Just nine months ago the U.S. economy was in an absolute free-fall, with its financial sector at a near total collapse. In this capitalist economy, the government’s executive branch has the principal responsibility to protect the general interests of the capitalist class as a whole. However, at the same time, the people expect the government to provide for the general well being of society. Balancing these contradictory aspects is just what the Obama administration has sought to do. Whether or not it can succeed is an entirely different subject.
During the final months of the Bush administration we saw the dramatic expansion of government intervention with the creation of the Troubled Assets Relief Program (TARP). It was designed to pump billions of U.S. treasury dollars into the financial sector of the economy, principally to the banks, brokerage firms and other financial institutions. Since then we have seen the Obama administration tighten the regulatory aspects of TARP and expand the program in May to include the six largest life insurance corporations.
We are witnessing the restructuring, reorganization and consolidation of the ruling class in the U.S. It is all being done from a position of centralized political power, in the general interests of the ruling class as a whole. Sink this capitalist to keep this one afloat. Let this one go out of business to fund the other. This process is not some economically driven set of events. It is a series of conscious political decisions to stabilize the U.S. capitalist economy and strengthen its relationship to the global economy as a whole.
The amount of the economic rescue plan is far reaching. The U.S. government, through the Treasury Department and Federal Deposit Insurance Corporation (FDIC), along with the Federal Reserve Bank have spent, lent and otherwise committed $12.8 trillion so far. That figure approaches the value of everything produced in the U.S. last year. The nation’s gross domestic product was $14.2 trillion in 2008.
Government regulation of the financial sector has also been set in motion. The executive branch, through the U.S. Treasury has asked Congress for legislation to overhaul the rules of finance, to give the government more control and oversight over derivatives trading. Stress tests are being required of all banks and financial institutions to see if they can weather a worsening financial crisis. And now Congress is being asked by the FDIC to establish a “Systemic Risk Council,” made up of government regulators to scrutinize, oversee and regulate “too big to fail” corporations. As we can see, increased state control of the economy is being implemented in definite stages.
Overall, the industrial sector of the economy is being particularly hard hit, especially the auto sector and related industries. Just to keep operating, Chrysler LLC and General Motors Corporation initially required $4 billion and $17.5 billion respectively, in TARP loans last year. Over the past month, the executive branch through its Treasury Department used its political power and an additional $42 billion from the public treasury to impose new terms for the bankruptcy reorganization of Chrysler and General Motors.
Something new is happening here. No longer are the economic decisions about a corporation’s future being decided by the board of directors in that corporation’s executive boardroom. These decisions have now become political decisions. And these decisions are being made by an executive committee in Washington, D.C.
Today, we are bearing witness to a step-by-step, government nationalization effort. A grand scale reorganization and consolidation of the ruling class is being imposed and is unfolding before our very eyes. It is being carried out to protect the general interests of the capitalist class as a whole.
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