Obama's Economy

Jack Rasmus

Description

Radical economist Jack Rasmus shows how the Obama administration failed to deliver on its promises of economic recovery and social justice and puts forward alternative proposals for how the administration could have realised these goals.



In the period of Obama’s presidency, corporate profits were up, and economic hardship was the bitter reality for millions of US citizens. Rasmus argues that the weakest economic recovery since 1947 was the direct result of the Obama administration's failure to take decisive action. Analysing deficit cutting, the fear of a global depression, tactical populism and austerity, this book is a clear and cutting antidote to current liberal narratives.



From Obama's presidential election to the passage of his 2012 budget, this book explains how the US economy failed and why the risk of a 'double dip' recession was on the cards.
Introduction

1. The Weakest, Most Lopsided Recovery

2. From Tax Cuts To Tactical Populism

3. Obama’s Jobless-Homeless Stimulus

4. A Record Short, Faltering Recovery

5. How More Is Less Of The Same

6. Historical Parallels And The 2010 Midterm Elections

7. Deficit Cutting On The Road To Double Dip

8. Sliding Toward Global Depression?

9. From Failed Recovery To Austerity Recession

10. An Alternative Program For Economic Recovery

Notes

Index

Sujets

• Economic Policy
• Public Policy
• Political Science
• USA
• United States of America
• General officer
• Political economy
• Central
• General
• États-Unis

Informations

• Publié par: Pluto Press
• Date de parution: 20 avril 2012
• Nombre de lectures: 0
• EAN13: 9781849646956
• Langue: English

Extrait

Obama’s Economy

First published 2012 by Pluto Press 345 Archway Road, London N6 5AA
www.plutobooks.com
Distributed in the United States of America exclusively by Palgrave Macmillan, a division of St. Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010
Copyright © Jack Rasmus 2012
The right of Jack Rasmus to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988.
British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library
ISBN 978 0 7453 3219 2 Hardback ISBN 978 0 7453 3218 5 Paperback ISBN 978 1 84964 694 9 PDF ISBN 978 1 84964 696 3 Kindle ISBN 978 1 84964 695 6 ePub
Library of Congress Cataloging in Publication Data applied for
This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental standards of the country of origin.
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Designed and produced for Pluto Press by Chase Publishing Services Ltd Typeset from disk by Stanford DTP Services, Northampton, England Simultaneously printed digitally by CPI Antony Rowe, Chippenham, UK and Edwards Bros in the United States of America
Contents


INTRODUCTION: A SYSTEMIC CRISIS OF RECOVERY
‘The Wasted $12 trillion’
1 THE WEAKEST, MOST LOPSIDED RECOVERY


‘Who Recovered, Who Didn’t, and Why’
2 FROM TAX CUTS TO TACTICAL POPULISM


‘Obama’s 2008 Campaign Promises’
3 OBAMA’S JOBLESS-HOMELESS STIMULUS


‘The First Economic Recovery Program (2009)’
4 A RECORD SHORT, FALTERING RECOVERY


‘The First Economic Relapse of 2010’
5 HOW MORE IS LESS OF THE SAME


‘The Second Economic Recovery Program (2010)’
6 HISTORICAL PARALLELS AND THE 2010 MIDTERM ELECTIONS


‘Obama as Franklin Roosevelt or Jimmy Carter?’
7 DEFICIT CUTTING ON THE ROAD TO DOUBLE DIP


‘Economic Recovery Policy in Reverse’
8 SLIDING TOWARD GLOBAL DEPRESSION?


‘The Second Economic Relapse of 2011’
9 FROM FAILED RECOVERY TO AUSTERITY RECESSION


‘The Third Economic Recovery Program (2011)’
10 AN ALTERNATIVE PROGRAM FOR ECONOMIC RECOVERY


‘Fundamentals of Economic Restructuring for the Twenty-First Century’

Notes
Index
Introduction: A Systemic Crisis of Recovery


‘The Wasted $12 Trillion’
The defining feature of the U.S. economy over the past three years since Obama took office has been its failure to achieve a sustained recovery. After three economic stimulus programs costing $3 trillion over the past three years, 2009–11, and after more than $9 trillion in bank rescues by the Federal Reserve, the faltering U.S. economic recovery of the past three years is headed toward an eventual double-dip recession by 2013. 1
The U.S. economy entered recession in December 2007. The decline accelerated in September–October 2008 with the onset of the banking crash. The collapse set in motion by the events of September–October 2008 continued through the first six months of 2009, at a pace virtually identical to 1929–30. The economy only bottomed out by June 2009. But bottoming out does not constitute recovery. Nor does the weak and faltering economy that followed the June 2009 bottom.
Recovery means restoring the economy to levels and performance prior to the onset of recession, or at least to some ‘average’ historical level and performance preceding the collapse. The period from June 2009 to the present therefore cannot qualify as a recovery in either of these cases; nor can it in any otherwise normal sense of the term.
Except for financial asset prices i.e. stocks, bonds, derivative trades, etc. during the first year, from June 2009 to June 2010, nearly all real (non-financial) economic indicators recovered at best only part of the prior losses of 2008–09. And critical sectors of the economy, like jobs and housing, recovered virtually nothing. Moreover, many economic indicators that did partially regain some lost ground in the first year after June 2009 thereafter experienced a further ‘relapse’ in the summer of 2010. Meanwhile, jobs and housing experienced a bona fide ‘double dip’. A second partial recovery followed in late 2010, even weaker than the first in 2009–10. In late 2011, the economy began to fade once more, as a second ‘relapse’ of the economy once again emerged. 2 This raises the first of three major themes of this book:


What explains this weak, repeatedly faltering economy and failure to achieve a self-sustaining recovery after trillions of dollars in fiscal and monetary stimulus?
By October 2011 an increasing number of economists, and even business sources, began to predict the ‘relapse’ might soon turn into a double-dip recession. A select few of those with the best forecasting track record to date have even begun to forewarn of a possible imminent global depression. 3
To the extent there has been any recovery these past three years under the Obama administration, that recovery has been limited to and has benefited a relatively small segment of the U.S. economy and population. After June 2009 stock markets rose more than 100%. Bond markets did even better. Corporate profits exceeded levels even preceding December 2007. U.S. large corporations accumulated more than $2 trillion in cash on hand, while U.S. multinational corporations were able to build a cash hoard of another $1.2–1.4 trillion in their offshore subsidiaries. Both continue to hoard their more than $3 trillion in cash, not investing it in the U.S. to create jobs and contribute to sustained recovery. Not to be outdone, big banks accumulated and then also sat on about $1.5 trillion in excess cash reserves, mostly refusing to lend to smaller businesses to create jobs and assist recovery. 4
Measuring ‘recovery’ in terms of its human dimension not just in terms of impersonal economic indicators yields a similar grossly unbalanced picture: CEO and senior management compensation and bankers bonuses recovered in 2010 to pre-2008 levels. The top 25 hedge fund managers did even better. Their income more than doubled in 2009 to surpass previous 2007 peaks. The wealthiest 10% of households returned to consuming luxury goods at pre-recession levels.
In contrast, more than three years after Obama took office there are still roughly 24 million unemployed. The numbers of part-time and temp jobs have increased by more than 10 million, as full-time permanent jobs are churned out and replaced by part-time and temp jobs with lower pay and hardly any benefits. Thus, not only the number of jobs but the quality and level of pay and benefits associated with jobs has also not ‘recovered’. Real weekly incomes for more than 100 million non-supervisory workers are less today than two years ago due to wage cuts, fewer hours of work, and escalating inflation of basic items like health care services, education, gasoline, and many basic food costs that have risen at double-digit rates throughout 2011.
In addition to jobs and wage income, home foreclosures have more than doubled in number since early 2009, to 11.4 million by late summer 2011. 17 million homes are ‘underwater’, with home values worth less than their mortgages. States and cities continue to lay off workers by the hundreds of thousands in 2010 and 2011, slash vital services and programs, and raise fees at an accelerating pace. Poverty rates in the U.S. are now at their highest levels in half a century, impacting more than 15% of the population (45 million). That includes more than 15 million children the latter distributed more or less evenly across white, latino, and black kids. More than 50 million officially and more in fact are without any kind of health care coverage. Food stamp usage has more than doubled in the past two years, as has student loan debt in two years. Trillions of dollars of seniors’ retirement ‘nest eggs’ have disappeared forever, as Congress in late 2011 nonetheless proposed to reduce their medical and retirement benefits further. The litany of conditions that have worsened is endless. That is not recovery by any stretch of the imagination.
And it’s not just workers, homeowners, students, and the 100 million plus working- and middle-class households who have not ‘recovered’. Hundreds of thousands of small businesses have gone under since the bottom of the recession in June 2009, more failing than are being created, as banks continue to starve them (and households) of basic loans and credit as the banks continue hoarding more than $1 trillion in cash reserves on hand. Even banks themselves have been divided into ‘haves’ and ‘have-nots’. The ‘too big to fail’ largest 20 or so banks have in part recovered, propped up by $9 trillion in U.S. Federal Reserve liquidity injections, zero-interest loans and direct subsidies, and hundreds of billions in direct grants from the U.S. Treasury and taxpayers. Meanwhile, more than 500 small community and regional banks have either failed outright or have been forced into mergers by government regulators to protect what little depositors’ assets remain on their books. In short, a small layer of wealthy households, professional speculators and investors, big banks and multinational corporations, CEOs and senior managers, have indeed ‘recovered’. But virtually no one else. The preceding undisputable facts lead to the second major theme of the book:


How to explain this historically unprecedented lopsided economic recovery enjoyed so much by so few at the expense of so many?
The Obama team has introduced no fewer than three economic recovery programs over the past three years. One each year in 2009, 2010 and 2011. This does not include Obama’s election year proposals he offered in 2008 as a program for economic recovery. This book will look at each of the three recovery programs and his pre-election promises and analyze each in depth.
Each of Obama’s economic recovery programs sh