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Time runs out for Obama and the constitution

The irresistible march of economic and financial events undermines legal and constitutional structures, weakens bureaucratic constraints, exposes weak and divided political leadership and transforms long-established relations between people and states.

Generations have stood before the Stars and Stripes and sworn allegiance to the Constitution of the United States. Adopted in 1787, and subjected to 27 amendments – the latest in 1992 – it is the oldest written constitution still in use by any nation in the world.

This is according to Wikipedia, which was itself set up as part of a global movement to undermine the property rights which are of the essence of the capitalist system. They argue rightly that private property in knowledge and software impedes human progress.

But world-shattering events are now shaking the foundations of the United States. The 14th was particularly important in establishing the legal authority of the Federal government in Washington during the reconstruction in the wake of the civil war and the ending of slavery.

Section 4 of the amendment reads: “The validity of the public debt of the United States, authorised by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

Some have suggested that President Obama could invoke this section to raise the government’s $14.3 trillion debt ceiling which is fast being approached. The Republicans are playing hard-ball and declining to reach an agreement with the White House to raise the ceiling before next Tuesday’s deadline. Raising the ceiling is required so that the United States can go on borrowing on international markets and service its debts.

Such a move by Obama would be a constitutional declaration of war with echoes of Abraham Lincoln’s military campaign to bring the south into line. Whether he’s up for this is debatable. But while Obama ponders his next move, what, according to the constitution, “shall not be questioned” is in reality being challenged by the money markets, as well as the obdurate Republicans.

The credit rating agencies which were effectively given power over companies and states by the Basel 2 international agreement on banking laws and regulation first published only in 2004, are threatening to downgrade US debt. That would force up borrowing costs and add billions to the total debt. The “validity” of the US public debt is definitely being questioned.

In any case, would invoking the constitution to raise the ceiling unilaterally do the trick. Not at all, as US commentator Andrew Leonard points out:

Would taking action under the 14th Amendment make the debt ceiling crisis go away? Highly dubious. Not only would the House GOP [Republicans] immediately start impeachment proceedings, but, as several commentators have observed, there's a real question as to whether investors would continue to buy US Treasuries while the legalities of the president's action were settled. Pretend you are China – do you think it's a wise move to keep buying US government debt while the US goes through a constitutional crisis? Using the 14th Amendment to protect the ability of the US to pay its debts becomes a lot less attractive if as a consequence, borrowing costs for the U.S. government rise sharply.

Not least among the many problems facing the multitude of politicians, bankers, and civil servants with the hopeless task of holding back the catastrophe is that downgrading a country’s debt to “default”, whether that country is Greece, the United States, Spain or Britain, has dramatic consequences.

During the madness of the last couple of decades, the entire global economy became irretrievably entangled in a seething interdependent mass of credit and debt held together by those fiendish financial instruments known as credit default swaps. The trouble is that if, or rather when one country is declared to be in default, it will trigger a chain reaction throughout the millions of CDS contracts.

No power exists to stop it. And it doesn’t much matter which country is first up. There are no “fixes”, quick or otherwise, as Obama is about to find out.

Gerry Gold
Economics editor
27 July 2011

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Your Say

Loïc says:

That's all very frightening. But isn't there a solution to re-settle the world finance system on fairer rules than derivatives markets. When balanced budgets are being set up in law in Europe, isn't it time to pressure governments and big companies behind those to credit public sector and social services... I don't know if the next economic era will be set on carbon trading rather than petrol but there is a move to be made and information to spread.

Robbie says:
Loïc: many of the commentators to our blogs are also expressing this fear, whether from the economic crisis or political crisis. But these governments and corporations are beyond pressure – they have to do what they have to do. Which begs the question: "what do we do if we have no influence on these bodies"? AWTW's answer – proposed throughout this website – is to build People's Assemblies.

Jonathan says:

One of the most important contributions to the present understanding and grasp of the interrelations unfolding and the driving force.

Thomas Paine wrote Common Sence in 1776: John Adams, a drafter of, The Declaration of Independence – somewhat peeved – (he became the second President) wrote :  "Without the pen of the author of Common Sense, the sword of Washington would have been raised in vain.” The 'pen', the man. After that – and remember this man sat at night in the freezing damp, and penned the stirring call for Washington who demanded it circulated, on crossing the Potomac – the important contribution to the Revolutions sweeping the world was Paine's Rights of Man, written in France in 1891: Paine died in poverty in the US, six attended his funeral: he is commemorated in Thetford, England by a monument set up by Americans. As for John Adams he grew, himself, in hatred of Paine, man, and writer. If the real content of the outcome of this form of ownership was necessary, a better example could not be drawn. A life well worth the visit. It is not too fanciful to say that Paine was the Trotsky of the bourgeois revolutions. For those that inherited the national power quickly buried him completely – there aren't even bones. Contained in The Rights of Man are that form of ownership expressed as rights as outlined above – it had its limit. Flesh turned to cancer.

The above has the power, the necessity, to keep a revolutionary, some not aware they are, awake at night: as the issues it outlines shows those trying to hold on to economical and political power. The why of it is in the first paragraph:  “ -transforms long-established relations between people and states.” That involves all of us, even those not aware, as not conscious yet of political matters. Not to be pretentious on my own position, I know as to awake, I tried it. Everything as to the above deserves – demands – objective study, and grasping, – once posed; otherwise it 'itches' and irritates as to world events, which are personal events, and what drives them, knowledge and understanding must be a part of practice. In fact world wide these central events are penetrating the 'thinking' in many forms, but essentially laying bare the contradictions in many acts: not settled they change into something else. Not theoretically-as-such but in that process of 'transformation'.

40 years after the Nixon Shock – it is tempting to say the goose that laid the golden egg has been well roasted. Whoever undermines Fiat Money and unilaterally claims the gold standard changes the name of the game: and while the US counters China with warships in two straights The Party in China has a whip hand. None of this changes what is central, what is the very nature of Marxism's grasp of Capitalism: The Law of the Tendency of the Rate of Profit to Fall (Capital. Vol. III Part III Chapter 13 ), & the impoverishment of the working class. These were identified with the precision that only could be dealt with by opponents in general: by ignoring them. Shift this way or that, bet futures, play accounting tricks, this form of production has had its day when it comes to extracting maximum value out of the present social relations: the reality of identities can not be ignored. While the above rings out loudly the stock markets claim new records and the speculator and betters make a double killing: one on money, the other on lives.

This call of AWTW of Assemblies takes the following course. Evald Ilyenkov “We understand thought (thinking) as the ideal component of the real activity of social people transforming both external nature and themselves by their labour” [Introduction to Dialectical Logic] Only inside the assemblies, the 'labour', 'the real activity' of building the resistance can the contradictions 'ravishing the world' and penetrating the social (and that is the personal) mind, the soul, be fought out and grasped, raised to the point of new knowledge – and action, direction. While the PR men shape the 'blank sheet', the 'tabla rosa' of Cameron and Co – Eton and Westminster was as close as they dare get – when their only real content, an ex banker, and oil man, Cable hits the nail on the head – from their world – with the comments as to ''Right-wing nutters" in the US, attacked as an 'unfortunate comment' given the similarity in interpretation on the logic of the Norwegian scouring of the heart of social democratic youth in Norway, and directed as an insult to the pity of their families; 'nutters' being an avoidance of the logic of the event, the 'hidden hand of history' shows itself in human affairs first as a mystery, then when we feel we have conquered the critique of historic events those beyond the ken, become those driven by 'nutters'. God and the Devil, common sense and nutters, or insanity. Meanwhile an aside on the billions raked in by pharmaceutical companies (now using India as a test bed) on bad drugs for bad treatment of serious conditions with much personal pain. While Cable knows well the economical and political base of these, and if true, as to real 'nutters' an impeachment would follow there: and even that others driven by the agenda of the Tea Party may well enter into psychosis acting out, or triggering, events that then feed back into the mix. Let those that sow the wind reap the whirlwind. As to the events in Norway, when that is the exact identity of 'ultimate cause' for it is not immediate, this has been building, while the twist in the wind, in fact that whirlwind, 'real' content must be drawn from the needs to 'coalesce' and direct against what will be an ultimatum in the form of force. To respond to Jean on the Blog as to the Norwegian events this is our only real protection. But, and it ought to be noted well, Capitalism by its nature, by its being, in the very course of affairs is responsible for the death and destruction of more in a moment than that event caused there and then: and without any 'fanfare'. It whittles lives away, and expectations, but as the Spanish march shows: it is on the back foot.

The centre of activities to these events appear first here, then there: this is a world crisis, and the crying need is for Assemblies in the US. where the intensity cries out for organisation and not disparate suffering. Obama is not Lincoln, and that was only the starkest contradiction between large plantations and their networks based on cheap and slave labour versus the burgeoning industrial north with it hunger for a labour force and internal markets for the new products. Each phase of the development of the mighty US has been propelled into the next by the contradictions in the last – and all identifiable in the constitution. This one threatens to propel the world, either into further servitude or liberation: and healthy relations between nation states.

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