The Real Problem With Obama’s “Rosy Claim”

First published on ZNet on June 12, 2012. It is interesting and chilling to observe how U.S. corporate media helps nudge the nation’s rancid and plutocratic political culture ever further rightward with seemingly innocent and innocuous word and phrase choices that are chock full of reactionary meaning. Starting in mid 2009 and well into last year, for example, it became commonplace for U.S. reporters and news-readers to almost reflexively refer to the arch-plutocratic right-Republican, corporate-backed, and classically Astroturf “Tea Party” phenomenon as a “populist,” “grassroots,” “anti-establishment,” “independent” and “conservative” social and political “movement” against the “big government” agenda of the supposedly “liberal” and even “left”-leaning Obama administration. 

All of these descriptions were egregiously inaccurate and false, but this hardly stopped them from reigning in the dominant media’s’ coverage and commentary – even creation – of the Tea Party phenomenon. That coverage and commentary helped check the possibility of progressive policy change when the Obama administration enjoyed Democratic majorities in the Congress. It also helped create an historic right Republican sweep in the mid-term Congressional elections of 2010. [1]

“The Problem with That Rosy Claim” 

Look, for another example, to a recent Associated Press (AP) story by veteran AP correspondent Andrew Taylor. Titled “Fact Check: Obama Off on Thrifty Spending Claim,” Taylor’s report argues that  Obama is misleading the public when he claims on the campaign stump that “Federal spending since I took office has risen at the slowest pace of any president in almost 60 years.” 

“The problem with that rosy claim,” Taylor writes, “is that the Wall Street bailout is part of the calculation. The bailout ballooned the 2009 budget just before Obama took office, making Obama’s 2010 results look smaller in comparison. And as almost $150 billion of the bailout was paid back during Obama’s watch, the analysis counted them as government spending cuts.” 

Barack Obama’s campaign boast (if that’s what we want to call it) sparked Taylor to undertake an investigation that claims  to discover that “All told, government spending now appears to be growing at an annual rate of roughly 3 percent over the 2010-2013 period, rather than the 0.4 percent claimed by Obama….” By Taylor’s calculation, federal spending rose 10 percent (“much of which is attributable to Obama”) in 2009 and 8 percent in 2010.” Then came slower spending growth over 2011-2012 – something that “reflects the influence of Republicans retaking control of the House and their budget and debt deal last summer with Obama.” [2] 

The Vicious Austerity Circle 

Is Obama wrong to claim that federal spending has risen at the slowest rate since the Eisenhower years during his tenure in the White House? Taylor never actually engages that historical question. My sense is that the president’s claim is in fact technically false but that this is completely irrelevant. Washington in the Age of Obama remains in neoliberal mode, privileging tax cuts for the rich and their corporations and a giant corporate-welfarist military budget over anti-poverty social expenditures and stimulus measures. The austerity drive in Washington and many U.S. state governments is supposed to be all about cutting debt and deficit, but the refusal of policymakers to increase taxes on the grossly under-levied rich and corporations suggest what its really about:  manufacturing a deficit panic as a pretext for dismantling social programs and rolling back public workers’ wages, benefits, and union rights. 

The “free market”’ theory behind this policy reality holds that making wealthy elites wealthier makes the rest of us richer since it is the rich who seek out marketing opportunities and then invest to create jobs. That theory is totally false, as the last three plus decades of slow U.S. economic growth and the ongoing Great Recession show. “Trickle down economics” doesn’t work. It can have no positive outcomes in the absence of polices that (contrary to neoliberal doctrine) that make the moneyed class deliver higher investment and share the benefits with – and put spending power in the hands of – non-affluent people, who spend a far higher portion of their income than do the rich.[3]  The best way for a government to drive economic expansion – and to end a recession – is for it to spend in ways that put significant purchasing power in the hands of lower and working class people. “In an economic downtown, like today’s,” the neo-Keynesian Cambridge economist Ha Joon Chang notes, “the best way to boost the economy is to redistribute wealth downward, as the poorer people tend to spend a higher proportion of their incomes. The economic-boosting effect of the extra billion dollars given to the lower-income households will be bigger than the same amount given to the rich through tax cuts.” [4] 

As John Maynard Keynes noted more than seven decades ago, “The boom, not the slump, is the right time for austerity.” “Even if you have a long-run deficit problem,“ liberal neo-Keynesian economist and New York Times columnist Paul Krugman notes, “slashing spending while the economy is deeply depressed is a self-defeating strategy, because it just deepens the depression. “ Further:  

“As many economists have pointed out, America is currently suffering from a classic case of debt deflation: all across the economy people are trying to pay down debt by slashing spending, but, in so doing, they are causing a depression that makes their debt problems even worse. This is exactly the situation in which government spending should temporarily rise to offset the slump in private spending and give the private sector time to repair its finances. Yet that’s not happening. “[5] 

The real “problem[s] with [Obama’s supposedly] rosy claim” is that cutting government spending is the last thing a responsible head of state should be boasting (accurately or not) about having done in the middle of an epic recession. The real problem is that the dominant “mainstream” political culture has been pushed so far to the right by business interests (including the reality-shaping mass media, a critical capitalist asset to say the least) that government acts to deepen the crisis with austerity. A related problem is the president’s failure, the media’s failure, and the broader political culture’s failure to make key distinctions between different types of government expenditure – between those that simply reward financial and corporate parasites for bad behavior (i.e., the record-setting Bush-Obama Wall Street bailouts) and those (like social welfare and public works programs) that would actually reduce poverty and increase effective demand and growth. 

“Everything Else We’re Talking About Won’t Matter” 

Not that we want growth per se – simple economic expansion to generate jobs as such. The looming environmental crisis shows that we are rapidly approaching the Earth’s environmental tipping point[6] – the end of our planet’s capacity to carry growth safely (for the lives of humans and other species) under the current carbon-addicted system of endemic pollution and climate change. Given modern capitalism’s deep sunk-cost fixed capital investment in the eco-cidal petroleum-addicted  model of growth[7] – a model that promises to generate a whole new generation of deadly and costly resource wars in “the race for what’s left” (Michael Klare)[8] – the obvious existential demand these days is for massive government spending on jobs programs dedicated to the post-carbon (and post-nuclear) ecological retro-fitting and re-conversion of the American (and global) economy and society: industry, agriculture, diet, transportation, homes and offices (facilities) and more. Noam Chomsky put it very well in a recent, widely cited essay:

“there are two dangerous developments in the international arena, which are a kind of shadow that hangs over everything …There are, for the first time in human history, real threats to the decent survival of the species.”

“One has been hanging around since 1945. It’s kind of a miracle that we’ve escaped it. That’s the threat of nuclear war and nuclear weapons. Though it isn’t being much discussed, that threat is, in fact, being escalated by the policies of this administration and its allies. And something has to be done about that or we’re in real trouble.”

“The other, of course, is environmental catastrophe. Practically every country in the world is taking at least halting steps towards trying to do something about it. The United States is also taking steps, mainly to accelerate the threat. It is the only major country that is not only not doing something constructive to protect the environment, it’s not even climbing on the train. In some ways, it’s pulling it backwards.”

“And this is connected to a huge propaganda system, proudly and openly declared by the business world, to try to convince people that climate change is just a liberal hoax. ‘Why pay attention to these scientists?’”

“We’re really regressing back to the dark ages. It’s not a joke. And if that’s happening in the most powerful, richest country in history, then this catastrophe isn’t going to be averted — and in a generation or two, everything else we’re talking about won’t matter. Something has to be done about it very soon in a dedicated, sustained way.”[9]

How to “solve the deficit” – and put millions of modern capitalism’s structurally redundant human beings to socially useful work? Save the planet for humans and other living things. End the petro-wars/empire and tax the rich with extreme prejudice to pay for the Green Transformation that is urgently required if we are going to have any chance of a decent and democratic future. 

Just to be clear, I do not believe that transformation (required for human survival) can be achieved under the profits system that Keynes was proud of saving and to which the neo-Keynesians Krugman and Chang necessarily retain allegiance[10] That system amounts at the end of the day to a socio-pathological and unelected dictatorship of capital, creating a deep and deadly “democracy deficit” that poses a far greater threat to humanity than the fiscal deficit leading politicians of both political organizations (hardly even real parties anymore) endlessly prattle on about. But that is a conclusion that can only become widespread common sense – as it must – through struggle and experience and with the help of skilled and dedicated cadres.   

Paul Street ( is the author of numerous books, including Empire and Inequality: America and the World Since 9/11 (Paradigm, 2004), Racial Oppression in the Global Metropolis (Rowman&Littlefield, 2007), The Empire’s New Clothes: Barack Obama in the Real World of Power (Paradigm, 2010), and (co-authored with Anthony DiMaggio) Crashing the Tea Party: Mass Media and the Campaign to Remake American Politics (Paradigm, 2011). Street can be reached at 

Selected Notes

[1] See Paul Street and Anthony DiMaggio, Crashing the Tea Party: Mass Media and the Campaign to Remake American Politics (Paradigm, 2010); Anthony DiMaggio, The Rise of the Tea Party: Political Discontent and Corporate Media in the Age of Obama (New York: Monthly Review, 2011).

[2] Andrew Taylor, “Fact Check: Obama Off on Thrifty Spending Claim,” Associated Press, May 26, 2012 at;_ylt=A2KJ3CbkUcBPaDsADQ7QtDMD

[3] Ha Joon Chang, 23 Things They Don’t Tell You About Capitalism (New York: Bloomsbury, 2010). 

[4] Chang, 23 Things, 146. 

[5] Paul Krugman, “The Austerity Agenda,” New York Times, May 31, 2012. 

[6] Common Dreams Staff, “Earth Facing Imminent Environmental Tipping Point,” Common Dreams (June 8, 2012), posted at

 [7] For some instructive reflections, see Bill McKibben, Eaarth: Making Life on a Tough New Planet (New York: Times Books), 52-55. 

[8] Klare’s latest chilling book is an essential read: The Race for What’s Left: The Global Scramble for the World’s Last Resources (New York: Metropolitan, 2012). 

[9] Noam Chomsky, “Plutonomy and the Precarait,” Huffington Post (May 8, 2012), read online at 

[10] Chang leaves no doubt that allegiance: “This book is not an anti-capitalist manifesto…Despite its problems and limitations, I believe that capitalism is still the best economic system that humanity has invented. My criticism is of a particular version of capitalism that has dominated the world over the last three decades, that is, free market capitalism…” For a critique of Chang from an anti-capitalist perspective that focuses significantly (though not exclusively) on Chang’s gaping environmental blind spot, see Paul Street, “Some Big Things Ha Joon Chang Doesn’t Tell You About Capitalism,” ZNet (June 16, 2011), read at,

Facebook Comments
By | 2012-06-14T13:46:07+00:00 June 14th, 2012|Articles|