At a February 26 press conference, President Obama said: “There are times when you can decorate your home and there are times when you have to fix its foundation. Today we are fixing the foundation.”

Do the president’s policies amount to “fixing the foundation” of our economy?

The $787 billion stimulus package includes spending on infrastructure projects, schools, aid to states facing massive budget deficits, extending unemployment relief, and more. Obama’s $3.6 trillion budget includes a 7.5% increase for Health and Human Services; 34.6% increase for the Environmental Protection Agency; 18.5% increase for Housing and Urban Development; and a 12.8% increase for Education.

Many workers and young people undoubtedly will view these policies as a relief and a departure from eight years of the disastrous Bush Administration.

The Nation magazine calls the budget proposal “an audacious plan to transform America.” Financial Times Columnist Clive Crook calls Obama’s proposals “a liberal’s dream of a new New Deal.”

The stimulus package and Obama’s budget do represent a real shift in approach from the free-market fundamentalism that has dominated policy since the 1980s, which reached extreme heights under Bush. Obama’s policies will likely ease some of the suffering – and the anger – created by the collapse of the capitalist economy.

Is It Enough?
The Administration’s goals are to create or save three to four million jobs by the time they take full effect in 2010 and 2011. But there are already over 13 million unemployed on the official roles, and ten million more if you count discouraged workers who are off the unemployment roles and part-time workers who need full-time jobs but can’t find them.

With new job losses running at a rate of over 500,000 per month, the reality is that Obama’s policies are extremely inadequate. Even pro-capitalist economists like Paul Krugman are sounding shrill warnings over Obama’s limited response.

David Rosenberg, chief economist at Bank of America Securities-Merrill Lynch, said: “We are really in a vicious cycle. This problem requires a massive positive shock to aggregate demand. The fiscal package as it is constructed falls short on that score.” (Bloomberg, 3/10/2009).

Who Will Pay?
The White House plans to pay for all this new spending by running an enormous budget deficit of $1.75 trillion in 2009. Massive budget deficits today mean massive budget cuts tomorrow, and higher taxes on working people.

Obama proposes to shift, in 2011, the top income tax bracket from 35% back up to $39%, where it was under Clinton. But this is still far below the 70% tax the super-rich paid for decades through the late 1970s.

Meanwhile, far more is spent bailing out Wall Street than Main Street. The $787 billion stimulus package and the social spending in Obama’s budget are dwarfed by $12.8 trillion spent or committed to the bank bailouts.

Why is the Obama Administration so hesitant to redistribute the wealth and restimulate demand?
While free-market fundamentalism is now widely discredited in Washington, Democratic Party leaders remain fundamentally beholden to big business, which funds their careers and party institutions.
They refuse to take measures that would truly stop the economic decline because that would necessitate a drastic redistribution of wealth and economic power to working-class people.

A Socialist Stimulus Plan
The resources and technical know-how exist to reverse the job losses, rebuild the economy, and meet the basic needs of everyone. However, we cannot expect working people’s needs to be put above Wall Street unless there is a mass movement in the streets, workplaces, and communities.

We need a socialist program to end the economic crisis and safeguard workers’ living standards, and a fighting strategy to make this program a reality.

A genuine public works program employing tens of millions under union wages and conditions. No hand-outs to private contractors, now a major recipient of stimulus money, who skim off fat profits at the expense of workers’ wages and benefits.

No more layoffs! Take failing industries into public ownership under the democratic control of representatives of the workers and the broader community, and retool them towards socially necessary and green production.

$12.50/hr minimum wage or $500/week minimum income.

No foreclosures or evictions! There are too many empty homes and too many homeless! Renters or homeowners should be allowed to live in their homes at affordable rents or mortgages.

Pass the Employee Free Choice Act to empower union organizing. This will make it easier for workers to use their collective power to fight back against cuts in pay and benefits.

A single-payer universal healthcare system. No more profiteering off of our healthcare!
Free quality education from pre-school through college.

How Do We Pay for All This?

  • End the wars in Iraq and Afghanistan. Bring all the troops home now!
  • Slash the military budget, which will go up 24% to $689 billion in 2012 under Obama.
  • Use the money saved to plug state and local budget deficits, stop cuts in education and social services, and stop layoffs of public workers.
  • Nationalize the banks under democratic control by elected representatives of small depositors, pension funds, bank workers, and the wider public.
  • Massive increase in taxes on the super-rich.
  • Draw up a national economic plan on the basis of human need and not profit, to be run by democratically elected councils of workers and consumers.

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