The Democratic Party has won the election and the privilege
to sit in power while the US economy crumbles bit by bit over the next
four years. Watch the tea leaves with Michael Hudson.
The Democrats could not have won so handily without the Citizens
United ruling. That is what enabled the Koch Brothers to spend their
billions to support right-wing candidates that barked and growled like
sheep dogs to give voters little civilized option but to vote for “the
lesser evil.”
This will be President Obama’s epitaph for future historians.
Orchestrating the election like a World Wrestling Federation melodrama,
the Tea Party’s sponsors threw billions of dollars into the campaign to
cast the President’s party in the role of “good cop” against stereotyped
opponents attacking women’s rights, Hispanics and nearly every other
hyphenated-American interest group.
In Connecticut, Senate candidate Linda McMahon spent a reported US$97
million (including her earlier ego trip) to make her Democratic
challenger look good. It was that way throughout the country.
Republicans are pretending to wring their hands at their defeat, leaving
the Democrats to beat up their constituency and take the blame four
years from now.
Obama’s two presidential victories represent an object lesson about
how the 1% managed to avoid rescuing the economy - and especially his
own constituency - from today’s rush of wealth to the top. Future
political analysts will see this delivery of his voters to his Wall
Street campaign contributors control as his historical role.
Republicans are pretending to
wring their hands at their defeat, leaving the Democrats to beat up
their constituency and take the blame four years from now.
In the face of overwhelming voter opposition to the Bush-Cheney
policies, the President has averted popular demands to save the economy
from the 1%. Instead of sponsoring the hope and change he promised by
confronting Wall Street, the pharmaceutical and health care monopolies,
the military-industrial complex and big oil and gas, he has appeased
them as if There is No Alternative.
If the Republicans are correct in accusing President Obama of
steering America along the “European” course, it is not really
socialism. It is neoliberal financial austerity, Greek style. His task
over the next two months is to avoid using deficit spending to revive
the economy.
The neoliberals whom he appointed as a majority on the Simpson-Bowles
Commission already have inflated their trial balloon claiming that the
government must balance the budget by slashing Social Security, Medicare
and Medicaid, not by restoring progressive taxation. My UMKC colleague
Bill Black calls this the Great Betrayal. “Only a Democrat can make it
politically safe for Republicans, who hate the safety net, to unravel
it” he notes. [1]
Having appointed the Bowles-Simpson commission members who seek to
shift the tax burden off business onto consumers, the President will
pave the way for Bush-type privatization. In his first debate with Mitt
Romney, Mr Obama assured his audience that they were in agreement on the
need to balance the budget (his euphemism for scaling back Social
Security, Medicare and Medicaid). By christening this “the Great
Bargain,” President Obama has refined Orwellian doublethink. It is as if
George Orwell went to work on Madison Avenue.
Four years ago, the economy stood at a potential turning point in the
war of finance against labor and industry, President Obama could have
mobilize public support for politicians willing to rescue hopes for
prosperity. He could have appointed a Treasury Secretary and Federal
Reserve chairman who would have used the government’s majority control
of Citibank, Bank of America and other “troubled asset” holders to take
these into the government sector to provide a public option.
Having been elected with an
enormous voter mandate, Mr Obama could have reversed the sharp
polarization between creditors who were pushing the 99%, industry and
real estate, cities and states deeper into financial distress. Instead,
his policies have enabled the 1% to monopolize 93% of America’s income
gains since the 2008 financial crisis.
He could have written down debts to payable levels at only a fraction
of the cost that was spent on rescuing Wall Street. Obama’s political
genius was to avoid doing this and nonetheless keep his “street cred” as
paladin defending the 99% rather than the 1%.
Having been elected with an enormous voter mandate, Mr Obama could
have reversed the sharp polarization between creditors who were pushing
the 99%, industry and real estate, cities and states deeper into
financial distress. Instead, his policies have enabled the 1% to
monopolize 93% of America’s income gains since the 2008 financial
crisis.
At a potential turning point in the direction the American economy
was taking, rescue and change were averted. We have seen what will stand
as a classic example of cynical Orwellian doublethink. Promising hope
and change four years ago, President Obama’s role was to hold back the
tide and divert voter pressure for change.
He rescued the financial sector and the 1%, and sponsored the
Republican privatization of health care instead of the public option,
and to take $13 trillion onto the government balance sheet in the form
of junk mortgages, largely fraudulent loans held by Fannie Mae and
Freddie Mac ($5.2 trillion alone) and other casino capitalist gambles
gone bad. Mr Obama was Wall Street’s white knight.
The trick was to get re-elected as a Democrat rather than as a
Republican sponsoring a health care plan crafted by the Koch Brothers’
Cato Institute, and putting Wall Street bank lobbyists in charge of the
Treasury and (de)regulatory agencies. As a Blue Dog Democrat, how was
President Obama made to look better than the alternative?
Big fish eat little fish, and
the 1% are devouring the 99%. Those who describe how this is happening
are accused of class war… What is collapsing is the idea of equity and
fairness in the economy - and in the politicians that are remaking
markets to benefit the 1%.
The answer is clear by looking at the alternatives being offered. The
Republicans have played ball. They call him a socialist - not too far
fetched when we look at how Europe’s Socialist, Social Democrat and
Labour parties are backing austerity and supporting anti-labor policies,
privatization sell-offs and other neo-oligarchic policies. That is what
socialism seems to mean these days.
While corporate profits are recovering nicely, most peoples’ savings
and the net worth of their homes are down. This is not economically
sustainable. Something has to give - and voters are afraid that it will
be their wages and savings. As corporate pensions plans are being cut
back or reduced in bankruptcy, their under-funding suggests that debts
to retirees will not be honored - only those to Wall Street. Big fish
eat little fish, and the 1% are devouring the 99%. Those who describe
how this is happening are accused of class war.
It is not the old fashioned class war of industry against employees.
It is a war of finance against the entire economy. And as Warren Buffett
has noted, the financial class is winning. Instead of breaking up the
banks, the five largest “Too Big to Fail” banks have grown even larger.
With support from the White House, they used their TARP bailout money to
buy smaller banks, turning the financial sector into a vast monopoly
that is busy privatizing the election process so as to hold the
government hostage.
What is collapsing is the idea of equity and fairness in the economy -
and in the politicians that are remaking markets to benefit the 1%.
Most voters opposed the bank bailouts of 2008. The Republicans were
politically savvy enough not to vote for it, so that they could strike a
populist stance. But Mr Romney has not picked up this line of attack,
even though it might have enabled him to defeat a president in whom much
of whose constituency has lost confidence.
There is disillusionment and many young people, minorities and the
“Democratic wing of the Democratic Party” have been busy writing op-eds
and blogs that this time they were going to “vote with their backsides” -
by staying home. And that is pretty much what the election returns
showed. Their complaint is that President Obama has broken nearly every
campaign promise he made to voters - but not a single promise he made to
his big campaign contributors!
That is the essence of being a
politician today: to deliver one’s constituency of voters to the
campaign contributors. In this respect Barack Obama is America’s version
of Tony Blair; or alternatively, Margaret Thatcher and Neville
Chamberlain rolled into one. We need a new word to describe this -
something more than simply “irony.”
That is the essence of being a politician today: to deliver one’s
constituency of voters to the campaign contributors. In this respect
Barack Obama is America’s version of Tony Blair; or alternatively,
Margaret Thatcher and Neville Chamberlain rolled into one. We need a new
word to describe this - something more than simply “irony.”
It’s not just Mr Obama, of course. It’s the Democratic Party
leadership. So here’s the litmus test to watch: On what committee and at
what rank will the Senate put Elizabeth Warren?
Will she be named head of the Senate Banking Committee? Will she even
be on it? Is she an embarrassment to Democratic fund-raisers on Wall
Street - or window dressing to help give the impression that the Party
really is other than crypto-Republican.
What inspired the Occupy Wall Street movement a year ago was a
spontaneous protest against not only President Obama but also the
Democratic Party for its lack of real effort to stem the right-wing
tide. The Democrats did not rush to the OWS defense, although some
operatives tried to jump in front of the parade and steer it into the
usual liberal blind alley. (They did not succeed!) Voters have expressed
a wish for just the opposite policy than the Democrats’ rightward turn,
but the American political system excludes third parties, not being
based on proportional representation as in Europe.
“By their fruits ye shall know them.” The Democrats took labor
unions, minorities and middle class voters for granted because they had
nowhere else to go, thanks to Mitt Romney giving Mr Obama wide room to
move to the right wing of the political spectrum. This is the political
wrestling match that is being scripted.
A new title is needed for a new
pro-labor, anti-militarist coalition that would restore the spirit of
true reform, progressive taxation and the rule of law (that is, throw
financial crooks in jail).
We can see the denouement. As in Britain, unionized public-sector
labor is being singled out. Chicago Mayor Rahm Emanuel, former White
House Chief of Staff, showed his colors (and incensed Progressive
Democrats) last week by signing a contract with the contractor of about
350 airport maintenance workers to cut back their wages by up to $5 an
hour (from $15 to $10).
How will the “Not Blue Dog” Democrats respond? Will Elizabeth Warren,
Bernie Sanders, Sherrod Brown, Tammy Baldwin and Alan Grayson in the
Senate and House take on the President in opposing austerity and the
appointment of yet more Wall Street lobbyists to his cabinet?
Here’s the dilemma the American president faces: Markets are
shrinking, and consumers are having to repay debts they earlier took on
during the heady Bubble Economy that crashed in 2008. Paying down these
debts leaves less to spend on goods and services. Labor productivity is
soaring - but not wages. While the bailout economy’s fruits are going to
profits and paid out as interest and dividends, neoliberals are
demanding that the retirement age be raised, not lowered, and that work
hours be lengthened more, not shortened. Federal Reserve Chairman Ben
Bernanke’s helicopter only hovers over Wall Street, not the rest of the
economy.
The middle class that voted so strongly for Mr Obama four years ago
is being squeezed. To describe their plight, I expect the next four
years to see the spread of a fresh vocabulary to describe what is
happening: debt deflation and neofeudalism, while the classic terms
rentier and oligarchy may become popular once again.
But neither party will use these words. Only a third party can do
that. Right now its potential members are called “Independents.” A new
title is needed for a new pro-labor, anti-militarist coalition that
would restore the spirit of true reform, progressive taxation and the
rule of law (that is, throw financial crooks in jail). The problem the
economy faces is how to revive wages and consumer demand, and to write
down personal debts, not government debt. Mr Obama has joined with the
Republicans in perverting the vocabulary to pretend that government is
the problem, not his campaign contributors on Wall Street.
Note: Michael Hudson’s new book summarizing his economic theories, “The Bubble and Beyond,” is available on Amazon. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion, published by AK Press. He can be reached via h@michael-hudson.com. The above article was posted at CounterPunch.
