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.