The Bailout Intensifies

Shamus Cooke
Protecting the social gains of the past generation will require the working class to mobilize itself in a way not seen since the 1930s. If we are to be successful, a broad coalition is needed, one that cuts across racial, gender, sexuality, documented citizen and undocumented, organized and unorganized, working and unemployed.

Even through its muffled language, it was obvious that the typically non-alarmist New York Times was having trouble digesting the latest government announcements. On November 26, the Treasury and Fed revealed it would spend 800 billion more tax dollars towards new “lending” programs. That day, the Times concluded that the government was “sending a message that they will print as much money as needed to revive the crippled banking system.”[!]

Later in the article we learn that “the government has assumed at least $7 trillion [!!] in direct and indirect financial obligations in the form of Wall Street bailouts, emergency lending and government guarantees on bank deposits, inter-bank loans and home mortgages.” The term “blank check” doesn’t begin to describe the vast amounts being tossed about.

Other sources, such as Bloomberg.com, are estimating $8.5 trillion (about $24,000 per person in the US).

At least 5 trillion dollars of this money comes from the Federal Reserve, which, because it is an “independent” entity, doesn’t need congressional approval to give mountains of taxpayer money to broken banks.

The Times continues: “The long-term risks are enormous and difficult to estimate. They begin with the danger of a new surge of inflation, at least after the economy comes out of its downturn. But they also include the hazards to taxpayers of taking responsibility for trillions of dollars in assets that may end up plunging in value. And they also raise unanswered questions about how the government will untangle itself from its new obligations, if it can indeed do so.”

The Times, along with others witnessing the money printing fiasco, are worried that in tackling the economic crisis, they’re creating the conditions for an even larger one. This is especially true because the current crisis is the result of similar practices applied to the last recession, which created a gigantic financial bubble that’s still deflating…fast! The tactic now is to insert as much money as needed to keep the sinking ship afloat.

But big problems are emerging: Every time they check the status of the economy, matters are worse — requiring ever greater money for patchwork; and money printing has its limits. After awhile, the dollar’s value will shrink (it’s already begun), creating conditions that could lead to a devastating inflation.

Obama, too, is drunk by the money printing orgy, and announced on November 22 an infrastructure and energy plan that could cost as much as 700 billion dollars. Obama bragged that his new plan will create 2.5 million jobs, which, by the time it’s actually implemented, will constitute a drop in the bucket.

But even these 2.5 million jobs will be the byproduct of the energy and infrastructure plan, not the intention. Large sections of the corporate elite have been calling for serious government measures to ensure the business class has secure, cheap access to energy, and usable roads and bridges to transport their goods. Obama’s plan was essentially choreographed by the corporate coalition “Council on Competitiveness” — a large group of CEO’s, industrialists, university heads, and a couple of labor leaders (traitors who have a strong belief in trickle-down economics).

This group realizes that US corporations are falling behind in certain areas — energy & infrastructure — that they desperately need to stay globally competitive. The obvious problem is that one cannot maintain a competitive nation with worthless dollars.

Obama knows this and is clear that, while he agrees with the flood of hot-off-the-press dollars for bank bailouts and bridges, vast cuts in spending are required to compensate. In one of his many recent press conferences, Obama said he will go through the federal budget “line by line” to massively cut spending.

And knowing that the poor will be the first affected, Obama quickly gave an example of millionaire “farm subsidies” as a program he believes to be unnecessary. It is unlikely that Obama will target the corporate elite in his future cost-cutting mania, especially since he has approved the trillions of taxpayer money directly subsidizing big business. Much more likely is that Obama will target the “big three” of social programs: Social Security, Medicaid, and Medicare. Education is surely to be attacked as well. Not only this, but taxes will have to be raised; the rich will use their political puppets to continue to shift this burden onto the poor.

These predictions can be considered safe for three reasons:

  1. Obama has already said that he will not cut a penny from the gargantuan military budget (he’s hinted that he will raise it).
  2. The scope of the national debt — realistically over 10 trillion dollars and growing — is such that drastic measures need to be taken.
  3. Lastly, most government programs have already been ransacked, there’s not much left to be “trimmed” — the circumstances demand a gouging.

Protecting the social gains of the past generation will require the working class to mobilize itself in a way not seen since the 1930s. If we are to be successful, a broad coalition is needed, one that cuts across racial, gender, sexuality, documented citizen and undocumented, organized and unorganized, working and unemployed.

Make no mistake, the ruling class has — by its actions — declared class war, and will continue to bolster their broken system with our tax dollars unless we demand it be stopped. No more bailouts! Hands off Social Security, healthcare, and education! Tax the rich!

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Shamus Cooke is a social service worker, trade unionist, and writer for Workers Action. He can be reached at portland@workerscompass.org