Waning dream

A MAN WHO had been looking for work over most of 2008, at an intersection at Miami in Florida in January 2009.-JOE RAEDLE/AFP

The recent jobs report of the U.S. Bureau of Labour Statistics shows that 95,000 jobs were slashed in September, while only 64,000 were added.

The jobless men stood Looking out the windows At the machines dying Like living things out there.

We Ain't Got No Money, Honey, But We Got Rain, Charles Bukowski, 1990.

ON October 8, the economic danse macabre continued in the United States. At 8-30 a.m. (East Coast time), the Bureau of Labour Statistics released its jobs report, which showed the unemployment rate steady at 9.6 per cent, with 95,000 jobs slashed in September (much of it off the government payroll) and a very low 64,000 jobs added in the month. The traders at Wall Street reacted as they often do with a bad jobs report: the Dow Jones average ticked upwards, over 11,000 points. Gold prices and the value of blue chip stocks gained. Champagne corks popped in some buildings around Manhattan, while a million U.S. households began to rearrange their belongings in anticipation of a foreclosure notice on their homes. The outlook for many is gloomy.

Not many mainstream economists have been willing to speculate about the return to normalcy. President Barack Obama's Chief Economic Adviser, Larry Summers, has decided to return to his safe academic perch at Harvard University. Obama's job approval rating is at a mere 38 per cent (CBS News), with a poll from September showing that 58 per cent of those asked by the Associated Press disapproved of his economic policy.

No wonder that the head of the Republican Party, Michael Steele, gloated that these numbers provide the final verdict on the failed policies of this White House and Democratic Congress as voters head to the polls. This jobs report is the last of its kind before the November 2 midterm election, when the fate of Congress, and so Obama's agenda, will be decided. The Democrats are in the doldrums, with little wind to carry them to victory in under a month.

Certainly, the Republican Party can only be confident because the U.S. population is stuck with a two-party system. Little that President George W. Bush (Republican) did over the period from 2001 to 2009 can be construed as positive for the U.S. economy. Under Bush's watch the U.S. government went into two unsustainable wars (Afghanistan and Iraq), giving the generals a blank cheque (in 2000, the U.S. spent 3.1 per cent of its gross domestic product on the military; by 2008, that figure had risen to 4.2 per cent). Bush's tax cuts to the wealthy fed a culture of impunity and raised the already growing inequality rate between the wealthiest Americans and the poorest.

The tax cuts cost the U.S. exchequer $1.7 trillion (from 2003 to 2008) and pushed income inequality to an obscene level (the top 1 per cent of income earners make 80 times more than the bottom 20 per cent of earners). The recession began in 2007, during Bush's second term in office. The Republicans can only wash their hands of the mess because of the kind of short-term memory cultivated by 21st century public culture.

Obama inherited a mess: two wars, an economy in freefall and a malignant political culture. In the U.S., elections occur every two years. This means that incumbents and candidates cannot take the long view on structural changes. If a policy does not deliver real change or the appearance of change, then the politician is shown the door. Long-range planning for reform is essentially impossible in this electoral system. Earlier this year, the U.S. Supreme Court decided to allow corporations to funnel vast sums of money into the electoral system, without any regulation or oversight ( Citizens United vs Federal Election Commission). A corporation, by this ruling, now has freedom of speech, and so cannot have its speech encumbered by too many restrictions.

No leadership for long-term reform

Bush's brain, Karl Rove, now runs a group called American Crossroads, which has pledged to spend $50 million in races across the country. It is unclear where it raises its money, and there is no indication that the soft disclosure requirements will make it come clean before the elections are over. The money and the short political cycle make it impossible to provide the kind of leadership needed for long-term reform.

In 2008, Robert Kuttner of the magazine The American Prospect, provided the main lines of such serious reform, restore taxes on corporations and the wealthiest Americans, reduce spending on foreign wars, incur temporary larger deficits, and use the proceeds for very substantial social investments ( Obama's Challenge: America's Economic Crisis and the Power of a Transformative President). Kuttner hoped that Obama would govern with this programme. It has not come to be, not only because this was never Obama's programme but also because of the short-term constraints of elections and the severe role that corporations play in American politics.

The most that Obama did was to indulge the country in a stimulus programme (an $814-billion stimulus package and a $700-billion financial institution bailout). The money went towards shoring up teetering banks and inefficient mega-corporations (such as General Motors). Promises of job preservation came to naught as the banks and firms haemorrhaged their workforce without embarrassment.

Millions of jobs depend on it, Obama said, with reference to the government bailout, but not long after, GM cut 27,000 jobs and closed down half of its car dealerships. Banks, now on the federal payroll, hold their almost $2 trillion in cash in their vaults, refusing to lend the money. The Federal Reserve held the short-term interest rate near zero and sent billions of newly minted dollars into the financial system. Banks remain constipated. Starved for money and afraid of further free fall, businesses refuse to extend themselves. The economy has stalled. The Centre on Budget and Policy Priorities has a sober assessment: A jobs recovery patterned after the 1980s, if it started right now, would require average job growth of more than 500,000 per month and would take 15 months (until January 2012) to boost the number of jobs in the economy back to where it was in December 2007, when the recession began. Imagine what this assessment says to the 15 million Americans who have registered as unemployed (the number is larger). Almost half of these people have been looking for work for 27 weeks or longer. It is a miserable time.

Laissez faire' capitalism

The American Dream, like the Titanic, struck the iceberg of the Recession, which came almost out of nowhere. When Ronald Reagan declared that it is morning in America, the American Dream seemed inevitable. Parents told their children to work hard and enjoy lives that exceeded the expectations of previous generations. An unshakable faith in laissez faire capitalism and the American spirit buoyed politicians and economists to shrug off reality in favour of their faith in boundless growth. That this growth was premised on debt of all kinds (housing, credit card, personal) was of no consequence. When the Cassandras warned of the disaster to come, they were scoffed at. The poor have always been there in the U.S., but the general theory of the establishment is that they are only poor because they do not have the right skills, do not try hard enough or have some disability that prevents their advancement.

What is needed is more education, more incentives or, for the infirm, a modest social safety net. There was little care to come to terms with the massive shifts in global production, with firms now leaving the former industrial heartlands of the Atlantic for the Pacific Rim and the Caribbean islands. Jobless growth was the order of the day in the U.S., with large numbers of people, before the 2007 recession, already slipping into the limbo of chronic joblessness.

After 2007, many more would enter this limbo. Almost 44 million Americans now live under the poverty line (that is 14.3 per cent of the population). The line is set at $10,830 for a single adult, or $22,050 for a family of four. Not many people can survive on such a modest income. If the poverty line were properly calculated (at perhaps double this amount), more than a fifth of the population would be seen as poor. As it is, a quarter of African Americans and a quarter of Latinos live in poverty. Columbia University's National Centre for Children in Poverty shows that 14 million children (19 per cent of all children) live in families with incomes below the federal poverty level. Research shows that, on average, families need an income of about twice that level to cover basic expenses, the centre points out. By this logic, 41 per cent of children in the U.S. live in poor families.

In late 2009, the U.S. Department of Agriculture revealed that 49 million Americans lack consistent access to food. The department considers them in a condition of food insecurity. They will not use the word hunger as it has been banned by the government since the Reagan administration. This did not stop the President: not long after the report came out, Obama said, Hunger rose significantly this year. His Agriculture Secretary, Tom Vilsack, noted: These numbers are a wake-up call for the country. No one has woken up.

Paltry social security net

Unable to create jobs, the Democrats at least tried to retain the paltry social security net. They pushed to extend unemployment benefits, which many analysts feel is the main way to get money into the hands of those who find it hard to buy food for their families. This extension remains blocked in the Congress by the Republicans and their Blue Dog Democrat friends. Some on the Right refuse to believe that there is an unfolding social crisis in the U.S.

The Heritage Foundation's Robert Rector put it plainly: Very few of these people are hungry. When they lose jobs, they constrain the kinds of food they buy. That is regrettable, but it's a far cry from a hunger crisis. If the Republicans take the Congress in November, such cruelty will be the order of the day. From the Democrats one gets a rhetorical fealty to liberalism; from the Republicans one gets the opposite. But action to combat the conditions of such suffering is not to be found from anyone.