The United States economy stands on the edge of a so-called “fiscal cliff”, peering into a perilous chasm. The narrative of this “fiscal cliff” hangs over the nation as an omnipresent specter promising death and destruction on economic systems. The hype of impending spending cuts and lapsing tax breaks, part of a commitment following last year’s debt deal, encourages us to believe an apocalyptic moment is coming, one that could forever change the future of the national economy. The Budget Control Act of 2011 mandates cuts at the end of the year should Congress not pass a series of cuts on their own. Democrats and Republicans have yet to forge an agreement on austerity measures, and the clock is ticking. The situation may not be as drastic as it appears, however.
The “fiscal cliff” is a manufactured crisis designed to stir up fear and silence opposition to austerity. Ben Bernanke, Chairman of the Federal Reserve, coined the term in his testimony before congress this past February.i Bernanke wanted to provoke a hysterical response to the crisis. He wanted to create a space for further austerity under the auspices of “shared sacrifice” by stirring the nation into a state of fear. Economists threaten the slow growth we’ve maintained could halt and reverse should no “grand bargain” be reached. This “grand bargain” would replace the mandated cuts and tax increases that were part of the Budget Control Act of 2011.
The Budget Control Act mandated cuts beginning at the end of 2012. Each Congressional session is required to make cuts for the next ten years totaling 1.2 trillion if no agreement on austerity measures is reached. Several other tax cuts and discretionary spending lapses occur at the same time, creating the conditions for this so-called “fiscal cliff”. Economists argue over the relevance of that terminology, though they almost all agree that a failure to address these issues will lead to a sudden and sharp drop in economic growth, possibly bringing the nation into another economic recession. They want to form a “grand bargain”, a new agreement on austerity, and they are pushing for it by arguing more cuts are necessarry, and saying that the rich will pay more in taxes.
Working people, however, are bound to take the brunt of the “grand bargain” currently being worked out in Washington. Cuts from earlier this year may be good indicators of what to expect this time around. The Budget Control Act of 2011 included cuts of thirty-six billion dollars in federal employee pensions, four billion dollars from the Supplemental Nutritional Assistance Program (SNAP) also known as food stamps, fifty billion from home healthcare programs, along with seventeen billion in other areas.
Tax increases on the rich will be menial at best. Neither the Democrats or the Republicans want to anger their campaign supporters. The argument is largely over reducing deductions, or returning tax rates to what they were under Clinton, a mere five percent increase. These changes would be marginal at best and are far from making the rich pay for the crisis they created – and in many cases profited from.
These are small pieces of what is likely to be much broader and deeper austerity measures in response to stagnant economic growth. Major cuts are expected in Medicare/Medicaid, Social Security, SNAP, and other social service programs. These, combined with moderate tax increases on the wealthy, are likely to form the “grand bargain” should one be reached. This agreement would hurt working people far more than the rich. The rich will pay a bit more in taxes. Working people and the poor may lose access to healthcare, education, food, many other social support programs critical to survival during an economic crisis. This deal would be a steal for the Ruling Class compared to the opposition their European face to similar drastic austerity measures.
The discussion about where to make the cuts often excludes the massive military budget, the largest government expenditure, and the source of most, if not all, of our spending problems. The wars in Iraq and Afghanistan cost roughly 1.38 trillion dollars to date, with an estimated final cost of possibly up to four trillion.ii,iii The mandate set by the Budget Control Act of 2011 is a mere 1.2 trillion, less than the total cost of these imperialist wars, and significantly less than their projected cost. The current fiscal deficit has a direct causal link to ten years of imperialist war, occupation, and oppression in the name of oil, capitalism, and regional hegemony. The wars of imperialist capitalist aggression cost working people on both ends – we die in the war and we are stuck with it’s cost.
The hype about the “fiscal cliff” is just that, hype, however, it also serves a purpose. The media hysteria is designed to whip the nation into a state of fear and create support for these draconian measures even though they are against our best interest as working people. It is designed to polarize the nation into two major camps defined by political elites – one aligned with the Democrats, one with the Republicans. It is a shell game designed to distract us from reality. Working people have carried the burden of this crisis. The rich will agree to a small tax increase on upper tax brackets in order to gain support for sweeping cuts to critical social service programs.
The “shared sacrifice” narrative is a spurious lie. The Ruling Class deserves all the blame for the economic crisis, many times over. They set up the sub-prime mortgages, financialized them on the stock market, sold them to employee pension programs, and hedged them all for their own profit. They went after working people when the bubble burst, demanding workers pay the difference. The rich took houses, retirement pensions and investments, and even people’s jobs. The banks took billions in bailouts, financed by working people through taxes that service the national debt. We should own the banks by right at this point so we can use them to create jobs, put people back into their homes, and build a better future. They have taken a lot from us, and now they are asking for more.
A five percent increase in Bill Gates’ taxes will have little to no effect on his daily life. Cuts to Medicare, Medicaid, SNAP, education, and retirement funds will drastically effect the lives of countless working people. The rich may complain about having to pay a few percent more, but mothers, grandmothers, children, young workers, retirees, and countless other working people will be forced to live on less so they can pay for needs that should be free by right.
Almost all of the budget problems could be solved with tax hikes on the rich, the people who caused the economic crisis in the first place, an immediate end to military excursions in other countries, and a drastic reduction of the military. The decreased costs combined with raised revenues could preserve and expand the social safety net, directly create jobs for working people, build towards a green future, and could go towards removing the economic impact of centuries long racism on communities of color. All of these things could be done.
We should be discussing the crisis of austerity, not the “fiscal cliff”. Politicians largely serve the will of the Ruling Class elites. The US national debt is a direct result of decades long wars on working people at home and abroad. Armies and tanks fight with working people on both sides of the gun. Military contractors reap billions in profit while working people suffer and die. Federal and state governments pass laws freeing up capital to move overseas, causing massive layoffs. Federal agencies use the “war on drugs” to wage war on poor communities, particularly communities of color. Poverty, homelessness, hunger, and unemployment are required to provide business with an easily accessible cheap labor pool for the Ruling Class. The crisis of austerity is the crisis of capitalism. Working people, especially in poor communities and communities of color, are the victims of the crisis. We must organize and create a political crisis if we want to fight against austerity.
Workers around the world are fighting back. Workers throughout Europe united on November 14th against massive austerity imposed through European Union powers which aimed to gut workers’ and community rights in the name of restoring profits. Workers united in opposition to austerity, neoliberalism, and capitalism in the first coordinated demonstrations across the Eurozone.iv
Workers in Greece, Spain, Portugal, Iceland, Egypt, and countless other countries demonstrate how to fight back against austerity, war, and capitalism. The Arab Spring, the capitol occupation in Wisconsin, general strikes in Greece, Occupy Wall Street, and the Quebec student uprising and strikes, all demonstrate our need to resist the onslaught capitalism and the Ruling Class bring on our lives and communities. Working people standing up to their bosses in opposition to austerity will be a gateway into other future struggles with deeper political roots and consciousness. Our greatest strength is in our ability to stop the machine, and turn it against the power elite.
These are the moments I wish Occupy still had the ability to shift the dialogue the way it did one year ago. The Ruling Class is likely to throw more spurious “victories” at working people, like small increases in taxes for the rich, because Occupy Wall Street pushed the dialogue a bit to the left. If Occupy still had that power, it could shape this discussion and push it towards a more leftist direction. It could open up space to talk about more radical anti-capitalist solutions to the crisis. Movements of other types will certainly rise out of Occupy, and they will be more than welcome.
Strike Debt is one example. Strike Debt focuses on the debt crisis, including student, commercial credit, housing, medical, and other debts incurred by working people. They have garnered support and shown some ability to confront these issues. They are far from inspiring insurrections similar to those that have swept through Europe in recent years, but they are honing a political message. Groups like this may help progress that message and develop a stronger consciousness through action.v
The Ruling Class seeks greater austerity in the current age of free-market capitalism. They desire a world where they have no limits to investment, no regulations to abide by, and no opposition to their hegemony, even after such policies sparked the recent economic collapse. The “fiscal cliff” is an invention, not a specific cut-off point. It is a rhetorical tool used to spur support for a right-wing agenda of austerity by creating and capitalizing on fear. The economy is and has been collapsing for working people for decades, and the so-called “fiscal cliff” won’t change much of anything. It is good to be concerned about how this deal comes down. The hype, however, is designed to make us ignorant to this history, to make us believe the only solutions to this crisis are the “politically viable” options presented by the power elite, politicians and business. We stand to lose on either side. We have to fight back to win and build movements capable of making this moment a crisis for the political power of capitalism and the Ruling Class.
We can change the future of the world. We can choose to rise up and resist impending austerity, the oligarchic rule of business and the ruling class over society, and the autocratic power of capitalism. We must fight back against proposed cuts to social systems that many of us need in order to survive this crisis. We must build movements to beat back the tide of austerity and continue the offensive against capitalism. We need to build a world that serves peoples’ needs, instead of giving away the fruits of our labors to the bosses. We can change the course of this nation and the world by confronting capitalism and pushing the failed economic system off the “fiscal cliff” and into the dustbin of history.