08.06.2023

Biden dodges a bullet

While an immediate financial abyss has been avoided, Daniel Lazare sees all the tell-tale signs of long‑term imperial decline

Amid warnings of impending financial doom, Joe Biden and Republican speaker of the House Kevin McCarthy avoided a federal default on May 28. They cobbled together a last-minute budget deal, allowing the US treasury to continue borrowing more than $1.4 trillion a year to feed a federal debt bubble projected to reach 195% of gross domestic product by the middle of the century.

The press touted the deal as a super-win for Biden and a humiliating loss for the Freedom Caucus - a far-right Republican faction whose 45 members claimed not to care about plunging the country into a financial abyss, as long as social spending was cut to the bone.

But the caucus blinked, as the showdown neared, and key members like Georgia Congresswoman Marjorie Taylor Greene (of Jewish space laser fame) and Jim Jordan of Ohio peeled off and voted for the Biden-McCarthy package after all. Two-thirds of Republicans followed suit, allowing the deal to sail through the House by 314 votes to 117 and then to triumph in the Senate by 63-36. After endless warnings that international capitalism was about to go off a cliff, the lopsided victory was more than a bit anticlimactic. But no-one cared, because disaster had been averted.

The result was a long-awaited progressive win after seemingly endless setbacks and defeats, right? Er, not quite.

In truth, the agreement confirms that America is following a time-honoured pattern of late-imperial decline, as it tries to outrun a growing list of problems at home by heading off in ever more bellicose directions abroad. Despite the venomous rhetoric on Capitol Hill, agreement on a few basic principles was surprisingly widespread. One was that key welfare programmes, such as Medicare, Medicaid and Social Security, should remain off the table, as far as budget cuts were concerned. Another was that the military budget should remain off-limits too.

That meant that only a few items of “non-military discretionary spending” remained on the chopping block, along with a few other rollbacks. Conservatives, for example, pushed to expand work requirements for childless adults who receive federal food assistance. Where recipients between the ages of 18 and 49 must now put in 80 hours a month, they called for extending the mandate to age 54. This is a nasty piece of legislation that will force thousands of people to work for the equivalent of $3.51 an hour - less than half the federal minimum wage! - in return for benefits totalling $281 a month. But, while Democrats said yes regardless, the Biden administration was still able to win exceptions for veterans, the homeless and others that will allow thousands more to enrol.¹

So it was a giant “eff you” to the poor - as Jacobin, the semi-official house organ of the Democratic Socialists of America, put it.² But it could have been worse.

Eager to protect billionaire tax cheats, Republicans also tried to slash $80 billion that the Biden administration had set aside for stepped-up tax enforcement. But the White House was able to pare that back to a $21 billion cut over the course of a decade - a relatively paltry sum, whose short-term impact will be minor. Republicans tried to cut billions in leftover Covid relief funds, but the administration was able to hold them to a minimum there as well.

That was it. The ferocious cuts that Republicans demanded across the board faded to near-zero, as Dems outmanoeuvred them at every turn. The Freedom Caucus ended up looking foolish, while Biden - a man who can barely read off a teleprompter or mount a stage with stumbling - wound up looking smart and in control.

Retirees could meanwhile heave a sigh of relief that Medicare and Social Security had survived. So could 86 million people who cannot afford private insurance and are therefore dependent on bare-bones Medicaid coverage, whose total cost is nonetheless nearing $600 billion a year.

Decline

But they were not the only ones who will benefit. So will Wall Street, which will have no shortage of treasury bonds to process, sell and profit from, as the federal government piles on another $20 trillion or so in debt by 2033. Arms manufacturers and military contractors will see their fortunes soar, as the outlook for war grows increasingly bullish. The same goes for pro-war think-tanks like the Brookings Institution, the Carnegie Endowment for International Peace and the Atlantic Council - all of which will continue benefiting from the defence overflow.³ After rising by better than 5.5% per year since 2017, military outlays are expected to jump another 6.4% to $815 billion in the current fiscal year and then hit $909 billion in the fiscal year, 2024 (which begins this October). And this does not include aid to Ukraine, which will undoubtedly grow too.

The American military juggernaut will thus continue growing at a rate greater than the next 10 countries combined. US defence spending will continue at 10 times the Russian pace and three times that of China. While the United States accounts for only four percent of the global population and roughly 25% of global economic output, it accounts for 39% of world military expenditures - a level per capita that puts it 50% above global norms.⁴ This is why America feels it can continue exercising not only political and economic hegemony, but military hegemony too.

After all, world domination does not work if you do not have muscle to back it up. As secretary of state Antony Blinken recently explained, America’s goal is not to keep other countries down, but merely to see to it that everyone plays by the same rules - rules that America happens to lay down for purposes of its own self-aggrandisement:

Our purpose is not to contain China, to hold it back, to keep it down. It is to uphold this rules-based order that China is posing a challenge to. Anyone who poses a challenge to that order, we’re going to stand up and defend it.⁵

China is free to do whatever it wants, in other words, as long as it leaves US supremacy intact. It can grow as much as it wishes, as long as it understands that America must grow even more. The status quo must remain unchanged - not today or tomorrow, but forever. Since China cannot possibly countenance such an arrangement, the Blinken formula is a recipe for a military clash in the western Pacific, whose likelihood is growing by the month.

What makes this classically late-imperial is the domestic decline that goes with it. Everyone knows about America’s long list of woes. The 2.7-year drop in US longevity since 2019 - due to a grossly-mishandled Covid epidemic, as well as ‘diseases of despair’, such as suicide, homicide, alcoholism and drug overdoses - may not be as bad as the 8.5% decline that Russia saw during and after the Soviet breakup in 1989-95. But it is disturbingly close.

Other symptoms of decay include a gun crisis that continues to worsen, as mass shootings proliferate; political rhetoric that grows ever more poisonous and a constitutional crisis that has only intensified in the wake of the attempted January 6 2021 coup d’état. Yet every attempt at amelioration makes matters worse. The only thing a badly-fractured capitalist power structure can agree on is to try to keep a lid on at home, while engaging in increasingly dangerous adventures abroad.

But the process works in reverse as well, as military adventurism abroad adds to social tensions at home. Guns proliferate both internationally and domestically, along with violence and irrationality. Poverty intensifies, as productivity stagnates and the economy grows more militaristic, hollowed out and one-dimensional.

Debt plays a major role. Since only the wealthy can afford the bonds and T-bills that the US treasury pumps out in growing quantities, the effect of federal debt is to redistribute wealth and income from the lower class to the upper. This is why the top one percent of American households have seen their wealth more than quadruple since the late 1990s while federal debt levels more than quintupled. With wages stagnant, it is also why the bottom 50% saw its share of national wealth shrink by more than 12%.⁶

In asking how the US wound up with so much red ink on its hands, The New York Times pointed to a series of missteps and reversals. The ‘war on terror’ led to a $6 trillion debt increase, while George W Bush’s tax costs added $5.6 trillion more. Obama pushed through nearly $800 billion in tax cuts and spending in the wake of the 2008 financial meltdown, while Trump contributed $1.2 trillion in additional tax cuts, plus another $3 trillion to counter Covid. (Some 1.17 million Americans ended up dying regardless - the worst performance per capita in the advanced industrial world.) Biden added a further $1.9 trillion to the pile with his March 2021 stimulus package, whose chief effect so far has been to aggravate inflation.⁷

Wild card

The pattern is clear. Turbulence in the form of war, disease and economic breakdown leads to mounting debt, as the US tries to borrow its way out of trouble. Debt leads to economic polarisation and hence to renewed turbulence, as social conflict mounts. War leads to social breakdown and then to more war, as the ruling class tries to compensate by adopting an ever more aggressive posture abroad. The vicious cycle intensifies, as each new effort at self-stabilisation causes the US to wobble ever more violently out of control.

Add to that a constitutional breakdown that has only intensified since the January 6 uprising, and 2023 is beginning to bear a strange resemblance to 1905. All it would take is a Chinese hypersonic missile laying waste to an aircraft carrier or two in the South China Sea for the picture to be complete.

The working class is meanwhile the wild card. With strike activity plunging to ever more negligible levels over the last half-century, the bourgeoisie would seem to have the problem well in hand. American workers seem to be dull and unresponsive, held back by a two-party system that requires them to choose between equally reactionary candidates and a labour leadership that has never been more timid or conservative.

But that could change on a dime, as the economy deteriorates and endless warfare makes itself felt more and more acutely. The Biden administration is following a carefully-calibrated strategy aimed at steering neatly between the two extremes, but the effort is looking more and more tenuous. No-one knows what would happen if Washington provoked a war with China or stumbled into a conflict that no-one wants (other than a tiny layer of arms manufacturers and military contractors). The consequences could be catastrophic for those in the line of fire, for the working class in general and for members of the bourgeoisie in think tanks and boardrooms.

Turbulence, debt and military conflict are all of a piece. The more one grows, the more the others grow with it, which is why American imperialism’s long-term indicators continue pointing downward. As the machinery of state deteriorates, society deteriorates - a process of mutual decline that only a militant working class can cut short.