Monday, October 28, 2013

Q&A: Recent US Debt Crisis

There is a heated conflict happening in the United States between the Obama administration and the Democratic Party on one side, and the rival Republican Party on the other side, about the budget and the raising of the debt ceiling that Obama's government is insisting on. The crisis has intensified with the failure to approve the budget which resulted in hundreds of thousands of federal government employees' work being disrupted in what is being called a short leave without pay.
And the question: How can this happen in America, the chief of the capitalist democratic states? What is this democracy, which they claim does justice to people, that withholds wages not due to their fault or any deficiency in their work done? And how is the government insistent on raising the debt ceiling, instead of being insistent on lowering the debt?
We would like this to be clarified in a way that can be easily understood, and may Allah سبحانه وتعالى reward you.

Answer:
The answers to your questions can be clarified and easily understood by understanding the following issues:
First: American Budget:
The approval of the American budget requires the approval of Congress, which is made up of the Senate, whose majority is controlled by the Democrats, and the House of Representatives, whose majority is Republican. An intensive round of negotiations went on, with the exchange of texts and proposals between the House of Representatives and Senate, until the night of Monday 30/9/2013. Despite this the American Congress has failed to approve the temporary budget before the first hour of 1/10/2013, which is the beginning of the new fiscal year.
Second: Issue of the Debt Ceiling:
American public debt is the amount of public debt due from the Federal Government; which is the total of US Treasury bonds owned by parties outside the United States, as well as US Treasury bonds, which are issued by the United States Treasury Department, that are owned by parties inside the United States.
Congress determines the debt ceiling that the Federal Government is not allowed to pass, which is currently 16.7 trillion dollars, and that the government is expected to exceed or almost exceed on 17/10/2013. Therefore, the Federal Government is holding its breath waiting for the decision of Congress on that date.
Third: The Crisis and its Causes:
1. Obama presented a project for healthcare that he named "Obamacare", which would provide social security and health insurance to 46 million low income Americans, and which would let those who do not enjoy insurance to get health insurance. For the project to be implemented the necessary allocations must be approved in the 2013-2014 budget that begins on 1/10/2013. However, the Republicans understood that the project would mean popular support and public opinion for the Democratic Party, especially with the midterm Congressional elections being in November 2014. Health care is expected to be a point of discussion, and therefore the Republicans refused to allocate funds in the budget for Obama's project and requested for it to be delayed unless the law was subject to negotiation and amendments. It would then be issued in the name of both parties, after accommodating the Republican Party's vision in the project, so it would not be Obama's vision by himself. This is so that Obama would not gain any electoral balance for the Democratic Party in the future elections, and because the Republicans have the majority in the House of Representatives, they are able to delay the issuance of the law.
And because the issue for both parties is not serving the people, instead it is a political quarrel for the sake of the future elections' yield, both parties have insisted on a halt, even if it harms the people as demonstrated later. Obama wants it to be approved, and the Republicans want it to be delayed so that it can be negotiated and packaged in a way that distances it from Obama, and associates it with the Republicans... and this is how the crisis deepened, with the Congress failing to approve the temporary budget before the first hour of the month of October, which was the appointed date for its approval, and with the debate between the two parties ongoing up to this date.
2. This has resulted in the activation of the "Federal Government Shutdown", because of the Republican Party's refusal to vote on the budget law for the year 2014 on 30/9/2013. The result was more than 800 thousand government employees entering a mandatory vacation without pay, and with the expectation of a reduction in employees for all American institutions and a large number to be laid off... as happened previously when government activity was interrupted for 21 days in December 1996 until January 1997, in the era of Bill Clinton when the state incurred losses of about a billion dollars.
3. This is only a part of the crisis, indeed it is just an introduction to the coming crisis, which is the government requesting the debt ceiling to be raised on the appointed date for Congress to study the situation on 17/10/2013. That is because the government's debt has exceeded the ceiling allowed, which is 16.7 trillion dollars. This is the ceiling approved by Congress, and it is obligatory on the government to not borrow more than it. But the state treasury will be almost bankrupt on 17/10/2013, when nothing but 30 billion will remain in the treasury according to predictions, and afterwards the state will be unable to meet its financial obligations.
4. The two parties have been pelting each other with accusations, especially after the people were affected due to the problems of the two parties, so each party has tried to cast responsibility onto the other. Obama considers the Republican party to be the cause and describes it as holding the nation hostage in exchange for realizing the party's interests, so in press conference in the White House on Tuesday 8/10/2013 he said that "Members of Congress — and the House Republicans in particular — don't get to demand ransom in exchange for doing their jobs, and two of their very basic jobs are passing a budget and making sure that America's paying its bills."
And the Speaker of the House of Representatives says that he would not allow Congress to raise the debt ceiling unless Obama presented concessions dealing with the project of health care known as Obamacare, and agreed to negotiations, and that he was "not going to raise the debt limit without a serious conversation about dealing with problems that are driving the debt up."
5. It is clear in the tug of war between both parties that both of them want to raise the debt ceiling, but the Republican Party tied its stance to the amendments to the health care law in order for it to be associated with the Republican party... but what is worth mentioning is that normal circumstances of states are managed in a way that control its financial and economic situation to lower the amount of debt and not to increase it. However, America is the only country that is not bothered by drowning in debt, because it issues bonds as it wants, and guarantees to pay them off under suitable conditions, even if it cannot due to its financial situation. This is because it can, if it found it an overriding interest, print more dollars without limits of hard currency in its treasury like other states. Particularly because it currency greatly controls other countries' reserves, and it can print more with the permission of the International Monetary Fund secretly or "even openly" without permission, because America is of actual influence in the Fund, and it can present fake reasons and conceal the reality of the situation with the International Monetary Fund's support! Even if the printing of these papers results in a dip in the price of the dollar or inflation in prices, as long as America sees that it has an interest in doing so, it will. For example, the press has reported that America printed between "2 trillion – 4 trillion" during the fuel speculation that resulted in an increase in the price of oil, which reached almost 150 dollars per barrel in 2008, and America was not far from the speculation. America printed those papers to be able to buy the greatest amount of the fuel directly or indirectly to add it to its inventory, and it saw that this was in its interest that exceeded the volatility of the prices, and the devaluation of the dollar...
And therefore the debt ceiling for the American government will be raised by necessity. For example the government debt increased (central government and local government) from 4.3 trillion dollars in 1990 to 8.4 trillion dollars in 2003, and to 8.9 trillion dollars in 2007. In the beginning of Obama's governance in 2009 the debt was 10.3 trillion dollars, and in 2011 it exceeded the mark of 14 trillion American dollars, and it now exceeds 16.7 trillion dollars. Another state would have drowned in much less debt than this and it would have collapsed and its economy would have been reduced to rubble! But America is not burdened by debt because it is an internal problem to it, and Congress can raise the debt ceiling whenever it wants, and its economy will proceed, and it will pay the debt by the strength of its economy if it is strong or else it will issue currency paper without limits as with other countries. The collapse of America will be the appearance of a state that gives not weight to the American dollar, and that deals with it either by exchanging goods or by returning to the gold and silver standard in currency exchange.
6. And thus the chief of the capitalist democratic camp confirms the failure of the capitalist democratic system, and that it is no more than ruling capitalist class' manipulation of the people, especially the middle class and particularly the common people. Obama made his issue the "Obamacare project" with the excuse of helping the millions of people attain health insurance, but in turn he disrupted the work of hundreds of thousands of workers with an unpaid vacation...! This means that the Democratic Party's intentions in this law are not to serve the people, rather to nail future elections. How does serving the people result in depriving them of their work not due to a fault from them? And to the Republican Party the issue is not an issue of health insurance or no health insurance, it is only that the project not be attributed to their contender so that they can have a share in it... The two parties are not concerned with health care for the people, and the proof is that they are willing to agree on it after both parties negotiate it, so therefore the issue is not in its content, but in the extent of its usefulness in the elections, even if it results in distress and trouble for the people! The project has a requirement that obligates large companies to provide health insurance to its employees, and the owner of this project himself announced last July that he wished to delay this requirement for a year, in order to please these companies, and to please its supporters in the Republican Party, with him assuming that the Republican Party would agree to his project... and from this it is clear that the two parties are not concerned with caring properly for the health affairs of the people as much as they care about electoral popularity. From all this it is clear that their capitalism is to exploit public capital to increase their capital, and their democracy is not to serve the people, instead for the people serve the "major" owners of democracy without pay!
7. And in conclusion we thank Allah سبحانه وتعالى that we are Muslims, and that Allah سبحانه وتعالى guided us to the wise and proficient system... The Khaleefah goes hungry if the citizens are hungry, and he is satisfied if they are satisfied, and he is not safe until they are safe... a system that assures the covering of all the basic needs of housing and clothing and food for every individual citizen. Whoever can work is provided with a job, and whoever cannot work and does not have a relative to spend on him, then the Khaleefah is his guardian and guarantees to provide for him... a system that allocates general property among the people to protect their livelihood and security, so it allocates to each their portion from birth... a system that achieves a secure just economic life that amends the affairs of the creations, for the Creator سبحانه وتعالى provides what amend people:
أَلَا يَعْلَمُ مَنْ خَلَقَ وَهُوَ اللَّطِيفُ الْخَبِيرُ
"Does He who created not then know? He is the All-Pervading, the All-Aware."
(Al-Mulk, 67:14)
We ask Allah سبحانه وتعالى the assistance and accommodation to return the Righteous Khilafah, so it will spread goodness not only in the abode of Islam, also to everyone who has a heart and loves peace and security... and praise be to Allah سبحانه وتعالى, Lord of the worlds.
6th of Dhul Hijjah 1434 AH
11/10/2013 CE

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