THE US RULING CLASS has hit its debt limit, with the Treasury Department now taking measures to try to prevent a devastating default.
Reaching the debt ceiling means the US government is not allowed to borrow any more money – unless Congress agrees to suspend or change the cap, which currently stands at almost $31.4tn (£25.4tn).
Since 1960, politicians have moved to raise, extend or revise the definition of the debt limit 78 times – including three times in the last six months.
But fresh tensions in Congress, where Republicans recently took control of the House of Representatives and are calling for spending cuts, have raised concerns that politicians will delay acting this time – potentially leading the US to intentionally default for the first time in its history, crashing the whole of the capitalist world economy.
The US Treasury will seek to manage the crisis by taking measures to suspend the ‘investments’ it is supposed to make into retirement and health benefit funds for federal employees – pauperising millions of US workers.
Already in a 19 January letter, Treasury Secretary Janet Yellen announced a ‘debt issuance suspension period’ for the Civil Service Retirement and Disability Fund (CSRDF), as well as the suspension of payments to the Postal Service Retiree Health Benefits Fund (PSRHBF).
The stand-off on the issue in 2011 prompted the S&P credit ratings agency to downgrade the country’s rating – a first for the US.
Government analysts have estimated that delays that year caused the cost of borrowing for the US Treasury to increase by at least $1.3bn, as investors demanded higher rates due to the uncertainty.
Treasury Secretary Yellen has already estimated that special measures can buy time for the US until at least June, at which point the government will no longer be able to pay its bills.
That is the scenario for an economic catastrophe for capitalism on a world scale.
In the event, to try to avoid default, obligations such as defence contractor payments, social security cheques and the salaries of government employees, including the military, will go unpaid.
Yellen warned recently that any default will ruin the country’s alleged trustworthiness and bring down global financial markets. ‘Failure to meet the government’s obligations would cause irreparable harm to the US economy, the livelihoods of all Americans and global financial stability’ – Yellen concludes.
British capitalism, amid the growing crisis of US and world capitalism, is the weakest link in the whole of the capitalist system.
The crisis will lead to a gigantic inflation in the UK as the pound sterling crumbles and real starvation and poverty in the UK emerges as the world wide capitalist system goes down.
There is only one way forward for the UK, the US and the EU workers. This is to put an end to the anarchy of capitalist production by carrying through the world socialist revolution.
Already the development of the world crisis has seen a huge strike wave emerging in the UK, France, Greece and Germany as the working class shows its determination to make the ruling classes redundant.
In the UK this means that the February 1st Day of Action to oppose the new anti-union laws, that are to be used to outlaw the right to strike, must be the first day of an indefinite general strike.
We urge all UK workers to force the TUC to call a general strike on Feb 1st and to bring down the Tories and bring in a workers government and socialism. This will see the working class nationalise the banks and the major industries to bring in a socialist planned economy.
It will also encourage workers throughout Europe and the USA to take action to get rid of the outmoded capitalist system and bring in a Socialist United States of Europe and then a World Socialist Republic.
This is the way forward. We urge workers everywhere to establish sections of the International Committee of the Fourth International to lead the world-wide socialist revolution to its victory and to dump capitalism into the dustbin of history.
This is the only way forward. Make the TUC call a general strike on February 1 to bring down the Tories and to bring in a British socialist republic.
Forward to the victory of the world socialist revolution!
