America's Ten Economic Crises

After nearly 4 years—and more than $3 trillion in tax cuts and spending by Obama and Congress and $9 trillion in free money given to the banks by the Federal Reserve—the U.S. economy has still not been able to generate a sustained economic recovery. And with $2.2 trillion in sequestered government spending reduction scheduled to hit the economy beginning January 2013, the prospect of a double dip recession in the U.S. is increasing.

Republicans and Democrats will likely cut spending by several trillions of dollars over and above the $2.2 trillion already schedule to take effect in January 2013. The grand bargain revived immediately after the November elections will most likely include some token initial spending for a year, more stimulus in the form of more tax cuts for business plus more subsidies for the states, a continuation of the Bush tax cuts that will cost over $4 trillion more in deficits, further cuts in the top tax rate from 35 percent to 25 percent for corporations and the rich, and, to pay for it all, massive cutting of Medicare, Medicaid, Social Security disability, education, and just about all other areas of discretionary spending—except for defense where cuts will be reduced from the $600 billion already projected in the sequestration package of 2011.

With the third U.S. rebound now clearly showing signs of dissipating at mid-year 2012, and the economic crisis progressively growing in scope and intensity across Europe, two of the three strategic preconditions for double dip are thus being realized. The third precondition—the aforementioned imminent turn by U.S. political elites of both parties to still more spending cuts in addition to the $2.2 trillion already scheduled this November-December—appears increasingly likely. And should that occur, along with the first two preconditions already well evolved, a double dip is assuredly on the agenda for 2013.

As serious as the faltering U.S. economic recovery continues to be in the short term (2012-13), ten longer term crises represent problems building for decades which political elites of both parties are not only unable to resolve, but are not even beginning to address—or in some quarters are even consciously intent on making worse.

Ten Long Term Crises in America

1. Chronic Failure to Create Jobs: the U.S. economy is having increasing difficulty creating jobs. Not just in the short term. Not just jobs lost due to the recession that began in 2007 and the jobless recession that has followed. But jobs longer term, even in non-recession periods, and especially in the last decade. This longer term problem is sometimes referred to as structural unemployment, meaning job loss or failure to create jobs apart from recession (cyclical) causes. Full time permanent jobs are being lost, churned, and replaced in the tens of millions by involuntary part-time and various forms of temporary employment, sometimes referred to as contingent employment. There are easily more than 40 million such contingent jobs in the U.S. today, out of a labor force of about 155 million. These are jobs that pay typically 50-70 percent of normal pay, with virtually no benefits.

Another structural problem is the loss of jobs due to offshoring by multinational corporations. A closely related development is the loss of jobs due to free trade agreements. In the last decade alone, recent reports indicate multinationals cut 2.7 million jobs in the U.S. while hiring 2.4 million offshore. Free trade agreements since 1989 have resulted in more than 10 million jobs lost, mostly in high paying manufacturing and business professional services. Simultaneously, multinational tech companies have brought millions of non-citizens to the U.S. on H-1B and L-1 and 2 visas since the late-1990s. These are not unskilled, manual labor, agricultural jobs that Americans don’t want, but high paying technical jobs they do. New technologies are additionally displacing workers in the U.S. where jobs are not yet out- or in-sourced at rates of job loss about equal to that of free trade-offshoring effects. In general, structural forces have wiped out 20 million jobs in less than two decades.

Cyclical trends have impacted jobs no less. Following every recession the last 30 years, it has taken longer and longer to recover jobs lost. In the 1980s and 1990s, it took 25-35 months. After the 2001 recession it took 48 months. After the most recent it will take more than twice that, 96 or more months at best estimate. In recovery from every recession since 1947, hiring by state and local government has led the way, in effect offsetting and dampening private sector job loss and thereby shortening the recession. Not today. State and local governments are the layoff leaders. Nearly 700,000 such public sector jobs have been lost in just the past 3 years. Millions more workers have simply left the labor force this past decade. While the U.S. population has risen since 2000 by more than 21 million, total private employment has not risen at all. There were 111.3 private sector jobs in May 2000; there are 111.3 million private sector jobs today.

What is needed is a broad set of programs and policies to revitalize job markets in the U.S. by reversing the above negative long run job creation trends. In the short run, what is needed is a massive government jobs program funded by a fundamental restructuring of the tax system described as follows. 

2. The U.S. Inverted Tax System: the U.S. tax system has been turned on its head over the course of the past three decades. It begins with Reagan in 1981 and his $752 billion tax cuts (on a base GDP or only $4 trillion), the vast majority of which accrued to the wealthy and their corporations. A massive shift in income, led by (but not limited to) tax cutting effects has been the outcome. The top tax rates in 1980 were 50 and 70 percent, they are now nominally 35 (income and corporate) and 15 percent (capital gains and dividends). However, the effective federal tax rates are 16 percent for the rich, on average, after their tax lawyers get to squeeze the IRS. And state and local taxes on the rich and corporate America have declined even more, as local governments race to the bottom in recent decades to desperately try to attract businesses to move to their states. And let’s not forget the $1.4 trillion multinational corporations have stuffed in their offshore subsidiaries in order to avoid paying even the nominal 35 percent, or their periodic blackmailing of Congress to lower the 35 percent to 5 percent to bring back those profits—which they did in 2004 and are proposing once again in Congress. Not to be outdone, don’t forget the $4-$6 trillion that hedge funds, very high net worth individual U.S. investors, and other financial institutions have squirreled away in their 27 offshore tax havens to avoid paying the same.

Conversely, taxes on the bottom 80 percent of U.S. households have risen on net, when one considers the historic hikes in payroll taxes since 1985 and other increases in state and local taxes and fees. The payroll tax alone the past quarter century has raised nearly $3 trillion in federal revenue—money that did not go into the social security trust funds for long but was borrowed by Congress every year to help pay for, you guessed it, more tax cuts for the rich and wars. The Bush tax cuts of 2001-04 alone, more than 80 percent of which has accrued to the top 20 percent and corporations, has cost nearly $3.5 trillion over the past decade. Should those tax cuts continue for another decade (which is the No. 1 goal of Republicans and corporate America after the election), it will cost the U.S. deficit another $4.6 trillion, according to the Congressional Budget Office’s 2012 projections.

The inverted tax system today cannot continue without even greater negative consequences for the U.S. economy long term. It not only has resulted in a massive shift of income upward and a stagnation in consumption for the bottom 80 percent households, but has served as a primary excuse for directly attacking the deficits it has produced by cutting spending on programs that are essential for continued economic growth as well.

What the inversion of the U.S. tax system over the past three decades shows is that the U.S. is not broke. There is at least $5 trillion in cash being hoarded by the rich and their corporations today as a result of the inverted tax system in America. The so-called deficit and debt problem could be cut in half immediately by discontinuing the Bush tax cuts as a whole; and eliminated completely by simply rolling back the tax cuts for the rich back to 1980 levels. The inverted tax system is also the number one contributor to the massive income inequality that now characterizes American society. It is also a major reason why sustained economic recovery has not occurred since 2009.

What is needed is a new tax structure that takes the current inverted system and puts it back on its feet, taxing the rich and corporations at appropriate rates once again while reducing taxation for the working and middle classes in order to re-redistribute income.

3. A Continuing Depression in Housing: once producing residential housing at the rate of 1.4 million units a year and commercial property construction in the trillions of dollars, it has, since 2008, been producing housing units consistently less than 500,000 a year. 

It is important to note that in every one of the 11 previous recessions in the U.S. since 1947, housing has led the way in terms of recovery. The longer term crisis in housing, however, is its role as a prime sector for financial speculation. The real super profits are made not on housing construction per se, but on the financial derivatives built on the housing boom. Again and again since the 1980s, financial speculators have been allowed by Republicans and Democrats alike to exploit the housing sector to realize massive profit gains from speculation. It has resulted in repeated housing busts in the U.S. What is needed is a utility banking system based on non-profit, direct lending at the cost of capital by new government agencies to homeowners and prospective homebuyers.

The solution to the housing crisis is simply to take from the banks and private financial institutions their key role as intermediaries of the cost and availability of housing. The profit motive must be removed from residential housing by creating a utility banking system that will provide loans to homeowners at the cost of long term money based on the 30 year bond rate, which today is roughly 2.5 percent. To permit refinancing at the same rates for those with existing homes. And to introduce an home improvement investment tax credit of 15 percent for homeowners. 

4. A Fundamentally Broken Retirement System: the retirement system established in the U.S. in the late 1940s is today in a state of severe collapse—and with it the incomes of most of the more than 45 million Americans presently retired and the 77 million babyboomers that will soon do so over the next decade. That system was built upon three elements: Social Security retirement benefits, defined benefit pensions, and personal savings. Each was supposed to provide one-third of the necessary income for the retired after age 65. Each of the three elements have been consciously weakened and undermined since the 1980s.

After three decades of policies aimed at undermining DBPs and promoting 401ks, the average balance in a 401k pension in America today is roughly $18,000; and for those over 55 only $50,000. Simultaneously, DBPs providing guaranteed retirement payments were dropped by companies, raided by managements for their surplus funds, manipulated by them to avoid paying required contributions by law, and otherwise dumped DBPs on public agencies by companies. A most recent corporate attack on DBPs—public and private—is now underway, designed to eliminate the last vestiges of such plans. Thus, the private pension income has been destroyed in recent decades. The third element of retirement, Social Security, has been under repeated attacks every decade. Under Reagan, Clinton, and George W. Bush its payroll tax-created $2.4 trillion surplus has been siphoned off by politicians and spent on wars and tax cuts for the rich. The attack is about to renew once more with cuts that will come after the November 2012 elections.

The collapse of the retirement system in America means not only severe hardship continuing for tens of millions, but also the elimination of a critical income growth base necessary to sustain consumption and therefore economic growth. It has meant the bottom 80 percent households having to turn toward more debt to maintain standards of living, to working longer hours and more part time jobs, to a greater reliance on credit cards, and ever more dis-saving and spending down past saved earnings to maintain an increasing precarious standard of living.

A basic overhaul of the retirement system is a precondition for future economic stability and growth. That means not cutting benefits and thus disposable income further, but instead an increase in Social Security retirement benefits, a nationalization of all 401k plans under Social Security, a business value added tax to fund future contributions to a national 401k pool, and policies to restore defined benefit pensions once again.

5. An Imploding Insurance Co.-Based Health Care System: the U.S. spends today more than 17 percent of its GDP—more than $2.6 trillion and rapidly rising—on health care. That is nearly double that paid by other advanced economies that typically pay 10 percent of their GDP for health-care services that are also generally superior in quality than that received by the average American. That 42.6 trillion means the U.S. wastes more than $1 trillion every year on middle men in its privately insured system—i.e., an excess $1 trillion that accrues mostly to insurance companies and other paper pushers that don’t deliver one iota of health-care services.

The fundamental causes of runaway health-care costs in the U.S.—costs that are undermining economic growth long-term in the U.S.—are not overuse of services by the vast majority of Americans. The unsustainable health-care cost run-up for two decades now is direct result of government-encouraged and tax-subsidized corporate mergers and acquisitions among health insurance companies, government subsidization of drug companies, and tax-encouraged for-profit hospital concentration—all three of which today drive health care costs all along the health care services supply chain. In other words, government policies for decades has encouraged monopolization in the industry that is the fundamental force driving health care costs. Government has not only done nothing about this trend, but has aided and abetted it since the Clinton administration and the exemption of health insurance companies from anti-trust laws.

As health costs have escalated for decades, the solution of politicians to the growing cost crisis has been to socialize the costs (while privatizing more of the benefits) for those sectors of society less able to afford it. Thus, the poorest Americans have been covered by more resources allocated to Medicaid and Schip programs for the disabled, the poor, and for children. Working and middle class Americans in turn have been subsidized by hospital emergency rooms (who pass the costs on to insured workers), have been required to pay more and more of the total cost of private employer health insurance and/or receive less coverage or have been forced to go without coverage. Retired Americans costs under Medicare have been socialized as well. Rising Part B Medicare doctor costs are paid increasingly out of general budgets and Part D prescription drugs totally out of such budgets. However, this system of perverse socialization of costs has reached its limits. Other ways are now being considered to continue the health care cost inflation benefiting companies and investors profits, while introducing new ways to socialize the costs. Obamacare is just the latest experiment in new methods to continue socialization of costs on behalf of health sector corporate America.

Concurrent with Obamacare and new forms of cost socialization, however, are planned massive attacks at Medicaid and Medicare. The retired (Medicare) and the working poor and disabled (Medicaid) will be asked to use less and/or pay much more directly for even lower quality health services. Meanwhile, those workers still with employer provided health insurance will be dumped on the market as employers after 2014 dismantle their employer-provided health insurance plans—leaving their workers either to be driven into the Obamacare private health insurance system or forced into the even lower quality/reduced coverage Medicaid system.

It is all further privatization of health care by another name—from employer provided health plans to individual paid personal health plans; from current Medicare- Medicaid programs to less coverage and more costly Medicare-Medicaid plans in which private insurance will play an even greater supplemental role; and to more individual self-rationing of health care services. This new system planned by politicians will not result in less of GDP, but more of GDP accruing to health care services and business profits in that sector. U.S. households and consumers will thus pay even more of total income for health-care services, resulting in a still further decline in disposable income with which to purchase other goods and services and support economic growth.

The only solution, long term, to the broken health services system in the U.S. is a true socialization of the crisis—not a socialization on behalf of insurance, drug, and for profit companies. A socialization of benefits as well as costs in which everyone pays a fair share, not where wealthy investors and corporations are subsidized at pubic expense for what is a right to health care and not a privilege. A solution based on a system of Medicare for All funded by a reasonable tax on all incomes—earned (wages) and all capital incomes alike. An elimination of health insurance companies and other middle men from the U.S. health care system saves a minimum $1 trillion a year. Add a reasonable tax of 3  to 5 percent on all forms of income in addition to the $1 million a year savings, and funding for a system of Medicare for All becomes more than feasible.

6. Corporate Reorganization of the Education System: both K-12 and college education systems in America were once the envy of the world. At the higher education college level, the central problem is runaway costs. College administrators have become intent on acting as corporate CEOs, spending more and more money on providing CEO level pay and benefit packages for themselves and their growing management bureaucracies; expanding physical assets (buildings, facilities, programs); recruiting more and more wealthy foreign customers (students) to help pay for it; and raising the price of higher education services for U.S. students at an annual rate of more than 12 percent, exceeded only by escalating health care costs. This three decades-long higher education financing formula has served banks and financial institutions as well, as the latter have provided ever higher and more expensive student loans to pay for it all—with profits guaranteed by the government. Student loan debt as a result now exceeds $900 billion and represents two-thirds of all consumer credit, growing monthly faster than both credit card and auto debt combined. As there exist absolutely no programs or policies by government to bring escalating higher education costs, or student debt, under control, the future scenario remains more of the same. Fewer Americans will seek and obtain higher education, more wealthy foreign students will be recruited to pay the excessive costs, and the quality of education provided in public colleges and universities will decline.

The scenario for K-12 is similarly dismal long term. Federal, state, and local governments have refused to fund K-12 education commensurate with the growth of population for decades. With the recent economic crisis and the continuing slow and faltering economic recovery, even inadequate past levels of funding are now repeatedly reduced. Desperate school districts cut programs and attack teachers jobs, wages and benefits to make up the shortfall—or, as at the college level, now also seek wealthier foreign students from Asian countries to pay top dollar for a U.S. high school education.

Corporate interests meanwhile lead the effort to prevent any tax increases at the state and local level to adequately fund education. Their answer is to privatize the public education system. Charter schools represent one form of such privatization in education. Bush’s No Child Left Behind (NCLB) is another. Before the education system can be successfully molded in a corporate image, its product must be standardized. That was the primary focus of NCLB. Obama’s subsequent Race to the Top (RTT) in turn represents a shift in the strategy to achieve that standardization—unlike trying to achieve it all at once and everywhere, as with NCLB, the Race to the Top attempts to focus it first on a subset of the education system by providing payment to those school districts that do it first. But the ultimate goal is the same: both NCLB and RTT are corporate in spirit and plan, both designed to further standardize and centralize K-12 education. The longer run consequences of transforming public K-12 education into a corporate image is cost-cutting in lieu of adequate funding. Represented perhaps best by the views of Bill Gates and others, the future goal once the classroom is fully standardized is to introduce massive amounts of new technical hardware and software into the classroom. Profits for tech companies rise as costs of providing education decline. The role of teachers as we know it disappears and with it their unions and current wage and benefits. In their place are teachers as machine operators, who will teach to the standardized curricula delivered by the hardware and software technology. What is taught and how it is taught will no longer be determined by the teacher but by the centralized, standardized formula. Contingent employment (part time and temporary) will become the rule in the K-12 classroom, thus mimicking the current situation in higher education where more than half of instructors are contingent as a way to reduce costs. Contingent K-12 labor is labor paid one-half to two-thirds current rates without benefits.

7. Accelerating Income Inequality: in 1978 the wealthiest 1 percent households earned roughly 8 percent of all annual income produced in America that year. That percentage remained more or less the same since the early 1940s, when top income tax rates were 91 percent. Commencing in 1981, however, those rates were dramatically reduced, tax loopholes broadened, and IRS enforcement moderated. The consequence was a steady escalation of the wealthiest share of national income to a level of 24 percent in 2006-07, only temporarily interrupted by the crisis of 2008-09 and subsequently restored quickly by 2011. In contrast, the median annual household weekly earnings, adjusted for inflation, remains less today than it was in 1982.

Since the fundamental causes of escalating capital incomes and stagnating and falling wage incomes are not being addressed at all today by politicians of either party in the U.S., it can only be assumed the income inequality in America will continue to grow in the foreseeable future as well. So too will all the negative economic consequences associated with that continuing inequality trend.

What is needed is a broad set of programs and policies that will, in effect, re-redistribute income in America. At the top of the list of such policies must be a fundamental restructuring of the tax system noted above, major institutional changes in the labor markets to restore real household income growth, and a redirection of capital incomes away from offshore and speculative financial investing and toward public investing in the U.S.  

8. Declining U.S. Global Economic Dominance: from 1944 to 1973 the U.S. maintained economic hegemony in the global economy. The U.S. dollar was the prime currency for trading and reserve purposes. This dominance was challenged in the post-1973 period briefly, however, as the U.S. economy experienced an economic crisis at that time. The institutional arrangements by which the U.S. retained dominance from 1944 to 1973 were restructured and rearranged. The U.S. economy and its world dominance was restored in a new set of arrangements and relationships with other states and economies starting in the 1980s. The U.S. led a drive to end controls on international money capital flows and the rest of the world followed. That event made possible in turn free trade, rapid growth of U.S. foreign direct investment offshore, globalization and the financialization of the U.S. economy. The symbol of that economic dominance, the U.S. dollar, after having seriously weakened in the 1970s was restored again to unchallenged status as the global currency in the 1980s and after.

Another consequence of these new structures, relationships, and arrangements was the rise of the U.S. twin deficits—the trade deficit and the U.S. budget deficit. Beginning from the early 1980s, under Reagan and subsequently every president thereafter, the U.S. ran growing trade deficits. These trade deficits made possible and enabled corresponding chronic and ever growing domestic budget deficits. The trade deficits meant U.S. dollars flowed out of the U.S. economy at an accelerating rate. But new arrangements meant the dollars would flow back to the U.S., as foreign economies and governments recycled the dollars back to the U.S. to purchase U.S. government bonds. First European and Petro-economy allies. Then Japan. Then via North American free trade agreements with Canada, Mexico and others, and not least, after 1999, increasingly China as well.

The growing trade deficits financed the U.S. budget deficit in the following manner: because the new post-1980 arrangements between the U.S. and other economies meant the dollars from the trade deficit that accumulated offshore would be consistently recycled back to the U.S., policy makers could now count on spending those dollars above spending based only on U.S. tax revenues. The recycling grew and was so large by the 1990s and after, that the deficit-recycled dollars permitted massive tax cutting for businesses and investors and the funding of wars in the middle east since 2001 without paying for them through taxation. $3.4 trillion in tax cuts after 2001 were passed, 80 percent of which accrued to the wealthy and corporations. And $2.1 trillion in excess war spending was paid for out of deficits—the first time in U.S. economic history wars were financed only by deficits.

The restructuring of the global economy in the 1980s, led by the United States (and a junior partner the UK) has now run its course. Once the unchallenged global currency, the U.S. dollar is once again facing challenge as the dominant global currency. The focal point of that challenge, today and in the years ahead, is China and its currency, the Yuan.

Already China’s share of global manufacturing is at least equivalent to the United States, about 25 percent each. China has currency reserves approaching $3 trillion and is matching the U.S. in foreign direct investment around the world. The Yuan is becoming a de facto global trading and reserves currency. Initially, it is doing so with its main economic partners, Russia, India, Brazil, and South Africa (i.e. the BRICS), but will soon do so with Europe as well. China is also slowly but steadily extricating itself from the twin deficits and recycling dollars to the U.S. arrangements. It is recycling fewer and fewer dollars back to buy U.S. government bonds. As that arrangement declines, the U.S. economy will not be able to deficit spend on as massive a scale as it has been over the past decade. It will have to either cut social spending or defense spending on a massive scale or retract the equally massive multi-trillion tax cuts for the wealthy, investors, and their corporations. Corporate America and its investors are intent upon cutting social spending, including entitlements, to avoid having to give up their tax cuts of the past three decades. That is the fundamental, driving force behind emerging austerity proposals in the U.S. today.

9. Growing Corporatization of Government and Politics: as the U.S. economy has continued to falter since 2000, both domestically and globally, the response of corporate America and their political elites has been increasingly to prepare to impose more draconian economic measures on the rest of American society to protect their capital incomes and economic interests. To successfully implement these more draconian measures, corporations, wealthy investors, and politicians must first deepen their control of the key levers of the political system and its governments. This means the policy-making apparatus of legislatures and bureaucracies, the executive apparatus of presidents and governors, the electoral process, and the opinion-making structures like the broadcast media, Internet, and social media. That influence has always been significant. However, it was deepened qualitatively after the 1970s economic crisis, in anticipation of the restructuring of the economy that was implemented in the 1980s and lasted until 2007 (sometimes referred to as neoliberalism or the Washington Consensus). But a new general crisis in the U.S. and globally erupted circa 2007, and a new attempt to once again restructure the U.S. and global economy is in its early stages since 2009. In turn, that means a new political restructuring—with less democracy—to accommodate the new economic and the new draconian measures.

The state and government will be drawn even closer into the corporate world as part of the new institutional arrangements. The preparatory steps are already evident with the Citizens United court decision that has opened the floodgates of deeper corporate influence over U.S. electoral, legislative and executive institutions, and political processes. This has included thus far: 

• more corporate direct funding aimed at takeovers of state governorships 
   
• the pending destruction of public employee unions, targeting first and foremost their influence over state and local governments 
   
• widespread attempts to restrict voter registration 
   
• introduction of new forms of poll taxes 
   
• limitations on voter eligibility in many states 
   
• the ALEC phenomenon of billionaire-financed deeper influence of legislative agendas on a national, corporate coordinated basis 
   
• the buying of Congress outright by offering them privileged access to new stock IPOs 
   
• countless measures at state and local levels to further isolate third party challenges, despite a non-parliamentary system of U.S. government that already is strongly biased in favor of a two-wing single party system  
   
• a plan to tighten political control over internet and new media forms of communications  
   
• national coordination of police actions against Occupy and other protest movements  
   
• increasing restrictions on public assembly and public speech at all levels  
   
• the planned widespread introduction of drones in U.S. cities and even on U.S. college campuses, both already in early stages, as means of more effective public protest control

These multiple developments represent something more than ad hoc development and normal evolution of political institutions and practices. They represent a broad attempt to restrict even the muted forms of democracy and democratic participation that existed in the U.S.—a development that is in significant part related to the economic crises short and longer term noted above.

10. Narrowing of Democracy and Civil Liberties: concomitant with the developments to project deeper corporate control over institutions is the restriction of general civil liberties as well. Democracy cannot be successfully narrowed without the accompanying further restriction of civil liberties of its citizens. The process began with the imposition of the PATRIOT Act in 2001. That Act was publicized at the time as temporary, but has been continued for more than a decade and, in some cases, even expanded. Further measures that limit citizen rights of privacy have also expanded over the past decade.

Government spying on its citizens has been broadened and deepened steadily over the decade. National Security Agency, military, and FBI monitoring of websites has become very widespread. Wiretaps and cellphone interceptions no longer require normal court orders. Plans for social media access periodically arise and are reported. The initially derided Total Information Awareness program of Admiral Poindexter that was authorized by the original Patriot Act, has become an institutionalized fact. Federal budgets for Homeland Security, averaging $40 billion a year over the last decade, have recently been proposed to grow to an average of $80 billion a year for 2012-17, despite the official ending of the Iraq and Afghanistan wars and the assassinations of virtually all the top Al-Qaeda leadership globally. Most of that increase is earmarked for internal U.S. domestic surveillance. Overall defense spending is thus not planned for reduction in 2013; it is just being redeployed to fund other electronic surveillance and cyber warfare measures (now the fifth military command officially, in addition to space, land, sea and air) and redistributed among different departments and parts of the U.S. budget.

The rights of U.S. citizens to assemble and to free speech are also being further restricted, as events involving protests this past spring in Chicago demonstrated. And in what is perhaps the most ominous recent sign of forthcoming plans to further restrict civil liberties, the Defense Authorization Act passed December 2011, signed by President Obama, authorizes the government “to order the military to pick up and imprison people, including U.S. citizens, without charging them or putting them on trial,” according to the American Civil Liberties Union (ACLU). In signing the bill, Obama said he did so with serious reservations and pledged not to use it on U.S. citizens without trial. Just as he pledged not to break up immigrant families by deportations, and put bankers who helped cause the economic crisis by fraudulent means on trial, and stop price gouging health insurance companies, and all the rest of the list of broken and shelved campaign promises.

The limitation of rights and liberties is not an isolated development. It is the other side of the coin of limiting democratic activity and expression. And that limitation of Democracy is a reflection of the growing new forms of corporatization of American government and society now being forged to ensure that, whatever new economic restructuring comes out of the current economic crises, measures can be successfully implemented that secure and protect the accumulated wealth of the 1 percent, their corporations, and their institutions in the decade ahead.

Z

Jack Rasmus is author of Obama’s Economy: Recovery for the Few, April 2012, published by Pluto Books and distributed by Palgrave-Macmillan in the U.S. His blog is jackrasmus.com and his website is: www.kyklosproductions. com.