Government shutdown a corporate lockout of the people

The government shutdown is a corporate lockout of the American people.

In the private sector, if the company and its union have not reached agreement when the contract expires, common practice is to extend the old contract while negotiations continue. But what if the company is determined to increase profits by busting the union, gutting the workers’ health benefits, raiding the pension plan and eliminating workers’ rights on the job? They resort to a lockout – they shut the company’s doors, and prevent the workers from doing their jobs or getting paid.

That’s exactly what the Republicans, led by the tea party caucus, have done – not only to 800,000 government workers, but to the American people.


The government crisis takes place as we near the start of the sixth year of economic depression. The wealthiest one-tenth of one percent – one in a thousand families – have fully recovered and have grabbed almost all of the modest gains made by the economy since 2009. But working families continue to suffer, with 25 million unemployed or underemployed, and with the typical household having lost $7,490 in annual income since 2000. Infuriated at having lost the 2008 and 2012 elections, the Republican Party, particularly its tea party extremists, are prepared to devastate the entire country in their racist drive to cripple the Obama presidency.

The boring stuff

  1. Constitution says the government cannot spend money without authorization from Congress. That authorization expired October 1. A continuing resolution (CR) would allow the government to continue spending at previous levels for a limited period while further negotiations take place. A CR passed the Senate, but the House attached a provision to defund Obamacare. The House would probably pass a clean CR – one that did not include extra provisions like defunding Obamacare, but House Speaker Boehner refuses to allow that to come to a vote.

  2. This crisis is taking place in the context of the sequester. The sequester was the result of negotiations that ended a similar debt ceiling crisis in August, 2011. It provides for across-the-board cuts in federal spending, cuts which get deeper each year. The sequester has already resulted in layoffs of government workers, cuts in programs, and loss of head start, section 8, unemployment and other benefits for tens of thousands. If the sequester stays in place, cuts will be deeper in 2014, and up to one million jobs will be lost. The “clean” CR that the Democrats were demanding left the sequester in place, leaving that battle to be fought again later.

  3. Sometime after October 17, the debt ceiling will be reached. Since WWI, Congress has imposed a limit on the debt the government is allowed to accumulate. After that, the government can only spend money as fast as it comes in – ie, government tax revenue will pay most of the bills, but not all, and payments could start to be late.

Immediate effects of the crisis

As a result of the government shutdown:

  • Two million government workers are not being paid. Of these, 800,000 are off the job, while the rest are working without pay.

  • African-American communities will be hardest hit. Because of institutional discrimination in the private sector, African-Americans with “middle class” jobs are more likely to work for the government.

  • Public services like national parks and monuments are closed.

  • Areas like Washington, D.C., with a large concentration of federal workers, are hit hard from loss of payroll.

  • The tourism industry near national parks and in the capitol will suffer losses. Tens of thousands of families and schools are seeing vacations and class trips ruined.

  • Social Security checks will go out, but new applications and services will be delayed.

  • Cancelled or delayed: Small business loans affecting up to six million businesses; inspections by environment, labor, and other protection and regulatory agencies; IRS audits of the super-rich, and investigations of offshore tax dodging.

  • If the shutdown continues, it will start to affect programs like Head Start, infant nutrition (WIC), and heating assistance.

A pattern begins to emerge of who is affected soonest and hardest. And it’s not the one percent.

The effects of the debt limit are harder to predict. Many commentators, and many business leaders, view this as more serious than the government shutdown. The administration has a number of options. There are accounting measures it can take to move money around and pay bills without formally breaking the debt limit. There are ways of, in effect, printing money to avoid borrowing. There are good constitutional arguments for ignoring the debt ceiling and continuing to pay all the bills that are due. If the debt ceiling is hit, administration action and the response to it will largely depend on the political balance of forces at the time.

The concern of many business leaders (and the rest of us) is, if the U.S. does not pay its bills on times, including making payments on past loans, it could weaken global confidence in the U.S. dollar and provoke a new financial crisis, a new recession, and massive loss of jobs. This most extreme scenario may be unlikely. But the instability created by continual political, financial and economic crises can have unpredictable and potentially catastrophic effects not intended by and outside the control of those who create the crisis – in this case the tea party Republicans and their backers.

Class war

Since Obama took office in 2009, and especially since the Republicans gained control of the House in 2010, the Federal government has been hamstrung by repeated crises over budgets and the debt ceiling. The mainstream media portrays the problem in generic terms like “dysfunctional government,” “congressional gridlock,” “polarization,” and “failure to compromise.” But in the labor movement and amongst progressive organizations, including progressives in Congress, far more accurate descriptions are increasingly being heard: “hostage taking” and “class war,” and even “treason.” The AFL-CIO refers to the government shutdown as a lockout.

The immediate issue in the shutdown is Obamacare. Republicans are reflexively opposed to anything that provides more economic security for the working class, and they are politically fearful that Obamacare will actually work and provide a political boost to Democrats in future elections. The high turnout in the first days of Obamacare is a blow to Republicans.

But the issues go far beyond Obamacare.

The AFL-CIO blog expressed this clearly: “The billionaires… are afraid if the government does its job, they will be taxed. So they want to force the government not to do its job. That means first they are happy to close the government entirely if President Obama won’t agree to pull back on the his commitment that all of America’s working families should have real health insurance. But the billionaires’ demands don’t stop there. They want to end food stamps, and let the poor starve. They want to cut Social Security and Medicare, stop the government from regulating Wall Street, and, surprise surprise– lower their own taxes.” In short, the shutdown stops the government from putting limits on the power of the corporate elite to plunder and pollute our country and the world at the expense of the working people.

The billionaire’s campaign has already had considerable success. During the recovery from every previous recession in the last 70 years, government spending increased steadily, helping to boost the recovery. That was equally true when Republicans Ronald Reagan and George W. Bush were president, both of whom presided over big increases in the deficit. But this time, after the initial one-shot stimulus in 2009-2010, government spending has declined and the deficit has been shrinking.

But the Republicans keep moving the goal posts. They have gained concessions in each round of hostage negotiations. And they come right back demanding more. As the price of raising the debt ceiling, they are talking about cutting Social Security, cutting food stamps, approving Keystone, and attacking women’s health.

All factions of the Republican Party represent the overall interests of big business – low taxes for them, no restrictions on their activity, no workers’ rights, a weak labor movement, and a large supply of unemployed and underemployed workers with no safety net and grateful for the chance for any job, at any pay, with any working conditions. But within that overall consensus, there are differences.

In an important column, Robert Reich lists some of the billionaire backers of the Tea Party. Besides the Koch brothers, these include executives in the financial industry including Goldman Sachs and JPMorgan, the Scaife family, and other corporate big-wigs. But it appears that the less fanatical sections of Wall Street are worried about both the political and economic consequences, especially regarding the debt limit. The Chamber of Commerce helped organize a letter with more than 250 industry groups that urged lawmakers to fund the government and raise the debt limit.

These differences in the ruling class are reflected in the growing divisions within the Republican Party. But those differences are largely tactical. They are united, for example, in pushing for agreement on long-term cuts in Social Security and other programs, usually proposed as part of a “grand bargain.”

Fighting back

Fortunately, in this crisis, Obama and the Democratic leadership are refusing to negotiate over how much to delay Obamacare, or which parts of government should be allowed to keep operating, and Obama is refusing to negotiate over the debt ceiling. And there are growing voices supporting the administration, and calling for them to stand firm.

There is no guarantee that the shutdown will be brief. Union members that have experienced lockouts by their employer know that victory goes to the side that can last one day longer. And for the workers to las longer, they must be kept informed, support one another, reach out to other workes and their community, and actively participate in the struggle.

The Republicans and their media are trying, with some success, to capitalize on confusion about Obamacare and widespread cynicism about government to demobilize the public. As a result, some people are blaming Obama for the shutdown. Overcoming this requires clarity on the class struggle issues which are at the root of the crisis.

For those who complain that the administration or congressional Democrats don’t have enough backbone – the only way to do something about it is to put millions in the streets (literally and figuratively) demanding not only no concessions to the hostage-takers, but that Congress go on the offensive for people’s needs. An example of this is the bills introduced by Sen. Harkin (S.567) and Rep. Linda Sanchez (H.R.3118) to increase Social Security benefits and lift the payroll tax cap. And an overflow signup for Obamacare is an important part of a people’s offensive. There has also been an immediate response from the AFL-CIO and dozens of other organizations thanking the President for standing firm and calling for phone calls to congress, public demonstrations, and other actions.

Key demands, raised by many organizations, include:

  • Pass a continuing resolution immediately.

  • Repeal the sequester. Pass a budget like the Progressive Caucus budget that creates jobs and starts to meet the real needs of working people and our nation’s infrastructure.

  • Abolish the debt ceiling.

  • Finance spending and reduce deficits by Closing tax loopholes for the wealthy and big corporations and passing a financial speculation tax as described in PC budget.

  • Transfer funds from the military budget, especially foreign wars and bases, to domestic needs.

The stakes are high. The intensified class war being waged against the working class has led to resistance and growth of class consciousness, seen in the coalition that elected Barack Obama, the growth of organizations like MoveOn, the Occupy movement, the growing strength of the immigrant rights movement, the national outrage over the Trayvon Martin killing, and the recent AFL-CIO convention which raised to a new level the leadership and collaboration of the nation’s unions with other progressive forces.

At the same time, sections of the corporate elite have responded by founding and funding the tea party and a host of media and front organizations to create fear, confusion and division amongst the 99 percent. They appeal to the economic security, as well as the desire for stability and order, recruiting small business, professionals, managers, and some ordinary workers. In other countries, similar economic and social conditions have led to a resurgence of fascist parties. While fascism is not an immediate threat in the U.S., the ultra right, including tea party’ers, ultra-right militia, and other groups, fan the fears and recruit a following based on the chaos they themselves create. The voter suppression, anti-immigrant, racist, stand-your-ground, anti-women, anti-poor, anti-worker, anti-environment laws and policies being enacted in states under tea party control are only the beginning of what might see if we the current situation of instability continues unchallenged.

The only antitdote is grass roots education and organizing, and getting our coworkers, neighbors, families and congregations involved in actions – demonstrations, letter-writing, phone calling, and elections – to end the shutdown, reject the hostage-takers, and move forward with a pro-people progressive agenda.

Photo: The government shutdown, and sequester (which will be in effect even after the shutdown), have already resulted in throwing millions of children out of Head Start. Here, teacher Carmen Prybylski works with children at a new Head Start building in Danbury, Connecticut. This program is among those in danger of closing. Carol Kaliff/AP


Art Perlo
Art Perlo

Art Perlo lived in New Haven, Conn., where he was active in labor and community struggles. He did research and writing on economic issues in Connecticut, including work with the Coalition to End Child Poverty in Connecticut which helped pave the way for the movement for progressive tax reform in the state. He wrote on national economic issues for the People's World and was a member of the CPUSA Economic Commission.