Obama Economic Policy: Change or More of the Same?

RICHARD WOLFF
Wolff is author of the book Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About It. He said today: "Some 20-30 million unemployed, underemployed, and no-longer-even-looking workers were not worth addressing nor offering any new governmental program (e.g. direct federal hiring as undertaken by FDR from 1934 to 1941). The past program of Bush and Obama to rely on the private sector and stimulating it in the hopes that benefits will trickle down to reduce unemployment has not worked now for years. Yet that is all the State of the Union address offers, more of the same old, same old that has failed. The long term effects of massive, long-term unemployment will continue to undermine growth and revitalization of the U.S. economy in multiple ways.

"The flashpoint of the ongoing economic crisis has now become the disastrous state of state and local government budgets. They are about to exhaust the federal help they got from Obama's first stimulus plan (which only partially mitigated their budget crises). They thus face budget shortfalls that will force them (given that they are blocked by law from borrowing for operating budgets) to either raise taxes or cut programs and payrolls, or both. Any and all combinations of these actions will worsen the crisis. Yet not a word in the SOTU about helping states and cities, nor about how their cut backs will effectively undermine whatever 'bold new initiatives' Obama can achieve against Republican obstructions.

"Because public education is the largest outlay for local government budgets and because higher education is one of the few major discretionary outlays for state governments, those two governments' budget crises will damage the educational system that Obama touted as a key to long term U.S. competitiveness. So too does continuing mass unemployment and underemployment (and shrinking pensions and rising job insecurities) distract countless children and young people from their studies and their schooling as they try to cope with the upsets, anxieties and depressions of their parents and families."

He is currently a visiting professor in the Graduate Program for International Affairs at the New School University in New York City. Video of his talk "Capitalism Hits the Fan" is available at: capitalismhitsthefan.com.