On or around 2nd August, without an increase in its debt ceiling, the US will begin to run out of money, and be forced to begin defaulting on its payments (in fact, the ceiling was hit in May, at which point the US began deferring pension fund investments). Raising the debt ceiling is usually a fairly routine affair – it’s happened 74 times since March 1962, including 10 in the past decade. It has to happen when the government needs to borrow more money; of course, the raise tends to be accompanied by standard complaints from opposition politicians about mismanagement of the country’s finances, but it gets lifted anyway. Not to do so would be catastrophic, and neither party has been prepared to get blamed for a potential financial and economic meltdown.
Something’s shifted in recent US politics: the birth of the Tea Party movement, ostensibly a grass-roots campaigning body that believes in lower taxes and “smaller government”. In reality, even if the Tea Party began as a popular movement, it was quickly hijacked by far-right interests, in particular Americans For Prosperity, which is funded by the billionaire Koch Brothers. Last November, around 60 Tea Party-backed candidates were elected to the House of Representatives, forming a caucus under the chairmanship of the gay-hating, genuinely moronic Michele Bachmann. Bachmann seems to have displaced Sarah Palin as the natural leader for American morons, and is standing to be the Republican candidate to oppose Obama in the 2012 presidential elections.
Previously, while extremism was prevalent in the Republican Party, and stupidity was fairly widespread in both parties, no significant group of people was ideological (or just crazy) enough to allow the US to contemplate its first ever default. The realistic deadline for agreeing a deal came and went last Friday, and all attempts at deals have fallen through. While (of course) the Republicans have tried to paint the situation as intransigence on both sides, the blame falls squarely on them; they refuse to contemplate a penny in tax rises, a stance which has been branded economic illiteracy by The Economist. If there’s any criticism of Obama, it’s been for his over-willingness to compromise without receiving the same from the other side.
This creates a puzzle; are there really people in Congress who are prepared to see huge damage done to the US economy by their obstinacy? Bachmann and a number of others made clear that they would oppose a ceiling increase regardless of any deal; in effect voting for an economic calamity. I wrote a post on the crisis last week, in which I suggested three reasons why the more extreme individuals may contemplate a default, as follows:
- Somehow the US electoral system really did allow genuine, semi-literate morons to be elected. They simply don’t understand the implications of what they’re doing, and believe the “we don’t need government” nonsense that they spew out.
- Some of these people are religious nuts; they live for Armageddon, and have got themselves into a position to bring it forward by crashing the global economy. Think I’m joking? Sadly, no.
- This one is a guess on my part: The suicide-bomb theory. The US owes China vast amounts of money – that’s part of the source of China’s growing economic power. Perhaps the morons think that if the US defaults on its debts, China would suffer enormous damage too. Of course, the only problem with suicide bombing is that the US (and Europe) would go down along with China. Perhaps these crazies think the US could recover quicker, and postpone the day when China inevitably takes over as the world’s largest economy.
I think all of these do apply, but I missed something bigger: a deliberate default by these corporate-funded individuals represents an effective coup against the democratically-elected Federal government, and against the US Constitution itself. While this has become increasingly obvious over the past few days, all doubt was removed by an interview with Senator Mike Lee, a member of the smaller Tea Party caucus in the Senate, in which he openly threatens the US with economic mayhem unless the Constitution is amended to meet Tea Party demands. It’s worth reading it carefully and contemplating its implications. Here we have a group of elected individuals, bought and paid for by far-right corporate interests, helped into office by Murdoch’s Fox propaganda channel, who are in a position to do major (perhaps unprecedented) damage to the global economy, and appear willing to do so.
America’s elected government was painstakingly set up by the founding fathers, backed by the US constitution, to defend the interests of the American people against the power of unelected vested interests. At the time, the the risk to democracy came from European royalty and super-wealthy aristocrats; but those powers have faded to near-insignificance, and been replaced by a new “corporate aristocracy” who are every bit as much a threat to democracy as the old aristos were. Without government, there is no democracy; if the government is brought to impotence by the Tea Party’s actions, democracy takes a huge hit (at the expense of an economic earthquake). Those best placed to move in and take advantage (both financial and political) of the chaos are the very people who back the Tea Party and other extreme members of the Republican Party.
Unlike the original Boston Tea Party, which challenged power on behalf of the people, the new version attacks the people on behalf of power. This is no revolution – it’s looking increasingly like a coup.