POLITICS-US: Dems Spar Over Ailing Economy

By IPS Correspondents Reprint | | Print |

Aaron Glantz

SAN FRANCISCO, Jan 24 2008 (IPS) - With financial markets crumbling around the world and some 3.5 million U.S. homeowners facing the prospect of defaulting on their mortgages over the next three years, how to stave off a major recession is taking centre-stage for voters and politicians of all stripes.

In Washington, the White House and Congress are hammering out the final details of a 140-billion-dollar economic stimulus plan.

And on the campaign trail for the Democratic presidential nomination, no candidate has focused as much on the economy as former senator John Edwards. In nearly every speech, he cites his modest background as a motivation for his candidacy.

“When I was born, my father had to actually borrow 50 dollars just to get me out of the hospital,” he says again and again. “He took me home to a two-room house in a mill village, he went to work at the mill every day with people who dreamed every day that their children could go to college. My father had that dream and I am running for president of the United States because I want that dream to be alive and well in the United States of America.”

If elected, Edwards has said he would immediately spend 25 billion dollars for jobs that would build infrastructure and promote alternative energy. He has proposed that an additional 75 billion dollars be spent in the event of a recession.

Edwards also says he wants to repeal President George W. Bush’s tax cuts for households earning more than 200,000 dollars a year and raise capital gains taxes for the rich. At the same time, he says he will cut taxes aimed at low- and middle-income families.

“I believe to my core in what you are doing,” Edwards told a September convention of the nation’s fastest growing labour group, the Service Employees International Union. “I believe we would not have a middle class in this country if we didn’t have an organised labour movement and I will just say this very plain and simple: I will be the president who walks out on the White House lawn and first, says the word union, (and) talks about the importance of organising.”

“I intend to be the best union president in this history of the United States of America,” he said.

Only a portion of organised labour is supporting John Edwards, however. While he has won the endorsements of the United Steelworkers, the Mineworkers, and the California state council of the SEIU, oher SEIU state councils have endorsed competitor Barack Obama.

Obama also won the endorsement of the massive hotel workers union UNITE-HERE and the support of the head of the powerful Los Angeles County Federation of Labour, Maria Elena Durazo, a leader in the national immigrants’ rights movement.

Senator Hillary Clinton has been piling up labour endorsements as well. The American Federation of State, County and Municipal Employees backs her, as does the International Association of Machinists. On Tuesday, the United Farm Workers of America (UFW) announced their endorsement.

“Senator Clinton has a very strong record of labour support,” UFW co-founder Dolores Huerta told IPS. “Most Latinos are working people. In the Senate, she introduced or co-sponsored over 30 pieces of legislation for working people and has helped mediate 11 labour disputes between workers and employers and, of course, she has walked picket lines.”

The UFW’s endorsement has power beyond the union’s membership in the fields. Its founder, the late Cesar Chavez, built public support through high-profile fasts, marches and boycotts and the UFW has been synonymous with civil rights and social justice ever since.

“In 1968, Chavez and the UFW backed Robert Kennedy against the Establishment, pro-war and labour-backed Hubert Humphrey,” affordable housing activist Randy Shaw wrote on the website beyondchron.org. “The UFW did not simply endorse Kennedy – the union played a leading role in Kennedy’s wining of the California primary, which could well have brought him the nomination had he not been assassinated after concluding his victory speech.”

In 1972, Chavez and the UFW strongly backed insurgent progressive Senator George McGovern. Shaw sees the union’s endorsement of Hillary Clinton as a major departure.

“Hillary just said in the South Carolina debate, ‘I’ve been attacked for 16 years’,” Shaw told IPS. “So what I’m assuming is everything that happened under Bill Clinton is part of her record. So if she’s going to take credit for all the economic growth like she keeps doing, she’s got to say ‘I didn’t fund housing, I didn’t fund jobs for the environment, I didn’t keep manufacturing jobs, I supported welfare reform’, and all the other things that have really hurt working people.”

But Huerta counters that Hillary Clinton would be a different kind of president than her husband.

“President Clinton did a lot of things that Hillary did not agree with. We certainly cannot blame Hillary Clinton for his mistakes,” Huerta said.

“Hillary Clinton did not support NAFTA (the North American Free Trade Agreement) and was very much against the president taking that position,” she added. “As a senator, she voted against the Central American Free Trade Agreement and the Korean Free Trade Agreement. So I think her position is fairly clear on that.”

As to welfare reform, Huerta said, “At the time they thought it would help people and it did help some people – although others fell through the cracks.”

If elected, Hillary Clinton says she will spend 70 billion dollars to “jump start” the economy, and would repeal the Bush tax cuts for households earning more than 250,000 dollars a year.

In Monday’s debate in South Carolina, Clinton said she also would freeze interest rates for five years to slow the rising number of home foreclosures and pledged to make 30 billion dollars available to working class families to help pay their energy bills.

Hillary Clinton has also come under criticism for her affiliation with Wal-Mart. She served on the board of the large, non-union retailer from 1986 to until her husband was elected president in 1992, a tenure Barack Obama highlighted in Monday’s debate in South Carolina.

“While I was working on those streets watching those folks see their jobs shift overseas, you were a corporate lawyer sitting on the board of Wal-Mart,” he said.

Like Clinton, Obama says he would repeal the Bush tax cuts for those earning over 250,000 dollars and raise capital gains taxes. He also says he would cut 80 billion dollars in taxes through a 1,000-dollar per family tax credit, eliminating taxes for elderly workers making less than 50,000 dollars a year.

“We have got to get tax cuts into the pockets of hard-working Americans right away,” he said. “It’s important that they not just go to the wealthy. That’s the way we stimulate the economy because those are folks who are likely to spend money right away.”

If any of the Democrats are elected president, they are likely to face an increasingly weak economy.

Jane D’Arista, an economic analyst at the independent Financial Markets Centre, believes the key issue the next president will face is the credit crisis, and whoever is leading the White House will be an unenviable position.

“Over time, good jobs have been lost and families have gone into debt,” she said. “The fact is they’ve already gone into debt and they can’t go further into debt for the reason that they are up to their limit and for the reason that the financial services sector has bombed. So there is no credit available to them even if they’re qualified. So you have a situation where spending is stopping in this country. How do you get it going again?”