By JAIME MONTEROJO

The debt ceiling drama is over for the time being. This debate was between a Democratic administration eager to negotiate a deal that would allow them to borrow more funds to cover federal spending, and a Republican Party bent on forcing cuts in exchange for approving an increase in the public debt ceiling. At the end of May, a majority of Senate and House members approved a compromise measure.

Today the debt is $31.4 trillion, or 133% of U.S. GDP, a 25% jump from 2016. This is the highest level of national debt in U.S. history.

The debt problem has at its root the crisis of capitalism’s profitability. The fall in this profitability, starting in the 1980s, prompted the rich to attack the conditions of the American working class through cuts in public services, anti-union attacks, and factory closures of companies that opted to move to other countries—mainly China—in search of better conditions to generate profits.

The state began to also lower taxes paid by the rich, one of the fundamental causes of the rise in debt. Successive presidents since Reagan have lowered taxes paid by the wealthy and undermining federal revenues. For example, Bush II lowered taxes on the wealthy in 2001 and 2003, in addition to encouraging the invasions of Afghanistan in 2001 and Iraq in 2003, which required going over $2 trillion in debt, a sum that is growing. In 2017, Trump cut taxes for the country’s wealthiest people to a rate lower than that paid by the working class, the first time in the country’s history.

The debt ceiling negotiations took place against the backdrop of the chronic crisis of capitalism and the decline in the global status of U.S. imperialism. It was inevitable that the Democratic Party would reach an agreement with the Republicans, since, if it were to default on its payments, the American economy, and with it the world economy, would fall into depression. The federal debt, normally considered a safe source of investment would be completely delegitimized, with a consequent fall in world confidence in the dollar.

A default on the debt would have unleashed a wave of company closures, bankruptcy filings, unemployment, and a dramatic rise in inflation. This economic catastrophe would threaten the global domination of the U.S. military, with its nearly 1000 military bases around the world, which depend on the stability of the economy to keep them afloat. The rulers of U.S. imperialism, as they approach the precipice of debt default, are playing with a fire that threatens to unleash a global crisis, a fall in U.S. hegemony, and an explosion of social unrest. These negotiations testify to the crisis and division-riddled bourgeois state with no real solutions to the crisis it has created, and a short-sighted approach rooted in their petty class interests that led us to this point in the first place.

So the ruling class is in a complicated situation: On the one hand, they need to borrow and spend more money to avoid a crisis and, on the other hand, they need to keep an exorbitant inflation at bay, during which two American banks—the Silicon Valley Bank and Signature—have collapsed. The agreement signed by the Democrats and Republicans worsens national indebtedness, keeps inflation levels high, and ultimately is a postponement of an economic storm that has been growing and threatening the world capitalist economy, at the expense of workers’ living standards.

Although the debate between the Republicans and Democrats makes them look like implacable enemies, in reality their differences over the debt are tactical. Both parties agree on attacking working-class living conditions as the answer to the debt problem. In 2011 and 2013, Democratic President Barack Obama—with Biden as vice president—offered massive cuts to social services, Social Security in particular, in debt negotiations with the Republican Party.

The Democrats’ capitulation to the Republicans belies Joe Biden’s promise not to bow to pressure to cut social services in order to raise the debt ceiling. The deal he now advocates sets new hurdles for SNAP recipients, accelerates construction of West Virginia’s Mountain Valley Pipeline, weakens the National Environmental Policy Act, and increases the budget for the military. The Democratic Party defends this deal as a victory for all!

In reality, these negotiations are a cover for the interests of U.S. imperialism. Biden could have used the 14th Amendment to the Constitution to raise the debt ceiling without negotiating with his opponents. They manufacture the debt ceiling crisis to justify neoliberal adjustments and increase the wealth of the richest. What has contributed most to the growth of the debt are tax cuts for the rich and the country’s unbridled militarism. Between 2001 and 2021, the U.S. spent $14 trillion on its wars of conquest in Iraq and Afghanistan and on its “war on terror” in the Arab world since then.

The war budget has been inflated by means of the alleged U.S. “aid” to Ukraine, which rather than helping the Ukrainian resistance—which does not receive the necessary armaments to defeat the Russian invaders—serves to rearm U.S. imperialism. Some 80% of the funds earmarked to “help” Ukraine end up being used to strengthen NATO and, in turn, increase the federal debt. This new debt deal also benefits the military and arms companies by limiting spending for all sectors except defense, which gets a 3% increase.

Revolutionary socialists do not take sides in the struggle between the two parties of U.S. imperialism. We do not accept the inevitability of cuts in social services or attacks on the environment. We reject the capitalist class punishing the working class to pay for the debt problem that the capitalists themselves created out of their unquenchable thirst for profits and imperial power.

The economic threat of debt default for the working class is real. That is why, rather than aligning ourselves with the Democrats who claim to negotiate on our behalf, we demand an end to debt payments to the banks. The banks should be nationalized and reordered to provide interest-free loans to working people and projects for the public welfare. We also say, “Tax the rich!” This includes placing a 100% tax on the profits of Big Oil & Gas and the other corporations mainly responsible for the current environmental and climate crisis. And it is essential to end payments to the Pentagon and military-production industries. No money for the war machine! All of these industries should be nationalized, under workers’ control, to convert them to production for people’s needs.

This is possible under a government and economy led by the working class through its democratic institutions. Such a government could not only navigate economic, but also environmental and political crises, as part of a process of socialist transformation that reorganizes our society for the benefit of the great majority, rather than the profits of a minority.

Photo: House Speaker Kevin McCarthy was pushing for budget concessions. (Elizabeth Frantz / Reuters)