Given that the last-minute deal in Congress was designed to
avert the US economy falling over a self-imposed “fiscal cliff”, the best way
to picture the outcome is to imagine a cartoon of the two main parties locked
together as they cross the precipice.
Now they’re hanging in mid-air, still pummelling each other
with nothing beneath them as millions stand fearfully watching and looking over
the edge. But there’s something else. The two contestants each have a hand
extended, and together they’re wielding a pickaxe at the ground beneath the
people’s feet.
It would be comical but for the looming inevitability of the
battering facing the 99% of not only Americans, but the majority of people
around the world excluded from the rich and powerful trying to rescue the
system at whatever cost to the rest of us.
For more than 160 million hard-pressed Americans, the most
immediate result of the agreement between the Democrats and Republicans – two
sides of the same capitalist coin – automatically removes 2% of their income.
In 2010, president Obama temporarily reduced the social
security payroll tax (a bit like the UK ’s national insurance) from 6.2%
of salary to 4.2%. The new deal doesn’t extend this part of the previous
attempt at a recovery from the crash.
For the majority, it’s austerity in everything but name.
Those in work will have to pay more to support those without it whilst
corporate profits soar. It will get worse within weeks because at the end of
February, the debt ceiling has to be resolved one way or another.
“Before you start pouring the champagne to toast the deal,
remember, the minute the House vote ends, the countdown to the next crisis
begins,” said David Rothkopf of Foreign Policy. The US has already hit its legal
borrowing limit of $16.4 trillion but the Treasury, through what it calls
“extraordinary measures”, can service the national debt for about two months
more.
Obama and the Democrats have deferred spending cuts on
programmes like health, social security, defence, excluding them from the deal.
The Republicans split and the temporary solution was achieved. But the massive
debt won’t evaporate.
The last-minute, dramatically-reduced package of tax
measures agreed by the outgoing US Congress not only does nothing to reduce the
already unsustainable but ballooning debt. It actually pumps an additional $4
trillion dollars into the balloon over the next ten years, according to the
Congressional Budget Office.
Obama claims he’s shifting some of the burden to those
300,000 or so earning more than $400,000 dollars, but most of them will just
shrug it off. Despite the controversy over the deal, only 0.7% will be hit by the higher income tax rates on
the wealthy, according to the Tax Policy Centre. But 77% of workers would face
higher taxes once the ending of a payroll tax holiday and other measures were
taken into account.
The unresolved “fiscal cliff” consists of several
inter-related components. Some are the result of the US system of budgeting and
policymaking. Then there is the fact that US capitalism is debt-driven – at
federal, corporate and household levels. Other countries like China buy US debt so that the American
government can keep functioning.
But by far the greater problem lies in the global web of
corporations controlled by no government but determining policy decisions and
actions irrespective of the wishes of the majority.
Anger is growing everywhere against Starbucks, Amazon and
the rest, merging with the universal hatred of the speculative profiteering of
the bankers that triggered the worldwide Occupy movement. Many, prefer to look
away, hoping that the system will crumble under the weight of it own
contradictions. But it won’t.
As the New Year agreement shows, those in power will bury
their differences in their determination to impose the most brutal of
solutions. We, the 99% need a new constitution, a concept of a different set of
social relations. And a new revolution.
Gerry Gold
Economics editor
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