Posted by John, July 29th, 2011 - under Saturday's socialist speak out.



In the US the debt crisis continues to unfold. In the name of failed neoliberalism the Tea Party faction of the Republicans are demanding no increase in debt and arguing to unleash a savagery of budget cuts. The other Republicans are standing firm on no new taxes and cuts to basic social services like pensions and health care.

The Democrats, the other wing of neoliberalism in the US, also want to attack social services but have proposed minor tax increases on the rich and business, the sole beneficiaries of the last 3 decades of capitalist growth in the US.

The plutocracy in the United States is divided over the way forward, not in terms of fundamentals but basically as to the best way to continue the shift in wealth from labour to capital and thus address long term stagnant or falling profit rates.

The figures on debt increase show the real problem – the Republicans. The figures for the debt increase by US Presidents are: Reagan 186%, Bush 54%, Clinton 41%, Bush II 72%, Obama 23%. The Republicans massively increased military spending and cut taxes on the rich. Slashing defence spending and increasing taxes on the rich and business would address the debt ‘problem’.

While this is a crisis manufactured by the representatives of big business, it could have a devastating impact on the global economy and US workers and social security recipients. This latter is because the priority of the elite will be to pay the interest on the debt. The money coming in will go to that and there won’t be enough to cover many government contracts, programs or social security.

Debt, both private and governmental, is essential to capitalism and its survival. Indeed the last century or so could be characterised as the century of finance captial in the sense of the importance of finance capital to the system and the interrelationship between both productive and finance captial and the dependence of both on each other. Couple that with the ongoing tendency to monopolisation of captial and the intertwining of capital and the state and the state has become both the lender of last resort and the most important player in propping up the system through debt.

US government debt arises from a number of other more immediate factors too – low taxes on the rich and big business, massive military spending and of course the bailouts of various elements of the elite as a consequence of the global financial crisis.

If the debt ceiling is not raised on 2 August then the US faces the prospect, unless Obama pulls something out of his arse, of default and a reduction in its credit rating. This will increase the interest rate on Government debt.

Obama might pull something out – most likely a massive attack on the poor and working class.

Nevertheless markets around the world are starting to panic and with good reason. The failure to increase the debt limit could p[lunge the global economy into the second leg of the global financial crisis. What a sick world when a bunch of tea party nutters can hold the rest of us to economic ransom.

Here in Australia the Gillard Labor Government has released its carbon tax legislation package claiming this is a tax on the top 500 polluters. The environmental left has wet its pants in excitement. They are falling for the three card trick.

There is a difference between legal incidence and economic incidence. The 500 companies will pass it on to workers.

This is a classic case of the legal incidence falling on business and the economic incidence on us. Just like the GST really.

Second the polluters receive billions in compensation.

Third the original plan was to tax the top 1000 polluting companies. So 500 are off the hook already.

The three points – economic incidence, compensation and limited application – all support my contention that this is not a tax on the big polluters let alone big business at all.

Finally, the Gillard Labor Government will outsource the torture of refugees to Malaysia. The Greens ahve huffed and puffed and played Parliamentary games but won’t actually do anything becuase that would threaten their precious neoliberal carbon tax being passed.

To talk about these or any other issues or to see what others are saying, hit the comments button.