As US president-elect Barack Obama prepares for his inauguration next Tuesday the impact of the recession on the US grows more severe by the day.
Some 2.6 million Americans were thrown out of work last year – the highest number to lose their jobs in a year since 1945. And unemployment growth is accelerating. In December alone half a million Americans lost their jobs.
It is in this context that Barack Obama is launching his $775 billion “stimulus plan” for the US economy – which he claims will create up to four million jobs by the end of 2010.
Many working class Americans, who are bearing the brunt of the economic crisis, have responded positively to these plans. They are encouraged that the intervention is about saving and creating jobs rather than just propping up rich bankers.
Expanding clean energy is a major component of the plan. And it includes many other positive aims, such as increasing benefits and healthcare for unemployed workers.
But unfortunately it will not be enough to shelter US workers from what Obama himself describes as the worst slump since the 1930s.
Obama is putting forward two ways to create jobs – government spending on “public works” and tax cuts.
He hopes that tax cuts for businesses will encourage them to invest – and so create jobs.
So, according to the plan, some 90 percent of the jobs will be in the private sector.
But this is problematic. Big business already has the money to invest, without governments throwing them any more cash.
But it will only invest in order to make profits – and at the moment many bosses think there is a high risk that they will not.
Obama’s plan could simply end up giving more money and tax breaks to the rich – with little benefit for workers.
The plan relies on triggering a spiral of job creation. It says that, “newly employed workers spend more and this stimulates other industries” and estimates that this will create 1.1 million jobs in “retail” and “leisure and hospitality”.
But it is not guaranteed that workers will increase their spending in this way.
With millions sinking into debt and one in ten mortgage holders behind on their payments or facing foreclosure, it seems more likely that any extra cash they have will be sucked up in simply trying to keep afloat.
It is not clear where the money for Obama’s plan will come from. The US budget deficit is already expected to soar to a record $1.2 trillion this year. There is pressure to reduce this debt – and this could mean cuts in services or tax rises.
Obama’s plan will have a positive impact in one respect.
Its very existence challenges the idea that governments can’t take action to defend jobs and services – and can encourage workers to fight for more.