A year ago at this time Commentary was writing about the departure of Paul O’Neill and Larry Lindsay from the Bush administration. Twelve months on and Mr. O’Neill is back in the news, this time because he has finally broken silence and given us his opinion of Bush et. al. in an interview with Ron Suskind which formed the basis for a book called The Price of Loyalty. We have been interested to learn that contrary to our opinion at the time, O’Neill was actually fired, just as the White House said he was. We had thought that he had quit and that the administration was trying to make it seem a matter of choice, to retain at least the appearance of order and discipline. We just did not think that they could be so stupid as to fire O’Neill and Lindsay. O’Neill and Lindsay lent them some credibility. Now we know the truth: they are that stupid.

From what we have seen so far, Suskind’s book is primarily interesting for one reason. As Treasury secretary, O’Neill was one of the most powerful men in Washington. He was brought onto the Bush team by Dick Cheney, who he counted as a friend. His professional credentials are unimpeachable. And we learn from his mouth that what we at SRA and many others have been saying all along is right: that the Bush administration is full of neo conservative ideologues whose objectives are partisan to a fault, motivated by ideology, superstition, greed, and vindictiveness.

Good governance is not a matter of convenience. It is a matter of survival. The intelligent rich stay rich because they understand, as Howard Dean apparently does and JP Morgan certainly did, that appearances count. In a political economy in which the top 1% already controls virtually everything, the style of the Bush administration not only calls attention to this most uncomfortable of political facts, but rubs everyone’s nose in it. It is the style of those whose only motive for action is that that they can do something, rather than that they should do something, as the president himself has confessed to Bob Woodward. The great thing about being president, as he put it, is that he doesn’t have to listen to anyone, but everyone has to listen to him. This style is not just short-sighted and puerile, it invites examination of the underlying premises upon which the status quo rests; premises which will not stand up to much observation under the cold light of law, ethics or even reason. That makes it dangerous to the people who pay the bills.

Which One Is A Republican In Drag?

You would think that the current resident of the White House, a third generation retainer from a family of retainers to the people who do pay the bills, would know this. But then the best butlers are trained in Britain, not West Texas. Perhaps the president thinks that because he is president that he cannot be fired. That is a mistake as others have found out, notably Richard Nixon.

The Bush administration is now taking a great deal of incoming political fire. O’Neill’s criticism notwithstanding, former Treasury Secretary Robert Rubin has weighed in as well, focusing his attention on the increasingly dire state of the nation’s finances. Rubin is absolutely right of course, and he has considerable institutional backing for his criticism, with the IMF in its last World Economic Outlook worrying about the threat to international stability inherent in America’s rapidly growing net foreign debt.

Having done so much himself to create the problem, Rubin ought to know. He left a political and economic time bomb for the Republicans to defuse when they came to Washington. Not only did they lack the intelligence to start defusing it by laying the blame on the Democrats where it could plausibly be laid, they have added to it the equivalent of a bunker-busting nuke that we reckon is going to blow Dick Cheney out of his hole under the peaceful Pennsylvania countryside. In one of the more delightful of O’Neill’s revelations, we learn that Cheney dismissed his concerns about the deficit curtly and shortly thereafter O’Neill was fired. According to Cheney, Reagan proved that deficits don’t matter. Of course Reagan proved no such thing. All he proved is that you can get away with mistakes for a long time as long as the consequences don’t come due inside the time frame of the relevant political cycle.

It looks to us as though the frontrunner for the Democratic Party’s presidential candidate nomination, Howard Dean, understands this. Dean may try to run as an outsider but he is no outsider nor is he a bomb thrower. He clearly knows a liability when he sees one however, and he has correctly seen the Bush administration’s biggest vulnerability: itself. All he has to do to win the election, we reckon, is to just let Bush and Cheney be themselves. He has also, and correctly I think, seen that the best way to secure the Democratic nomination is to attack the Clinton wing of the party. The dominance of that wing over the last decade has been first due to its willingness to betray the class, race and intellectual bases of the party’s support. Related to that is his ability to raise money. These two strengths over time have become a liability just begging to be exploited. Dean is doing so now. The Democratic Leadership Council is just the Republican wing of the Democratic Party, says Dean. People gasped when he said that, but nothing happened. Not only did he get away with it, his support has multiplied.

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All the more reason to pay attention to the employment numbers in the US. In spite of the fantastic amount of both monetary and fiscal stimulus applied by the Bush White House, job creation remains moribund. The reason for this is simple enough. Most of the stimulus has benefited those who didn’t need more money, and too little of it has gone to those who do. In economic terms it is simply that most of the tax breaks have gone to those with the smallest marginal propensity to consume and too little to those with the highest marginal propensity to consume. The latter have been encouraged to consume by taking on more debt, not by putting more earnings in their pockets. Christmas sales last year told the story: luxury goods sales were very strong; everyone else was discounting like crazy. This is two economies, not one.

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Soaring corporate profits sit uneasily alongside declining wages and salaries. With rapidly rising crude materials prices pushing up manufacturing costs, it seems clear that companies are successfully demanding that labour absorb the cost increases. And the borrowing that is fuelling the rise in manufacturing output is ultimately underwritten by that same labour. And although benefits are rising, all this amounts to is paying with promises instead of money. These are the same tactics used by early twentieth century companies such as the Pullman Company against their workers: pay them less than they need to get by, lend them the cash that they need to do so, and force them to shop at the company store. It was not unheard of for Pullman workers to discover at the end of a month’s work that they owed the company money. Judging from the personal bankruptcy statistics of the last decade, more and more Americans find themselves in the same situation.

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President Bush’s expedient answer to this widely shared problem is to announce his intention to grant amnesty to illegal immigrants. This is a tactic time-tested and true in America, where immigration has from the early colonial days always proven an effective means of blunting the organisational impulse of labour. In the early colonies, a shortage of workers proved the spur not to the higher wages that neo-liberal economic theory might have suggested should have been the case, but to the rapid development of the trans-Atlantic trade in black slaves and to the sentencing of criminals to lengthy periods of indentured labour in the colonies.

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Today there are estimated to be 7 to 11 million illegal immigrants in the United States. This is a staggering number when measured alongside a legal non-farm labour force of 130 million. When the prison population of 2 million is added to the illegals the miracle of labour “productivity” is considerably demystified. Here is a combined labour pool of up to 10% of the legal work force without the right to vote and without any legal status or rights. Not only is this a heavy stick with which to hit the unions in an election year, but it is also a sure way of seeing that the administration enjoys sizeable campaign contributions from the companies that exploit those people.

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There is thus a curious juxtaposition of economic factors going into this election year. On the one hand, the economy as measured conventionally is performing rather well, and the Bush administration’s core constituency, the corporate sector has never had it so good. The people who do the work in those corporations are not seeing much of the benefits, however, and to judge from the administration’s belligerence have already been written out of the election playbook by the White House. What this means in practical terms is that the Republican Party will benefit as usual from a low turnout in November, the lower the better.

One last point: record corporate profits, lower inventories, and falling wages and salaries are making it possible are making it possible for corporations to pay down bank debt. This is undoubtedly contributing to the drop in the monetary growth rate that has been of concern to some observers of the economy. In a way, it is a worry, because it is symptomatic of the unbalanced nature of the rewards that this expansion is generating. However, when inventories start to rebuild, when interest rates finally start to climb again, and god forbid, corporations start paying more to their workers; the money supply is likely to grow sharply.

There is a limit to how much workers can be squeezed, isn’t there?

- Chris Sanders

Despite repeatedly stating that a key demand was an end to administrative detention, and that no partial offer would be accepted, an Israeli offer was yesterday accepted by the Higher Committee for the Hunger Strikers on behalf of the prisoners. Although Israel has agreed to release 19 prisoners from solitary confinement - several of whom have been in isolation for more than ten years - and to lift the ban on family visits for prisoners from Gaza, the agreement states only that administrative detention will not be ‘renewed’ automatically and that after six months, the prisoner must be released, or charged. Current administrative detainees will be released, or charged, at the end of their current sentence. (video by Julie Webb-Pullman - Nakba Vox-pops with Gazans)More>>

REPORTS ON THE STRIKE END:

• Prisoner Interview - Julie Webb-Pullman: Jalal Saker’s Story
• Government Media Office - Victory of the prisoners in the Battle of the Empty Stomachs
• Palestinian Information Center - Palestinian prisoners win battle of empty stomachs
• International News Links - Palestinian prisoners, Israel make deal to end hunger strike
• Israel Security Agency - Terrorist Activity by Security Prisoners
• Israel Prison Service - End of the Hunger Strike

Julie Webb-Pullman: Gaza.Scoop.ps – Real Time News From Gaza

• Photo Essay: Al Jundy on Day 25 of the Battle of the Empty Stomachs
• Palestinians Favour A Diplomatic Solution, Says Haniyeh
• Hundreds Of Gaza Women March To Join Hunger Strikers Rally
Photo essay – 20th day of the Battle of the Empty Stomachs
• May Day In Gaza
• Protest Tent in Support of Hunger Striking Prisoners Relocates in Gaza City