The result of the mid-term elections in the U.S. confirmed previous forecasts on which Obama and the Democratic Party would suffer a heavy defeat.
Indeed, they lost 50 members of his party’s representatives (now they have become a minority in the House), they have lost the governorships of 10 states among those states where they dominated (but won California) and barely managed to maintain a slim majority in the Senate. Obama himself acknowledged the main cause of this defeat: the weakness of the country’s economy progress, and in particular, the persistent unemployment.
Things do not go well
The U.S. economy fails to recover from the impact of the crisis that began in August 2007 soon after the speculative bubble burst in the housing market and deepened in September 2008 with the collapse of Lehman Brothers. U.S. banks were on the verge of bankruptcy and there were sharp falls in national GDP in the fourth quarter of 2008 and the first quarter of 2009. It was the worst moment of the U.S. economy in decades, equivalent to the decline experienced in the months following the 1929 crash.
The massive aid package to banks and market speculators, launched, first by Bush, then by Obama, on the one hand, saved the banks and prevented the collapse of U.S. financial system. On the other hand, it stopped the downward spiral of the economy and prompted some recovery which peaked in the first quarter of 2010 (annualized GDP growth of 3.7%).
However, it was a fragile recovery, driven by government aid and spending and not driven by a sustained increase in private investment (the bourgeoisie had not yet recovered its “investor confidence”). In the following quarter, the economy began to slow again, with growth of just 1.6%. Bourgeois economists like Paul Krugman and Nouriel Roubini began to talk of a possible “’new recession’ or, at best, an” anemic growth”.
The consequences for the people
To the impact of the crisis itself, it joined the company policies (layoffs) and the government policies (save the banks but cut budgets in social areas like education and health) in order to download the cost of the crisis on the workers shoulders and their families.
The most serious consequence is that unemployment remains stuck near 10%, a very high figure for the U.S. According to Krugman, it is needed a growth rate of 2.5% per year to prevent unemployment from rising. Below 2.5%, unemployment will continue to grow.
In capitalism, unemployment is at the same time, a consequence of the crisis and a requirement for employers to reinvest. Companies take advantage of it to impose the biggest pay cuts and the worst working conditions that are possible. Being so, companies maximize the exploitation of workers who keep their jobs and the surplus value extracted, seeking the recovery of profit rate, which will grant a new investment wave.
According to a study of the Economic Policy Institute (EPI) from the fourth quarter of 2007 (time of the crisis onset) up to the first quarter of 2010 (peak of the recovery), the company earnings grew by 5.7%. In the same period, the work force has lowered down by 5%. To this, it is added the companies’ pressures on wages; in the case of GM and other companies, there was a demanding to reduce 50% of the salary upon the threatening of being fired and substituted by other workers.
This scenario aggravates the fall in living standards of American people (at least since the Reagan administration) and is expressed in the growth of poverty. A recent report by the Census Bureau shows that in 2009 the total poverty rate reached 14.3%. Almost 44 million Americans, the most in 51 years since this record has been taken. In the richest country on Earth, one, out of every seven people, is poor! The scenario is worse among black people and Latin American people (affecting a quarter), especially in childhood: nearly 36% of black children and 33% of Latin American origin are poor.
Punishment vote
In the 1990’s, the former Democratic president Bill Clinton popularized the phrase “It’s the economy, stupid” to summarize what would be the centerpiece of his campaign to defeat Bush Sr. and then to secure his reelection.
Currently it could be a perfect answer to the question of why Obama lost. It was largely the result of the irritation of a sector of the American people against a president who promised to “radically change the policy” but who quickly showed that he did not govern for the poor and dispossessed, but for Wall Street.
Is the Right strengthened?
Although the punishment vote went to GOP candidates, it is not the traditional structure of this party (immersed in his own” reconstruction “after the failure of the Bush project) that was actually strengthened.
As no alternative had been arisen from the Left, it was the Tea Party (after winning numerous nominations and internal GOP against traditional figures), who capitalized electorally on discontent, mainly amidst the impoverished middle class and unemployed white workers sectors.
Tea Party organization, whose main figure is Sarah Palin, postulates a right-wing ideology that mixes: “Americanism”, racism and extreme “anti-statism”. Like Europe’s far-right formations, Tea Party uses racism and puts blame on immigrants in order to hide the very responsible ones for the crisis. Thus, in face of Obama wear and as no alternatives have arisen from the Left, the Tea Party took advantage of its supposedly “alternative” speech and won a large space. It means however, a much-distorted manifestation of the economic crisis and its reflection in the American political system.
Besides Tea Party’s manifestations, there has been a starting of the workers struggles and popular struggles in the educational community against budget cuts and their consequences, with its epicenter in California. There have been struggles also in health sectors, for similar reasons. In some industries, there have been struggles against cuts on wages and against the attacks on other conquests. As we have said, these are still incipient struggles but, as the economy worsens and the attacks become fierce, as the population skepticism increases, these struggles may be heralding the beginning of a larger process.
Some prospects
Obama’s electoral defeat and the loss of Democratic parliamentary majority put the American political system against a very complex scenario. The government has become what Americans call a “lame duck”, forced to co-govern with an opposition parliament. A situation that may increase the trend to the Right, which has been already happening in his government (just look its expulsion policy of “illegal” immigrants and the budget cuts for education and public services). At the same time, this defeat leaves the U.S. government much weaker to face international situation, as well as a worsening in the country economic situation.
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Translation: Wilma Olmo Corrêa
