Capitalism’s Looming Crises

Jeff Mackler

Mar. 25, 2023

From Budget Debt Hyperbole to Banking Disaster

President Joseph Biden presented his third annual budget proposal at $6.8 trillion on Thursday, March 9. A day later Silicon Valley Bank (SVP), in Santa Clara, California, the nation’s 16th largest, declared bankruptcy, followed days later by New York City’s Signature Bank. A half dozen others faced similar and immediate disasters, brought on, as with the 2008-9 Great Depression collapse, by speculation-driven bank CEOs leveraging their assets far beyond the point when an impending collapse could be remedied with liquid assets on hand or a private quick loan. 

This time out, with disaster lurking, the failing bank CEOs secretly appealed for help to various top dog institutions like JP Morgan Chase, among the largest banks in the world with asserts at some $2.3 trillion. But in today’s world of high finance during crisis times, secrets are hard to keep. When the word got out, SVP depositors ran for the hills. The shock waves spread around the world with major troubled banks like Credit Suisse, with $1.4 trillion in assets, bought out by the even larger Swiss-based banking giant, UBS, according to an Associated Press report.

Over the past week Bloomberg News reported “Some $600 billion dollars of [stock] market value has evaporated from the 70 biggest US and European banks.”

Panicked bank depositors similarly raced to liquidate their essentially uninsured accounts before lying bank officials, who had days earlier insisted that their banks were stable and prospering, closed the doors heading for bankruptcy.

Meanwhile, Biden’s staff and media entourage gleefully, but momentarily, took to the airwaves to tout his 2023 budget objectives – to reduce the unprecedented US debt, now at the statutory limit of $34.1 trillion dollars, and to do so by taxing the rich, the latter an oxymoron if there ever was one. 

A slew of New York Times reporters instantly likened Biden’s budget priorities to Democratic Party rhetoric in the run up to the 2024 presidential elections. Indeed, a front-page NYT article the same day stated that Biden’s “Plan Was Unlikely to Pass…,” a gross understatement to say the least.

The corporate media neglected to note that $2.8 trillion of Biden’s $6.8 budget proposal, as with his 2022 proposal of the same amount, was paid for by increasing the debt limit rather than reducing it.

Still worse for the ruling rich, any Biden decision to stem an oncoming banking catastrophe with promises to once again bail out the super rich by further increasing the US debt to the tune of the multiple $trillions extended during 2008-9 crisis, was dead on arrival. 

Biden’s top economic advisers were quick to inform him that his budget hype, predicated on qualitatively reducing the nation’s debt, had to be back-burnered a day later. The ruling rich chose instead the temporary gambit of instantly promising that private investors, not the government, would ensure investor deposits. That is, the funds of bank clients, not the failed bankers and their stockholders, would this time out be the prime beneficiaries of the forth coming bailout. 

Biden and his top officials at the US Treasury and the Federal Reserve met with JP Morgan Chase’s CEO Jamie Dimon and other top bankers to arrange the details based on the latter pledging to protect uninsured bank depositors to cool the panic withdrawal frenzy and no doubt to privately down the line, recover any expenditures when at least some of the failed bank’s disappeared assets were found. 

As we go to press it’s not clear if the super rich will be successful. But for now, with the JP Morgan Chase megabank on board, the ruling rich expected the panic to subside.

Tax the Rich Rhetoric Abandoned

Biden’s previous promises to “tax the rich,” who he repeatedly claimed, “don’t pay taxes” and to “tax the war profiteers” who he demagogically pilloried last month, and the “greedy” oil corporation monopolies that raised fossil fuel prices to the high heavens, tripling their profits during the US-instigated Ukraine War, all came to naught. With the sound of yet another banking time bomb intensifying Biden and his media pundits instantly disappeared yesterday’s tax the rich populist rhetoric.

The corporate media was instructed to shift its focus to more serious US-government perceived evil enemies like the Chinese, Russians, Iranians, Venezuelans, immigrants, and most recently, via a bi-partisan House resolution condemning “socialism“ itself as the ultimate evil. 

The February 2 twisted House diatribe concluded with the single admonition, “Resolve that Congress denounces socialism in all its forms, and opposes the implementation of socialist policies in the United States of America.” The vote was 328-86 with the majority of Democrats, 109, voting in favor and 14 voting “present.” The resolution neglected to denounce the bi-partisan “socialism for the rich” policies always pursued with abandon by the ruling elite. It served only as a crude Republican Party-initiated maneuver to ensnare and red-bait incautious Democrats while providing hoped for future justification to gut social programs.

Biden’s 2022 budget pledge to spend some $6 trillion to remedy catastrophic fossil fuel-induced global warming, was similarly disappeared while fossil fuel production escalated and profits last year reached new highs. The same with the military-industrial complex, once again bloated by $billions for the US-instigated Ukraine War. Need we add that the US multi-trillion dollar gambit to substitute expensive US-fracked liquified natural gas (LNG) for the cheaper Russian gas that previously supplied Germany and much of Western Europe, and the associated US obliteration of the Nord Stream pipelines constructed to deliver it – detailed by Pulitzer Prize journalist Seymour Hersh – were central to US imperialist objectives? Ukraine has proved to be picture perfect as yet another a $multi-billion, if not multi-trillion dollar fossil fuel war.

The Rich Don't Pay Taxes

Under Joseph Biden today, and his presidential predecessors, whether Clinton, Bush, Obama or Trump, the taxes paid by the super rich have steadily declined – to near zero in some years.

An errant Internal Revenue Service trove of documents released in a ProPublica whistle blower report revealed that four of the nation’s richest men, the approaching $trillionaires – Amazon’s Jeff Bezos, Tesla’s Elon Musk and financiers Michael R. Bloomberg and Warren Buffett – “paid almost no federal taxes, and in some years paid no taxes at all.” 

No doubt, the tax dodgers’ deeds were in full compliance with the U.S. tax codes, written and re-written into law countless times by the ruling class’s elite lobbyists and handful of select congressional representatives, Democrats and Republicans alike. And if the richest four largely avoided taxes, not to mention getting tax rebates, one can assume with certainty, contrary to Benjamin Franklin, [“Nothing is inevitable except death and taxes.”] that their ruling class cohorts and their multi-national corporations, with tax havens from the Cayman Islands to Ireland, similarly operate to largely avoid taxes. 

Today, the $trillion multi-national corporate entities’ “legal” tax avoidance schemes increasingly include the technical division of their behemoth enterprises into literally thousands of “small business partnerships” that qualify for tax exemptions galore.

Similarly, the US military budget, including its 2023 rendition, has soared, along with Biden’s fossil fuel extraction projects, today slated for the pristine and ever increasing areas made “accessible” via global warming to easy drilling in the Arctic region. Biden’s previous approval of 2000-plus off-shore drilling permits gave proof once again that corporate profits, not the future existence of humanity itself, drive the system forward to oblivion!

The Debt Limit Scam

There is no disagreement that Biden’s current $6.8 trillion budget proposal cannot be approved without a congressional agreement to raise the mandated cap on how much the government can borrow to pay its bills, that is, to print ever more paper money or issue bonds or other financial instruments to avoid the world’s richest nation declaring bankruptcy, not to mention once again bailing out the nation’s banks and leading corporations to the tune of tens of trillions of dollars. 

Last year’s high-powered budget rhetoric had the corporate media predicting imminent disaster if a “balanced budget,” including an immediate extension of the debt limit, was not immediately approved. Biden’s 2023 budget shortfall is again at $2.8 trillion, presumably to be covered by raising the debt cap. Today, however, the rhetoric has been toned down a bit with “budget experts,” including Treasury Secretary Janet Yellen, suddenly discovering that the implementation of various “accounting techniques” will allow the government to continue to pay its bills, that is, to avoid instant bankruptcy, until at least August, 2023. 

After August, according to a recent Senate Finance Committee report accompanied by a report from the chief economist at Moody’s Analytics, Mark Zandi, “millions” of US jobs will be lost and the US will, again, instantly tumble into recession. “Unless,” that is, according to the Democrat-controlled Senate Banking Committee headed by Elizabeth Warren, “House Republicans agree to extend the debt limit.” In short, the entire unfolding budget debate, wherein rightwing Republicans are said to be holding the nation hostage to an unprecedented default and US bankruptcy, is nothing less than sham partisan bickering, with each side seeking political leverage to pose the other as irresponsible, or reckless, while maneuvering behind the scenes to shuttle additional $millions and $billions to their favored corporate benefactors.

Last year’s budget villains, when the Democrats held a majority of the House of Representatives and the US Senate, were the dissident “centrist” Democrats, Senators Kyrsten Sinema, of Arizona, and West Virginia’s multi-millionaire coal magnate, Senator Joe Manchin III. In point of fact, the Democrat’s two holdouts were mere stalking horses for the ruling rich, allowing Biden to gut his touted climate crisis mitigation and “tax the rich” promises, that he and his party had zero intention of seriously implementing. Today the villains are to be the House majority Republicans, who will be similarly blamed for thwarting Biden’s “tax the rich” promises.

The Republicans, equally dedicated to playing the annual budget war games, claimed in response last week that while still-unnamed social programs had to be cut to win their approval to once again raise the debt ceiling to achieve the mandatory “balanced budget,” they envisioned no cuts in the government’s most expensive Social Security and Medicare programs. The stage is once again set for the behind-the-scenes deals orchestrated by the real representatives of the US ruling elite – not the millionaire and handful of petty billionaire posturers who constitute the US Congress.

The Truth Behind the U.S. Debt

The last major financial crisis of the Bush and Obama era saw the ruling elite expend literally tens of trillions of dollars in bailout funds to save the bankrupt US banking and related financial systems and key corporations, including the then bankrupt General Motors Corporation. At that time, 2008-9, the U.S. debt stood at $10 trillion. Today is stands at more than triple that amount, at $34.1 trillion, an amount that exceeds the entire annual US Gross Domestic Product, now at $25.4 trillion.

The US, the nation that previously lectured its European Union associates to refrain from issuing inflation-abetting debt to pay its bills, today exceeds all others in printing paper money to do the same. And inflation, today “officially” exceeding 7 percent, and likely higher, is raging, but not because of some mysterious out-of-control economic forces that can be remedied by the Federal Reserve increasing borrowing rates. 

The decision to raise prices resides in the exclusive purview of the highly monopolized corporate capitalist system. Their decision on this critical issue, as with the myriad of others they deploy to maintain profit rates when they are increasingly under attack, has the direct effect of transferring value from the mass of workers who produce it, to the elite who steal it.