Without doubt the key story of the next week will be whether the USA defaults on its debt.It is uncertain if the senate and house of representatives will be able to reach a deal.
The congress in May 2011 set up 14.3 trillion dollar ceiling on the USA national debt.The Republican party want to cut 3.00 trillion dollars in federal government expenditure but they are against any cuts in military expenditure in fact some Republicans want to increase public expenditure. The Democrats favour smaller cuts in public expenditure and there plans would include some cuts in military expenditure. They also favour some tax inceases for the more wealthy Americans.
The obvious question is how America got in the mess in the first place and what it can do to get out of it.
America is a country with a vast potential with excellent raw materials and arable land it also has a very well educated population so it should be able to provide a very high standard of living for all of its people with excellent welfare services. However the USA has a growing underclass with many of its roads and public facilties in decline.Many cities and even a few states are close to bankruptcy.
A key factor which led to the debt was the Bush presidency massive tax cuts for the rich, when he became president in 2000 America had no budget deficit. Also the Bush adminIstration from 2000 to 2008 massively increased defence expenditure. 1.2 trillion was borrowed for the war in Iraq.
There is now vast inequality in the USA.Corporate profits rose by 27% in 2011.Many workers living standards are declining in real income terms. Only about 7% of employees who work in the private sector are in unions this makes it easier for employers in the USA to attack workers living standards.
What then is the solution to the crisis.Firstly reverse the decision to de industrialise America.Start rebuilding the American manufacturing base.Start a massive programme of public works to help reduce unemployment from the current rate of 9.5%, Also increase taxes for the major corporations and the rich. Next cuts defence expenditure by about 40%.
And most importantly start a national investment bank to give cheap low interest loans to small business and oridinary Americans.
I am certain that these policies offer a way out of America,s current crisis.