Obama maps out plans to rescue U.S. capitalism

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In his State of the Union address on Jan. 25, President Barack Obama laid out his goals for the second phase of his efforts to rescue U.S. capitalism. His first term was devoted to preventing a total system breakdown, with efforts that consisted of bailouts for banks and corporations, paid for by workers. He succeeded in restoring confidence to a point in which a total freeze of credit markets was ended, and plunging production and consumption were reined in, if not revived to pre-recession levels.

Having minimized some of the worst symptoms of speculative capital’s excesses, Obama now believes he can take measures to reassert U.S. capital’s global dominance. But these efforts are doomed to failure. While the economy has limped out of the pit of the recession, the wild flights of fancy stemming from profits based on speculative capital have not—and cannot—be replaced by any significant new revival of manufacturing or services.

Nor will the modest sums announced by Obama for the keystone of his proposals, a mild dose of infrastructure investment, do much to encourage revived, much less expanded, investment in new productive capacity. Given the continued global downturn and the resulting heightened competition between countries, such capacity would clearly be pointless in any case, even if Obama were to advocate far larger sums.

In a slap in the face to the country’s jobless, still suffering from Depression-level unemployment rates, as well as to the millions still worried about home foreclosure, Obama said, “Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again.

“The past two years were about pulling our economy back from the brink. The next two years, our job now is putting our economy into overdrive. Our job is to do everything we can to ensure that businesses can take root and folks can find good jobs and America is leading the global competition that will determine our success in the 21st century.” There was not a word, of course, about the trillions spent on weapons, war, and occupations.

Obama proposed a five-year freeze in spending on some domestic programs that he said would reduce the deficit by $400 billion over 10 years. While he does not yet have the capital to move ahead with his “deficit” commission’s proposal to destroy Social Security, The New York Times reported that this “left open the possibility of benefit ‘trims.’”

And he called for massive cuts to Medicare and Medicaid. State governors are already implementing cuts to the latter, which serves primarily children and the disabled. He called Medicare and Medicaid “the single given GE’s leading presence in many goods-making industries. But the company’s financial arm, GE Capital, became the nation’s largest non-bank financial firm during the real-estate bubble and was a leader in securitizing mortgages, leading to crashing profits that threatened to drag down the whole company. Like every other major corporation, GE was rescued by Washington, with the Federal Reserve giving it $16.1 billion in credit guarantees.

And while Obama called for tougher competition with China, South Korea, and other emerging economic giants, his appointment of Immelt shows his real goal is to help corporations more tightly weave the chains that imprison workers both here and abroad.

GE, already a major player in Chinese markets, will invest $2 billion in China through 2012, expanding Hart-Landsberg correctly noted, “Working people in China are struggling in the face of multinational corporate demands that the Chinese government keep wages low and working conditions profitable. … Chinese workers are not stealing our jobs … our problems are at root caused by contemporary capitalist dynamics. Forcing China to become more open to capitalism is not going to help us or them.”

State governors and legislators will certainly do their part to make the U.S. more “competitive”—i.e. to force workers to tighten their belt—by stepping up already life-endangering attacks on jobs and services.

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