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Le Monde, France

The Real Debate Between Left and
Right is Taking Place in the US

By Paul Jorion

Translated By Joshua Kirby

14 January 2013

Edited by Kyrstie Lane

France - Le Monde - Original Article (French)

It used to be said that the U.S. does not have a left and right wing like France does; the Democratic and Republican parties were all but interchangeable. While this opinion may once have been justified, recent events on the other side of the Atlantic surrounding the so-called “fiscal cliff” and in France with the twenty billion euros handed to businesses by the competitiveness treaty suggest that it is no longer so. Perhaps, indeed, that the situation is now the other way around.

On the night of the first day of the new year, an agreement was reached regarding the “fiscal cliff”: A set of measures written in August 2011. These measures were to come into effect automatically on Jan. 1, 2013 in the event that a deal was not reached in the meantime between Democrats and Republicans to control the inexorable rise in public debt.

In the U.S., the public debt ceiling is a legally enforceable limit. When this limit was reached in spring 2011, the ceiling had to be raised. An eleventh-hour deal was reached at the beginning of August 2011, even if all it achieved was to put off certain thorny problems until a later date.

In fact, it was a toxic and unsatisfactory mishmash that was concocted in an effort to get the measures approved by congressmen and senators from all sides. A set of measures, acceptable to neither side, was intended to come into force automatically on Jan. 1, 2013. To put off the Democrats, it included attacks on the welfare state; to disgust the Republicans, there were to be straight-out cuts in military spending, as well as in the profits of private clinics and the pharmaceutical industry as a consequence of Medicare, the medical insurance scheme for the retired.

But thanks to the polarization of politics in the U.S. since the beginning of the financial crisis, both parties dug themselves into their respective positions, blocking progress on any eventual agreement.

For the Republicans, the goal is to reduce the debt progressively and lower taxes at the same time, a double bind that would entail a reduction in state spending. As the only variable adjustment in this case, it would be social protection that would have to cover the costs of the operation.

As for the Democrats, whose electoral base is now composed largely of the female half of the American population as well as Hispanic, Afro-American and Asian minorities, they have only one goal: to ensure the inviolability of social protections.

Despite the Asian minority today being richer than the white majority, meaning that the average Republican voter is now older and poorer than his Democratic equivalent, the irreducibility of the opposing positions is clear. There is clear water between the right and the left on the question of the welfare state, whose form and the manifestations are considered negotiable by the right, and sacrosanct by the left.

The choice for Americans today is between two different analyses of their society. One says that society is healthy but penalized by over-taxation and a social protection scheme that is both unnecessary and too expensive. The other says that the division of the nation’s wealth is unequal, with half of the population sharing two percent of the nation’s assets, and a third of these assets remaining in the hands of one percent of the population. Due to a dearth of productive investment opportunities that stems from the weak purchasing power of the nation as a whole, the richest speculate and thus destabilize the price formation mechanism.

In this confrontational environment, so-called “compromise solutions,” such as those reached on Aug. 2, 2011 or Jan. 1, 2013, are anything but: The irreducibility of the respective points of view allow for no solution. The agreements that are reached serve only to put off any true compromise until a later date, unattainable today due to the irreconcilability of the two alternative visions of society.

Omaha billionaire Warren Buffett declared some years ago that class warfare does exist in the U.S.: It is the richest classes who instigated it and they have already won.

Mr. Obama commanded a dream majority at the time of his first election to the presidency, the only truly left-wing majority in the recent history of the U.S. However, his systematic alignment with right-wing positions has disappointed his partisans and allowed the Republican Party to quickly win back a majority in Congress.

It is an additional paradox that the resulting coalition, which has continued into the beginning of Mr. Obama’s second mandate, has reignited the class warfare that Mr. Buffett, perhaps prematurely, declared finished.



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