US President Barack Obama has hailed the deal reached with the Republican Party to avert a ‘fiscal cliff’ of huge tax rises and spending cuts that the capitalist world feared would plunge the US and the world capitalist economy into a deeper slump.
After the Republican-dominated House of Representatives passed the bill by 257 votes to 167, Obama said the measures were ‘just one step in the broader effort to strengthen the economy’.
In fact, the bill marginally raises taxes from the wealthy and delays spending cuts, and the slashing of Medicare and Medicaid, which are vital for the survival of the working poor and the poor, for two months.
The vote immediately saw share prices rising in the stock markets of the world, which forgot for the moment that the USA is over $16 trillion in debt, and is only being kept from state bankruptcy, via the collapse of the dollar, and with it world trade, by the fact that the Chinese Stalinist bureaucracy is still prepared to buy its debt.
This proves once again that Stalinism and its politics play a vital role in propping up the dying capitalist and imperialist system.
The Chinese Stalinists are carrying out this service regardless of the fact that the USA is now shifting its most powerful military forces to the Asia-Pacific Region. It is preparing to cancel its debt to China through military means, provided its current attempt to deal with Syria and then Iran is successful.
In Tuesday night’s house vote, 172 Democrats and 85 Republicans voted in favour of the bill. A majority of Republicans, 151 in total, voted no, along with 16 Democrats.
Speaking before returning to Hawaii, Obama said that in signing the law he was fulfilling a campaign pledge.
He warned: ‘The US deficit is still too high.’ His key message was: ‘There is a path forward, if we focus not on politics, but on what’s right for the country,’ meaning by that the US ruling class.
The compromise deal extends the tax cuts for Americans earning under $400,000 (£246,000) – up from the $250,000 level Democrats had originally sought.
In addition to the income tax rates and spending cuts, the package includes a one-year extension for unemployment benefits, affecting two million people, and a five-year extension for tax credits that help poorer and middle-class families. It blocks a 27 per cent cut in Medicare payments to doctors for one year. At the end of the year the amount of compensation doctors get from the government for treating patients on government programmes could drop by 27%. A failure to renew the $20bn provision will impose a significant salary cut for some doctors and seriously damage Medicare.
It also delays for two months $109 billion worth of across-the-board spending cuts that were set to start striking Federal agencies this week.
Obama now has two months to form a coalition with ‘right minded’ Republicans to force through a programme of agreed savage cuts, which although they may inconvenience the rich, because the measures may touch their wealth, will devastate the poor and in particular destroy the Medicare and Medicaid programmes.
This is what Obama means by ‘focussing on what is right for the country’, and ‘not on politics’, ie political parties.
US capitalism cannot resolve its gigantic debt crisis by any other means except attacking the rights and gains of the working class at home and seeking to reorder the world, through regime change, that is war, to grab the world’s resources, so that capitalism can stagger on for a little longer.
The US working class now has two months to put its house in order.
It must make the US trade unions break with the Democrats and form a Labour Party to defend the interests of the working class and the poor by fighting for socialist policies both at home and abroad.
However humanity will not be able to move forward unless capitalism is put an end to and relegated to the museums.
This means that in the US the politically advanced workers and youth must form a section of the International Committee of the Fourth International, that will play the leading role in forming a Labour Party based on the trade unions, and will provide the revolutionary leadership for the US working class to take the power and carry through the American socialist revolution.
