Thursday, July 14, 2011

Obama's Phoney Budget War

There's a fairly decent chance that the morons who run the American Empire will let the country slip into default at the beginning of August, causing a cascade of penalties and blowback that will kill the barely breathing recovery. Greek politicians can at least claim that their hands have been forced by the dictatorship of the financial industry, marking them as cowards to be certain. But at least nobody can accuse them of being so stupid as to walk into the fiery pits of hell over the most minor of points of principle.

The media plays up the argument between the Republican and Democrats about dealing with the debt ceiling as the battle royale, as though it were a clash of fundamental differences and worldviews that can find no middle ground. This is a total crock. All that separates the Obama and the Republicans is a thin sliver of degrees. Obama has already agreed to slash hundreds of billions of dollars from what remains of the pathetic US welfare state. He has already agreed not to roll back the Bush tax cuts, including some tax cuts for the rich. Mostly what he's demanding at this point is the closing of some tax loopholes that are exploited by big corporations. The formula was basically three dollars in cutbacks for every one dollar in tax increases on the wealthy.

However, to the Tea Party freaks even this is impossible to swallow. Any taxes on the wealthy or cuts to the Defence budget are akin to socialism for the Tea Partiers. They live in the cloud cuckoo land that believes the world is the same as it was in 1955. To them the USA is unassailable and only needs to speak the words for the whole world to listen and obey. Trouble is, the times have changed. America no longer commands 50% of global manufacturing, having declined to perhaps 20% or less, with China nipping at their heels. And, speaking of China, it holds over $1 trillion in US Treasury debt and isn't impressed by the possibility of a default, with its own rating agency having already downgraded US debt as a result. But the Tea Party have drunk too much of the Fox News kool-aid and believe that America can do what ever it wants. Such denial of reality is typical, I believe, for at least a section of the ruling class in any empire in decline. They become a cartoon parody of the ideology that underpinned the nation in its heyday - that America was built on individual initiative and strong defence.

But while the Tea Party road is an expressway to madness and economic collapse, they are a useful foil for Obama, who was never as progressive as his most ardent supporters made him out to be and as millions of his voters hoped he might prove. Obama has always been a centre-right Democrat. Among his first acts in office were to send more troops to Afghanistan - where they are presently witnessing the meltdown of the colonial client regime - spread the war to Pakistan - which has caused the biggest ever diplomatic rift with their former erstwhile ally and may have been the spur to cause a nuclear armed state to go into meltdown. And, in the economic field, he appointed to his team of economic advisors the very people - like Tim Geithner and Larry Summers - who held a heavy share of responsibility for the lack of regulations over the derivatives banking sector that led to the 2008 meltdown. These same guys, along with Federal Reserve Bank Chairman, Ben Bernanke, then demanded that the US government hand over $700 billion to keep the banks afloat, including Citibank - the former managing director of which is also a member of the National Economic Council and a deputy advisor to the president.

It was, in fact, frustration with the fact that when decisions were made they always were in favour of the right and the rich, that drove the head of the Council of Economic Advisors, Austan Goolsbee, to resign and return to his teaching post in Chicago. At the behest of the White House, Goolsbee had made a big public show of denouncing the $700 billion in Bush tax cuts for the rich - only to see those tax cuts continued by the White House as part of a political compromise to get an emergency unemployment benefits package extended. Obama's new chief of staff is William M. Daley, former executive with JP Morgan Chase - a bank that has been fined billions in the last decade for its involvement with helping Enron cook its books and screw investors (Citibank was fined for this as well), bribing public officials in Alabama in order to get the city council to buy toxic derivatives that turned out to be worthless and almost bankrupted the city. And, in case you think that JP Morgan Chase has been chastened since 2008, just today it was announced that they would be fined over a hundred million dollars for, basically, bribery and political backroom deal-making:

The Securities and Exchange Commission has charged JP Morgan Securities(JPMS) with fraudulently rigging at least 93 municipal bond reinvestment transactions in 31 states, generating millions of dollars in ill-gotten gains.
To settle the SEC’s fraud charges, JPMS agreed to pay approximately $51.2 million that will be returned to the affected municipalities or conduit borrowers. JPMS and its affiliates also agreed to pay $177 million to settle parallel charges brought by other federal and state authorities.
All of which brings us back to the debt negotiations. Both Obama and the Tea Party Republicans are happy to represent - and be funded by - Wall Street. It seems likely that the majority sentiment amongst the US ruling class is for there to be some sort of compromise reached that doesn't look like a completely open and undisguised screwing of working class people while the rich get more tax breaks. There is always the danger of social explosions if working people are pushed too far. However, it has been so long since there has been any sustained mass movement in America that has truly effected change, and the union movement is practically a dead duck in the private sector, that they may have the hubris to believe that they can do anything that they want. Certainly the bailouts from 2008 suggest that they don't need to fear much of a backlash when they help the rich and leave the poor to lose their homes. I'm sure that they are watching the polls to see which way public support falls. But either way, the parameters of the alternatives on offer are so narrow as to be indistinguishable.

Claiming the Republican agenda as his own |
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