Concerning the last minute deal in Congress to avert a default, Gail Collins, a New York Times columnist, wrote, “Well, um, yippie. Wow. Congress has decided it won’t trigger a global financial crisis out of pure pique. Can’t get any better than that.”

Much could be written about the antics of the far right in the Republican Party these past weeks. But beyond the grotesqueries, personal animosities, horse trading and the seamy side of bourgeois politics, the deal to end the government shutdown and avoid a default will now turn into a further bipartisan attack on the living standards of workers.

The deal included funding the government to 15 January and avoiding default to 7 February. It is possible, therefore, that in a few short months we will be back where we started. I think that is unlikely (but not impossible). The Republicans sought to stop the Affordable Care Act (Obamacare) by a partial government shutdown and threat of default, but suffered a major defeat.

The great majority in the US blame the Republicans, and if they try it again, it could prove fatal to them.

Already, the crisis has revealed deep fissures in the Republican Party between the Tea Party ultra-rightists, who favoured a continuation of the shutdown and a default, and the more sober-minded mere rightists.

Economic damage

The partial government shutdown has hurt the economy. A front page article in the New York Times said, “Containers of goods idling at ports. Reduced sales at sandwich shops in downtown Washington. Canceled vacations to national parks and to destinations abroad. Reduced corporate earnings forecasts. Higher interest payments on short-term debt.

“Even with the shutdown of the United States government and the threat of a default coming to an end, the cost of Congress’s gridlock has already run well into the billions, economists estimate. And the total will continue to grow even after the shutdown ends, partly because of uncertainty whether lawmakers might reach another deadlock early next year…

“[E]conomists said that the intransigence of House Republicans would take a bite out of fourth-quarter growth, which will affect employment, business earnings and borrowing costs. The ripple from Washington will be felt around the globe.”

“Uncertainty and disgust set to endure”, headlined the Financial Times. The business paper quoted an important fund manager: “The fact that the narrative in Washington is even about whether we extend our debt ceiling is just not acceptable. If you are a debtor nation, your job is to make sure your creditors like you. Even with a deal to avoid a default, the damage has been done and the result will be a slowdown in economic growth.”

Another part of the deal, its most important aspect, is that Congressional leaders and the administration will now meet behind closed doors to reach a budget agreement by 13 December.

The deal to reopen the government stipulated that it was to be funded at the level before the shutdown. That level was part of a previous compromise between the Democrats and Republicans that slashed funds for social programs known as the “sequester”. (Capitalist politicians and economists like to use words that obfuscate reality. In my Webster’s dictionary, “sequester” means to “set off or apart”, not to slash social programs.)

Before the deal was reached, the Financial Times noted, “Highlighting the cost of the political deadlock over US fiscal plans, a Financial Times analysis shows automatic US government spending cuts that took effect in March are causing most damage in regions that weathered the recession better than the rest of the country.

“Cuts under so-called ‘sequestration’ have hit federal funding for scientific research, forced civilian government employees into unpaid leave [these workers will not be rehired under the deal] and reduced anti-poverty programs including jobless benefits, housing vouchers and early childhood education.”

Cutting ‛entitlements’

In the secret budget negotiations, which started the day after the deal was passed, the Republicans will seek to deepen the cuts, while the Democrats’ starting point is the “sequestration”.

The Republicans (not just the Tea Party faction) have made it clear that they want deep cuts in “entitlement” programs, such as Medicare, Medicaid and Social Security. Both the Democrats and Republicans now refer to these programs as “entitlements”, with the understanding that the word now means its opposite – what workers are not entitled to.

Obama has asserted all along that he agrees with the Republicans that these “entitlements” can and should be cut in pursuit of a balanced budget. He repeated that as he signed the deal.

A “balanced budget” is code for austerity for working people in the US, Europe and elsewhere. If they really wanted to go toward a balanced budget, they could raise taxes on the capitalists.

Obama points to a recent decrease in the federal budget deficit as proof of his commitment to a balanced budget, and the Republicans answer that this was because of “sequestration”.

Social Security, Medicare, Medicaid and other social programs such as unemployment benefits, food aid to the very poor, public education and so forth were won through struggle. They are all under attack.Recent elections put the White House in the hands of the Democrats, the House with a Republican majority and an ultra-right Tea Party faction and the Senate with a Democratic majority. The Tea Party pushes hard to the right. The whole Republican Party moves to the right in its wake but not as far. The Democrats move to the right in the Republicans’ wake, but not as far.

That’s the dynamic of the budget negotiations. If they succeed, the likely result will be what Obama has called a “grand bargain” to slash the “entitlements” and other social programs, in what will be called a “compromise” between the two parties of capitalism.