Bush leads US to war & recession

Socialist Voice Nov. 2002

THE REPUBLICAN victory in the recent US elections has encouraged George Dubya Bush to step up his war mongering. Meanwhile, the US economy is moving towards a recession. TOM CREAN and ALAN JONES, members of Socialist Alternative, the American sister organisation of the Socialist Party, report from New York on recent developments in American society.

Even as UN weapons inspectors prepare to head back to Iraq after Saddam Hussein agreed to comply with the latest Security Council resolution, the US war machine is gearing up for invasion. Recent reports indicate that Bush has decided on a plan involving the deployment of between 200,000 and 250,000 troops. Heavy equipment is already being moved to the Middle East and a forward base has been established in Kuwait.

There are many factors at work in the drive to war. The right wing of the Republican Party which dominates the White House is obsessed with Iraq and wants to "finish the job" left over from the 1991 Gulf War.

War for oil?

But in a broader sense, Bush and co. want to redraw the strategic balance of the Middle East by occupying the region's second largest oil producing country. This war will not be simply about oil but it is impossible to separate the question of controlling this vital resource from the aim of reasserting imperialist domination in the wake of 9/11.

Of course, it must be stressed that war is not inevitable. The US faces massive opposition abroad - and increasingly at home - not just from ordinary people but from sections of the ruling class who see an invasion of Iraq as potentially destabilizing the entire Middle East. They particularly fear mass upheaval and the overthrow of regimes from Pakistan to Egypt by right wing Islamic fundamentalists. In reality, if the US goes to war, it is heading into a quagmire. Even if they manage to topple Saddam with relatively few casualties (by no means a certainty), they will be forced to occupy Iraq for the forseeable future and face potentially huge complications.

Division in US society

Despite Bush's victory in the recent mid-term Congressional elections the road to war domestically has certainly not been smooth. A poll in the New York Times at the beginning of October showed that while a majority of 67% support Bush's general campaign to "disarm" Iraq - figures that are significantly lower than the support for the war against Afghanistan - a majority also said they feared a long and costly war. 60% said they expected an invasion of Iraq to develop into a wider war in the Middle East and 50% said they thought it would increase the chances of more terrorist attacks in the United States. A majority said they did not want the US to act without the support of its allies and when it was posed more bluntly that "Iraq presents such a clear danger to American interests that the US needs to act now even without the support of its allies" only 29% agreed!

Anti-war movement

Apart from general disquiet, recent weeks have also witnessed the emergence of a potentially very powerful anti-war movement. On 26 October, a demonstration estimated at between 100,000 to 200,000 marched in Washington D.C. Tens of thousands of others marched in San Francisco and other cities across the country. The Washington demonstration was the largest anti-war protest in the US since the Vietnam War.

Young people have played a key role both in the national protests but also in the hundreds of local protests, especially on college campuses. But it is also very important that a number of unions and labor councils have adopted antiwar resolutions despite the continued support of John Sweeney and the leadership of the AFL-CIO for the "war on terrorism". The Washington State Labor Council, the first state labor council to oppose the drive to war, also called for the repeal of the US Patriot Act and other "anti-terrorism" legislation that was used to round up hundreds of Middle Eastern immigrants after 9/11 and hold them indefinitely without charge. Socialists including supporters of Socialist Alternative, the American section of the Committee for a Workers' International (CWI), played a crucial role, alongside other rank and file activists, in getting the Washington resolution passed.

Meanwhile, the recent convention of the United Electrical Radio and Machine Workers Union (UE) overwhelmingly passed a resolution stating, "An invasion of Iraq is not in the interests of workers. As in the Vietnam War, working people will be forced to pay for this war with our lives and our pocketbooks."

But what is most remarkable is that this movement which is already more powerful than the movement against the Gulf War a decade ago has emerged only a year after the 9/11 tragedy. In reality, the patriotic mood whipped up by the ruling class after 9/11 only temporarily cut across an ongoing process of disillusionment with the American establishment among large sections of the population.

But now, the US is barely emerging out of one recession before lurching toward another with the prospect of further mass layoffs. There is also massive anger at the scale of corporate corruption which has been revealed since the Enron scandal broke last year. At a local level, there is the prospect of serious cutbacks in social services. People are asking where the money is supposed to come from to pay for Bush's adventures in the Middle East. 9/11 led to an outpouring of patriotism which benefited Bush but it also shattered Americans' feelings of security. The question is whether ordinary people here - or anywhere else on the planet - are more "secure" after a year of the "war on terrorism". The answer is that the US ruling class couldn't care less about the security and well-being of ordinary people. They claim to be defending the population against terrorism but in reality they defend the interests and profits of the big corporations.

Turning point

American society is at a turning point. In the next period there is the prospect of huge movements by workers and youth against war, cutbacks and the corporate domination of politics. The recent lockout of dockers on the West Coast was only one indication of what could be in store. Socialists have a key role to play in making sure that this time the opportunity is not lost to create a real political challenge to the ruling class. Ultimately only a mass movement which directly challenges capitalist rule in the US and around the world can remove once and for all the basis for exploitation, poverty and wars of imperialist domination.

A choice of "stupid white men"

In the November elections, Republicans won back control of the Senate and increased their majority in the House of Representatives. That's going against a tradition dating back to the beginning of the 20th century that wants the presidential party losing votes in the midterm elections.

But, the Republican victory should not be interpreted as a "landslide victory" nor does it represent a turn of the mood in the country to the right. All the polls showed extreme anxiety of the population about the economy, unemployment, corporate scandals, healthcare and terrorism, while 40% of those asked said the country is headed in the wrong direction.

The Republican victory in the Senate was the result of the swing of a mere 50,000 votes in three states. That was mainly due to the ability of the Republicans to energize their base of support to turn out and vote and the vigorous campaigning of the President in key contests. That cannot be said about the Democrats.

For the one-third of the eligible voters that bothered to cast ballots, the choices were either the war and tax-cut policies of Bush and the Republicans or the policies of (slightly more cautious and multi-lateral) war and "we-have-no-objection-to-tax-cuts-for-the-rich" of the Democratic Party.

Concerns about the economy had led to a drop in Bush's popularity in the polls-which posed a danger for the Republicans in the November elections. He started to beat the war drums in order to whip up patriotism and mobilize his electoral base. Unchallenged by the media and the timid Democratic Party leadership, the Republicans were able to re-position themselves as the party that would fight "corporate corruption" and send CEOs "to jail." Suddenly they were even in favor of cheaper prescription drugs for the elderly.

The 2002 November Elections provided more evidence of the fact that the Democratic Party can not provide even nominal opposition to the policies of Bush and the Republican right-wing circus. It's also further proof that workers and young people need a new, radical political alternative in order to challenge Bush's policies.

There is a deep reason why the Democratic Party has ended up in the position that it is in: Challenging Bush and the Republican policies could ignite the huge class anger and political polarization that exists in the country with a mass movement on the streets. This would be dangerous for the future of the two-party system, with far-reaching consequences for politics in this country.

We in Socialist Alternative campaign to build broad left coalitions that can bring together the struggles against war, budget cuts, democratic and trade union rights, environment, globalization, racism, sweatshops and against Bush and his "permanent war" plans around the globe. These campaigns should have a fighting program, organizing regular meetings of the activists from different sections of the movement and organizing joint campaigns. There should be conferences of activists to launch these coalitions and campaigns in each city with democratically-elected coordinating committees.

We reject the idea that the Democratic party can become an effective opposition to Bush because it also is a party of capitalism and a servant of big business. Out of the movement against Bush's policies, the conditions could be created to run independent workers' and anti-corporate candidates in a number of cities in a short period of time. We can use the elections to build a mass, militant movement that can defeat Bush and the Republicans as well as lay the basis for a mass political party based on the working class, the unions, community, immigrant and youth organizations and the struggle to protect and clean the environment.

Economy: 1,000,000 jobs at risk

After months of denying that there was any possibility of a "double dip" recession, the corporate media is becoming increasingly gloomy as the promised recovery fails to materialize.

Even the announcement that the US economy grew at an annual rate of 3.1% in the third quarter, didn't change the more pessimistic tone because the reported growth was concentrated in July and August. In fact, the economy shuddered to a halt again in September. Projections for fourth quarter growth are 1% or less.

It appears consumer spending - which sustained the artificial boom of the late 90s and remained strong even during last year's recession - is finally faltering. Measures of consumer confidence have fallen sharply recently.

The other factor which sustained consumer spending is the "bubble" in the real estate market which replaced the Wall Street stock market bubble. But the signs are this bubble will burst soon as well. The increasing anxiety of the bosses is reflected in the decision of the Federal Reserve to bring the benchmark interest rate down to 1.25%, the lowest level in over 40 years.

Socialists are not surprised by these developments. Justice, the paper of Socialist Alternative, has insisted over the past year that the problems of the US economy go far beyond the impact of 9/11 or simply working off the "exuberance" of the late 90s. Capitalism is inherently a boom and bust system and the notion that globalization and new technology would change that was always a pipe dream. The truth is that superprofits of the 90s were based far more on increasing the exploitation of working people here and abroad than any real breakthrough in productive capacity.

It is now admitted that productivity gains over the past few years were greatly exaggerated but it turns out that profits were also seriously overstated by many corporations as part of the attempt to keep investors buying their stock. According to a recent article in Business Week, "...the aftertax profit rate on corporate investment peaked in 1997. It likely stands at only 5.2% today, no higher than it was a decade ago and well below the long-term historical average" (4 November).

This crisis of profitability has been a key factor driving the mass layoffs of the past two years, especially in manufacturing. Unemployment now stands at 5.6% and initial unemployment claims are hovering over 400,000. But as the bosses seek to restore profitability by cutting costs, far worse is on the horizon. Business Week goes on to estimate that, "in order to boost operating profits by 12% during the next year, companies in the S&P 500 may have to cut some 900,000 jobs or 4% of their workforce."

This is the insane "logic" of a system driven by profit. 5.6% unemployment just isn't enough to force down "high labor costs" (i.e. wages). For that you need the terror of truly mass unemployment. But if another million working people lose their jobs and the incomes of those with jobs are driven down, consumer demand will slump and a far sharper recession will result.

But even this is not the worst of the news because it is now becoming increasingly evident, as we have repeatedly warned, that the danger of deflation - a general decline in prices which was last seen in the US in the 1930s - is fast becoming a reality. The massive overcapacity in the global economy and slumping demand has led to a decline in prices from China to Switzerland. While declining prices may sound like a consumer's dream, deflation also increases the real value of debt, a potential disaster in the US with such massive levels of individual and corporate indebtedness. Deflation will also make it harder for companies to generate profits and thus lead to long term stagnation as has happened to Japan in the 1990s.

A few years ago, everything the capitalists touched seemed to turn to gold. Now everything they touch turns to crap. It's time for the rest of us to decide once and for all to put an end to the madness of the "free market" and replace it with a rationally planned, democratically controlled socialist economy.

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