After a week of economic and political turmoil, on Friday, October 3rd, Congress bowed down to Wall Street and passed the largest corporate welfare package in U.S. history. On top of the $700 billion package, Democrats agreed to add another $150 billion in tax cuts for the rich to secure more Republican support. Many lawmakers conceded this bill may only be the first installment in further attempts to make taxpayers and working people pay for Wall Streets enormous gambling debts.
Worse still, the bailout hasnt slowed the downward spiral of the global economy. Following the Friday vote, markets worldwide continued to tumble. On Monday the Dow plunged over 600 points, dipping below 10,000 for the first time in four years.
Over the weekend, credit markets went into deep freeze amid news of more bank failures in Europe. 159,000 jobs were lost in September, the worst month in five years. Meanwhile, as working people anticipate further economic pain, new reports show consumer spending for the quarter will almost certainly shrink, the first quarterly decline in nearly two decades (NYT, 10/6/08). For over a decade, debt-financed spending by American workers has been the lynchpin of the entire world economy, so this news, while not unexpected, represents another severe blow to economic confidence.
This economic crisis, the worst since 1929, is only in its opening stages. But it has already wreaked political and ideological havoc, severely undermining essential pillars of U.S. capitalism. Numerous commentators have declared the end of free market ideology. For the Democrats and Republicans, the timing of this crisis just weeks before the elections could not have been worse. While economic anxiety is undermining support for McCain more than Obama, the $850 billion Wall Street bailout exposed both parties as defenders of big business.
The initial defeat of the bailout package in the House on September 29th was the byproduct of fierce public opposition. However, without a mass working-class political movement offering a clear alternative plan to confront the economic crisis, the ruling class was able to use fear of a depression to rally enough votes in Congress to pass essentially the same bill four days later.
The bill contained no meaningful oversight for how Treasury Secretary Paulson could spend the $700 billion. The proposed independent panel and Congressional oversight committee will consist of a small clique of Wall Street insiders vetted by Henry Paulson, himself a former CEO of Goldman Sachs. This is legalized corruption on a colossal scale.
In collusion with the Bush administration, House Democrats voted three to one for the bill, allowing right-wing Republicans to pose as principled defenders of Main Street by voting 108 to 91 against. Obama in particular used his authority with the Black Congressional Caucus and freshman Democrats to shore up support for the bill.
In recent weeks, many have paid grudging tribute to Marxs economic ideas. But the mid-week scenes of Congressional leaders huddled in the White House for closed-door strategy discussions with Bush, Obama and McCain provided new credence to Marxs famous explanation of capitalist government: The Executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.
The Wall Street bailout does absolutely nothing to help families facing foreclosure from being kicked out of their homes. It does nothing to reverse declining wages and rising prices. There are not any provisions forcing the banks receiving the bailout to invest in job creation programs or any other economic initiative aimed at boosting working peoples spending power. This bill was aimed solely at protecting the most rapacious, profit-hungry Wall Street capitalists and the financial system they use to exploit the rest of us.
As Michael Moore pointed out: The richest 400 Americans — thats right, just four hundred people — own MORE than the bottom 150 million Americans combined. 400 rich Americans have got more stashed away than half the entire country! Their combined net worth is $1.6 trillion. During the eight years of the Bush Administration, their wealth has increased by nearly $700 billion — the same amount that they are now demanding we give to them for the bailout. Why dont they just spend the money they made under Bush to bail themselves out? Theyd still have nearly a trillion dollars left over to spread amongst themselves!
House Speaker Nancy Pelosi led the charge to deceive U.S. workers, claiming that rather than protecting Dow Jones, the bill was passed on behalf of Mr. and Mrs. Jones of Main Street. But even pro-capitalist economists acknowledge the bill is nothing more than a band aid on the open sores of a failing US economy.
While failure to pass the bailout would have caused even further panic among investors, so far it has not provided any real respite from economic bad news. This is because the economic crisis is rooted in the collapse of the housing bubble, which was the foundation for the explosion of cheap credit and the debt-financed boom of recent years. With living standards falling and unemployment rising, more workers are going to be unable to repay their mortgages. This crisis is only going to worsen.
Along with that has been the collapse of the speculative bubble in derivatives and other speculative investments. This is infecting the traditional banks and leading to a virtual standstill on credit markets, with banks refusing to lend to each other and other businesses at affordable rates. With workers and businesses unable to borrow money cheaply, the economy will slow even more, throwing the U.S. and world economy into a painful recession.
Giving more handouts to the rich and Wall Street will not turn the US economy around. It only lines the pockets of the rich and enables them to demand more cuts in wages and benefits from workers to pay off their massive debts.
Bailout Main Street, Not Wall Street!
The events of recent weeks will drive home a crucial lesson for the most class-conscious workers and youth: big business and their two political parties are preparing more brutal attacks on working people to make us pay for their crisis. As every previous capitalist crisis has also confirmed, it will only be mass movements of working people, organized independently of big business and their political parties, that can offer a way out of the economic downturn.
Wall Street banks are the leading contributor to both Obama and McCains campaigns, according to the Center for Responsive Politics. These are not philanthropic donations to the democratic process! They are calculated investments and these bankers expect a fat return. Now Obama, McCain, Bush, and top Congressional leaders have delivered to their paymasters as never before.
We need our own political party that stands up for the millions, not the millionaires. A genuine party for working people would not accept any contributions from big business. It would prevent its elected officials from receiving more pay than the workers they represent, and hold them accountable to a pro-worker, antiwar, and environmentally sustainable program. Now more than ever, building such a mass workers party is on the agenda. Especially in the event of an Obama victory, millions will experience firsthand the pro-corporate betrayals of the Democratic Party.
A crucial task in the next month is to use the heightened political atmosphere of the elections to prepare the ground for building a working-class political alternative. This means boldly calling for a break from the two-party system, and urging the strongest possible protest vote against them. Socialist Alternative is calling for a vote for Ralph Nader, who is on the ballot in 45 states across the country and is actively campaigning against the Wall Street bailout while putting forward a pro-worker, antiwar agenda.
The struggle in the electoral arena must be combined with building movements in our communities and workplaces against all attempts of big business to make working people pay for their crisis. We have just entered a new a volatile period in U.S. and world history. In the coming months and years, as capitalism fails to offer any solutions to the problems facing working people, increasing layers of humanity will begin to question this rotten system and open up to the idea of a socialist alternative.