Oppose Wall Street Extortion on Debts!
As the “debt debate” drags on, its fraudulent character becomes more apparent. The Wall Street financiers have stepped up their extortion of the public, threatening to lower credit ratings and raise interest rates unless the government makes certain “The U.S. government not default in any way on its financial obligations.” This language echoes that of the much-hated Michigan Emergency Financial Managers law, which “Does not allow any termination or diminishment of obligations to pay debt service.” Both the Michigan law and the likely deal on the “debt,” do sanction termination and diminishment of government obligations to provide social programs.
The debate is a fraud because while it is presented as vital to the economy, it in fact does not deal with any of the economic problems facing the people, like the wrecking of manufacturing, high unemployment, wages and pensions that do not meet the U.S. standard, and massive military spending. It does not challenge control of the economy held by the big monopolies. Indeed, it is being used to force the public to submit to this control and the current demands of the monopolies to intensify their attacks on the public and society as they grab more and more of the public treasury. The debt and deficits are concoctions of the rich used to force the people to pay for a crisis they did not create. Abundant wealth is produced by working people and solutions to the current economic problems rest in challenging monopoly control and demanding that the people control the economy — it is a problem of who decides.
The monopolies are making clear that they insist on pursuing their wrecking path serving their interests for the most profits and for the world domination needed to secure them. They are the ones refusing to compromise “in any way.” They are the ones threatening the economy with destruction, as they organize more aggressive wars with more massive war funding, engage in more speculation and drive working and living conditions ever lower. It is monopoly control of the economy and the political set up that is the source of the problems and which must be challenged.
It is the working class and people that produce the wealth and have first claim on it. It is they who must control the economy and decide its direction. The fraud of the current debate is to hide the fact that the voice of the working class is being silenced, while all are instead encouraged to join the chorus for monopoly right.
We say no! Public Right Yes, Monopoly Right No! We say the issue of who decides is what is decisive and when it comes to the economy we say: Whose Economy, Our Economy! Who Decides? We Decide! Let everyone uphold this banner and send this message to the President and Congress. Let us advance our own debate centered on empowering the people to be the decision makers and the practical political steps needed to achieve this.
Closed-door negotiations between President Barack Obama and congressional leaders are continuing as their imposed date of securing a deal by August 2 fast approaches. It is the Democrats that are now putting forward plans for the most massive cuts, of about $2.5 trillion, to social programs, including Medicare, Medicaid, Social Security and various programs for the most vulnerable. Unlike the usual budget debates, where such issues are at least presented in public in congressional hearings and on the floor, these discussions continue to be done behind closed doors. Most Congresspeople, let alone the public, do not know the specific content, other than that trillions in cuts are planned. Whatever is worked out will be rapidly voted on, to meet the “deadline,” further restricting public debate and even an opportunity to hear Congress debate the plan.
The biggest monopolies and their spokespeople have continued issuing threats aimed at securing more social program cuts for the people and pay the rich schemes for themselves. This includes a second letter to the president and Congress July 28 signed by CEOs for Bank of America, Citigroup, Goldman Sachs, Wells Fargo and others. These are the same financiers notorious for their massive speculation and mortgage fraud that contributed to the current economic crisis as well as their massive raid of the public treasury securing trillions of dollars in bail out funds. They reiterated an earlier letter demanding that the U.S. “not default in any way on its fiscal obligations.” The managing director of the International Monetary Fund (IMF) also chimed in, saying the debt ceiling needs to be raised immediately and that default “would be a very, very, very serious event, not just for the United States but for the global economy at large.” Obama and Congressional leaders are all echoing this “disaster” scenario, with August 2 given as the day the debt ceiling must be raised to prevent “doomsday” on August 3.
The entire “debate” is a fraud designed to convince everyone to accept the demands of the monopolies to seize even more of the public treasury for their narrow interests while further attacking social programs. It is to hide control of the economy by the monopolies, and the further concentration of power in the executive as necessary to maintain that control and implement the anti-social offensive of the monopolies in the face of growing opposition.
Within this situation of increased threats and back-door dealing, top Republican Senator Mitch McConnell is being promoted as critical to any “compromise.” He is also emphasizing that Congress needs to “reengage the president, the only person who can sign a bill into law, and get a bipartisan solution.” McConnell and Democratic leader Senator Harry Reid are continuing their private meetings even while the Senate considers another bill. It is very likely that the main elements of a plan introduced by McConnell July 12, and backed by Reid then, will be included in the final deal reached. Obama again said that the McConnell plan remains a possible solution. Speaking July 29 he said, “Senator Reid, a Democrat, has introduced a plan in the Senate that contains cuts agreed upon by both parties. Senator McConnell, a Republican, offered a solution that could get us through this. There are plenty of modifications we can make to either of these plans in order to get them passed through both the House and the Senate and would allow me to sign them into law.”
The McConnell plan concentrates more power in the office of the president, while also concentrating more power in a small, appointed, committee of Congress to make budget cuts. All of it is against the role of the public in governance, and against even the concept that government is duty bound to defend and extend public right.
One main feature of the McConnell plan is to give the president authority to raise the debt ceiling. There continues to be some in-fighting over when the ceiling is to be raised and by how much. But it is likely Obama will concede on this in exchange for having the power to raise the debt ceiling. The main content of the plan is to allow Obama to request to Congress a raise in the ceiling. If Congress refuses, he can veto, which would then require a two-thirds vote in both houses to override. Even if the House overrides, Obama would need only 34 Senators to support him to block the override and secure the debt increase. This is a shift from the current situation where only Congress can raise the debt ceiling and it requires only a majority vote for or against. Thus it is an arrangement that secures greater power for the office of the president over the public purse strings. This is a significant change as in the U.S. system it is Congress that controls the purse strings, not the president. It also is a mechanism for Obama, and future presidents, to secure this power without having to resort to a more blatant display of executive power, such as with an executive order.
Secondly, Obama is to present spending cuts equivalent to the debt increase requested. Making these cuts however is not binding on the president or Congress in order for the debt to be raised. This measure also increases executive power. Essentially, the President is being given power to re-open the budget and present more cuts, and he can do so with the ready-made justification that the cuts are required to “balance” the debt increase.
Normally, once the budget is passed and funds appropriated by Congress, it stands, much as a contract would. Government agencies, the states, public universities and schools, etc. depend on knowing their budget allotments. But much as workers nationwide already experience that a contract is not a contract and the monopolies unilaterally act to impose cuts, the rich are now putting similar power in the hands of the president to make demands for yet more budget cuts after the budget has been passed. Now, in addition to special war funding requests made outside the budget process, these demands for more cuts will also be made. The plan also gives the president space to further maneuver to place blame on Congress for being unable to do “what’s right,” further justifying the need for increased executive power.
A third part of the plan is for a “bipartisan” committee of 12 Congresspeople, six Republicans and six Democrats from the House and Senate, to be appointed to work out a longer-term budget cutting plan. This too is a mechanism concentrating power in such an appointed committee and removing it from the normal public committees and debates of Congress. Any plan the committee devises is to be “fast-tracked” through Congress, meaning no amendments, very limited debate and then a straight up or down vote.
If the current negotiations are any indication, this committee will also meet behind closed doors and have closed meetings with top financiers, while blocking public participation and accountability. It also concentrates power in the top leadership, thus blocking the kind of maneuvering done by freshmen Republicans during this debate. Their refusal to submit to Republican House leader John A. Boehner’s demands, for example, weakened his power and that of the Republicans more generally. He had to twice cancel a vote on his own bill and then barely secured a majority, 218 in favor out of 240 Republicans and 433 representatives (there are currently two vacancies in the House, which has 435 representatives in total).
The “bipartisan” committee strengthens the hand of top leaders of both parties while weakening that of those these leaders consider “extreme” and “unwilling to compromise.” The establishment of such a committee and giving it increased decision-making powers over Congress as a whole, further eliminates the public from governance while concentrating powers in the hands of a few.
At present it appears McConnell and Reid will include a “package” of cuts as part of the measure, while leaving a more extended plan to the “bipartisan” committee. Specifics of the cuts are limited, though it is clear that the vast majority of cuts will be to social programs of the people, not war funding and government pay the rich schemes.
Second Letter from Financiers
Chief Executive Officers (CEOs) of major monopoly financiers, including Bank of America, Bank of New York Mellon Corporation, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, U.S. Bancorp, Wells Fargo, as well as Allstate, Metlife and Prudential and the president of Wall Street’s Financial Services Forum, representing all the largest banks, all signed a letter to President Barack Obama and Congress demanding that the federal debt limit be raised to steer the U.S. government away from the threat of “default.”
“The consequences of inaction — for our economy, the already struggling job market, the financial circumstances of American businesses and families, and for America’s global economic leadership — would be very grave,” the executives wrote July 28. They further threatened, “A default on our Nation’s obligations, or a downgrade of America’s credit rating, would be a tremendous blow to business and investor confidence — raising interest rates for everyone who borrows, undermining the value of the Dollar, and roiling stock and bond markets — and, therefore, dramatically worsening our Nation’s already difficult economic circumstances,” the financiers said. This letter followed an earlier one sent to the Congress and the president July 12. That letter also threatened that “The U.S. government not default in any way on its fiscal obligations,” not even a “technical default.” It also demanded a plan to “substantially reduce our long-term budget deficits,” which will involve “difficult choices” that must be “long-term, predictable and binding.” The financiers credit agencies backed-up these threats saying any “default” would lead to a lowering of the U.S. credit rating and that $4 trillion in cuts are required.
These two letters make clear that it is Wall Street that is extorting the public and our public treasury. They are the ones demanding that every penny in debt payments and servicing be paid, or else! They are the ones orchestrating the “sky is falling” atmosphere where all must submit to their blackmail or face drastic consequences. The government, instead of rejecting such extortion, is serving as their willing instrument against the public and public right to the social programs and services a modern society requires.
It is these very same monopolies that used their massive mortgage and other speculation to secure massive profits while further increasing economic crisis here and worldwide. Then they secured the biggest pay the rich scheme in history using the blackmail that without it the financial markets would be unstable. Now they want to seize yet more of the public treasury for their own narrow interests, using the blackmail of lowering the credit rating and raising interest rates.
How is it that these monopoly financiers control such matters?! It is clear they cannot organize the economy in the interests of the people. Indeed their decay is such that they can no longer provide even the most minimum of benefits like Social Security and Medicare. The entire debt debate fraud in Congress hides the fact that it is these monopolies that control the economy and do so to serve only themselves, not society. It is these Wall Street financiers that are holding the people hostage. It is their extortion of the public treasury and their control of the economy that is the problem to be addressed.
A main feature of the on going “debt debate” fraud is the discrediting of elected governance and particularly legislative bodies like Congress. The Wall Street financiers and their monopoly media have emphasized that the current problems lie not with themselves and their monopoly control of the economy, but with Congress. For example, the Washington Post, speaking to possible passage of the McConnell plan — which now appears likely — said, “The McConnell plan offers political cover for cowardice and irresponsibility. If it is the best Washington can do, it is better than nothing. But it’s not much of an advertisement for what Washington can do.”
President Barack Obama has echoed this view of the monopolies, saying that Congress, including Democrats and Republicans, are refusing to “do what’s right for the country,” and the lack of a “compromise” reflects a “breakdown in our political process.” In his comments July 28 he again emphasized the demand of the monopolies to not miss a penny in debts payments, while targeting Congress: “There are plenty of ways out of this mess. But we are almost out of time. We need to reach a compromise by Tuesday [August 2] so that our country will have the ability to pay its bills on time, as we always have — bills that include monthly Social Security checks, veterans’ benefits and the government contracts we’ve signed with thousands of businesses. Keep in mind, if we don’t do that, if we don’t come to an agreement, we could lose our country’s AAA credit rating, not because we didn’t have the capacity to pay our bills — we do — but because we didn’t have a AAA political system to match our AAA credit rating."
Why is the president submitting to this blackmail from Wall Street over the credit rating — why should such a matter be left in the hands of such parasites? It is government, as representative of society, that should control such matters. And it is the people who must hold government, Congress and the President alike, accountable. It is public right, the rights of the people to jobs, education, healthcare, housing, that must be upheld and monopoly right restricted. Instead government is submitting to the Wall Street blackmail and demanding that the public do the same.
Further, Obama is facilitating acceptance of the direction the monopolies are demanding for concentration of power in the hands of the executive. Obama again called for people to line up behind him, against Congress. He said, “Now, on Monday night [July 25], I asked the American people to make their voice heard in this debate, and the response was overwhelming. So please, to all the American people, keep it up. If you want to see a bipartisan compromise — a bill that can pass both houses of Congress and that I can sign — let your members of Congress know. Make a phone call. Send an email. Tweet. Keep the pressure on Washington, and we can get past this. And for my part, our administration will be continuing to work with Democrats and Republicans all weekend long until we find a solution. The time for putting party first is over. The time for compromise on behalf of the American people is now.” In this manner, it is the President who acts on behalf of the American people, Congress that is threatening to cause a “default,” and Wall Street has no responsibility whatever for the problems!
The strengthening of executive power serves the monopolies, as they see elected governance as an obstacle to securing the public treasury. Their drive to secure greater power for the executive can be seen in the McConnell plan which will likely be passed, in State laws like the Michigan Emergency Financial Manager law, and other anti-worker, anti-social laws. The “debt debate” is being used to rally support for this dangerous direction and divert debate from the direction needed — which is political empowerment of the people. The existing government has indeed shown itself unfit to govern — because it refuses to defend and expand public right and instead submits to the Wall Street blackmail to extend monopoly right. The solution lies in holding government accountable to the public, and in increasing and expanding the role of the public in governance. Political empowerment of the people to govern and decide the direction of the economy and of government, is needed.