The health care bill: an historic moment?

If there is one thing that Democrats and Republicans agree on, it is that the vote on health care was a major historical moment. For Obama, the vote answered “the call of history.” For Republicans, it was “one of the most offensive pieces of social engineering legislation in the history of the United States.”

You’d think that it ranked on the same level as massive spending on foreign wars, trillions of dollars of national debt, and the shrinking tax base sustaining the state. In fact, the cost of health care is trivial compared with any of these problems. Moreover, the indebtedness of the U.S. threatens to undermine any and all health care arrangements: the IMF is talking of forcing advanced economies to cut pensions and health care programs.

The significance of the vote is more political than historical. As Robert Reich points out, it reasserts the role of government in providing solutions to social problems as against the anti-government narrative established by Reagan. That is a real achievement, and it creates the possibility that this principle can be extended in the future.

In itself, however, the bill changes little: it is a centrist proposal not too different from what Republicans themselves were advocating fairly recently. While health care is extended to many who are currently uninsured (and for this we must be thankful), the major beneficiaries of mandated coverage are going to be drug and insurance companies (their shares soared after the bill was passed). It does nothing to deal with the problem of higher co-pays which discourage people from using the insurance they already have.

Yet Republicans are acting as if they had just missed the Second Coming. Clearly, since they stand for the super-wealthy, they have a visceral opposition to extending state benefits to the poor if they should risk losing a few dollars. But the corporate medical industry is going to profit at taxpayers’ expense, just like the banks. Why should Republicans be so opposed?

To preserve their chances of power, Republicans want to roll back the demographic and social changes of the past which are expressed symbolically in Obama’s presidency. They have been busting a gut to delegitimize Obama’s administration by their unanimous legislative opposition to the health bill and by going out of their way to leverage popular mistrust of government. They are trying to harness a real movement which manifests a growing hostility to government and social structures, but they are only successful because of a political vacuum which the Democratic Party can do nothing to fill.

While not specifically tied to the Republicans, the anti-government mood is reactionary in the sense that one of its components is a reaction to the economic erosion of white privilege, manifested in open racism at tea party protests. But there is also real fear and concern about jobs and the economic prospects of future generations.

In Andy Kroll discusses the source of this movement, asking the question “Why do so many Americans feel like hapless investors who have thrown away their life savings to pay off guys at the top whose only goal is to screw over everybody else? It’s an unmistakable sign, at the very least, of a deep, simmering distrust and disillusionment, a dark undercurrent of despair spreading through our culture…” This distrust, sparked by recent high-profile Ponzi schemes, “extends as well to the government that finally jailed Madoff and is prosecuting Stanford, but has dealt a free pass to Lloyd Blankfein of Goldman Sachs and Dick Fuld of Lehman Brothers.”

The bank bail-out restored the wealth and power of the financial elites at the expense of social programs. The tension between the two is such that Obama cannot continue to balance between them for much longer. Health care coverage is now at the center of strikes and industrial disputes. We need to look out for a resurgence of union militancy and other forms of struggle, and support organizations that act to link up and unite different class groupings and fight the Republicans’ attempts to split the country using racism.



Filed under health care, political analysis, populism, US policy

3 responses to “The health care bill: an historic moment?

  1. Hi, what an interesting account of the forces at play in today’s politics. It does seem that the expense of shoring up the bankers and the subsequent slashing of social programmes, only just beginning in the UK, reveals a basic tension whereby the interest of business are paid for by the conditions and wages of those who work for a living.
    What also occurs to me is that the US and UK governments have both gone to extraordinary lengths to abandon monetarism and move back to a Keynsian response to minimise the economic downturn. Part of the response of these governments, the Anglo-American Capitalist Classes from the point of view of the rest of the EU and probably the world, is to lose its faith in the market solution to breakdowns, especially financial, in the market economy. By contrast, the IMF carries on imposing market solutions on the rest of the world.

  2. Dick Taylor

    Kudos to the colonel for his incisive analysis of contemporary capitalist political economy. While I concur with his admonitions regarding Federal debt, I would point out that the acceleration of spending by the national government is symptomatic of a deeper crisis–the one of emergent stagnation in capital accumulation. To understand this, we have to put the current crisis in context. The neo-liberal era that commenced with the “Volcker Shock” of 1979 saw a dramatic reduction in the real wages of the working class in order to increase the rate of profit. While corporate capitalism did succeed in amassing vast sums of cash, this did not lead to an accelerated accumulation of capital or, to put it in terms of mainstream economics, an enhanced rate of investment. This is hardly surprising because reduced real wages translated into diminished aggregate demand. Cognizant of this, the corporate elites and their political agents undertook the desperate expedient of stoking demand through profligate debt creation. This worked for the first six years of the Bush administration, as the housing sector went on a torrent, accounting for 40% of GDP growth during this period. Nonetheless, despite the debt binge fueled by historically low interest rates, real wages continued to fall and GDP growth managed an anemic 1.8% average annual rise, considerably lower than the rate of the preceding two decades. Consequently, when interest rates on mortgages began to rise in the middle of the decade, the lack of sufficient real income revealed a debt burden to heavy to sustain. That point can’t be overstated, and once again ratify Marx’s point that all crises are ultimately attributable to the restricted purchasing power of the working class imposed by the wages system that rob the workers of the full value of their product.

    As senior economist for the Financial Times, Martin Wolf, reported, “deleveraging” or the reduction of debt, led to the removal of $1.25 trillion from effective demand in the US economy. Aware that 0% interest rates would not suffice to counterbalance this decline in private spending, the Obama administration carried out a limited stimulus program to cushion the collapse in private spending with Federal spending. I should write “highly limited” because research from the National Bureau of Economic Research (NBER) indicates that added Federal spending merely counterbalanced the decline in spending at the level of states and localities. In other words, the net stimulus has been about 0. This feckless Keynesianism partially explains why unemployment is still so high. There is still a vast insufficiency of aggregate demand to lead to full employment of both labor and industrial capacity. At the trough of the recession capacity utilization in the total economy fell to 70%, and it has only moved up a few points since. So, once again we see revealed the wastefulness, heartlessness, and absurdity of more than a quarter of the immense forces of production sitting idle while myriad human needs go unmet.

    The only way corporate capitalism can shed its reliance on debt is to revive investment that leads to higher growth and income. There is scant evidence that this is occurring. Indeed, economist Alan Blinder told Business Week that in the next decade, 22-29% of all remaining jobs in the US will be exported. (IBM already has 72% of its workers abroad.)

    • tompainesghost

      Dear Dick,

      Your contribution to the discussion is welcome, but seems to have taken us somewhat off-topic. I think it’s important to take the political arena seriously as a sphere of human life with its own logic. Political actors are circumscribed both by economic realities and social movements – the state has to retain legitimacy in order to sustain the status quo.

      While I agree with you that the problem of capital accumulation is an underlying condition of today’s political situation, this is an historical problem of capital in general, while the fact of U.S. indebtedness is a specific part of the relations between nations and national capitals, which is why the IMF is threatening financial measures to curb state spending on social programs.

      It would seem that Obama is reinstating the role of the state in addressing social problems by signing the health care bill, which runs against neoliberal philosophy. However, he is hamstrung by his acceptance of the economic maxim that “credit is the lifeblood of the economy” (as the colonel has pointed out elsewhere). So my point is that the historical significance of the health-care bill is questionable.

      But you raise some points that it is important to address. For example, why is it that the rise of neoliberalism in the late 1970s is associated with weak aggregate demand? The slowing of wage growth and mass consumption is one factor, but we also have to take into account the weakening of state institutions (apart from the military) and the removal of controls on the movement of capital across borders. Government spending on social programs and infrastructure slowed precipitously in that era – take a look at the crumbling bridges in the U.S. Fiscal policy transferred wealth from the poor and middle class to the super-wealthy. Unrestricted capital flows created recurrent boom-bust financial cycles that reduced growth rates and undermined state guided developmental models that achieved high growth rates in developing countries.

      It is wrong to suppose that corporations did not invest as a result of neoliberalism. Intensified competition internationally forced debt-financed investment by corporations, in new products, new methods of production, new supply chains, etc., for their own survival. As a result, there is excess capacity in virtually all core industries. Can anyone imagine that the world today requires all the vehicles capable of being manufactured by Ford, GM, Chrysler and Toyota? The excess capacity has to be eliminated, but every corporation and every nation wants it to be somebody else’s. The same process of debt-creation has given the financial sector huge power to the extent that they virtually dictate government policy in the U.S.

      So you have a vicious circle of reduced aggregate demand and excess aggregate capacity which reinforce each other. What we are seeing is a global search of ever-larger masses of capital for avenues to valorize itself, that is, to find new ways mobilizing labor so as to increase its total mass. It has led to the plundering of public assets in a form of primitive accumulation. Increased corporate investment will not appease this process; indeed, U.S. corporations have invested heavily in manufacturing – in China. Sixty percent of China’s exports to the U.S. are from U.S.-owned companies.

      Yes, capitalism is a vicious and insane system, but are people going to just lie down and have what they consider they are entitled to taken away from them?

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