President Obama signed the American Recovery and Reinvestment Act—a $787 billion stimulus package—into law Feb.17.
There is no doubt that the U.S. economy is mired in a deep and worsening crisis—a crisis that has spread worldwide. According to a recent Bureau of Labor Statistics report, 3.6 million jobs have been lost since December 2007. In January alone, 11.6 million people were out of work.
The official unemployment rate has jumped from 7.2 percent to 7.6 percent. In Latino communities, it is as high as 9.7 percent. In African American communities, it has soared to 12.6 percent—the highest level since 1994.
But even those figures are deceiving: They do not include those who have stopped looking for work or are working part-time because they cannot find full-time work. The real unemployment rate is in the double digits.
The past year has seen a continued rise in foreclosures. According to recent data, almost 3 million foreclosures were filed in 2008 on 2 million properties, an 81 percent increase from 2007 and 225 percent more than 2006.
For millions of people, job losses and foreclosures are not just statistics but real personal disasters. Suicide hotlines have noted a spike in calls, particularly those related to finances, in the past year.
The U.S. government has acted to address this crisis by bailing out the biggest banks and corporations with $8 trillion of taxpayer money and loan guarantees with nearly no strings attached—even as these companies lay off millions of workers and pay obscene executive bonuses.
The owners of big banks and corporations like Washington Mutual, JP Morgan Chase, Citigroup, Bank of America, Merrill Lynch and Countrywide have not used the bailout money to loosen credit or hire more workers, but rather to line their own pockets.
Job creation estimate dubious
More than two years into an ever-deepening economic crisis, the U.S. government has finally taken some action to address the profound suffering of the majority of people in the country instead of only the few super wealthy owners. But how much will the stimulus really help workers?
The stimulus package will supposedly create 3.5 million jobs and jumpstart the economy. Given the extreme job loss over the last year, 3.5 million jobs would be a welcome measure to address the crisis.
The projection, however, is at best an exaggeration. Even the economists responsible for the estimate do not trust the accuracy or reliability of the models they used to generate it.
Much of the presumed job creation rests on the assumption that tax cuts to businesses and the wealthy will lead to increased hiring. The largest part of that $212 billion in tax cuts is for individuals, which is unlikely to result in many new jobs. Business tax savings, much like the bank bailout, will have their fate decided by the private interests who receive them—and capitalists have not been particularly eager to invest in new jobs during times of economic uncertainty.
A smaller portion of the stimulus package is geared toward infrastructure and other improvements. That spending would indirectly create jobs as contracts to private companies are awarded—$120 billion is set aside for projects like bridges and highways and $30 billion for energy infrastructure upgrades. Appropriations dedicated to school construction and other projects that would translate into jobs were whittled down as the bill passed through the House and the Senate.
Some measures will assist working people directly. The Congressional Budget Office noted that the Act devotes another $267 billion on direct spending, including increased unemployment benefits and food stamps.
Workers making $75,000 a year or less will see an estimated additional $7 to $12 a week in their paychecks due to tax cuts. Retired, disabled and other workers unable to work will receive a one-time payment of $250. Food stamp payments will increase 13.6 percent. Workers who lost their jobs after Sept.1, 2008, will see a decrease in their COBRA health care payments for 9 months due to a subsidy paid to former employers.
Relief measures inadequate
Though these and other measures will offer some welcome relief, the stimulus package falls far short of what is needed to address the needs of the working class, which is bearing the brunt of the crisis.
The health care provisions, for example, include little to address the health care crisis many workers face with skyrocketing costs and substandard insurance. Analysts have said that $2 trillion—not $120 billion—are needed to fix failing infrastructure.
Although $787 billion seems like a huge amount of money, it amounts to less than 10 percent of the total potential bailout funds allocated so far, most of it for the banks and other financial institutions. The U.S. government has again shown which class it represents—the class of wealthy capitalist owners.
The U.S. ruling class has learned from the lessons of the Great Depression. During the 1930s, U.S. workers, employed and unemployed, organized against desperate conditions and fought for gains we still enjoy like Social Security, union rights, and other benefits. A mass radicalization caused many to reject capitalism and fight for socialism.
Since the Great Depression, there have been 12 economic crises in the United States—each one caused by the same contradiction of capitalism—collective production for private profit.
The crisis today is the worst yet. In the eyes of the capitalist class and their representatives in government, the capitalist system must be preserved at all costs. To that end, they must maintain political stability by heading off another Great Depression and do something—but not too much—to ease the suffering of working-class people.
The stimulus package, on top of the previous bank bailouts, is their answer. But the capitalists’ solution is skewed toward their continued enrichment and meager in comparison to what could and should be done for workers and the poor in the face of this crisis.
What is really needed to address the economic crisis? There are real practical solutions that can be implemented right now. Here are just a few examples:
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Declare a national housing emergency. This would include an immediate moratorium on foreclosures and evictions with a reduction in mortgage and rent payments to affordable levels. This would allow people to stay in their homes.?
Make the super wealthy pay the $2 trillion needed for infrastructure repairs. This would put millions to work.?
Extend unemployment benefits for the duration of the crisis and implement a jobs program to get people back to work repairing infrastructure, building safe, environmentally sustainable energy sources and working in health care and education.The present economic crisis, along with the others before it going back to the early 19th century, have their roots in the capitalist system itself. These crises are the product of the relentless pursuit of profits that pits capitalist against capitalist, eventually leading to more being produced than can be sold for a profit. Unable to unload their inventories or find customers for services provided, the capitalists slash production, eliminate jobs and effectively aggravate the very crisis they seek to escape.
Until the system is undone and replaced by one that does not serve the interests of the rich minority at the expense of the working majority, these crises will continue.
