Crisis and despair in Obama’s America

David Glanz looks at the problems haunting Barack Obama in the face of swing against the Democrats in the mid-term elections

MORE THAN 130,000 workers lost their jobs across the US in September as a result of some 1500 mass lay-offs—retrenchments involving at least 50 staff. Almost a quarter of mass lay-offs were in manufacturing.

Barack Obama’s popularity rating is running at its lowest since he took office in January 2009. A Wall Street Journal/NBC News poll found that 62 percent of people felt the country was on the wrong track. Just one third thought the economy would get better over the next year.

It is statistics like those that help explain why Obama’s Democrats were taking a pounding in the mid-term elections taking place as Solidarity went to press.

Obama’s victory two years ago was won on the back of the slogan “Yes we can.” Now he seems likely to spend his next two years in office negotiating with the rival Republicans—a party increasingly influenced by the racist reactionaries known as the Tea Party.

The crushing loss for the Democrats in the US is a product of disilussionment with Obama\'s same old rule for the rich policiesWhat has happened to a presidency that was characterised by Obama’s iconic image, twinned with the word Hope? Why has the mass, grassroots movement that brought Obama to office been replaced by the Tea Party phenomenon and the folksy rantings of Sarah Palin?

The answer can be found in four factors.


The first is the economy, which suffered a catastrophic decline as a result of the Global Financial Crisis. In 2008-09, the US economy went through four quarters of shrinkage—almost 7 per cent in the final quarter of 2008 alone.

Today, it is growing, but the damage is very deep and the turnaround slow. The national unemployment rate was 9.6 per cent in September, down only 0.2 per cent on a year earlier. The picture is uneven. In the West, unemployment was 10.9 per cent in September, a rise of 0.3 per cent on a year before.

In late 2008, the US Congress approved a $US700 billion package to bail out the financial sector. Money was also put into jobs programs. But the impact was shallow and looks like it has not been sustained. In the first quarter this year, the economy grew at an annualised rate of 3.7 per cent. In the second, growth slowed to 1.7 per cent. In August, governments at all levels across the country slashed their wages bill by $US5.2 billion.

In response, the Federal Reserve is expected to once again engage in what is known as quantitative easing —creating money and then pumping it into the system by buying debt from the banks.

But there are limits on how far this process can go. The US is running a monthly deficit on international trade in goods and services of more than $US40 billion and government debt is currently 94 per cent of annual GDP, or $US13.6 trillion.

Perhaps the starkest indicator of how little has changed since 2008 is the housing crisis. The Bloomberg news agency reported that US home seizures reached a record for the third time in five months in August. Bank repossessions climbed 25 per cent from a year earlier, to 95,364.

“We’re on track for a record year for homes in foreclosure and repossessions,” Rick Sharga, RealtyTrac’s senior vice-president, said. “There is no improvement in the underlying economic conditions.” According to Bloomberg, lenders will seize about 2 million houses in 2011. Home sales this year will be 7 per cent below the 2009 total.

The US working class continues to hurt, and a growing number are taking that pain out on the political establishment.

Obama’s strategy

Obama’s ability to console his supporters and buffer the pain has shrunk badly thanks to the way that he has failed to meet their expectations on so many other fronts. This is the second reason why the Democrats are in trouble.

Obama won the election by being seen to back “Main Street, not Wall Street”, but once in office he moved decisively to prop up the banking and finance system. As Lee Sustar wrote in the US Socialist Worker: “Effectively, Obama has simply handed the bankers a blank cheque from the Treasury, with just a few conditions on executive pay to make it more politically palatable.

“Even where bailouts have given the government enough shares in company stocks to control them—such as at insurer AIG and Citibank—the Obama administration has done everything it could to avoid taking outright control in order to leave private capital in charge.”

As people lost their jobs and their homes, they saw the banks rescued by low-interest loans and corporate profits soar. The Democrats used the bailout to take over General Motors but, rather than save jobs, the Obama administration oversaw a bankruptcy that led to tens of thousands of lay-offs.

Obama disappointed his supporters, too, with his approach to the wars in Iraq and Afghanistan. He delivered on his promise to withdraw combat troops from Iraq, but has left 50,000 US soldiers bunkered down to maintain control of the country—combat troops by any other name.

In Afghanistan, he hasn’t even maintained that level of pretence, overseeing a surge in military presence. In July, the House of Representatives approved his proposal for funds for a further increase in US troop numbers to 150,000. Under Obama’s caring control, the number of civilian deaths is running at around 3700, with about 800 of those inflicted by Western forces.

The New York Times reported earlier this year on the rapid rise in the use of unmanned drones by the US as it seeks to minimise its own casualties at the expense of Afghans. “The Air Force now flies at least 20 Predator drones—twice as many as a year ago —each day. They are mostly used for surveillance, but have also carried out more than 200 missile and bomb strikes over the last year.”

Obama’s signature reform, to the US health system, has disappointed many, too. Far from providing full, free and accessible health care, his system has consolidated the role of the private insurance industry. A new AP poll found that 40 per cent of people felt that the law did not go far enough, compared to just 20 per cent who thought it went too far.

The tea party

According to the Australian media coverage of the mid-term elections, Obama’s biggest problem is the rise of the Tea Party—a rightwing movement associated with the Republican Party and named after the Boston Tea Party of 1773, in which American colonists rebelled against British rule.

The Tea Party is indeed a problem, its ranks filled with the odd and the dangerous. Its rise will pull the Republicans further to the right and it’s clear that the Democrats are likely to bob along in their wake.

But the phenomenon, while a further factor why the Democrats are about to take a beating, is not the cause of Obama’s humiliation but rather a symptom of his failure to use the huge political capital he gained in victory two years ago.

The Tea Party largely consists of the people who voted against Obama in 2008—the reactionary white middle class. These are people who, affronted by a black President whose rhetoric has favoured the poor, lap up conspiracy theories about him being a socialist Muslim and being born overseas.

The Tea Party’s hysteria—its mass rallies and its success within the Republican primaries that selected candidates for the mid-term elections —is a reflection of the depth of the systemic crisis within US capitalism.

The Left

But that begs a question: what has happened to the US Left? Why isn’t it offering hope to the unemployed and the dispossessed in at least the same measure as the Tea Party offers more free market madness, scapegoating and racism?

Solidarity warned two years ago that the networks of support for Obama would need to continue as networks of struggle if the gains that Obama promised were to be delivered in reality. But Obama himself dropped the networks, and wide swathes of the Left, including the peace movement, demobilised.

The result is the worst of both worlds: there has been no consistent pressure on Obama to deliver on his 2008 agenda. As Obama said recently: “Yes we can … but it’s not going to happen overnight.” And his voting base is demoralised. Some Democrats are switching to the Republicans. But Obama’s biggest problem is those who simply stay at home.

As the Washington Post reported: “The groups that showed the largest decline in interest? Those who voted for Barack Obama – liberals, African-Americans, self-described Democrats, moderates, those living in either the Northeast or West, and younger voters 18 to 34 years of age.

“[A pollster] theorises that a lot of this is driven by Obama’s tendency to constantly seek a middle ground between what he tends to characterise as equivalent extremes on either side. She thinks he’d do better speaking directly to the base.”

Obama’s Democrats are being handed humiliating defeat because they have refused to challenge the priorities of US capitalism. Whatever the precise result, inequality, poverty, unemployment and homelessness will grow. The challenge for the US Left is to turn despair into action.


Solidarity meetings

Latest articles

Read more

Biden and the Democrats a dead end for the US left

Joe Biden has declared he will run again for US President. The 2024 election is looking increasingly like it will be a repeat of 2020, with Biden taking on Donald Trump.

Evergrande crisis shows Chinese growth figures built on sand

The looming potential default of the Chinese property giant Evergrande is sending shivers down the spines of capitalists across the world.

Derek Chauvin is guilty, and so is the whole rotten system

Relieved celebrations broke out as police officer Derek Chauvin was found guilty on all counts of murder and manslaughter in the death of George Floyd last year.