In his State of the Union address, Obama boldly announced a three-year spending freeze starting in 2011 that will affect every area of the budget except the “Defense” budget, Veterans Administration, Social Security, Medicare and Medicaid. This threatens funding for education, transportation, fiscal aid to state governments, housing and food assistance, all kinds of regulatory agencies and many other as yet unknown essential social programs. In other words, imperialist slaughter thousands of miles away gets a vote of confidence. Social programs for the poor and defenseless are fit for the chopping block.

At a time when almost every corner of the country is mired deep in recession, the Obama administration’s spending freeze is an idea which may put a dagger through the heart of any recovery – at least if we mean recovery for the vast bulk of the population as opposed to Wall Street banks like Goldman Sachs which “earned,” through tax-payer bailouts, its greatest profits ever in the last two quarters.

One of the reasons for this proposal is that the White House is smarting from the surprise defeat of the Democratic candidate for the Massachusetts Senate seat. It wants to court centrist and right-wing voters by further abandoning the pretense to a liberal domestic agenda. Despite the fact that it was the loss of only one Senate seat from a massive 19-seat majority, Democrats and corporate media commentators were quick to say how this is a major game-changer that will make it necessary to scale back on the Democrats’ major legislative agenda. It’s funny how during the Bush years, when the Republicans never had a filibuster-proof majority, they still managed to carry out their agenda full throttle, with the support or acquiescence of many Democrats.

Consequences of the Spending Freeze
A likely casualty of all this talk of freezing government spending is the already anemic effort to provide fiscal relief to state and local governments facing gaping budget deficits. While there were some limited funds allocated for states in the Jobs for Main Street Act passed by the House back in November, the Democratic-controlled Senate, in typical fashion, whittled it down and passed a $15 billion bill that included virtually no aid to states and localities.

The presumption is that they would pass additional mini-jobs bills in the coming months. But the Senate Democratic leadership has not given very many details on what the next leg of jobs bills would be or if they would include substantial aid to the states and localities. The state budget deficits for 2010 and 2011 are projected to reach a staggering $375 billion. Failure to provide aid to state governments to shore up budget deficits will make mass layoffs and cuts in services all but inevitable. (http://www.themiddleclass.org/bill/jobs-main-street-act-2009)

The Center for Budget and Policy Priorities predicts a minimum of almost a million jobs will be lost without federal aid to the states.

In New York City, for example, if Governor Patterson’s state budget cuts of $1.3 billion passes the legislature, the city “will have to lay off more than 10,000 public workers, in addition to 8,500 teachers”(Reuters 1/25/2010). In addition to job losses, there are proposals to cut services across the country. Colorado Springs, CO, budget cuts will mean “the city-run Colorado Springs Utilities will shut down 8,000 to 10,000 of more than 24,000 streetlights.” (www.denverpost.com 1/31/2010) Education is also under attack. At the end of last year, the University of California Board Of Regents approved a massive 32% increase in across-the-board tuition. The story is more or less the same across the country.

In this environment, what we need is not posturing about fiscal responsibility but to act fast and prevent the bleeding of jobs in the public sector.

“Liquidate the workers…purge the rottenness”
Liberal economist Paul Krugman of the NY Times expressed shock at the idea of a spending freeze right now, in the midst of double-digit unemployment. He points out that the only thing standing between the present situation and a double dip recession is government spending. In a blog post on January 26 titled “Obama Liquidates Himself”, Krugman was apoplectic, making the point that the president may be harking back to the program of Herbert Hoover’s Treasury Secretary Andrew Mellon whose proposed solution to the Great Depression was: “liquidate the workers, liquidate the farmers, purge the rottenness.”

The message from the White House and the ruling class as a whole is pretty clear. Since November 2008, they forced us all, the vast bulk of American workers and poor, to hand over tax dollars to bailout Wall Street. Because of our exceeding “generosity,” Wall Street executives, the creatures recently celebrated by Obama as “savvy businessmen” (Bloomberg 2/10/2010), were able to come out way ahead of the position they were in before the recession, collecting over 140 billion dollars in record compensation.

And now they come to us again, to ask us to further extend our generosity by bearing ever more painful cuts and layoffs. While the captains of finance swim in abundance, the lives of workers and poor sink deeper into misery and suffering.

In his blog for the Economist, online economics editor Ryan Avent offers an apt characterization of what the Obama spending freeze proposal means: “If it weren’t enough that the proposal treats voters as children and a serious problem as a political football to be kicked around, the president’s plan also appears to endanger an economy that hasn’t meaningfully raised employment in over a decade and it solidifies defense spending as the untouchable budget category.”

With layoffs, wage cuts, foreclosures, and bankruptcies already having wreaked havoc on workers’ buying power, the continued bleeding of the public sector will only make the situation worse for the overall economy. This is because one of the main reasons businesses are not hiring is lack of confidence in consumer demand. Without growing consumer demand, who can be sure there will be a market for the products of new or increased capital investments? In fact, corporations have primarily been able to return to profitability recently by using severe cost-cutting measures.

Deeper Cuts Looming
The current proposal for a spending freeze does not bode well for what might come down the road. The president issued an executive order to create a bipartisan “blue ribbon” commission to come up with more proposals on how to reduce the deficit. This will be an unaccountable body to push through devastating policies allowing politicians to escape the fallout.

For now the spending freeze may have left alone Social Security, Medicare and Medicaid simply because of the potentially vast political costs of donning the butcher’s apron with these programs on the chopping block. Yet they are among the fastest growing sectors of non- defense discretionary spending. The military budget of course is untouchable by bipartisan consensus.

The NY Times offers us a warning hidden deep in a January 26 article about the spending freeze:
“One administration official said that limiting the much smaller discretionary domestic budget would have symbolic value… ‘By helping to create a new atmosphere of fiscal discipline, it can actually also feed into debates over other components of the budget.’”

In other words, the current spending freeze proposals are intended not only for a short term political calculus to appease rightwing critics, but also to prepare the political ground for further attacks on popular social programs precisely like Medicare, Medicaid and Social Security.

Who Really Busted the Budget?
This is the sick logic of the political representatives of U.S. capitalism. For decades, they have insisted on maintaining a military budget that now exceeds the next 45 highest spending countries combined (Center for Arms Control and Nonproliferation). Every year they spend hundreds of billions of dollars in subsidies to big agricultural and technology firms. They have for years allowed the richest corporations to escape without paying income taxes. For example, “more than 60% of U.S. controlled corporations with at least $250 million in assets … reported no federal tax liability each year between 1996 and 2000 (Center for Corporate Policy).

In the last 10 years the U.S. ruling class busted the budget engaging in wars of aggression in the Middle East and South Asia. They busted the budget giving tax cuts to the wealthiest Americans. The Bush Administration was given war authorization with overwhelming support from both Democrats and Republicans while the Bush tax cuts passed with enough Democrats voting for them to avoid a filibuster. Directly or indirectly, the two parties of Wall Street and big business ensured that the taxes paid by working people went to finance the gluttony of rich bankers, military contractors and big business in general.

So now, having sent the public debt even higher into the stratosphere by bailing out Wall Street after the crash of ’08, they want to make it possible to meet these new obligations by gutting spending on programs for poor and working people. A big part of these cuts will be the continuation of massive layoffs of public sector workers.

Public employee unions are already being vilified and referred to as privileged “special interests.” The mantra goes something like this: “Families across America are tightening their belts and the government should do the same.” The ruling class is attempting to create the perfect environment to be able to say that public sector workers must accept deep wage and benefit cuts or face mass layoffs. This is the program of the ruling class all across the world that is ridden with crisis. Right now, for example, Greek public sector workers are being asked to take painful cuts as the country is facing deficits of over 12% of Gross Domestic Product, threatening the stability of the European Union (“Euro Tremors— Greece Shakes the Eurozone Foundations” http://socialistalternative.org/news/article12.php?id=1260). The reality, however, is that this program of the ruling elites around the world ignores a fundamental fact of the current global economic crisis. Private sector spending is as anemic as it’s ever been and will be so for years (cashflowanalytics.com 12/19/2009). So the end result of cutting public spending is to knock out the last legs of support for global capitalism in this era of deep recession.

Unlike most of the recessions since the Second World War, this is a deep structural crisis of capitalism characterized by the end of a whole era of growth based on debt-fueled spending and speculation. On the basis of capitalism, the house of cards constructed by Wall Street bankers has collapsed and cannot be rebuilt for years until all the excess debt built up over the years is paid down. Even then, a return to the type of growth preceding the current crisis is highly unlikely.
However, the ruling class never wants to waste the opportunity of a good crisis in order to push through unpopular policies that pad the ledgers of big business at the expense of workers and poor people. The less federal funds are committed to helping ordinary people, the more that can be transferred to corporations and the wealthy elite in a myriad of ways.

“We Won’t Pay for Your Crisis”
We don’t have to accept this! Workers in Greece have responded to the EU ultimatum by mounting multiple 24-hour general strikes and mass protests. We also have to make a stand and scream at the top of our lungs the same battle cry of the Greek workers: “WE WON’T PAY FOR YOUR CRISIS.” Wall Street and big business screwed up the economy. We bailed them out. We refuse to continue to underwrite their luxury at the expense of mass misery! We have our own proposals for cutting the deficit:

• 1. Massive taxes on the super rich and Wall Street, not working people!
• 2. An end to the five-country war in the Middle East and South Asia. Massive cuts to the military budget.
• 3. No cuts to vital social services and programs. The poor and the working class who use these services did not create the economic crisis. They should not be made to pay for the mistakes of rich bankers and big business executives.
• 4. Take over bailed-out banks and place them into real public ownership under democratic control of the population, forcing them to fork over all bonuses and profits to underwrite a massive jobs program of public works which will reinvigorate the tax base of states and localities, preventing more layoffs and cuts to services.

Need for Bold and Independent Mass Movements
Achieving these demands will require going against decades of neoliberal orthodoxy and intransigent corporate power that has grown accustomed to unchallenged supremacy. The corporate-backed politicians of both the Democrats and Republicans will not accept these demands unless forced to do so by a massive tidal wave of popular pressure.

A small but promising example we can build on is the national day of action that took place on March 4th, 2010, against budget cuts in education, initiated by California public university students and unions. Hundreds of thousands of students, teachers, faculty, staff and parents took part in at least a 100 actions in over 30 states. The movement in California has already etched a heroic history of determined struggle including campus occupations, strike action and mass demonstrations even before March 4th.

However, even there, where the anti-cuts struggle is the strongest, much bolder action involving wider sections of the working class and students will be required to actually secure victory. The powerful public sector unions have so far only engaged in limited strike action, which if extended would put enormous pressure on the state government. Activists will need to step up the pressure on union leaders to find their backbone in defense of public education and all other services that are being cut, resulting in thousands of layoffs.

Moreover, while it’s true that each state has far more resources it could bring to bear to resolve budget crises if it were simply forced to shift the burden onto corporations and the super-rich, there are strict limits as to how far they could go. Big business interests will respond by trying to hold states hostage with the threat of capital flight to more business friendly states. The only answer is to build a strong national movement that can force the federal government to bring its resources to bear as it bends to the demands listed above.

This will require social movement organizations, public and private sector unions and activists to be out front and center calling for mass demonstrations and direct action in the streets, workplaces and in our schools. Statewide protests and strike action could be linked to nationally coordinated action. Imagine, for example, if the AFL-CIO followed the leading example of California activists by calling for a nationwide day of protest against public sector budget cuts, for a massive public works program and for universal healthcare.

The AFL-CIO has the money and apparatus to make this a reality but unfortunately its attachment to the Democratic Party is a massive obstacle to such bold but necessary tactics. Time and time again, instead of charting an independent course and mobilizing for workers’ interests based on our own mass strength, the official trade union leadership has left it up to whoever is the Democratic soothsayer of the day.

Yet the Democrats have shown that save for the occasional campaign stump speech, their actual policy record once elected largely favors corporate interests over working class and poor people. This can be seen from how the Democrats and Obama have largely dropped the idea of passing the Employee Free Choice Act, which would have made it easier for workers to organize into unions.

There will be no knight in shining armor from the White House or any other quarter in official politics. As the Obama Administration and the Democratic Party continue to expose themselves as only the second party of Wall Street, ordinary workers and youth will have to rely on our own mass strength to fight for our interests. Obama will not come to our rescue like the mythologized image of President Roosevelt in the 1930s. In reality, ordinary workers in the Great Depression years had to rise up and launch a colossal wave of strikes, workplace occupations, and mass demonstrations – regularly clashing with FDR’s National Guard – before all the great public works programs and social welfare provisions enacted by Washington came into being. We need to do the same on a much bigger scale today, linking up the struggles across our communities with the fight to build a mass, independent, working-class political alternative to the corporate dominated Democrats and Republicans.