2009 Economic Forecast

An analysis written by John Case.
The economic outcomes of 2009 for working people, one year from now, is in the hands of the acutest political struggle which is emerging over how exactly government should intervene in the US economy to avert a depression? How much more, or what different kinds of, intervention will be required for recovery? And, what is Recovery?

On one wing conservatives still intoxicated with free-market-fundamentalism, or unprepared Republican Party organizers desperate to hold on to the crumbling remains of their “Reagan coalition” will, use every diversion to avert another 40 year long Democratic Party congressional supremacy, as followed the election of FDR, the passage of social security, the NLRA, unemployment insurance, etc. Already, blatant racism and immigrant bashing within the Republican Party leadership are reflecting the desperation. Expect to hear strong demands for protectionism, racist, nativist and isolationist ideas and provocations, from this group in response to the crisis. In addition this wing has yet to confront its numbness over finding that military might alone, or even in the main, will not meet the challenges globalization demands be solved: inequality, development, energy, democracy, climate change, universal labor and human rights. So far it does not appear as if any of Obama’s appointees are from this wing. However, to the extent these forces are able to block, distort, waste or significantly blunt the Obama stimulus campaign they shall remain the most dangerous threat to halting the current and dramatic economic free-fall and bringing the economy under effective control and management.

Another wing – lets call them the “formerly-neo-liberal-now-leaning-more-liberal” (FNLNLML) financial sector with allies throughout the real estate, insurance, manufacturing and defense sectors. Obama has several of these in his cabinet: Geithner, Summers, Volker, and for a while – Gates. On the economic side these forces represent the most powerful institutions of finance capital. They are prepared to spend as many dollars as it takes to stimulate the economy according to the advice of Keynesian economists. To varying degrees they embrace universal health coverage, liberalization of labor law, major public infrastructure and education investments, and restructuring of the financial, real estate, energy, transportaion and manufacturing sectors of the economy – pretty much the commanding heights of the economy.

Yet this wing’s chief weakness in democratic reforms or nationalizations is already evident in the US Treadury takeovers/bailouts of A.I.G, GMAC, and scores of banks and reborn-over-night-as-banks institutions scrambling to get a piece of the $700 Billion TARP funds passed last month by Congress. That weakness is spinelessness and feebleness when it comes to actually exerting its legal power to place the public interests over private ones in the execution of its duty – which is to restore confidence, liquidity and lending at adequate rates to financial markets, effect full employment and moderate inflation. In part this weakness is currently so pronounced because the government may have the legal authority to takeover management of the “too-big-to-fail” financial institutions, but not the ability or tools with which to really perform management functions.
The third wing are the millions of ordinary working people, notably organized labor, retirees, professionals, small business, the large majorities of African American, Latino, Asian, Women and Youth that became mobilized and activated in the grass-roots campaigns of the election season – especially the Obama campaign. This is the wing, the only one, that can remain consistent and insure the stimulus, revitalization and recovery promises of the Obama campaign can become real. This is the wing that understands stupid when it sees a failed car company management being bailed out for (now) over 20 billion dollars, when the government could have bought the company for $3 billion. This is the wing that must go to war with corporate and defense lobbying corruptions that left to their own half-hearted beneficence will divert a lions share of the stimulus support into futile and self-serving kickbacks.

Lets be straigtforward in defining exactly how to determine the minimum economic conditions by which a stimulus program may be judged successful: a) when full employment is restored; and b) when universal health coverage is enacted. Both are eminently doable, but both will require “a new birth of freedom” of association and mobilization by working people of the United States, and efective public instruments serving their will – to fufill all the social and economic tasks subordinate to this historic effort.

Its either going to be a breakthrough year for the peoples movements and organizations, or its going to be very bad.