Obama Wakes from his Beauty Sleep

The American Jobs Bill Speech, Thursday, September 8.

Since the Simpson-Bowles Commission released its findings in December 2010, the bi-partisan discussion among both Democrats and Republicans has been about deficits. The basic question was how much to destroy the ‘safety net’ for the working class, and how much to hand money up to the wealthy and the corporations. Like any clever bill, a few good ideas nestled next to many reactionary ideas. Of course, they all had an equal chance of passing, didn’t they? In a sense, there was a complete continuum between the Tea Party and the Democratic Party leadership about the paramount importance of deficits, going on for 9 months now. Snzzzzzzzzzzzzz.

All of a sudden, as the stock market starts falling again, and the threat of another ‘official’ recession advances (as if the real recession isn’t still going on…) Obama has suddenly woken up and realized he has to get elected. Of course, to the short-term deficit geniuses of the U.S. government, this was all unexpected! In order to be re-elected, Obama had to attempt some kind of a successful deal with the Republican Party on ‘jobs.’ Hence the September 8 speech.

This speech was given directly to the Republicans, and no one else. Yes, The Mustache – Richard Trumka - sat in the audience and thrilled once again to hear about how construction workers and teachers might be getting jobs. Or that rich people should pay their ‘fair’ share. Yes, the Alliance for American Manufacturing, also affiliated to the AFL-CIO, might hold their nose, but they were also generally enthusiastic. Yet nothing in this proposed bill hasn’t been tried before or agreed to before by some or all members of the Republican Party. Bloomberg even called it borrowing from an ‘old playbook.’ The AFL-CIO probably appreciated that the topic now was on jobs, and not the ‘deficit’ – but if you look carefully at this plan, it is also a sleight of hand – using the jobs ‘emergency’ to further the capitalist agenda. The chatter after the speech was all about how it didn’t have a chance of passing, and so was a political move by Obama to finally show he cared about jobs – again.

The real question is – what if all or some of these suggestions DO get passed into law? Because this reveals what the Democratic Party leadership is really all about. Let’s look into them in a bit of detail.

First off, Obama said, “it’s all going to be paid for.” How? The “Super-Committee”! This body of Democrats and Republicans is tasked with adding the $447B price-tag for this bill to their deliberations. If you’ve heard them talking, they thunder about not listening to ‘special interest’ groups, which presumably also means their constituents. We’ve seen this before. A member of Congress is elected, and then does what he is supposed to do by the unwritten rules of the ruling elements in the society, not what he was elected to do. Which shows every day that the bourgeois democratic system in the U.S. doesn’t work. What this means, if you read between the lines, is they will do what is best for the ‘country.’ And what is best for the country they understand is what is best for the capitalist economy. Which means, to hell with my constituents, I will cut spending like a muthafucka as I'm being told.

So how is this a stimulus if they are going to cut $447B down the road? The only difference is timing. As one friend put it, they are ‘buying time.’ It might ‘dent’ another recession just enough to get the election over with. Overall, however, there will be insufficient Keynesian impact to this bill, even if passed, but many nasty effects that will last longer.

So what are the elements?

1. The biggest part of the bill is another tax cut – 3.1%. It is a payroll tax cut for businesses and workers, the money coming from Social Security taxes. The theory is that demand will increase, and pay Social Security back. However, as with most tax cuts, they actually have very little ‘stimulative’ effect. Most people use them to pay off debts, or stick the money in the bank – as corporations have been doing for years now. Very few jobs will be created and very little will be bought. If you look at the ‘Cash for Clunkers' program and the credit for purchasing a house - both were far more direct attempts to channel money into the economy – and their effects wore off almost immediately, a quick high. What this proposal will really do is further deplete the Social Security fund, which has been robbed by bourgeois politicians for years to pay for other programs. This is another blow to Social Security. This tax cut is part of the $250B in new tax incentives, now added to the ones passed during the deficit ‘emergency.’

2. More tax breaks with shaky effects: Tax holiday for new hires for one year. Bloomberg pointed out that businesses hire people for longer than one year, so the only people that might use this are seasonal or low-end service/retail businesses. This will not create long-term decent jobs. And again, fewer taxes paid by businesses means less tax money to fund municipal/state and federal jobs. Can you say 110,000 layoffs at the Post Office? Obama also proposed a fifty percent reduction of the tax rates businesses pay on the first $5 million in payroll; and a $4,000 tax credit for employers who hire long-term unemployed workers. But do they have to keep them? No.

3. A plan, now being used by Georgia Republicans, to make unemployed workers work for free for businessmen, which Clinton initiated many years ago under the “Workfare” label. I.E. taxpayers are directly subsidizing businessmen to hire people. More corporate welfare. What will stop them from not hiring people they intended to hire and instead hire ‘free’ labor? Nothing. Perhaps the next step will be lending out prison labor from our federal lockups to needy businessmen. Oh, wait, we do that already. Will they prevent this practice or stop the fake B1 Visa program to create jobs? No. That would piss off the corporations, you see.

4. Obama again brought up the ‘free trade’ bills for South Korea, Columbia and Panama – three of our direct client states – as a way to ‘create’ jobs. This plan has been floated since 2010. Identical to the debate over NAFTA, (as chronicled in the book on Wal-Mart, “God & Walmart,” reviewed below) Obama waived the ‘vision’ of American cars being sold in South Korea. Of course, under NAFTA, the exact opposite happened, and Mexican goods appeared in American Wal-Marts. And now, of course, Chinese goods are in Mexican and American Wal-Marts. The Obama administration has already put a rider to these bills concerning ‘possible’ American job losses and ‘retraining’ – so even they know what it will lead to. The AFL-CIO sees through this scam, of course, but John Boehner clapped! So the Republicans are on board. The “Jobs Council” Obama mentioned in the speech is made up of businessmen from different industries – which is sort of like putting the foxes in charge of preparing the chickens.

5. The best parts of the bill is some amount between $105B//$125B/$175B (estimates are all over the place) for aid to states for education and spending on infrastructure, which might prevent some teacher or municipal/state worker layoffs in the near future, and hire some construction workers. This is similar to the ‘shovel ready’ part of the 2009 stimulus bill. However, again, the money is being taken out on the back end by the ‘Super-Committee’, so this is really a ‘take from Peter to pay Paul’ scheme. Again, buying time. As the Keynesians are pointing out, even in the short term, too little to make a difference - similar to the first Obama medicine.

6. Infrastructure Bank – seems to be some kind of publicly-run hedge fund that will pay interest to private parties who invest in infrastructure projects. Is this a wedge to get private investment owning 'public' property?

7. $62B (per Bloomberg) will be to extend unemployment benefits for a year. If you noticed, the deficit bill passed by the Democrats and Republicans a few months ago after Naomi Klein's “U.S. deficit ceiling emergency” (see below – the ‘Accident on the Potomac’) actually got rid of extended unemployment benefits, so Obama is now trying to slip this back in. At this point, so many people have been out of work for so long that it is unprecedented in recent labor history. And these extensions have never been needed before. However, this, again, does not create jobs or aggregate demand.

8. Another tax break for businesses to be able to write-off investments quicker. Again, nothing to do with jobs. This was also in prior bills.

9. Help with refinancing underwater homes at 4% through FNMA/FMC. Again, not directly connected to jobs, but it would put more money in people’s pockets. However, will they spend that money on new purchases? The odds are no – what gets people to spend is a real job. Obama’s prior mortgage program basically did almost nothing to stem foreclosures. Also part of this is a plan to fix up neglected foreclosed homes. However, private parties seem to be already doing this, so this could be part of another subsidy to businessmen.

10. And quite noticeably, Medicare had a big red target publicly painted on it by this ‘Democratic” President. Obama vowed that Medicare, ‘with an aging population and rising health-care costs, is spending too fast to sustain the program.” This repeats in public Obama’s private proposal in the ‘grand bargain’ with Republican Paul Ryan to cut Medicare. And who is raising health-care costs? Hmmm? Big Pharma? HMOs?

11. There was no proposal to ‘tax the rich’ or the corporations, only rhetoric. Richard Trumka, sit down at the children's table.

Right now, this is a ‘mini-stimulus’ bill that undermines Social Security and Medicare, will not result in long-term job growth and in some respects, undermines long term job growth through tax cuts and mini-NAFTAs. It continues the redistribution of wealth up the ladder through tax cuts. Even on its own terms – as a jobs stimulus – it is insufficient – and will not create enough jobs. It does not mention the elephant in the room – military spending – perhaps because the U.S. will never seriously drop military spending due to its key role in absorbing surpluses and policing the world for corporations.

This bill continues to pay bi-partisan credit to the myth that small businessmen are the ‘job creators.’ Given their failure since fall 2007 to create jobs, I’d say continuing to buy into this myth is merely throwing good money after bad. Of the 33 million corporations, partnerships and sole proprietorships in the U.S. only 200 corporations generate a 3rd of the profits and income. You do the math.

Capital in the U.S. is lurching from political paralysis to fighting the deficit to short-term stop-gaps. This bill is a last attempt to again come to terms with a situation that has been going on for 4 full years. They are betting the U.S. population will once again be satisfied with a small carrot, rather than the long stick. Their paramount purpose is to prevent any kind of mass mobilization outside the bourgeois parties – strikes, demonstrations, political activity, occupations, bombings etc. And so far, their bet that a Democratic president could control the mass movement better, in a time of economic and military failure, has been successful. Anti-war organizations like Move-On showed their real colors and shut up. The AFL-CIO is making 'noises' and tiny moves, but still ultimately buys the folderol. The 'left' of the Democratic Party has created no primary opponent to Obama. Not one single large organization has seen through the con-job, except perhaps parts of the Latino movement.

The real question is, is being afraid of Rick Perry enough to convince people that a 'soft' Rick Perry is a viable option?

Red Frog
September 10, 2011