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New Deal vs Obamacare: one reality and one desperate try

by system failure

In the 20s America, there was an unprecedented upsurge consumerism and a tendency for easy money. Something similar happened in the West in general, especially since the early 90s onwards. The great crash of 29 and the misery brought to millions of people, was essentially a big victory of the big bankers and speculators who made huge profits on the "corpse" of middle class, and so the Roosevelt administration was forced to turn to the Keynesian economic model where the economy could be restarted through the state as a basic investor.

The predecessor of president Roosevelt and US president during the great financial crisis of 29, Herbert Hoover, from the Republican party, did not believe in the welfare state, but in austerity and fiscal discipline. It is a perception that currently imposed by Merkel government in the eurozone, in contrast to the American government which, traditionally, focus on growth and job creation especially during the presidency of Democratic presidents. But the complete predominance of neoliberalism, rapidly changes policies implemented today in the Western world.

The decline of deregulation and the "New Deal"

Roosevelt implemented an aggressive policy of state investments in order to restart the economy and fight unemployment which had reached at nightmarish levels after the Great Crash of 29. Moreover, new infrastructures created, to benefit in many ways the American society. One example is the state company Tennessee Valley Authority (TVA), created in May 1933, to construct , among other things, flood control projects and dams producing electricity and boost the economic development of the Tennessee Valley, a region which was particularly affected by the economic crisis. Private companies were particularly dissatisfied, as were excluded from the program and lost the chance for big profits.

Roosevelt faced negative criticism from across the political spectrum. The American economic elite criticized him because it didn't want to pay extra taxes for the "New Deal" implementation. Even the U.S. Supreme Court moved against him, considering that many legislative settings of the "New Deal" were unconstitutional. Propaganda had been unleashed by the economic elite, in an attempt to baptize the policies of "New Deal" as Socialist or even Communist, something which happens today in America, but in Greece as well.

A quote from a Roosevelt's speech is characteristic: “A few timid people, who fear progress, will try to give you new and strange names for what we are doing. Sometimes they will call it "Fascism," sometimes "Communism," sometimes "Regimentation," sometimes "Socialism." But, in so doing, they are trying to make very complex and theoretical something that is really very simple and very practical.”

Despite its imperfections, Roosevelt's "New Deal" created millions of new jobs and new infrastructure for the benefit of all American citizens, boosted some sectors such as agriculture, strengthened social security and boosted the economy in general. The response of Roosevelt, "of course we spend money", to his opponents, captures the perception of his government, giving importance to the prosperity and relief of people and not to the strict austerity for the sake of economic indexes. Indeed, while in 1933 the national debt was 20% of GDP, by 1936 this figure almost doubled, but what mattered for Roosevelt was to relieve American citizens and give them hope and perspective.

What happened until the Obama administration

While Roosevelt, despite the strong criticism he received, was able to impose a series of reforms that literally transformed the American state and gave to it a prominent role in the recovery of the economy, against the interests of big capital and for the benefit of the American people, Obama now faces a hard war for the "Obamacare", only one reform trying with great effort to pass, which focus exclusively on health and social security.

Today things are very difficult for Obama and for anyone who wants to pass laws that would enhance the welfare state and would benefit the vast majority because of the complete domination of the neoliberal doctrine, favoring a financial oligarchy, on top of which, the biggest private banks stand.

The first big victory of the big bankers recorded in December 1913, when under Woodrow Wilson administration, the control of dollar finally passed to the big private banks through the Federal Reserve Act. For the record, the final signature by the president Wilson came just two days before the Christmas holiday of 1913, if this means something. Thus, the US central bank continued to be "Federal" only by name, since the complete control of the quantity and flow of money, finally passed into the hands of the big bankers.

Although the Great Depression was a field test of the new conditions, the gold standard which was active at that time, had prevented "Federal" Reserve to print money at will, uploading with more debt the government. The bankers could not fully control government through debt and so Roosevelt, along with his strong personality, managed to pass the laws he wanted, despite the war against him.

After WWII, there has been an attempt for market regulation through the Bretton Woods Conference, but in 1971, Nixon ended the direct convertibility of the US dollar to gold, opening the door for the total dominance of neoliberalism and the big banks.

Little later, Milton Friedman and the Chicago Boys conducted the first major neoliberal experiment, using Chile of dictator Pinochet as a lab rat. Reagan and Thatcher who were fanatically committed to the neoliberal doctrine, extended its dominance during 80s, by applying the respective policies favoring deregulation and dismantling of the welfare state. In 1992, the former banker and CEO of Citigroup, Walter Wriston, finally announces the total dominance of neoliberalism in his book "The twilight of Sovereignty", while the same year, the chairman of the "Federal" Reserve, Alan Greenspan, "warns" the newly elected president Bill Clinton, to withdraw his campaign commitments for social benefits, as he claimed that, the deficit was reached dangerous levels.

Subsequently, we have twenty years of financial bubbles and failed policies, with the IMF intervening in many areas of the planet. The only winners were the big banks and speculators, while the economies of many countries were destroyed.

Obama: probably wants, definitely can't

If one take a look at the data, can see that the share of the US government debt held by the "Federal" Reserve reached record levels in 2011, reaching 11.2% of GDP, the highest since 1940 onwards, and possibly the historically higher. In 2012, this rate was also high at 10.6% of GDP. Only once this figure reached such levels, in 1946, i.e. shortly after the end of WWII, when it reached 10.7% of GDP. [Table 7.1, http://www.whitehouse.gov/omb/budget/historicals]

The spiraling debt of the Federal Government to "Federal" Reserve, is due to repeated quantitative easing policies, i.e. primarily "printing" new money, supposedly made to stimulate the economy. Instead, however, the money went solely to bailout biggest banks, some of which participate in the "Federal" Reserve! Which means that, money returned to the banks through a circle, while uploaded US government with more debt, which will be passed on to future generations! Unanswered questions remain also, about the case on the basis of which, the "Federal" Reserve secretly supplied through the "back door" with more than $ 9 trillion, various financial institutions with questionable balance sheets during the financial crisis in the US. Nobody seems to deal with this issue today. [http://www.counterpunch.org/2010/12/20/the-tax-payers-tab-a-cool-9-trillion-and-then-some/]

The wealthiest only see numbers and not people. The growing population means for them "more taxes", while the government shutdown means "less taxes". While Roosevelt did so many steps to reform the state and to relieve the American people, Obama cannot pass neither one legislation for the health and social security. The visit received from leading bankers shortly after the announcement of the US government shutdown is characteristic. Bankers don't pretend anymore because they want to show clearly who is the "big boss".

And this is not far from truth since, the introduction of dollar as the global reserve currency and the rapid rise of computer technology, made the US "Federal" Reserve completely dominant. So, if China for example, would theoretically require to be paid in dollars for the entire US debt which holds, in just one day, this could be done practically with the push of a button on the computer. China's share of US debt would pass automatically to the hands of the "Federal" Reserve. One easily understands that any American government is fully controlled by the "banksters".

Bankers, who lie at the top of the economic elites, want to secure the ultimate goal of the neoliberal doctrine, which is the dissolution of the nation-state. This would extricate economic elites from state supervision and taxes for the welfare state, which is in favor of the economically weaker, and would finalize their dominance through the growing concentration of wealth in a global environment of full deregulation. So, they do not want in any way to open a new cycle of a Roosevelt type state intervention because this could hinder their ultimate goal.

So, the bankers in particular, do not want to risk the appearance of a "mad" politician of the Andrew Jackson type, who could nationalize central bank and zero national debt because that would mean the end of their absolute sovereignty.

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