ON SUNDAY, US president Donald Trump’s Treasury Secretary, Scott Bessent, felt compelled to appear on a US news channel to insist to the public that America will not run out of cash and will never default on its debts.
The fact that Bessent denied what not so long ago was thought by economists to be inconceivable speaks volumes for the economic debt crisis crushing US capitalism.
Interviewed on CBS news, Bessent said: ‘I will say the United States of America is never going to default. This is never going to happen’ before adding: ‘We are on the warning track and we will never hit the wall.’
If alarm bells were not ringing already throughout the international financial world, then the fact that Bessent was forced to issue such a categorical denial has only increased the panic over the US debt mountain of nearly $37 trillion.
Bessent was responding to a dire warning issued by Jamie Dimon, chief executive of the giant investment bank JPMorgan, on Friday, that Trump’s ‘big, beautiful’ tax and spending bill will add up to an extra $5 trillion on the federal debt mountain over the next decade and could ‘crack’ the US bond market.
This bond market is where investors and hedge funds buy up US government bonds with the money they provide used to pay for government spending.
In the not too distant past, the US was viewed by these global financial investors as a safe place to park their money and in return they charged comparatively low interest rates on these loans.
Now the situation has dramatically changed, and the US is considered a dangerous, unstable economy that could renege on its debts by effectively declaring a default.
Now they are refusing to buy US debt or demanding a massive increase in interest, driving the debt even higher.
Their fears have been vastly increased by Trump’s erratic on-off and then on-again tariffs on China, Europe and the rest of the world.
This is what Dimon was warning about when he said: ‘I just don’t know if it’s going to be a crisis in six months or six years, and I’m hoping we change both the trajectory of the debt and the ability of market makers to make markets.’
Trump and Bessent have desperately tried to convince the money markets and speculators that his great tax and spending bill will ‘gradually’ bring down the government debt pile.
Trump has promised that the billions on tax cuts to corporations and the mega-rich will come from tariffs imposed on US rivals and savage cuts on benefits at home.
This received a setback last week when the courts ruled these illegal and that Trump had acted unconstitutionally, a decision immediately suspended while the Trump administration lodged an appeal.
While bankers and speculators live in constant fear at the prospect of the most powerful global capitalist nation running out of cash and declaring itself effectively bankrupt, the working class in the US and across the world are directly confronting the consequences of a capitalist system that is determined to impose its bankruptcy on their backs.
Trump’s bill will cut spending on Medicaid by $800 billion resulting in over 7.6 million low income workers losing access to medical treatment.
This number is set to increase with other measures to cut Medicaid spending even more, while cuts to food stamps that millions of US workers living below the poverty line rely on to eat, are set to be slashed by over two-thirds.
The debt crisis crushing US capitalism and plunging it into recession and collapse is reflected throughout world capitalism.
In its final death agony capitalism is crashing, and is determined to take the working class down with it as it struggles to survive.
The working class in the US and internationally will not sit back and have their lives destroyed by a bankrupt capitalist system and are reaching the conclusion that the only solution to this crisis is for the working class and masses of the world to dump capitalism by taking power and replacing it with a socialist society and a planned economy.
This is the way forward.
