Committee for the Abolition of Illegitimate Debt

 Empty promises

After almost a year of mandate, we can definitely assert that the promises of a progressive turn towards more social justice have not been kept.

The minimum hourly wage of 15 dollars was soon abandoned, it is still fixed at 7.25 dollars.

No measure was taken to levy new taxes on corporations and on the richest. Even worse, the Biden administration has introduced an additional measure that is favourable to wealthy households, which made it possible for Republican delegates to expose the measure’s injustice and deviousness. [1] It increases from $10,000 to $80,000, the amount taxpayers can deduct from their federal taxes for the payment of local taxes (either municipal or state taxes). “According to an analysis by both the non-partisan Tax Policy Center and the fiscally hawkish Center for a Responsible Federal Budget think-tank, 94 per cent of the benefits of increasing the SALT cap to $80,000 would go to the top quintile of earners nationwide — who make at least $175,000 a year — with 70 per cent going to the top five per cent.” [2] The loss of revenues for the Treasury would amount to $275 billion per year.

The minimum hourly wage of 15 dollars was soon abandoned, it is still fixed at 7.25 dollars

The military budget was increased to $768 billion, with the support of the Republicans. This is the highest military budget since the Second World War (in spite of the disengagement in Afghanistan).

In terms of public works, the Biden administration, with the Republicans’ support, voted a budget, conducive to big construction companies.

Let us not forget that the coronavirus pandemic has resulted in the highest number of dead in absolute figures in the US: over 834,000 dead on 23 December 2021.

Yet in spite of the gravity of the crisis, Joe Biden has so far not taken any measure that could run against the interests of pharmaceutical corporations. While the government holds the main patent for the production of RNAm vaccines, it is not inclined to use it or allow the public sector in the US or elsewhere to use it too (see the box “Biden protects the interests of Big Pharma at the expense of people’s health, in the North as in the South”). All the production is left to Big Pharma and the patents held by private companies are not lifted. The Biden administration has not offered the patent it holds to countries that might have benefited from it and are able to produce vaccines if allowed either. Whereas in May 2021, Joe Biden claimed that his administration wanted the WTO WTO
World Trade Organisation The WTO, founded on 1^st January 1995, replaced the General Agreement on Trade and Tariffs (GATT). The main innovation is that the WTO enjoys the status of an international organization. Its role is to ensure that no member States adopt any kind of protectionism whatsoever, in order to accelerate the liberalization global trading and to facilitate the strategies of the multinationals. It has an international court (the Dispute Settlement Body) which judges any alleged violations of its founding text drawn up in Marrakesh.

to lift patents as requested by over 100 countries of the South, he has not done anything to support this measure.

 A third vaccine dose in the North and vaccinal apartheid

Like the West European countries, the US is organizing massive injections of a third vaccine dose (a fourth one is even on its way, as in the State of Israel) and the vaccination of children whereas the WHO demands that priority be given to the vaccination of the populations in countries of the South that have so far had limited access to vaccines.

Nothing has been done either regarding the financial regulation aiming at enforcing some discipline upon big banks and other big financial companies. On the contrary, laxity has increased. To clearly signal his orientation towards financial markets and Big Capital, Biden nominated Trump appointed Jerome Powell for a second term as Fed FED
Federal Reserve Officially, Federal Reserve System, is the United States’ central bank created in 1913 by the ’Federal Reserve Act’, also called the ’Owen-Glass Act’, after a series of banking crises, particularly the ’Bank Panic’ of 1907.

FED – decentralized central bank : http://www.federalreserve.gov/ chair. He also appointed former Fed chair Janet Yellen as United States secretary of the treasury. These are clear signs in favour of Capital. In early December 2021, Saule Omarova was supposed to take over banking regulation at the head of the Office of the Comptroller of the Currency. She had to resign after a destabilization campaign launched by Wall Street and the Republicans. We read in the Financial Times: “She faced a backlash from Republicans and the banking industry, with critics focusing on her upbringing and her career as an academic with proposals including a state-run bank account system.”... “What Wall Street banks worry about is that I am going to be an independent, strong-minded regulator who is not one of them, who is not beholden to them,” she told the FT. Actually, next to predictable attacks from Republicans, she was also battered by some Democrat delegates, who are just as closely tied to Capital as their colleagues.[[Financial Times, “Joe Biden’s pick to lead bank regulator withdraws her nomination”, 9 December 2021. Extract from the FT: “Both Jon Tester, a Democratic senator from Montana, and Mark Warner, of Virginia, voiced concerns during the hearing about Omarova’s previous criticism of aspects of a 2018 bill they had championed that had relaxed regulations for community banks. Tester also questioned her proposal for a state-backed national investment authority, which he said could decide which sectors of the economy to lend money to.”]]

The “Build Back Better” programme has been sabotaged by the right-wing of the Democratic Party and will most likely be abandoned

Biden had promised to have an ambitious programme of expenditure adopted towards more social justice and the protection of the environment. Called Build Back Better (or BBB), the programme should have been adopted along with the big plan for spending in public works, big Capital is fond of. But eventually, Biden and Nancy Pelosi, speaker of the US House of Representatives, let the two votes be dissociated, a separation that was not accepted by the left-wing of the Democratic Party. The public works plan was adopted with the support of the Republicans and in spite of the opposition of six left-wing democrats including Alexandria Ocasio-Cortez. On the other hand, the Build Back Better programme has been sabotaged by the right-wing of the Democratic Party and will most likely be abandoned.

This jilting of the “Build Back Better” programme shows the true nature of the Biden administration’s policy, which is at large, in economic and social terms, a continuation of that of Republican presidents, whether G. W. Bush or D. Trump. Back in 1891, Friedrich Engels in his postscript to Karl Marx’s texts on the Paris Commune de Paris had accurately described the political system in the US as dominated by the Democratic and Republican Parties that take turns in power and stand up for the capitalist order (see box below).

In spite of all its well-intentioned discourse, the Biden administration has not taken any real measure to control access to firearms either while the number of homicides is rising sharply (30% increase by 2021). 400 million firearms are in circulation in the US.

The Biden Administration has not taken any measure to defend the federal legislation that decriminalizes abortion in spite of States like Texas adopting very repressive laws against abortion; it merely expressed its disagreement.

While some States, including once again, Texas, decided to change election laws to limit the exercise of voting rights by the working classes and especially their racialized layers, the Biden Administration did nothing.

As far as migrants’ rights and reception of refugees are concerned, the Biden Administration is not much different from that of Donald Trump

The Biden Administration does not fare any better than that of Donald Trump as far as migrants’ rights and the reception of refugees are concerned. In September 2021, Daniel Foote, the US envoy for Haiti, resigned to protest against “inhuman” deportations by the United States of thousands of Haitian migrants. His resignation was a hard blow for Joe Biden: his policy of massive extradition of Haitian migrants back to their country is publicly exposed by his own envoy. [4] 

In terms of international politics, the current administration continues and confirms Trump’s policies on central issues such as total support of the Israeli government and an aggressive stance towards Cuba and Venezuela. A New York Times report recently revealed that the use of drones in Syria, Iraq and Afghanistan had officially killed over 1,400 civilians. The actual figure is likely to be much higher. In this respect, the Biden Administration merely continues Trump’s policy. At the end of August 2021, 10 civilians were killed in Kabul by a drone strike but it had been decided in December 2021 that no military personnel would be punished. The bombing “did not violate the laws of war and was not caused by the misconduct or criminal negligence,” Defense Department Chief Spokesman John F. Kirby explained. The Biden Administration also supports Marshall al-Sisi’s military regime as it provides around $1.3 billion in foreign assistance annually. Similarly, Biden maintains friendly relationships with the Saudi ultra-reactionary regime.

The US’ re-joining the Paris Climate Agreement and resuming negotiations about nuclear production in Iran do not pen on to strong measures. On the contrary, Biden recently increased subsidies for oil and gas mining in the US to ensure higher volumes of extraction. As the US does not concede anything substantial to Iran, the situation can only deteriorate.

 How can the absence of a Keynesian turn be accounted for?

The key to any significant turn is the state of the class struggle. Popular classes, and salaried workers, in particular, have failed to increase their level of organization and their capacity to act. This is a major difference with the 1930s when the workers’ movement was expanding with a wave of strikes and factory occupations, especially in the car industry. Radical unions and socialist ideas enjoyed wide support. The USSR was a pole of attraction since its planning and public control of the means of production was perceived as a better solution than laissez-faire capitalism.

The “social” measures taken by Trump and then by Biden are not structural, they do not offer new rights, they are not long-term measures

To complete the picture, it should be added that in 2020-2021 the government (whether Trump’s or Biden’s) has massively oiled the wheels by paying large indemnities to the working classes and by deferring the payment of a significant part of the debts (mortgage Mortgage A loan made against property collateral. There are two sorts of mortgages:
1) the most common form where the property that the loan is used to purchase is used as the collateral;
2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral. debts, student debts, rent debts...). Poverty has regressed in 2020 and in 2021, thanks to various kinds of social aids. This has played a real role as a social buffer. The working classes have not been forced into action. Certainly, some sectors have mobilized and in some cases have won, but this is far from representing a groundswell.

The “social” measures taken by Trump and then, by Biden are not structural, they do not offer new rights and they are not long-term measures. The adoption of Build Back Better programme could have generated the impression of some social progress but clearly, even in the best of cases, it would be very limited. This shows that we have not entered a new Keynesian cycle in which the government and the capitalist class would be forced to make significant concessions to the popular classes, who in turn would register an improvement in their social rights and a significant increase in their salaries.

The capitalist class is still getting richer even if the rate of profit has seen better days and if a large part of the accumulated capital is fictive and could collapse like a house of cards in case of another financial crisis.

Inequalities further increase with a greater concentration of wealth in the hands of the top 1%.

 The debt issue

In the third term of 2021, the US public debt was $28,000 billion or 125% of the country’s GDP GDP
Gross Domestic Product Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another. . Whether post-2008, in order to face the financial crisis or from 2020 faced with the crisis resulting from the coronavirus pandemic, the US leaders resorted to adding on to their public debt. There was no crisis tax levied on big capital. So far, the increase in public debt has not really been noticed because interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation. are close to zero. The current interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. rate on public debt is actually even negative since inflation Inflation The cumulated rise of prices as a whole (e.g. a rise in the price of petroleum, eventually leading to a rise in salaries, then to the rise of other prices, etc.). Inflation implies a fall in the value of money since, as time goes by, larger sums are required to purchase particular items. This is the reason why corporate-driven policies seek to keep inflation down. is over 5%. The Fed will gradually increase interest rates but there will be no serious problems in the short or medium term. In the US, the volume of public debt will further increase without resulting in any strong disturbance.

The unfair claim of debts from the popular classes will become more significant in the coming years

Household debts among the popular classes have increased over the last ten years but social aids in the form of cheques sent by the government in 2020-2021 have temporarily relieved the burden of repayment. Moreover, both the Trump and the Biden administrations temporarily suspended the repayment of a number of debts: some mortgages, student debts, some rent debts too, not forgetting the debts owed by small enterprises. But these measures will come to an end and the situation will become tense. Some deadlines are known: May 2022 for student debts, which amount to more than $1,600 billion. Bernie Sanders and Alexandria Ocasio-Cortez demand total cancellation. Movements claiming cancellation are currently multiplying.

The unfair claim of debts from the popular classes will become more significant in the coming years

With regard to students’ debts, Barack Obama had achieved some partial cancellations (the cost of which was borne by taxpayers and not by creditors); it is possible that Biden will do as much. It will depend on mobilizations. The developments need to be followed…

The debt owed by big private companies sharply increased over the past years. In case of an increase in interest rates, some might go bankrupt and another financial crisis might break out.

 Conclusions

Beyond its announcements and unfulfilled promises, the policy of the Biden administration mostly extends the offensive of capital against the working classes. No social turn has actually started which could break with 40 years of neo-liberal policies. No left-minded citizen will ever regret Trump but we should not entertain illusions about Biden either, there are serious limitations.

Biden and the Democratic party have disappointed the members of the popular classes who had supported them against Trump and the Republican candidates in the fall of 2020. In the course of 2021, in several by-elections, this disenchantment was expressed at the ballot boxes and the Republicans strengthened their position. The October 2022 mid-term elections are likely to result in the Democrats losing their majority in the House (of Representatives) and the Senate, which will strengthen the trend, making possible aRepublican victory in the 2024 presidential election.

Will the left-wing of the Democratic Party and the Left outside of it be able to find the way to get stronger and break away from the bipartisan system described by Engels 130 years ago? This is a big historical question. Will the popular movement in the US, which has experienced strong moments such as Black Lives Matter or feminist mobilizations, be able to consolidate? Will Labour counter Capital? Will the youth fight in other struggles after Black Lives Matter, on the environment, debts… Answers to such questions are wide open and of the utmost significance for the world.

Translated by Christine Pagnoulle