SEPTEMBER 15, 2010
Counterpunch and other venues
Driving Another Nail Into the Coffin of the New Deal
Obama’s Latest Apologetics
Alan Nasser

In Cleveland, Ohio last Wednesday and a White House press conference two days later president Obama opted full throttle for Richard Nixon’s Big Lie strategy: when you preside over a worsening disaster look your constituency straight in the eye and tell them that black is white. Don’t flinch, don’t shift your eyes. Just lie. Lie big. Then cross your fingers they won’t believe you could have the audacity.

All of the White House’s current pronouncements aim to avert large Democratic losses in the November elections, and to cover the administration’s ass in the face of economic conditions that are already worse and asymptotically approaching the worst. Wednesday’s talk touted an allegedly new plan that would address more effectively the dreadful unemployment situation: 30 million workers either can’t find jobs or are forced to accept part-time work. Friday’s press conference restated the message with an added vigorous renunciation of capitalism-with-a-human-face politics.

Obama acknowledged the train wreck but sought, as per liberal boilerplate, to shift blame to the Republicans, specifically to the “governing philosophy” of the Bush years, which Obama described as “Cut taxes, especially for millionaires and billionaires. Cut regulations for special interests. The idea was that if we had blind faith in the market; if we let corporations play by their own rules; if we left everyone else to fend for themselves, America would grow and prosper.”

Well excuse us, but weren’t these policies given their big pre-crisis push by the Republican Democrat, Bill Clinton? They exhibit one of the president’s favorite ideals, bipartisanship. Both Parties had cut taxes for the rich and endorsed deregulation; Clinton merely baptized them and passed them on to Bush, who dutifully handed them over to Obama. And about leaving working people to “fend for themselves”: is Obama’s audience to have deluded itself that the 30 million under- and unemployed have somehow managed to miss out on the benefits that Obama, Summers, Bernanke and Geithner have lavished on working people? Back in Jesuit school we used to snickeringly refer to the medieval philosopher Robert Grosseteste as “Bobby BigBalls”. The old scholastic had nothing on Obama.

The president proposed $50 billion to fund transportation development, mainly for rail lines, roads and airports. This merely extends the February 2009 original stimulus package funding of $71.76 billion for construction projects, much of which has not yet been spent and which is scheduled to expire. All this comes to a very small fraction of the $2.2 trillion the American Society of Civil Engineers shows is required to rehabilitate the country’s crumbling infrastructure. And the “infrastructure bank” Obama has concocted is yet another barely disguised subsidy to private companies; it is intended primarily as an inducement to private investment in public projects.

Obama expects us to miss that the “new jobs plan” is nothing new. It’s just a reaffirmation of Obama’s trickle-down corporate tax breaks with added perks. Firms would now be allowed an additional deduction for the full value of new capital investments and for outlays for research and development. And the latter deductions are to be made permanent. As if firms are not adding to capacity because taxes are too high! They are not investing because consumption demand is at record lows, due to unemployment, flatlined-since-1973 wages, debt deleveraging and increased savings for the upcoming rainy days predicted by the administration itself to last at least until 2012. Only a fool or a liar could think that firms will invest or banks lend under these circumstances, and Obama is no fool.

What is most significant about last Wednesday’s speech is its reassertion of Obama’s adamant rejection of New Deal liberalism. There was a flat-out dismissal of direct government creation of jobs: “I’ve never believed that government’s role is to create jobs or prosperity…I believe it’s the private sector that must be the main engine of our recovery.” There will be no public works programs. Not because they haven’t worked in the past; the WPA was a transcontinental project and employed vast numbers, and no one denies its success. Nor because of lack of need; we are in precisely the sort of situation which Keynes correctly identified as requiring government to take on the responsibility for creating useful employment. Such is the position of the most estimable of liberal economists, including Joseph Stiglitz, James Galbraith and Robert Kuttner. Obama sneeringly dismisses them as “the professional left”.

The deficit is the main pretext for the imposition of the new age of austerity, and Obama cites its threat as his reason for his ridiculous reliance on the market as savior of the “middle class”. He insists that his proposal is not a “government stimulus” and promises that it will not add to the deficit: “I am absolutely committed to fiscal responsibility, which is why I’ve already proposed freezing all discretionary spending unrelated to national security for the next three years.” He is here referring to “A New Era of Responsibility”, the title of his long-term plan for cuts in Social Security and reductions in Medicare and Medicaid benefits, among other components of the social wage.

Obama will not aver these Reaganite intentions, and he deliberately deceives on this issue in the course of…. distinguishing himself from Republicans! He pledged to fight “the efforts of some in the other party to privatize Social Security, because as long as I’m president, no one is going to take the retirement savings of a generation of Americans and hand it over to Wall Street.” The man knows full well that the present strategy for cutting Social Security is not privatization but reducing benefits, extending the retirement age and and offering “the opportunity to own a portion of your own Social Security retirement account”, i.e. private “add-on retirement accounts”. These aims will be recommended by his National Commission on Fiscal Responsibility and Reform, which is of course not a Republican creation.

“Once the bipartisan fiscal commission finishes its work,” Obama confessed, “I will spend the next year making the tough choices necessary to further reduce our deficit and lower our debt.” It should be common knowledge that talk of “tough choices” is always doubletalk for unpopular measures which will make things even more “tough” on working people.

The Washington Post’s (September 9) comments on the speech cites several economists as estimating that Obama’s proposal might create tens of thousands of jobs -and that’s it- a year from now. The Post adds “This would be a drop in the bucket compared with the 7.6 million jobs lost during the recession that began in December 2007.” No matter, professional liberals will swallow it whole.

Their eyes ever on November, the Democratic leadership had little or nothing to say about the proposals. With negligible Democratic support and certain Republican opposition, they are not likely to pass. In that case, the Democratic response is predictable and robotic: House Dems will claim that it would be foolish to have supported the proposals without the likelihood of Senate support, which from the beginning was not forthcoming. They will fail to mention that the Democratic leadership in both houses uttered scarcely an encouraging word about the proposals. The Democrats will announce that the new jobs plan failed because the Republicans would not cooperate. The poor Democrats hanker after bipartisan niceness, but the mean old Republicans snub their overtures. We are supposed to forget that the Democrats hold large margins in both houses.

Obama set the stage for invoking the Republican-obstructionist excuse by contrasting himself with the Republicans on whether to extend Bush’s tax breaks for the wealthy. Obama would continue the cuts for 98 percent of all households, those earning less than $200,000 a year for an individual or $250,000 for a couple. These are allegedly not “wealthy”. The remaining upper 2 percent don’t get Obama’s official blessing, but their incomes too will be Bush-breaks blessed if Senate majority leader Harry Reid and former Office of Management and Budget head Peter Orszag have their way. Both have indicated that they support the extensions for all households above the cut-off level. If they prevail, it will be the Republicans’ fault. As if.

David Broder’s Thursday op-ed Washington Post piece described Obama’s speech with uncommon candor: “What [Obama] said this week is that he is now prepared to adopt business’ own favorite remedy, and subsidize private firms in hopes they will invest and hire more rapidly. The centerpiece is a classic bit of pro-business tax manipulation, allowing immediate expensing of equipment purchases and making permanent the research and development tax credit. This is the kind of tax reform Republicans can love, and it’s now been placed on offer by a Democratic president, even before the election results are weighed.”

In his Friday press conference, Obama simply reiterated the content of the Cleveland speech, misdescribed the 9.6 percent unemployment rate as “9.5 percent” and restated more emphatically his antipathy to New Deal priorities.

The hypocritical attempts to win support for his proposals by distinguishing himself from the Republicans were if anything more audacious than Wednesday’s mendacities: “Prior to us getting here, as I indicated before, you had a set of policies that were skewed toward special interests, skewed toward the most powerful, and ordinary families out there were being left behind. And since we’ve gotten here … on a whole range of issues over the last 18 months, we’ve put in place policies that are going to help a middle class and lay the foundations for long-term economic growth.”

The ingenuity of the doublespeak is wondrous. Prior to Obama’s tenure, policies were indeed “skewed toward special interests, skewed toward the most powerful, and ordinary families out there were being left behind.” But Obama’s words are entirely compatible with the fact that nothing has changed in the meantime. His administration is “going to” help “a (sic) middle class” and enable long-term growth. He’s right about that: it hasn’t happened yet. His reverse-Keynesian economic policies are in effect a promise that it won’t happen at all.

Obama showed his colors most brutally in his response to a reporter’s question: “On the economy, could you discuss your efforts at reviewing history as it relates to the poverty agenda, meaning LBJ and Dr. King?”

Obama’s response was a paradigm of pre-Keynesian dogma: “Now, I think the history of anti-poverty efforts is that the most important anti-poverty effort is growing the economy and making sure there are enough jobs out there—single most important thing we can do. It’s more important than any program we could set up. It’s more important than any transfer payment we could have. If we can grow the economy faster and create more jobs, then everybody is swept up into that virtuous circle…”

That has been Obama’s recurring theme, The Audacity of Nope. The rejuvenation of the private sector is the key to recovery. Any government enabling may only take the form of “transfer payments”…. to the perps! There will be no such payments to the working majority. If we lavish a fortune on the windfall-takers, they will employ and lend to increasingly penurious debt paeons. He’s got to know that’s pure horseshit.

How long will it take the street liberals to wake up?

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Alan Nasser is Professor emeritus of Political Economy and Philosophy at The Evergreen State College. His book, The “New Normal”: Persistent Austerity, Declining Democracy and the Globalization of Resistance will be published by Pluto Press in 2013. If you would like to be notified when the book is released, please send a request to nassera@evergreen.edu

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