Obama maps out plans to rescue U.S. capitalism

by Andrew Pollack
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 biggest contributor to our long-term deficit.” What this will mean in practice is hundreds of thousands tossed from the rolls, or having the number of covered visits and access to services cut. What it will not mean in any significant amount is cutbacks in funds to cover high-tech (and often unnecessary) care provided via machines made by manufacturers such as GE.
Certainly, the more Washington and statehouses get away with cuts to Medicaid, the sooner Social Security will be attacked.
These proposals were all motivated as part of a competitiveness agenda that would allow the U.S. to compete with rising powers like China and India: “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.”
Obama called on the nation to prepare 100,000 new math, science, and engineering teachers—this while his administration has backed the testing-based regime used as an excuse to close entire schools, fire or discipline teachers, and pack classrooms with more and more students! Obama also called for simplifying the corporate tax code by eliminating loopholes in exchange for lowering the 35 percent rate. This, of course, will merely shuffle around the largesse to corporations. Shortly before the address Obama also pledged to capital that he would get rid of supposedly “job-killing” regulations.
What’s good for GE …
If anyone had any doubts about the political direction of Obama’s State of the Union, they should have been cleared up by his appointment of the CEO of General Electric, Jeffrey Immelt, to head his renamed body of economic advisers, the Council on Jobs and Competitiveness. “Jeff Immelt’s experience at GE,” said Obama, “and his understanding of the vital role the private sector plays in creating jobs and making America competitive makes him up to the challenge of leading this new council.”
This follows Obama’s appointment of William Daley, former Commerce Secretary and senior executive at JPMorgan Chase, as his chief of staff.
Some pundits claimed Immelt’s appointment showed Obama’s sincere desire to revive U.S. manufacturing, 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 its presence in what Immelt calls “the world’s fastest growing market for aviation, energy, transportation, health care, and financial services.”
Shortly before Obama’s State of the Union, Immelt stood side-by-side with the president throughout the visit of President Hu Jintao of China. And when Obama was in India recently, he announced deals involving American companies, including a $750 million order from Reliance Power for steam turbines manufactured by GE.
The United Electrical Workers Union said the company has closed 29 plants in the U.S. and one in Canada in the past two years, eliminating more than 3000 jobs. But the AFL-CIO, while mumbling about GE’s destruction of jobs in the U.S., nonetheless supported Obama’s move, saying Immelt had “embraced the president’s agenda of investing in America’s infrastructure and rebuilding manufacturing.” The union federation also issued a joint statement with the U.S. Chamber of Commerce, praising Obama’s address for the jobs that will supposedly be created through his infrastructure projects and the resulting heightened competitiveness.
Criticizing the competitiveness theme of Obama’s address, New York Times op-ed columnist Paul Krugman wrote: “It’s true that we’d have more jobs if we exported more and imported less. But the same is true of Europe and Japan, which also have depressed economies. And we can’t all export more while importing less, unless we can find another planet to sell to.”
What’s more, competition between countries is rivaled in economic significance by competition between multinational corporations. In an analysis of the production chains linking China and other East Asian economies to the U.S., radical economist Martin Hart-Landsberg pointed out, “We are being reshaped, just like East Asia, by a multinational corporate strategy … approximately 90% of China’s high technology exports to the U.S. are produced by multinational corporations.”
This helps explain Immelt’s laid-back attitude toward the supposedly artificially low levels of the Chinese currency, which he told interviewers wasn’t even among his top five concerns. Instead, he told reporters, U.S. workers just had to work harder to compete more effectively.
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. In what promises to become an increasingly common phenomenon, Nassau County in New York had its finances taken over by a state board, which immediately declared union contracts null and void.
In recent weeks, right-wing media commentator Glenn Beck has repeatedly attacked Professor Frances Fox Piven as a terrorist for encouraging the country’s unemployed to take to the streets to demand jobs. No doubt Beck would apply the same label to workers in Portugal, Greece, France, and elsewhere in Europe who have repeatedly engaged in general strikes and mass revolts against unemployment and benefit cuts. 
And there’s no question Beck would label as Islamist dupes the heroic unemployed youth who are right now engaging in revolutionary upsurges in Tunisia, Egypt, Jordan, Yemen and elsewhere throughout the Arab nation against regimes whose subservience to dictates of Western banks and corporations and the IMF have meant catastrophic levels of unemployment.
Workers in the United States must study closely the tactics used by these workers, and find in ourselves the same heroism they are showing, a heroism shown frequently in pitched battles against our own U.S. employers—including GE!—in the past.

> This article was originally published in the February 2011 print edition of Socialist Action newspaper.

Related Articles

Behind Sam Bankman-Fried’s Cryptocurrency Crash

FTX’s plunge from $32 billion to bankruptcy and the collaping value of cryptocurrencies shows the speculative casino nature of the capitalist economy, where unimaginable wealth is driven by fictitious capital.

Summer Strike Wave Hits Britain

In Britain, the working class is experiencing a wave of strikes and “Industrial Action” from some of the largest established unions in the country, activity that disrupts the economy. These striking unions have made political demands in recent years to renationalize mail, rail and the electric grid.