americans safe or secure, Obama has 
escalated one war and begun yet another military adventure 
(Libya). While claiming that he wants to cut military spending, 
Obama actually requested a $26 billion increase in military 
spending for the 2012 fiscal year. The Republican House recently 
approved a $17 billion increase.  The debt/budget deal ostensibly 
cuts $350 billion from military budgets over the next ten years. 
However, automatic increases for inflation could offset the entire 
amount. The US Military – global capitalism’s global cop – is 
unlikely to sustain real and substantial budget cuts.

The Obama Presidency is Global Capital’s creation and he is their 
man. The Obama White House has now delivered part of what Global 
Capital demanded: the debt/budget deal will shift more of the 
economic burden of empire from corporations and their owners (aka 
the rich or monied interests) to working people and the poor. 
Obama has not yet been able to raid Social Security and Medicare. 
But the Debt/Budget Deal holds within it the means to that end as 
well. Through it Social Security and Medicare can be cut and most 
in Congress can claim they did not vote for those cuts. I can 
almost hear Nancy Pelosi rhetorically wringer her hands on camera 

How much abuse will Americans take?

The Democratic Party and the Republican Party have become 
instruments of Global Capital. That is the inevitable consequence 
when corporate “speech” is unfettered, information is controlled 
by global corporations and elections can be bought and sold.  US 
progressives are demoralized and fractious; we have no unifying 
analysis and no unified program. Progressive Democrats can’t even 
manage a “Dump Obama” movement.

All over the world regular folks are rebelling. From England and 
Greece to Egypt and the Middle East – even in Israel - workers, 
middle class folks and the poor have taken to the streets and are 
demanding changes which would have the effect of limiting the 
economic and political dominance of Global Capital.

It is too early to tell whether the popular revolts popping up 
around the globe will lead to real change. The opponent – Global 
Capital – is well organized and powerful. The popular movements 
for change, on the other hand, are new, fragile and linkages among 
them are rudimentary or non-existent.  Unlike Global Capital, 
organized labor remains primarily national; labor lacks strong, 
unified and international programs to challenge capital’s global 

Will the emerging revolts be sustained? Will they link across 
borders? And how will everyday Americans react? Will working, poor 
and middle class Americans continue to absorb raids on their 
wealth and welfare? Can they continue to be persuaded to vote 
against their own interest? Will they continue to vote for the 
candidates Wall Street chooses?

How much abuse will the American People take before we rise up?

Felice Pace is a writer and activist in northern California. He 
holds a degree in economics from Yale University.

More information about the Marxism mailing list