Barack Obama is in the difficult and contradictory position of being a president who wants to do good in a position that requires him ultimately to serve the U.S. economic elite and maintain America's military dominance of the planet. The outcome of the contradiction is unpredictable and depends to a large extent on whether or not those mobilized to get him elected -- especially young people -- can re-mobilize for a protracted and difficult struggle.

This contradiction is revealed when we contrast Obama's Iraq policy, for example, with his efforts to implement a progressive agenda domestically. Ironically, the latter ultimately depends on the former simply because America's wealth and government revenue depend on oil and the U.S. cannot afford to ignore the world's second largest supply of the stuff.

Well before Obama was elected, the end of corporate globalization was already beginning to play itself out. The economic crisis, a global catastrophe, signals the end of America's reliance on its transnational corporations' dominance of globalization. And the end of America's parallel dependence on the phony wealth of the casino economy. Many people have pointed out that "government is back" -- that is, we are entering a new era of activist, interventionist government. But this means that borders are back, too, because globalization was characterized by both the shrinking of government and the melting away of borders.

Giant corporations effectively replaced governments as the dominant institution of the era. Now it is clear that many of these giants are breathing their last breaths or will end up much diminished versions of their former selves. This will demand that the U.S. government be even more aggressive internationally in the medium and long run. Despite Obama's efforts to re-engage with allies in the developed world and back away from U.S. unilateralism, he will, sooner or later, have to turn to protectionism and to maintain the U.S.'s aggressive defence of its "national interests" around the world.

A very useful crisis

But leaving the darker side of his agenda aside for the moment, let's look at Obama's domestic agenda and how he intends to sell it. Obama, in a strategic move loaded with delicious irony, is using the right's strategy of the 'useful crisis' (what Naomi Klein calls the shock doctrine) against them -- using the economic crisis to rewrite the purpose of government and bring it back to an activist and interventionist role much faster than anyone could have imagined -- or indeed could have accomplished in the absence of a crisis. It is arguable that without this crisis, democracy would have continued what seemed to be its inexorable decline.

Before we examine the good stuff Obama is doing courtesy of the crisis, let's be clear: there are strict limits to what he can accomplish. Not only is he not challenging the precepts of U.S. capitalism and empire, he intends to try to save them and ensure their dominance. Obama is after all a capitalist. So both economically and politically he must play the role of an imperial president. To save capitalism, he has to save the banks and insurance companies; to save the empire he must continue the military dominance of the Middle East. And that means the continued occupation of Iraq.

Government no longer villain

Many commentators have expressed extreme scepticism regarding Obama's intentions, warning that he has set expectations so high with his "Yes we can" campaign that disappointment and renewed political cynicism are almost inevitable. Maybe. But some of Obama's initiatives are truly fundamental shifts from 'the government is your enemy' period launched by Ronald Reagan in 1980.

Here's a few of them. Obama has in mind a cap and trade plan estimated to raise $650 billion from corporations over 10 years. He is rolling back the obscene tax cuts for the wealthy (and increasing the highest tax rate from 35 to 39.6 per cent and increasing capital gains taxes). This frees up $60 billion a year. At the same time he will remove10 million low income Americans from the income tax rolls altogether with his "Making Work Pay" tax deduction for 150 million working individuals and families. His plans to reform health care will cost hundreds of billions and keep the U.S. in trillion dollar deficits for years. But again, Obama takes advantage of his "bail out the banks" initiative. How can the wealthy complain about deficits when their man Bush drove them through the roof and the bailout will benefit them the most?

A labour president?

In another bit of brilliant strategizing, Obama is "pairing" tax increases on corporations and the wealthy with benefits for the poor and middle class: if Congress balks at the tax increases, they automatically kill benefits for millions of hard-pressed (and pissed-off) voters. For example, his planned $117 billion assistance for college students will be partially funded by eliminating subsidies to banks making student loans. Half the revenue for his initial $634 billion for health care reform will come from placing limits on charitable and mortgage interest deductions for high income earners. Most of the rest will be found by reducing Medicare payments to private insurers.

Obama is also planning a number of other pro-labour moves that most working people had given up on years ago: increasing the federal minimum wage to $9.50 (from $7.25 as of this July); legislating seven paid sick days a year (millions currently have no sick leave at all); and expanding the Earned Income Tax Credit -- one of the country's few effective anti-poverty programs.

But the flip side of the imperial presidency is not nearly so pretty. Obama has no plans to slash the military's colossal military budget, now nearing $700 billion -- more than all other countries' budgets combined. Millions of Americans voted for Obama at least in part because they believed he would really get them out of Iraq. He regularly denounced the war and called the continuing occupation a "violation of international law." But his recent statement on the war suggests that the occupation -- and its goal of controlling Iraqi oil -- will continue. Obama's plan to keep 50,000 U.S. troops in the country "to advise Iraqi forces and protect U.S. interests" and to continue the expansion of over 50 military bases does not bode well for a genuine withdrawal, his promises notwithstanding.

Also, while working and middle-class Americans will clearly benefit from several hundreds of billions more spent on education, health care, and progressive tax cuts, the bank and insurance company bailout essentially rewards the most destructive business behaviour in the history of U.S. capitalism. Ultimately it will cost close to two trillion dollars. The spending gap -- like the growing income gap which is never mentioned -- is huge.

He'll need grassroots support

So there you have it. Obama, who I think is as a good a person as could be elected in the U.S. at this time, has a plan to re-establish an activist role for government in the U.S. using the economic crisis and Americans' distrust of the "market" but protecting his back by doing what any U.S. president has to do. Namely, protect the capitalist financial system and maintain the empire. And he is brilliant at executing it, so far.

But I would go further. He is actually counting on something few other presidents since FDR have counted on: a robust democracy. Implied in this ambitious agenda is a page from Franklin D. Roosevelt's play book. In conversation with A. Philip Randolph, a legendary black union leader, Roosevelt said he agreed with everything Randolph said needed to be done. Then he said, "But I would ask one thing of you, Mr. Randolph, and that is go out and make me do it." And he and the union movement did, the result being the famous Wager Act creating the legal right to organize a union and bargain collectively.

Obama's domestic agenda will only be possible if the legions of people who got him elected go out "make him do it." (Changing his position on Iraq and Afghanistan is a whole other question.)

Those already planning to stop him are enormously powerful and determined, even if for the moment they are somewhat humbled by the crisis they created (Obama's popularity is around 60 per cent; Republicans, 26).

The wealthy are not amused at losing billions and are in no mood to lose even more. But there are signs that the people inspired by the message of hope are still engaged and gearing up for the fight ahead. Its outcome will have huge implications not only for the U.S. but also for Canada and all the English speaking developed nations where the Chicago Boys' denigration of government held such powerful sway.

Tomorrow: Who's Obama Proving to Be? (Part 2): Michael Byers on the great opportunity the new U.S. president affords Canada.

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