Main Street moves against Wall Street

From Richard D. Wolff:

At last, the first signs that politicians are heeding popular anger at the austerity measures imposed to pay for bankers’ greed

Published on March 28, 2011

When the current economic crisis hit, the Obama campaign blew away Bush and McCain by promising hope, change and a solution that would overcome this crisis and prevent future crises. Likewise, some governments in Europe came to power based on public fear reacting to the global meltdown. Ongoing crisis, mass economic pain and deepening public anger keep shifting political winds.

Within six months of Barrack Obama’s election, those winds had changed again. His liberal campaign rhetoric had hit a wall. What humbled Obama was the determination of business interests to shift onto others the costs of the crisis and of the government’s response, namely its hugely expensive bailout of major corporations especially in finance. We watched and learned who was really in charge of how this economic crisis would be “managed”.

There would not be a 2011 rise in the federal income tax rate from 35 to 39% for the richest Americans (even though it had been 91% in the 1960s). There would be no legal or other requirement that corporate beneficiaries use their bailout billions in economically and socially useful ways (rather than only for their private profits). There would be no federal employment programme, no matter how high the US unemployment rate went, nor how long workers remained unemployed. There would be no real programme to lift wages or otherwise offset millions of homeowners’ inability to make mortgage payments even if that omission meant that the housing market would tank again – the double dip downward in that crucial industry is now under way.

US governments at all levels (city, state and federal) dared not raise taxes on businesses or the rich – even as their general tax revenues fell because of unemployment and consequent reductions in incomes and consumers’ expenditures. The federal government also slowed its borrowing. Reduced taxes plus reduced borrowings cut the funds all governments had to spend. Political leaders mostly responded by curtailing employees (worsening unemployment) and social services. Federal officials justified no more borrowing by pointing to the trillions added to the national debt since 2007 to finance Washington’s “crisis response” programme. State and local officials just restated the usual homilies about “living within our means” – as if doing so would alleviate the problems caused by the economic crisis.

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