The coincidence of Sept. 11, the war and a global recession mark the end of the neo-liberal age, a span of 20 years of unrelenting (ruling) class warfare against working families.

Bill Moyers summed it up: “Contrary to right-wing denigration of government … today’s heroes are public servants. The 20-year-old dot-com instant millionaires and the preening pugnacious punditry of tabloid television and the crafty celebrity stock-pickers on the cable channels have all been exposed for what they are – barnacles on the hull of the great ship of state.”

Not that the GOP (the guardians of privilege) can or will admit the error of its ways. In this time of crisis they seem intent on peddling the same failed policies, as if nothing has changed.

One living legacy of neo-liberalism is a shredded safety net at a time when the casualties of recession and Sept. 11 combine to overwhelm the capacities of “faith-based charities,” exposing, in the process, the limits of “compassionate conservatism.”

In contrast, the nationalization of airport security signals the beginning of the end of privatization. The looting and collapse of the Texan energy giant, Enron, has come to serve as a cautionary tale of the greed and irrationality of deregulation.

Global recession

The Economist recently observed, “The world economy is flirting with a … deep recession.” Bloomberg News reported that the Central Bank of Japan “darkened its outlook … The substantial decline in production [is] beginning to have an adverse effect on private spending through decreases in employment and income.”

The New York Times reported Germany is “close to recession.” Since Germany accounts for a third of the economic output of the Economic Union, its problems quickly spread to the entire Euro zone.

Export-dependent economies of Singapore and Taiwan are experiencing “sharp economic contraction due to sour economic conditions in Japan and the United States.”

While the U.S. economy has been shedding manufacturing jobs for some time (1.1 million over the past year), the pace of unemployment surged in the fall of 2001. The official unemployment rate jumped to 5.4 percent in October from a 4.9 percent rate the month earlier, with 415,000 workers losing their jobs and more to come.

Approximately 110,000 of the lost jobs were in the service sector, the primary engine of job growth and a harbinger of things to come. The vast majority of jobs lost were low-wage.

Compounding the economic crisis is the fiscal straightjacket that is forcing states and municipalities around the country to cut spending (despite growing need) in the face of sharply lower revenues.

According to the NYT, New York City will face a budget deficit of between $4 and $6 billion next year, while New York State might have to close a $4.3 billion gap.

On the West Coast, California confronts a projected $11.3 billion shortfall in state education revenues, according to Rep. George Miller (D-Calif.). “The faltering economy is putting at risk the advancements that many states are making to improve the quality of their education systems,” he said.


With the social safety net in shreds after two decades of neo-liberalism hubris, with an unemployment system that covers less than 40 percent of the jobless, with the end of welfare, with a public health-care system unable to cope with the existing load, let alone the newly uninsured, with unemployment rising and state budgets contracting, what is the federal government to do?

The GOP plan is to make a bad situation worse. Their goal is to stimulate the rich and reward wealthy corporations through hefty tax cuts, with, of course, no guarantee that the beneficiaries would actually use the tax windfall productively.

Paul Volker, former Federal Reserve chairman, thinks it’s a bad idea, as does Robert Rubin, a former Treasury secretary. Even current Treasury Secretary Paul O’Neill has derided the effort as “show business.”

Given existing industrial overcapacity and the limited prospects for profit, were Republican tax cuts actually enacted they would have no stimulative effect on the economy. But that is not their goal.

The multibillion-dollar giveaways to the wealthiest 1 percent of the population and the most profitable corporations (the latter in the form of a retroactive repeal of the alternative minimum tax) are really designed to use up the budget surplus in order to “create a fiscal straightjacket for Congress.”

As NYT columnist Paul Krugman recently observed: “the GOP plan has nothing to do with stimulating free markets: it’s about taking from the poor and giving to the rich.”

It can be expected that as domestic economic casualties mount and states confront mounting fiscal crises due to declining tax receipts, the GOP will try to block federal revenue sharing.

The administration is already trying to stiff New York, the main site of the terrorist attack. While promising $20 billion in recovery support, House Republicans have authorized only $11 billion.

What is happening to New York, Krugman points out, is part of a larger picture: the reluctance of GOP congressmen to help states caught in a “financial squeeze.”

Krugman anticipates that states, desperate to balance their budgets as mandated in the mania of two decades of neo-liberalism, will “slash spending – with the biggest cuts falling on education and medical care for the poor.”

The GOP is cynically and unpatriotically banking on Sept. 11 and the war to mute opposition and divert attention from the fact that its stimulus plan “provides,” as the AFL-CIO points out, “almost no help to the workers already displaced and depends heavily on tax cuts, which primarily benefit corporations and the very rich.”

But the Republicans have overplayed their hand. Exploiting pain, hardship and sacrifice for the selfish benefit of a few is not only unconscionable but comes with a political-economic price: a growing struggle to redefine “homeland security” to include the right to: a job at a living wage; quality education; universal health care; a dignified retirement; a healthy and sustainable environment; and the right to enjoy the protection of civil liberties.