Sunday, April 5, 2009

News of the Day and Obama's First Hundred Days

by Norman Markowitz

Having been overwhelmed with work, union struggles, car problems, and bad computer connections, I have neglected my PA blogging. Let me get back into it.

First the Obama administration is nearing the end of its first hundred days. The administration has been in its totality, given the global economic situation it faces and the political balance of forces it faces, the most progressive since the New Deal. However, it has not yet begun to take the "left turn" which the New Deal government did in 1935 when it supported the National Labor Relations Act, Social Security, Unemployment Insurance, the Works Progress Administration providing millions of public works jobs for the unemployed and, unsuccessfully, advocated a national taxation program to sharply raise taxes on the wealthy.

But it has come forward with the largest compensatory fiscal policy in the history of public investments to counteract the looming depression. It has also come forward with the most progressive national budget since The Johnson Great Society budget of 1965 That budget proposed in a very different context, with the economy expanding significantly, the labor movement much stronger and the political balance, following the overwhelming right Republican defeat at all levels in the 1964 elections, much more favorable to the Johnson administration . Although the right Republicans have suffered a major defeat in the 2008 elections at all levels, they have both the deficit question and a stronger position in Congress.

The Obama administration, as witnessed by the G-20 meetings, is also in a very different position than U.S. administrations have been toward the other major capitalist states in the post WWII era. For the first time since the Roosevelt years, the U.S. President and government is taking a more progressive position on global economic questions than the other states that compromise the U.S.-NATO bloc, with the exception of Britain, of course, which continues to publicly "tail" U.S. policy as it has done throughout the postwar period regardless of which party was in power. While many Europeans with some justice blame the crisis on the spread of American"i.e (Reagan Bush) capitalism, it should be remembered that the Thatcher government in Great Britain inaugerated them thirty years ago and they were embraced by capitalist ruling classes globally as a way to weaken labor and peoples movements and most of all to greatly expand short-term profits.

It is Obama who today is calling for international regulation of banking and stock market based hedge funds and the Europeans who are balking. It is Obama who is advocating significantly larger "stimulus" or compensatory fiscal policy to contain the crisis and it is the Europeans who are talking what in the pre 1980s world (that is the Milton Friedman in Wonderland world of Thatcher-Reagan and those who followed them through the Looking Glass) would be considered fiscal conservatism.

But the crisis remains at a chronic level in the U.S. Unemployment is now at 13.2 million (it would be escalating much more, I believe, were it not for the administration's policies, which makes it imperative to have the budget passed without significant cuts) and at 8.5 % nationally, given official figures.

Detroit, center of the U.S. auto industry, has 22 percent unemployment, clearly a depression level by any standard, as the administration takes unprecedented acts to restructure GM. While President Obama is calling for a necessary global regulation of banking, there is still no clear program by the administration to direct the banking sector to infuse capital into the most damaged and threatened sections of the economy in the interests of labor and the people, in spite of the hundreds of billions in public investment that the banks have already received.

While the administration has taken significant steps to strengthen existing regulation of Wall Street and is beginning to call for new regulation to close loopholes that the insurance sector of finance capital has used, there is at this time still no real evidence of a comprehensive reform of banking and stock market regulation, in effect, new Securities Exchange and Federal Reserve Acts (the last positive ones were in 1934-1935) to sweep away the "deregulation" of the last thirty years and also update the SEC, the Federal Reserve, the FDIC et al to deal with the 21st century economy.

Internationally there is the conflict in Afghanistan, the looming "Afghan trap." Here the administration is stressing diplomatic overtures and internal reforms while it is significantly increasing U.S. troop deployment. It is calling for a multilateral effort, but there is no evidence that the other NAT0 states are willing to send more troops.

While the forces in conflict are radically different then they were in Vietnam in 1965, when the Johnson administration (at the same time that it was enacting Medicare, Medicaid, Federal Aid to Education, Civil Rights, and Jobs training programs, launched its planned escalation to use large numbers of U.S. troops to "win" the civil war it privately understood the Saigon regime the U.S. had created could never win) one should remember that the Johnson administration also promised to bring far-reaching economic Reconstruction and reform to South Vietnam, "reforms" that were a cruel joke for the Vietnamese and escalated disillusionment with and opposition to the administration at home by the very groups who were most sympathetic to its domestic programs.

In the U.S. the administration also faces an emerging contradiction which the New Deal government faced and never really resolved through the 1930s. State governments in their budget cutting, their layoffs of public employees and their attempts to impose salary and wage freezes, forced leaves or suspensions without pay (de facto wage and salary cuts) are pursuing anti-stimulus policies, reducing both the employment and mass purchasing power that compensatory fiscal policy is supposed to sustain and expand.

In that 1930s, such policies, along with hostility by state and local governments to the advance of the trade union movement and the implementation of federal reforms (because state and local governments can be influenced if not controlled outright by capital much more than
the national government) led conservative politicians, especially Republicans who historically had supported a strong federal government aiding business and maintaining a strong military, to because champions of "states rights" , denouncing "big government" and Washington.

The Obama administration can begin to act now, as Roosevelt used to say often, to address at least some of these questions. It can begin to make it clear that "stimulus"money to states will be tied to states maintaining both jobs and union contracts(and also accepting the unionization of public employees).

It can intervene with the banks to channel capital into cities like Detroit with what depression unemployment rates(and in Detroit it is high depression unemployment) to provide jobs that will sharply reduce unemployment. It can begin to look at the auto industry in a creative way, establishing perhaps a state agency to purchase used cars at favorable prices in order to encourage the purchase of new U.S. cars, to take over GM directly and manage it as a public corporation, while at the same time addressing the internationalization of the auto industry (what is an "American car" today?). It can and should begin to experiment with the economy the interests of labor and the whole people in the U.S. It should also be very wary of Afghanistan, to avoid the spiral of escalation that brought down the Johnson administration, the last administration that pursued a "liberal" domestic policy in the American sense of that word.

If I were grading Obama at this point, before the conclusion of the first hundred days, I would, compared to the first hundred days of any U.S. administration in my lifetime, give him an A-. Given what we have come to expect from U.S. Presidents, an A+. Given what I see has to be done in the near term, a B+.

Of course, the administration has a long way to go to the midterm (elections) but the pace of change in the global economy is much faster and there grades will be calculated by the people in terms of jobs, living standards, and quality of life.