Obama´s Agenda
Carlos A. Sánchez - 26.02.2009 04:09
Central Bureau (Prensa Latina) One cannot criticize US president elect Barack Obama for lacking a well-defined government plan, with its main objectives perfectly outlined, because it´s all about facing the economic catastrophe he inherits as of today.
Central Bureau (Prensa Latina) One cannot criticize US president elect Barack Obama for lacking a well-defined government plan, with its main objectives perfectly outlined, because it´s all about facing the economic catastrophe he inherits as of today.
Unemployment affect about 10 million persons, 7.2 percent of the country´s labour force. The economy contracted in the third and fourth quarters of 2008 and the chairwoman of the San Francisco Federal Board, Janet Yellen, foresees a much more severe contraction of the Gross Domestic Product.
The continuous job losses and drop of prices in the main stock exchanges of the world, have dealt a blow to the morale of consumers, who have cut their expenses in durable goods and food, while businesspeople are also reducing their investments.
Consumer spending, which represents two thirds of the US economic activity, dropped 3.1 percent at the end of 2008, the most severe fall since the last quarter of 1980.
Meanwhile, the GDP report showed the available personal income registered a drop of 8.7 percent, the lowest since this indicator began to be registered in 1947.
The current recession, denied by outgoing president George W. Bush, had to be officially recognized, almost a month after it was admitted by Great Britain, Germany, France and Japan.
The crisis unleashed by the burst of the high risk mortgage bubble, in the second half of 2007, brought about losses still to be counted, in the order of hundreds of billions of dollars for numerous private and central banks in all continents.
This situation of deregulation of norms controling financial activity, as neoliberal theories proclaim, allowed irrestricted speculation with mortgage contracts and disaster broke when mortgage holders could not pay the leases on the mortgages.
The rise in oil prices which put the barrel in almost $150 dollars, provoked a general rise in prices of all productive sectors, hitting hard millions of families of the lower middle class which had mortgages on their homes, and they saw everything go up overnight.
These excesses led to defaults that kept growing until they were massive, generating bankruptcy of powerful firms like Lehman Brothers, Merrill Lynch, Morgan Stanley and Bears & Stern.
The two companies controlling over 70 percent of the mortgage market, Fannie Mae and Freddy Mac, went bankrupt and the government intervened, injecting up to 200 billion dollars to prevent their total ruin.
Giant insurance company, American International Group (AIG) was taking the same road and the government bailout was also high: 85 billion dollars.
All this led to a credit and confidence crunch in the banking and financial sector, including insurance firms and the immediate result was to freeze real-estate credit, and financing debts with credit cards, but also the loans to buy cars and student credit.
About 20 banks have gone bankrupt, but another 200 could enter a critical situation in 2009, affirm specialists.
The tense situation being lived today in the United States is thus described by US economist Chalmers Johnson, rigurous analyst and critic of the militarist Bush administration, based on the enormous fiscal debt present in the US public finances.
"Since Roosevelt, the United States have tried to maintain a military economy and a civil one simultaneously. Through the years, this has had the effect of lack of vital resource allotment, away from investment and consumption, in an action that undermined the country´s international competitiveness.
Social and economic conditions in 2008 are a bit similar to those in 1932, making a realignment posible. Unemployment in 1932 reached a record level of 33 percent. Today the rate is much lower, but other severe economic pressures persist.
These include eviction of families due to mortgage default, bank and financial firm bankruptcies, inflation stimulated by the rise in food and fuel prices, lack of a health system of universal coverage, an increasing alarm over the environmental catastrophe which will produce greenhouse warming due to excessive consumption of fossile fuels,
Also the continuous costly interventions in Iraq and Afghanistan, with others forming in the horizon due to failed foreign policies (in Georgia, Ukraine, Palestine, Lebanon, Iran, Pakistan and elsewhere) and the super-deficits in the budget and trade. "
Changes to the Bailout Plan
To face this situation, the Bush administration asked Congreso for 700 billion dollars to introduce a bailout plan for the banking and financial sector.
However, a few weeks after its approval by Congress, Treasury Secretary, Henry Paulson announced a change in bailout strategy. The idea of massive buys of bad debts, both for having been made without the requirements that marked bank norms before deregulation, as because debtors were declared bankrupt.
Now the government tends to revitalize some sectors, announced Paulson, as loans for real estate mortgages which this time will be carefully checked, credit card debts, which are undermining consumption, student loans and the reduction of the number of families being evicted from their homes for mortgage default.
GM, Ford y Chrysler Cry for Help
If the previous recount was not enough, the three automotive giants, General Motors, Ford and Chrysler announced they were in critical financial situation due to a drastic drop in sales.
The three asked the government initially for $25 billion dollars to help them overcome the crisis and threatened leaving unemployed 10 million people who directly or indirectly are linked to auto production and retail.
The petition made at the beginning of the fall 2008, went up weeks later to $35 billion dollars as the indispensable figure to stay above water. Managers of the three asked that sum be extracted from the $700 billion already approved for the banking bailout plan.
Soon after being elected, Obama said to be in favor of helping the three car manufacturers, but after making their initial petition, he demanded they argued their proposal in more detail. When the companies made their second petition, he said it was more mature, but he did not elaborate on the subject.
Campaign Promises
On economic issues, Obama declared himself in favor of practical policies which lead to free market, economic security, corporative innovation and social mobility. His initiative includes a tax exemption for the next two years to all companies that create jobs and a temporary credit of $3,000 dollars for every workplace created by a company in the nation.
The Democrat candidate assures he has a plan for $18 billion dollars to benefit child development, to foment the study of mathematics, physics and summer schools. It would also reward teachers and professors with bonuses if their performance is worthy of them.
As for the fiscal topic, Obama offers to eliminate taxes on citizens of retiring age with incomes below $50 thousand a year. He would also favor revoking fiscal cuts to those who earn over $250 thousand a year, including corporations and individuals. He also is for fighting those who pay less taxes using tax havens.
Regarding the controversial migration issue, which envisages the situation of 12 million illegal immigrants, many of whom have children born in the United States, the chief of the Obama cabinet, Rahm Emanuel, said it would not be easy to approve a new immigration law.
Obama promised to withdraw the troops from Iraq. By the middle of 2010, there would only be left the personnel of military bases. The contingent will be redeployed to Afghanistan and Paskistan to close the siege on Al-Qaeda, according to sources orf the Democratic Party.
The president of the US as of January 20, designated Robert Gates to continue heading the Department of Defense, apparently taking into consideration that Gates seduced the Senate by his frankness, when he admitted during an autition that the United States was not winnintg the war in Iraq and he said was not in favor of a conflict with Iran or Syria. His confirmation that Israel was "a nuclear power" earned him harsh criticism in that country.
If he is confirmed to the post, he will have to realign the US forces to Afghanistán, which Obama considers "the front of the fight against terrorism".
Gates backs the idea of Obama to send reinforcements to that country and to close the prison at Guantanamo, Cuba.
But he would not support to establish a fixed calendar for the withdrawal from Iraq, something that Obama wants to achieve in a 16-month period.
The tasks are so complex and so many interests are affected that if the new President achieves to stop a greater fall of the economy, and creates the basis for recovery in the middle term, his mandate could be described as successful.
For this, however, he will have to concert international efforts and it would be desirable he seeks the participation in this task of Third World countries which now share the damages and are worthy of receiving also the future benefits.
 E-Mail: frank.diaz55@gmail.com
|
