Obama's spending cuts target the poor

While President Obama is enjoying his European tour, which is essentially a PR trip to boost his chances of re-election next year, his administration is preparing to bear down hard on the most vulnerable in a bid to cut the country’s soaring national debt.

A group of Democrats and Republicans in the US administration are hard at work on a life-support deal for the capitalist economy that will slash $1 trillion from the Federal budget, which is a cut of about 30% on current spending levels.

They are hoping to agree on a tit-for-tat exchange that will allow an increase in the total debt limit of $14.3 trillion which has already been reached. This is equivalent to a whole year’s national output and is forecast to rise to $20 trillion.

America’s debt was recently downgraded by a credit agency for the first time since the attack on Pearl Harbour in 1941.

Failure to increase the debt limit before its expiration date of August 2 would force the United States to miss interest payments on its debt, risking devastating fallout for global financial markets and the US economy. The Treasury Department is tapping pension funds and other pots of money now that the country has reached its debt limit, but has warned that it will exhaust those measures before August.

Even with an unwarranted optimistic view of a growing economy, and divided over the use of tax increases, Democrats and Republicans agree that the United States needs to reduce budget deficits by $4 trillion over the coming decade to ensure its debt remains at “a manageable level”.

In their third round of talks, the group homed in on the Medicare and Medicaid government health plans for retirees and the poor, which represent nearly a quarter of all federal spending. These areas are expected to eat up a growing portion of the budget in coming decades as the population ages and medical costs continue to outstrip inflation.

But the coalition for capitalism has a big problem on its hands: the American people. About 80% of registered voters, including 70% of right-wing Tea Party supporters, strongly oppose cutting the programmes, according to surveys.

Medicaid is a federal-state partnership that mostly covers low-income children and parents and disabled people. It also covers two-thirds of nursing home residents. Only 13% of Americans say they would support major reductions in Medicaid spending and just 10% back major reductions in Medicare and social security.

"If you watch the debate about the deficit and entitlements, you would think that almost everyone has a problem with the Medicaid programme and wants to change it, or cut it – or both," Kaiser Family Foundation president and CEO Drew Altman said in a statement released with the poll. "The big surprise in this month’s tracking poll is that one group who does not want to cut Medicaid is the American people."

Meanwhile, the crisis continues to mount at state level as the recession cuts into revenues. Yesterday in San Jose, Wisconsin, councillors set a date of June 21 for a vote on formally declaring a fiscal state of emergency and slashing pensions for public employees.

Today in Madison, the Wisconsin Wave is mounting a rally against Governor Scott Walker who will sign into law one of the most restrictive voter ID laws in the country, disenfranchising students, senior citizens, rural residents, low-income earners and homeless people.

Throughout the world millions of ordinary people are clashing with governments intent on slashing spending and raising taxes to repay debts accumulated on the now failed expectations of future economic growth. But the only thing growing is the number of countries like Greece on the verge of bankruptcy and default.

The slash and burn policies of Obama and the Coalition in Britain are the road to social disaster. The global resistance to capitalist crisis measures point to the need for new kind of a much wider democracy, based on the social ownership of the world’s productive resources and, not forgetting, financial systems.

Gerry Gold

Economics editor

Obama - defender of the status quo

As President Obama starts looking towards a second term in the White House, the realisation is growing among would-be supporters that he is just as much a defender of the status quo as his predecessor, George. W. Bush.

In fact, Obama has maintained many of the policies inherited from Bush. Camp X-Ray at Guantanamo remains open and military trials are still in place. Bush’s “war on terror” is carried on by targeted killing of “suspects” in Afghanistan and Pakistan. A new military intervention, this time in Libya, was done without Congressional approval in the manner of the previous administration.

Banks continued to be bailed out at the expense of Main Street and tens of thousands of people lost their homes as Washington stood idly by. Bush’s tax cuts for the rich, to the tune of hundreds of billions of dollars, were extended last December while Obama last week agreed to massive public spending cuts that will fall on the poorest.

Now, Obama stands poised to attack the massive federal budget deficit by reductions in welfare programmes that increasing numbers of Americans rely on. In the early months of the Obama presidency, Glenn Greenwald was not one of those who thought that all that was lacking was sound advice and a good strategy.

Greenwald, a constitutional and civil rights lawyer, author and blogger, says: “What evidence is there that Obama has some inner, intense desire for more progressive outcomes? These are the results they're getting because these are the results they want – for reasons that make perfectly rational political sense.”

His economic policies, Greenwald says, have “the added benefit of keeping corporate and banking money on Obama's side (where it overwhelmingly was in 2008)”. Being surrounded by former Goldman Sachs executives like treasury secretary Tim Geithner doesn’t hurt either. These types do not sit around wondering how to increase welfare or get a decent health bill through Congress. Their instincts are entirely the opposite. More in sorrow than anger, Greenwald adds:

When does he [Obama] offer stirring, impassioned defences of the Democrats' vision on anything, or attempt to transform (rather than dutifully follow) how Americans think about anything? It's not that he lacks the ability to do that. Americans responded to him as an inspirational figure and his skills of oratory are as effective as any politician in our lifetime. It's that he evinces no interest in it. He doesn't try because those aren't his goals. It's not that he or the office of the Presidency are powerless to engender other outcomes; it's that he doesn't use the power he has to achieve them because, quite obviously, achieving them is not his priority or even desire. Whether in economic policy, national security, civil liberties, or the permanent consortium of corporate power that runs Washington, Obama, above all else, is content to be (one could even say eager to be) guardian of the status quo. And the forces of the status quo want tax cuts for the rich, serious cuts in government spending that don't benefit them (social programs and progressive regulatory schemes), and entitlement "reform" -- so that's what Obama will do.

Greenwald’s analysis is, as far as it goes, sound. It is limited by his failure in nearly 3,000 words to mention the crisis of capitalism which is driving Obama’s politics. What next? Will the “liberals” in and around the Democratic Party once more campaign for Obama in 2012 on the basis that the Republicans in the White House would be far worse. It was the argument that resonated during last year’s general election in Britain, when it was clear that Labour was much committed to spending cuts as were the Tories.

In practice, there is no essential difference between the two major parties in the United States, just as in Britain little separates the main parties. In Wisconsin, where the state government has implemented savage cuts and taken away trade union rights, the response was sit-ins and the creation of a People’s Assembly. That is the right response, not just to the failed politics of the Democratic Party but to the poverty of capitalist politics in Britain too.

Paul Feldman
Communications editor