Barack Obama’s re-election is undoubtedly the best outcome for American capitalism.
This may seem surprising. After all, the higher a voter’s income the more likely he or she was likely to support the hapless Republican candidate Mitt Romney. The stock market fell after Obama won.
Moreover, as the Financial Times reported before the election, “Although there are some notable exceptions in Hollywood, high tech and clean energy industries—big business and wealthy executives across the country are cheering for the US president’s defeat.
“Goldman Sachs, [along with] executives at AT&T and General Electric, are now putting most of their campaign contributions behind Mitt Romney.
“From industrial magnates like the conservative Koch brothers to Wall Street and big oil executives, most of whom never supported Mr Obama in the first place, many see the election of Mr Romney as the clear choice to revive the sluggish US economy.”
This choice was motivated largely by greed. Wall Street was desperate to halt the implementation of the Dodd-Frank Act, which imposes rather mild regulation on the banks. And bosses in every sector didn’t like Obama’s campaign theme that the rich should pay more tax.
As Karl Marx pointed out long ago, individual capitalists often have their snouts too deep in the trough to think about their interests as a class. One of the functions of the state is to force them to act as a collective.
So, yes, Romney as president would no doubt have done his best to be a safe pair of hands for big business, from whose ranks he had sprung.
The problem is that the base of the Republican Party is dominated by lower middle class white crazies. This was bad enough when they concentrated on so-called social issues such as opposing abortion and the theory of evolution.
But now the Tea Party movement has mobilised the Republican base for a crusade to radically reduce the role of the state. As a result, almost all the party’s members of the House of Representatives and the Senate have signed a pledge to vote against tax increases.
Obama, by contrast, has been willing to use state power selectively to shore up American capitalism. Not only did he continue George Bush’s bailout of Wall Street, but he also rescued and restructured the auto industry.
This last measure—fiercely denounced by Romney—was probably decisive in allowing Obama to secure re-election by winning a number of Midwestern industrial states. But it also helped to keep the US in the game as a major industrial producer.
Big business also wants a more flexible immigration policy. Romney, trying to appease his crazies by promising to make migrants “self-deport”, ensured that even a majority of Cuban Americans voted for Obama.
Equally, American capitalism had no interest in the efforts of the Republican free market fanatics in Congress to force the US to default on its debt in July 2011. This is important because of the so called “fiscal cliff” that is now looming.
The debt crisis was postponed when Obama and Congress agreed that, unless they could find a compromise on how to reduce US government debt, massive cuts in public spending would come automatically into effect at the end of this year, along with the end of the tax cuts introduced by Bush.
The Congressional Budget Office calculates that if these measures were implemented, real national income would fall by 2.9 percent and 3.4 million jobs would be lost. The US, and probably the rest of the world, would be pushed into another recession.
Not surprisingly, stopping the economy tumbling over this cliff has become Obama’s number one priority since his victory. This means achieving the compromise with the Republicans (who have retained control of the House of Representatives) that has so far eluded him.
He will try to trade some increase in taxes on the rich for cuts in the two most important federal welfare programmes—Social Security (pensions) and Medicare, which guarantees pensioners access to health insurance.
This kind of deal broadly fits the interests of American big business. It doesn’t want to get taxed more but it needs the state to provide a stable and predictable environment. Constant uncertainty over the debt and endemic warfare in Washington work against this.
Economists argue over how a big a debt problem the US actually suffers from. What’s certain is that government borrowing has surged because of the bailouts and the recession.
The private debt accumulated by the banks during the financial bubble of the mid-2000s has been transformed into public debt. The price of reducing it will be paid by the ordinary working people who, on the whole, voted for Obama.
They will suffer from the further narrowing of the very limited welfare system provided by the federal government, and also from the often massive cuts being implemented by state governments.
So delightful though it was to see the Republican rabble routed, don’t celebrate too long. Back in the White House, Obama will continue, in his cool detached way, to advance the interests of American capitalism.
‘Wall Street cannot win this’
“I felt Romney was going to be more for the interests of the wealthy whites, while Obama, although he’s not perfect, is hopefully going to be more inclusive of other classes and races. I also supported Obama because of Romney’s views on immigration and women’s rights”
Evelyn Ibanez, student, UCLA
“Working people and unions played an essential role in re-electing President Obama. We celebrate the election results. But it is also time to send another message. Wall Street can not win this vote through the back door.
“We still have too many people who are jobless, facing un-payable medical bills and the loss of their homes, and worried about their retirement security and economic future.”
Rose Ann DeMoro, National Nurses United union
Assembly line workers and UAW union members in a Siemens factory in Mississippi celebrated Obama’s victory by wearing a UAW T-shirt featuring Obama.
Management instructed the workers to remove them or be sent home. Robert White spoke out, saying:
“I’ve seen Romney and Ryan shirts on a couple of white guys. You got people coming out there with confederate flags and different things, other political type of statements, and I can’t wear the president of the United States of America. I don’t know where I’m at anymore.”