US Perspectives for 2003 / 2004: July 2003 Introduction

Here we publish the perspectives' document approved at the National Congress of the Workers' International League, held last June.

In the few months since this document was written, events have proceeded rapidly. Although many of the specific facts and figures have changed, the overall perspectives retain their relevance and should serve as a guide to orienting the activities of the American Marxists for the coming period. The capitalist class is carrying out an unprecedented attack on the living conditions of millions of youth, elderly, and working Americans. With health care already in crisis, Bush is cutting Medicare and Social Security at the same time he hands out billions to the ultra-rich in the form of tax cuts. The stock market continues its up and down see-sawing, while the threat of deflation, high unemployment, stagnant demand, a weak dollar, and skittish consumer confidence threaten to burst the housing bubble. Surplus has turned into deficit, international trade into protectionism, and optimism for the future into pessimism.

The Economy

As explained in the pages below, the root of all the political, social, and military instability is the weakness of the overall world economy. Once the motor-force of the global economy, the US continues to sputter along with the threat of deflation and a double dip recession as likely now as it was over a year ago. Unemployment has jumped from 6.1 to 6.4 percent with the number of Americans receiving unemployment benefits at its highest point in more than 20 years. Nearly a million workers have been laid off in the past 3 months alone.

The key to any recovery remains increased capital spending, but this is nowhere to be seen. On the contrary, companies continue to layoff thousands of workers in an effort to raise profits through "cost-cutting" instead of investing in new equipment and technology. Manufacturing remains weak, and construction spending recently posted its biggest drop in a year (1.7 percent). In May, the Chicago Federal Reserve's monthly manufacturing gauge for the Midwest fell for the fourth month in a row, showing no improvement in production even after the end of the Iraq War. The Institute for Supply Management's national factory gauge remains below 50 – which indicates contraction as opposed to growth. As Owen Fitzpatrick of Deutsche Bank Private Banking explains: "There's a combination of concerns over earnings ... and the economic news coming out was not as strong as expected. People are hoping to see some signs of a recovery, but we've yet to see one on the corporate side. The ISM has been hovering around 50 for quite some time, and people are getting concerned it's not improving. Given the length of time we had interest rate cuts, it's unusual to see a delay in recovery for such a prolonged period of time."

The US trade deficit widened slightly to $41.84 billion in May from a revised $41.65 billion in April, the third biggest trade gap on record. In the words of one economist, "it reflects the fact the global economy is weak, especially global capital spending."

The Produce Price Index rose 0.5 percent in June – almost entirely due to a 3.4 percent rise in energy costs and a 0.4 percent rise in food costs. The producer price report showed a steep 7.6 percent rise in the cost of gasoline and a 9 percent increase in home heating oil. Residential natural gas costs rose 3.6 percent. Residential electricity costs rose 1.1 percent. These higher energy costs cut into consumer spending on other goods and services, as well as into corporate profits. The core PPI (stripped of energy and food costs) fell 0.1 percent in June, underlining the continued threat of deflation (over the past 12 months, the core PPI has fallen 0.3 percent). Good for consumers, but bad for producers were the falls in the cost of cars and light trucks. Car prices slid 0.7 percent, while the cost of light trucks fell 1.5 percent. Sales incentives from automakers have led to price volatility - auto prices are down 1.3 percent over the past year and the cost of small trucks is down 3.2 percent. Communication equipment prices also tumbled, sliding 0.7 percent, their biggest drop since October of last year. As one analyst explained: "The PPI report is of some concern because it points toward a squeezing of profit margins by rising energy costs amid a lack of pricing power. This confirms that businesses continue to lack pricing power and suggests that the Fed's skewed assessment of risk with respect to disinflation will remain in place for some time."

Interest rates are already at a 45-year low of just 1 percent, and the Federal Reserve Board has made clear it will further reduce them if necessary. In the words of Alan Greenspan: "Indeed, there is an especially pernicious, albeit remote, scenario in which inflation turns negative against a backdrop of weak aggregate demand, engendering a corrosive deflationary spiral." It is clear however, that they are running out of room to maneuver - they cannot reduce rates below 0 percent.

With the war on Iraq, spending on the Homeland Security Department, tax cuts for the rich, and a stagnant economy, the federal budget deficit has exploded to a record $455 billion this fiscal year. While the Bush administration claims it will reduce it by half by 2006, it doesn't explain how it will pull this off. We can say with certainty that it will attempt to do so with further cuts in social spending, attacks on the unions, and by increasingly slashing healthcare and education spending. With military operations in Afghanistan and Iraq alone costing $4.8 billion per month ($58 billion per year), it is truly monstrous that the capitalist class claims it has no money for domestic spending.

The US capitalists are deliberately causing a fiscal crisis in order to justify their plans to wipe out all the gains that working people fought for over the decades. As the Financial Times pointed out, "the lunatics are now in charge of the asylum". Overtime pay, the 8-hour work week, health care and retirement benefits - you name it - Bush and his partners in crime want to take it from us. This is a finished recipe for a massive resurgence in the class struggle around the world - including here in the US. It is the urgent task of the labor movement and the working class as a whole to stand up against this war on working people at home and abroad.

War and the Anti-War Movement

Written before the actual invasion of Iraq, the section of the US Perspectives document on the war and the anti-war movement could of necessity have only a general, conditional character. However, the overall lessons to be drawn from the movement, and the perspectives and tasks of the working class in relation to the rising discontent against the horrors of capitalism remain largely the same. The relatively short war cut across the anti-war movement and prevented it from becoming more generalized at that point in time. But the truly mass character of the protests (larger than even at the height of the Vietnam War), which took place even before the war started is significant. For millions, this was the first time they had taken to the streets to make their views known. IN a significant development, it was not just the "usual suspects" – the activists and "rrradicals" who participated in these demonstrations, but people from literally all walks of life. In the coming years of increasing instability, this experience will serve as the starting point for millions of Americans in their struggle to fight back against the depredations of capitalism.

The wave of patriotism and calls to "support the troops" dampened the protests when the war formally began, but discontent with the situation in Iraq has in fact increased dramatically since the war officially "ended" on May 1st. A USA Today/CNN/Gallup poll found 56 percent of respondents said things were going well for US forces in Iraq, a drop from 70 percent a month ago and 86 percent during the week of May 7th. Bush's approval rating is now at 60 percent – a healthy number overall, but a dramatic drop from the 90 percent he had after September 11th, and a significant drop since his 74 percent rating on April 9th during the fall of Baghdad.

Millions of Americans, many of who formerly supported the war wholeheartedly, have now begun to doubt the validity of the war's proclaimed aims and the progress of the war itself. The White House has been forced to admit what we explained all along – that "evidence" of Iraq's alleged attempts to buy weapons grade uranium from Niger was forged. This, combined with the complete absence of the "imminently threatening" weapons of mass destruction has cast much doubt on the sincerity of Bush's war aims. Only 45 percent of the public now believes the United States is in control of events in Iraq; just 23 percent believe the war is going well, down from 61 percent in mid-April; just over half feel that the mounting casualties are becoming uncomfortably high when weighed against the goals of the war; 56 percent say Bush administration officials were hiding important elements of what they knew or were lying outright. Even before US officials hinted that more troops might be needed (a reversal of earlier claims to the contrary), eight out of ten in the Post-ABC poll said they were very or somewhat concerned that the United States "will get bogged down in a long and costly peacekeeping mission."

Not only are Americans at home questioning the progress of the occupation, the tens of thousands of military personnel stationed in Iraq (who are, after all, workers in uniform) are rapidly losing confidence in their mission. Far from open-armed parades and flowers, US troops face a hostile population, and increasingly coordinated guerrilla attacks. 147 troops have now been killed in combat – equal to the number killed in the 1991 campaign. Some 10-25 attacks per day have left the troops in Iraq spread dangerously thin. All of this, combined with their long-term deployment, heat, and even lack of food, has led to widespread discontent and a collapsing morale among the troops stationed there. Female service members are becoming pregnant on purpose in order to hasten their return home. Reserve infantryman Eric Holt says: "We didn't win this war, not at all. I don't know what I'm doing here and I don't like what's happening in this city. It ain't right for the folks here". Statements to this effect can be reproduced by the thousands.

Reuters recently reported:

"Told several times they would be going home only to have their hopes dashed this week, a small group of soldiers from the 3rd Infantry Division in Iraq, spoke of poor morale and disillusionment with Defense Secretary Donald Rumsfeld. 'If Donald Rumsfeld were here, I'd ask him for his resignation,' one disgruntled soldier told ABC's 'Good Morning America' show. Asked by a reporter what his message would be for Rumsfeld, one said: 'I would ask him why we are still here. I don't have any clue as to why we are still in Iraq.'"

Military families are also increasingly frustrated as their loved ones continue to die while Bush urges the "non-existent" guerrillas to "bring it on". The wives of two of the soldiers also appeared on "Good Morning America". "'Just send my husband home - send all the soldiers home. They have done the job they were supposed to do,' said Rhonda Vega from Hinesville, Georgia. Stacey Gilmore said U.S. troops were ill-prepared for the post-war phase. 'They were told after the fighting ended they were coming home. All I know is that morale is low and they are just hanging in there, sticking through it.'"

Military officials now admit that they are in a "classical guerrilla war", and that "it's war however you describe it", making a mockery of Bush's macho (and expensive) flight onto the deck of an aircraft carrier. Many blame Bush personally for the deaths of their friends and relatives, and at a recent meeting with military wives, the government's representative had to literally flee the women's aggressive demands that their husbands be brought back home. Dan and Emma Withers, whose son is stationed in Iraq explain: "'I gave [Bush] the benefit of the doubt because I felt they might have intelligence information that was not available to me. I guess I hoped if they were going to make the leap, they would base it on something I didn't have knowledge of. I'm not sure of that anymore. You just don't want to think you're being led down the garden path by the president and Colin Powell. ... I think I'm tired of being lied to.' It's hard for her to admit, because she's a registered Republican. Dan Withers voted for Bush in 2000." (Quoted in the St. Petersburg Times of Florida)

Long-term deployment and war have a devastating effect on families, jobs, economic stability, and psychology. Those lucky enough to have jobs waiting for them on their return will have a multitude of other problems to deal with. With 17 million tons of depleted uranium scattered around Iraq, it is certain that we will see a repeat of "Gulf War Syndrome" – perhaps on an even larger scale. Ironically, while Bush "supports the troops" when they are fighting his wars overseas, he shows his true colors when he cuts veterans' benefits and healthcare here at home.

With the war "officially" over, attention has returned to domestic issues, and things are not looking so good for Bush and co. In June 62 percent of Americans are unhappy with his efforts to revive the economy, up from 53 percent in May. CBS reported that jobs and the economy dwarfed every other issue in terms of people's greatest concerns, cited by almost four times as many people as cited Iraq or the war on terrorism as their chief concern. According to that report: "And the most troubling pictures on any of the three broadcasts were those of a line of cars, stretching out of sight down a flat two-lane road in Logan, Ohio - jobless and struggling families waiting for the twice-a-month distribution of free food by the local office of America's Second Harvest. The head of the agency said, 'We are seeing a new phenomenon: Last year's food bank donors are now this year's food bank clients.' Said CBS reporter Cynthia Bowers, 'You could call it a line of the times, because in a growing number of American communities these days, making ends meet means waiting for a handout.'"

The millions of people who flooded the streets in protest against the war are still out there. Our numbers are surely even greater today, despite our public profile since the war began and ended. This movement must embrace even broader layers of society; it must link the militarism abroad with the attacks on our conditions of life here at home, and must be given a working class orientation and leadership. The war on Iraq was just a continuation of the ongoing war on working people here in the US. In this one-sided class war, the ruling class has mercilessly rolled back the gains fought for by working Americans over the past hundred years. It is time for the labor movement and working class as a whole to say enough is enough! The American working class should take to heart the words of an Iraqi civilian whose son had been shot when he proclaimed: "Damn Saddam and damn Bush! What have I got from either of them?" But what is the alternative to Bush?

Election 2004 – The Democrats Are Our Main Enemy

In the perspectives document, we give a broad outline of the upcoming presidential elections. We lend special emphasis to the fact that the Democrats are not capable of providing a solution to the problems of working people. Bush and his pals have already been discredited in the eyes of millions of workers. But in a two-corporate-party system, the so-called "opposition" usually benefits from the bad fortunes of the party in power. In this case, this means the Democrats. In the coming months, there will be a lot of pressure from those on the left who want to defeat Bush at all costs. The logic behind this sentiment is understandable - for millions of Americans, GW Bush represents all that is evil, decrepit, and dangerous in the world (a capitalist world). But is this a real solution? Can voting for a "lesser evil" candidate lead to genuine, lasting prosperity, peace, jobs, stability, universal health care and education?

The answer is clearly "No!" So long as the capitalist system continues its quest for profits for the few at the expense of billions of other humans, this is simply not possible. While the Democrats may bend over backwards to give the impression that they are "worker-friendly", a capitalist-backed party cannot serve two masters. Despite their being the "opposition" party at present, the Democrats are unable to inspire confidence and enthusiasm among working people, who instinctively distrust them after decades of betrayals. The abandonment of Gore and the Democrats in the 2000 and 2002 elections are an example of this. In a recent poll on the crisis of healthcare in this country, only 38 percent of Americans felt that the Democrats could do better than the Republicans - this on an issue they have traditionally been very strong on (though they have delivered next to nothing in the past 20 years).

Only a mass party of labor, based on the trade unions and armed with a program of socialist demands can fight back in the interests of the hundreds of millions of workers in the US. Only with such a party can the process of falling wages, dropping living standards, and shrinking rights be halted. The Democrats will never be capable of this. We must start now in our work to break the labor movement from the Democrats, and to break millions of workers' illusions in the Democrats (who they support for lack of an alternative). Given a genuine alterative, millions would rejoin the ranks of voting Americans. This will not be an easy task - but there is no other alternative. The Democrats are our real enemies at this point in time; they have had their chance to work in the interests of working people and have betrayed us time and time again. They have always been, and always will be, a party of big business. We, the working class, the vast majority of American society, must build a party that will fight in our interests - a working class party of and for working class. Armed with a socialist program, such a party would play an important role in the revolutionary transformation of society.

Next year we will expand on these perspectives, and continue to develop them as new information is available. See also our perspectives documents from previous years. We encourage our readers to read and discuss this document, contact us with their comments, questions, and criticisms, and above all to join the Workers International League in building an alternative to the decrepit capitalist system.