A month ago Barrack Obama looked like he had lost his once apparently solid lead over John McCain. McCain’s appointment of Sarah Palin, a hardline member of the Christian Right, had trumped Obama’s triumphalist rally at the party conventions. This choice played well to the reactionary mass base of the Republic party that feared McCain was “too liberal” on issues like abortion. With Palin’s appointment McCain’s popularity immediately surged, closing the gap with Obama till he was neck-to-neck with the Ohio senator. At the same time Obama moved to the right on a series of issues civil liberties, Iraq, Afghanistan, healthcare, and so on while saying little about any real, radical plans on the economic crisis that would make him different to the Republicans. He declared on CNBC “I am a pro-growth, free-market guy. I love the market.” Such was Obama’s retreats in the opinion polls, commentators began to point to the John Kerry debacle in 2004 where an unpopular Bush won a secure majority, after the Democrats “triangulated” themselves into looking no different from the Republicans. But then, on the 7th September, the titans of US finance went to the wall.
[b]Working class misery index skyrockets[b/]
American workers and large swathes of the middle class are already reeling from the burst housing bubble and slowing economy. House repossessions, unemployment, and prices are all rising. Anger and disillusion with the government and despair over the future are at record levels too. Polls show that this should favour Obama. 50 per cent called the economy and jobs the single most important issue that will determine their vote (up from only 37 per cent two weeks before). The same poll showed that a plummeting minority (9 per cent) cited the Iraq war as their most important issue. A rising number of voters believe Obama is the best candidate to handle the economy’s problems (53 per cent to 39 per cent for McCain, Sept 24 Washington Post-ABC poll). Figures from the US Bureau of Labour Statistics (BLS) show that over the past 12 months, the number unemployed has risen by 2.2 million to 9.4 million, and the unemployment rate has risen to 6.1 per cent. In reality, many more are just getting by on part-time jobs. For black Americans unemployment hit 10.6 per cent, for teenagers 18.9 per cent (5 Sept BLS). “That screams recession” according to John Ryding at RDQ Economics.The housing crisis has meant job losses in construction total some 558,000 since January 2007. The BLS also charts layoffs involving 50 workers or more are increasing and at their highest rate since 2003, with manufacturing responsible for nearly a third of them. Big manufacturers such as Whirlpool appliances, IT giants Dell and Hewlett-Packard, car part manufacturers such as DMAX, all report plummeting consumer demand and soaring inflation in the costs of raw materials such as steel and oil. Wholesale prices are rising at the fastest pace in 27 years, and will feed through into price hikes on store shelves and for US exports.
US workers also face the worst housing slump since the 1930s with prices for homes in 20 US metropolitan areas falling by 15.9 percent in the last year. Repossessions rose by 55 per cent from last year. While millions facing losing their homes, millions more cannot afford a mortgage and 3.9 million family homes remain unsold the most since 1982. The “misery index” (inflation rate + unemployment rate) has risen to 11.47 per cent August 2008 the highest monthly rate since the depths of recession in 1991. The number of people saying their household’s financial situation was getting worse rose to over half (55 per cent June, 61 per cent July, ARG) over the summer.No wonder McCain is seen as out of touch when Phil Gramm, his chief economic adviser, was forced to resign after he said that Americans were “winners” in a “mental” recession! Bill Clinton won the 1992 for the Democrats by pointing to the growing recession with the slogan “it’s the economy, stupid”. Obama could easily do the same as workers’ fears for the future increase. Yet in his desire to prove himself loyal to the interests of his corporate backers, including those from Wall Street, he has moderated his message, refusing to play his strongest card and disappointing his supporters. Obama and the Democrats support bailing out the bankers
Bush and Paulson’s bailout looked like highway robbery to the average US taxpayer. It caused massive anger among workers, trade unionists, the poor, but also from the insecure middle classes too. The New York Times reported that the Democrats were under massive pressure with thousands of outraged emails and phone calls from their voters. Obama was obliged to lay down four conditions, including congressional oversight and measures to limit executive pay. But though the proposal, agreed in negotiations between the presidency and congress leaders on 29 September, did allow for the government to take equity stakes in exchange for bad assets and for some limits on executive pay, plus a few other sweeteners, in the end it was clearly a bailout for Wall Street that socialised the bankers’ losses. The Democrats eventually dropped their demands for protection for homeowners facing repossession. They dropped their proposal to save 20 percent of any (unlikely) profits to build affordable houses.
In the eye of the storm Obama even talked about keeping “King Henry” Paulson on board as his Treasury Secretary! Indeed the so-called “progressive” Democrats supported this outrageous deal with even greater eagerness than the Republicans. The pressures on them from their constituents, within eight weeks of congressional elections, was simply too great. Both parties tried to on the one hand avoid responsibility for torpedoing the deal and on the other responsibility for its gross unpopularity. Thus the House rejected the bailout by 238 to 205, with 60 percent of Democrat Representatives voting for it and 67 percent of the Republicans voting against it. As we go to press its fate is still uncertain. Will an even greater Wall Street crash be needed to force the legislators to re-vote it, substantially as it is, or will legislators have to include major concessions – to help the distressed home owners at least- in order to appease their angry voters?The most violent opposition to the deal came in fact from Republicans who declared the plan violated their neoliberal principles. One representative even described it as “socialism for the financial sector” and “un-American”. On the other side the Democrats were busy signalling that if Obama is elected in November, even the very limited, often market-based social programmes he was putting forward would have to be scrapped. Obama rushed to say as much: “Does that mean that I can do everything that I’ve called for in this campaign right away, probably not. I think that we are going to have to phase it in. A lot of it is going to depend on what our tax revenues look like.”He has also stated that he will go through the federal budget “line by line” to cut out unnecessary programmes and impose efficiencies on those that are kept. This sounds like a vote winner against Congressional “pork barrel” politics and corruption, but this double-edged phrase also has a different “dog-whistle” message for the rich and the Wall Street backers: Obama will be a fiscally responsible Democrat who, like Bill Clinton, who cut the federal budget deficit by slashing public projects and social programmes.
Trillion dollar bailout, trillion dollar war, billion dollar election
In the first debate between Obama and McCain in Oxford Mississippi on 26 September many commentators were struck by how little Obama had to say on the economy – except that he would sacrifice spending plans if necessary, though he did say health and education reforms were too important to cut. McCain also floated a spending freeze but without committing himself to what exactly would be cut. Hardly a massive difference.But amazingly McCain managed to take the offensive over Iraq, which he described as “the central issue of our time”. Obama let McCain put him on the back foot, even agreeing with McCain so many times that the McCain campaign were able to make a Youtube spoof video ‘proving’ Obama supported Macain’s warmonger values.Instead of playing the antiwar candidate Obama appeared the young hawk. He demanded sanctions and “tough diplomacy” for Iran, whose “terrorist” revolutionary guards’ bid for nuclear weapons, he said, had grown with Bush’s failed policies. The US needed missile defence systems like those Bush is encircling Russia with. He repeated his calls for going after Al Qaeda in Pakistan, as Bush is now doing.Already the election costs have topped more than $1.2 billion.
Obama raised an unprecedented $66 million in August and overall has raised $456 million, while his McCain has only brought in $218 million albeit he was doing much worse before campaign contributions leapt forward with the Sarah Palin nomination. Obama leads in every sector of industry, especially Wall Street, with McCain only getting more contributions from three business sectors, agribusiness, construction and oil. Obama is clearly the candidate of financial capital and the bulk of the US ruling class.However he has also successfully won the support of the unions, the anti-war movement, black organisations and the immigrant rights movement on the basis of the promise of a “historic candidacy” and the chance to realign politics for good. Obama has to balance this contradiction between the support he has mobilised from these popular forces with the Democrats’ historical commitment to American capitalism. His actions as the crisis has unfolded illustrate that he works on the classic Democrat maxim: no real harm would be done to the strategic interests of the titans of finance and industry.America will continue whether Obama or McCain win to plunder the world with its huge military aggressively enforcing its hegemony. While, at home, a Democrat or Republican presidency will make the working class pay the costs of a crisis it did nothing to cause. Obama disguises his basic agreement with the Republicans on the economy with using a litany of phrases and change and popular mobilisation from below. But the black organisations, the trade unions and immigrant groups need to prepare to be let down, and organise to fight an Obama administration to win their demands. The anti-war movement, the recovery in union strength, the mass immigrant movement, and, most recently, the outbreaks in popular anger and protests over the Wall Street bail out, all point to the opportunities for real change in the United States. But change will not come through the Democratic party an historic party of the American ruling class that has never governed in the interests of the workers.
American workers need their own party
In every movement mobilising for resistance to the attacks flowing from the economic crisis, socialists must raise this simple but essential demand. But as capitalism proves that it is a bankrupt system, now more than ever American workers need to fight for socialist goals. We need to develop a set of goals for our struggles a programme of action that links the day-to-day resistance, to the goals of revolution and socialism.