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As Obama reassures financial markets, public opposition grows to budget cuts

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These polls underscore the dramatic and widening gulf between mass sentiment and the politics of the American ruling elite. There is overwhelming popular opposition to cuts in Medicare and Medicaid and overwhelming support for making the rich pay for the crisis of the federal budget. Yet in the precincts of official Washington, it is impossible to raise taxes on the 50,000 wealthiest Americans, but considered perfectly reasonable to slash medical benefits for 50 million people.

In his speech Tuesday, Obama sought to adapt to the shift to the left among working people with a bit of threadbare populist rhetoric. "There are powerful lobbies and special interests in Washington," he said. "And they're going to want to reduce the deficit on your backs. And if you are not heard, that's exactly what's going to happen."

However, both the Democrats and the Republicans serve the needs of these corporate interests. Both of them are prioritizing deficit reduction over any measures that would create jobs or alleviate the mass suffering caused by the ongoing economic slump.

The French news agency AFP published an analysis of the rival budget proposals by an economist for Societe' Gene'rale, one of the major French banks, who estimated that Obama's budget cuts would slash 0.9 to 3.0 percentage points off economic growth each year after 2012, while the Republican plan would cut between one and 3.6 percentage points off growth each year.

Obama's immediate response to the S&P ratings warning was to tell a television interviewer in Raleigh, North Carolina Monday, "We've got to start making sure we're living within our means, both medium term and long term." He pointed to the $2 trillion in spending cuts he proposed last week, while suggesting that a modest tax increase on the wealthy -- only $320 billion would be raised by phasing out the Bush tax cuts -- would constitute "making the tax system fairer."

House Majority Leader Eric Cantor, the second-ranking Republican, called S&P's negative outlook on US debt "a wake-up call" that demanded "meaningful fiscal reforms that immediately reduce federal spending and stop our nation from digging itself further into debt."

The leading media voice of American liberalism, the New York Times, chimed in with an endorsement Wednesday, in an editorial headlined, "Good Advice From S.&P." The editors admitted that the ratings agency served as "enablers of excess" in the run up to the 2008 financial crisis, although criminal accomplice would be a better term.

Nonetheless, the Times suggested that the credit warning should be heeded, and used by the Obama administration to pressure congressional Republicans not to jeopardize legislation to raise the federal debt ceiling. The newspaper particularly calls attention to the S&P's demand for "the emergence and debate of credible budget plans" before the 2012 election. The Times thus suggests that deficit reduction should be decided before the election, in keeping with the desire of the US ruling elite to carry out policies in defiance of the popular will revealed in the opinion polls.

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Patrick Martin writes for the World Socialist Website (wsws.org), a forum for socialist ideas & analysis & published by the International Committee of the Fourth International (ICFI).
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