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For 16 days, the world waited with bated breath as the US government was shut down and teetered on the brink of default. At the eleventh hour, a deal was rammed through both the Senate and the House and signed by Obama, thus averting the immediate crisis. What is the meaning of all this? What are the ramifications for American politics and the capitalist system itself?

Had a last-minute deal not been reached, the US Treasury Department would have run out of credit at midnight on Wednesday. It would have had to pay its debt obligations solely with the government’s $30-billion in cash reserves and incoming tax revenues. Within days or weeks, the world’s most powerful economy would have been forced to pick and choose which debts it would honour, and which would be allowed to lapse. Social Security checks and veterans' benefits would have stopped flowing. The effects and outrage would have been widespread and the unrest could have led to a mass movement against government incompetence and austerity.

World stock markets gyrated wildly as investors and world governments hoped for the best and prepared for the worst. The effects of a default would have been unpredictable. Ratings agency Fitch—whose loyalties lie with Wall Street’s profit-makers and not with any nation in particular—warned of a downgraded credit rating for the US if the impasse continued. Mutual funds, many of which are not allowed to hold defaulted securities, may have had to dump billions in US treasury bonds. Even without a default, Standard and Poor's estimates the government shutdown cost the US economy $24-billion.

As we have explained elsewhere, the showdown in Washington is at root a reflection of the intractable crisis of capitalism and the inability of the ruling class to continue ruling in the old way. The last few weeks have been a textbook example of how any attempt to reestablish economic stability can only lead to an increase in political and social instability. In recent years, there have been many budgetary “near misses,” but none so razor close and pregnant with implications for the future as this one. Although the dust is still settling and the process will not be linear, history may well look back at this episode as the last hurrah of the right-wing petty bourgeois Jim Crow conservatives, and the beginning of a decisive new stage in the changing consciousness of the American working class.

What’s in the bill

During the shutdown, 800,000 federal workers were furloughed and a million forced to work without pay. They have now been sent back to work and all will receive their unpaid wages. But their confidence in their job security will have been severely rattled.

The much-lauded deal represents a damaging setback for the Republicans, but will in the long run turn out to be a Pyrrhic victory for the Democrats. It contains little of real substance, and in effect only “kicks the can down the road” a few more months. As per the agreement, the government will now be funded through January 15, and the debt cushion has been extended through February 7 of next year.

The Republicans’ original aim in all of this—using their leverage over the budget and federal borrowing authority to defund or delay Obamacare—failed abjectly. The only change to the Affordable Care Act contained in the agreement was a tightening of the requirements to prove eligibility for government subsidies for health care, which is a blow aimed at those least able to afford coverage and navigate the “health exchange” process.

Also tacit in the agreement is the Democrats’ openness to discuss the budget for the rest of 2014, with Tea Party austerity hawk Paul Ryan from Wisconsin at the helm. On the table will be cuts in “entitlement” programs such as Social Security, Medicare, Medicaid, and other remaining safety nets that millions of Americans rely on to survive. In the meantime, the sequester cuts (the result of a previous debt limit showdown) are locked in, and Obama has stated he wants an overall deal to avoid such regular showdowns. In reaching such a compromise, he has clearly stated that he is willing to negotiate with Republicans on anything and everything to make it happen—even if it includes cuts to the above previously “untouchable” social programs.

Furthermore, in spite of the urgency of avoiding a default, what was passed was not a “clean” bill, focused strictly on raising the debt limit and reopening the government. Senate staffers worked night and day to come up with a 35-page bill that also included a variety of “pork” for both parties.

For example, the widow of Frank Lautenberg, a long-time Democratic Senator from New Jersey, who died of viral pneumonia while in office earlier this year, will receive a death benefit equivalent to one year’s pay. This means that $174,000 in tax dollars—money the government insists it does not have for schools, food programs, and Social Security—will be handed to the family of one of the richest members of Congress (Lautenberg was worth an estimated $59-million in 2011).

And in a year when the full extent of the government’s programs to spy on Americans has been revealed by former NSA employee Edward Snowden, it is comforting to know that $3.1-million will go to a “watchdog group meant to guard Americans' right to privacy against overreach by government cyberintelligence.”

Also buried in the legalese of the new legislation is a provision for $2.2-billion dollars for construction projects related to a dam on a river that just happens to flow through Republican Senate Minority Leader Mitch McConnell’s home state of Kentucky. It is an open secret that the aim of every congressional delegation is to get more out of the national treasury for their respective states than those states pay in; nonetheless, the hypocrisy of what some are calling the “Kentucky Kickback” is breathtaking.

Deliberately ineffective

The rapidity of the bill’s passage raises some poignant questions. Congress is infamously slow and plodding, with a maze of committees, subcommittees, leadership meetings, working groups, staff meetings, caucuses, undemocratic voting thresholds, filibusters and other Senate and House procedural rules and traditions, and more.

The gridlock is intentional. It provides a convenient excuse to prevent anything meaningful from being passed, and allows a minority to obstruct the functioning of the entire legislative machine. It above all ensures that the will of the majority of Americans can never be truly expressed within the limits of the existing political set up.

So how was it possible to get both houses of Congress to approve a bill to be sent to the President’s desk to be signed in the course of just a few hours? This is a question many Americans will be asking themselves as they continue to think long and hard about the political circus they have just been at the mercy of.

What the Tea Party really represents

In essence, the Tea Party represents the hysterical remains of the old Confederacy, of the Jim Crow South, and rural conservatism generally. Their ideas are a mish-mash of right-wing libertarian populism reflecting the interests of the frightened white petty bourgeoisie. However, compared to just a few decades ago, they have no substantial social base, as it has been whittled away by profound demographic and social changes, particularly since the 1960s. Although they have successfully dragged some ordinary workers behind them through their demagogy and the lack of a bold alternative by the labor leaders, they above all express the fears and interests of the local magnates of small capital in small towns and cities across the country.

Despite the millions of dollars poured into their activities by billionaires such as the Koch brothers, and the artificial boost they have received in the mainstream media, the Tea Party’s most vitriolic base of support could be described as the “big fish in little ponds.” These “self-made” men and women both hate and covet the serious wealth and power of the big bourgeois in places like New York, Los Angeles, and Silicon Valley, but equally despise and dread the working class, blacks, Latinos, Asians, Arabs, the poor, and their “inferiors” generally.

They fear being swallowed up by the “big boys” on Wall Street as much as they worry about being overwhelmed by the working class. They are terrified by the leftward shift in society as reflected in attitudes toward issues such as gay marriage, immigrant and abortion rights, decriminalization of marijuana, and so on. They arrogantly rule the roost in many local and state governments, but are enraged at their growing impotence at the national level. As a result, they prefer to stymie and sabotage the workings of their own system of government than concede an iota of their power and influence.

After being defeated in the Civil War, their ancestors were able to perpetuate their local tyranny by derailing Reconstruction and imposing Jim Crow. Skillfully balancing between the various factions and interests in both ruling class parties, they prolonged their out-of-proportion influence well into the 20th century. The Civil Rights movement gave them an almighty fright, but with Nixon’s blatantly racist “Southern Strategy” they were able to tip the balance in their favour a while longer.

Through gerrymandering, disenfranchisement of the poor and minorities, growing apathy among disenchanted voters, and the rise of the money and ideology-dominated primary system (as opposed to the old party bosses/machines used to select candidates for the general elections), they were able to punch well above their social weight in national politics for a whole historical period.

Powerful and well-connected Senators and Congressmen, mostly from the South, were thus able to impose the will of a minority on the nation as a whole. They ensured their constituents’ loyalty by funnelling billions in federal dollars to their home districts in the form of agricultural and other subsidies and contracts, and by building and maintaining military bases and other projects large and small.

But the tide of history is against them and there is little they can do about it in the long run. This all contributes to their paranoia and irrationality, resulting in the outrageous antics of their political representatives in Washington.

Which way forward for the US ruling class?

The Republican Party—once the party of Lincoln and a revolutionary war against slavery—is now embroiled in an internal civil war. On the one hand, the Tea Party, which has lost all sense of proportion as to its own weight in society, claims to speak for the “American people” and vows to redouble its efforts to win even more seats from “moderate” Republicans who voted for the deal. On the other, many traditional Republican big-money backers are turning against the Tea Party candidates they previously supported. They unleashed the Tea Party as a battering ram against social programs and the working class, but don’t appreciate the attack dogs biting the hand that fed them. They now find themselves in the position of funding primary challengers against Tea Party incumbents. Even the Koch brothers are having some second thoughts, as their vast industrial holdings would have been severely damaged by a default.

The polarization between the Democratic and Republican parties, and within the parties themselves, is a reflection of the polarization between different wings of the US ruling class. Their differences are not over whether or not to defend capitalism or whether or not impose austerity, but over how best to do it—preferably without provoking mass social unrest that could threaten capitalist rule itself. Historically, the capitalist class has required both a left boot and a right boot to rule, switching from one to another as needed. However, given the depth of the crisis of capitalism, things are not as straightforward as they used to be.

Both parties discredited

While the Republicans clearly came out the worse for wear, with just 28% approval at the height of the showdown—the lowest level recorded since these polls began in 1992—the latest farce in Washington has called into question the legitimacy of both parties. While approval for the Republicans fell by 10% since September, the Democrats’ rating fell by 4%.

Due to partisan redrawing of electoral districts, most incumbents are overwhelmingly reelected to office—94% members of the House of Representatives were returned to office in 2006, with 85% winning reelection in 2010. However, with midterm elections already on the horizon for 2014, a “throw the bums out” mood is developing among voters. Nearly 75% of registered voters say they would like to see most members of Congress defeated in the next elections. Another poll showed that a record 38% said they want their own representative thrown out, up from 25% at the same stage of the electoral cycle in 2005. 60% of Americans said that if given the chance, they would replace every single member of both the Senate and the House of Representatives.

According to Gallup, “60% of Americans say the Democratic and Republicans parties do such a poor job of representing the American people that a third major party is needed. That is the highest Gallup has measured in the 10-year history of this question. A new low of 26% believe the two major parties adequately represent Americans.”

But even these results don’t provide the full picture of dissatisfaction with the political status quo in this country. Given a concrete alternative clearly representing the interests of the working class majority—a labor party based on the unions—things would be very different. Unfortunately, the only real alternative most voters have at present is to vote for the “lesser evil” or the “other guy.” Millions of others have already opted for “none of the above” by staying away from the polls altogether for lack of a viable alternative, and are not considered in polls of “likely voters.”

The 2014 midterm elections

Although their image too has been tarnished, the Democrats clearly came out less battered than the Republicans. This could potentially open up some extremely interesting scenarios in the upcoming elections. Although much can still happen between now and November 2014, if the Democrats can maintain their “lesser evil” momentum a while longer, they may well be able to win back the House of Representatives, thus controlling both the Presidency and the whole of Congress. While they may be elated at the possibility at the moment, this could in fact turn out to be a poisoned chalice, as it would serve to expose them before millions of workers.

It often happens that in the second half of the second term of two-term presidents, disenchantment with the party in power leads to partisan deadlock between the White House and Congress. For example, GW Bush’s last two years were spent largely as a “dead duck” after Democrats swept Congress in the 2006 elections on a wave of popular backlash against the president. Bush was unable to push much through during those final two years, and whatever bills the Democrats favoured always faced the threat of the president’s veto—a convenient excuse to not to do anything about American’s deep-seated discontent with Bush and Cheney’s policies.

This was one of the reasons there were so many honest illusions among Americans when Obama was elected in 2008. For not only did he promise “hope and change,” but the legislative majority to make the perceived promises a reality was also in place, as Democrats won both the House and Senate. Riding the tide of Obamamania, the Democrats could have passed virtually any laws they wanted. Instead, for two years they allowed the minority Republicans and the so-called Tea Party to bully their way to legislative gridlock through a combination of procedural smoke and mirrors and hysterical threats, and they eventually lost control of Congress.

But it was all a sham. The hopes and dreams of ordinary Americans notwithstanding, Obama’s real constituents were always on Wall Street, and they call the shots in this country. It is no accident that the first thing Obama did after winning the election—aside from giving his support to Bush’s bailouts of the banks and insurance giants—was to dismantle the grassroots machine that helped propel him into office. The last thing the ruling class wanted was an active, engaged, organized, and mobilized population that believed elected officials should actually do their bidding.

The Democrats were able to get away with this at the time for a variety of reasons. For one, the working class was in a state of shock as the economic crisis ripped through jobs, savings, homes, and dreams of a better future. Although he disappointed them early on, many persistently maintained that Obama “meant well” but that his “hands were tied” and he could “only do so much,” as he had inherited an unholy mess from Bush.

But if the Democrats were to win back control of Congress in 2014 it would be a different story. No longer would they have any excuses for not passing the kind of progressive, pro-worker legislation the majority of Americans would support. With the Tea Party having blown a gasket over the government shutdown, it would be far more difficult for the Democrats to justify their continual concessions to the right. Disappointed by the Democrats and repelled by the Republicans, interest in a mass political party truly representing the working class would grow by leaps and bounds.

Perspectives for an intensification of the class struggle

In the meantime, in the absence of a political outlet, the workers’ struggle would be channelled into the workplace, with a rise in strikes, organizing drives, and militant, class struggle tendencies in the unions. But as economic struggles and strikes are nowhere near enough to stop austerity, this energy would feed back into the struggle to build a labor party. And as even a labor party in and of itself will not solve the problems confronting American workers, interest in socialism will continue to grow. International events and the economy generally will also play a big role in shaping workers’ consciousness.

With the notable exceptions of Wisconsin, Occupy, and the Chicago teachers, American workers have for the most part taken the attacks of the last few years attacks lying down. But this will not last forever. The labor leaders’ policy of class collaboration and appeasement of the bosses has led to a dead end. They have capitulated entirely to the capitalists. They thought that by offering concessions and givebacks, they could somehow save jobs and preserve their own positions. This approach has utterly failed. The capitalists will never be satisfied and will always demand more—unless the workers organize and fight back.

Under conditions of capitalist crisis, the only way for workers to win these battles is by returning to the methods of struggle that led to the rise of organized labor in the first place. If this means defying the pro-capitalist laws that artificially tie workers’ hands and limit the tools at their disposal, including the solidarity and the general strike, then so be it. There will be many defeats; but the workers will learn from the experience.

In the coming whirlwind of economic, political, and social struggle, many movements and parties will rise and fall. But only a labor party based on the power and resources of the unions can fundamentally challenge the entrenched interests of the US ruling class. The rise of such a party in the context of a general intensification of the class struggle could quickly pose the question of political and economic power—provided such a party is armed with a socialist program and class struggle methods.

In every other advanced industrialized country, the workers have mass parties to represent them. At present, the leaders of these parties are in bed with the capitalists and serve to smother and betray the workers’ struggles. Workers in these countries will need to engage in tremendous battles to kick these representatives of the capitalist class out of their organizations. But in the US, no such party exists.

Without a ready-made and well-established party bureaucracy to do their dirty work for them, who will the capitalists turn to once the Democrats and Republicans are thoroughly discredited? The US ruling class may well regret not having allowed the workers to have their own party in the past. Rising in tandem with strikes and other mass movements, it will not be so easy to hijack and derail the future mass party of labor.

The headlines proclaim that disaster has been averted—for now. But for millions of workers, the disaster of capitalism continues. Nothing fundamental has changed. The gargantuan debt and deficit remain and the rich continue to insist that the workers must be made to pay. Dismantling the gains won through struggle in the past, smashing organized labor, and forcing Americans to accept a “new normality” are still very much on the agenda of the ruling class.

In the 1930s, Trotsky said that the bourgeois were tobogganing toward disaster with their eyes closed. It has been said that nowadays, they are tobogganing toward disaster with their eyes wide open—and there is nothing they can do about it. Everywhere they look they are confronted by instability and are thrown off balance as a result. No matter what choice they make, it will only exacerbate their problems.

The capitalist system follows laws of its own, as inexorable as the law of gravity. As long as you accept this system, you must accept all that comes with it. No matter how much policymakers twist and turn or cook the books, they cannot resolve the fundamental contradictions of the system within the bounds of the system itself. The only solution is the socialist transformation of society, and this can only come about through the conscious, concerted action of the working class.

Make the rich pay!

Build a labor party and throw the bums out!

Fight for socialism!

This article originally appeared at Socialist Appeal (USA).