The Debt Crisis and the Working Class

By David Sole
Published Jul 22, 2011 7:34 PM

The most remarkable thing about the debate over the debt ceiling crisis is not what will result if the U.S. government defaults. Commentators from a wide spectrum of political and economic opinion cannot agree on what might take place on Aug. 2 if the debt ceiling isn’t raised.

The startling thing is that here, in the heart of world capitalism, with a ruling class of unparalleled wealth and power, the political representatives of this system are stumbling along unable to fashion a solution.

Nothing more clearly shows how out of control the capitalist system is than this fact.

One would think that with capitalism still mired in economic recession, with more than 30 million counted as unemployed or underemployed in the U.S., with the foreclosure crisis dragging on for years, that all sections of the ruling class would unite on an economic plan of action to avoid default. But they can’t. It is the class character of the United States that is making a solution so difficult to achieve in this bourgeois democracy.

The Republican Party represents the highest ranks of the Wall Street bankers and corporations. But because this is a “democracy,” this billionaire class has had to cultivate a mass base in the middle class and even sections of the working class. For decades they have appealed to racism, anti-union and anti-immigrant prejudices to bring under their wing groups like the Tea Party and religious fundamentalist elements. Thus Congress is filled with a host of new, ignorant and rabidly right-wing politicians.

Many of these representatives are so unschooled they don’t even realize who their real bosses are. So they play with the fire of default on the debt in order to press for massive cuts to all social programs won by the working class over three-quarters of a century. Republicans with more sense and more connection to Wall Street understand this, but they have difficulty resolving this conflict between their masters’ economic stability and the need to maintain a mass electoral base.

Mass action needed to counter cuts

The Democratic Party leadership, with President Barack Obama leading the way, is willing to begin dismantling Social Security, Medicare and Medicaid. All they are asking of the Republicans is that they agree to some paltry tax loophole closings. The Democrats could then tell their mass electoral base — of poor people, people of color and the unions — that the rich gave up something, too. The objection of a section of the Democratic Congress to any cuts to Social Security and other critical programs only shows their fear of losing their constituency’s support.

What is missing in all this drama is a real mass reaction in the streets. The union leadership, despite decades of losses, still clings to the Democratic Party as their only salvation. With all the attacks at local, state and national levels, they are still mobilizing more for Obama’s reelection than for real mass struggle.

For example, the Service Employees union has spent millions of dollars and put hundreds of paid staff into the streets to organize “Good Jobs Now” rallies in Detroit and other cities over the past few months. But their own speakers have expressed worry that workers won’t come out to vote for Obama in 2012. They hope that by getting people into motion through rallies and picket lines for jobs they can then direct them into the polling booth next year.

The Democratic Party dares not unleash a real mass movement for fear it could not be controlled. Polls show that the majority in the U.S. want big tax increases on the rich. But this is totally unacceptable to the capitalist ruling class, which wants to unload the entire crisis onto the backs of poor and working people.

While the majority of the people oppose the wars abroad, no serious proposal has been put forward to end the wars and redirect the trillion-dollar military budget to solve the problem. Neither the politicians nor the capitalist-controlled mass media allow these logical solutions to get a hearing.

The working class doesn’t have the organization or the influence as yet to intervene decisively in this debate over the debt ceiling. It lacks consciousness to put forward a real class program that puts the blame and the solution entirely onto the backs of the banking and corporate bosses. Without these the working class remains a spectator to the show being put on in Washington.

‘Democracy’ fragile

The inability of the capitalist “democracy” to resolve this issue, so important to the stability of finance capital, points to a hidden danger that every worker should be made aware of — the fragility of our “democracy” itself. Capitalism is an economic system that can exist under many different governing forms. It has existed under monarchies, military dictatorships, fascist regimes and representative governments. Capitalists often prefer operating under representative government (bourgeois democracy) as the best way to hide their real dictatorship and keep the masses deluded. But in times of crisis when the “democratic” system isn’t able to protect them or serve them, the capitalist class wastes no time in shifting its support to a naked dictatorship.

This can be seen in microcosm in the recent move in Michigan to strengthen the law permitting the governor to appoint an Emergency Financial Manager over any town or city that might be in deep financial difficulty. This has been done in Benton Harbor and Highland Park, as well as with the entire Detroit Public School system. All elected officials are pushed to the side. All union contracts are liable to be cancelled. A dictatorship is imposed.

At the federal level we can see the decline of the power of Congress in the refusal of the president, the head of the executive branch, to follow the War Powers Act when the U.S. launched its assault on Libya. Even though this act and Article 1 of the Constitution itself give war-making powers only to Congress, that body caved in to the executive branch with barely a peep.

It isn’t impossible to imagine that a severe financial disaster could propel this country further away from democratic forms of rule. Only the intervention of the vast working class and its allies can reverse the declining standard of living and end the hidden or open dictatorship of the capitalist ruling class.