Stephen SquibbBack to OpinionStephen Squibb

On the origins of the debt-ceiling crisis

Four days later, the temperature picked up again with “A Mobilization in Washington by Wall Street”:

After a year of clashing with Washington over new financial reforms, the country’s most powerful bankers have found common ground with regulators in the hard-fought effort to lift the debt ceiling and avoid a default.

Wall Street is no longer watching from the sidelines as the most polarizing political fight in years plays out on Capitol Hill. In the last few days, top executives have been in close contact with Washington in a last-ditch attempt to prod lawmakers toward a compromise by Tuesday. . . .

If the House Republicans preference for demolishing the world economy to compromising can be seen as actualizing a useful political fiction — that tax increases are equivalent to demolishing the economy — an actual default would have involved the fictionalization of an equally useful political reality. This is the belief that the phrase ”Full Faith and Credit of the United States Government” indicates not only the existence of value, but is value itself.

 
Considered against the great encyclopedia of human promises, no religious gospel or philosophical ideal, no scientific theory or legal precedent, no testimony of love or vow of hatred has ever been more widely or deeply believed than the full faith and credit of the United States Government is today.
 

Despite having been uncoupled from all other currencies, the dollar has maintained its status as the preferred form of reserve currency throughout the world. Despite being backed by nothing other than a nine-word pledge, U.S. debt is considered the safest investment going, and this absolute safety has a value separate from its relative rate of return. Once again hypocrisy comes into focus: the neoliberal effort to convince the American electorate of its democracy’s untrustworthiness has effectively provided the world with fourteen trillion reasons to believe the opposite. Considered against the great encyclopedia of human promises, no religious gospel or philosophical ideal, no scientific theory or legal precedent, no testimony of love or vow of hatred has ever been more widely or deeply believed than the full faith and credit of the United States Government is today.

This is why I referred to the debt-ceiling debate as a crisis of hegemony or identity rather than one of debt itself. If Congress were to default, and in such a way so as to truly convince the markets of the situation’s hopelessness, all the fables about ”the death of god” and ”the end of meta-narratives” would became material reality overnight. A U.S. default would be an epic act of deconstruction that would throw the truth of all those holdings enumerated at the outset into radical question. The consensus that this would be a world-historical disaster cannot to be seriously contested, especially by those of us who stand to suffer significantly less than others. That said, here are three points in conclusion.

1. It is worth remembering what drove us to the edge of the cliff: the right’s absolute commitment to the further robbery of the American people for the benefit of unproductive wealth. If anyone should have delayed the increase in the debt ceiling, it ought to have been the left, which had a simple and compelling case to make: restore what you have taken from us by raising taxes, canceling the debt owed the Federal Reserve, and re-regulating the banks.

2. It is important to point out that nowhere in the wildest dreams of the most militant revolutionary could an attack more powerful and effective than default be imagined. If we are to speak of endemic injustice on the one hand and raising the debt ceiling on the other, the burden falls to us to articulate at least a faintly plausible scenario whereby the salvation of the system also somehow includes real plans for its imminent progressive transformation.

3. In formulating such plans, we ought to be concerned not only with economic justice but also with ecological sustainability. If we take seriously the scientific consensus concerning the environmental impact of the consumption model we are fervidly trying to resurrect, we are again forced to ask why the debt ceiling is not being held hostage to secure lasting changes in our relationship with the natural world. Again, the case is simple: even if we could go on borrowing this way, we certainly can’t go on living this way.

What finally prevents the adoption of the defeatist position is, of course, a sober appraisal of the state of international organization. The current state of progressive or leftist power — be it institutional or spontaneous, national or international, theoretical or cultural — gives absolutely no indication that it possesses the resources to triumph in the throes of crisis, or even what that would mean. It is not that victory is impossible, only that it would be irresponsible to assume it. We’d pray for order under heaven even as the last remaining bridge melts beneath us, and we fall, finally, into air.

This article first appeared at the website of n+1 magazine.

 

Comments

  • concerned liberal

    THE BUSH TAX CUTS, UNPAID DRUG PLAN AND THE WARS! The real reason for our problems.

  • http://www.economic-undertow.com/ steve_from_virginia

    Good article but it leaves out the elephant in the room, the USA energy/resource waste.

    The establishment jettisons (or appears to, it really cannot) the periphery in order to save the ‘center’. What’s that?

    Both parties in the US are ‘automobile’ parties, the business of America is the auto industry and its cohort industries such as real estate development and construction, not to mention energy production itself. The five million unemployed since 2008 were building the housing bubble, for instance.

    We are at an inflection point, the accusations of trickle up are irrelevant. Nobody gets out of here alive. 

    Not even the rich. All the (petroleum) lifeboats have holes in them. Just shift a little bit from a ‘money’ perspective to ‘energy’ and you will see them.

    Oh yes, jettisoning the poor: don’t worry about them, they simply shift to the vibrant underground economy: grow enough pot and you don’t have to worry about Social Security or unemployment insurance.

  • ken

    obama is a republican that ran for president as a demacrat because he new we wouldnt elect another republican after bush. so now what. im thinkin sarah palin    give credit were credit is due.  bush drove this country in the ditch ,obama set it on fire, lets give whats left to sarah an watch her flush it down the toilet.

  • Leslie

    I agree with “concerned liberal” just above but I’d add we could reduce our debt considerably if we would: 
    1) Legalize & tax the sale of all drugs instead of wasting billions on the “drug war” to try to keep them out. 
    2) Raise the payroll taxes on those earning over $250,000 and eliminate all loopholes which allow corporations and the very rich to avoid taxes.3) Tax hedge fund managers at  the top 39% rate not at the 15% capital gains rate they now pay.4) Eliminate corporate tax loop holes that make it legal for the likes of GE to pay no taxes at all.5) Eliminate loop holes for the wealthy, such as yacht and plane owner.6) Eliminate life-time funding for security, health and pension benefits for any person who serves even one term in congress.  The only way I see change possible is to separate getting re-elected from the need to raise millions of dollars to pay for re-election ads. If congress could vote for the USA and not for what will get them donations to their campaigns we could perhaps move forward. Join americanselect.org now, throw them all out and elect persons dedicated to what’s best for the USA.

  • Leslie

    I agree with “concerned liberal” just above but I’d add we could reduce our debt considerably if we would: 
    1) Legalize & tax the sale of all drugs instead of wasting billions on the “drug war” to try to keep them out. 
    2) Raise the payroll taxes on those earning over $250,000 and eliminate all loopholes which allow corporations and the very rich to avoid taxes.3) Tax hedge fund managers at  the top 39% rate not at the 15% capital gains rate they now pay.4) Eliminate corporate tax loop holes that make it legal for the likes of GE to pay no taxes at all.5) Eliminate loop holes for the wealthy, such as yacht and plane owner.6) Eliminate life-time funding for security, health and pension benefits for any person who serves even one term in congress.  The only way I see change possible is to separate getting re-elected from the need to raise millions of dollars to pay for re-election ads. If congress could vote for the USA and not for what will get them donations to their campaigns we could perhaps move forward. Join americanselect.org now, throw them all out and elect persons dedicated to what’s best for the USA.

  • http://www.well.com/ComicLinkmarks/ComicLinkmarks.html Kent Paul Dolan

    s/reign/rein/

    Sheesh.

    xanthian.

  • J7t14r

    The corporate CEOs love massive unemployment because it provides a great pool of unemployed workers competing for fewer jobs so the hiring officers can bargain down wages and benefits. So don’t expect Republicans to put anyone back to work. They have American workers right where they want them.