[Marxism] The debt-limit crisis: a bipartisan fraud

Fred Feldman ffeldman at verizon.net
Fri Jul 15 08:00:56 MDT 2011

Although  Republicans state a part of the truth when they say there is 
no justification for Obama's threat to stop funding Social Security and 
Medicare unless both parties unite on measures to cut Social Security 
and Medicare, the fact is that the current "crisis" is a bipartisan 
scam.  There is no "crisis" except for the fact that the politicians and 
the media want to have a "crisis" in order to make big and unprecedented 
in the already very battered gains won by working people in the past..

The Fourteenth Amendment to the constitution explicitly requires the 
government to pay or keep up interest payments on its obligations. It 
bars the government from refusing to do so. (In fact, one of the key 
reasons for the adoption of the US constitution from 1789-1791 was to 
assure government debt as a trough from which the rich could reliably feed.

Shane Mage  summarized yesterday on the Pen-L list
Default ain't credible.  The stupid .'debt limit' law can't override the 
explicit 14th Amendment requirement that the government honor its 
debts.  Nor does the president have to borrow unilaterally to do so.  By 
using the constitutional authority of the Treasury to 'coin money'  he 
need only mint a coin of sufficiently large denomination, pay it to the 
Fed in return for US bonds it presently holds, and those bonds are no 
longer outstanding debt counted against the 'debt ceiling.'

Mage concluded: " Default ain't credible. Yet everyone seems to treat it 
as possible. Only in America."
Nation publisher Katrina vanden Huevel is one of the few in the 
capitalist media who  has stressed the president's power to simply brush 
off the August 2 date for raising the "debt-limit." under the 14th 
amendment. The president,  despite his claims to the contrary, has the 
power as well as the constitutional obligation to use this power against 
"debt limit" racketeering.

  However, the Nation editors and most of the contributors go along with 
the favorable contrasting of the "reasonable" Obama willingness to put 
SS and Medicare on the chopping block with the Republican intransigence 
against  imposing  modest tax increases one the wealthy.   And the 
battle cry of liberal Democrats becomes, "No cuts in SS or Medicare 
UNLESS there are tax increases on the rich." This is a slogan IN FAVOR 
of cutting SS and Medicare..

This does not mean that there can never be a default crisis, but that 
will  be a product of a deep social and economic crisis, which is not 
yet the case here and will not become the case on
August 2. The passing of August 2 without a deficit compromise will not 
"destroy  the US economy, "  as liberals are claiming.

Working people have absolutely nothing at stake in the "debt limit" 
debate. And the question of taxes really is not central in our lives. 
When all is said and done, it's all surplus value -- a product of US 
capitalist exploitation of working people all over the world. The 
endless debates over taxes do nothing to change this situation.

Our only stake in this situation is the defense of SS, Medicare, 
unemployment compensation and all elements of our social wage.  In that 
fight, as far as I can see, all sides of the Great Debate on the ""debt 
limit"  are on the other side.
Fred Feldman

I Don't Believe You. You're a Liar.
By David Weigel
Posted Thursday, Jul. 14, 2011, at 3:58 PM EDT

  There is a Reality Gap in the negotiations over the debt limit. The 
gap is between what Republicans think will happen if the debt ceiling 
isn't raised and what Democrats and the Treasury think will happen. 
Republicans simply don't believe that default needs to happen; Treasury 
and Democrats say it will if the limit isn't raised.

After meeting with Senate Democrats and Treasury Secretary Timothy 
Geithner, Senate Majority Leader Harry Reid went after Republicans on 
the Reality Gap.

"August 2 is the deadline," said Reid. "We're already seeing 
consequences. Credit rating agencies have already warned us they're 
thinking about downgrading us from our AAA status. Yesterday Moody's 
announced that they're already examining the possibility that they'll 
downgrade it. If we don't reach an agreement, we'll have less than 2/3 
of the funds we need to pay our obligations." Later: "There is no wiggle 

Geithner spoke next, delivering a short statement and leaving before 
questions. "We looked at all available options and we have no way to 
give Congress more time to solve this problem," he said. "We're running 
out of time. The eyes of the country are on us. The eyes of the world 
are on us. We need to make sure we stand together and send a definitive 
signal, to avoid default and to also take advantage of this opportunity 
to make some progress in dealing with our long-term fiscal problems."

As luck would have it, right after this wrapped up, Senate conservatives 
were talking about the letter they were sending to the president, 
chastizing him for saying Social Security checks might not go out if the 
debt limit is hit. Now: Even getting to this argument is a rhetorical 
coup for Republicans. Even getting Harry Reid to talk about the 
government pulling in revenue after Aug. 2 is something. Because their 
argument remains: We can pay the bills that matter without raising the 

"I frankly think the president should apologize," said Sen. Rand Paul. 
"The president should apologize for politicizing Social Security. 
There's plenty of revenue to pay for sending out all of the Social 
Security checks. In fact, there's plenty of revenue to pay all of the 
soldiers' salaries."

This is not the most straightforward argument ever made by a senator. As 
Benjy Sarlin points out, Republicans are fairly cagey when asked what 
they'd cut, because "paying soldiers" sounds good, but "selling off 
parks and stiffing the FBI" doesn't. So I also asked Sen. Ron Johnson 
why Republican plans to prioritize spending -- even if that was workable 
-- made sense, because rating agencies don't seem to take the plan very 
seriously. Johnson pointed right back to Obama.

"A responsible leader wouldn't be scaring the markets, scaring the 
American people," said Johnson. "A responsible leader would have rolled 
up his sleeves months ago. In terms of this August 2 deadline, do we 
have something to worry about? Probably, because it will be a self 
fulfilling prophecy. Because the administration has been scaring the 
markets, they've been roiling the markets for so long, yeah, the markets 
will probably be a little upset if some things didn't occur. But I put 
that squarely on the back of the president for failing to lead by 
scaring the markets."

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