From one 'cliff' to the next

Anti-worker deal on taxes sets stage for anti-worker deal on spending

Rep. John Boehner and President Barack Obama during fiscal cliff negotiations, Dec. 17, 2012

Poor and working people know what crises are. Being evicted, losing your job, or being sick and uninsured is a crisis. Crises have definite causes and consequences that require immediate action.

But for Wall Street’s loyal servants in Washington, crises are not all that bad. They present an opportunity to carry out on a grand scale the permanent bipartisan agenda of Congress to protect the rich and their ability to make money. Fiscal cliffs, debt ceilings and other creatively named points of no return induce so much fear that workers often find themselves paralyzed and unable to present any real resistance to the austerity schemes that are hatched in the halls of power.

These types of crises are so convenient for the politicians that they manufacture them all the time. First came the 2011 “debt ceiling” negotiations. Since 1917, Congress has periodically increased the amount of money the federal government is allowed to borrow in a relatively drama-free affair that prevented the country from going bankrupt. However, the Republican-controlled House of Representatives decided that they would refuse to raise the debt ceiling unless major cuts to vital social programs were made. Months of fear-mongering and negotiations in Washington produced the Budget Control Act of 2011.

With wide bipartisan support, this law established the “fiscal cliff” that has been dominating headlines since the Presidential election. Under the Budget Control Act, Congress set itself a deadline—conveniently after the 2012 election—to come to an agreement that would reduce the federal deficit by $1.2 trillion over ten years. If they failed to reach an agreement and “went over” the fiscal cliff, a series of tax hikes and budget cuts would automatically be enacted.

This absurd non-dilemma is the cause of the recent drama in Washington: if the politicians could not agree on how to cut social spending and increase taxes, then social spending would be cut and taxes would increase. Either way, workers lose and Wall Street successfully shifts the burden of its crisis onto our shoulders.

Last-minute deal

Although the government did technically go over the fiscal cliff to appease the petty posturing of some extreme right-wing members of the House of Representatives, a last minute deal was pushed through Congress with support from both Democrats and Republicans. It fell short of a grand bargain that addresses government spending —that will have to wait until March—but it still does considerable damage to poor and working families just by addressing taxation.

Over the last few weeks, Democrats who advocated a slight increase in taxes for the wealthy endlessly repeated that they were defenders of “98 percent of Americans.” In the end, these champions of the so-called middle class agreed to a deal that raised taxes on 77 percent of people in the United States.

Those making over $400,000 will suffer a barely-noticeable increase in their tax burden from 35 to 39.6 percent. People inheriting over $5 million will have to deal with a 5 percent increase in the estate tax. Some provisions of the deal make it more difficult for the wealthy to use accounting tricks to write off much of their tax bill, but then again few groups in history have proven as adept at tax evasion as the U.S. capitalist class.

Poor and working people, on the other hand, will see their payroll tax increase from 4.2 to 6.2 percent. In practical terms, this means that someone making $30,000 a year will see their income reduced by $600.

While apologists for the Democratic Party may point out that a 2 percent hike on wages is lower than a 4.6 percent hike on the rich, such a comparison is totally divorced from reality. The social security tax could determine whether or not a family can afford rent, while a higher top-bracket income tax would at worst force someone to forsake a new car or luxury vacation.

Several subsidies were also included in the bill to sweeten the deal for certain sections of the capitalist class. Goldman Sachs, J.P. Morgan, Hollywood studios and owners of “motorsports entertainment complex properties” managed to secure themselves favorable terms on the sidelines of the big debates.

The Democratic Party: no friend of the working class

The corporate media framed the fiscal cliff negotiations in largely the same way as the presidential election: the Republicans push anti-worker policies while Democrats try to protect the “middle class” but are eventually forced to compromise by necessity or their own incompetence.

In fact, the Democratic Party fully accepted the notion that spending on so-called entitlements needed to be reduced. “Entitlements” is the euphemism used by capitalist politicians and media pundits to refer to Medicare, Medicaid, Social Security and a wide variety of vital social programs tens of millions of poor and working people rely on. Socialists refer to these things as basic rights.

In anticipation of a major budget fight, President Obama hand-picked a team of politicians called the Simpson-Bowles Commission to come up with recommendations on how to reduce the deficit—the difference between the federal government’s annual income and annual spending. The President’s team came up with largely the same anti-worker attacks that the Republicans advocate, including over a trillion dollars in social spending cuts and raising the eligibility age for Social Security benefits.

The Democrats never considered making Wall Street pay for their crisis, or seizing the $1.4 trillion of idle “excess cash” held by the big banks. Similarly, the military-industrial complex, a central pillar of U.S. capitalism, was largely given a free pass during negotiations. The Pentagon’s enormous budget accounts for 57 percent of all discretionary spending. While most concede that there will be very modest reductions in “defense” spending, it always seemed to escape liberal experts and anti-big government conservatives alike that the budget deficit could be easily fixed by dismantling the vast imperialist apparatus of military bases, nuclear weapons, espionage and other instruments of terror and mass destruction.

The Democrats could not even bring themselves to mobilize their supporters in a serious way to support the pathetic bargaining position they decided to begin with. Fresh from an election victory, the president could have easily brought hundreds of thousands of people into the streets to defend Medicare, Medicaid and Social Security and decisively change the course of negotiations. Of course, this was never an option as both Democrats and Republicans agree that one voice that should never be heard is that of the working class.

Poor and working people need real political leadership that will consistently stand up for their day-to-day needs while fighting to change the balance of power in society. The fiscal cliff negotiations illustrate once again that the Democrats woefully fail to live up to this measure.

Another cliff

Despite the agreement on tax policy, Wall Street’s politicians are not nearly done with their perpetual crisis racket. The last-minute deal on taxation only raises $600 billion in new revenue out of a goal of $1.2 trillion. The automatic—sometimes referred to as “sequestered”—spending cuts were simply postponed for two months to allow more time for negotiations.

Around the same time in March, the government will once again reach its “debt ceiling.” Although the new members of Congress will have taken office, any increase in the borrowing limit will still have to pass a Republican-controlled House of Representatives, which will continue to play “bad cop” to the Democrats “good cop.”

For example, Representative Tom Cole, a Republican, said on MSNBC “The continuing resolution runs out at the end of March and obviously the debt ceiling … I think there will be opportunities to deal with the spending issue next year [2013].” By “opportunities,” Rep. Cole is undoubtedly referring to an opening to carry out the currently-delayed assaults on Social Security, Medicare, Medicaid and other programs won by workers over years of struggle.

Unlike imaginary cliffs and invented ceilings, the decimation of these vital services would constitute a real crisis. The only avenue to avert this impending disaster is the massive, militant and independent intervention of poor and working people. As is always the case under capitalism, the only option is to organize and fight back.

This struggle needs to be premised on a rejection of their phony negotiations and fake compromises that bridge non-disagreements. Rather than complicated tax formulas and economic calculus, our solution is simple: throw the bosses off the cliff.

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