The U.S. Government is Scrambling in an Effort to Go Into Deeper Debt

By Steve Halpern

Nearly every year the government threatens to shut down because government officials can’t agree on a budget. Whatever agreement these paid government employees reach never favors the working class over corporate interests. However, this year there is a new wrinkle in this insidious game.

Apparently, there is a law that prohibits the government from borrowing more than $31.4 trillion. The Biden Administration apparently is using “extraordinary measures” that would allow the government to borrow more than that amount. What are those “extraordinary measures”? This is what the Philadelphia Inquirer reported.

“It is predicted that even if Congress and the White House did not reach an agreement, the Treasury Department would prioritize debt service payments ahead of social spending.”

The Inquirer also commented on what might happen if the government fails to make their debt service payments.

“Federally backed debt is the backbone of the domestic and global markets. A failure to make good on U.S. borrowing could set off panic on Wall Street and spark millions of job losses.”

So, a legitimate question to ask is, What the——is going on here?

For me, a good place to start is with the question: What is a bank?

The universities and the pro-capitalist news media argue that banks finance corporations and that this financing allows most corporations to function. I have a different answer to that question.

The working class of the world produces all wealth. Corporations hire workers because the source of corporate profits comes from the labor of the workers all over the world. 

Corporations then use some of the surplus derived from human labor and give that surplus to banks in interest on the money they borrowed. All banks in the world depend on that interest on investments for their survival. 

When we understand these basic facts, it become clear that banks, in effect, never finance anything. Banks exist because of the surplus derived from the labor of the working class of the world. So, the money banks use to supposedly finance corporations is, in effect, money that was routinely taken from the workers who produce all the goods and services in the world.

So, understanding these facts, why would the government need to borrow more than $31.4 trillion in order to function. How and why would this effect the global economy of the capitalist world?

When we understand that all banks and corporations exist because of the labor of the working class, we can see that the system of capitalism is, in essence, a continuous struggle between capitalists and workers. 

Capitalists have three fundamental goals. These are to sell more and more commodities, and to cut costs. Because they need to continually grow, they are driven to support governments that are continually driven to dominate the entire world.

Workers, on the other hand, need and want goods and services throughout our lives. So, the needs of workers are in continual contradiction with the essence of what capitalism is all about. This explains why employers have essentially absolute control over what we do during the time we work for them on the job. 

While government officials claim they represent all of our interests, their current crisis is clear evidence of the government’s determined effort to serve banking interests before the interests of the working class.

I believe a bit of background to this crisis is useful. Responding to a previous so-called banking crisis, President Obama gave banks literally trillions of dollars in what his administration called quantitative easing. President Trump continued to give banks trillions of dollars in 2020 following the lead of Obama. Obama and Trump got that enormous amount of money by allowing the Treasury Department to print the money. Yet today, the government is faced with a shut-down because they need to borrow more from banks. 

Why would all of this effect the economy of the world?

Before the first and Second World Wars, Britain was the dominant capitalist power in the world. During those two world wars, the world’s superpower became the United States. Those wars were responsible for the deaths of about eighty million people.

Then, in 1944 before the end of the Second World War was over, the United States invited nations from around the world to a conference in Bretton Woods, New Hampshire. In that conference United States government and economic officials announced that they would be the new superpower of the world. The dollar and not the pound would be the dominant currency of the world.

Then, during the war against Vietnam, the U.S. government discovered that it didn’t have enough money to pay for that war. They responded by taking the dollar off the gold standard. Because the dollar was the international currency, nations from around the world invested their surplus in U.S. government bonds. These measures helped finance the wars against Vietnam, Iraq, and Afghanistan, as well as the continuous massive funding of the military.

Today, workers routinely depend on banks in our day to day lives. Our salaries are drawn from banks accounts. We get the cash we use from machines operated by banks. Most of us are in debt to banks because of credit cards, home, and or auto loans. While the banks profit handsomely from these loans, they never, ever actually produce the goods and services we need and want. Yet the government is fully prepared to compromise social programs to fund the debt servicing of banks. 

The current political and economic crisis of the government is clear evidence of how the capitalist system has no answers for the problems of workers all over the world. While there are four individuals who each own more than $100 billion, there are about 34 million people who don’t have enough to eat in this country. In the world, 30,000 children die of preventable diseases every day. 

This crisis also makes clear the fact that we need a worker’s government, rather than a government that makes a priority of debt servicing to banks. That government would make it their priority to ensure that everyone in the world has the goods and services we need, as well as many of the things we want.     

What Would a Socialist World Look Like?

By Steve Halpern

I’m writing this blog in January, at a time when many people think about making resolutions for the new year. Those resolutions are usually about some form of self-improvement aimed at giving an individual a better life. Well, allow me to take this discussion out of the usual context. In order to do this, I will begin by asking the question: What do we really want?

Certainly, there are many things we want and need during our entire lifetimes. These include food, clothing, housing, health care, education, transportation, communication, and exposure to cultural activities like music, art, literature, film, dancing etc. 

We are raised with the idea that in order to get these things, we need money. Most of us need to work for that money, and if we aren’t working, then we might be denied access to those goods and services. So, I have another question: Can humanity work towards giving everyone lifetime rights to all those goods and services? In order to answer these questions, a bit of history is useful.

Feudalism

There was a time in the history of the world when feudal monarchies ruled. In those years, peasants tilled the land and produced the food. Feudal monarchs relied on sheriffs to collect a portion of the food grown by the peasants. Failure to adapt to this system was met with violence.

With the surplus food derived from the peasants, there emerged craft guilds who did the skilled labor that produced commodities. Also, with that food, workers built castles, churches, and maintained standing armies. 

The feudal monarchs had real power, but they were constrained by the reality of what feudalism was. If the kings or queens didn’t allow the peasants to have enough food, there would be rebellions. If they didn’t tax the peasants enough, they might come under pressure from other monarchs, or from the armed forces of monarchies from other nations. Because of the violence of feudalism, a king or queen might lose their life if they failed to adopt to the reality of the feudal epoch.

Capitalism

Within the feudal system, a new class of people emerged. These people began to replace the guild system with a factory system based on mass production. For this new system to emerge, there needed to be many profound changes.

There needed to be a banking system, a parliamentary government, an educational system, a news media etc. This new capitalist system came in conflict with the established monarchies. The United States was established as a result of a revolution against the feudal monarchy of Britain. 

Today we can say that capitalism created a new reality that most feudal monarchs could not have imagined. Millions of cars, cell phones, and countless other commodities are produced every year. Those commodities are supported by literal armies of workers employed in sales, banking, insurance, advertising, as well as the so-called Defense Department. For the feudal monarch who relied on taxes paid by peasants, today’s capitalist world would appear to be unrecognizable.

However, just as the feudal monarch needed to adapt to that system, today’s capitalist, as well as their millions of supporters, need to adapt to what Karl Marx called the “coercive laws” of capital and competition. At the heart of capitalism is the drive for profits. Private employers will only hire workers if they believe that those workers will create a surplus that capitalists call profits. 

The fundamental problem with capitalism is that it needs to continually be obsessed with two priorities. One is to sell more and more commodities. A corporation that fails to do this will be put out of business by the larger corporation that can sell commodities at lower prices. The other priority is to cut costs. We see this in the move of manufacturing corporations leaving this country, and financing the construction of factories where wages might be ten dollars per day or less. 

All of this created an atmosphere where one nation dominates the politics and economics of the world. Vladimir Ilyich Lenin, who was a leader of the Russian Revolution understood this reality and argued that “Imperialism is the highest stage of capitalism.” 

In the feudal system, monarchs needed to violently repress opposition to their rule. Lenin argued that with capitalism the state was created as a “special repressive force,” ultimately aimed at taking the fruits of the labor created by workers. That enormous surplus is routinely handed over to a tiny minority of capitalists. 

The wealth of the feudal world went to monarchies and religious clerics. In capitalism, the wealth created by workers goes to capitalists in profits, bankers in the form of interest, insurance companies, rents to landlords, advertising, corporate law firms, and money for the so-called Defense Department.

So, when we think of the actual production and distribution costs of commodities, those costs represent a tiny fraction of the prices we pay for commodities. The enterprises I listed above take the lion’s share of the money paid for commodities. 

When we look at the skyscrapers located in most large cities, we are looking at office buildings where people get dressed up every day to work at desks. Their jobs, for the most part, add no value to the goods and services we need and want. 

While the feudal monarchs needed to adapt to that system, the power brokers of capitalism need to adapt to the coercive laws of capital. So, there is no question that the hundreds of billions of dollars that are used in advertising every year, might be better used to feed the hundreds of millions of hungry people in the world.

In capitalism, failure to advertise, means a failure to grow the economy. If this doesn’t happen, there will be recessions and depressions where millions of workers will be thrown out of their jobs.

Because of the drive to continually cut costs, discrimination is a pillar that supports capitalist production. Black people have historically done the worst jobs for the lowest pay. After the legal discrimination of Jim Crow segregation was pushed aside by the civil rights movement, a new form of discrimination emerged. Michelle Alexander wrote her book, The New Jim Crow—Mass Incarceration in the Age of Colorblindness. This book documents how the entire so-called criminal justice system in this country targets African Americans. 

We were taught in school that the institution of slavery was abolished because of the Civil War. However, the 13th Amendment to the Constitution allows for slavery with respect to those who are “duly convicted” of a crime. Over 90% of those in prison today are there because of the plea-bargaining system. Rather than face long prison sentences, those accused of a crime, cop a plea to a lesser charge and a much shorter sentence. However, after these prisoners are released, they discover that it is almost impossible to find work with a prison sentence. 

Recently the Supreme Court declared that women in this country do not have the right to decide if and when they become mothers. That ruling only reenforces the systematic discrimination against women that has existed throughout the history of this country. There is also institutionalized discrimination against Latinos, and Native Americans. Immigrants have no rights in this country, in spite of the fact that no one has any control over where we are born. 

During the 1800s Frederick Engels wrote a book describing the horrendous conditions that existed for workers in Manchester, Britain. Today those conditions have clearly improved in that part of the world. So, there are many who argue that this is evidence that there is real progress in the capitalist system.

That argument neglects to mention that during the 1800s capitalism was in its infancy and was largely isolated to Britain. Today capitalism has spread its tentacles all over the world. When we consider that about 70% of the world’s population lives on $10 per day or less, there is an unescapable conclusion. Throughout its history the majority of those who live in the capitalist system, live in dire poverty.   

These are just some of the issues that the capitalist news media refuses to report on. Rarely, if ever, does the press report on the contradiction that there are four people have over $100 billion in assets, while billions live in poverty. The fact that this enormous amount of wealth exists, in the midst of dire poverty, has always been the essence of what capitalism is all about. 

So, while this is how the capitalist system works, we can begin to see how the fundamental problems we face could begin to be resolved with a socialist political economic system.

Socialism

While the power brokers of capitalism are driven to sell more and more, while cutting costs, a genuine workers government would have completely different priorities. This would be to provide everyone with the goods and services we all need and want. 

When we go shopping in supermarkets, we see how there is no shortage of food. In fact, much of the unused food is thrown out. What does this mean?

We work for employers so they can derive a profit. Then, we go to the store and pay prices that enable capitalists to profit again. The idea that we are in fact creating a surplus by working and that surplus could be used for the purchase of food is never mentioned.

As I’ve argued the skyscrapers in the cities can be seen as monuments of accumulated surplus that was derived from the working class of the world. Rather than continuing to support enterprises that contribute nothing to our wellbeing, a worker’s government would organize a discussion where we could plan an economy that would benefit everyone. This is how a genuine democracy could work. 

We could then go into the supermarket, get the food we need and want, and walk out without paying anyone. The price for the food would be paid for in the surplus derived from our labor. If we didn’t want to go to the supermarket, the food could be delivered to our home with no charge.

Eventually society would move towards developing and efficient mass transit system. However, that would only be part of the way to deal with transportation. A worker’s government could plan municipalities so that jobs, schools, shopping centers, and restaurants were all located in close proximity to where we live. When we would want to travel outside our local area, there could be high-speed rail networks that could get us to our destination faster, using less fuel, in a much safer way than with auto transport.

When we consider how to save fuel, we might think about insulating homes properly. This would radically reduce the amount of fuel we need. 

We can also consider how the vast resources of the capitalist world could be used to transform the health care system. Health care would become a lifetime right, free of charge, for everyone. The number of doctors could be tripled and massive funds could be used in research to cure diseases. However, today many people suffer and die because of curable diseases.  

However, these advances will only have real meaning if they are shared with everyone in the world. The United Nations reports that every day about 30,000 children die of preventable diseases. There are two primary causes of these deaths. 

One is the fact that many children in the world have no shoes. Parasites enter the feet of those children and their stomachs become bloated. Before the age of five, these children do not have the immunological systems that can fight off many infections. So, they develop diarrhea and die of dehydration. The other cause of many childhood deaths is exposure to infectious mosquitoes. 

So, we don’t need to have a degree in medicine to understand that the technology has existed for a long time to save the lives of all those children. This hasn’t happened because capitalist governments in the world are locked into a system where the accumulation of massive amounts of surplus value is seen as more important than saving the lives of 30,000 children every day.

The only way that a worker’s government will come to power is when a movement develops that makes the elimination of all forms of discrimination its top priority. That government would work towards rebuilding the least affluent neighborhoods first. Workers who had been discriminated against in the past would be given opportunities to have the best jobs. 

The government would also make it a priority to ensure that Black people, Latinos, Native Americans, Immigrants, and women were all represented in government. These representatives would have real power to establish how neighborhoods were rebuilt.

Today, capitalist enterprises routinely pollute the air, sea, and land. A worker’s government would make it their priority to end and reverse the pollution of the world. 

Commodities would be packaged in recyclable containers so they would not need to be disposed of. Food that would be thrown out could be used as mulch for gardens. Clearly, this would be an involved task, however, the first step in reversing the destruction of the environment is to develop the political will to do the job. The current capitalist system is about destroying the environment for the sake of maximizing profits.  

Conclusion

Unfortunately, a genuine worker’s representative government will not come about because of a debate between those who support capitalist versus socialist perspectives. Anti-capitalist revolutions erupted in Russia, China, Vietnam, and Cuba. The masses of people in those nations faced intolerable conditions and were open to those who advanced a revolutionary perspective. 

In Cuba we see a government that makes the needs of the people on the island, as well as people all over the world their priority. Ever since the Cuban Revolution in 1959, Cuba has given medical assistance to nations all over the world. Cuba also gave military support to Angola defending that nation from a South African supported invasion. That support paved the way for the overthrow of the apartheid government. So, while other nations that had anti-capitalist revolutions abandoned many of their socialist perspectives, Cuba remains true to its revolution. 

In the United States, 10% of the population or about 34 million people have about $1.2 million or more in assets. Yet the Department of Agriculture reports that a similar number of people are “food insecure,” meaning they have inadequate access to food. This gross disparity of wealth has always been routine to capitalism. However, the dire conditions that existed in the nations where there have been anti-capitalist revolutions haven’t existed in this country for a long time.

Today, the capitalist analysts argue that we are headed for a recession or depression. From a rational point of view, this doesn’t make any sense. There are adequate numbers of workers as well a natural resources to provide for everyone. However, because we live with capitalism, recessions and depressions are inevitable. 

All of this means that the debates between the Democratic and Republican parties are not about a debate about rational politics. Those debates merely reflect the style that capitalists will use to exploit the working class of the world. When we look at the politics of President Joe Biden, there is very little that distinguishes him from the politics of former President Donald Trump.

For me, all this means that we need to advance a perspective that argues for rational solutions to our problems. This means arguing against the perspectives advanced by all the pro-capitalist media outlets. As the Grenadian leader Maurice Bishop once argued, “Forward ever, backward never.”