FT-CI

With Obama’s budget

The workers will go on paying for wars and Wall Street’s party

10/02/2010

Os February 1, US President Barack Obama announced the year 2011 budget, that will be sent to Congress. The figures show that the US economy is in the red: it is estimated that the budget deficit for this year will be $1.6 billion, the highest since the Second World War, equivalent to 11% of the US GDP. For next year, the deficit will be $1.3 billion and, according to forecasts, it is not expected to go down significantly until 2012; that is, if the US economy maintains sustained growth in the coming years, which is by no means guaranteed. These enormous sums of money will be used essentially for financing imperialist wars and paying interest on the government debt, that amounts to $12 billion.

During Bush’s administration, the budget deficit grew with the increase of military spending for the wars and occupations of Iraq and Afghanistan, and with the tax cuts for the richest groups in the population (who will continue to enjoy this privilege until the end of the year, when the exemption expires), and jumped with the government bailout of the Wall Street bankers and the automakers, that continued under the Obama administration.

While the big banks recovered their profits and returned to paying their executives millions of dollars in bonuses, millions of jobs were destroyed. The official unemployment rate is 10% (the highest since the recession at the beginning of the 1980’s), but if the underemployed, who are involuntarily working part-time, are counted, along with those who have stopped looking for work, the rate rises to 17.3% (around 20 million people). According to the forecasts in Obama’s budget, unemployment will scarcely fall to 9.2% by the end of next year, and in 2012, it will still be over 8%. This shows that although the US economy grew during the last two quarters of 2009, this is a precarious recovery and was essentially due to the effect of different stimulus packages on consumption (like the government’s cash for clunkers program that boosted automakers’ sales), and the renewal of the inventories of the big firms, that have also used the crisis to lay off workers and increase productivity.

As an editorial in the New York Times sets out, Obama’s problem is that "most people in the US don’t see any recovery." What they see is "10% unemployment and a crisis in the real estate market, and, above all, they saw how the federal government rescued the banks, the financial firms and the auto companies, while they continued to hope that Obama would keep his promises to stop the destruction of jobs." (NYT, January 20, 2010).

Facing this prospect and in view of the Democratic Party’s defeat in the Massachusetts special election, as well as the premature weakening of his administration, Obama tried to present his budget as an active policy addressing the problem of unemployment, and, at the same time, he tried to respond to the concerns of the establishment about the growing deficit, which, together with government debt, they have begun to see as a national security problem, by proposing freezing public spending for the next three years, except for defense and security spending, which entails cutting back more than 100 social programs.

But beyond Obama’s populist talk, in his attempt to regain the base of the working class and the lower middle class, and beyond the fierce criticism from the Republicans, for whom the cutbacks are not enough, only some 100 billion dollars will be indirectly used for the unemployment problem, in the form of a tax cut for small businesses, so they can hire new workers, with some of the money designated for the financial rescue of commercial banks to encourage credit for small businesses and extending unemployment benefits, as well as loans to state governments that are almost bankrupt, like that of California.

This is a ridiculous sum, compared to the more than 700 billion dollars in military spending, for 2011 alone, which includes the Pentagon’s regular budget, plus an additional 33 billion dollars to pay for the troop increase in Afghanistan. The conservative right wing, whether inside the Republican Party or outside, with the "Tea Party" movement, is trying to capitalize politically on dissatisfaction with Obama and is already thinking about winning the mid-term elections. For the working class, that put their hopes on Obama, it is a matter of drawing the conclusion that it is necessary to build a workers’ alternative independent of the two parties of the US imperialist bourgeoisie.

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