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The New Deal - in the US and Germany

by Thomas Lukscheider Saturday, Nov. 29, 2008 at 6:02 AM

A radical rethinking, a New Deal, is on the agenda. The worldwide depression can only be countered with stronger economic regulation, increased public spending and fiscal measures. This means an end to privatizations and rebuilding the essential infrastructure.


By Thomas Lukscheider

[This editorial published 11/17/2008 in: Linkszeitung is translated from the German on the World Wide Web,]

The German public has not really grasped the change implicit in Barack Obama’s election victory. A radical rethinking, a New Deal, is on the agenda. The worldwide depression can only be countered with stronger economic regulation, increased public spending and fiscal measures. This means an end to privatizations and building- and reorganizing the energy-, transportation-, education- and health care systems.

Obama’s triumph was a victory of democracy, not only of Democrats. This can be shown in several facts. Since the Second World War, never did so many US citizens vote: 64.1 percent. 63.8 percent voted in J. F. Kennedy’s election in 1960.

The excellent voter participation occurred despite the antiquated bureaucratic US election laws hostile to minorities. Voters must be entered in an election register; the election takes place on a workday; the voting precincts are much too large. Long lines form at the polling places: the voting machines are unreliable; trust in the local election board is trifling. All this kept minorities and low-income persons from voting in the last decades. But this time it was different.

Never did so many US citizens who previously were non-voters join in a presidential election. Never did the disadvantaged and minorities in the US vote for a candidate with such an overwhelming majority. 56 percent of women, 65 percent of Latinos and 95 percent of African-Americans chose Obama.

Obama’s election helpers showed an enthusiasm not seen since the time of Kennedy. They went on a pilgrimage from house to house, cleaned clinics and took vacations to support Obama in “states on the verge of bankruptcy,” to bring the poor population out of resignation and move them to register and vote.

Barack Obama’s two most important election helpers were Sarah Palin and the financial crisis. The governor of Alaska constantly reminded voters of George W. Bush’s limited intellect. Narrow-mindedness exists in the republican camp that even surpasses George W. Bush’s baseness.

For simple people the financial crisis showed the economic dangers in the ruthless preference of big money and the pampering or coddling of speculators, the military- and weapons lobby: loss of jobs, roofs over heads, health care and old age provisions.

In his election program, Barack Obama gave a clear answer to these challenges. This is called “New Deal” and means higher taxes for the richest, a more secure social security for the masses of the population and the weakest, drying up the speculator scene in the financial sector, supporting firms in the real economy through state-commissioned infrastructure projects, protecting the environment, safeguarding jobs and strengthening domestic demand.

Until recently, the term “New Deal” was laughed at in Germany’s economic magazines as a fossil belonging in a museum. In the regimented media from ARD to ZDF (German television), state initiatives were denigrated for decades as “retro,” “out of time” or “behind the times.”

“Keynes is dead,” “the state is a Moloch,” “Roosevelt and Brandt failed,” and “the market and managers are our happiness” – these propaganda slogans of neocons and neoliberals splashed over the Atlantic for more than 15 years. They were gullibly soaked up and piously repeated by our media gurus and economic and political elites. Where the true rightwing neoliberal faith was lacking, the director or publisher replaced the editorial staff as in “Spiegel” and “Berliner Zeitung.”

However the stream of dollars, mantras and tracts from the marketing offices of the financial branch is now drying up. The ideological following wind from Washington subsides. Obama’s projects, initiatives, social program and New Deal now cause a gradual change of consciousness among several opinion-makers in Germany and Europe.

The crisis cannot be mastered with sheer cosmetics and combating symptoms. A radical rethinking, a German New Deal, is on today’s agenda. In Germany, this means obligating the millionaires as Obama plans in the US, a clearly higher tax rate for the rich with mammoth assets of at least a million euro, a progressive increase of the top tax rate for persons made of money with 500,000-euro annual income.

If German tax rates for assets in the millions were raised to the level of France, Great Britain or the US, they would climb to 2.5 – 4 percent of the annual gross domestic product. In Germany tax revenue from the caskets of the richest amounts to 0.86 percent of the GDP. An increase to 3 percent would bring around 55 billion euro annually into state coffers and then transferred for labor-intensive projects and contracts to local enterprises to improve the infrastructure.

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