The two-party political system is facing its biggest challenge since the 1930s. With the exception of Marxists such as the CWI and a few other notable economists, no one was prepared for the deep economic recession of 2008 and the subsequent economic stagnation that has engulfed the country. There are no simple ways to get the capitalist system out of its present prolonged stagnation and crisis. The ruling elite nationally – and internationally – are at a dead end.
Obama’s stimulus package was very weak and thus failed to pull the economy out of the recession. It is possible a new stimulus package could still emerge if Obama can enact it into law. This would particularly be the case if a powerful movement began from below.
Both major parties, along with capitalist governments around the world, are following a policy of austerity in a drastic attempt to make their own countries more competitive than their rivals. Obviously, it is impossible for the capitalist class in each country to achieve this. The consequence of this present bipartisan policy of cuts has been a one-sided war on the working class and poor, pushing the economy towards a double-dip recession. With deficit reduction becoming the policy of both major parties, and with state and local governments facing endless deficits, the chance of any serious growth is low and the threat of a double-dip recession is very high.
Despite the heated rhetoric from both parties, neither party can get us out of the crisis. Obama is still holding out for an element of stimulus, but even if he could get a majority for his limited proposal of stimulus spending, it would be like trying to use a bucket to empty out an ocean of debt, deficits, and falling incomes. Even Roosevelt’s massive jobs and infrastructure spending program of the 1930s was only a temporary success. The economy fell into a new recession in 1937, and only massive war spending in preparation for U.S. entry into World War II got the U.S. out of the depression of the 1930s. Also, attempting to spend the economy out of the crisis will exacerbate the deficit and the national debt, storing up future problems.
The ruling elite understand the need to make U.S. capitalism more competitive with its rivals and that, to do that, they need to claw back gains won by the U.S. working class over the last 70 years. In order to succeed, they need their political system to deliver, but the checks and balances built into the system are designed to prevent sudden change. So, in order to attack the working class in the way they want to, they need to pressure both parties to act in a coordinated and ruthless fashion.
However, with mass anger from below pressing on both parties, this is harder to achieve. In fact, the breakdown in relations between the parties led to a complete collapse of attempts to slash entitlement programs during the last year. This happened despite Obama’s attempt to use his presidential office to forge some sort of agreement.
Recent events have also distorted the two-party political system. U.S. policies have been dominated by very specific sections of the capitalist class: finance capital and extraction industries, in particular oil. These capitalists have been able to make their short-term interests – access to oil markets, unregulated capitalism, and opening markets to free trade – the policies of the state. These policies have dominated the tops of both parties. However, these policies also led to massive inequality and the savaging of the middle class as the manufacturing sector, owned by another section of the capitalist class, was weakened. Facing a structural crisis of capitalism alongside the shattering of the middle class, not to mention ecological crisis and the potential threat of more extensive popular revolt, other capitalist voices, such as those of Warren Buffet, Paul Krugman, and Nouriel Roubini, are now being raised to curtail some of these recent excesses.