BOTH US Treasury Secretary Timothy Geithner and President Obama issued warnings to the Republican Party on Monday that, so dire is the world crisis, their refusal to play ball on extending the US state deficit will crash the US and world economy.
Hours after Obama had pleaded with the Congress to raise the $16.4 trillion borrowing limit with as little fuss as possible, Geithner said that lawmakers might have just one month to raise the $16.4 trillion debt ceiling. He added that the Treasury Department is close to exhausting its ‘extraordinary measures’ to avoid the United States of America going into default, carrying the rest of the world to the bottom of the abyss with it.
At his Monday press conference, the last of his first term as president, Obama said he had no interest in negotiating with Republicans demanding major spending cuts in exchange for a rise in the debt limit.
He added: ‘The issue here is whether or not America pays its bills. We are not a deadbeat nation.’ He warned of the Republicans: ‘They will not collect a ransom in exchange for not crashing the American economy.’
Obama continued: ‘If congressional Republicans refuse to pay America’s bills on time, Social Security cheques and veterans’ benefits will be delayed. We might not be able to pay our troops, or honour our contracts with small business owners.
‘Food inspectors, air traffic controllers, specialists who track down loose nuclear material wouldn’t get their paycheques.
‘Investors around the world will ask if the United States of America is, in fact, a safe bet. Markets could go haywire. Interest rates would spike for anybody who borrows money – every homeowner with a mortgage, every student with a college loan, every small business owner who wants to grow and hire. It would be a self-inflicted wound on the economy. It would slow down our growth, might tip us into recession, and ironically, would probably increase our deficit.
‘So to even entertain the idea of this happening – of the United States of America not paying its bills – is irresponsible. It’s absurd. As the Speaker said two years ago, it would be – and I’m quoting Speaker Boehner now – “a financial disaster, not only for us, but for the worldwide economy”.’
He concluded: ‘Republicans in Congress have two choices here: They can act responsibly and pay America’s bills; or they can act irresponsibly and put America through another economic crisis.
‘But they will not collect a ransom in exchange for not crashing the American economy. The financial well-being of the American people is not leverage to be used. The full faith and credit of the United States of America is not a bargaining chip.’
In fact, not just Obama and the Republicans, but the US and the world economy is like a man on a highwire over the Niagara Falls without a safety net and with a gale blowing.
Even if the Republicans allow the US debt to advance from $16 trillion to over $20 trillion it is only a matter of a little time before US capitalism plunges off the highwire and plunges the entire world economy into its greatest and deepest slump.
Our message to US workers is they must force the trade unions to break with the Democrats, and form a Labour party that will fight to get rid of American capitalism, and go forward to socialism.
Obama nationalised GM in order to rescue it from bankruptcy and hand it back to the bosses.
The US workers must expropriate all of the US banks and major industries and put them under workers management so that the US can develop a planned socialist economy with jobs for all.
For the workers of the world the warnings from Geithner and Obama must be the spur to build sections of the International Committee of the Fourth International all over the world to get rid of capitalism and imperialism, through organising the victory of the world socialist revolution.
