As budget-cutting guts needed social services and jobs, many progressive workers and young people are hoping the Obama administration will provide some relief. But, instead of stepping up to the plate to combat the budget-cutting policies of Republicans and to demand more funding for jobs and social services, Obama has laid out a strategy to compromise with Republicans to win the so-called political center.

First he capitulated to Republicans on extending, and even expanding, tax cuts for the super-rich. Then he announced his budget proposal for 2012 with $1.1 trillion in spending cuts over the next decade. These include cuts to necessary domestic programs and community services, causing pain to workers and the poor. At the same time, these cuts will further weaken demand for goods and services, pushing the economy closer to a double-dip recession.

In another signal of his political intentions, Obama appointed William Daley as his administration’s new Chief of Staff. Thomas Donahue, President of the U.S. Chamber of Commerce, states: “I think it’s a very, very strong choice. Daley is a business person who understands politics.”

Democrats Turn to Budget Cuts
This clearly indicates a new phase in the evolution of the Obama administration: a further rightward shift in an attempt to grab the so-called political center ahead of the 2012 elections. Part of this has been to accept the Republicans’ logic that budget cuts will be good for the economy and the American people. As Robert Reich, Secretary of Labor in Clinton’s first term, states: “That means the Great Debate starting this week will be set by Republicans: Does Obama cut enough spending?” (Huffington Post, 2/13/11).

The next few months of Congress will likely be stormy. Under pressure from newly-elected Tea Party members, House Republicans are demanding a drastic $61 billion in social program cuts from this year’s budget. Obama and the Democrats, instead of exposing this disastrous policy, have gone along with it piecemeal, adopting $6 billion in cuts every two weeks.

But this cannot continue. At some point, a major battle will erupt. Republicans are threatening to shut down the government if their policies are not adopted. We can expect Obama and the Democrats to make a stand at some point. However, by accepting the need for cuts they massively confused the public that budget cutting is a way forward to reviving the U.S. economy.

Lurking in the background are the really important programs: Social Security, Medicare and Medicaid. Obama’s bipartisan budget commission called for increasing the Social Security qualifying age to 69; a reduction in retirement payments; a 15-cent increase in the gas tax; increased co-pays as well as benefit cuts to Medicare and Medicaid; and cutting 200,000 federal jobs while freezing pay for those remaining.

Both parties are petrified of being seen leading the charge in implementing such unpopular policies due to their fear of a public reaction. The NY Times stated: “Mr. Obama said he and Republican leaders are ‘going to be in discussions over the next several months.’ He said moving forward required ‘a spirit of cooperation between Democrats and Republicans. And I think that’s possible,’” (NY Times, 2/15/11).

These words are a serious warning for all workers, youth and poor people. Bipartisanship is all about making deals behind the public’s back so neither party can be seen holding the knife. Senate Republican leader Mitch McConnell spelled out the process: “It doesn’t have to be in public,” he said. “We all understand there are some limitations to negotiating significant agreements in public,” (NY Times, 2/15/11).

But big business, which funds both parties, is demanding that deep budget cuts are pushed through. With capitalism in a deep structural crisis, U.S. big business wants to improve its profitability and steal an edge over its rivals by cutting the cost of social programs. Under this logic, tax cuts for businesses are good, and wages and benefits for working people and the poor are bad. Yet it is spending by workers and governments that is essential to pulling this economy out of the doldrums, not tax cuts for the rich.

Robert Reich explains: “Big American companies are sitting on almost $2 trillion of cash because there aren’t enough customers to buy additional goods and services. The only people with money are the richest ten percent whose stock portfolios have been roaring back to life, but their spending isn’t enough to spur much additional hiring.

“The Republican bromide – cut federal spending – is precisely the wrong response to this ongoing crisis, which is more analogous to the Great Depression than to any recent recession. Herbert Hoover responded the same way between 1929 and 1932. Insufficient spending only deepened the Great Depression,” (Huffington Post, 2/13/11).

Socialist Policies Needed
The problems of the economy are rooted in a decaying capitalist system that is choking on massive debt and collapsing property prices triggered by decades of reckless and selfish activity by big investors looking to maximize their profits. The wreckage left from the financial implosion of 2008 and the Great Recession still scourge the land.

Tens of millions of workers and their families are still unemployed, underemployed, marginally employed or too discouraged to seek employment. Millions of these no longer turn up on the official unemployment statistics, let alone figure in the national debate. Tens of millions of workers are delinquent in their mortgages, or their mortgages exceed the value of their imploding home values. This has all worsened under this so-called economic recovery.

Neither shoveling more money into the hands of the super-rich and big business nor cutting budgets will kick-start this economy in a way that can put millions back to work and raise the living standards of workers. It will only fill the pockets of the rich and lead to new speculative bubbles.
What we need is an immediate program of massive public spending to create jobs and provide massively expanded services to speak for the desperate needs of working-class communities. This should be paid for by increased taxes on the super-rich and big business. To adopt such policies will mean challenging the power of the 500 huge banks and corporations that dominate the economy and our political system, and bringing them into public ownership under the democratic control of the majority of society.

Of course, neither major corporate party will adopt these policies. That’s why we need to build a new working-class movement and support for a socialist society that can end the grief and misery caused by this diseased capitalist system.