United States:
“Poised for Progress” ... In Increased Profits and Exploitation

Jan 30, 2011

“We are poised for progress,” declared Obama in the 2011 “State of the Union” address. “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.”

There was only one “oversight” in Obama’s upbeat report: Jobs are still down in the dumps. He may have briefly acknowledged that nasty fact—but he hastened to add, “we have broken the back of this recession,” with one million new private sector jobs created last year.

Two discrepancies: one, the “benchmark revision” ten days later explained that only a half a million jobs had been created; and two, this was less than one third the number needed just to keep pace with the growth in the working-age population this year. More to the point, 11.4 million jobs would have to be created just to restore the pre-recession unemployment rate of 5.0%. The real level of employment—as distinct from official reports—has not only not recovered, but has grown steadily worse this last year.

Nonetheless, says Obama: “We are poised for progress.... But we have more work to do. To win the future we’ll need to take on challenges that have been decades in the making.”

Those challenges are, according to Obama: revolutions in technology that have made many production and clerical jobs obsolete, and the spreading of production globally, which throws American workers into competition for the remaining jobs with other workers around the world.

But, said Obama, “We know what it takes to compete for the jobs and industries of our time. We need to out-innovate, out-educate, and out-build the rest of the world. We have to make America the best place on Earth to do business. We need to take responsibility for our deficit and reform our government. That’s how our people will prosper. That’s how we’ll win the future.”

In reality, this call to compete is how the U.S. state apparatus, with Obama at its head, will try to wring more sacrifices from the working class and other ordinary layers of the population.

“Making America the Best Place to do Business”

Obama painted a marvelous picture of “the future” he promises to win: high speed Internet for almost everyone, tripling the number of college graduates, electricity produced by “clean sources,” high-speed rail in most of the country—and roads, airline terminals and other parts of the infrastructure repaired ... soon.

BUT—and a very big “but” according to Obama—we won’t get to this “future” unless U.S. companies are enabled to compete with companies in Europe, in Japan, in India, China, even Korea.

Thus, Obama proposed to give more tax breaks and subsidies to encourage corporations to engage in biomedical research, or develop information technology, or develop clean energy technology, or use renewable energy, or more generally produce something “innovative”... whatever that means.

Obama also proposed a flat, across-the-board reduction in corporate income tax rates. Supposedly, that reduction will be paid for by eliminating all special corporate tax breaks. With over 71,684 pages of the tax code required to spell out those loopholes, Obama would have us believe, that Congress will vote to eliminate every last one of them! Hard to imagine—even harder since Obama, in this same speech, just proposed to add still more tax breaks and subsidies for various and assorted industries!

To listen to Obama, you would think that American businesses are the poor relative of the world’s bourgeoisie.

The fact is, American businesses build factories and exploit workers all over the globe. They have entwined their financial interests with companies from other countries. And they have developed their productive facilities together with “foreign” companies, creating multinational mega-companies with loyalty to no country—if they ever had any. Over the past year, the “American” companies have produced massive amounts of profit—1.7 trillion dollars last year alone—even as unemployment grew worse.

And nonetheless, Obama would squeeze the population to give business more money.

It’s not for lack of capital that businesses don’t put people to work today. According to the Wall Street Journal, the 50 biggest U.S. non-financial companies are holding more than a trillion dollars in reserve, NOT investing it, not creating jobs.

Instead they use the unemployment as a threat to squeeze more work out of a smaller number of workers. That bitter fact is illustrated by the following contradiction: The GDP has grown and the manufacturing index has increased this year—even while the share of people working has declined. The percentage of the adult population with a job declined drastically last year, hitting a new low of only 64.2%.

Jobs are not obsolete—they are being crunched together, with one person killing himself to do the work of two, or even three.

Obama also proposed to reduce what he called “barriers to growth and investment”: regulations that supposedly put an “unnecessary burden on business.”

Getting rid of regulations may remove some of the very few small protections for workplace safety that are currently part of the code. It may add to the devastation the corporations already wreak on the environment. And it can increase some profits. But once again, more money won’t make U.S. capitalists create jobs.

For that, the workers, through their own actions, must impose themselves on the corporations so they begin to hire.

All this babble about making U.S. companies more “competitive” not only serves to justify new, bigger gifts to the corporations, banks and the wealthy. It also reinforces the claims made by some of the biggest companies in the world—the auto companies, for example, or GE—that they need sacrifices from their workforce in order to “compete.” It is false, and doubly false when coming out of the mouth of a U.S. president, who uses the federal treasury as a slush fund for the biggest financial interests in the world, and who directs the most devastating military machine to impose the interests of the big U.S. corporations around the world.

Taking Responsibility ... for Whose Deficit?

Obama: “Every day, families sacrifice to live within their means. They deserve a government that does the same.” Instead, he added, “We are living with a legacy of deficit-spending that began almost a decade ago.”

Nowhere in his lengthy speech did Obama bother to discuss what had actually contributed to the budget deficit—other than a quick reference to the financial crisis, in the wake of which “some of that [deficit-spending] was necessary to keep credit flowing, to save jobs, and put money in people’s pockets.”

That “legacy of deficit-spending”—amounting to 1.55 trillion dollars this year, with a total accumulated debt of 9.5 trillion, not counting the 4.6 trillion more owed to Social Security, Medicare and other “dedicated” government funds—was created in part by the three or four trillion dollars that ended up, not in the pockets of the people, as Obama claims, but in the pockets of the big banks in 2008 and 2009, allowing them today to declare record high profits, to award historic executive compensation, and to issue healthy dividends.

The flow of money from the Treasury hasn’t stopped. The vast “bail-out” operation more than emptied the U.S. Treasury’s cupboard, requiring it to issue bonds, which those same big banks rushed to buy with the very same money the Treasury or the Federal Reserve had given them. Today the banks enjoy—and will enjoy for years to come—the interest payments the Treasury puts into their hot little hands or those of their clients.

That “legacy of deficit spending” was also built up by the two wars that Bush started and Obama continues up to this very day—amounting to another several trillion dollars. Not even mentioning the more than 327 hundred billion dollars that pass through the Defense Department every single year in highly lucrative contracts, gifts to the munitions makers and military contractors like Cheney’s KBR corporation (better known as Haliburton).

“That legacy of deficit-spending” was increased, just last December, by 326 billion dollars, according to the Congressional Budget Office, as a result of the two-year tax cut granted to the wealthiest five percent of the population. Yes, Obama, scolds the Republicans a little, hinting that he had his arm twisted making him go along with the tax cut. But, in fact, he was the one, together with the Republican leadership, who engineered the deal. He had all the means at his disposal to prevent it.

And 325 billion doesn’t count the billion or so the very wealthiest won’t pay in gift taxes for money that they transfer to family members over the next two years, another result of the tax-cutting deal.

Neither does it count the tens of billions created by the big tax loophole given to the corporations in the same tax-cutting deal—for research they would have done anyway.

All of these expenditures—and many more like them—have created a “legacy” of debt, which adds to the debt through the interest payments the government makes every year on previous borrowing. Last year, 8% of the year’s annual budget—over 300 billion dollars—was accounted for by interest payments the treasury made on its earlier debt.

Someone whose aim was to reduce the deficit would have moved to reduce or eliminate these gargantuan outlays that have created “the legacy of deficit spending.” Obama didn’t propose it. Neither did the Republicans who turned “cutting the deficit” into their electoral battle cry.

No, yelling about this “legacy of deficit spending” is only a way to justify holding the population’s needs hostage so the government can spin out more gifts to the wealthiest people on the planet, and the corporations and banks they own.

In this regard, Obama was well-served by the results of the 2010 elections, which gave him a divided Congress, forcing the Republicans to share the blame with the Democrats for the cuts that are to come, and for the continual handouts to the wealthy. And he made quick use of that election. Only 27 days later, Obama froze the wages of government workers, calling his own decision a “compromise” with the Republicans. And one month later, before the Republicans even took over the House, he engineered the two-year tax cuts for billionaires and filthy rich corporations, pretending this was a necessary “compromise” with the Republicans so he could extend long-term unemployment benefits ... for a year, for a very small part of the unemployed. And then he agreed to actually increase taxes for the poorest 25% of all taxpayers—by cutting the “Making Work Pay” tax credit for low income earners!

“This Generation’s Time to Sacrifice”

“Sustaining the American Dream has never been about standing pat. It has required each generation to sacrifice, and struggle and meet the demands of a new age. Now it’s our turn.” So said Obama, letting the “OUR turn” slide out of his mouth as though we were, rich and poor alike, every last one of us, about to be put to the test.

Not so. And Obama soon clarified that point. The sacrifices he listed come only from the working class and other ordinary layers of the population.

Not so. And Obama soon clarified that point. The sacrifices he listed come only from the working class and other ordinary layers of the population.

In reiterating his order to freeze the pay of government workers for two years—which is only a way to cut those workers’ real income—Obama reinforced the demands for cuts in wages, benefits and pensions rippling through states, cities and school boards. The demands today for sacrifice from public employees and teachers, like the demands for concessions from auto workers three years ago, serve as the battering ram aimed at lowering the standard of living of the entire working class.

In announcing an across-the-board five-year freeze in domestic spending, Obama was guaranteeing that the draconian cuts carried out by states, cities and school boards over the last several years would worsen. Those cuts have already curtailed or even eliminated many public services, denied or severely delayed access to many social services, and starved the public schools for teachers, staff, decent facilities, books and supplies. Obama’s five-year freeze—which, given the rate of increase in the population, is actually a 6% cut—weighs particularly hard on local finances since so much of state and local expenditures are actually funded by grants that come from the federal government.

By reasserting his administration’s reliance on “Race to the Top,” Obama proposed to extend the disastrous results of that policy (and of Bush’s “No Child Left Behind” policy, on which Obama’s “education reforms” rested). Obama may have pledged to “out-educate” other countries, but these two programs are not aimed at better education. Their aim is to reduce the income of most teachers, under a bonus system tied to students’ results on tests, and to hand over an increasing part of the public schools to private enterprise, whose track record has already proven disastrous to students.

Obama called on young people to throw themselves into the profession of teaching, referring to the lack of at least 100,000 teachers this year. In fact, this year, American schools were already short about 300,000—if you count full-time, fully qualified teachers. But even with 100,000, Obama glossed over the basic question: Where is the money to hire them going to come from? If federal money is cut, if states and cities are cutting, more qualified teachers will be cut. Obama declared that Medicaid and Medicare are targets for cost-cutting. In proposing to cut Medicaid, Obama is ready to cut still further this program that has already been drastically cut—the program that gives bare medical coverage to the poorest part of the working class and unemployed. It’s already so starved for money that only 40% of doctors will take patients who have only Medicaid insurance.

Obama, in announcing these cuts, claimed that both Medicaid and Medicare are the biggest contributors to the deficit. Medicaid, of course, is funded by the government—it covers people who have no money for their medical care. But, as for Medicare, it’s a blatant lie! Until last year’s high unemployment cut into payroll taxes, Social Security and Medicare, both of which workers pay into all their working years, were running surpluses. And Obama knows it, because his government, just like all those governments that preceded his for the last 42 years, have gobbled up the surpluses to hide the extent of the government’s actual debt. Nonetheless, Obama set Medicare to take another hit, following those of the last few years—even while Medicare today pays only about 48% of the actual medical costs retirees run up.

But the main target of Obama’s cost-cutting is Social Security, although he hurried past this point in his address, calling only for a “bi-partisan solution to strengthen Social Security.” A vague phrase with ominous undertones, given that his “Bi-Partisan Fiscal Commission” already reported, late in November, just after the election, that the age of retirement should be raised from 67 to 69. And it proposed to cut benefits indirectly by “revising” the current inflation index, which theoretically keeps benefits in line with inflation. In fact, earlier “revisions” in that index in 1978, 1983, 1988, and 1995 have already served to understate inflation. Now, they want to do it again.

No wonder Obama insisted so much on the need for “bi-partisan” solutions. Already looking toward the next elections, he needs to engage the Republicans in sharing the blame for the attacks the bourgeoisie wants made in Social Security and all the rest. The Republicans, true to form, have already signaled their eagerness to cut.

Finally, the Afghan and Iraq wars—Obama barely touched on them in his speech, glossing over their reality behind patriotic tributes to the troops and Bush-style rhetoric about terrorism. Not a word in his speech about the cuts already made in veteran’s benefits, about the real mistreatment of the soldiers who protest the war, and the ongoing denial of needed medical treatment for returning veterans. Obama may have implied that the U.S. is almost out of Iraq and will begin to leave Afghanistan next summer. But the military had already made it clear, after meeting with Obama, that the U.S. would still be in Afghanistan in 2014, and would still be occupying Iraq into the indefinite future. Under the rubric of anti-terrorism, more generations of young workers and farm boys will be ground up, and greater destruction will be visited on the peoples of those two countries—all so that the U.S. government can impose an imperial order, defending U.S. business’s ability to grab oil from the Middle East and exploit labor around the world.

The Working Class Has Its Own Message to Give

The message of Obama’s 2011 “State of the Union” address is that the bourgeoisie and its state apparatus are determined that this year will be just like last year, only more so. More cuts to the very programs that allow society to function, more cuts to the programs that give a bit of support to the population; more cuts to education; a further reduction in the standard of living of the population; continuation of the wars. And more gifts to the bourgeoisie.

The working class and other ordinary layers of the population have their own message to deliver to Democrats and Republicans alike, to these front men for the wealthy: a message whose main words are “NO, NO, NO”—a refusal to go along with the sacrifices both parties would impose on the population, a message that can only be delivered by mobilizations of the workers’ own vast forces.

When we see the vast amount of wealth being accumulated today by the bankers and the corporations, it’s obvious there is wealth enough to serve the population’s needs—but only if the working class moves to put its hands on the money. When we see how much the government, even while decrying its deficit, is ready to hand over to the wealthy and their companies and banks, it’s obvious the population could find the means to have its own needs served. But none of the bourgeois politicians—not Obama, not the Democrats, not the Republicans, not the Tea Party demagogues—put the needs of the workers and other parts of the population first.

The working class has to impose its own needs. Revolutionaries have a role to play in this, and first of all by exposing the lies foisted on the working class to justify these attacks, something that in another time period the unions might have done, but no longer do.

January 30, 2011