The Obama administration has made history. After 30 years of disappearing government and lawless markets, we are witnessing the most dramatic, proactive use of government powers in the economy since the Great Depression. Mr. Obama dropped billions of dollars of public money on the economy. This is a dramatic turn from the practices of Bush, Reagan, and Clinton. And it should signify a definitive victory for us, right? With a black president riding a wave popular demand for change, and with the greatest crisis in global capitalism that we have ever witnessed, it should mean that the economy will finally be just and fair, right?
In fact, things are a-changin', but it does not mean a progressive rearrangement of the economy. In cities throughout the country, the stimulus has not been visible. It's early, but everything in the design of the Recovery Act means that it will make little structural difference for communities of color. Black, Latino, and Asian inner-city communities have been in recession since at least 2004. Whether the national economy can recover any time soon is a big question, but no matter what happens, local urban communities will stay in crisis for much longer. The stimulus was designed to save the existing economy, but not fundamentally restructure it. It will create some new opportunities, for sure; but that money will largely disappear into the sponge of budget deficits and special interests who are looking for stimulus monies to save them.
It is hard to imagine how 1.6 trillion dollars (between the financial bailout and the stimulus) can get lost, but it will. Here's the formula, surprisingly simple actually:
1. A third of it goes to tax rebates, which people use to pay off a small piece of existing debt
2. Another third of it goes to government departments and States in severe crisis, which do the same - use it to reduce budget deficits
3. Lastly, a third of it goes to 'shovel-ready' projects, which means that in most places, it goes to the same people who were ready to use public money to make a profit (developers, titans of industry) before the bailout.
This is the same formula for the financial bailouts, where $750 billion dollars was handed to the greedy people who made the mess, with almost no conditionality. And of course, they did what greedy people do: they hoarded the money and used it to take care of themselves first. Now, nearly a trillion dollars later, it is still impossible to get a small loan from banks. We can't even borrow back the money we gave them while they insist on maintaining their multimillion dollar bonuses.
The bottom line is that most of the stimulus money won't filter down to those at the bottom, or even in the middle. As in the banking disaster, the same cast of characters that got us into the economic mess -- the same ones that benefited from opportunities presented by out-of-control housing markets -- will benefit from the stimulus. Bankers/financiers, developers/builders, all fueled the speculative market. Government structures at the federal, state, and local levels enabled fat cat friends of politicians to take without giving. Together they fueled the financial/real estate bubble and did not put anything away for the public good. They amassed vast and immoral personal wealth when the speculative market was hot, and when it went bust they took the first opportunity to protect themselves above all else.
As much as things seem to change, they actually stay the same. Corrupted corporate interests maintain enormous control over our democracy. Mark my words: This Recovery Act will not address racial and class disparities. It will not take communities of color out of our collective depression.
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