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The News Line: Editorial No Compromise in the US – Workers must break with Democrats and establish Labour Party US President Barack Obama has signed in a wave of steep spending cuts that will take $85bn (£56bn) from the US federal budget this year.

The Sequester cuts were designed to be so fearful that they would force the warring Democratic and Republican parties into reaching a compromise between taxing the rich and slashing the Medicare and Medicaid programmes that would begin to tackle the US’ massive $16.6 trillion of state debt.

However, there has been no compromise.

Obama said of the Republicans: ‘They’ve allowed these cuts to happen because they refuse to budge on closing a single wasteful loophole to help reduce the deficit.’

He warned the cuts will reduce US economic growth by half of 1% and cost 750,000 jobs, declaring: ‘We shouldn’t be making a series of dumb, arbitrary cuts to things that businesses depend on and workers depend on.’

The sequester was drawn up in mid-2011 as Congress and the White House clashed over raising the debt ceiling and how to slash the huge US deficit.

Republicans wanted the end of Medicare and Medicaid spending while Democrats insisted that there had to be additional taxes of the super-rich to appease the workers.

After the failure to agree, the incoming defence secretary Chuck Hagel has already warned that, ‘We intend to issue preliminary notifications to thousands of civilian employees who will be furloughed,’ that is, put on permanent holiday without pay.

Defence officials say 800,000 civilian employees will have their working week reduced.

Obama said, on March 2, of the Republicans in Congress: ‘They’ve allowed these cuts to happen because they refuse to budge on closing a single wasteful loophole to help reduce the deficit. As recently as yesterday, they decided to protect special interest tax breaks for the well-off and well-connected, and they think that that’s apparently more important than protecting our military or middle-class families from the pain of these cuts.’

He added: ‘I’m going to keep on reaching out to them, both individually and as groups of senators or members of the House, and say to them, let’s fix this – not just for a month or two, but for years to come. Because the greatest nation on Earth does not conduct its business in month-to-month increments, or by careening from crisis to crisis. And America has got a lot more work to do.’

What has come to the fore in this crisis, which emerged in 2008, is that US capitalism, faced with $16 trillion of national debt is incapable of carrying forward the same type of ‘New Deal’ that Roosevelt pushed through in the 1930s.

Even that ‘recovery’ only gained speed when the US went over to war production after the outbreak of the Second World War, in 1939.

The crisis of US capitalism – which relies on the Peoples Republic of China to buy up its debt to keep it afloat and avoid a disintegration of the dollar – is so great that the two great bourgeois parties cannot reach a compromise way forward.

The task for the ruling class is to slash US wages to the level of the competition in the Far East and to destroy the social security gains that the US trade unions and workers have made.

Obama wants ‘fairness’ to try and keep the working class quiet, through balancing cutting Medicare and Medicaid with tax rises for the rich.

However, he has already shown his ruthlessness in defending capitalism, with his trillions of dollars of aid to the banks, while millions of workers lost their homes, and with his nationalisation of giants like GM, to organise mass closures and wage and pension cuts, before handing the giant back to its shareholders.

The US ruling class is going to have to take ‘unthinkable’ measures to save US capitalism, and Obama will support these measures in the final analysis.

The US trade unions must now also act decisively. They must break with the Democrats and establish a Labour Party to fight for the interests of the US workers, by putting an end to US capitalism and establishing a socialist republic.
 
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