The first 100 days of the Obama administration have made clear that the tremendous expectations driving last year’s dramatic election are already coming into conflict with the realities of US capitalism in crisis. The desire for change on the part of ordinary Americans could not but be reflected in early policy decisions. However, there is deep counter-pressure from US business and the military to which Barack Obama is already bending.
The reversals of George Bush’s policies on “moral” issues have been both symbolic and important; the lifting of bans on stem cell research and on US funding for international organisations that offer advice on or carry out abortions are both unquestionably progressive. Obama has also passed executive orders requiring employers to notify workers of their right to join a union and giving preference in awarding federal construction contracts to union labour. Such reforms—even if they do return to pre-Bush policy rather than institute anything really new—mark a significant ideological break from the right wing moralism of the Bush era, and they make a difference to people’s lives. The sense of the wind being in progressive sails has no doubt also contributed to the votes for gay marriage in three US states (although Obama himself does not favour same-sex marriage).
Most importantly, Obama has ordered a $787 billion stimulus package for the economy and his $3.2 trillion budget for the coming year includes significant government spending.
For liberals desperate for a presidential saviour, these changes prove that Obama is in the same class as Franklin D Roosevelt, president at the high point of reform in the US. Marking the first 100 days—itself a challenge for US presidents thrown down by FDR’s legislative response to the economic depression in 1933—the Guardian exulted: “The changes racked up already suggest a potential to become one of the most liberal presidents in US history”.1 Jonathan Alter, author of Obama’s preparatory reading before becoming president,2 makes a quantitative comparison: “FDR had 15 major bills and Obama has ten to his credit. He might not have as many bills as FDR but in terms of dollars spent he is right up there with FDR. The times are not as serious as the 1930s but the response of Obama is as aggressive. I am surprised by how he has kept his foot on the gas”.3
Others have been more critical. A much borrowed phrase, used by commentators as varied as Martin Wolf in the Financial Times and France’s New Anti-capitalist Party to describe the first 100 days, has been the Italian aristocrat Tancredi’s assertion in Lampedusa’s The Leopard that “for things to remain the same, everything must change”.4 This assessment is sadly the more accurate one, as a brief outline of Obama’s first few months illustrates.
Wolf makes the point that it is precisely Obama’s conservatism that supports the comparison with FDR: “What we have seen unfolding, from the president’s choice of Lawrence Summers and Tim Geithner as his principal policy advisers, to last week’s ‘stress tests’, is classic conservative policy making. The aim is simply to get the show back on the road”.5 Roosevelt’s project in his first months was to stabilise US capitalism, not to overturn it. According to one historian, FDR “enacted an impeccably conservative programme, underwriting the existing banking structure and slashing government spending”.6
Obama is certainly doing the former. His government had spent, at time of writing, $700 billion on its troubled asset relief programme (Tarp) bank bail-out, and there will be more to come. Following the recent bank “stress tests”, Treasury secretary Geithner conceded that more public money would be handed over to the likes of the Bank of America and Wells Fargo if the $76 billion capital it is estimated the banks need cannot be raised privately. The tests have been widely criticised for not being stressful enough, underestimating both the likely unemployment rate over the next two years and the extent of the fall in house prices. Dean Baker of the Centre for Economic and Policy Research argues, “It is hard not to conclude that these stress tests, and certainly the PR campaign around them, were intended to paint as positive a picture as possible of the banks’ financial condition”.7 His own estimate is that an extra $120 billion could be needed unless there is another stimulus package to prevent further unemployment.
The existing $787 billion stimulus package (the American Recovery and Reinvestment Act), which aims to “create or save” 150,000 jobs, includes money for public works, assistance for states, and tax relief for individuals and business. However, nearly three months after approval, less than 6 percent of the money has been spent and, while some states are holding back from sacking teachers or construction workers in the anticipation of government money, it is unlikely to be enough preserve the status quo when it does arrive.8
A Centre for Economic Policy Research report argues that since the recession has pushed state governments into the red, increased central funding will be cancelled out or at least have its impact reduced:
The vast majority of [local] governments are facing budget deficits in 2009 and 2010 due to the economic downturn. Virtually all of these governments are required by their constitutions or charters to balance their budgets. Therefore, the projected deficits will force them to either cut spending
and/or raise taxes. These spending cuts and tax increases will partially offset the impact of the stimulus.
The shortfall between 2009 and 2011 “is projected to be more than $100 billion a year”.9 What will happen when the federal money trickles through remains to be seen, but it is likely to fall well short of the challenge. The creation or salvation (and the two are not the same thing) of 150,000 jobs would be welcome but puny. Unemployment rose by 563,000 to 13.7 million in April, with the unemployment rate rising to 8.9 percent. Over the past year that is a rise of 6 million in the numbers of unemployed Americans, and the average conceals higher rates of unemployment for black Americans (15 percent) and Hispanics (11 percent); 21 percent of young people are out of work.10 Those job losses have been widely spread across private sector industries and 1.2 million are manufacturing jobs, reflecting the fact that manufacturing production has fallen by 16 percent since December 2007. US industry as a whole is operating at 69.1 percent of its capacity, the lowest rate since 1967.11
Obama’s government spending is raising howls from Republicans, who regard the $3.4 trillion budget plan in much the same terms, minus the celebratory tone, as the Guardian does. It is, we are told, “the biggest redistribution of wealth from the rich to the poor in US history”.12 Given that the bank bail-out probably represented a hefty redistribution in the opposite direction, this would be fair enough. But it’s not likely.
The Treasury has already made $17 billion in cuts from the budget including an early years childhood literacy programme. One of Obama’s key campaign pledges reflected in the budget is healthcare reform; in May the announcement that groups representing hospitals, pharmaceutical companies and insurance providers have agreed to cut spending by $2 trillion (£1.3 trillion) over ten years was heralded as “historic”.13 There has been some scepticism regarding these players’ commitment to facilitating reform to extend coverage and lower costs to some of the 46 million Americans without healthcare. As one surgeon in Ohio put it, the collection of interests offering to “reform” healthcare was reminiscent of foxes guarding the henhouse: “They are adamantly against any kind of government sponsored public health plan that would be available to middle class [read working class] Americans. Health insurers are fearful that such a plan would cut into their profits and just might drive them out of business”.14
Those profiting from selling healthcare may have no choice but to engage with reform, and Obama would no doubt prefer they were—in Lyndon Johnson’s words—inside the tent pissing out, but they surely intend to water it down or render it unworkable, if not to resist it altogether. Obama also faces opposition to healthcare reform from Republicans and, crucially, Democrats in Congress: “Already apparently dead is a plan to raise $267 billion over the next decade to pay for his healthcare initiative by curbing the ability of wealthier people to reduce their tax bills through deductions for mortgage interest, charitable contributions and state and local taxes”.15
Other aspects of the budget have also been removed, including a plan to limit tax deductions for the wealthy, or they have been limited, like the Make Work Pay tax credits which are only funded until 2010.
Critically, the budget requires that any reform in education, healthcare and energy provision must not increase the overall budget deficit—calculated at just over $7 trillion between 2010 and 2019. Again the Obama figures are optimistic. The budget deficit for 2009 has reached $1.84 trillion as a result of the bail-outs and stimulus measures, and the $7 trillion figure is based on projected growth in the US economy of 3.2 percent in 2010, almost twice that predicted by a survey of private economists, who also see unemployment as continuing to rise through 2010.16
The Obama government’s intervention in the car industry illustrates starkly the gap between rhetoric and action from the administration. The collapse of General Motors, until last year the world’s largest car maker, is the biggest failure of an industrial corporation in US history and has serious implications for the company’s 235,000 workers. Following the initial bailout of $17.4 billion for GM and Chrysler, the forced resignation of GM head Rick Wagoner and the Fiat takeover of Chrysler, the Obama administration made its assistance dependent on further cuts and concessions from car workers. A recent United Autoworkers (UAW) deal with Ford negotiating “givebacks” and cuts in bonuses, unemployment benefit and healthcare set the tone (indeed Ford may well follow GM and Chrysler into bankruptcy proceedings). UAW members are owed over $20 billion by GM, although the bankruptcy proceedings protect the company from claims from creditors.
In a speech outlining the condition of the car industry, Obama placed the blame squarely on the executives in Detroit and politicians in Washington under Bush, but it will be car workers who continue to pay the price. Seven weeks after his sacking Wagoner was still being paid by GM, while the Treasury decided whether he should receive a $20 million severance package! The Obama government underwrote GM’s move to bankruptcy on 1 June to the tune of a further $30 billion and a 60 percent government stake in the company. Despite criticism of GM’s executives, the restructuring plan involves the closure of nine additional plants with a further three being mothballed, and a loss of 21,000 US jobs in an industry that has seen 400,000 workers thrown out of work in the past year. The priority for GM, under new chief executive Fritz Henderson, is to restore profitability, and Obama made it clear that car workers are being expected to pay for the company’s losses.
The reversal of the Bush government’s torture policies has also shown the vacillation of the government under pressure. In January Obama ordered the closure of the prison camp at Guantánamo Bay “within a year”, the end of its military commissions, an end to the use of torture, the closure of the CIA’s secret prisons and the lifting of the ban on media publication of pictures of US casualties returning from Iraq and Afghanistan.
However, new CIA chief Leon Panetta has been permitted to retain the use of extraordinary rendition; on his 114th day Obama reneged on a deal with the American Civil Liberties Union to release photographs of the abuse of prisoners in Iraq and Afghanistan by US soldiers; and on day 116 Obama reversed his decision on military trials at Guantánamo. Obama’s alleged willingness to talk with leaders of Iran and Syria was refreshing after Bush, yet his government has extended sanctions against both countries.
During his presidential campaign Obama pledged to withdraw the 142,000 troops from Iraq within 16 months of taking office. That date has now been put back to August 2010 and between 35,000 and 50,000 troops will be kept in the country to execute a “drawdown plan”. Meanwhile, US emphasis in the “war on terror”—or “contingency operations” as US imperialism is now called in another linguistic change that preserves the essence of the previous policy—has shifted to Afghanistan and Pakistan.17
The “exit strategy” from Afghanistan involves sending more troops in. Obama ordered an extra 17,000 US troops which will take the total over 60,000 by autumn as well as increasing the size of the Afghan army and police force and extending the war further into Pakistan, including the use of Predator drones in the Baluchistan region.18 Despite having been elected on a surge of anti-war feeling, Obama is committing more troops to a conflict that could well become his Iraq—plus he still has Iraq itself to deal with.
Anthony Cordesman of the Centre for Strategic and International Studies, has summed up Obama’s dilemma:
The centre of gravity in the war of terrorism is now in Pakistan, and the threat of instability in a nuclear Pakistan has more strategic importance than the future government and stability of Afghanistan. More broadly, the US is now losing the war in Afghanistan that has been popular in US politics, but it is far from clear it has won the unpopular war in Iraq in ways that allow it to rapidly deploy large reinforcements to US forces in Afghanistan. The US also now faces the most serious financial crisis since the Great Depression, an uncertain Afghanistan government, and growing uncertainty as to how long those of its allies that are now in the fight will sustain their commitment.19
The war in Afghanistan may have been “popular” in comparison with Iraq among US voters, but a recent poll has demonstrated a sharp change—42 percent of Americans now say that sending troops to Afghanistan was a mistake, a significant rise from 30 percent in January.20 Another ominous development is the change of personnel organising the war. Defence secretary Robert Gates has appointed General Stanley McChrystal as military commander in Afghanistan. McChrystal was in charge of Joint Special Operations Command as part of Cheney’s “dark side” forces employed in Iraq and was responsible for the taskforce accused of the abuse of detainees at Camp Nama in Baghdad in 2006.
However, the priorities of the war in Afghanistan have also led to some tensions between the US and Israel—visible in Obama’s Cairo speech in which he pointed to Palestinian suffering and called for an end to Israeli settlements. It remains to be seen how these will be played out.
The contradictions in Obama’s first 100 days are the result of the class faultlines that characterised his election and that are further widening as the impact of the recession is felt. Not all Americans are in the crisis together. Obama worked hard, and diluted policy, in order to win Republican support but not a single Republican voted for the budget. From Dick Cheney’s robust defence of the Bush government’s torture policies to the cries of “Socialism!” from Republicans opposed to the expansion of government intervention in the budget, Obama’s initiatives are coming under fire. Although polls show that he remains popular, his ratings are split on partisan lines: overall his approval rating is 63 percent, but it falls to 30 percent among Republicans. These results may sound unimportant but it is the most polarised result for any president in the past four decades.21
Obama’s handling of the economy, the budget deficit and healthcare gain significantly more approval from workers on lower incomes than from better off Americans. According to the Pew Research Centre, people with incomes of less than $30,000 approve of Obama’s overall job performance by 71 percent with 16 percent disapproving; of those on between $30,000 and $75,000, 61 percent approve and 30 percent disapprove, while among those with incomes of $75,000 or more 58 percent approve against 31 percent disapproval. This suggests that, while the lower income Americans who voted for Obama in such numbers have kept the faith, higher income voters (especially in the highest bracket) are peeling away.
However, the generally high figures suggest that working Americans are prepared to give Obama time. The measures the administration have taken so far have benefited the rich over the poor but after eight years of Bush the sense of change and the chance of improvement created by the Obama presidency persist.
One historian’s description of the atmosphere following FDR’s election as president in 1932 could have described the excitement generated by Obama’s election: “Where once there had been apathy and despondency, there was now an immense sense of movement. If the country did not know in what direction it was moving, it had great expectations; the spell of lassitude had been snapped”.22
Close to two million people turned out on inauguration day stirred by similar hopes for change and expectation of transformation that was shared by millions more worldwide. Those expectations may well be misplaced in the figure of Obama and his capacity or inclination to challenge business interests. But just as it would be a mistake to sow illusions in Obama’s ability to bring real change in isolation from a movement pushing him to do so, it would also be an error to decouple the hopes raised in the campaign from the necessity of fighting for and developing collective class action to protect workers and their families from the effects of the crisis.
Of course it is true that change, or the appearance of change, can act to preserve class power by appearing to answer more radical hopes while not altering the status quo. But even minor concessions to the deep sense of frustration and bitterness in society can also fuel expectations and encourage the development of collective impulses to deliver more profound and lasting transformation.
The impact of the current crisis on workers and poor in the US is immense. Thirteen million are unemployed, including one in ten in Michigan; three million Americans lost their homes last year with a further three million forecast for 2009; images of police tearing down tent cities in California and Florida are reminiscent of scenes from Steinbeck’s Grapes of Wrath; the retirement savings of millions of middle aged Americans have been wiped out in stock market falls; in 2008 the amount that US households were collectively worth fell by 18 percent, the biggest loss since the Second World War.23 Such economic pain can challenge the ideological conceptions that many have of US society and the drawing of class lines in the crisis can expose the priorities of bankers and business leaders, coming as it does after three decades in which the gap between the rich and the poor in the United States tripled. While the US economy was growing between 2000 and 2005, productivity went up by 16.6 percent but family incomes fell 2 percent; during the Bush years workers were made to work harder in order to further enrich the wealthy.24 Politically, the experience of the Bush governments has been to broaden resistance (from the 1999 Seattle protest through the anti-war protests to immigrant rights marches), and to expose US imperialism and racism, through two wars and Hurricane Katrina, in the eyes of far wider numbers of people.
Under these circumstances the Obama administration, heavy with Clinton (and Bush) era politicians, though appearing radical in comparison with the recent past, may be exposed as being in no way radical enough to help those who are suffering. If Obama continues the direction of the first 100 days, his rhetoric may be seen to be merely sugaring the pill. However, it is also possible that the erosion of patience with government and with economic conditions can combine with those aspirations for change expressed in the election to force Obama’s government leftwards to deliver real reform.
Perhaps in the comparisons with FDR it is worth considering that the bulk of the progressive legislation of the Roosevelt presidency came well after the 100-day mark and came in response to class anger as the inability of early measures to alleviate the suffering of urban workers and farmers provoked protests and a series of strikes. Roosevelt’s popularity did not collapse with the big strikes in 1933 and especially in 193425—the Democrats won majorities in the congressional elections that year and FDR won a landslide victory in 1936—but they did propel the reforms of the “Second New Deal” as FDR reluctantly responded to pressure from below: “It was only later on in the depression decade…that the emphasis shifted decisively from salvage operations to work relief programmes, and other measures that directly benefited the working class”.26
Socialist argument—and this is true in Europe where Obama is a more popular politician by far than Gordon Brown, Nicolas Sarkozy, Silvio Berlusconi or Angela Merkel, as well as in the US—can relate to people’s desires for better lives, expose and explain the class realities expressed in Obama’s legislation thus far and attempt to lay the basis for a new ideological framework through which people can express their experiences as they alter under the impact of the crisis.
1: The Guardian, 29 April 2009.
2: Alter’s book on Roosevelt, The Defining Moment: FDR’s First Hundred Days and the Triumph of Hope, was cited by Obama before his inauguration.
3: Quoted in the Guardian, 29 April 2009.
5: Martin Wolf, Financial Times, 12 May 2009.
6: Badger, 2008, pp26-27.
7: Dean Baker, The American Prospect, 8 May 2009.
8: Washington Post, 12 May 2009.
9: Baker and Deutsch, 2009.
10: Bureau of Labour Statistics.
11: Federal Reserve figures.
12: The Guardian, 26 February 2009.
13: BBC News, 11 May 2009.
14: Dr S Amjad Hussain, Toledo Blade, 18 May 2009.
15: The Guardian, 11 May 2009.
16: The Blue Chip Economic Indicators survey, reported on Reuters, 10 April, 2009.
17: The Guardian, 25 March 2009.
18: See Simon Assaf, “Afghanistan’s Disasters Of War”, Socialist Worker, 5 May 2009.
19: Cordesman, 2009.
20: Poll conducted by Gallup.
21: Poll by the Pew Research Centre.
22: Leuchtenburg, 1963, p47.
23: The Wall Street Journal, 13 March 2009.
24: BBC News, 4 September 2006.
25: See Newsinger, 2009.
26: Foster and McChesney, 2009.
Badger, Anthony J, 2008, FDR: The First Hundred Days (Hill & Wang).
Baker, Dean, and Rivka Deutsch, 2009, “The State and Local Drag on the Stimulus”, Centre for Economic Policy Research, www.cepr.net/documents/publications/stimulus-2009-05.pdf
Cordesman, Anthony, 2009, “The Afghan-Pakistan Conflict: US Strategic Options”, Centre for Strategic and International Studies, www.csis.org/media/csis/pubs/090317_afghpakconfl.pdf
Foster, John Bellamy, and Robert W McChesney, 2009, “A New New Deal under Obama?”, Monthly Review, February 2009.
Leuchtenburg, William E, 1963, Franklin D Roosevelt and the New Deal (Harper Perennial).
Newsinger, John, 2009, “1934: Year of the Fightback”, International Socialism 122 (spring 2009), www.isj.org.uk/?id=530