He has also indulged the military-industrial complex with the biggest war budget in US history since World War II, even adjusted for inflation. The US is building more bases and upgrading its military facilities all over the world to secure its control over strategic resources (such as oil and gas in West and Central Asia, and West and Central Africa); encircle potential rival powers, particularly China and Russia; and attack or intervene in regions where US interests are being challenged (such as in Latin America, Pakistan, Iran, and Korea.). It is also paying out billions to US monopoly firms to supply and service US bases overseas and “reconstruct” the civilian infrastructure destroyed by US invasions in Iraq and Afghanistan.
All this generosity to the most parasitic and brutal fraction of the big bourgeoisie has resulted in the rapid increase in public deficits and debts in all the major economies. The Bank for International Settlements estimates that the debt-to-GDP ratios of the G-7 countries are likely to shoot up to between 150 and 300 percent within the next decade. Hence the executives of the monopoly bourgeoisie are preparing a new assault on the working masses in their own countries and against Third World peoples in order to squeeze out more surplus value.
The Obama administration has for instance frozen discretionary social spending, laid off thousands of teachers and public sector employees, and is getting ready to further whittle down Medicare and Social Security. Leaders of the Group of 20 are now talking about “deficit containment” and “returning to a normal policy stance” even amidst an ocean of unemployed and dispossessed masses. By this they mean withdrawing stimulus measures, imposing fiscal austerity and new taxes in order to raise revenues needed to cover the bailouts handed over to the finance oligarchy. This translates to wholesale job cuts particularly in the public sector, and slashing education, health, housing and other social and welfare programs. This is what all this talk of “recovery” means for the working masses.
The International Monetary Fund is again stepping in to impose devastating austerity measures and wage cuts not just in debt-stricken Third World countries in Asia, Africa and Latin America but now also in Eastern Europe and the less advanced capitalist countries such as Greece. In countries that have managed to steer clear of the IMF by relying on private capital markets, international finance capital still issues decrees through ratings agencies such as Moody’s and Standard and Poor. Countries that refuse to reduce their fiscal deficits through cutbacks in social services, lay-offs and more regressive taxes are punished by poor ratings and higher interest rates.
Even then, there remains the threat of widespread defaults and financial meltdown in the near future. In fact, these are inevitable because the response of the ruling class to the crisis — intensified exploitation of the working masses, over-accumulation of capital, debt-driven spending, and financialization — actually aggravates the basic conditions which lead to crises. The expected bursting of the public debt bubble will have far worse consequences than the bursting of previous bubbles.
While continuing to rave about the free market masquerade of monopoly capitalism, the US is now desperately carrying out a protectionist policy and trying to reduce its external deficits through cutting imports and more aggressive export promotion. Obama recently launched the National Export Initiative which aims to double US exports in five years. The US can therefore be expected to become even more aggressive in prying open foreign markets, enforcing its “property rights” overseas while restricting the entry of imports. This is sure to exacerbate trade frictions between the US and its commercial competitors as well as intensify inter-imperialist rivalry for plundering the Third World.
In the face of the economic crisis and challenges to its hegemony, US imperialism is escalating militarism, state terrorism and wars of aggression. The biggest armed conflicts and greatest instability are happening in regions where US intervention is most extensive – West, Central and South Asia, and West and Central Africa. These are also the regions with the greatest concentration of strategic resources, foremost of which is oil, the control of which is an explicit aim of US military policy since the 1950s.