posted May 30, 2021
Inflation Myths & the US Economic ‘Rebound’ 2021

On May 12, 2021, the US Labor Department released its report on businesses now raising prices, as the US economy reopens in the wake of Covid vaccinations and moderating Covid infections. The CPI, or Consumer Price Index, rose 0.8% in April, after a 0.6% in March, and 4.2% for the twelve months ending last month, April 2021, which was the largest increase since 2008.

Republicans, conservatives, and business interests are using the fact of recent rising prices to attack legislative proposals to increase government spending. They argue the recently passed $1.8 trillion ‘American Rescue Plan’ (Covid Relief Plan) by the Biden administration was too generous. And proposals to spend on Infrastructure ($2.2T) and American Families ($1.5T) will only stoke consumer spending and boost inflation further.

They and their mainstream media friends are arguing that fiscal stimulus putting money in the hands of households is driving up prices. In other words, consumer DEMAND is now causing prices to rise sharply, they argue.

But is it? Or is the problem of rising inflation a business SUPPLY problem?

Inflation Not Due to Fiscal Spending & Household Demand

There is little evidence that fiscal stimulus spending is responsible for recent price hikes. The fiscal stimulus spending for 2021 is far less than reported, so its effect on household Demand spending—and therefore Inflation—is thus far minimal. The recently passed American Rescue Plan is not actually $1.9T, as media reports. The Congressional Budget Office, the research arm of Congress, reports that only $1 trillion in spending is even authorized for 2021. And of that, at least $200 billion or more won’t be spent in fact: it will be hoarded and unspent by households and local governments or used to pay down debt and won’t get into the US economy in 2021. The majority of the remaining $800 billion hasn’t even hit the US economy yet and won’t until late 2021. And what about the Infrastructure and Family Assistance subsequent proposals? They’re just on paper. And won’t get passed until sometime in 2022, if then, and certainly reduced in authorized spending by large amounts. In short, the Republican-Business hype about $6 trillion going to households and consumers is just another ‘big lie’. It’s no more than $800 billion—that is, just about the amount of similar fiscal spending in 2020 that dissipated in just two to three months. Put another way, the fiscal ‘stimulus’ is not really a stimulus—just a ‘mitigation’ spending measure designed to put a floor under the economy while waiting (and hoping) for the reopening of the economy to generate a sustained recovery.

A fiscal spending of at most $800 billion this year—which has hardly even hit the US economy yet—is not sufficient to generate excess demand by households to cause inflation. So much, therefore, for the argument that government fiscal spending is causing excess household DEMAND spending that is resulting in current inflation!

Inflation Due to Business Supply Problems

A closer look at the CPI shows that the problem of recent rising prices is a SUPPLY problem in business, not a DEMAND problem due to households’ excess income.

Much of the recent CPI increase, when broken down, is due to sharp increases in auto prices, especially used cars. That is a supply problem: auto companies are experiencing a crisis in obtaining semiconductor chips for production. New car production has fallen. That’s created a shortage that allows the companies to jack up prices on their new cars. In turn, it has resulted in used car prices rising even further and faster than new cars. New car prices have surged 9.6% and used cars even more, by 16.7%, according to the Wall St. Journal. Auto prices have surged 21% over the past year. April’s car and truck double digit price hikes—the highest since 1953—thus account for more than a third of the overall 4.2% April CPI annual increase!

The 2020 economic contraction resulted in businesses reducing their inventories of unsold goods deeply. They now have shortages. Recent US GDP numbers show inventories collapsed last year and continued to contract in the first quarter of 2021 as well. This has created a condition that now allows businesses to sharply raise prices due to the shortages of supply. This is a condition and problem across many industries and companies today.

Businesses in 2020 were not able to raise prices due to the massive unemployment and inability of consumers to spend as the economy was largely shut down. Service industries like airlines, travel, lodging, entertainment, restaurants & bars, and retail were especially hard hit. In response, many of the companies in these industries cut prices in order to try to capture what little household demand there was. Now, as the US economy reopens, they are trying to recoup those losses by sharply raising prices, trying to test what the market will bear in terms of inflation.

Looking at the recent CPI numbers once again, apart from auto prices new and used, the sharpest increases in the CPI index are occurring in airline prices, other travel related prices, hotels and lodging, and similar services—all rising recently at more than 10%! At the same time, auto insurance companies and utility companies are raising prices by double digits as they price gouge consumer in the recovery. Consumers aren’t buying more utilities. That demand remains stable. Nevertheless, the big utility companies are using the opportunity to boost prices. The auto insurance companies experienced a big windfall in profits in 2020, as households drove less and their insurance premiums remained at pre-pandemic levels. But now they too are raising prices by double digits to ‘game’ the system. Then there’s the oil companies sharply boosting prices at the pump to recoup their losses in 2020.

Not to be left out, in addition to these supply driven causes, new housing prices are surging as well as shortages in lumber and other materials, and due to the low availability of housing stock. In other words, a SUPPLY problem, causing inflation!

Global Markets As Cause of Inflation

Wholesale prices for commodities like aluminum, copper, and crude oil are all rising sharply as well, as investor speculators buy up futures contracts to resell later at a big profit. In addition, global supply chains for many commodities, as well as semi-finished goods, were severely damaged by the Covid global recession. Supply chain and speculators gaming the shortages all add to inflationary pressures. Now rising commodity wholesale prices will soon penetrate consumer prices, causing retail price inflation. But that means the problem once again is not the household consumer and demand; it is the professional financial speculator causing most of the current rising world commodity price inflation.

And then there’s the problem of the falling US dollar, which drives up imported goods prices (in the CPI), which has nothing to do with household demand either. The Federal Reserve US central bank has a policy of keeping interest rates at near zero. It has pumped more than $4 trillion into banks the past 18 months; and continues to provide $120 billion every month to ensure rates stay low. This policy and subsidization of low interest rates has resulted in less foreign investor demand for US dollars to buy US Treasury bonds that pay little interest. That reduced demand for dollars drives down the value of the US dollar. And that lower valued dollar in turn, raises the cost and price of imported goods coming to the US. Import prices of goods in the CPI therefore rise in turn and contribute to the general increase in the CPI. In short, the falling dollar is a cause of inflation that has nothing at all to do with excess household demand for goods due to fiscal spending.

Problems with the CPI as Indicator of Inflation

How reliable is the CPI, in general, and especially as a measure of economy-wide inflation?

The answer is not very. There are major problems with the CPI as an accurate indicator of the price level—i.e. of inflation. Here’s just some of them:

First, the CPI is not even an indicator of the general price level and inflation, as economists well know. It is an indicator of the cost of living for urban households only. Cost of living and inflation/price level are not the same thing, contrary to the general public’s understanding of the two concepts.

The CPI measures only around 450 different ‘goods and services’ in the economy—i.e. the most purchased by urban households. There are millions of different goods and services in the US economy with prices, none of which are included in the CPI but are part of the general price level.

Second, unknown by the general public, the US government keeps secret how it calculates most of the CPI. Why so? It says it does that in order not to reveal how businesses raise prices because it would reduce competition among businesses. But that’s nonsense. Most businesses, especially the larger corporations, know full well how their competitors raise prices.

The US government reveals more detail about how it calculates employment and unemployment, but keeps secret most of its methods secret how it manipulates CPI raw data. It does that, in my opinion, in order to ‘low-ball’ inflation. It has an incentive to under-estimate the CPI. The higher the inflation, the more the government must spend in cost of living for social security, food stamps, school lunches, government pensions, and so forth. So it prefers to low ball inflation and does so in a number of way. Unlike employment stats, it also avoids segmenting inflation by race, age, gender, and income levels. That would show how CPI inflation more seriously impacts minority and low income households.

Third, the CPI measures the increase in inflation compared to a similar month or quarter in the previous year. So if prices were falling last spring 2020 due to the severe economic contraction, prices this spring 2021 appear especially high. Businesses are recouping price cuts (deflation) last year, so price increases appear even higher this year. In other words, it matters what ‘base year’ is used to estimate the CPI (or any inflation index for that matter). The CPI can be either higher or lower depending on what base year is used. And if the base year was deflationary, with falling prices as was 2020, then the subsequent year, 2021, inflation and CPI appear exceptionally higher than otherwise.

Apart from the CPI not being an actual measure of the general price level and its methods for estimating inflation kept a secret, there are further problems with the CPI itself. Here’s just a few:

1) The CPI’s basket of 450 or so goods and services have weights assigned for the various goods and services. In other words, the cost of lodging weighs more in the final CPI calculation than does, for example, the cost of smart phones. But the weights are changed only every 4 or 5 years. The cost of food, autos or housing may surge significantly in any given year (now occurring) but their weights are not changed to reflect the increase. The CPI is thus under-estimated for that year. Moreover, the weights are not segmented by household income levels. So for the median or even more for the working poor households, the cost of rents result in an even greater inflation effect than for, say, wealthier households. The poor are impacted by inflation more as a result. Their CPI cost of living is thus much higher than the general CPI number

2) The CPI makes adjustments for rising quality of goods. For example, even though the cost of a new iphone may be higher this year for the buyer, because the new iphone has more features and functions, the government calculates a zero rise in price or even a price deduction for smartphones in its overall CPI calculation. The buyer-consumer may experience an actual price hike, but it doesn’t show up in the CPI as such.

3) There’s also what’s called the ‘substitution bias’ problem in the CPI. This happens when prices rise for a product in the CPI basket and the consumer responds by not buying that higher priced good and buys instead a lower cost substitute. There’s an actual increase in the price level for that original good that isn’t captured in the CPI because it isn’t purchased.

4) New goods and services that are created in the economy and their inflation are not captured because they may be not yet included in the 450 basket of goods and services of the CPI. Their prices and inflation are for certain part of the general price level rise, but aren’t reflected in the CPI. And remember, there are millions of goods and services not included in the CPI.

Add to these issues and problems, there is no adjustment for the value of the dollar falling, or for the fact the CPI measures only urban cost of living, or there is no segmentation that would show lower income households’ CPI are higher, the CPI excludes altogether certain important items that account for inflation: there’s no mortgage rates estimated in the CPI or rising income taxes. And many economists argue the CPI still significantly underestimates price increases for online shopping.

Summary

All the hype from Republicans and mainstream media that the recent, and pending, fiscal stimulus spending is driving up inflation has no basis in fact. It is an argument designed to be used to block and roll back the spending that would benefit households and consumption. That argument assumes the emerging inflation is a household DEMAND driven problem. On the contrary, rising prices are far more a business SUPPLY problem. Businesses are using the supply shortages as an excuse to boost prices, and to test how much the markets will allow, to generate and recoup 2020 losses and price cuts during the pandemic. Global issues unrelated to Demand are also at work. A detailed look at recent CPI numbers shows the biggest increases in prices are due to shortages in supply and those business sectors trying to recoup losses. Other businesses without losses in 2020 are going along and doing the same, using the rising prices as a cover to raise their prices as well.

The Biden fiscal spending is a small fraction of what the opponents claim. Only $800 billion will be spent in 2021 (and likely less as more workers leave unemployment benefits for jobs). It’s not $6 trillion as the business media in particular likes to tout. $5 trillion of that claim is just talk of legislation that won’t hit the economy until 2022 or after, or not at all, and the remainder of the Biden American Rescue Plan of $1.8T is spread out over 10 years!

Finally, the CPI is not an indicator of inflation and has a number of serious limits when it comes even to estimating the cost of living for US households. In general, moreover, it grossly under-estimates even the cost of living and is not a reflection of rising general prices and inflation.

Inflation will rise in 2021, for certain. But it will be more due to business practices and SUPPLY problems as well as other global conditions—and all that has little to do with consumer demand and government fiscal spending programs or legislation.

Nonetheless the US economic ideology machine, and its mainstream media conduit, will continue to pump out the fiction and myth that it’s government spending and excess US middle class and working class household demand that is the problem behind inflation.

Jack Rasmus is author of ’The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump, Clarity Press, January 2020. He blogs at jackrasmus.com and hosts the weekly radio show, Alternative Visions on the Progressive Radio Network on Fridays at 2pm est. His twitter handle is @drjackrasmus.

posted May 7, 2021
US First Quarter 2021 GDP: Recovery or Just Another Rebound?

This past week the US Commerce Department released its early estimates for US GDP for the 1st Quarter 2021, January through March.

If we are to believe the numbers, the US economy grew a respectable 6.4% during the period. But did it really? And does it represent a strong recovery underway? Or just a rebound, as the economy reopens in the services sector; and once the reopening concludes, will the economy flatten out again—as it did with last summer’s 2020 partial reopening that collapsed in late 2020?

The first thing for readers to understand is the 6.4% is not really 6.4% for the first three months of 2021. The US is one of the few countries that reports its GDP figures in an ‘Annual Rate’ (AR) percentage. Most other advanced economies do not. Annual Rate reporting takes the actual growth for the period and then multiplies it by four. In other words, a 6.4% annual rate GDP means if the economy continues to grow as it did in the first quarter 2021 then it will amount to a 6.4% for the next twelve months! That means the actual GDP growth for the first quarter was about one-fourth of 6.4%. That actual growth was 1.6% over the previous, fourth quarter of 2020.

Another obfuscation in the official numbers is that the US sometimes reports the gain for the quarter compared to the same quarter a year ago, and therefore not the previous calendar quarter. What is important is how much the economy grew in the quarter compared to the preceding quarter—and not compared to a quarter twelve months ago.

On top of all this, it’s important to understand that ‘real GDP’ (the 6.4% annual rate overestimation) is obtained by reducing what’s called ‘money GDP’ from the rate of inflation. So if the rate of inflation is underestimated, then real GDP appears higher than it actually is. And the US always underestimates inflation in order to get a higher real GDP number. It does this in many ways. For example, it doesn’t use the Consumer Price Index (CPI) to estimate the inflation. It uses another price index, called the ‘GDP Deflator’. Its number for the overall level of inflation is always much less than the CPI. There are many ways the US further underestimates inflation. Without going into boring statistical details, another way is called ‘chained pricing’. Another is to reduce prices based upon absurd assumptions that improvements in the quality of various products subtracts from their actual price increases. For example, rising prices for computers and smart phones actually show up as price declines. Apple may charge $800 for a new edition smart phone, a hike of $100-$200, but the Commerce Dept. will include it in its inflation estimate as a price decline!

The actual 1st quarter 2021 US GDP growth is therefore only 1.6%–when the ‘annual rate’ puffery is discounted; and that still ignores the manipulation of inflation in order to boost real GDP still further.

So does this 1.6% represent a robust growth? And what is causing it? And will the cause continue?

It’s important to distinguish between an economic REBOUND which is temporary and an actual economic RECOVERY that is sustained. Rebounds dissipate. Real recoveries continue to show a rise in GDP over several quarters into the future.

Last summer 2020 at this time the US economy partially reopened. Especially in the red states that ignored the shutdowns. The US economy experienced a Rebound as a result of the reopening from roughly mid-June 2020 to mid-August. That rebound then faded and in September the economy began to weaken again. That weakening continued through the last three months of 2020 as the economy almost totally stagnated. Here’s the actual quarter to quarter GDP numbers (not reflecting the ‘annual rate’ puffery):

In the first half of 2020 the US economy collapsed by an historic -10.5%. That included the decline that set in during February as the Covid virus began to hit the economy. April-May were the hardest hit months, followed by early June. By mid-June the economy was reopening (prematurely it turned out). The reopening resulted in a REBOUND from mid-June through August. That produced a 3rd Quarter GDP rise of roughly 7.4% (discounting the annual rate nonsense again). So the US economy recovered about two-thirds of its historic collapse in the first half mostly due to the reopening.

The alleged $2.2 Trillion ‘Cares Act’ fiscal stimulus passed in March contributed some to the REBOUND of the summer, but not all that much. It was mostly due to the reopening. The Cares Act, as reported by the media, amounted to $2.2T stimulus. But that was misrepresented by half! It provided only $1.3 trillion—not $2.2T. Here’s why: $500 billion was provided by the $1200 income checks households received plus the expanded unemployment benefits. Another $525 billion was provided by the PPP small business loan/grants (mostly latter) program. (An initial $350 billion was provided in March but then another emergency supplement was added to bring the total spending on PPP to $525 billion by August). So that’s just a little over $1 trillion. Another $1.1 trillion was earmarked for loans to medium and large businesses, to be distributed through the Federal Reserve US central bank. But only $175 billion was actually loaned out through the Fed’s so-called ‘Main St.’ program by year end. (The Fed sat on $455 billion and then returned it to the US Treasury in December 2020).

So the actual first stimulus, Cares Act, only provided $1.3 trillion into the US economy ($1.025T in checks, benefits, and PPP) plus $175 billion from the Fed. A good part of all that did not get into the economy, but was ‘hoarded’ by better off households and businesses and not spent or used to buy down their debt loads. Probably no more than $800 billion actually got into the economy. In short, the 3rd quarter GDP growth of 7.4% was thus mostly due to the reopening and not the inadequate fiscal stimulus called the CARES Act.

Politicians knew, by the way, that the Cares Act was not a stimulus measure. It was a ‘mitigation’ bill and they called it that. Mitigation means putting a floor under the economic collapse for 2-3 months. It doesn’t mean a spending surge that would result in a sustained economic recovery. Mitigation bills produce REBOUNDs, at best; not sustained recoveries. And that’s what the Cares Act did. It bought some time over the summer, as the economy partially reopened.

But the Cares Act spending ($1.3T minus hoarding and debt repayment) dissipated by the end of summer 2020. And only part of the economy reopened by summer’s end 2020. Consequently the US economy faltered and stagnated in the final months of 2020.
US GDP growth in the 4th quarter 2020 thus registered a mere 1.1% actual growth, which was probably zero growth due to inflation underestimation. This was followed by the 1st quarter 2021 initial GDP numbers reported last week showing a 2021 growth of only 1.6%.

That too was due largely to the reopening of the US economy, and not to the emergency fiscal stimulus of another $866 billion passed at the end of December, which provided a continuation of unemployment benefits and a small $600 check to households. The December emergency measure was also a ‘mitigation’ measure, not a stimulus. It dissipated by end of February 2021, indicated clearly by a new collapse in consumer retail spending after a brief boost in January.

In short, the 1st quarter 2021 GDP growth of only 1.6% is due to the second reopening of the US economy in 2021 as the vaccines for the virus were distributed.

So here’s a summary of the actual growth of the US economy from February 2020 through March 2021:

January-June 2020: -10.5%

July-September 2020: 7.4%

October-December 2020: 1.1%

January-March 2021: 1.6%

The average historical GDP growth rate in recent decades has been around 1.8% to 2.2%. So the current 1.6% is not even average! Moreover, it will slow as the reopening of the service sectors of the economy hardest hit by the virus become more or less concluded. The question then is: will Biden’s much heralded recent ‘American Rescue Plan’ (Covid relief) fiscal spending measure of another $1.9 trillion, passed by Congress last month, be sufficient to provide spending stimulus to push the economy beyond just a REBOUND to an actual sustained RECOVERY in the second half of 2021?

That remains to be determined. But it should be noted the $1.9T reported by the media is actually only $1.8 trillion. (US Senate cut it by $100B). Moreover, according to the Congressional Budget Office, the research arm of Congress, the actual spending out of the $1.8T for this year 2021 is only $1 trillion, not $1.8T! And one must assume that a good part of that $1T will be hoarded and not spent by wealthier households as they get their $1400 checks, and that they, as well as many small businesses, will undoubtedly use their stimulus to pay down debt. Neither hoarded or debt directed money will get into the actual US economy to boost GDP in the second half of the year, 2021. In reality, it’s likely no more than $800 billion stimulus will hit the US economy in 2021. And that’s about the same amount compared to the $866 billion passed last December; and less than the Cares Act passed last March 2020!

If the Cares Act and the December emergency stimulus turned out to be mere ‘mitigation’ fiscal spending, will the current Biden ‘American Rescue Plan’ $800B result in just another mitigation measure as well?

Is the Biden stimulus of around $800 billion therefore sufficient to generate a sustained RECOVERY and not just another REBOUND after this summer and the effects of the 2021 economy reopening run their course?

Another way of looking at the course of US GDP for the remainder of the year is to break down 1st quarter US GDP by its components. Most of the 1.6% was due to a continuing surge of manufacturing. About three fourths of the growth was manufacturing. Can that sector continue to surge? And it is only about 12% of total US GDP.

Services—80% of the economy—began to recover in the 1st quarter but are still doing so only moderately. Business investment is not surging and inventories—a part of investment—actually continued to collapse in the quarter. The trade deficit was another negative contributor to US GDP. Will it turn around? Residential housing growth is plagued by shortages of homes; it won’t contribute much (and is only 4% of GDP anyway). Commercial properties (factories, hotels, parks, malls, office buildings, etc.) are busted. Don’t expect growth here either.

Government spending in the 1st quarter was not all that great a contributor to GDP, as the impact of the Biden act won’t begin to hit until summer. But again, will $800 billion be enough?

Probably not. Much more government spending will be necessary. But isn’t that coming with Biden’s ‘Infrastructure spending’ proposals (i.e. the American Jobs Act’) of reportedly another $2.2 trillion. And his recently announced additional ‘American Families Plan’ of another $1 trillion? Don’t hold your breath. Those two bills won’t be passed, if at all, until 2022. And if passed, no doubt in much lower amounts and over longer periods of time to have much effect on the US economy—and none on 2021.

To conclude: it is to be determined whether the US economy, based on recent GDP numbers and legislation, will look fundamentally different than what happened in 2020. There is a reopening of the economy underway that will certainly boost GDP some. And there’s another $800 billion in mitigation spending. But fiscal stimulus measures in 2020 of roughly that amount show their effects dissipate after a couple months. So will the reopening prove sufficient to generate something more than just another REBOUND 2.0 and a true sustained economic RECOVERY by year end 2021?

That remains to be seen. However, in a number of ways the economic trajectory looks a lot like 2020, in terms of REBOUND and not sustained RECOVERY.

And then there’s the economic ‘wild card’ of Covid. The refusal of 40% of the US population to take advantage of the vaccines indicates there will be no herd immunity attained. The virus will be with us for some time. And the risk is growing that new mutations may prove resistant to the vaccines. What happens then? Another shutdown next winter? If so, expect another fourth quarter 2021 collapse of US GDP growth, just as it did last winter 2020.

Whatever the scenarios, readers should not fall for the statistical hype in the absurd ‘annual rate’ and inflation adjusted misrepresentations of US real GDP and actual economic growth.

Dr. Jack Rasmus,
May 4, 2021

Jack Rasmus is author of ’The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump, Clarity Press, January 2020. He blogs at jackrasmus.com and hosts the weekly radio show, Alternative Visions on the Progressive Radio Network on Fridays at 2pm est. His twitter handle is @drjackrasmus.

posted February 4, 2021
Gamestop–And the Game That Never Stops

This past week a video game company in trouble, Gamestop, became the center of media attention. Day traders had driven up the company’s stock price by thousands of percent in just one day. The mainstream media narrative was the ‘small guy’ investor challenged the big boys of finance who had bet Gamestop stock price would contract, not rise sharply. The little investor, so the story goes, initially won big but Gamestop’s stock price escalation was stopped in its tracks by coordinated forces of Wall St., as trading was abruptly halted later in the day in the midst of the run-up. But that narrative, that media spin, has it wrong. The real meaning of what has happened is quite different.

The Facts

Earlier in the week stock day traders gathered on the platform called Reddit in what’s called a crowdsourcing event. They communicated among themselves in a forum called ‘WallStBets’ and as a group began betting up the stock price of Gamestop, using the no cost stock trading platform called ‘Robinhood’. Similar moves were made against the movie theater chain, AMC, also in big financial trouble, with little revenue coming in but loaded up with mountains of junk debt. A couple other companies in similar condition were targeted by the day traders as well. Stock prices of these companies—all losers or about to be losers—were in a matter of hours driven to record heights in some cases—as if these companies were raking in profits like a Tesla or Google. But there were no fundamental reasons for the price acceleration; in fact just the opposite. Betting so, hedge funds and other financial market speculators were short selling their stock, betting their price would fall; and by ‘short selling’ they were actually manipulating the stock to force a price decline.

Short selling has a time limit on the bet. If the stock price doesn’t fall by a certain time, then all the money ‘bet’ by the short selling hedge fund is lost. As Gamestop’s price kept rising, some of them found themselves short of ‘liquidity’ (money) to cover their short sale bets. They had to sell other assets to pay for them. Or they have had to borrow money from other speculators and lenders (and pay interest) to cover their failed bets.

This had never happened before! That’s not how the system is supposed to run, the hedgies cried! The day traders weren’t playing by the rules of the game, they shouted! But of course they were. It was the hedge funds very own rules. It was all quite capitalist legal.
It was kind of like a poker hand at a Casino. If you bet your opponent isn’t holding a winning hand, you can raise the stakes and hope he drops out. You win the pot. But if some other player puts money on the table and raises you back, i.e. in this case raising the price of the stock like the day traders did with Gamestop, then they in effect call the hedge funds bluff; the hedge funds lose! The hedgies didn’t like that, of course. They are used to short selling without interference and then taking home the entire pot. But this time they didn’t. The day traders were winning the bet—at least the first hand played for the hedge funds got the Casino manager to change the house rules at the last minute to minimize their losses by halting further trading.

So the hedge funds, the big finance capitalist price speculators—as opposed to the crowdsourcing small day trader speculators—immediately changed the rules of the game, i.e. their rules, in order to teach the upstarts a lesson.

Robin Hood of Capitalist Finance

The small speculator capitalists used a trading system called Robin Hood in order to place their disruptive bets to drive up Gamestop’s stock price. What’s Robin Hood? It’s a finance trading competitor to the Schwabs, Interactive Brokers, and other low cost stock trading platforms. In recent years there’s been a ‘race to the bottom’ in charges for stock trades across the trading industry. Who can charge the least per trade can steal trading market share from the others. Robin Hood broke into the sector by introducing ‘no fee’ trades. It appealed to the ‘day trader’ by peddling the message that Robin Hood was about enabling the small trader to compete with the big boys. Robin Hood promised to enable the small speculator day trader to make more money at the expense of the big boys like the hedgies.
Except Robin Hood kept it a secret from its day trader clientele that it was funded in large part by the same big hedge funds. In fact, one of its biggest, Citadel Securities, which reportedly had a $2.7B stake in Robin Hood. Robin Hood is therefore an extension of the Hedge Funds sector.

This was quickly obvious when Robin Hood halted the day traders’ speculation in Gamestop…and almost certainly at the behest of Citadel and other Wall St. finance capitalists. By stopping the day traders driving up the price of Gamestop stock, it saved the hedge funds and other short sellers billions of dollars of potential additional losses should the stock price of Gamestop kept rising. They next day, January 28, Gamestop and other targets’ stock prices began to retreat once again. While Robin Hood has since indicated day trading of Gamestop could resume, it would have certain limits on trading and Robin Hood made it clear it would halt trading again if necessary. And not just for Gamestop. Robin Hood/Citadel has since identified a list of other possible ‘Gamestops’ for which it would limit trading. Citadel, the hedge funds, and Wall St. aren’t about to let another Gamestop event catch them by surprise.

The CEO of Robin Hood was interviewed on CNN shortly after these events by host, Chris Cuomo, who asked outright: “How do you make sure Robin Hood isn’t rigging it for the Sheriff of Nottingham?”—the Sheriff of course being Citadel, other hedge funds, and other short selling institutional speculators. Robin Hood’s CEO hemmed and hawed during the interview and hid behind the claim that it wasn’t Citadel or other that made him halt the buying of Gamestop stock and its price escalation. No, Robin Hood was just following regulatory requirements by the SEC and other government regulatory bodies, its CEO argued.

Left unanswered, however, was why did Robin Hood stop the buying of Gamestop stock when the SEC and other real regulatory bodies did not intervene themselves to stop the trading in the stock? When asked what regulatory agency asked Robin Hood to do so, the CEO had no answer to Cuomo. And why did Robin Hood halt only the buying of the stock that was driving up the price, but not the selling of the stock? Why did Robin Hood act as regulator, when the regulators saw no need to intervene? After all, the buying of Gamestop stock was no less legal than the short selling of Gamestop stock, according to capitalist regulatory rules. Government regulators didn’t tell Robin Hood it had to shut down Gamestop trades. A smoking gun anyone?

A Finance Speculator Food Fight

What happened with Gamestop, Robin Hood, Citadel and who knows what other big boys behind the scene, is best understood as a feud between two wings of Finance Capital. This isn’t about the small mom and pop day trader David vs. the Hedge Fund Goliath! It isn’t about Goliath telling David to put down his sling because it’s not allowed to fight that way.

Both the hedge funds and the day traders are financial asset market speculators. What’s a speculator? It’s someone who ‘invests’ (aka bets) that the price of some stock or bond or derivative or currency will rise (or fall). The speculator then bets on the rise or fall by buying or short selling the stock. The objective is to then ‘flip’ the stock purchased in a relatively short time and thereby make a quick capital gain. It isn’t investing in a normal sense. It’s just the mere buying or selling of a piece of paper (or now mere electronic entry) claiming temporary ownership of the paper. An actual investment is buying and holding a stock longer term in expectation of the company realizing future profits that will eventually drive up its stock value—in a company that actually makes things or provides an actual service, that requires hiring workers who in turn earn wages or revenue that would benefit the real economy.

In contrast, financial speculators are interested only in boosting demand for a stock in order to artificially drive up its price, then to flip it, and realize a financial profit—i.e. a capital gain. Speculative investing is about making a purchase and then a quick sale to realize a capital gain. That may also take the form of a short sale—i.e. a contract to buy a stock after its price had fallen and sell it at its higher price at the time of the contract. In both cases, its about selling after a price appreciation.

Make no mistake: the day traders driving up the price of Gamestop stock price weren’t doing it for the pleasure of tweaking the nose of short selling hedge funds. They were doing it to accelerate the stock price in order to later quickly sell it—just as the hedge funds were ‘short’ selling it for an expected profit as well. Only the method of the selling is different.

So both sides were planning on ‘selling’ Gamestop stock—just in different ways. The day traders by driving up the price by buying it first; the hedgies by reserving the right to sell the stock at yesterday’s price, after they ‘buy’ it when the price collapses tomorrow.

In other words, they’re both financial stock speculators. They’re both committing money capital that could—and should—be invested in the real economy not in paper claims of temporary ownership. Real investment is about longer term money capital commitment in order to make real things or services that required hiring and paying wages.

Both forms of stock price speculators are thus vultures preying on the real economy and undermining its recovery! They divert much needed money capital from the real economy into the financial sector that produces no actual economic growth, no jobs, no wage incomes, no consumption. The day traders aren’t the ‘poor little guy’ being exploited by big Wall St. hedge funds. They’re part of the problem.

Day Trading Is Also Casino Capitalism

Crowdsourcing day trading stock speculation is just the latest form of Casino capitalism, clashing with traditional financial speculators dominated by hedge funds, private equity companies, investment banks, and the other forms of shadow bank institutions that have risen in recent decades to prominence and power in 21st century capitalism. The newcomers are just fighting for a piece of the finance asset speculation pie, previously eaten whole by the hedge funds and the other shadow banks and professional investors.
It’s therefore absolute nonsense to make the latest specie of financial speculators—the crowdsourcing day traders—appear as if they are the ‘little guy’ being crushed by big guy Wall St. players. This isn’t about small financial speculator good, large financial speculator bad. This is a family food fight between sectors of capitalist finance.

The real question is what has given rise to the family food fight? What has enabled it in the first place? And how does it reflect a deeper social crisis in the country?

Technology the Great System Destabilizer

Technology in general, and social media in particular, has contributed significantly to the growing political instability in America. It has enabled conspiracy theories and lies to displace debate over facts. Without technology and social media there would have been no Trump, Trumpism, Breitbart, Parler, Proud Boys-Oath Takers, political institutional collapse, and now accelerating decline of Democracy in America. Technology may not be the fundamental cause of the above, but it certainly has been a major enabler of the deepening of the more fundamental causes.

Think of Reddit, the day trader’s WallStBets app, Robin Hood, etc. as the financial markets analog to the Breitbarts, Parlers, etc. in the sphere of political markets! Technology is disrupting 21st century capitalism in myriad ways. The Moloch has begun to devour itself!
Technology has enabled the day trader speculator gang to challenge the hedge funds and other shadow banks’ ability to manipulate the capitalist speculator show as they will. It has enabled the ‘small’ investor to aggregate his bets into a big enough play to compete with the traditional finance capitalists; it has enabled the ‘small’ investor to inter-communicate and coordinate those bets; and it has enable the concentration of financial bets to move a stock or even perhaps a market—contrary to the bets of the hedgies and other traditional speculators. And that’s what has really pissed off the latter.

So the old speculators quickly struck back! And their political allies will now hold meetings and deliver yet another slap on the wrist of the newcomers. Congress has already called committee hearings to figure out how to deal with it should it happen again.

The Real Origins of the Conflict

The ‘small guy’ crowdsourcing financial speculators aren’t really so ‘small’. Virtually all the stock trading by day traders is done by players who are easily within the wealthiest 5% of households in the US, and probably even fewer. So where have they gotten their money capital to make such bets sufficient to challenge the established rules of the game? The same place that the hedge funds and others ultimately get their money capital.

Since at least the past quarter century the central bank of the US, the Federal Reserve, has pumped tens of trillions of dollars into the banking system. The big commercial banks affiliated with the Fed—i.e. Chases, Wells, Citi, Bank of America—in turn have loaned the tens of trillions of dollars to the shadow banks—i.e. investment banks, private equity, VCs, hedge funds, etc. They in turn redirect much of it into financial asset markets—stocks, bonds, derivatives, etc. They reap record financial profits for themselves and their owners and members, who then redirect it back into the same markets as well.

At the same time, the US tax system has been turned on its head: More than $15 trillion in tax cuts has flowed to the investor class since 2001. That too gets largely redirected into financial markets.

Then there’s the corporate conduit itself. US corporations have redistributed more than a $ trillion dollars a year on average, every year, since 2010 to their shareholders in the form of stock buybacks and dividend payouts. Under Trump, the average for 2017-19 was $1.3 trillion a year. The deep tax cuts on capital gains since 2001 means the shareholders then get to keep more of the buybacks and dividend payouts, and that in turn means even more funneled into financial asset markets.

So the Fed’s monetary policy, the US government’s tax policy, and corporations’ buybacks-dividend practices have all converged the past two decades to keep the US and global stock markets ever rising. But the hedge funds haven’t been the only investors grown fat on the redirecting of massive money capital to investors. Nearly all within the top 5% of the income scale—and that means the day trader crowd—have benefited as well.

The crowdsourcing ‘small guy’ has had excess money capital with which to risk in speculative trades like Gamestop no less than the hedge funds—thanks to the Fed, government, and corporate America. Add the new technologies to the dry powder of excess speculative capital and the mix is explosive. It’s a witches brew of financial speculation!

The Realization Behind the Appearance

What appeals in this story of Gamestop is the appearance of ‘small guys’ getting screwed by the big guys even after they figure out how to ‘win one’. The Gamestop affair is just another confirmation for John Q. Public that the system is rigged. Gamestop is an example of how those with wealth and power are able to change the rules of the game in the middle of the game to ensure they will always come out on top! And they not only do it to ‘us’. They do it to each other. The big fish always eat the smaller, even the smaller of their own species.
But one should be less concerned about day traders getting burned, and more about the tens of millions of Americans families going hungry, jobless, being evicted from their rents, and dying in the hundreds of thousands due to a failed health care system and gross government mismanagement. The day trading stock speculators will survive. Many who have no idea what a stock trade is may not.

Readers interested in a further explanation of finance capital in the 21st century, the role of shadow banks, financial asset speculation, and the rise of the new global finance capital elite, read Dr. Rasmus 2017 book, ‘Systemic Fragility in the Global Economy’, Clarity Press, 2017.

posted January 27, 2021
Biden’s ‘American Rescue Plan’ $1.9 Trillion Stimulus

This past Thursday, January 14, 2021 Biden announced his ‘American Rescue Plan’ (ARP), a list of programs and proposals purported to generate a robust economic recovery in 2021, just as the US economy continues to deteriorate as a growing list of recent economic data now indicate.

US Economy Faltering Fast

New filings for unemployment benefits have been rising rapidly. From a ‘low’ of about 1 million/week in December last week’s initial claims for benefits topped 1.4 million—when both benefit programs, State administered and the Federal PUA, are counted . Another red flag indicator is consumer spending (70% of the US economy) and retail sales, its largest component. The latter fell -1.4%% in November and another -0.7% in December, according to just released US Commerce Dept. data. These are typical months during which they rise the fastest. Another indicator of consumer spending in growing trouble, credit card spending fell an even larger -2.7% in December, according to Chase Bank’s database of 30 million credit and debit card holders. Still another red flag is trade. The US trade deficit based on recent months is now running $85 billion a month and close to $1 trillion a year. Trade deficits mean US exports, and thus US production for exports, is trailing imports to the US badly—and thus contributing to US GDP contraction in 2021 still further.

The severe weakening in the private sector of the US economy now underway can only be offset by increased government spending and stimulus. The much vaunted recovery of manufacturing activity represents only 11% of the US economy and, furthermore, has already increased most of its potential growth. It cannot continue at past rates or carry the general recovery from here. Only massive government spending at this point can do that.

The $900 Billion December 2020 Non-Stimulus

As the economy has weakened in the latter months of 2020, the US government injected a paltry stimulus in last December’s $900B (actually $866B per the Congressional Budget Office). But that will have minimal stimulus effect the current sagging real US economy. Here’s why:

Last December’s $900/$866B billion emergency stimulus passed just after Christmas just continues the level of unemployment benefits of $300 per week. That’s not a net new stimulus. The economy was already slowing fast in November-December despite that prior $300 level of benefits. Discontinuing the $300 in 2021 would have made the economy worse but continuing it does not make it a further net stimulus. Moreover, that $300 extension in benefits is good for only 11 weeks. It will run out by mid-March 2021.

Then there’s the $600 checks part of the December $866B/$900B. That’s a net stimulus but a minimal one at best. It injects only $166 billion into the real economy which is miniscule relative to the more than $20 trillion size US economy. Not even 0.1% of the $20 trillion US GDP. And even that assumes the entire $166 billion will actually be spent and not hoarded for future emergencies or used to pay down debt.

The $284 billion for direct small business grants is the largest part of the $900/$866 billion. It will have some net stimulus effect but won’t start hitting the economy for weeks and maybe months. It must first be applied for, then distributed, and then actually spent. And we all saw how that process dragged on with the Cares Act small business PPP program last March 2020—and how larger businesses scammed off a good deal of it and then sat on the scammed dollars.

In short, as an economic stimulus funding of the sagging US economy, the $900/$866 billion is a DOA effort to stimulate the economy, this first quarter 2021 in particular. It might keep the slowdown now underway from being even worse than otherwise a little. In that sense it’s a ‘mitigation’ package, but it is not a stimulus.

Biden’s $1.9 Trillion ‘American Rescue Plan’ Stimulus

Overlaid on the futile December mitigation package now is Biden’s $1.9 Trillion stimulus proposals announced this past week. But that’s still just a proposal—not yet an actual stimulus spending Act passed by Congress. Moreover, for it to have any appreciable effect stimulating the economy, there are three reasons why the $1.9 trillion will almost certainly end up much less.

First, the problem remains how much of the $1.9T will get cut as Republicans, and corporate Democrats, in Congress as they attack it. Already political forces are organizing to slash billions from the $1.9 trillion, including Democrats. A second reason why Biden’s proposals will not amount to $1.9T new actual stimulus to the economy is that a large part of it just continues prior spending levels. And that spending level that hasn’t been able to prevent the current US economy’s slowdown. Third, there’s the question of how soon the stimulus will actually be spent and thus actually get into the US economy. Certain programs and their spending will be delayed until well after the current January-March critical period.

So let’s describe in detail what’s in Biden’s ‘American Rescue Plan’ (ARP) and consider those programs that are likely candidates for cutting by Republican and corporate Democrats in Congress; that constitute just continuation of prior spending; and that will likely experience significant delay before the spending actually hits the economy.

Larry Summers: Corporate Shill Takes the Lead

Forces in and out of government and within both parties are coalescing to roll back the $1.9T Biden ARP proposals. Once again in the lead for corporate Democrats, is former adviser to Barack Obama in 2009, Larry Summers—now also advisor to Biden. Summers is appearing everywhere on corporate and mainstream media outlets declaring that the $1.9T is too much. He’s especially attacking the $2000 checks for families earning less than $75K per year in income, saying it’s too much. Summer’s message is even Biden’s $1400 in checks will expand government deficits and will overheat the economy causing inflation.

But there’s been no inflation for the past two decades despite adding $15 trillion to deficits and the national debt. The claim that deficits cause inflation in real goods and services is empirical nonsense, not because of some worn out neoliberal economic theory but because the facts simply don’t support it. But that old fake economic bogeyman of ‘excess spending leads to deficits that cause inflation’ is being peddled once again by Summers, on behalf of his corporate Democrat buddies, and of course most of the Republicans. They’ll seek to cut at least $500 billion from the $1.9 trillion.

For Summers this isn’t the first time he’s given fake and dangerous advice to presidents in time of economic crisis. It was Larry Summers who, back in early 2009, as key advisor to Barack Obama on how much to spend on Obama’s January 2009 economic recovery plan at the time, convinced Obama to reduce his 2009 stimulus by $120 billion that the US House of Representatives was prepared to spend. As a result the US recovery lagged badly in 2009-10. Congress had to make up the loss in spending by passing emergency measures like ‘First Time Homebuyers’ and ‘Cash for Clunkers (autos)’ subsidies for households. But by then it was too late. During Obama’s recovery package—amounting to way too little too late as now acknowledged by most economists—it took more than six years to recover jobs lost in 2008-09. And then those recovered were at pay levels much less than those that were lost. Meanwhile as well, 14 million of the 48 million mortgages were foreclosed. And tens of millions more were added to the list of those workers without health insurance between 2009-2015.

The Biden proposals are numerous and detailed. But if readers think they understand it by reading the Washington Post, New York Times, or other mainstream media summaries of it they are wrong. What that media has provided thus far is just bits and pieces of information, packaged up with very little analysis as to how much of the spending will actually get into the economy, how soon might it get there, and whether the $1.9 trillion will yet be gutted and reduced—as the Biden ARP ‘wish list’ hits the Republican buzz saw in Congress.

What follows is a breakdown of the spending elements in Biden’s $1.9T ARP proposals, as well as where and how it will likely be attacked and rolled back by Senate Republicans, Corporate Democrats, and Business Interest lobbying friends of Larry Summers.

Part 1: $400 Billion Covid Relief, School Reopening, & Emergency Paid Leave

There’s 4 Categories of spending in Biden’s proposed $1.9 trillion ARP. The first is $400 billion for Covid measures, Vaccine distribution, and for reopening the schools. In this group, corporate forces and their political allies will likely attack spending $170 billion earmarked to reopen schools, as well as the roughly $70 billion more to provide for 14 weeks paid emergency leave for workers who have to leave their jobs due to schools or child care center closings, to care for family members sick or to quarantine themselves. The $70B emergency leave measure also extends such paid leave for the first time to the 2 million federal employees and to reimburse state and local governments for the cost of the leave. The paid leave maxes out at $1,400/week and for workers earning $73K per year in annual income. In other words, it covers roughly 75% of all US workers.

Opponents like Summers and Senate Republicans will argue the $170 billion for schools is too much and should be reduced. It’s really money not needed for schools’ reopening. It’s really money Democrats want to push to local government—a source for which Republicans and Mitch McConnell have vowed not to allow funds since last June 2020. Anything appearing to help fund state and local governments will be opposed in their push back, and there’s a lot of money for local governments in the $1.9T in various forms of funding.

Even though the $70B for emergency leave will be paid directly to employers to offset the costs of the paid leave, it will still be attacked by conservatives and corporate Democrats, like Senator Mnuchin, in West Virginia and other corporate interests in Congress. Apart from its being extended to federal and state-local government workers, they’ll oppose it as well because it expands paid leave well beyond the minimal provision in the March 2020 Cares Act. The Cares Act last March 2020 exempted big corporations with more than 500 workers from providing paid leave of any amount, as well as exempted very small businesses with fewer than 50 workers. Now the ARP measure covers all workers impacted by Covid who have to care for sick family members, or fill in for child care closings, or leave their jobs to provide schooling at home for their K-6 children, or have to quarantine themselves.

Business interests fear the long term effect of providing such leave. They fear it will legitimize more permanent paid leave in future legislation. Better not to allow the precedent now, rather than fight it later.

Other proposals in the $400 Billion Part 1 will be more difficult for corporate interests to roll back. The remainder of the roughly $160 billion (after $170B for school reopening and $70B for emergency paid leave) goes to a national vaccination program ($20B), testing ($50B), the Disaster Relief fund to replenish stocks of Personal Protective Equipment (PPE), pandemic supplies like developing more therapies. A further amount, not specified, is allocated to International Health Groups (presumably the WHO) which conservatives will fight to remove. There’s also calls for OSHA to issue Covid protection standards and provide money grants to organizations that implement them. That too Congressional Republicans will likely also oppose.

Part 2: $1 Trillion Direct Family Relief Proposals

A second major category of ARP spending is called Direct Family Relief. It allocates $1 trillion more in spending in addition to the $400 billion for Covid, Schools, and Paid Leave. Here the opposition will be intensely centered around the $1400 checks per person to help working households cover back rents, mortgages, keep the utilities on, and, most important for tens of millions now to provide food for their families. Biden’s ARP now extends the checks to adult dependents of households who were left out of the Cares Act’s $1200 check disbursement. The checks are a large cost item, amounting to $464 billion (for $2,000 which includes the $600 recently authorized this past December). Here the Republicans will argue it’s ‘deficit busting’.

Yet these are the same Republicans and corporate Democrats who quickly approved $650 billion in deficit busting tax cuts for businesses and investors in the March 2020 Cares Act. Then approved another $100 billion more in the December 2020 Defense Bill. Not to mention their approval of $429 bill in tax loopholes in 2019 for investors and corporations, which followed Trump’s notorious $4 trillion January 2018 business-investor tax cuts. In other words, they had no problem passing more than $5 trillion in tax cuts the past two years but now they’re crying wolf over spending for working families, students, renters, and local governments approaching bankruptcy.

Another major element of the $1 trillion proposed for Direct Family Relief is the restoration of unemployment benefits. This is the $300/week supplemental unemployment benefits just passed in December in the $900B emergency ‘mitigation’ Act. Biden’s ARP raises it a modest $100, to $400. The December 2020 bill, however, provided the extra benefits only until March, a mere 11 weeks after its authorization in December. Biden’s ARP proposal picks up after March and extends the benefits to December 31, 2021.

It’s important to remember, however, this is not a net new stimulus but a continuation of prior spending. It may help prevent a further slowing of consumer spending and its effect on the economy, but it will not constitute a stimulus as net new spending. And it doesn’t kick in until three more months. Nevertheless, Corporate interests in Congress will argue it should not be extended through next December 2021. At best, they may agree to a few more months past March instead. They’ll argue those benefits will save hundreds of billions of $ in deficits to the US budget this year.

Other proposals within the $1 trillion for Direct Family Relief that will be subject to reduction in spending include the additional $35 billion for rent and mortgage relief; the $13 billion more for SNAP and food assistance; and the $40B for assistance to child care providers and for assistance to families of essential workers, caregivers, unemployed, and women who had to leave the labor force to care for children schooling. Like creating a precedent for paid leave, Republicans and others will fight to reduce the ARP Child Care funding out of concern it will legitimize more permanent spending in these areas later.

One area that opponents won’t likely try to reduce is the further $20 billion allocated in this category to Veterans Health needs. Nor probably the provisions that subsidize COBRA health insurance payments for millions of workers forced to leave their jobs due to Covid. These payments will ultimately get into the hands of the employers and their health insurance companies, so that’ll be ok with the Republicans and friends no doubt.

The remainder of the $1 trillion takes the form of small funding increases for cash assistance for women on welfare ($1B for TANF program), for substance abuse ($4B), and for programs to address domestic violence due to Covid family stress. While the amounts are small, the idea of providing more funds for such programs will be viewed as adding non-Covid crisis related ‘wish list’ Democrat spending to the total ARP. Opponents will argue this spending is irrelevant to the Covid and economic crises at hand.

The $1 trillion also includes four tax cutting measures that impact working family households in particular: funds to help essential workers, caregivers, and jobless to pay for child care expenses; funds to expand for one year the child care tax credit for households that would allow a tax credit up to half the cost of child care expenses for each child under 13 years old, up to $4k per child (max $8K); an increase in the general child tax credit up to $3.6k per child including now children up to 17 yrs old; and increases in the Earned Income Tax Credit (EITC) for child-less adults, from $530 to $1,500 for those with incomes up to $21k per year.

While the total cost of these 4 consumer focused tax cuts is not exactly known, the idea of raising tax credits for families will be viewed by conservatives as threatening their business and investor tax credits. They will oppose these four measures or, in exchange, at best demand a further increase in their business-investor existing tax credits.

Finally, there is another element in the call to spend $1 trillion that opponents will fight against tooth and nail. It’s the proposal to raise the federal minimum wage to $15 an hour. And the call to pay essential workers retroactive hazard pay. Neither of these proposals contribute to the cost of the $1.9 trillion, their actual costs unknown at this point. Nor are they probably serious proposals for passage by Biden and the Democrats. They will almost certainly be withdrawn. At best they may constitute ‘markers’ for where future legislation may go. It will be important for opponents to get Biden and the Democrats to drop these ideas from negotiations quickly, which most likely they will.

Part 3: $440 Billion Struggling Communities Support Proposals

The third major category of Biden’s $1.9T ARP is for ‘Struggling Communities Support’. It calls for another $440 billion in spending—in addition to the $1 trillion and $400 billion noted.

Just as in the case of the $1,400 Checks, Unemployment Benefits extension, Schools Reopening and Emergency Paid Leave, the $440B in part 3 of Biden’s ARP targeting communities will be among the main targets attacked by conservative, Republican, and corporate lobbying interests.

The big target for rollback here will be the $350 billion of the $440 billion allocated for an emergency fund for state and local governments to pay for more 1st responders and essential workers needed immediately to attack the spread of Covid and accelerate the vaccination of millions before the much feared new and more infectious strains of the virus accelerate among the population. In addition to the $350 billion, an additional $20B each is earmarked for local public transport needed to keep essential workers in big cities are able to get to work and for pandemic response costs by tribal governments.

Opponents will see this category 3 of 440B as just another way to get money to state and local governments. They’ll argue there’s already funds in the $400 billion for Covid response by governments and the $350B is just duplicative.

Ever since Mitch McConnell made funds for state and local government the ‘bete noir’ of stimulus spending proposals, Republicans in particular have been adamantly against any aid whatsoever to such local governments. They’ve preferred that States and big cities go to the municipal bond market and borrow more if they need it instead. In other words, let the blue states and big cities get more in debt than they already are. Let them lay off more public workers. The McConnell strategy was to let those states and cities suffer and make them turn on their Democrat politicians. This political bias and prejudice is not gone in the US Senate. It is led by McConnell, with the Senator Paul Rand ‘deficit hawks’ faction of around 20 his main allies. That critical mass is likely to succeed in rolling back most, if not all, the provisions in the $1.9T ARP proposals associated with providing aid to states, cities, local agencies, and tribal governments.
The amounts related to rolling back state-local government assistance in the $1.9T are probably around $500 billion of the $1.9T. So the fight over them in Congress once Biden’s proposals hit the floor will be intense. And likely drawn out.

And that’s a problem for getting government spending and stimulus into the economy promptly in order to offset the likely decline continuing in consumer spending, especially in the first quarter of 2021 when it is desperately needed.

The fight in Congress over the $1.9T stimulus could actually become a long, drawn out affair—unless the Democrats and Biden want to retreat quickly on key provisions like aid to local governments, emergency paid leave, and other measures in order to get some kind of a quick agreement. That is quite possibly what they’ll do, especially if the economy continues to deteriorate noticeably in the first quarter.
If Biden and friends do not reduce their $1.9T, the actual economic stimulus effect will be delayed and with it the economic stimulus effect. But, conversely, if the $1.9T is significantly reduced, that too will reduce the economic stimulus effect. It’ a ‘lose/lose’ scenario for the economy.

Some commentary among progressives is already arguing that the Democrats in the Senate can bypass the Republican opposition and quickly pass the $1.9T by reverting to what’s called the ‘Budget Reconciliation’ rule. This allows the passage of legislation by a simple majority instead of the Senate’s otherwise archaic 60 votes rule for passage. But Democrats have only a 50-50 Senate margin, with the Vice President voting for a 51-50 narrowest majority. That assumes, however, that all 50 Democrat Senators will vote in support. There are a number of them, however, who are closer to Republicans in their corporate affinities than to their Democrat colleagues. It is no guarantee that a budget reconciliation strategy will therefore succeed.

Part 4: Modernize US Government Technology & CyberSecurity

A final part 4 of Biden’s $1.9T ‘American Rescue Plan’ addresses spending to upgrade and improve federal government use of technology, especially where cybersecurity is involved. Amounting to a couple tens of billions of dollars and the remainder of the $1.9T it is clearly an ‘add on’ unrelated to the Covid, Family, and Community Relief proposals. It is more a matter of infrastructure spending which Biden promises will come in a subsequent set of proposals for government spending and investment later this spring. Republicans and opponents of the ARP will no doubt argue it should be suspended until then, and will move to have it considered in that later legislation.

Based on the preceding possibilities it’s reasonable to assume as much as $500 billion could be cut by Congress once conservatives, Republicans, and Corporate Democrats in the Senate get their claws into the $1.9 trillion package. What remains moreover will almost certainly be delayed well beyond February. In short, very little of the ARP will come in time to slow the US economy’s current first quarter trajectory.

Addendum: What’s Actually Net Stimulus in the $1.9T

Apart from the Congressional cuts likely coming, there are still other reasons why Biden’s ARP proposals economic impact will not be the full $1.9T.

A good part of what remains of the $1.9T is not really net new or additional economic stimulus in the first place. A significant part represents just a continuation of prior spending levels. At best it can serve to help mitigate an even more serious economic slowdown. But it won’t qualify as a net stimulus.

For example, the unemployment benefits in the ARP don’t kick in until after March and just represent a continuation of the benefit spending levels. The extension continues until the end of 2021. That could be as much as around $300 billion of the $1.9 trillion. Then there’s the four consumer tax credits. That effect won’t be felt until households filing their 2020 taxes start to get tax refunds. Those refunds will be late this year. Households will wait until the passage of the ARP before they file tax returns in order to see if in fact they can claim the tax credits and get the refunds reflecting them. Refunds will not flow into households until later this summer as a result, especially if the passage of the ARP Act is delayed in Congress. That could amount to another $100B or more in reduced stimulus effect.
So the actual stimulus effect of the ARP might be as little as half the $1.9T. $500 billion cut by Congress. Another $300B that’s just continuation of benefits. $166B that will have already entered the economy as the initial $600 checks. And $100B in consumer tax credits.

In short, the actual stimulus to the economy could amount to barely $1 Trillion, not to Biden’s announced $1.9T.

Will that be sufficient to generate a sustained economic recovery in 2021. Not even close!

Biden and the Democrats are thus confronted with making the same error that the Obama administration did in early 2009—not providing a sufficient fiscal stimulus to generate a sustained recovery. Having failed in that objective in 2009-10—despite a far more solid majority in Congress than Biden now faces—Obama turned to even more tax cuts in 2010 for business. That did little to reverse the recession for tens of millions of working families and small businesses in the US. The direct consequence of that was the Democrats severe loss of members in the US House of Representatives in the mid-term election in November 2010. And then the subsequent loss of the US Senate as well. And that led to policies that fueled the discontent and rise of opposition throughout the US to Democrat government—paving the way for Donald Trump.

Biden and the Democrats don’t even have the same time as had Obama in which to prevent the repeat of the last decade. They must turn the economy around quickly. They must put the Covid threat to bed by this summer 2021 at latest. They must somehow neutralize Trump, Trumpism and the proto-fascist radical right that is not going away the next four years. They must address the growing discontent with institutional racism. And they better hope that all this doesn’t eventually lead to a recurrence of a financial crisis—as debt loads accelerate in the private sector in 2021 due to a slow recovery and in turn lead to defaults and bankruptcies that precipitate a new financial instability event!

Follow Dr. Rasmus commentary on his blog at http://jackrasmus.com, on Twitter at @drjackrasmus, or on his weekly radio show, Alternative Visions, on the Progressive Radio Network weekly Fridays at 2pm eastern time, podcast at http://alternativevisions.podbean.com

posted January 4, 2021
What Happens January 6th, 20th & After? America’s Declining Democracy

This past week’s events are a harbinger of worse to come on January 6th and 20th. Contrary to Democrat Party leaders, the political crisis will not end on January 6, 2021 when Congress confirms the electoral college vote; nor on January 20 when they say Trump will be removed from the White House.

These two milestone dates will simply reveal how deep the crisis of America’s truncated, capitalist form of limited Democracy has become. And how likely it will continue and deepen into 2021 and beyond.

January 6 and 20 is not the ‘endgame’ of the attack on Democracy by Trump and his radical right wing supporters. Those dates may mark the beginning of renewed attack on a new level and the commencement of a more dangerous period thereafter.

Last week at least a dozen Republican Senators—led by Ted Cruz the heir apparent and would-be ‘prince of Trumpism’—publicly declared they will challenge the electoral college results on January 6. In the US House, Kevin McCarthy, Cruz’s echo, will lead a group of at least 140 Republican Representatives parroting the same challenge. Behind them stand tens of millions of American voters who have been convinced by Trump and his Congressional allies that the recent election was stolen—a theme reminiscent of Weimar Germany in the 1920s when millions were similarly convinced by the Nazis that victory in World War I was ripped from them by the ‘liberal’ politicians back in Berlin who ‘stabbed them in the back’. They did not lose. Victory was ‘stolen’.

The Trumpublicans in the Senate and House will not succeed in over-turning the Biden election. But they know that. So why are they proceeding on January 6? Is it just out of fear that Trump will retain enough influence with their base sufficient to deny them their next primary endorsement? Are they just pandering to future Trump base voters? Or is there something more to it longer term. Something more beyond what the mainstream media and the Democrats say is a futile attempt to disrupt the election results on January 6? Are Cruz and friends so politically dumb they can’t see the futility of an overturn of the election results on January 6? Or are they not so dumb maybe! And their game is about what comes after January 6?

The Maybe ‘Not So Dumb’ 12 & 140

There may be a longer term strategy behind the chaos that will happen on January 6. And make no mistake, January 20 will prove no less chaotic.

The Cruz-McCarthy led circus that will take place on January 6 may be about building momentum and support for a January 20 protest in DC in the short run. And something even bigger in the longer run. The January 6 events will clearly define the line in the sand between Trump loyalists and traditional Republicans in the Senate and House for all the Republican base to clearly see. Who’s ‘with us and who’s against us’. The vote January 6 will be relevant to running for House seats in 2022 and for Senators up for re-election that year as well.

Cruz & McCarthy know they can’t overturn the results on January 6. Apart from shaking out Republican Senators and Reps still on the fence by forcing a vote on the 6th, what’s their longer run game? The more support Trump sycophants in Congress can gather on January 6—i.e. the more defections in the Senate and House beyond the 12 and 140 they can get on the 6th— the greater the call to the radical forces in Trump’s base to come to Washington on the 20th to defend the president! The greater the vote against the electoral college results, even if insufficient to change the Biden election, the more Cruz & McCarthy legitimize Trump’s message the election was stolen. And that encourages a greater turnout of Trump supporters on the 20th, with who knows what other ‘calls to action’.

Democrats keep saying Trump will have to leave office on the 20th or ‘he’ll be removed’. But Trump isn’t calling his Proud Boys to Washington on the 6th to be mere observers? That call is a warning to intimidate Republican fence sitters and to prep the protestors for an even greater turnout on the 20th? The era of street politics and its manipulation by elites has come to America!

As this writer has been forewarning since this past summer, Trump will likely encourage his Proud Boy and street thug friends to come to DC on the 20th in order to physically defend him in the White House. What police force, local or federal, will then want to crash the Proud Boys defense line around the White House and drag Trump kicking and yelling from his oval office in front of nation-wide media coverage? It will certainly make great video fodder for Trump’s political base and the radical right, to be used again and again to mobilize and further radicalize his followers in the weeks and months that follow.

None of this is an impossible scenario come January 6 and January 20. It should be clear by now there are no lengths to which Trump will go to hold onto power or to protect himself and his financial interests once out of office.

In short, what’s going on this past week, and what will likely transpire on the 6th and 20th, is not just Trump’s attempt to over-turn the Biden election. That may be the appearance. However, in essence it’s about his fight to ensure his continued control of the Republican party. Only continued control of the party after January will check the Democrats going after him legally and financially, and ensure him a second run at the presidency in 2024. If he loses control of the party, all bets are off he can weather the counter-offensive by his opponents or secure the nomination for another run at the presidency.

Trump certainly knows the traditional Republican establishment will try to marginalize him when he’s out of office. To protect himself he will even risk splitting the Republican party if he has to, driving more of the moderates out while retaining himself control of the party apparatus, thereafter rebuilding it in his image even more so before the 2022 election. It is a process purging and then rebuilding a party in his image not unlike that pursued by Hitler within the Nazi party in the mid-1920s, when challengers and moderates were purged or driven out after 1925. Hitler only became the indisputable leader in 1926-27 after that process was completed. Trump must hold onto control of the party to protect himself legally while out of office and to ensure his ability to define who gets to run under its banner for Congress in 2022. Only then can he re-run for the presidency in 2024 himself.

Epigones, Sycophants & Opportunists

By their announced plans for January 6, Cruz and McCarthy have signaled they are on board with Trump for the next political cycle in 2022 and 2024. They are committed to ensuring his and their control of the Republican party by forcing a vote in Congress to reject the Biden election on the 6th, a move which, in turn, will likely exacerbate events on the 20th.

Trump needs more chaos on the 6th and 20th, not less. The message to the Republican base on the 6th and 20th will be: not only has the ‘deep state’ denied Trump the election but a large and growing percentage of Reps and Senators in Congress agreed on January 6 the election was stolen. Come out on the 6th to give more of them courage to come forth and support Trump. The second message to the radical right base is the same deep state is planning to physically attack Trump on January 20, so come out and defend him in the White House. By implication this latter message to the base is the deep state will soon come after you too and physically take away your freedoms as well. So defend Trump now in order to defend yourselves next.

The ideologues around Trump see that by creating more visible chaos around January 6 and 20 it will raise the opportunity to build an even more radical movement in 2021-22, with growing influence both within Congress as well as without.

Dual Power as Pre-Revolutionary Situation

The obvious objective of the Cruz-McCarthy faction in Congress is to de-legitimize the Biden administration and the Democrat Congress in the House (and Senate should they win Georgia’s runoff elections on January 5) among the 74 million of Trump’s political base. The stronger that de-legitimization is achieved, the more possible it will be for Trump forces to get red state legislatures and other government state institutions to refuse to cooperate on various levels with the Biden administration once it is in power.

That de-legitimization leads to a situation called ‘dual power’, a condition not seen in the USA since the 1850s when the legislatures in the Confederate Southern states simply ignored federal laws and executive directives from Washington and governed independently for a period. When they moved to eject all federal forces from the southern territory, that action then precipitated the military phase of the civil war. But preceding that phase, civil war in the form of exercising of dual power at the state level was already occurring. ‘Dual power’ thus refers to a set of competing authorities and institutions that vie for legitimacy as the sole authority with the sole right to govern. A situation of dual power is a clear indicator of a pre-revolutionary situation. But in this case, the pre-revolution is a right wing radical and often proto-fascist revolutionary condition.

Trump As Shadow President?

Over the past weekend Trump has upped the stakes for his followers in the Senate and US House. A recording of his conversation with Georgia State election commission officials, Raffensberger, and his legal team, revealed how far Trump is prepared to go to refuse to acknowledge the electoral college results and to refuse to leave office.

According to the Washington Post that obtained a copy of the recording of Trump’s call to Raffensberger (and CNN’s leaking of parts of the conversation this weekend on air), Trump demanded that Raffensberger ‘find’ the votes necessary to overturn the election in Georgia in his favor—despite three vote counts with paper trail having been conducted in Georgia since November 3. Trump then warned Raffensberger if he didn’t find the necessary votes, it would be a criminal act on his, Raffensberger’s, part. In other words, if you Republicans don’t do as I ask, then some day you’ll legally pay for it. Trump’s recorded conversation with Raffensberger is a signal to fence sitting Republicans they should not ally with the Deep State and stab Trump in the back. Should they do so, then a price will be paid and collected at some future date for such “criminal activity”, as Trump called it.

It is not an impossibility that, after January 20, Trump will attempt to act like he’s a “shadow president”. And some red state legislatures might follow him, depending how strong the Cruz-McCarthy vote is on January 6 and what chaotic events take place around January 20 and after.

Trump as shadow president could ‘govern’ by issuing Executive Orders and national emergency declarations. Some red states with deep Trump support may follow his lead and legislate in support of Trump’s orders and declarations in turn. That would then require the Biden government to challenge those states in Court—a long drawn out process—or even have Congress pass new laws to clearly over-ride those states’ legislation—also a process that might not get the support in Congress needed given Trump’s supporters there. The same could apply to those rogue states’ courts. They could issue decisions in support of Trump and their legislatures, requiring higher federal courts to overturn. That would mean still more delay. In the interim, the Trump ideology media machine would continue to deepen its conspiracy theories among Trump’s grass roots followers, and use the crisis to still further de-legitimize the Biden administration and the US government in general.

It should not be forgotten that behind Trump, behind his sycophants in Congress, and behind the ideological apparatus are Trump’s media arm of Breitbarts, NewsMax, QAnon, and Fox News evening talking heads. And behind that lies the big money radical capitalists that have supported Trump from the very beginning—and still do. That includes the Mercer family (Cruz’s big money source as well), the Adelsons, Singers, and all the rest of the radical finance capitalists who want to see a further truncated form of Democracy in America in order to ensure their recently amassed wealth is not threatened.

Roots of US Democracy’s Decline

What’s happening to limited Democracy in America this year, and next, is not an isolated development. This is not just about Trump and the 2020 election. The process of destruction of Democracy in America has been underway for at least a quarter century. It is only now accelerating at a faster rate for all to see.

The process first erupted into the open with the success of New Gingrich’s ‘Contract for America’ movement in the early 1990s when he and his radical friends wrested control of the US House of Representatives with the 1994 election. Gingrich publicly declared at the time his objective thereafter would be “to create a dysfunctional government” that the public would lose faith in. Then there was the election of 2000, when Al Gore lost to George W. Bush as a result of the US Supreme Court stopping the recounting of votes in Florida, in effect ‘selecting’ George W. Bush. Gore and the Democrats let it happen, deciding it was a ‘one off’ event and that the system would return to the political shell game in which the competing elites would trade off ruling every four or eight years. Then came the ‘Citizens United’ decision of the Supreme Court in 2010 that declared dollars spent by corporations were a form of ‘free speech’ protected by the Constitution’ 1st amendment. Corporations were ‘people’ and had the same rights as the rest of us, even though they never died and amassed massive dollars and thus votes. In 2013 that same Supreme Court gutted the 1965 civil right act, opening the door to widespread voter suppression that ensured in dozens of red state Republican legislatures, that would thereafter used their entrenched control to gerrymander and ensure their control for decades to come. That too was endorsed by the Supreme Court. The Patriot Act after 2001 then sliced away long standing protections of civil liberties and civil rights for US citizens, measures later extended annually by National Defense Authorization Acts.

Not least, technology developments in the last decade have solidified control of broad segments of public opinion in favor of Trump forces and right wing interests in general. Without the Facebooks, YouTubes, and the Internet it would not have been possible to create the 70 million adherents to Trumpism in today’s US body politic or the countless conspiracy theories that serve as a kind of secular religion that ties the congregation to the interests of their clever politician priests. Naïve techies promised that technology and the internet would deepen democracy in America; time will show, as it is already, that technology has instead deepened government surveillance of the public, assisted tighter control of public assembly and protests, and enabled the manipulation of the electoral process as never before. Technology too is undermining Democracy in America and the clever elites and radicals know it.

All that was needed for this political conflagration was the proper fire lit under tens of millions of Americans desperate for change. The match was lit by the deep discontent across America with the direction of governance by the elites, Republican and Democrat alike. That discontent developed since the mid-1990s as well, in parallel with the rise of the radical right, with the offshoring and destruction of millions of decent paying jobs, the hollowing out of industrial America and the middle class, the destruction of Unions, and the replacing good paying jobs with low pay/few benefits tens of millions of part time, temp, and gig work.

To the collapse of jobs and wages was added the privatization of health care with its ever rising costs that denied access health access for 50 million and rising premiums, copays and deductibles for the rest; the destruction of the once decent pension and retirement system; and the indebting of a generation grasping at a chance at higher education to escape it all.

Meanwhile, $15 trillion in tax cuts were granted to corporations, investors and the wealthiest 1% households starting in 2001 and continuing to this day. Alongside that massive income shift was the launching of never ending wars and war spending for the next 20 years costing at least $7 trillion more. (Both of which add up to about the $22 trillion in US national debt as of 2019).

Then came the 2008-09 great recession and crash, from which tens of millions of average Americans never recovered, while banks and corporations were quickly bailed out by fiscal and monetary policies that accelerated income and wealth inequalities in America several fold. As tens of millions struggled to stay afloat during the so-called ‘Obama recovery’, corporations distributed more than a $1 trillion dollars a year—every year for a decade on average—in dividends and stock buybacks to their investors. Obama era policies not only failed to mend this condition, but exacerbated it, thus further providing the ideological fodder for the radical right and the rise of Trump and Trump’s political base.

All this too has been part of the decline of Democracy in America—by providing the conditions for the evolution and deepening of anti-Democratic impulses and support for radical right alternatives by wide segments of the American public.

In short, the elites in general—traditional Republican and Democrat—have created the conditions over the past quarter century for the assault on Democracy that is now intensifying throughout the USA. Their shared failure explains why there is such intense political hatred of elites of both parties in the country, on both the right and left, and in turn why wide swaths of the public is willing to abort the remnants of Democracy. Democracy hasn’t been working for them. So why defend it. And they see little evidence it will change. So they throw in with clever politicians like Trump, Cruz, and others who are willing to use failing Democracy as the excuse for their discontent.
Get rid of the liberals and we’ll return to a former period of prosperity, aka MAGA—i.e. the exact same claim of the Nazis in the mid-1920s. The main target of Fascism in the period of its rise and support by the public is always the ‘liberal politicians’ who are responsible for the system not delivering, i.e. who are ‘stabbing us in the back’.

Biden’s Very Short Window

Biden and the Democrats have only 12-18 months to fundamentally change the conditions that are giving rise to the attack on what little is left of US Democracy. However, the likely scenario is not optimistic. Should they not win in Georgia, it will be a continuation of Grinch McConnell’s Senate preventing any significant change in policies. McConnell will only pass small measures for which he can extract on behalf of further concessions for investors, the wealthy, and their corporations. And should the Democrats win both seats in Georgia on January 5, it is likely that Biden’s policies and measures will still be minimalist and thus insufficient. He will resurrect Obama’s ‘bipartisanship’ approach which resulted in little basic changes then and even less now. Biden will gain little from McConnell even with Republicans in a minority role in the Senate. And 50-50 is hardly a minority position at that. Pelosi in the House will achieve not much more with her minimal 11 vote margin either- a sliver thin margin that the recent Census 2020 will erode to a mere half dozen.

With Biden championing ‘bipartisanship’ with McConnell it is unlikely he’ll be aggressive with Executive Orders and other tactics. The most likely outcome is therefore not the fundamental measures and change desperately needed in 2021-22, but a minimalist ‘go slow’ approach similar to Obama’s in 2009-10. Obama’s bipartisan approach resulted in working households waiting for six years to recover lost jobs and then at wages well below that of pre-2008—while investors and stock holders amassed literally trillions in dividends and stock buybacks.

As Biden fails to create fundamental change, the emerging Trump-Cruz-McCarthy forces will attack him and the Democrats ever more aggressively as they move toward building a ‘dual power’ situation within the red states legislatures, Governorships, and state courts.
The more likely scenario is the 2022 midterm elections will be a disaster for Democrats, much like 2010 was for them as well. After that, the same cycle returns. But this time with tens of millions far worse off than before and with an even more radical right entrenched in Congress and a majority base in the heartland.

Clearly both wings of the Corporate Party of America—Trumpublicans and Democrats—share responsibility for how we got here. And even more for where we may be going.

Dr. Jack Rasmus
January 4, 2021

Dr. Rasmus is author of the recent book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, 2020. He blogs at http”//jackrasmus.com and his website is http://kyklosproductions.com. Join him for his weekly radio show, Alternative Visions, on the Progressive Radio Network on Fridays at 2pm eastern time, and on Twitter at @drjackrasmus.

posted December 27, 2020
2 Articles on Latest US Stimulus: 1. Economic Consequences of 2nd ‘Mitigation’ Bill + 2. Congress Passes $900B Covid Relief Bill (As Double Dip Recession Looms)

>1. ECONOMIC CONSEQUENCES OF A 2ND ‘MITIGATION’ BILL


by Jack Rasmus, December 17, 2020

As of mid-December 2020 the US economy has begun showing increasing signs of an exceptionally weak 4th quarter, October-December, growth. After having collapsed -10.5% in the March-June 2020 period, followed by a partial ‘rebound’ (not sustained recovery) in the 3rd quarter, July-September 2020, the economy is now slowing rapidly once again.

Dismal reports of consumer and especially retail sales in October-November appear driving the slowing growth—in turn driven by rising unemployment claims, a growing number of permanent layoffs by large businesses as the economy structurally changes long term, and, shorter term, by a sharp rise in Covid deaths, infections, and consequent partial shutdown of the services sector of the US economy throughout the US.

This scenario and trends has pushed more economists, mainstream included, to predict an even sharper 1st quarter 2021, contraction in the economy. Even a normally conservative forecast source like JPM Chase Bank’s research has raised the likelihood of a bona fide 2nd contraction of the US economy early next year—i.e. a ‘double dip’ recession, that this writer has been predicting since last March 2020.
The failure of both parties in Congress to pass a fiscal stimulus bill as late as mid-December 2020 has exacerbated the slowing economy and likelihood of a further contraction.

Ranks of Unemployed Rising; Benefits Falling

Latest initial unemployment benefit claims have risen, from the steady 1 million per week through the fall, to 1.28 million in early December, a weekly rise of 28%. As claims rise, a steady million per week have been exhausting their benefits for months. This is about to accelerate greatly, as a large block of 12 million are scheduled to end benefits by the last week of December.

Despite the US Labor Department’s monthly ‘low ball’ estimates of a jobless total of only 10.5 million and 6.7% unemployment rate, more than 20 million without jobs are still collecting unemployment benefits—twice the number the Labor Department and media consistently repeat as total jobless today!

Simultaneously, the ranks of the jobless without benefits, or having exhausted benefits, continues to rise as well. Four million workers have dropped out of the labor force altogether. Another 1-2 million have had to quit, in order to manage their K-6 grade children’s remote education. Millions are ‘furloughed’ at home with hope of at some point returning to work but not yet—a status the Labor Department erroneously calls working, and not unemployed, even though they aren’t being paid by their employers. (An error the Labor Dept. has made since last April, acknowledged it was an error, but has refused to correct nonetheless).

Easily at minimum 25 million American workers today as of December 2020 are jobless, either with or without benefits, not 10.5 million. And the unemployment rate is thus closer to 18%-19%–i.e. not even remotely close to the official, cherry-picked low ball number of 6.7% reported monthly by the Labor Department, which even most mainstream economists now ignore.

The Trump administration allowed the expiration of the supplemental $600/week unemployment benefits for millions of jobless last August. That reduced GDP spending by $65 billion a month (not counting multiplier effects on GDP of roughly 2X that amount). Some of that was restored for 5 weeks with $300 supplement unemployment benefits by Trump Executive Order in August. But the money was funded by reducing other government spending elsewhere, so there was no effective positive impact on total spending. That $65 billion (times 2X) negative spending effect on the US economy continued through December, and has no doubt played a part in the 4th quarter US consumer-retail spending slowdown.

The negative impact of reduced unemployment benefits is about to get much worse, however. The 12 million more that will lose benefits on December 26, 2020 is estimated to reduce household spending by another $150 billion per month (plus multiplier). Should current proposals restore half of that $600/wk., the negative household spending impact will still be $75 billion more in addition to the previous $65 billion reduction since August.

Renters’ Crisis Deepening

The real economy’s actual deteriorating condition is further illustrated by the renter crisis gaining momentum weekly. Of the 43 million total rental units in the US, 11.4 million are behind in their rents, averaging around $5,800 per household, for a total of $70 billion, according to the business research company, Moodys Analytics. As evictions moratorium ends in January 2021 many renters (mostly still unemployed) will not only have to start paying rents once again, but will have to make up the $70B in lost rent payments or still face evictions. Even after having been evicted, landlords will still legally pursue back payments.

The renewal of rent payments by renters, while still jobless, combined with back payments, will have a devastating impact on household spending and consumption in 2021, the latter of which accounts for 68% of all US economic spending and GDP.

Contrary to the media reporting, millions are already undergoing evictions and facing legal orders to repay back rents. The initial rent moratorium passed last March as part of the Cares Act (‘mitigation bill 1.0’) did not cover all renters, as the mainstream media consistently suggests, but covered mostly those whose housing was associated with government aid by the HUD and FHA agencies. States and cities in some cases had initiated local moratoria . But most of those local moratoria expired months ago. Trump’s Executive Order last August 2020 extended rent moratorium on federally supported rent units, but only until end of December 2020.

Issued by the Trump administration’s CDC in September, Trump’s EO for rent moratorium expiration will result in 2.4 to 5 million of renters evicted in January 2021 alone, with millions more per month thereafter, according the Wall St. Journal. Moreover, the Trump EO did not prevent landlords from initiating legal action to evict. Hundreds of thousands of evictions are already in progress and legally proceeding in cities across the US, per the Princeton University Evictions Lab. Most heavily impacted are minority households. A recent survey by the US Census Bureau indicates 32% of black renters and 18% of Hispanic renters were behind on rent payments, and about 12% of white renting households.

Homeowners Mortgages Crisis Brewing

While the picture is not as dire for homeowners as for renters, it too is deteriorating and will be intensifying in 2021.
There are 82 million single homes in the US. 49 million (62%) have mortgages. At present 3.6 million are in forbearance, meaning mortgage payments have been temporarily suspended. Suspended payments will have to resume in 2021, however, much like rent back payments suspended require payment. Like renters, homeowners may have to double up on mortgage payments, in whole or part, commencing 2021. It is estimated that 6.8% of homeowners have missed payments in 2020. That’s 5.5 million of homeowners—i.e. the 3.6 million in forbearance but another 1.9 million not and who have been missing monthly mortgage payments.

The percentages and totals for mortgage payments in arrears may seem less a problem than the renters’ missed payments. But the totals are actually far greater in terms of back money owed: all the deferred and missed mortgage payments amount to $752 billion in back payments that have to be made up. That make up will reduce household spending by another hundreds of billions of dollars in 2021, with further negative impact on US GDP in 2021.

Student Loan Forbearance Ending

Like renters and homeowners, the March 2020 Cares Act permitted suspension and deferral of student loan payments until year end 2020. Also like rent and mortgages, however, that deferral is scheduled to end in 2021. Students will have to make up payments and in effect ‘double down’ on payments in most cases.

The negative impact on ‘doubling down’ and making up lost payments is massive. There are 44.7 million student loans in the US, averaging $36,500. Hundreds of thousands own much more. Many more than $100,000. 35 million of the 44.7 million student loans were in forbearance in 2020 and the deferred principal will have to be repaid. The total principal alone, temporarily deferred, amounts to $777 billion in arrears.

Payroll Tax Deferrals

When Trump and his negotiators abruptly broke off negotiations on the fiscal stimulus bill in August 2020, they issued 4 Executive Orders with 24 hours (thus indicating they had planned to do so from the beginning, after having lured Pelosi-Shumer and the Democrats to reduce their May 2020 $3.2 trillion original stimulus proposal called the Heroes Act by $1 trillion).

Among the Trump four EOs was one that deferred payroll taxes of 6.2% for workers for the rest of 2020. (The other three EOs were the temporary substitution of $300/wk. supplemental unemployment benefits for five weeks; extending student loan forbearance to end of December; and the CDC’s partial extension of rent moratorium for 5 million renters). The EO affecting payroll taxes was clearly unconstitutional. Only Congress could change tax laws. But Trump went ahead anyway with the 6.2% payroll tax deferral. Not all businesses followed suit, however.

Since employers by law are responsible for collecting payroll taxes, they knew they were on the hook to repay the deferred 6.2% in 2021. They would have to add 6.2% to their employer share of 6.2% nonetheless in 2020 and then repay that in 2021. That meant doubling up on paying their share and their workers’ share of 6.2% (deferred September to December 2020) starting January 2021.

It could mean paying payroll taxes of twice that 12.4% in 2021, however. Employers were allowed to temporary suspend their 6.2% payroll taxes since March 2020, and starting repaying that deferred amount plus new payroll taxes by end of 2021. Not many wanted to face the prospect of paying double payroll taxes for both themselves, the company, and collecting and paying double for their workers as well—or 24.8% in payroll taxes. So most opted out of the Trump EO and didn’t stop their workers from paying the 6.2% in 2020.

Most large corporations opted out, including GM, UPS, Fedex, Costco, grocery chains, health companies, big Pharma, utilities, and many states as well. Trump forced federal government employees to suspend their payroll tax payments, September-December 2020. Other states and local governments did so as well. Starting January 2021 now many will have to start paying double payroll taxes. That will in turn reduce millions of public employees’ available disposable income for consumption in 2021. And that too will reduce US GDP in 2021.

Small Business Collapsing

Even greater magnitude of potential negative impact on the US economy is the current accelerating closing of many small businesses. There are an estimated 30 million small businesses in the US economy, which include millions of small ‘independent contractors’. Estimates by the National Federation of Independent Businesses, the trade organization for small business, are 3.3 million have permanently closed as of November 1, 2020. More than 110,000 restaurants, or every one of six. Hundreds of thousands more restaurants, bars, entertainment, travel, and related service small businesses are likely to close over the coming winter months. The impact on consumption, as well as business spending and unemployment, promises to be significant—and in addition to all the preceding negative effects on the US economy.

What is especially concerning about this scenario is that ever since August 2020 the Trump administration has sat on $135 billion in unspent funds allocated by the March 2020 Cares Act for loans and grants for small businesses assistance. $670 billion total was approved by the Cares Act for the PPP program, as it was called, to provide assistance to small business. Much of that was siphoned off and redirected to larger businesses. Millions of very small businesses received nothing. Despite the need in August, the program was ended in August with $135 billion unspent.

From Stimulus to Mitigation 2.0 Negotiations

What started out as a true economic stimulus bill in the form of the Heroes Act, passed by the US House last May 2020, has by mid-December collapsed into a partial economic ‘mitigation’ bill. Mitigation means just buying time until a true fiscal stimulus can be introduced. Mitigations simply slow down the economic collapse and crisis temporarily, to buy time. True stimulus proposals do just that: generate economic growth that is sustained for months and years to come.

The May 2020 Heroes Act was a true stimulus, proposing $3.2 trillion in new spending across a broad set of programs. It was immediately rejected by McConnell and the Trump administration, both of whom then played ‘hard cop/soft cop’ in negotiations with Democrats over the next six months. In August 2020 Democrat negotiators, Pelosi and Shumer, were lured into reducing their package of Heroes Act spending by $1 Trillion, down to $2.2T, in expectation—signaled by the Trump administration it would similarly respond with a major counteroffer to the Democrats $1 trillion proposal reduction. But they didn’t. Trump’s negotiators, Mnuchin and Meadows, simply walked out of negotiations after Pelosi-Shumer had come down $1 trillion. Meanwhile, McConnell sat back watching the show, holding firm on his no more than $500 billion spending proposal he offered in June.

As the 2020 election grew closer, Trump-Mnuchin offered several new proposals—without any details—to ensure it appeared they were interested in a deal. The latest in October was reportedly as high as $1.8 trillion. It appeared a deal was possible, with the Democrats at $2.2 trillion since August. However, McConnell scuttled the negotiations by making it clear he would not approve more than his $500 billion. Having been burned the previous August, Pelosi and Shumer did not ‘bite’ at the Trump shadow offer, correctly assuming it was pre-election posturing. Had they done so, Trump would have taken credit; no deal would have been reached; and McConnell would have stalled discussions—as he has ever since to the present.

Following the election in November 3, the next development was Mnuchin recalling $455 billion in unused funds from the Federal Reserve given to the central bank the preceding April as part of the Cares Act. That was to be used to help bail out businesses. The Fed did not use much of the Cares Act given it by the US Treasury and Congress, including $135 billion unspent on the small business aid program called the Payroll Protection Program, PPP. That program ended in August, but the Fed held onto the $135 billion, as well as other funds for medium sized and larger businesses and various financial markets. The total unspent came to $455 billion, which Mnuchin then told the Fed to return to the Treasury, which it did. Both Mnuchin and McConnell would use the $455 billion to pay for McConnell’s $500 billion long-standing offer in stimulus negotiations in December.

To attempt to break the bargaining logjam, in December a bipartisan group of Senators and Representatives offered a compromise package of $908 billion. There were no $1200 income checks, only half of unemployment benefits for only 90 days, no aid to state and local governments, and numerous other provisions missing from the Democrats’ $2.2 trillion package on the bargaining table. Nevertheless, McConnell still rejected the $908B compromise. He then cleverly offered to drop his ‘stalking horse’ proposal for business blanket liability if the Democrats dropped their $160 billion in aid to state and local governments.

In the latest iteration of the negotiation charade, the bipartisan group on December 14, 2020 revised their $908B proposal, reducing it to $748 billion by taking out the $160B for state and local government. It split its prior single $908B offer into two parts: one with the state-local government aid and the business liability; the other with all the remaining proposals it had originally offered.

As of mid-December, the proposal on the table by the bipartisan group, accepted in principle by the Democrats but not McConnell, is as follows:

+ Unemployment half benefits at $300/wk through March 2021
+ PPP small business funding of $300B, now with no need to use to pay workers’ wages
+ $45B for airlines & transport businesses (despite airlines with $billions of cash on hand)
+ No $1200 checks
+ Student loan forbearance continued for 3 more months
+ Renter evictions moratorium continued for one month
+ $82 billion for education
+ $13 billion for emergency food assistance
+ $35 billion for health care providers
+ $13 billion more for farmers & agribusiness (after receiving $70B since 2019)
+ $25 billion rent assistance (payable to landlords)

The important point of the total $748B, however, is that it too is a temporary ‘mitigation’ proposal—not a true stimulus bill.
Like the March 2020 Cares Act, also a mitigation bill, it will only buy a little more time for an economy clearly in a deep slowdown in the 4th quarter and on the brink of another double dip recession in 2021, if one were to agree with Chase bank!

The Cares Act of March was only $1.1 to $1.5 trillion in actual spending—not the $3 trillion mainstream media often noted. $650 billion of $3 trillion was business tax cuts that were mostly hoarded. And more than $1.1 trillion for medium and big business bailouts that didn’t happen by the Fed loans, the funds of which were returned to the Treasury in December. Big businesses were bailed out, but via Fed other $3 trillion plus money injections into the banks and markets—not by the Cares Act.

So the Cares Act was a temporary mitigation bill that ran out of spending by late summer. And the bipartisan group proposal of $748 billion is an even smaller mitigation bill that will run out of funds well before next spring.

There is, and there has been, no fiscal stimulus since the crisis began. Nor is a stimulus on the horizon. More importantly, what this means for the economy is that the lack of a true fiscal stimulus for 2021 means the double dip recession looms ever larger on the horizon now! Unemployed workers, renters and homeowners, student debt, double taxed workers, and small businesses will get another temporary partial assistance. And should the Democrats not win both seats in the Georgia Senate runoff elections on January 5, 2021, McConnell will retain control of the Senate and it will be four more years of ‘No, No, No’ in help to those truly in need. The implications of that for the US economy, and for Democrats in 2022 mid-term elections, is obvious. But that’s the likely intention and game plan of McConnell and the Trumpublicans no doubt.
………………………………………………….

    2. CONGRESS PASSES $900 BILLION MITIGATION 2.0 BILL (AS DOUBLE DIP RECESSION LOOMS

by Jack Rasmus, December 22, 2020

As the 2020 year closes, Congress is about to pass a $900B Covid Relief spending bill. But make no mistake. It’s Senate leader Mitch McConnell’s proposal. And it will hardly dent the rapidly slowing US economy this 4th quarter and the increasingly forecasted coming double dip recession early next year.

The new spending shouldn’t be confused as a ‘stimulus’ bill. It won’t stimulate the economy much, if at all. A stimulus requires significant net new spending. Most of the deal is just a continuation of past spending levels, and in some notable examples it’s a reduction in spending levels. The same can be said for the companion legislation to keep the US federal government funded. That’s another $1.4 trillion. But that too is just continuation spending. Nevertheless, we hear from the mainstream media it’s a $2.3 trillion total spending package, the second largest in US history (the first largest being the past March Cares Act which the same media keeps misrepresenting as a $3 trillion package).

For the record, the $3T Cares Act amounted only to $1.4 trillion actual spending that got into the US economy. More than $1 trillion in loans initially earmarked for medium and large corporations, and 11 financial markets, never got spent by the Federal Reserve. In addition, $650 billion of the $3T was actually tax cuts for investors and businesses. That’s mostly been hoarded. The only actual spending that got into the real economy and GDP was the $500 billion for income checks and unemployment benefits for workers, plus $525 billion in loans and grants for 5 million of the 31.7 million US small businesses, plus another $100B or so to the Federal Reserve’s ‘Main St.’ lending programs and less than $100B for other Fed lending. So the much touted March Cares Act actual spending was less than half the media’s reported $3T.

It’s Mitch McConnell’s Bill

Since the passage of the Cares Act in March (with a supplement in April), McConnell has insisted a follow up package would be no more than $500 billion. That’s been his position since last June. The Pelosi-Shumer team passed a $3.2 trillion true stimulus proposal in the US House called the Heroes Act in late May. McConnell rejected it out of hand and has done so for the past six months.

Pelosi-Shumer reduced their $3.2 trillion to $2.2 trillion in August. That too was rejected by McConnell and the Trump administration, who have been engaged in a phony tactical ‘hard cop/soft cop’ negotiation since July designed to break down the Democrats’ proposals. They have finally succeeded in the $900 billion deal about to be signed. The Democrats, as they guessed, finally capitulated at the 11th hour.

Here’s why the $900B is McConnell’s proposal: It amounts to the $500 billion he insisted on since last June plus the $435 billion that Treasury Secretary, Mnuchin, clawed back from the Federal Reserve earlier this month. That’s the roughly $900 billion that McConnell has agreed to.

The $435B clawed back from the Fed was money the Democrats agreed to in the March Cares Act to be given to the Fed to loan out to medium and big corps, theoretically to companies that would invest it and expand production and hiring. It didn’t happen. Big corporations in particular didn’t want the money from the Fed and its banks. They were already flush with cash. In terms of corporate bonds alone, Fortune 500 corporations alone had raised more than $2.2 trillion—thanks to the Fed’s other policy of reducing interest rates (and bond rates) to near zero.

So the money parked with the Fed in March was never used, and Mnuchin simply took it back earlier this month, gave it to McConnell, which the latter added to his $500 billion. And there you have it. Voila! The $900B forthcoming deal.

The McConnell package

· $325 billion for small business grants ($135 billion of which was left over from March)
· $166B in $600 one time income checks (cut by half from $1200) for working families with incomes less than $100k/year
· $120B in $300/wk. unemployment benefits (for 90 days, & at half former $600/wk)
· $45B for transport (including $15B for airlines already sitting on $billions of cash)
· $13B for food stamps (despite 20% American families now officially food deprived)
· $25B for rent assistance (for one month moratorium on rent evictions for 11.4 million behind on their rents owed totaling more than $70 billion)
· The rest for schools, vaccine distribution, hospitals, and other spending

The reduction in the level of the unemployment benefits and the one time income checks represents at least $150B to $200B a month, every month, taken out of previous levels of household spending. That’s not counting its ‘multiplier effect’. That’s a hundreds of billions of dollars of reduction in consumer spending and therefore US GDP that will hit the economy come January!

Just maintaining prior levels of spending has already resulted in a rapidly slowing US economy this fourth quarter 2020.

US Economy Sliding into Double Dip

After having collapsed quarter to quarter by -10.5% in early 2020, the economy briefly rebounded in part as the economy prematurely reopened in the third quarter 2020. That was a 7.4% rebound off the -10.5% collapse. In other words, only 2/3 of what was lost in GDP terms. But that tepid rebound (not to be confused with a sustained recovery) has relapsed seriously this current 4th quarter. Many economists’ estimates, even mainstreamers, is the US GDP will grow at best around 1.5% this quarter—i.e. down from 7.4%.

Retail sales turned slightly negative in October and then sharply fell by -1.1% for the recent month of November. It will likely turn even more negative in December. Even the much announced gains in Manufacturing and Construction—together barely 20% of the economy—are now showing signs of slowing. Indicators of industrial production and manufacturing in the Chicago area and Mid-Atlantic states are slowing sharply.

More economists are forecasting a broad economic contraction—i.e. a technical double dip recession—in the coming January-March period. That includes JP Morgan bank’s research. A condition that this writer predicted last March when the economic crisis emerged. As in all cases of Great Recessions, double dips typically occur, and sometimes triple dips. The 2020 Great Recession 2.0 today is no exception.

It is in this context of a sharply slowing US economy fourth quarter, and a growing likelihood of a second bona fide contraction in early 2021, that Congress is about to pass the $900 billion McConnell package.

It’s important to understand that it’s not at all an economic stimulus proposal. It’s the weakest of possible ‘mitigation’ bills. Mitigation is about just buying time (30-90 days) until a real stimulus can be passed. Even the Cares Act of last March was acknowledged as a mitigation measure, not a stimulus, bill by its Congressional proponents.

This McConnell $900B proposal is even less a mitigation measure. It’s more a temporary palliative at best, buying 60 days of a partial offset to a coming contraction.

Moreover, one should not assume all the $900B—or even a part of it—will actually get in to the real US economy. Apart from the reduction in unemployment benefit levels, not all of the $325B money earmarked for small business PPP will be spent soon, or even at all. Studies and research shows that the PPP program of last March did not all go to those small businesses that needed it most. And much of it was used not to retain workers and wages, as the legislation proposed in March, but went to pay down business debt or was used to increase business savings that were subsequently then stuffed into business bank accounts by those businesses that scammed and skimmed off the PPP funding.

With virtually no oversight in the case of the $525B PPP from last March’s Cares Act having occurred over the past nine months, it will be significant if even half of the $325 billion is actually spent. The same can be said for much of the $44B now allocated for the airlines and other transport businesses. And even in the case of the $82B targeted for schools and colleges. It won’t all be actually spent and therefore will provide no actual stimulus or mitigation to the real economy.

In short, out of the $900B will be 2/3 at best actually spent and entering the US economy and GDP next quarter. That’s not much of even a ‘mitigation’, given the accelerating slowdown of the US economy at year’s end 2020 now underway.

The Corporate Democrats’ Spin is In

Nevertheless, Democrat party leaders—i.e. the corporate wing of that party—are spinning the capitulation to McConnell as just the first of further coming legislation after Biden is inaugurated January 20, 2021. That’s how they’re selling it to John Q. Public.
But don’t expect much in terms of fiscal spending legislation forthcoming after January 2021. That’s especially true if McConnell remains in control of the Senate, which is more likely than not, and it’s especially the case if Republicans win at least one of the Georgia Senate run off elections on January 5, 2021. McConnell will continue to say ‘No No No’ to just about everything proposed in Congress should he retain control of the Senate.

Democrats are naïve to think that, after having agreed to $900B, that McConnell after only 45 days will agree to anything more in terms of emergency fiscal spending come February-March 2021!

In this scenario, as the US economy likely slips into a double dip recession next year Biden will be relegated to any new spending via Executive Order and other presidential actions. But his already announced policy of resurrecting bipartisanship with McConnell will ensure Biden will go slow, if go at all, in terms of governing by Executive Order. He could do a lot, but he won’t. He’ll extend the bipartisan hand to McConnell again, as had Obama for years; and again the Republican dog will bite the hand and little will change.
In summary, what we have in the pending $900B ‘relief bill’ is virtually no relief at all. Even for the next 90 days; it’s a partial relief, a palliative that barely even qualifies as a mitigation. The $900B will definitely not turn around the impetus and trajectory of a rapidly slowing US economy and the likely coming double dip recession approaching in 2021.

But what’s to worry? The stock markets are hitting records daily. Money from the Fed for investing by corporations, hedge funds, private equity firms, and other professional speculators is virtually free. More business tax cuts are being added in the pending legislation to the $650B passed last March in the Cares Act (and the $4T passed before that in 2018-19). The 651 US billionaires added $1T to their wealth in just the last eight months!

Besides, Trump’s leaving the White House…maybe! (if he doesn’t declare martial law first).

posted December 2, 2020
New Technology That Will Dangerously Expand Government Spying on Citizens

If you’re worried about the capability of government to conduct surveillance of citizens engaged in political assembly and protest, or even just personal activity, then you should be aware the technological capability of government surveillance is about to expand exponentially.

The US Air Force’s Research Lab (yes, it has its own lab) has recently signed a contract to test new software of a company called SignalFrame, a Washington DC wireless tech company. The company’s new software is able to access smartphones, and from your phone jump off to access any other wireless or bluetooth device in the near vicinity. To quote from the article today in the Wall St. Journal, the smartphone is used “as a window onto usage of hundreds of millions of computers,s routers, fitness trackers, modern automobiles and other networked devices, known collectively as the ‘Internet of Things’.”

Your smartphone in effect becomes a government listening device that detects and accesses all nearby wireless or bluetooth devices, or anything that has a MAC address for that matter. How ‘near’ is nearby is not revealed by the company, or the Air Force, both of which refused to comment on the Wall St. Journal story. But with the expansion of 5G wireless, it should be assumed it’s more than just a couple steps from your smartphone.

One can imagine some scary scenarios with this capability in the hands of government snoops:

Not only would the government know your geographical location via the GPS signal to your cellphone. They’d know what you are doing. And with whom.

A political gathering would allow them to see all the owners of other cellphones in the vicinity of a protest or demonstration. How many are gathering at a particular street or location. The direction they might be heading. Or whether there’s an organization meeting in a hall or room and who (with a cellphone as well) might be attending.

If you’re driving on a winding coastal or mountain road, it would know, and could possibly access, your car’s various electronic systems to turn them off. It might access your car’s circuit board that governs your power steering when you’re driving in an area of winding roads. Or it might be able to just shut down your car’s electrical system and remotely lock all your doors. The police no longer have to engage in highway chases until capture.

The new tech would allow the government to access the data on your fitbit device while you’re jogging. Or worse, maybe even interfere with the signal on your heart pacemaker device.

The technology might be used to access your smartphone, and from there to turn on your home Alexa device to listen in and record conversations without you ever knowing. Or to listen in on your zoom conferencing on your laptop. Or maybe even worse, to shut down or bypass the safety features on your home furnace equipment. Or turn off your home security system.

And with 5G wireless broadband, the tracking might be extended well beyond the range of a bluetooth device. Add 5G broadband wireless to SignalFrame’s technology, and then wed that to the capability of machine learning and artificial intelligence, and you get instant processing of a massive amount of data on any targeted person or gathering!

This problem of government surveillance on free citizen activity is not new. It took a giant leap after 9-11 with the Patriot Act and acquisition of phone data by Homeland Security and other government agencies. It was supposed to have stopped. But it hasn’t. The snoops have continued to ignore Congressional resolutions and court decisions on privacy invasion of citizens. The latest Air Force lab testing is likely just a recent ‘tip of the iceberg’ revelation. And if the Air Force is doing it, be assured so are the Army, Navy, the NSA, CIA, FBI and all the other government snoops.

Certainly this kind of technology would be used not only by the US government. If the USA has it, you can bet other governments do too–especially China, Russia, Israel, and probably some of the Europeans as well.

Unlike in 2001, in 2020 SignalFrame’s technology takes government surveillance to a new level–given the ubiquity of smartphones, Internet of Things (IOT) devices, digital circuit board dependent autos, and all the many household devices now with MAC wireless access addresses. And now, unlike circa 2001 and the passage of the Patriot Act (and its continuation in annual NDAA legislation), we have AI, machine learning, neural nets everywhere, and massive government data processing power.

In short, Technology is becoming a growing tool and power in the hands of governments, to use to thwart democratic and constitutional rights–as well as to detect, apprehend, and ‘deal with’ those who protest and oppose those governments.

The coming decade in the USA will be not only increasingly difficult economically, increasingly unstable politically, but will prove to be a period in which technology is increasingly threatening basic civil rights as well as the very foundations of Democracy itself.

Jack Rasmus is author of ’

    The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump,

Clarity Press, January 2020. He blogs at jackrasmus.com and hosts the weekly radio show, Alternative Visions on the Progressive Radio Network on Fridays at 2pm est. His twitter handle is @drjackrasmus.

posted November 30, 2020
Does the 21st Century’s First Great Worldwide Depression Lie Ahead?

Economists generally distinguish between what they call ‘normal’ recessions and ‘great recessions’—as well as between both normal, great and what’s called an economic depression. All three forms of capitalist economic contractions share certain characteristics in common, but are distinguished by certain fundamental differences as well.

By all accounts, after four months of economic collapse—March 2020 through June 2020—the US economy is clearly now mired in another Great Recession once again. And it appears the current 2020 Great Recession 2.0 is far worse than the 2008-09 prior Great Recession event. Moreover, the odds are greater today than in 2008 that the current 2.0 contraction may evolve into the first Great Depression of the 21st century.

Great recessions are worse than ‘normal’ recessions in the depth and duration of their economic decline. They are also anterooms to Great Depressions. They may be prevented from evolving into bona fide depressions; or they may fail to be contained, deteriorate further, and eventually transform into a Great Depression. They are thus highly unstable events.

So how does today’s Great Recession 2.0 compare on the spectrum of US capitalist crises and collapse over the past century? And will it be prevented from further deteriorating? By all indications thus far, the chances of the latter are growing. What happens in the second half of 2020 will determine its trajectory—and whether it is successfully contained or morphs into the first Great Depression of the 21st century!

A Spectrum of Capitalist Crises

The Great Depression of the 1930s decade began as a Great Recession in 1929-30 that collapsed further into a Great Depression after 1930. In contrast, the Great Recession of 2008-09 was successfully contained and prevented from evolving into a Great Depression—albeit at great longer term cost to the stability of the capitalist system itself over the subsequent decade. So what can be said of the current crisis? How is it similar or different from 2008-09? And what is the likelihood of a repeat of the 1930s?

It remains yet to be seen, after only four months from March through June 2020, what the future trajectory of today’s Great Recession of 2020 may be: containment or further deterioration. The odds favor the latter, however, for seven reasons:

• Today’s 2020 collapse comes on the heels of a weak US and global economy in 2019, in contrast to the much stronger US and global real economy in 2007.
• The current collapse has occurred much faster; it has also already contracted five times deeper compared to 2008-09. In just four months, March to June, the US economy has contracted somewhere around 25%-30% in US GDP terms. In 2008-09 the decline was no more than 6%.
• Today’s US collapse occurs with more than 90% of other world economies similarly in deep recession—compared to 60% in 2008-09. This time there won’t be any China and emerging markets economic boom, as occurred in 2009-10, to put a floor under the collapse of the US, Europe, and Japan by stimulating global trade.
• Governments’ policy responses to stimulate their economies will prove even less effective this time around compared to 2008-09 due to a decade of accelerating income inequality, low productivity and business real investment, widespread wage and incomes stagnation of working classes, collapse of social safety nets, record budget deficits and tens of trillions of dollars of debt run-up by business, households, and governments alike.
• The COVID-19 overlay is continuing to depress the economy still further, with no sign thus far of its moderating; in fact, today at mid-year signs are growing of an even worse second wave of mass infections and hospitalizations with all the negative consequences for the US economy and recovery.
• The growing political instability—especially in the USA—has a great potential to negatively impact both consumer and business expectations that would further dampen household spending and business real investing. Political instability and uncertainty becomes itself a negative economic force.
• Finally, there’s the very large wild card looming on the horizon in the somewhat longer term. Should recovery lag or falter, a combination of the preceding six factors may cause the volume and rate of defaults and bankruptcies (business, consumer & even state-local governments) in the US economy to overwhelm the US banking system once again, leading to a financial crash. This in turn will exacerbate still further the decline in the real, non-financial side of the US economy, possibly descending into the first Great Depression of the 21st century.

These seven great forces are emerging from deep within the current economic crisis and have yet to play themselves out. But any one of them, and certainly any combination, are capable of pushing the already fragile US real economy into an even deeper contraction in the coming months.

The 1930s: A Great Recession Morphs into a Great Depression

Historically, it is not well understood by economists that 1929-30 began as a Great Recession and only after 18 months began to morph into an actual Great Depression.

A stock market crash in October 1929 precipitated and accelerated a sharper decline in manufacturing and construction that had already slowly begun to develop even before October. The faster decline of manufacturing and construction that followed after the October 1929 stock market crash had not yet spilled over to the rest of the US economy. Unemployment rose to around 10% in 1930. But banks were not to begin collapsing for another 15 months, more than a year later, in December 1930. It was only when a series of increasingly severe banking crashes began to occur—in December 1930, in 1931, 1932, and March 1933—that the US economy, ‘ratchet-like’, fell off a series of cliffs, plunging ever deeper into the Great Depression, only hitting a trough in summer 1933.

Thereafter the road to recovery took seven years of stop-go, partial recoveries then relapses. In 1933-34 the banks were bailed out, and a pro-business policy called the National Recovery Act was introduced to benefit businesses but not wages and employment. The non-bank real economy rebounded (not recovered) modestly but failed to attain a sustained recovery. In 1935 the Roosevelt New Deal fiscal spending programs succeeded in partially stimulating the economy and generated some sustained recovery. However, the New Deal was prematurely repealed in part by a Republican dominated Congress and conservative US Supreme Court in 1937-38. The result was a relapse into depression once again. Restoration of the New Deal programs in 1938 restored the track to sustained recovery, although slowly. In 1940-41 an acceleration of US war preparation spending provided a much needed second push for recovery, which was fully attained by 1942, as the US government share of total GDP spending rose to 40% of GDP from less than 20%, even during the peak years of the New Deal.

2008-09: A Great Recession Is Successfully Contained

Unlike the 1929-30 period, the 2008-09 events illustrate how a Great Recession was contained, averting a slide into a bona fide Great Depression.

In both periods, a crash in the financial sector provided the catalyst. While in 1929 a financial crash precipitated a decline in the real, non-financial economy, in 2008 the financial markets responsible were the housing markets and what were called the derivatives markets (i.e. credit default swaps or CDSs). Together these interacted and resulted in a collapse first of several investment banks, then of the quasi-government financial institutions associated with the housing market, Fannie Mae and Freddie Mac. The financial crash quickly accelerated to impact mortgage companies and banks which had over extended in providing mortgages. The financial crisis culminated in September 2008 with the collapse of the investment bank, Lehman Brothers, that had over-invested in subprime mortgages and the giant insurance company, AIG, that had over-written CDS insurance contracts on Lehman Brothers that it couldn’t pay for. A general banking crisis and freeze of lending by the banks to all companies, non-financial as well as financial, followed. The banking crash thus brought down the ‘real’ economy. Mass layoffs followed, peaking at 600,000+ per month through late 2008 and into early 2009.

The banks and financial system were quickly bailed out and stabilized. In mid-2009 the US central bank, the Federal Reserve, quickly provided trillions of dollars in emergency funds to the banking system and lowered interest rates to near zero—unlike in 1930-32 when the Federal Reserve failed to bail out the banks and eventually allowed 17,000 US banks to fail.

The Federal Reserve would continue to provide free money to the banks to the tune of $5.5 trillion over the next seven years, 2009-16, and to hold rates at near zero. B7 2010, banks had been bailed out but they continued to be subsidized for years thereafter by the Federal Reserve by keeping rates near zero and providing banks with further trillions of dollars of virtually free money. The trillions of dollars of free money found its way from the US banks to non-bank businesses and investors and to US multinational corporations expanding offshore.

The Fed’s allocation of more than $5 trillion in virtually free money to banks and investors was processed by an annual distribution of money to US corporations over the next seven years at the rate of $800 billion a year, which these utilized in the form of stock buybacks, dividend payouts, and other corporate to shareholder distributions. This historic massive distribution of more than $5 trillion by the U.S. central bank, the Fed, contributed significantly to the accelerating wealth concentration among corporations and wealthiest 1% households in the USA from 2010 to 2016.

With most of the Bank bailout money now going to fuel corporate mergers & acquisitions, offshore investing by US multinational corporations, and creating asset price bubbles in stocks and other financial assets, the real non-financial economy was starved of money capital for investing in the US real economy and fared less well in the following years. The financial sector of the US economy in effect ‘crowded out’ job-creating real investment in the real economy, .

In contrast to the more than $5 trillion pumped into the US banking system and private investors by the Federal Reserve from 2009 through 2015, the non-financial real economy was provided with only a $787 billion fiscal stimulus in January 2009 by Obama’s economic recovery program.

This proved insufficient as a stimulus, not only due to its insufficient magnitude but because of its composition as well—with only about $600 billion in business tax cuts and subsidies going to state & local governments. Both business and state governments in turn then largely hoarded the stimulus at first and then spent it very slowly, if at all. This failed fiscal stimulus accounted for much of the weak and protracted recovery of the real economy after 2009—in contrast to the massive, immediate and continued bail out of the banks and investors by the Federal Reserve over the same post-2009 period.

Unlike the quick recovery of banks and investors, the real economy struggled to obtain a sustained recovery. Economic growth in GDP on average annually was only 60% of a normal post-recession recovery. It took six years just to recover jobs lost since 2008, which didn’t occur until late 2015. Real wages stagnated at best for most of the US work force over the same period. A typical legacy of great recessions is always a weak real economy recovery, very slow job restoration, and wage stagnation. The 2008-09 was thus no different.
The trajectory of the post-2008 collapse was a short, shallow recovery followed by similar relatively short periods of anemic growth. The US economy stalled, almost falling into subsequent recessions, on two occasions in the winters of 2012 and 2015. Europe and Japan fared worse. Europe stumbled into a second, double dip recession in 2011-13 and Japan slipped in and out of short recessions on three separate occasions after 2009.

Near economic stagnation, and short economic relapses, for an extended period for another 5-6 years was thus the defining characteristic of the period of from June 2009 through 2015—i.e. the first Great Recession in the 21st century. A second banking crash did not follow the real economy’s decline of 2008-09. The Great Recession of 2008-09 was thus prevented from transforming into a bona fide Great Depression, such as occurred in 1931.

The weak recovery of the real economy, 2010-16, was achieved at the great cost of a weak jobs recovery, stagnant wages for most, low real business investment and productivity, and growing income inequality in favor of the financial-banking sector and wealthiest 1% investor households—all of which would eventually come at a price when the 2020 crisis erupted.

2020 Phase 1: The Second Great Recession

The current 2020 crash of the real economy in the USA dwarfs the 2008-09 first Great Recession. Since late February 2020, the US economy has contracted more than four times faster than it did in 2008-09. In the latter case the contraction took 19 months for US GDP to decline by 6%. In 2020 US GDP faced a similar decline in just the first quarter, January-March 2020. Official forecasts for the second quarter 2020, April thru June 2020, are for the US economy to contract by another astounding 30%-40%: The Federal Reserve bank’s districts of Atlanta and New York provide GDP prediction services for the economy.

The combined economic decline for the entire first six months of 2020 will likely range from 20% to 25% of US GDP. That’s a loss of about $5 trillion in GDP terms— in just four months, compared to 19 months in 2007-09; and four to five times deeper than that which occurred in 2008-09.

Another pair of key sources indicating the severe dimensions of the current second quarter collapse are the Purchasing Managers Indexes (PMIs) for manufacturing and for services. An index number of 50 indicates stagnation: no growth in manufacturing and/or services but no contraction either. A number above 50 indicates growth of the economy in these sectors; below 50 indicates a contraction or recession in activity. PMIs for both manufacturing and services plummeted in March and April to record lows in the 30s range, and, while rising as in the April-June second quarter, both PMIs are still below 50, indicating a continued contraction of both manufacturing and services.

It is thus a myth that the US economy is growing once again in June. It is just not falling as fast as it had in March-May.
Another way to envision the special severity of the current 2020 Great Recession is that more than 90% of countries globally are accompanying the USA in the decline—compared to 60% in 2008-09, making the current contraction even more global in character than was 2008-09—occurring not only faster but also steeper.

According to June 2020 latest forecasts of the global economy by the World Bank (WB) and the International Monetary Fund (IMF), the volume of world trade is projected to decline by double digit percentages throughout 2020. The World Bank predicts a -13.4% fall in 2020; the IMF, 12%. Both sources see a -5% fall in global GDP—something that has never occurred before in modern record keeping. Both the IMF and World Bank forecast the USA, Europe, and advanced economies will contract by 8%-10% for the entire year, 2020—about double that of the 2008-09 Great Recession!

However, that optimistic forecast of 8%-10% for the US and other advanced economies assumes a successful fiscal-policy implementation in the second half of 2020 as well as the absence of a second COVID-19 surge in the coming months—neither of which appear likely to happen.

The World Bank’s -5% and -8% best case forecasts include the assumption there is no second COVID-19 wave and no premature reopening of the US and other economies. If either happens, “then we will begin talking about depression-level growth and policy responses”. Of course both had already begun to occur by late June 2020. The World Bank added that its best case -5% contraction (and -8% for USA) is further dependent on sufficiently strong government fiscal stimulus as well as on no resumption of the global trade war.
It further warns that should these assumptions prove real, then that “will almost certainly be followed by a solvency (financial) crisis, particularly among small firms in the retail, leisure and hospitality sectors.”

US Federal Reserve chair Jerome Powell has more or less echoed the World Bank’s conditional optimistic forecast, noting that much depends on the US economy reopening without a second COVID-19 wave. While Trump and company continue to spin the V-shaped recovery scenario, Fed chairman Powell and other Federal Reserve governors have been consistently warning that is not on the horizon. Appearing before Congress in mid-May 2020 Powell made it plain that the United States faces a long overall recovery…likely not before the end of 2021. European Central Bank chair Christine Lagarde has echoed Powell’s warning, pointing out “we’re not going to return to the ex-ante status quo” and that global trade will be “significantly reduced.”

Another big factor among the noted ‘seven’ forces that could potentially drive the US economy deeper into recession is the adequacy of a US government fiscal stimulus response to the current crisis.

First, Congress passed two small fiscal spending bills of $100 billion and $75 billion, targeting reimbursements to hospitals; neither were designed as general economic stimulus bills. Then in March 2020, the US Congress passed the dubiously-termed CARES ACT, amounting to about $2.2 trillion. It included three business lending programs: for small, medium and large businesses, totaling $1.45 trillion, to which a further $310 trillion was quickly added to what was called the Payroll Protection Program (PPP), for small business loans.

To this approximately $1.8 trillion in business loans, convertible to cash grants if the business borrower used 70% to maintain the wages of its employees—was added another $500 billion in direct subsidies to workers in the form of expanded unemployment benefits and one-time supplemental income checks of $1,200 per adult and $600 per dependent for no more than two dependents.

In addition to the loans/grants and unemployment/supplement checks were $650 billion in tax cuts in the CARES ACT. This is seldom referenced in the media, and are virtually all business- and investor-targeted, leaving less than 3% of the total to be provided to households earning less than $100,000 a year in annual income. Featured tax cuts include a payroll retention tax credit, temporary business payroll tax deferment, net operating loss corporate tax averaging, faster depreciation write-offs, and a larger business loss allowance.

Summed up, the CARES ACT and its predecessors provided a fiscal stimulus—at least on paper—of $1.8T in business loans/grants, $500 billion to workers and families, $650 billion in business tax cuts, and about two hundred billion in direct subsidies to hospitals and health care deliverers. Or about $3.2 trillion total.

If it is assumed all the $3.2 trillion actually entered the US economy as a stimulus by the end of June, then the stimulus as a percent of US GDP amounts to about 11% of GDP. But it didn’t. As of end of June 2020, only about half that has actually been spent. So the stimulus is only 5.5% of GDP. In other words, about the same 5.5% as in 2009, for an economy in 2020 that has contracted five times faster and five times deeper! And if 5.5% was insufficient to stimulate the real economy in 2009 (in contrast to the Fed’s successful $5 trillion bailout of the financial side of the economy), then the 5.5% fiscal stimulus embodied in the CARES Act will certainly prove insufficient for real economic recovery as well in 2020!

In short, the fiscal stimulus as of midyear 2020 is woefully inadequate to ensure a sustained recovery of the US economy in 2020—let alone anything resembling a V-shape recovery.

As of June 30, 2020 the $500 billion in unemployment benefits and income checks has been spent already. There is no further stimulus effect for the coming 3rd quarter. Only $517B of the $660 billion small business PPP program has been loaned out. No more than $100 billion of the $500 billion allocated for loans for big businesses has been loaned. And the additional $600 billion for loans for medium sizes businesses, called the ‘Main St.’ program, has yet to lend anything.

Congress never intended the CARES ACT as a fiscal stimulus bill but rather as a ‘mitigation’ effect, to put a floor under the collapsing economy to prevent it from plummeting even further than it has. Rather, Congress, or at least the US House of Representatives, intended it to be followed up by a subsequent, true fiscal stimulus package. This package was introduced by the US House in May and is called the ‘HEROES ACT’. But at this writing, this actual fiscal stimulus is being held up by Mitch McConnell and the Republican Senate, who are opposed to further stimulus in the form of continued unemployment benefits and income checks, the former of which expires on July 31, 2020.

Nor are McConnell and Republicans interested in adding more to the large and medium size corporations’ $1.1 trillion loans allocated by the CARES ACT. Neither large or medium corporations have taken up the loans. $1 trillion is still allocated but not being used. Even $135 billion of the small business PPP program is still not taken up. The question is why, if the economy has contracted so sharply? The answer is that big businesses are already bloated with cash they’ve been accumulating since January 2020. They don’t need the loans and don’t want them, if they come with the condition of using 70% to maintain their workers’ wages.

The cash-bloated US big corporations have accumulated a cash war chest of at least $3 trillion. In January-February they quickly drew down their bank credit lines by hundreds of billions of dollars and issued record levels of corporate bonds, raising another more than $1.3 trillion in March-May, more than in all of 2019. They suspended hundreds of billions of dollars in their dividend payouts to shareholders and, in some cases, sold off their minority equity (stock) ownerships in other companies to gather in more cash. They issued more stock of their own, and cut facilities and wages in the shutdown. Bloated with cash, they have had no need of the CARES ACT loans, and Republicans McConnell & Co. know this. Their main constituency of big business, bankers and investors don’t need their further financial assistance.

What the Senate Republicans have been proposing in negotiations on the HEROES bill is to convert the money spent on unemployment insurance after July 31 to a direct wage subsidy to employers. Instead of issuing unemployment checks to workers, they propose issuing checks to their employers to pay their wages instead of the employers having to pay them wages out of their revenues and profits. Another provision proposed is more tax cuts for business: a permanent payroll tax cut, more capital gains tax cuts, and more tax cuts for business expenses.

With an election in just months, it is highly unlikely any further significant fiscal stimulus will be forthcoming this summer—with ominous consequences for achieving a sustained economic recovery in 2020.

When combined with a reopening of the domestic economy which is intensifying a second COVID wave underway, and with a continuing decline in the global economy and therefore global trade, and given the likely end of extended unemployment benefits come July 31, 2020, it is increasingly likely the US economy will deteriorate further in the second half of 2020. Making matters worse, after July a wave of renter evictions and mortgage payment defaults is expected, further intensifying the negative economic effects in the US.
In addition, the reopening of the US economy will not result in a full and rapid return of jobs and therefore of wage income and consumption. Household credit is also tightening, reducing potential consumption as well. Employers are calling back workers selectively and carefully, with many re-employed with fewer hours to be worked. Uncertain of the recovery, businesses will not return to robust investing and production expansion; households, uncertain of future employment prospects, will not return to prior levels of spending either.

But it will appear as if recovery has begun in the 3rd quarter as GDP recovers moderately. It is not impossible for any economy to continue to contract at 30% every quarter. A modest 5-10% ‘rebound’—not recovery—is likely in the 3rd quarter simply as the economy reopens, even if only partially. Similarly, some of the current 40 million plus jobless will return to work. Politicians will hype the GDP and jobs data to spin it as a ‘recovery’.

But a mere rebound is not a recovery.

2020 Phase 2: Great Recession or Great Depression?

It remains to be seen whether the 20th century’s second Great Recession, now in its fourth month and still early in its trajectory—in just Phase 1 thus far—will be contained. The alternative scenario is a failed containment and a subsequent descent into the first true Great Depression of the 21st century in 2021-22. It’s inherent in the nature of a Great Recession to be unstable. It either moderates or it intensifies and morphs into a Great Depression. For the latter to happen, however, a major financial system crash must occur—i.e. the seventh ‘wild card’ force noted above.

Thus far the US central bank, the Federal Reserve Bank, has undertaken historic and unprecedented action to forestall a financial crash of the banking system. In the first Great Recession, the Fed bailed out the banks to the tune of more than $5 trillion. In the current crisis, it has pre-emptively bailed out the banks with more than $3 trillion thus far, and promised ‘whatever it takes’ in additional virtual free money capital injections, should the banks need it. A pre-emptive bail out of the banking system has never before occurred in US history, but is underway today.

The Fed is pre-bailing out non-financial corporations for the first time as well. That too has never occurred in US economic history. Trillions of dollars more are being allocated by the Fed to buy the bonds of corporations directly. Even derivatives of corporate bonds, called ‘Exchange Traded Funds’ (ETFs). Even junk bonds of corporations. This massive corporate bond buying program by the Fed is designed to throw trillions of dollars at corporations in order to offset the waves of corporate defaults expected to come. Defaults and bankruptcies will mean banks that provided the companies with loans will have to assume their corporate debt when they default. That could lead to bank insolvencies and a banking crash in turn. So the Fed is flooding both banks to have sufficient cash to absorb the coming defaults as well as the potentially defaulting corporations. It is an historic experiment in monetary policy. And it is uncertain whether the even historic money injections will succeed in preventing the waves of defaults that are likely to be coming.

The areas of major corporate defaults expected are not just the obvious travel, leisure and hospitality, and big box retail companies. Defaults are already spreading as well in the fracking energy industry, in commercial properties (malls, office buildings, hotels, theme parks, etc.), and soon in local governments and agencies.

All Great Recessions are characterized by mutually amplifying negative effects between financial cycles and real economic cycles. In 2008 a major financial instability event precipitated and exacerbated the subsequent steep contraction of the US real economy from October 2008 through June 2009. Today, in 2020, the real side of the economy has contracted even more severely first. It remains to be seen whether and when that real contraction might precipitate a subsequent financial crash in turn. Should that occur, the feedback effects on the real economy will intensify, driving the real economy even further into contraction—and into a possible Great Depression.
The economic jury is still out and will remain so for months as to whether the Fed’s historic massive pre-emptive bailout of both banks and non-bank corporations can succeed in preventing a bona fide descent into depression. The failure of fiscal policy will be decided much sooner, well before the November 2020 elections. A failure of central bank monetary policy, should it occur, will likely be sometime in 2021.

In the interim, the trajectory of the US economy will be more W-shaped—as is the case in all Great Recessions. While V-shape recoveries are more frequent in normal recessions, it appears capitalist economies no longer undergo normal recessions, with contractions of only three to six months and GDP declines of only 1-3%. Capitalism in the 21st century is more prone to major crises, like Great Recessions and Great Depressions. The mutual amplifying effects of financial cycles and real cycles, and the growing financialization of capitalism, are likely the cause of this phenomenon of growing mutual cycle amplification and more intensified Great Recessions.

Much of the trajectory of the US economy in the second half of 2020 and beyond depends on the response of fiscal and monetary policy both this year and in 2021, after the November 2020 national US elections. Will Congress continue to fail to provide sufficient fiscal stimulus, as it did in 1929-32? Will the Federal Reserve’s March-June 2020 even more massive—and this time pre-emptive bank bailout—successfully forestall a banking crash in 2021?

Other key questions impacting the economic trajectory include whether the reopening of the US economy now underway significantly exacerbates the COVID-19 negative effects on the economy. Rising infections and hospitalizations will discourage and dampen further both business investment, job recalls, and household consumption, and lead to further layoffs. What will happen with global trade and other economies’ recoveries?

Political instability events should not be discounted as well. A growing direct conflict between two wings of the US capitalist elite and their political constituencies has been assuming constitutional forms as well as grass roots protests and conflicts between their supporters. It is not impossible that the upcoming November 2020 elections will result in an intensification of these conflicts and a general political and constitutional crisis not seen since the 1850s. The economic fallout of that would be severe.

The most likely scenario for the US economy in 2020-21, is an extended, weak and unstable economic recovery—not to be confused with a temporary ‘rebound’ over the summer—that will take years to unfold.

The trajectory and scenario of the current Great Recession 2.0 is therefore strongly in favor of a W-shape recovery at best, in the shorter run, with the possibility of a descent into the first great worldwide economic depression of the 21st century in the intermediate to longer run.

What Lies Ahead?

The US economy at mid-year 2020 is at a critical juncture. What happens in the next three months will likely determine whether the current Great Recession 2.0 continues to follow a W-shape trajectory—or drifts over an economic precipice into an economic depression. With prompt and sufficient fiscal stimulus targeting US households, minimal political instability before the November 2020 elections, and no financial instability event, it may be contained. No worse than a prolonged W-shape recovery will occur. But should the fiscal stimulus be minimal (and poorly composed), should political instability grow significantly worse, and a major financial instability event erupt in the US (or globally), then it is highly likely a descent to a bona fide economic depression will occur.

The prognosis for a swift economic recovery is not all that positive. Multiple forces are at work that strongly suggest the early summer economic ‘rebound’ will prove temporary and that a further decline in jobs, consumption, investment, and the economy is on the horizon.

A Second Wave of Job Losses

Through mid-June to mid-July, the COVID-19 infection rate, hospitalization rate, and soon the death rate, have all begun to escalate once again. Daily infections consistently now exceed 60,000 cases—i.e. more than twice that of the earlier worst month of April 2020. Consequently, states are beginning to order a return to more sheltering in place and shutdowns of business, especially retail, travel, and entertainment services. The direction of events cannot but hamper any initial rebound of the economy, let alone generate a sustained economic recovery.

Exacerbating conditions, a second wave of job layoffs is clearly now emerging—and not just due to economic shutdowns related to the resurging virus. Reopening of the US economy in June resulted in 4.8 million jobs restored for that month, according to the US Labor Department. That number included, however, no fewer than 3 million service jobs in restaurants, hospitality, and retail establishments. These are the occupations that are now being impacted again with layoffs, as States retrench once more due to the virus resurgence underway. But there’s a new development as well: A second jobless wave is now emerging in addition to the renewed layoffs due to shutdowns not only of the resumed service and retail occupations, but reflecting longer term and even permanent job layoffs across various industries.

Household consumption patterns have changed fundamentally and permanently in a number of ways due to both the virus effect and the depth of the current recession. Many consumers will not be returning soon to travel, to shopping at malls, to restaurant services, to mass entertainment or to sport events at the levels they had, pre-virus.

In response, large corporations in these sectors have begun to announce job layoffs by the thousands. Two large US airlines—United and American—have announced their intention to lay off 36,000 and 20,000, respectively, including flight attendants, ground crews, and even pilots. Boeing has announced a cut of 16,000, and Uber,n just its latest announcement, a cut of 3,000. Big box retail companies like JCPenneys, Nieman Marcus, Lord & Taylor, and others are closing hundreds of stores with a similar impact on what were formerly thousands of permanent jobs. Oil & gas fracking companies like Cheasepeake and 200 other frackers now defaulting on their debt are laying off tens of thousands more. Trucking companies like YRC Worldwide, the Hertz car rental company, clothing & apparel sellers like Brooks Brothers, small-medium independent restaurant and hotel chains like Krystal, Craftworks—all are implementing, or announcing permanent layoffs by the thousands as well.

Reflecting this, since mid-June new unemployment benefit claims have continued to rise weekly at a rate of more than 2 million—with about 1.3 million receiving regular state unemployment benefits plus another 1 million independent contractors, gig workers, self-employed receiving the special federal government unemployment benefits. The latter group’s numbers are rising rapidly since mid-June.

As of mid-July no fewer than 33 million are receiving unemployment benefits, with another 6 million having dropped out of the labor force altogether and no longer even being counted as unemployed. Unemployment therefore remains at what will likely be a chronically high number, at around 40 million—with about 25% of the US labor force unemployed—as renewed service-retail sector layoffs, plus new permanent layoffs, both loom on the horizon.

Added to the growing problem of renewed service layoffs and the 2nd wave of permanent layoffs in the private sector is the growing likelihood of significant layoffs in the public sector, as states and cities facing massive budget deficits are forced to lay off several millions of the roughly 22 million public sector workers in the US. This potential public employee layoff wave will accelerate and occur sooner, should Congress in summer 2020 fail to bail out the states and cities whose budgets have been severely impacted by the collapse of tax revenues while facing escalating costs of dealing with the health crisis. Estimates as of last May are that the states and cities will need $969 billion in bailout funding this summer—roughly two-thirds for the states and the rest for cities and local governments.

The resurgence of layoffs from all these sources is a sure indicator that the economy’s rebound—let alone recovery—is in trouble. Rising joblessness means less wage income for households and therefore less consumption and, given that consumption is 70% of the economy, a slowing of the rebound and recovery. Problems in consumption in turn mean business investment suffers as well, further slowing the economy and recovery. Exacerbating the decline in personal income devoted to consumption due to unemployment is the evidence that even those fortunate enough to return to work after spring 2020’s economic shutdown are doing so increasingly as part time employed—which means less wage income for consumption compared to the pre-COVID period before March 2020.
Overlaid on these negative prospects for employment, consumption, business investment is the intensification of economic crisis-related problems.

Rent Evictions, Child Care & Education Chaos

There is an imminent crisis in rents affecting tens of millions. At the peak in April, it is estimated that roughly one-third of the 110 million renters in the US economy had stopped making rent payments due to the COVID-related shutdowns of the economy. The CARES ACT, passed in March, provided forbearance on rental payments, although perhaps as many as 20 states failed to enforce it. That forbearance directive expires at the end of July, with as many as 23 million rent evictions projected in coming months. A major housing crisis is thus brewing, as well as the second wave of job layoffs.

A combined education-child care crisis is about to occur almost simultaneously. The K-12 public education system is approaching chaos, as school districts plan to introduce remote learning on a major scale in order to deal with the renewed COVID-19 infection and hospitalization wave. The heart of the crisis is that tens of millions of US working class families dependent on two paychecks to survive economically cannot afford to accommodate school district practices for remote learning—especially for young children in the K-6 grade levels. Even if such families could afford to pay for expensive child care, the current US child care system is far from being able to accommodate them. Many minority and working class households, moreover, lack the computers and networking equipment, or even the requisite skills to set it up, to enable their children participate in remote learning.

Several forces are driving the shift to remote learning: school district fears of liability actions by parents if children become ill, the significant cost of ensuring disinfected classrooms, the lack of classroom space to allow distance learning on site, and the growing concern of teachers regarding their own exposure to infection. At least 1.5 million public school teachers are over age 50 and have health conditions that put them at greater risk of serious infection, should they attend closed-in classroom environments.

The child care plus K-12 education crisis will likely erupt within months on a major scale. Chaos in education is around the corner.
This fall, higher education—colleges and universities—will also experience chaos of their own kind. While distance learning will not be as serious an implementation problem as it will in K-12 levels, costs from the pandemic will force many smaller, private colleges into bankruptcy, consolidation or closure. Public colleges’ funding problems will require them to sharply reduce available services. Remote education will create a two-tier system of higher education—educational services delivered remotely and those of a more traditional nature on campus; or a hybrid of both.

However, demand for higher education services will likely decline sharply in the short term, during which higher education will experience a devastating decrease in tuition and other sources of college revenues. Some estimates show a third of freshmen plan to take what’s called a ‘gap year’: i.e. accept entrance but not attend for a year. That’s a massive revenue loss. Some estimates foresee a 15%-30% decline in new student attendance, with another 5%-10% decline in transfer students, and a similar decline of 5%-10% in continuing students. In addition, the attendance by international students, the ‘cash cow’ for most colleges, will also decline sharply due to the Trump administration’s new rules.

Still other developments will sharply reduce college revenues. Students forced to attend classes via remote learning will demand lower tuition. One can expect a wave of legal suits as students seek to ‘claw back’ full tuition expenses. Other secondary sources of college revenues—from fees, on-campus room and board, endowment earnings and gifts, and sports revenues—also spell a looming revenue crunch.

A wave of college consolidations and closures is inevitable. And with student loan debt at $1.6 trillion it is unlikely that the federal government will introduce new aid through that channel. Nor will States increase their subsidization of public colleges, given the severe state budget deficits on the horizon.

In short, the economic crisis is about to assume more socio-economic dimensions and character: rent, child-care, education chaos will soon overlay the continuing unemployment problem and worsening recession. Social and political discontent, frustration, and anxiety are almost certainly to rise in turn in coming months as a consequence.

Global Recession & Sovereign Debt Defaults

The weakness of the global economy is yet another factor likely to ensure the US economy’s W-shape trajectory. As noted previously, with 90% of other countries in recession, global demand for US exports will remain weak or declining. In addition, global supply chains have also been severely disrupted by the health crisis, or even broken, and will not be restored soon. The global economy is suffering from deep problems of both demand and supply. This too is a unique historical event. Never before have demand and supply problems occurred congruently. Together, they increase the potential for a global depression.

Commodity producing economies have been hard hit, especially oil and metal producing countries. Many were in a recession well before the COVID health crisis. Global trade in general had stagnated, registering little to no growth in 2019, for the first time since modern records were kept. Many countries had over-extended their borrowing, expanding their sovereign debt loads during the last decade. This was money capital borrowed largely from western banks and capital markets (i.e. shadow banks).

Now, with global trade flat and declining, and prices for their export goods deflating in price as well, these debt-extended countries cannot earn sufficient income from exports in order to pay the principal and interest on their debt. As a result, several countries in the worst shape may soon default on their debt payment to western banks, hedge funds, private equity firms, and so on. Debt defaults potentially mean the same western financial institutions that loaned the funds now experience financial crises in turn. In such a manner, financial instability events abroad are often transmitted to the domestic US economy through its banking system. It would not be the first time, moreover, that foreign bank crashes have spilled over the US and rest of the world economy and in the process significantly exacerbated a recession already underway.

Theoretically, countries experiencing severe sovereign debt crises could borrow from the International Monetary Fund. However, the IMF has nowhere near the funds to accommodate multiple large sovereign defaults that occur simultaneously. Nor is it likely that the US and Europe will increase the IMF’s funding to enable it to do so. Once it becomes clear the IMF cannot handle a crisis of such potential dimensions, the global capitalist economy will slip even further toward global depression.

The further deterioration now already occurring in economic relations between the US and China may also potentially impact the Great Recession in the US, and ensure its continued W-Shape recovery. Trump’s trade pact with China signed December 2019 has proven thus far a colossal failure. The president declared at the deal’s signing it would mean $150 billion in China purchases of US goods in 2020—especially farm products, oil & gas, and manufactured goods. At mid-year, China has purchased only $5 billion of the agreed $40 billion in farm products and only $14 billion of $85 billion in US manufactured goods. Trump’s promised $150 billion was never agreed to by China, even before the Covid pandemic struck the US economy in 2020. China never agreed to a dollar value of purchases of US exports, but announced it would purchase based on conditions in 2020-21. Trump’s $150 billion was typical Trump misrepresentation of a deal never made. At best China would purchase perhaps $40 billion in agricultural goods—i.e. about the level of it purchases before Trump launched a trade war with it in March 2018. Failure to deliver his exaggerated public promise in 2020 Trump turned on on China and embraced further his anti-China hard line advisors on trade and other matters. The former ‘trade war’ with China will likely transform now, in the wake of Covid, into a broader economic war with China. Furthermore, the deterioration of relations with China, set in motion by the current recession and the collapse of global trade, shows signs of spilling over to other political and even military affairs.

Permanent Industry Transformation

The COVID health crisis is accelerating the transformation of entire industries and sectors of the economy, US and global. As noted above, household consumption patterns are already changing fundamentally and will continue as changed even after the health crisis passes. Entire industries will shrink as a consequence. Company consolidations and downsizing are inevitable in airlines, cruise lines, and even public land transport. So too will companies fail, consolidate and restructure in the hospitality, leisure and hotel industries, in mall-based retail establishments, inside entertainment (movies, casinos, etc.) to name but the obvious. Sports and public entertainment companies are struggling to redefine their business models and how they bring their ‘product’ to the public for consumption. Even education—public and private—is undergoing a radical shift. Not so obvious is similar fundamental change in oil & energy industries, and later as well in manufacturing as supply chains are slowly returned to the US economy.

Not only will these changes significantly (and often negatively) impact employment levels and wage incomes, but business practices as well. Already businesses are instituting new cost cutting practices under the pressure of the health crisis and shutdowns. These practices will become permanent. And since much of the practices and cost cutting will focus on workers’ pay and benefits, more of what economists call ‘long term structural unemployment’ will result—in addition to the current ‘cyclical unemployment’ occurring due to the current recession.

An historic consequence of the current Great Recession precipitated by the COVID-19 health crisis is the accelerating introduction underway of what some call the Artificial Intelligence revolution. AI is about cost-cutting. It’s about new data accumulation, data processing and statistical evaluation, to allow software machines to make decisions previously made by human beings. AI will eliminate millions of low level decision-making by workers in both services and manufacturing. A 2017 report by the business consulting firm, McKinsey, predicted no less than 30% of all workers’ occupations will be severely impacted by AI by the end of the present decade. 30% of jobs will either disappear or have their hours reduced significantly. That means less wage income and less consumption still.

The important linkage to the current Great Recession 2.0 is that the introduction of AI by businesses will now speed up. What McKinsey formerly predicted for the late 2020s decade will now take place by mid-decade. The economic consequences for the next generation of US workers, the late Millennials and the GenZers will be serious, to say the least. After decades of the permeation of low pay, low benefits ‘contingent’ part time and temp jobs since the 1990s, after the impact of the 2008-09 crash and aftermath on employment, after the acceleration of ‘gig’ jobs with the Uberization of the capitalist economy since 2010, and after the even more serious negative economic effects of the current Great Recession 2.0, the tens of millions of US workers entering the labor force today and in coming years will have to face the transformation of another 30% of all occupations. The future does not portend very well for the 70 million millennials and GenZers. US neoliberal economic policies and the Great Recession 2.0 is accelerating the long term structural unemployment crisis of both the US and the global capitalist economy.

Return of Fiscal Austerity

The US federal budget deficit under Trump averaged more than a trillion dollars annually during his first three years in office. The federal national debt at the end of 2019 was $22.8 trillion. As of July 2020 it has risen to $26.5 trillion—and rising. Earlier projections in March were that it would increase by $3.7 trillion in 2020. That has already been exceeded. So, too, will projections for 2021, or another $2.1 trillion. The deficit and debt will likely rise to more than $4 trillion in this fiscal year and another $3 trillion in 2021. That means the current national debt within 18 months will reach $30 trillion. And that’s not counting the debt level rise for state and local governments, already $3 trillion; nor the debt carried on the US central bank, the Federal Reserve, balance sheet which is scheduled to rise another $3 trillion at minimum.

The point of presenting these statistics is that the US elites, sooner or later, will introduce a major austerity program. It will likely come later in 2021. And it will make little difference whether the administration that time is headed by Democrats or Republicans. It will come and it will target social security, Medicare, Medicaid, Obamacare, education, housing, transport and other social programs.

A The first Great Recession provides a historical precedent. Obama’s recovery program in January 2009 provided for $787 billion in stimulus. But the joint Republican-Democrat austerity agreement introduced in August 2011 took back nearly twice that stimulus, or $1.5 trillion, in 2011-13. That austerity contributed significantly to the W-shape recovery from the 2008-09 economic crash and contraction—i.e. the first Great Recession. With the current deficit surge of $6 trillion to date, likely to increase to $9 to $10 trillion, the US economic elites will no doubt pursue a new austerity regime at some point within the next few years. That austerity will, like its predecessor, ensure at best a W-shape recovery typical of Great Recessions. At worst, it may prove the final event that pushes the US economy into another Great Depression.

Financial Instability

Those who deny that the US and global economy have already entered a second Great Recession offer the argument that the 2008-09 crash and recession was caused by the banking and financial crash of 2008-09, and therefore, since there has not yet been a financial crash, the economy at present is not in another Great Recession. But they are wrong.

Great Recessions are always associated with a financial crisis, but that crisis need not precede the deep contraction of the real, non-financial economy. The COVID-19 pandemic has played the role of a financial crash in driving the real economy into a contraction that is both quantitatively and qualitatively worse than a ‘normal’ recession. Furthermore, a subsequent banking system-financial crash is not impossible in the coming months, although not yet likely in 2020.

The preconditions for a financial crisis are in development. It won’t be precipitated by a residential mortgage crisis, as in 2007-08. But there are several potential candidates for precipitating a financial crash once again. Here are just a few:

• The commercial property sector in the US is in deep trouble. Commercial property includes malls, office buildings, hotels, resorts, factories, and multiple tenant apartment complexes. Many incurred deep debt obligations as they expanded after 2010 or just kept operating by accruing more high cost debt when they were unprofitable. Today they are unable to continue servicing (i.e. paying principal and interest) on their excessive debt load. Many have begun the process of default and chapter 11 bankruptcy reorganization. Banks and investors hold much of the commercial property debt that will never be repaid. Excess derivatives (credit default swaps) have been written on the debt. A debt crisis and wave of defaults and bankruptcies in 2020-21 in the commercial property sector could easily precipitate a subprime mortgage-like debt crisis as occurred in 2008-09. And derivatives obligations could transmit the crisis throughout the banking system—as it did in 2009. Regional and small community banks in the US are particularly vulnerable.

• The oil and gas fracking industry, where junk bond and leverage loan debt had already risen to unstable levels by the advent of the COVID crisis. The collapse of world oil and gas prices—which began before the COVID-19 impact and continues—will render drillers and others unable to generate the income with which to service their debt. Already more than 200 companies in this sector are in default and bankruptcy proceedings. Again, regional banks that financed much of the expansion of fracking in Texas, the Dakotas, and Pennsylvania will be impacted severely by the defaults. Their financial instability could easily spread to other sectors of banking and finance in the US.

• State and local governments, should Congress fail to appropriate sufficient bailout funding in its next round of fiscal spending in July 2020. State and local governments are capable of default and bankruptcy—unlike the Federal government, which is not. The US has a long history of state defaults associated with the onset of Great Depressions. This time around, state financial instability will quickly spill over to public pension funds, and from public to private pensions, and from there to the municipal bond markets with which state and local governments raise revenue by borrowing to fund deficits.

• Global sovereign debt markets, as previously noted. Defaults on massive debt accumulated since 2010 by many countries could result in serious contagion effects on the private banking systems of the advanced economies, including the US, Europe, and Japan. Should the IMF fail to contain a chain of sovereign debt crises that could follow in the wake of the current Great Recession, a chain reaction of defaults across emerging market economies in particular has the potential to precipitate a global financial crisis.
History shows that financial crises often originate from unsuspected corners of the economy. The above candidates are the ‘known unknowns’. There may also lurk in the bowels of the capitalist global financial system still more ‘unknown unknowns’—i.e. what are sometimes called ‘black swan’ events.

Political Instability

The US and other countries are on new ground in terms of potential political instability. The piecemeal curtailment of democratic and civil rights has been progressing at least since the mid- 1990s. In the 21st century it has been accelerating, both in the US and across the globe. Recent years have seen a growing public confrontation between contending wings of the capitalist elites and their political operatives. Institutions of even limited capitalist democracy are under attack and atrophying. And now political instability is growing as well at both the institutional and grass roots levels. One should not underestimate the potential for even more intense political confrontation among elites, or between segments of the US population itself, from having a negative impact on the current economic crisis and 2nd Great Recession. A Trump ‘October Surprise’ or a November 2020 constitutional crisis are no longer beyond the realm of the possible, but even likely.

The expectations of both households and business may serve as transmission mechanisms propagating political instability into more economic and financial instability. Political instability has the effect of freezing up business investment and therefore employment recovery. It has the further effect of causing households to hoard what income they have and raise the savings rate—at the expense of consumption. It also leads to government inaction on the policy necessary to provide stimulus for recovery.

On a global front, political instability may even assume a global dimension. History in general, and US history in particular, reveals that US presidents seek to divert public attention from domestic economic and social problems by provoking foreign wars. Targets for US attack, in the short term, are Iran and Venezuela—especially the latter, which is more susceptible to US military action. But tomorrow, in 2021 and after, it could well be Russia (Ukraine or Baltics US provocations), North Korea (a US attack on its nuclear facilities) or China (a US naval confrontation in the South China sea)—irrespective of the unlikely success of such ventures.

Like another financial-banking crash, a major political instability event—domestic or foreign—could easily send an already weak US economy struggling in the midst of a Great Recession into the abyss of the first Great Depression of the 21st century.

Overall, the future looks grim.

Dr. Jack Rasmus

posted November 25, 2020
What’s Behind the US Treasury vs. Fed ‘Rift’?

This past week the US Treasury and the US Federal Reserve Bank engaged in a rare public disagreement. US Treasury Secretary, Mnuchin, in a letter to Jerome Powell, chair of the Federal Reserve, last week directed the Fed to return $455 billion that the Fed was holding in reserve should future lending to banks and non-bank businesses become necessary if the US economy and markets further deteriorate in 2021.

Fed chair Powell initially balked at Mnuchin’s request, replying that the Fed needed the funds to ensure market stability since the US economy was entering a “difficult period” in late 2020 and early 2021. According to Powell, the $455 billion was essential “as a backstop for our ill-stressed and vulnerable economy”. Returning the funds therefore was “not appropriate”. To do so now was not the right time. Not “yet”, replied Powell. Not even “very soon.”

The Fed’s initial response to Mnuchin no doubt reflected Powell’s concern the US economy may very likely weaken in the current 4th quarter, compared to the 3rd. That means possibly more defaults and bankruptcies could be on the agenda for the 1st quarter 2021—in particular for junk bond heavy businesses and state and local governments that appear most vulnerable at the moment. The Fed therefore needs to keep the $455 billion funds in reserve to address a potentially worsening economic situation.

If the differences between Mnuchin and Powell represented a ‘rift’, as the mainstream media often reported, it was undoubtedly the shortest Treasury-Fed rift on record. It wasn’t twenty-four hours after Powell’s initial resistance statement that the Fed capitulated to the US Treasury. Powell quickly retreated publicly, saying the Fed would comply. In retracting his position of the day before, Powell declared the US Treasury had “sole authority”. The Fed would return the funds. The ‘rift’ was over in less than 24 hours.

What then were Mnuchin’s rationale for insisting the funds be returned to the US Treasury? What were his public reasons given for taking back $455 billion at a time of intensifying Covid impact on the economy; as fiscal stimulus appeared dead for months to come; and as 12 million workers were about to lose unemployment benefits in December while simultaneously hundreds of thousands were experiencing rent evictions, lines for food banks were growing throughout the country, and student loan forebearance for millions was about to end?

Mnuchin’s Rationale

To deflect critics Mnuchin floated a number of obviously false narratives to justify his decision to take back the $455 billion. He said it was Congress’s intent to end all the funding by December 31, 2020. Even so, he added, he was allowing Fed programs like the Fed’s commercial paper and money market mutual fund special lending facilities to continue for an additional 90 days into 2021. Then there was the $74 billion in the Fed’s Financial Stabilization Fund (FSF) which would remain at the Fed. He puffed up the $74 billon saying the Fed “would still have $800 billion”, assuming the $74 billion represented a fractional reserve that allowed the Fed to fund up to 10X that amount. The central bank could also keep another $25 billion to cover distribution of funds in progress. He further noted that the $455 billion was needed to fund spending in what might be an eventual fiscal stimulus bill later negotiated in 2021 between the US House and the Senate.

It is perhaps interesting to note that Mnuchin’s retraction of the funds came barely a month after in October he wrote a letter indicating that all the Fed’s funds, including the $455 billion, could be retained by the Fed into 2021. The October letter, followed by his November decision to retract the $455 billion, suggests strongly that some kind of decision was made by the Trump administration, or McConnell in the Republican Senate, or perhaps both, sometime after the November 3 election in order to make it as difficult as possible for the incoming Biden administration to address the deteriorating US economic situation.

McConnell had signaled quickly after November 3 there was no chance for a new fiscal stimulus in 2020; Mnuchin then retracted the $455 billion and McConnell was among the first to publicly endorse his move. The timing of both was unlikely merely coincidental.

The Reactions

The Democrat and mainstream media reactions to Mnuchin’s move were swift and to the point.

Typical was Democrat Maxine Waters’, a key player in the US House of Representatives: “It is clear that Trump and Mnuchin are willing to spitefully destroy the economy and make it difficult as possible for the incoming Biden administration”.

Even more to the point were business media editorialists and comments that followed Mnuchin’s announcement: The Financial Times declared Mnuchin has “aligned himself with Mr. Trump’s ‘burn the house down’.” The Wall St. Journal added “The termination is also important to limite the demands by politicians to use the Fed for policies they can’t get through Congress”. Fidelity Investments’ Market Watch online news service concluded the “intent of the Mnuchin move appears to be to prevent the next Treasury Secretary extending relief to state and local governments”.

In other words, the real rationale of Mnuchin was Politics, first and foremost. One might add a close second: i.e. improving Bank profits. Stripping the funds from the Fed would now force borrowers to turn more to capital markets to raise funds, instead of relying on government funding programs made available through the Fed.

The Politics of $455 Billion

Despite Mnuchin’s various explanations to the contrary, his withdrawal of the funds from the Fed is clearly about denying the incoming Biden administration from perhaps convincing the Fed to expend the $455 billion to provide loans to hard pressed state and local governments in 2021 and/or for making additional loans & grants available to small businesses.

For the Biden administration, getting the Fed to provide the financial assistance in loans to local governments and small business would obviate the need for the Biden administration to have to fight a Republican Senate, led by McConnell, to pass the same amount of aid targeting local governments and small businesses as part of an eventual Biden fiscal legislative package.

Mnuchin and McConnell have long opposed fiscal support for state and local governments, which they view as heavily weighted toward Democrat ‘blue’ states and cities. They preferred these governments raise money in capital markets instead of getting financial aid via government programs. Providing loans via government programs, with terms and conditions more favorable to borrowers (and not to banks), means less profits for private banks and private lenders. The same applies to small businesses as well as local governments. Republicans want to redirect their financing needs to private markets, instead of through government programs.

That economic motive fits nicely with the political objective of Mnuchin, McConnell, and other Republicans to deny the Biden administration access to funding already on the Fed ‘books’, i.e. funding that was already established in March 2020 as part of the Cares Act passed at the time.

The fact that $455 billion has not been spent as part of Cores Act after almost nine months is of course a related question of importance. Given the great distress of small businesses and 22 million still unemployed in the US as of late November, one might well ask why hasn’t that $455 billion been provided to businesses and their employees still in need? Why has the Trump administration not comitted it, given the growing stress on small business and expiring unemployment benefits? And why have the Democrats not more insisted it be spent, as was intended in March. Congress and the Trump administration have been at stalemate for months over passing a new fiscal stimulus bill, when $455 billion in funds was, and still remains, available.

In recalling the Fed’s funds back to his Treasury, Mnuchin’s strategy is clearly to force the Democrats to confront McConnell and Republicans directly via renewed fiscal stimulus negotiations sometime in 2021, and to do so starting from scratch. Biden and the Democrats won’t have that $455 billion potentially available from the Fed. And they’ll have to in effect ‘renegotiate it all over again’.
Moreover, should the Republicans retain control of the majority of the Senate in 2021—to be determined after the Georgia state Republican Senator election runoffs—McConnell can dictate with his Senate veto the scope and magnitude of any future fiscal stimulus in 2021. The Fed and its $455 billion ‘back door’ possible funding source for state and local governments and small businesses will be denied to Biden and the Democrats.

The Mnuchin move is therefore political—i.e. to deny Biden the availability of nearly a half trillion in bailout financing especially for small businesses and state and local governments—and to force the Democrats to renegotiate it with McConnell again. A corollary gain for the Republicans is to force the same governments and small businesses to access the private capital markets for future financing needs, thus benefiting private lenders more than they would otherwise by simply playing ‘middle men’ distributing government program loans for a fee.

Banks have consistently complained since March that the Cares Act lending programs did not provide them sufficient profits. Their interest rate spreads are too narrow. Redirecting lending from Fed programs to private capital markets would prove more profitable.
Just What is the $455 Billion?

The $455 billion represents the unspent funds left over from the Cares Act passed in March 2020. That Act consisted of four parts. One part provided $500 billion in emergency unemployment assistance and $1200 per person checks for households whose annual income was less than $75,000. The checks were spent within 60 days. A good part of the unemployment benefits later expired at the end of July 2020; the rest will expire around Christmas and thus leave 12 million workers without any unemployment benefits any longer. It is estimated the August partial ending of the benefits reduced US GDP household spending by $65 billion a month; the December expirations will reduce it another $150 billion per month.

Another part of the Cares Act amounted to $350 billion to provide loans to small businesses, called the Payroll Protection Program or PPP. That $350 billion initially proved insufficient, as larger businesses quickly scammed and exhausted the funds with the help of their banks that were responsible for distributing the funds. Many of the banks simply disbursed the funds first to their larger, preferred customers even if they didn’t qualify as ‘small business’ under the PPP program. As a result, another $320 billion supplement to the PPP was passed by Congress in April. That brought the total available in the PPP to $660 billion ($10B of which was put aside for administration). The PPP was shut down in early August 2020, even when only $525 of the $660 billion was distributed. So $135 billion of the PPP remains unspent. That remainder is apparently part of Mnuchin’s order for the Fed to return $455 billion.

As a third element, the March Cares Act provided for another $600 billion for medium sized corporations, and for a host of special directed financial bailouts of financial institutions and corporations. A number of the bailouts were created under the umbrella of what is called the ‘Main St. Program’.

The Main St. program included Fed purchases of corporate bonds for the first time in its history, including Exchange Traded Funds (ETFs) which are traded like stocks. It also included Fed financial support for the Municipal Bond market, for asset backed securities, for nonprofit businesses, commercial paper issuers, and for money market mutual funds, among others.

Most of these were special lending facilities resurrect from the 2008-09 experience, with the exception of funding for corporate bonds and ETFs which were historically new and unprecedented. What was also precedent setting was none of the above markets had actually collapsed in March. The Fed resurrecting of the special lending facilities was in anticipation of a possible collapse. So much of the Fed lending to big corporations and financial markets was a pre-emptive bailout before an actual crash! So too was the Fed lending to non-financial corporations!

In short, there was at least $1.1 trillion put aside in the Fed—supported by Treasury funding—for the purpose of bailing out medium and larger corporations and targeted financial asset markets like commercial paper, asset backed securities, corporate bonds, municipal bonds, etc. But it mostly wasn’t used.

Why Big US Corporations Didn’t Need Fed Loans

Medium and large corporations didn’t require emergency liquidity from the Fed. They were able to accumulate trillions of dollars to add to their balance sheets quickly as the real economy began to crash in March-April. The Fed enabled their liquidity accumulation in significant part by pumping $120 billion a month via its QE program into the economy, and by other measures, which drove interest rates to record lows. That enabled large businesses to issue record levels of new corporate bonds. For the Fortune 500 alone it raised $2 trillion in funds. Hundreds of billions of dollars more were added by big firms drawing down their credit lines at their banks, again enabled by low rates thanks to the Fed. Nearly all big corporations suspended their dividend payouts, which in prior years had exceed more than $500 billion a year. Still other firms boosted available liquidity by saving on their daily costs of operations as workers were either laid off or allowed work remotely and facilities were shuttered.

In other words, most medium and large US businesses were fat with cash, could borrow at lower rates in private markets, and simply didn’t need the $1.1 trillion in emergency loans provided for them, through the Fed, as a result of the March Cares Act. So Mnuchin’s request for the $455 billion returned from the Fed included the funds the Treasury had given the Fed in March for possible lending to medium and large corporations—lending that never materialized because it was never needed.

About $100 billion was loaned by the Fed to date for various ‘Main St.’ lending facilities and other programs. In March the US Treasury provided $195 billion for Main St. programs. Another $25 billion was allowed the Fed to complete funding in progress. That left $70 billion of the $195 billion that Mnuchin now wants back. Add to that $70 billion the roughly $135 billion in unused PPP funds. And to that total ($70 + $135) another approximate $250 billion in funds allocated for large corporations and for other sources, and the grand total is the $455 billion that Mnuchin told Powell he wants back.

Jerome Powell’s Conundrum

The Fed will be left with the $25 billion to cover Main St. loans still being disbursed, as well as $74 billion in its ‘Financial Stabilization Fund’ (FSB) for future emergencies.

Cleaned out of most of its emergency funding originally allocated under the Cares Act, the Fed will be forced to address any future financial instability and emergencies by providing even more QE in addition to the $120 billion a month already. But that’s quite ok with financial investors and markets, since it will mean even lower (and longer duration) interest rates on Fed government securities. It may even force the Fed to introduce nominal negative interest rates, as have other central banks in Europe and Japan.

By his action, Mnuchin signaled the Republican preferred policy is to force monetary policy to again play the lead role in any future recovery. Fiscal stimulus is not primary, or even likely, in 2021. That explains in large part why both the Trump administration and McConnell’s Republican Senate have stonewalled any fiscal stimulus package subsequent to the March Cares Act. The Democrats’ ‘Heroes Act’ of $2.4 trillion passed back in June 2020 by the Democrat majority US House of Representatives has been thwarted and delayed by various tactics and means by McConnell and Trump coordinated maneuvers. Nor will McConnell permit any reasonable fiscal stimulus in what remains of 2020. Should he agree on anything, moreover, it will be to ‘give’ the Democrats back the $455 billion he took from the Fed with the assistance of Mnuchin. Moreover, should the Republicans retain control of the Senate by winning the run off elections in Georgia on January 5, 2021, McConnell’s Republican Senate majority will continue to oppose any fiscal stimulus proposed by the new Biden administration. It will mean a continuation of virtual veto of fiscal stimulus proposals that McConnell and Republicans have adhered to since at least 2012-14.

The Cares Act March 2020 fiscal stimulus was an aberration to this strategy. Immediately after, the Republicans returned to their monetary policy/central bank as primacy policy that has been in effect ever since the 2008-09 great recession 1.0. But even that generalization may be an exaggeration, since by monetary policy in this Republican strategic view is meant only QE and near zero rates—and does not include special lending to small businesses or employment assistance. In short, soon after the passage of the Cares Act it was back to monetary policy designed to benefit private markets and investors and not to benefit small business or wage earners.

The GDP Effect of Fiscal-Monetary Policy in 2020

The Cares Act has been consistently estimated as a $2.4 trillion stimulus event (or $3 trillion if one counts the $650 billion in business-investor tax cutting also provided by that legislation). But in fact the actual fiscal stimulus—in the form of PPP $525 billion and $500B employment assistance—amounted only to around $1 trillion! Add another $200 billion in direct spending assistance to hospitals and for Covid emergency health care, plus the minimal $125 billion or so in Main St. and other corporate lending, and the total actual fiscal stimulus to the general economy has totaled less than $1.5 trillion under the Cares Act. That’s around only 7% of GDP!

That compares to roughly $5.5% stimulus in the 2009 Obama recovery act, which proved grossly insufficient to generating a sustained economic recovery for most of the real economy after 2009. The 2020 contraction of the real economy has been at least four times as deep as the 2008-09 contraction. So the stimulus in GDP terms in the Cares Act was even less sufficient than was the Obama 2009 recovery package. How long it will take the 2020 great recession to recovery in employment and business activity terms with this even less sufficient stimulus to date remains to be seen. But history suggests recovery in the current great recession 2.0 will be measured in more years than the last 2008-09 great recession 1.0.

There has been much hype by politicians and media about the so-called economic recovery 3rd quarter in the USA. But the facts show the economy contracted sharply by 10.8% from March through June. It then ‘rebounded’ (not to be confused with ‘recovered’)in the 3rd quarter by 7.4%. More importantly, many key economic indicators have been flashing in the 4th quarter that the 3rd quarter recovery will weaken appreciable in the 4th. And some predict even more so in the 1st quarter 2021. Like Europe, the US Economy may be headed toward a double dip contraction over the winter months ahead. That will result in a clear ‘W-shape’ recovery (not V-shape) that is typical of all great recessions—which this writer has been predicting since last March.

The economic ‘relapse’ to a slower growth path in the 4th quarter is all but ensured by the current failure to quickly pass a sufficient fiscal stimulus bill at year’s end 2020, by the intensifying negative impact on the US economy by the Covid 3rd wave surging in America today, and for months still to come, and by the continuing political instability and gridlock in policy impacting the economy as well.
Much is made by optimists of the strength of recovery of US manufacturing and Construction sectors—i.e. the goods sectors—in the US economy. But together they constitute only 20% at best of the total US economy and GDP. Moreover, the recovery here is deceptive. Manufacturing is still 5.6% below 2019 and employment not recovered by any estimate. And Construction recovery is limited to new single family housing—with apartment and multiple housing barely improving—and commercial property construction still mired in a deep recession with no end in sight. This is not the basis for a sustained full economic recovery by any means. Especially since much of the services sector will lag in recovery for some time as well.

It is in the context of this questionable ‘recovery’ of the US economy in late 4th quarter 2020 that a fiscal stimulus package appears dead on arrival in Congress for the rest of the year; that Covid continues to surge with its expected economic impact; that the last vestiges of the Cares Act will soon expire before year end; and political instability threatens to create more business investment uncertainty.
In the midst of all this, Mnuchin and Republicans have acted to pull much needed funding from the Fed, making it even more difficult to restore economic resources needed in 2021.

Dr. Jack Rasmus
November 24, 2020

Dr. Rasmus is author of the recently published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, January 2020. He blogs at jackrasmus.com. His website is http://kyklosproductions.com and his twitter handle @drjackrasmus.

posted November 22, 2020
US Political Crisis Enters More Dangerous Phase

Today the political crisis in America may be entering an even more dangerous phase–a phase that I predicted was possible months ago. Today reportedly Trump has asked Republican state legislators in Michigan, where he lost the popular vote, to come to the White House. Trump no doubt wants them to select electors who will vote for him, not for the winner of the vote in Michigan, Biden.

The veil of Democracy in America is being ripped away from the body politic right before our eyes. Not only can the Electoral College thwart the popular vote for president; but there are even more nefarious ways for political elites to circumvent the Electoral College if they don’t like it.

The electoral college is, of course, the means by which the popular vote for the president is prevented. Instead of Democracy’s principle of ‘one person, one vote’, we have electors who are selected by their state legislatures who then cast their vote for president. That’s the appearance. But it’s even worse than that.

The timeline for the Electoral College to meet and cast their votes for president is December 8. Each state’s vote in the Electoral College’s must then be sent by December 14 to their state’s governor, who must send that decision to Congress by December 23. Congress then confirms the president by January 6. That’s the actual process how presidents are ‘elected’.

The problem is that state legislatures select the electors who vote in the electoral college. But the electors they select don’t necessarily have to vote for the candidate the majority of the people of their state vote for. The legislature can select electors, or direct the electors they already selected, to vote for a candidate who the people of the state didn’t vote for. Court decisions prohibiting this are not clear cut, so it can be argued the legislatures can select the electors who can vote for whatever candidate they want. Even recent US Supreme Court decisions on this are ambiguous.

By calling Republican state legislatures from Michigan today to the White House–an act that in itself is intimidating, since Republican politicians know Trump can unseat them next primary–Trump is clearly attempting to ‘convince’ them to select, or order, electors to vote for him instead of Biden. If successful in Michigan, Trump will no doubt target another couple Republican majority state legislatures to do the same between now and December 14. Like Michigan, Wisconsin, Pennsylvania, and Georgia are all Republican state majority legislatures. That’s how he’ll try to ‘reverse’ the electoral college vote in his favor, or at least he clearly now thinks he can or he wouldn’t bother ‘inviting’ Republican state legislatures from Michigan to the White House. He’s not doing so for any other obvious reason.

Those who disagree with this analysis may say, ‘even if he convinces Republican state legislators to select electors for him, the governors of those states will not send the vote of those ‘reversed’ electors to Congress on December 23′. So he won’t get away with that maneuver.
But wait. Not so fast. Trump can then use that refusal of a governor to send Trump electors to Congress as an excuse to call in the US Supreme Court to decide the issue. Trump’s lawyers will then argue to the Court there isn’t a complete electoral college vote total to determine the outcome of the election if one or more governors don’t send in the results. The Supreme Court would then likely ‘pass the buck’ and order the decision on the election referred to the US House of Representatives, per the US Constitution.

Here’s where US Democracy is further revealed as the ‘fig leaf’ it is. In the House of Representatives the vote for president is done by one vote per state, not by total representatives. 435 Representatives don’t vote if the election is thrown into the House, which has a majority of Democrat legislators. No. Each state in the House gets just one vote. All the states with a majority Republican state legislature get to cast one vote for president. With Republican politicians cowering everywhere, fearful of Trump’s 70 million Republican voters, guess how they’ll vote in the House?

And if Trump has more red state Republican majority legislatures–which he does–the majority of red states would out-vote blue states by a vote of around 27 or so to 23. Trump wins!

If this sounds incredible it is nevertheless arguably legal and politically possible. And we know Trump will go to any length over the next 60 days–regardless if it results in the destruction what’s left of even the fig leaf of Democracy in America. Even if it leads to a political breakdown of the system or violence in the streets between Trump’s supporters and the rest of the country’s voters and citizenry (which Trump would no doubt like to see as well).

By calling Michigan state legislatures to the White House today it is clear this is the trajectory Trump now has in mind. We should all be forewarned! The fight to restore what’s little left of American Democracy may just be beginning.

Dr. Rasmus’s most recent book is ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, January 2020. He blogs at http://jackrasmus.com and hosts the weekly radio show, Alternative Visions, on the Progressive Radio network. His twitter handle is @drjackrasmus. His website with downloadable podcasts, videos, reviews, and public talks is http://kyklosproductions.com.

posted November 8, 2020
How Could 70 Million Still Have Voted for Trump?

November 7, 2020
Dr. Jack Rasmus

Media pundits and others have been deeply perplexed as to why so many Americans in this election–70 million in fact– nonetheless voted for Trump.

But it’s not all that difficult to understand. There are 3 major explanations: One economic. One health. And the third, and most important, a matter of culture and racism manipulated by clever politicians for the past quarter century at least.

The first explanation—economics—is that the red states (Trump’s base) did not ‘suffer’ as much economically from the recession as have (and are) the blue states and big urban areas. The red states shut down only in part and for just a couple weeks then quickly reopened as early as May. A few hot spots in New Orleans and Florida were quickly contained. By reopening quickly they economically minimized the negative effects of the shutdowns and quarantines. They would eventually pay the price in health terms for early reopening, but they clearly chose to trade off later health problems for early economic gains. At the same time they quickly reopened, the red pro-Trump states still received the economic benefits of the March-April Cares Act bailout that pumped more than a $trillion into the economy benefitting households directly–i.e. this was the $670 billion in small business PPP grants, the $350 billion in extra unemployment benefits, the $1,200 checks, and other direct spending on hospitals and health providers. The Trump states got their full share of the bailout, even if they didn’t need it as much after having reopened early. Finally, if Trump supporters lived in the farm belt sector of Red State America, they additionally got $70B more in direct subsidies and payments from Trump that was designed to placate the farm belt during Trump’s disastrous China trade war. That’s 3 main sources of added income the red states as a general rule received that the blue states, coasts, big cities elsewhere did not get. In short the economic impact of this recession was therefore far less severe in the geographic areas of the greatest concentration of Trump’s political support.

Second, Covid did not negatively impact the red states as much as it did the blue states and major urban areas of America—at least not until late in Sept-Oct after which much voting had already begun and political positions had hardened. And then when Covid did hit the red states late, it impacted relatively more the larger cities and not as much initially in the small towns and rural areas of Trump’s red states. Covid’s impact economically was therefore relatively worse in big urban areas, especially in the coasts.

But even more important than these relative economic and health effects, the continued support that exists for Trump in his base of red states—i.e. in the small town, rural, small business, and religious right areas—is grounded in the ‘ethnic’ composition of his mostly White European heritage followers who are fearful ‘their’ white culture is being overwhelmed by the growing numbers and diversity of people of color in America.

This fear is the foundation of his—and their—white nationalism which is really a form of racism. So too is their anti-immigration. It is anti-immigration directed against people of color–whether latinos, blacks, muslims or whomever. White European heritage, small town, rural, evangelical, small business ‘heartland’ of the south & midwest America sees ‘their America’ disappearing or at least having to share more equally with people of color America. The latter are now almost equal in population to White Europeans but are not equal politically or economically. They are knocking on the door and want in. They want their equal share.
But clever politicians have convinced White European America that it’s a zero sum game: what people of color America may get will be only at their expense! Sharing is not possible. Trump and others, who are manipulating this fear and discontent for their own political careers, have convinced them that it’s an ‘Us vs. Them’ zero sum game. That way those with wealth and real power redirect discontent from their four decades of obscene wealth accumulation at the expense of everyone else, white or non-white Americans. Whipping up and redirecting discontent into identity and racial identity themes means the super well off won’t have to share with either White European or non-White European people of color.
Pit the one against the other, while they–those of wealth and power–continue to ‘pick the pockets’ of both. That was, and remains, Trump’s strategy in a nutshell. It’s also the strategy of his wealthy backers. It’s the age old American ruling class racism ‘shell game’. Just now in the form of ‘old wine in new bottles’, as they saying goes. ‘America First’ means in effect White America of his political base comes first. Trump and financial backers and power brokers–like the Adelsons, Mercers, Singers and their allies–have convinced White European America in the heartland to be fearful and oppose equality for Americans of color elsewhere. That’s why Trump sounds very much like a ‘White Nationalist’, and even at times as pro-fascist because that’s the message of the far right as well. His theme of ‘Make America Great Again’ is really, when translated, make White European America safe again and stop the hoards of people of color taking ‘their America’ from them.

Here’s why they fundamentally support him: Trump has become their ‘bulwark’ against this demographic change which they fear above all else. That’s why Trump could do or say whatever he wanted and move increasingly to further extremes, and they’d still support him. They would support him even in dismantling what remains of truncated Democracy in America, if it were necessary in their view. And they still will continue to support him. Neither Trump nor Trumpism is going away. It has taken deep root in the 70 million, waiting for a resurrection in 2024 or even 2022.

All this is not unlike what happened in the USA in the 1850s decade. The USA is about at 1854 in terms of historical times and events. The 2024 election may therefore be even more ‘contentious’, should Biden and the Democrats fail to aggressively resolve the economic and health dual crises deepening this winter in America. Should Biden adopt a minimalist program and solution–in the name of a renewed ‘bipartisanship’ strategy aimed at placating Mitch McConnell’s Republican Senate–then ‘Bidenomics’ is doomed. It will result in a midterm 2022 election sweep return of Trump forces, maybe under the leadership of Trump, or maybe a Ted Cruz, or maybe a Marco Rubio. Or maybe some clever new face. A minimalist Biden program will suffer the fate of Obama’s minimalist economic stimulus program of January 2009, which resulted in a massive loss of electoral support for Democrats in the midterm elections of 2010 and in turn led to the loss of the US House of Representatives Democrat majority and then the Senate soon after. The economic consequences of that particular gridlock following that are all well known. There is a great risk of the same occurring in 2021-22.

The 2020 election looked in some fundamental ways a lot like 2016, with the differences today being the working and middle classes in the swing states of Wisconsin, Michigan, Pennsylvania flipped back to Democrats in 2020 after having voted for Trump in 2016. It was a 3 state flip. That flip was because Trump simply did not deliver on his 2016 promises to bring good paying industrial jobs back to those states after 20 years of free trade, offshoring, and the de-industrialization of the region. A good example of Trump’s failed promises was the Asian Foxconn Corp., maker of Apple iphone parts. Trump and Foxconn promised to bring 5000 jobs to the US upper midwest. It never happened. Foxconn’s operation in the US today is limited to only 250 jobs in a warehouse. So the upper midwest again slipped back by narrow margins to the Democrats. But if the Democrats now can’t deliver jobs either, they’ll just as easily slip back again in 2022 and 2024.

The other difference in 2020 from 2016 is the emergence of real grass roots movements in Georgia and in the southwest in Arizona-Nevada; Black folks and their allies in Georgia and Latinos and Native Americans in the southwest. Also new organizing and mobilizing of people of color and workers in places like Philadelphia, Detroit, Erie, Pittsburg, and elsewhere.

These new growing grass roots movements are the real political forces that determined Biden’s win, along with the working class and middle classes disenchantment with Trump’s failed promises. Biden’s win had therefore less to do with Nancy Pelosi’s strategy of targeting suburban white women, vets, professionals and independents. That strategy failed to produce any ‘blue wave’ whatsoever. In fact, it resulted in Democrat loss of seats in the House of Representatives, while wasting tens of millions of dollars on futile Senate races like that in Kentucky against Mitch McConnell. Just think if that money was spent in Georgia. If it was, there might not be the need to have runoff elections there this coming January for the state’s two Senate seats.
No, the Democrat leadership grand strategy was a definite failure; the strategy of mobilizing the grass roots in Georgia and the southwest, a strategy not supported much financially by the Democrat party leadership, is what has put Biden in the White House.

What remains to be seen is whether Pelosi, Shumer and the moneybag corporate donors of their party will understand what has really happened this election cycle and really why Biden won (and the House and Senate campaigns largely failed). If the leaders of the party now go the route of a minimalist program in 2020, as did Obama in 2009, they will no doubt come 2022 suffer a similar fate as Obama and they did in 2010. Then we will all be back to ‘square one’ with a resurgence of Trump and Trumpism once again.

The Democrats are at an historical crossroads. They can either understand the real forces behind the 70 million supporters who voted for Trump, or they can ignore history in the making and repeat history of the past of 2009-10 and subsequently suffer the same consequences in 2022 and certainly 2024. But don’t expect the media pundits to understand any of this, any more than they can even now comprehend why Trump’s followers number in the tens of millions despite his loss. They and Trump are not defeated yet. They have been merely ‘checked’ for a while.

Dr. Jack Rasmus
November 8, 2020

posted November 6, 2020
The Day After: 2020 Election Update & Political Predictions

In my article last week, ‘Why the Record Vote Turnout May Not Matter’, I predicted the election via electoral college would look very much like 2016: the 3 swing states (PA, MI, WI) would determine the outcome again, and maybe one other state could flip (either Arizona or, less likely, North Carolina). I predicted, as of a week ago, the electoral college vote was very close, with 244 votes for Biden and 248 for Trump.

As of last night, Nov. 3 late, it was exactly that, according to CNN. 244 to 248. This morning, Nov. 4, it’s come down to NV, AZ, WI, MI likely ending up for Biden once final votes are counted; and GA, NC likely for Trump. With Pennsylvania undetermined for days yet. And maybe weeks should Trump take legal action to stop the mail in vote count, which is likely.

As I also predicted last week, Trump came before the TV cameras late last night Nov. 3 and declared the election was a fraud, that the vote counting of mail in ballots should halt in all the swing states only, and that he was going to the US Supreme Court.

Democrats’ naive prediction during the election that they would carry several of the big red states: Texas, Florida, Ohio turned out, as I predicted in my article last week, to be ‘wishful thinking’. As I argued then, these states were long time notorious voter suppression states and would remain Trump’s. Georgia and Florida each already prevented the right to vote, or have impounded, hundreds of thousands of eligible voters in each of those two states, as reported by investigative journalist, Greg Palast.

As of noon today, Nov. 4, should Biden win MI, WI, NV, AZ, where he now leads, and also carry the one special district in Nebraska, he will then have 269 electoral college votes. He won’t win GA or NC. And Pennsylvania is undetermined.

So where could Biden get votes to put him over the required 270? Only one state left: Maine with its 4 votes.

If this scenario holds, the US election will be therefore determined by less than five votes. The country remains fundamentally split and divided.

The policy gridlock concerning economic stimulus will likely continue as a result, as the Senate appears will remain in Republican hands and Senate votes will be driven by the Republican right wing led by Rand Paul who wants no more stimulus but wants more austerity cuts to government spending.

Republicans in Senate will continue their stacking of the Federal courts, and will rely on the ideological partner of the US Supreme Court, with its 6-3 Trump majority, from time to time, to help them block and undermine legislation already passed.

In many ways the election map now looks very much like 2016, with one or so states flipping Democrat but not much change except two ‘blue wall’ swing states going Biden by very thin margins.

In terms of government policy to follow, however, the country will look more like 2012–with McConnell’s Republican Senate thwarting initiatives on economics (stimulus, health, jobs, taxes, etc.) by the US House of Representatives and President (presuming Biden wins).
Consequences for the US economy are not good. The chances are less than 50-50 that a stimulus bill of necessary proportions will be passed before January 2021, just as Covid worsens and dampens household spending and business investment. But big corporations will be happy with this continued gridlock, since it means it is unlikely their massive 2018 tax cut of $4 trillion plus will be reversed for another four years, as the McConnell Senate now prevents all efforts to raise revenues for stimulus spending.

Another important outcome of the election is that the Democrats have actually lost seats in the US House, but not yet control. They expected a ‘blue wave’ that did not occur. The Democrats also failed to take back the US Senate. And Biden as president has no clear mandate. They are in a very weak position to make changes but in a position to be blamed for the failure to make changes which will have negative impact on them in 2022 midterm elections.

The Democrats failure in general, apart from maybe squeaking out a presidential win, shows their election strategy was wrong. As I argued back in November 2018 after the midterms, their strategy of focusing on the suburbs and upper middle class professionals and independents, would not succeed in a general election. It hasn’t.

So where does the country go politically from here?

First, Trump will not go away. That means not just leave office quietly–but also Trump as a social-movement will remain and likely grow stronger as his base believes the election was ‘stolen’ from him as he so often warned. Trump is an unstable, reactionary social movement, not just an unstable individual.

Second, both political parties may split before 2024 (and certainly before 2028) causing a basic party realignment in the US.
Trump’s wing will grow more radical and possibly split from the Republican party should that party’s big corporate leaders use Trump’s loss as an opportunity to ‘take back’ their party. The Democrats may also split. If Biden and the corporate wing of his party introduce ‘go slow’, minimal program and measures in 2021 it may force the Sanders-Warren-‘Squad’ progressives to finally leave as well. After disastrous 2016 and 2020 campaigns it is clear the Democrats as a party cannot deliver change needed to confront the growing multiple crises–economic, health, climate, and political.

Third, this election and likely consequent crises in the US continuing now make it further clear that the American global economic empire has entered a declining stage. It began in 2008-09 but will now become more clear. China will continue to rise in power and influence. Europe will continue to decline and reorient from the US hegemony. More emerging market countries will shift away from the US.

The 2020 election has heralded in a new decade where fundamental changes domestically and internationally will now accelerate.

Dr. Jack Rasmus
copyright November 5, 2020

posted October 30, 2020
Why the Record Vote Turnout May Not Matter

Mainstream media is pounding out an incessant drumbeat: ‘Get Out and Vote! Mail in Your Ballot! Do It Now! Vote Early!’

But what may well determine the outcome of the election on November 3 may not be the current record voter turnout now underway. That is, not how many actually vote. But rather how many votes get actually counted.

While Democrats are pushing voter turnout, Trump and Republicans are planning to prevent the counting of the votes that do turnout—at least in the three, or at most four, key swing states of Pennsylvania, Michigan, Wisconsin that will in the end determine the results of the 2020 election in the Electoral College.

If the Electoral College were to cast its votes today Trump and Biden would be virtually tied!

Contrary to the mainstream media and the popular vote trend, Biden does not have a comfortable lead in Electoral College votes. By this writer’s estimate, Trump has 248 Electoral College votes, while Biden has 244! Barely 40-50 potential Electoral College are therefore actually ‘in play’ as they say. These 40-50 are in the true swing states: Pennsylvania, Michigan, and Wisconsin that together account for a total of 46 votes. The three are also the states in which Trump’s legion of hundreds of lawyers have been preparing for weeks to demand from pro-Trump recently appointed judges that they halt the counting of mail in ballots.

That 248 to 244 close tie in the Electoral College today all but ensures that Trump moves forward on November 3 to implement his plans to stop the mail in ballot vote count in the key swing states. Further encouraging that plan is the fact that those same three swing states don’t start counting mail in ballots until midnight on November 3. Trump could potentially stop the count of virtually all the mail in ballots in those key swing states.

The Electoral College As Bulwark Against Democracy

The Electoral College is an abomination on Democracy. Nevertheless, it will determine the outcome of the 2020 election less than a week from now.

Most election polls, according to mainstream media, show Biden has a commanding lead in the popular vote of 8% to 10%. But the popular vote is irrelevant in America’s 21st century truncated Democracy. All that matters is the total Electoral College vote and which candidate wins a total of 270 Electoral College votes across all the 50 states wins the November 3 election.

Wait. Check that. All that matters is the Electoral College count in the three swing states this time around. Well, let me correct that further: All that matters is the mail-in ballot vote count in those three states.

Trump plans to declare himself the winner late evening November 3, or at latest early morning November 4—i.e. well before the mail in ballots are counted in those 3 states. Before the sun comes up on November 4 he’ll launch his hundreds of lawyers already ensconced in those states—and McConnell’s handpicked judges there—to stop the mail in ballot counting with preliminary injunctions and other legal legerdemain! That will be done before most folks wake up for breakfast on the 4th. The injunctions and legal motions filed in federal district courts will then be quickly kicked upstairs to the Appeals Courts, both dominated by McConnell’s rushed appointees in recent years. The Appeals Courts will pass it on eventually to Trump’s now 6-3 majority US Supreme Court to rule!

That’s what American electoral Democracy has come down to: the next president will be determined by mail in ballots in just three states; more correctly, whether those mail in ballots in those three states are counted or not.

CNN’s Election Myopia

Both the pro-Trump right wing media like Fox news, as well as the more mainstream CNN, like to play the ‘who’s winning the electoral college’ vote game every day. But their guestimates are no better than yours or mine.

CNN has its daily color-coded ‘Electoral Map’ showing which states are firmly for Trump or Biden (red or blue), which states are leaning toward Trump or Biden (light blue or pink), and in which ‘battleground’ state (yellow color coded) is neither candidate leading.

Amazingly CNN has Biden leading with 290 solid or strongly leaning ‘blue’ states. To get to 290 CNN assumes that Biden will eventually win the light blue ‘leaning’ states of Pennsylvania, Michigan, Wisconsin, Arizona, Nevada, Colorado, Minnesota, and even New Hampshire. Apart from these ‘leaning blue’, Biden has 204 other electoral college votes solid blue and thus wrapped up for Biden.

The eight states ‘light blue’ and leaning Biden total 86 electoral votes which, when added to the solid 204, result in CNN’s assumed 290 for Biden. So it looks like Biden’s a strong lead in the Electoral College, per CNN analysis. Of course, CNN also assumes all votes for Biden will be actually counted, including mail in ballots.

But will all the ballots get counted? Or will the SCOTUS suspend and stop the counting of mail in ballots—just as it did ballot recounting in 2000 in Florida?

All Trump has to do is succeed in stopping the mail in ballot vote counting in just Pennsylvania (20), Wisconsin (10) and Michigan (16) and Trump wipes out 46 of Biden’s 290 total, leaving Biden with just 244 electoral college votes and well short of the required 270 to win!

CNN assumes further the remaining 5 states’ leaning blue’ actually go blue: That means Colorado (9), Arizona (11), Minnesota (10), Nevada (6), and New Hampshire (4). It also assumes all (4) votes from Maine go for Biden—i.e. are not ‘split’ between Biden and Trump which is possible in only that state (and Nebraska which also can split its 5 votes).

This is a list off some big assumptions! That is, Trump won’t succeed in stopping the mail ballot count in the 3 states; the 3 states will all go Trump on November 3; and the other 5 ‘leaning blue’ states will all go Biden.

Doing the Electoral College math still further, Trump only needs to stop the mail ballot count in two of the three states of Michigan, Wisconsin, Pennsylvania in order to deprive Biden of 270. And should no halt to mail ballot counting occur in any of the three, Biden still needs to win two of the three fairly nevertheless.

In other words, halting the vote count in just two states is all it will take to give Trump another four years. If you think Trump, McConnell & friends haven’t done this calculation, you’re mistaken!

CNN’s analysis of Trump’s solid and ‘leaning’ red states is no less naïve than its analysis of Biden’s.

It has Trump with only 163 solid red state electoral votes, with Texas’s 38 votes indicated as only ‘leaning red’ toward Trump. So Trump only has 201 electoral college votes.

CNN then describes Florida (29), Georgia (16), Ohio (18), and North Carolina (15) as neutral ‘battleground’ states that are up for grabs. Really? Who believes that? These 5 states are the notorious five (when including Texas) states that have a long history of voter suppression by various means. With no limits put on their vote suppression activities for years, including the last four in particular, these five states will almost certainly go for Trump again. Their legislatures are all solid rabid Republican! And if anything they’ve intensified their voter suppression activity since 2016.

The notorious five are ‘battlegrounds’ only in CNN and the Democrat Party’s wildest dreams. Hundreds of thousands of eligible, potential Democrat voters have been purged from their voting rolls in recent years and months. Maybe millions. These five are where voters cannot register by mail, nor at the poll on voting day. Where mail in ballots must be received by election day, not merely post marked before. Where drop boxes for ballots are limited one to a county sometimes covering hundreds of square miles. Where witnesses must accompany a voter to get registered. Where a de facto poll tax must be paid in many cases. Where Trump supporters are allowed to ‘stand guard’ at polling sites with their guns if they want, in order to intimidate voters. Where votes in pro-Democrat precincts are often ‘lost’. Where voting machines supposedly break down when voters are kept waiting in line for six and more hours to vote. The list is long and disgusting. No. These five notorious voter suppressor states are not battlegrounds. They’re Trump’s. They are not ‘yellow code’ battleground states; they are Trump states kept in his camp by suppression and voter intimidation.

Voter suppression in these five allowed Trump to win in 2016, just as much as Hillary’s terrible campaign permitted Trump to grab Michigan, Pennsylvania, and Wisconsin by smaller margins. Eight states turned the election in 2016. The five voter suppressor states will repeat. And instead of Hillary giving away the three upper Midwest swing states, this time around Trump’s plan is to deny them to Biden by stopping the mail in ballot vote count there.

When the notorious ‘vote suppressor big five’ states’ 116 electoral college votes are added to Trump’s solid 132 small red states’ votes, Trump has 248 potential votes—to Biden’s 244!

That means the election in the Electoral College today is a virtual tie at 248 to 244! It’s not CNN’s 290 to 163!

Both Biden’s and Trump’s campaign strategists know the election will be close, very close. The virtual tie with less than one week to go explains in large part why both Trump and Biden are paying attention to Maine and Nebraska, both making stops there despite their minimal 4 and 5 electoral votes, given that both states are the only ones allowing a split in their electoral college votes across candidates. Picking up one or more votes from either may play a role in this election before it’s over as well. Trump knows it. So does Biden.
In summary, what the election appears coming down to is two things:

First, will Trump prove successful in halting the mail in vote count in at least two of the three key states leaning blue: Michigan, Wisconsin, and Pennsylvania? If so, he wins.

Second, will the notorious five voter suppression states—Florida, Georgia, North Carolina, Ohio, and Texas—pull off enough suppression in order to deliver their states’ electors to Trump yet again? If they don’t, Biden wins.

In other words, it’s not getting more voter turnout that will determine the election. It is voter suppression plus vote count prevention that together will determine the fate of the USA for another four years! That’s what Democracy in America has come down to.

Let’s Fundamentally Restructure the College & the Supreme Court

None of the above abomination of Democracy would be possible were there no Electoral College; and if the US Supreme Court had not have become in recent decades a handmaiden of the right and business interests.

Trump’s strategy to pull off an electoral coup d’etat would not be possible without both institutions working ‘hand in glove’, as they say, to thwart the will of the majority of the American people.

The two institutions, captured by a president like Trump, now make Trump’s planned legal coup a possibility.

So how do we change these two great anti-Democracy enabler institutions—i.e. the Electoral College and the Supreme Court?
Growing popular today is the movement to amend the US Constitution to abolish the Electoral College. But that requires the vote of three fourths of state legislatures and therefore many of the small ‘red’ states in Trump’s camp who enjoy a preferential advantage and influence beyond their population numbers due to the Electoral College. They are not about to vote to eliminate their advantage by voting for a Constitutional amendment to abolish the Electoral College.

But the Electoral College doesn’t need to be abolished in order to break the stranglehold of the small red states! There is another way to radically restructure it to re-balance it to reflect the population changes and popular vote.

The Electoral College is composed of 535 members, one each for the number of US House of Representatives plus 2 Senators from each state. That’s 435 Representatives and 100 Senators. The 435 representatives is based on the population of the country. The US Constitution calls for adding representatives as the population rises. The last time Congress did that was in 1913. It is long overdue to add representatives and House districts to reflect that increase in representatives. That would result in more representatives in the more populous blue states, and therefore more blue state Electors. That would effectively break the back of the small, red state lock on the Electoral College and in turn end Trump-Republican red state total electors advantage in presidential elections—an advantage that consistently now is out of line with the popular vote for the presidency.

Another, less effective way perhaps is just to add more states, which would add more electors by adding more representatives and Senators alike. Proposals are already floating around to add Washington DC as a state and perhaps even Puerto Rico if its citizens so voted to do so.

Either or both of these alternatives to change the current Electoral College could result in a less lopsided and imbalance favoring smaller, less populous, Trump dominated red states. Just doing what the Constitution calls for, which Congress has avoided since 1913, is the better restructuring solution.

And what about the growing imbalance favoring the radical right in the US Supreme Court? Public discourse is already raising the possibility of adding 2-3 or more SCOTUS judges, from the current 9 to 11 or 12. Congress has the Constitutional authority to do that since it created the Supreme Court, not the US Constitution. But reform should go well beyond just adding numbers. The terms of the judges should be reduced from lifetime to no more than 10 years. And SCOTUS judges should be elected not appointed. 12 or 15 districts could be created across the USA and a judge elected from each. And what gets elected can get recalled. The founders of the country and framers of the US Constitution feared that lifetime appointments of what amounts to nine never elected lawyers could thwart the will and sovereignty of the American people. And that’s what’s been happening in recent decades and is now happening today.

Without a basic restructuring—if not outright abolition—of the Electoral College, American Democracy will continue to result increasingly to produce abominations like the 2000 election and its likely repeat in the upcoming November 3 election. Instead of one person one vote—i.e. true Democracy—we keep getting presidents elected without the support of the majority of the American people. At some point that will explode.

And the same may be said for the rightward and pro-corporate drift of the US Supreme Court. It has already lost serious legitimacy in the eyes of the majority of the American people. And it’s about to exacerbate that loss in the wake of next week’s election when it likely comes to the aid of Donald Trump to halt the mail ballot vote counting.

The Court’s myths about being a co-equal branch of government created by the US Constitution, with the authority to overturn the laws passed by the Congress, and with the usurped power to interfere with elections and ‘select’ a president will eventually blow up in the face of the US elite, as Americans come to understand the Supreme Court’s true origins and its truer functions—i.e. origins and functions that have little to do with ensuring Democracy and, increasingly in recent years, far more to do with ensuring its decline.

It is worth concluding one more time: next week’s election is not about ‘getting everyone out to vote’. It’s going to be about preventing the full counting of that record vote turnout!

Dr. Jack Rasmus
October 28, 2020
Copyright 2020

posted October 29, 2020
Barrett Confirmed by U.S. Senate, Post-Election Chaos Now Inevitable

Today Mitch McConnell’s Republican Senate confirmed its third ultra conservative Supreme Court nominee, Amy Barrett, as Supreme Court Justice. Coming in the midst of America’s current dual crisis—economic and Covid health—both now worsening, the Barrett appointment ensures the emergence of historic political instability in the USA. The dual crisis is about to become a triple crisis.

As US unemployment claims rise, rent evictions accelerate, food lines grow, the prospect of a fiscal stimulus bill in Congress fades, and as a third Covid 19 wave creates record level infections & hospitalizations, each deterioration has begun reinforcing the other.
Potentially exacerbating all the above, political instability and conflict of historic dimensions is around the corner. And the Barrett confirmation today, October 26, 2020 will put the US Supreme Court at the center of this dynamic.

The Consequences of the Barrett Confirmation

Democrats correctly complain Barrett’s confirmation will mean the end of women’s right to choose, a destruction of what’s left of the Affordable Care Act, the ending of many gay rights, a further US retreat from climate change, more deregulation of business, and a long list of other social programs of recent decades. They are right on all that. But even all that may not prove the worst of it.

Perhaps the most serious, and most immediate, consequence of the Barrett appointment to the US Supreme Court (SCOTUS) will be that Court’s interference once again in a presidential election—as in the 2000 national election when the Court played the central key role in stopping counting of votes and thus ‘selecting’ George W. Bush as president.

The Barrett appointment to the Court means Trump will have his 6-3 majority on the court just in time for the election and the counting of ballots. Even if chief Justice Roberts becomes an occasional swing vote, Barrett’s appointment will still ensure a 5-4 vote in favor of Trump.

The historic question thus arises: will Barrett, along with the other two Trump SCOTUS appointees Kavanaugh and Gorsuch, vote to stop the counting of mail in ballots in swing states and thus give Trump a second term? Would they dare? In particular would Barrett, being just confirmed to the Court?

More specifically, will the 6-3 SCOTUS Trump majority perform again its role of usurper of Democracy in America and intervene in Trump’s favor—as it did In 2000 when it ordered a halt to a vote re-count in Florida by declaring it “prejudiced George Bush’s’ campaign”? Is this possible again? You bet it is.

Guess who two of Bush’s main defense lawyers were in 2000 who demanded and argued to the Court at that time that it halt the vote re-count in Florida in favor of Bush? Both Barrett and Kavanaugh!

The Pusillanimity of Democrat Leadership

Democrats have been gnashing their political teeth, pounding their desks in the Senate, boycotting committee voting on the nomination, and making empty threats about stacking SCOTUS after the election. But recent history shows the Democrats themselves are complicit, and therefore responsible in part, for Barrett’s appointment, as well as for the appointments of her two radical right predecessors, Gorsuch and Kavanaugh.

It was the Democrats who capitulated when their nominee to SCOTUS, Garland, was nominated by Obama in early 2016. Garland’s nomination was stopped dead when the Senate’s leader, McConnell, refused to even have hearings on Garland—let alone take his nomination to a vote. McConnell used a phony Senate rule that there must be no nominations in a year of a presidential election, to halt the Garland nomination. And what did the Democrats do? Nada! They thought they would win in 2016 and push through Garland then. Bad strategy. Hillary and the Democrat party corporate moneybags who ensured Hillary was the party’s candidate in 2016 scuttled that. The Democrats capitulated to McConnell and did nothing.

That wasn’t the first time either. Remember the do-nothing Clarence Thomas’s nomination to the Court? No fewer than 11 Democrats in the Senate voted for him too? Now in 2020 they’re being ‘sandbagged’ once again by McConnell, who arbitrarily changed Senate rules a few weeks ago to get Barrett approved in a mere week before the national election! Democrats couldn’t get a hearing for Garland 11 months before an election; Barrett gets approved less than 11 days before the election! Democrats didn’t fight him in early 2016. They gave tepid resistance to the Gorsuch nomination by Trump. He flew through the confirmation hearing with little Democrat resistance. Kavanaugh was a wake up call for Democrats. They fought but, as usual, with an ineffective strategy.

Democrats’ failure to effectively resist McConnell is not new. Senate leader McConnell has played hard ball with the Democrats for years, striking them out repeatedly. Their batting average is pathetic. McConnell arbitarily broke Senate rules whenever it suited him, created new ones on the fly, and has generally ran roughshod over the Democrats at will. Meanwhile, Democrats keep crying ‘foul’ with each rule change, demanding McConnell play by the (old) rules and stop throwing them curve balls they can’t hit. So McConnell just threw them a fast ball past them in the Barrett case they couldn’t even swing at. Now they can’t even step up to the plate.

It all began with Obama back in 2009. He continually tried to establish a ‘bipartisan’ consensus with the Republicans to pass legislation for economic recovery. Obama listened to their demands to reduce his stimulus. But when he did not one Republican voted for it.
But they did vote when they convinced Obama in August 2011 to cut social spending programs by $1.5 trillion—i.e. more than Obama’s 2009 stimulus bill of $787 billion. Obama kept pursuing his futile ‘bipartisanship’. But he was tricked into cutting $1.5 trillion in education and other social programs, on the Republican promise that Defense spending would be cut as well by $500 billion.

Republicans later found a way around that and Pentagon spending cuts were eventually restored. Outfoxed again, Obama fell in line in 2013 in the name of ‘bipartisanship’, when he and Democrats supported the Republican demand to extend George W. Bush’s 2001-03 massive $3.4 trillion tax cuts for business and investors for another decade. That added ten years of business tax cuts cost taxpayers another $5 trillion! Obama ended up actually cutting business-investor taxes by $trillions more than George W. Bush!

Time and again Obama extended his hand to the Republican dog which repeatedly bit him. Obama kept extending it nonetheless; and McConnell kept biting. That’s the history of legislation in Congress over Obama’s entire term, 2008-2016. And it explains a lot why millions of voters abandoned the Democrats in 2016—although Hillary’s ineffective campaign helped a lot.

With Trump’s election, Republicans shifted strategy from just thwarting Democrat policies to plans to destroy the Democrats politically for a generation. The Obama era bipartisanship strategy continued for a while into the Trump era. Trump was permitted to keep raising US defense spending by hundreds of billions of dollars every year, in exchange for his agreement not to cut social program spending. He gained; they kept what they had. Meanwhile, the US budget deficit reached $1 trillion a year, during what was vaunted to be a robust economy. Lasts year, 2019, the Dems woke up to the failure of bipartisanship with Trump and his transformed Trump-worshipping Republican party out to destroy them, but too late.

Now the Barrett confirmation will enable Trump and McConnell to bite off at least a couple more fingers of the Democrat hand: womens’ right to choose and the Affordable Care Act. But not just Obamacare or women’s right to choose are about to be severed. Soon Barrett will be the decider on the Supreme Court again—as in 2000—determining the outcome of the upcoming presidential election. Trump and McConnell may slice off a thumb.

With the Barrett confirmation, the US Supreme Court—with no right to select the president— may nevertheless do so again. An institution not even mentioned in the US Constitution, with Barrett providing Trump a secure 6-3 (or at minimum 5-4) majority the Supreme Court may once again usurp the sovereignty of the American people. Here’s how it may occur:

Creating One, Two, Three….Many Floridas!

In just a few short weeks, it will become apparent the USA in 2020 has entered a déjà vu contested election as in 2000. ‘Contested’ is an unfortunate term. Every election is contested. What the media really means by choosing such a safe, neutral term like ‘contested’, is that the election may be stolen… once again. And this time it may usher in a deeper coup d’etat, not just a personality change at the top, as Trump radically attacks his opponents and the last vestiges of Democracy in America upon consolidating his victory coup.

The November 3, 2020 election may be Florida 2000 all over again! Only this time, unlike 2000 when vote re-counting was halted in three counties in Florida to give George W. Bush the election, it will be two, three, many Floridas. And it won’t be vote recounting. It will be counting of initial mail-in ballot votes.

All indications are Trump clearly plans to challenge and halt the mail in ballot vote counting in swing states where the direct in person vote tally will be close—i.e. Pennsylvania, Michigan, Wisconsin, Iowa, Arizona, and maybe even Georgia or Florida. He already has more than 250 of his lawyers stationed in the swing states to file injunctions to stop the mail in ballot counts. More will be coming, poised in the wings to swoop down into the swing states if needed. They’ll demand and get preliminary injunctions to halt the mail in vote counting. Hundreds of McConnell judge appointees in the swing states in recent years will move quickly to approve injunctions and move them along quickly; ditto for McConnell Appeals Court appointees who’ll cooperate and hand off the appeals to the Supreme Court. The matter will quickly rise to the new Trump SCOTUS with 6-3 majority with Barrett, Kavanaugh, and Gorsuch recent appointees to the Court. They’ll pick the most favorable to Trump case to decide on, creating a de facto precedent that can be used to halt mail in ballot counting in other swing states.

The disruption and delays in vote counting will give Trump time to declare he has won the key swing states based on direct in person voting. He’ll likely declare himself the winner late on November 3 or certainly early on November 4 based on in person voting on November 3. Mail in ballot counting will be further delayed by legal maneuvers as long as possible. Trump will publicly hammer the message he won via direct votes and mail in votes are suspect, even fraudulent, and shouldn’t be ever counted but impounded.
Democrats will again gnash their teeth, jump up and down, and declare ‘foul’. Trump’s not playing by the rules. (Of course, he’s rewriting the rules in his favor, dummies, as he has always done).

Following Trump’s November 3 or 4 declaration of himself as winner, people will take to the streets to protest and demand resumption of the mail ballot vote counting. Trump will likely call on his supporters to hit the streets as well.

Demonstrators and counter-demonstrators will clash, sometimes violently. It may well make the Antifa vs. Proud boys conflicts of recent months look like a high school play dress rehearsal.

But those clashes and growing violence will benefit Trump. His lawyers can then argue that the social and political disruptions will only worsen, unless SCOTUS puts an end to it by permanently halting the mail ballot vote count. SCOTUS will comply, as it did in 2000. Or perhaps punt the ball and declare Congress should resolve the issue—but immediately to quell the social unrest and not after the new Congress takes office. That means with the existing Congress, dominated by the Republican Senate. Intensifying social disruptions in November-December will help to push the Court to decide in his favor, whichever of the two possible outcomes. He’ll therefore incite his followers incessantly through November-December.

It’s not coincidental that Wall St. and business interests are now buying insurance and hedging their investments in expectation of a scenario not unlike that just described. Nor coincidental that police forces and local governments are quietly preparing for mass confrontations in November, even as the mainstream media is purposely refusing to report on those preparations and scenarios.

Feeble Democrat Party Counter Strategies

Biden and Democrats are hoping that by generating a mass voter turnout they can avoid the close election results on November 3 in the swing states that, should that occur, would set in motion Trump’s plans and a SCOTUS repeat of Florida 2000 now in multiple swing states.

But a record voter turnout may occur in both sides—for Trump and for Biden—in the same swing states, with neither overwhelming the other and thus resulting in a close election in the swing states with record turnout for both sides! Turnout in such a case will be irrelevant. The election results will still be close, allowing Trump to still declare himself victor early.

The fact that far more Republicans will vote directly on November 3 than will Democrats (and conversely more Democrats vote via mail than Republicans) enables Trump to declare early victory and try to stop the mail in vote count. CNN polls show nationally that 55% Republicans will vote in person November 3, and only 22% Democrats. The percentages are reversed for the mail in voting. The swing state spreads will likely be even greater than the national CNN poll percentages.

Democrats and their media (CNN, MSNBC, etc.) keep talking today about national polls showing Biden with 8-10% lead over Trump in the popular vote nationwide. National polls are totally irrelevant. Only state wide polls and winning enough small states to accumulate a required 270 electoral votes to take the president. And the swing state polls show Trump and Biden virtually tied. Trump’s halting of mail in ballot counting could tip more swing states in his favor.

This election is not about maximizing voter turnout. It’s about not fully counting voter turn out in the form of mail in ballots in the swing states!

The US Supreme Court As Bulwark Against Democracy

America is a truncated Democracy. It does not have a direct democracy form of presidential election. There is no one person one vote. There never has been.

The USA has the electoral college, created in 1789, that was designed to check the popular uprisings of the 1780s following the end of the Revolutionary War in 1783. Read the minutes of the US Constitutional Convention. The electoral college was a concession to those who feared the direct action and voting by the general population. Following the revolutionary war’s end in 1783, Yeoman farmers rose up everywhere protesting the economic depression of 1784-87.

They occupied and in some cases even seized control of their state legislatures in protest to the unpaid debts owed them by their governments and rising taxation.

The US Constitution of 1789 was created in response to their protests, designed to centralize power in the hands of northern Merchants and southern Plantation owners in order to check the popular uprisings. No women or slaves could vote was one outcome of that Constitution. Another was no direct election of Senators. Another was the electoral college, designed to allow state politicians and their appointed electors to determine the presidency. The right of women to vote, freeing of slaves and ensuring their right to vote, and Americans’ right to directly elect Senators were all achieved by means of mass popular movements that amended the original un-democratic constitution. But the electoral college still remains unamended. Neither party wants to amend it. They fear the uncontrolled will of the people still.

Here’s another fact that most Americans don’t know about their own Constitution: no where in it does it call for or authorize a US Supreme Court! Just that the Congress after the ratification of the Constitution by the States would legislate some kind of judiciary. The Congress created the court by means of legislation after the Constitution. So SCOTUS is subordinate to the authority of Congress, to whom the people in turn delegate their ultimate sovereignty periodically by means of elections. And take it back in elections.
So Congress can change anything it wants about the Supreme Court. It can add or delete justices. It can limit their terms in office, no longer for lifetime. It can make the justices serve by means of elections. It can even abolish SCOTUS altogether and replace it with something else.

The Supreme Court is thus not a co-equal to the Congress in the Constitution. It is not a co-equal institution. SCOTUS was purposely omitted by the framers of the Constitution because they didn’t want an institution of judges who were not directly elected by the people and who served for a lifetime to have any power to negate the sovereignty of the people or its elected Congress. That’s what the founders argued in the minutes of the Constitutional Convention of 1787!

Even less so was the Supreme Court given the authority to rule a law passed by Congress was unconstitutional. The legislation passed by Congress creating a court system did not give the Supreme Court authority to negate laws. That power is called ‘judicial review’, i.e. a power the Supreme Court usurped for itself in 1803 when it simply assumed the power of judicial review for itself. In short, the power of the Supreme Court to declare a law unconstitutional is not provided by the US Constitution nor passed by any law of Congress! It is therefore unconstitutional.

Even more so, neither the Constitution, nor Congress, nor any other institution ever gave the Supreme Court the authority to intervene in an election for president and decide on suspending a vote count, or any way interrupt a vote count, in order to favor one candidate for president over the other. That is, not until 2000 in Florida. And now again soon most likely in 2020!

Those who believe SCOTUS does have the right to intervene in elections, or that the Supreme Court can rule a law unconstitutional, or even that it is a co-equal branch of government simply don’t know their own US Constitution. Or how the Supreme Court usurped and declared its powers in 1803.

The usurpation was declared in 1803 by then Supreme Court chief justice, John Marshall. Who was he? He was a former Secretary of State for John Adams, president 1797-1800, who lost the election of 1800 and quickly appointed Marshall, his Secretary of State, as Chief Justice, in order to try to check the incoming new president, Thomas Jefferson, from reforming Adams’ corrupt business dominated government. Adams also tried to stack the lower courts before Jefferson took office. Sound familiar?

The purpose of all this explanation of the origins of the Supreme Court is not to provide an academic history lesson. It’s to point out that the US Supreme Court is not an institution of American Democracy. It’s an institution created by business interests more than two hundred years ago, the primary purpose of which is to check and prevent the exercise of direct democracy and direct voting rights of the American people. It’s been doing just that for two centuries!

In recent years the Supreme Court has become even more active in thwarting Democracy in America.

In 2013 SCOTUS struck down the even weak voting rights act of 1965. It passed the infamous Citizens United decision in 2010 that gave businesses and wealthy investors virtually unlimited right to spend money for their candidates in elections, presidential and all other! It has repeatedly allowed and endorsed various ‘red’ states voter repression efforts in recent years, including allowing conservative and radical right state legislatures and governments to throw out hundreds of thousands of registered voters before elections. It ‘selected’ George W. Bush as president in 2000. And it’s about to do the same—given the Barrett approval to join the Supreme Court today—for Trump in 2020.

America’s Rolling Coup D’Etat

Readers should remember all this when they watch the news tomorrow, as Barrett takes her seat on the Supreme Court before next week’s November 3 election—i.e. just in time perhaps to do the ‘selecting’ of another president contrary to the popular vote and will of the majority of the American people!

There is a rolling coup d’etat’ in progress in America today led by Trump and the radical economic and political interests supporting him.

And the Supreme Court of the USA, now firmly in his camp with the Barrett appointment, may well prove to be one of his essential tools in pulling off that coup d’etat.

A good part of the American people will no doubt resist, setting in motion street protests and demonstrations, counter-demonstrations with associated violence, and a period of great political instability in America in coming months perhaps not seen since the 1850s. That instability will exacerbate the growing concurrent economic and Covid 19 health crises, already mutually exacerbating each other. The dual economic-health crisis may thus soon become a ‘Triple’ crisis: economic, health, and political.

Dr. Jack Rasmus
copyright 2020

posted October 21, 2020
A Short History of ‘On Again, Off Again’ US Fiscal Stimulus Negotiations

It’s been more than three months since the March-April economic rescue package, called the Cares Act, expired at the end of July. Since then both political parties, Republican and Democrat, have played a ‘hot potato’ bargaining game: i.e. “here’s my offer, the ball’s in your court…Here’s mine, now it’s your turn”. This week the game continues, showing no indication of ending.

Last March’s ‘CARES ACT’ was not a fiscal stimulus. It was instead about ‘mitigation’–meaning the various measures contained in that $2.3 trillion package (actually nearly $3T when the additional $650 billion in business-investor tax cuts are added to the Act) were designed only to put a floor under the collapsing US economy–not to generate a sustained economic recovery. Even the politicians voting for it publicly acknowledged at the time that it was not a stimulus bill, but rather a set of measures designed to buy time–no more than 10-12 weeks at most–until a more serious economic recovery Act could be implemented.

The real fiscal stimulus bill was to follow, designed to pick the economy up off the floor and generate a sustained recovery as the economy reopened. The reopening began in May and gained a little momentum over the summer. But not enough to generate a sustained recovery by itself that was expected by late summer.

In a typical Great Recession trajectory, the reopening over the summer resulted in a roughly two-thirds recovery of lost economic activity by end of July. It was thought by politicians and mainstream economists that, when the reopening crested at two-thirds in July, a subsequent real stimulus bill would follow. The two forces–reopening and fiscal stimulus–would together generate a sustained recovery.

But it just didn’t happen that way. Nor is it to date.

The Democrats in the US House of Representatives presented their version of a fiscal stimulus bill–called the HEROES ACT-in late May. But the Trump administration and the McConnell led Republican majority in the US Senate balked at joining in passing a stimulus bill.
McConnell & friends looked around and it appeared big business and corporations and banks were doing just fine by June–even if small business and working households were not. A few exceptions to big business doing well were the airlines, hotels and some leisure and hospitality industries. But banks and other big corporations were fat with cash. The Federal Reserve had already pumped nearly $3 trillion in virtually free money into the banks. And big corporations had raised trillions of dollars more by selling corporate bonds at record historical levels, at cheapest rates, also made possible by the Federal Reserve. Trillions more were hoarded by borrowing down their credit lines with banks, saving on facilities operations, and temporarily suspending dividends and stock buybacks.

McConnell, Trump and their business constituencies didn’t need more stimulus. Indeed, they didn’t even need the Cares Act. That Act, passed in March, included among its provisions no less than $1.1 trillion in loans for medium and large businesses, along with $650B in tax cuts for the same. But as of this past August, less than $150 billion of that $1.1 trillion had actually been borrowed by big businesses and spent into the economy, and it appears little of the tax cuts resulted in production increases or hiring as well.

So in June, McConnell and the Republican Senate dug in their heels for two months and simply ignored the Democrat House stimulus proposal in the form of their late May passed $3.4 trillion HEROES ACT bill.

In July McConnell eventually put forth his proposal, called the ‘HEALS Act’. It totaled $1.5 trillion, but was loaded with ambiguous and onerous language like exempting all businesses from any and all legal claims for negligence for failing to provide safety and health conditions for their workers.

By end of July the only provisions of the Cares Act that provided any semblance of economic stimulus ran out. That was the $500 billion in extra unemployment assistance to workers, the $1200 checks, and the $670 billion in grants and loans (mostly grants) to small businesses. The unemployment, checks and grants amounted to government spending of only $1.2 trillion of the Cares Act’s $3 or so trillion. That $1.2 trillion was, and remains, the only actual spending to hit the economy, since the $1.1 trillion in loans to large-medium corporations has never been actually ‘taken up’ and spent into the economy by business. Ditto for the $650 billion in business tax cuts in the Cares Act. So only a little more than a third of the Cares Act resulted in any economic spending.

That $1.2 trillion, moreover, amounts to barely 5.5% of US GDP. In GDP percentage terms, that’s roughly the size of the 2009 stimulus of $787 billion spent during the previous Great Recession of 2008-09. That $787 billion proved insufficient at the time to generate a prompt recovery from that recession. It took six years just to get back to the level of jobs in 2007 before that recession, for example. But today’s 2020 Great Recession 2.0 is four times deeper in terms of economic contraction compared to 2008-09. And it’s still only an effective 5.5% spending package as contained in the March Cares Act.

A much more aggressive stimulus bill was desperately needed as a follow up as the Cares Act spending ran out at the end of July. The May HEROES ACT was an attempt to provide that follow up actual stimulus but, as noted, McConnell, Trump and Republicans weren’t interested. Their banker and big business constituencies were doing quite well by early-summer. No doubt Trump-McConnell further believed the reopening of the economy, as Covid 19 disappeared, would prove sufficient to lead to a sustained economic recovery.
Of course, history has already proven them wrong.

By late July many sectors of the US economy began to weaken again. And a second, worse wave of Covid 19 hit the economy in July-August, just as the weak Cares Act spending ran out at the end of July. Unemployment claims began to slowly rise again through August and into September. Small businesses began to close, many permanently now, in greater numbers. Large corporations began to announce mass layoffs, more permanent than just furloughs now. Evictions of renters by the millions began to occur. Low income homeowners began to miss mortgage payments. And the much predicted V-shape recovery began to look increasingly like a ‘W-shape’.

But instead of seeing the trend, Trump and McConnell doubled down and refused to negotiate seriously with the Democrat House on its HEROES Act proposal. In early August, House Speaker Pelosi, thinking the Trump administration might bargain in good faith, reduced her proposal from the HEROES Act $3.4 trillion cost by $1.2 trillion. Instead of following up, however, the Trump negotiators, led by Trump’s Staff Secretary, Mark Meadows, abruptly broke off all negotiations–without making a counter offer. What he did leave though was a bad taste in the mouths of Pelosi and Schumer, who now could not trust the Trump team should further negotiations resume. Nor could they trust McConnell and his Republican Senate, who followed Trump and withdrew their prior HEALS ACT $1.5T and refused to consider anything more than $650 billion if brought to the Senate by the Trump-Pelosi negotiators in the future. Moreover, $350B of the $650B was unspent funds left over from the Cares Act. So the net spending increase proposed was only $300B.

Trump had set up Pelosi and then ‘sandbagged’ her, in bargaining parlance. Within 24 hours Trump publicly announced four executive orders as his personal fiscal stimulus offer. But the EOs were no stimulus in fact. Just a diversion of already existing government funds and payroll tax cuts that would have to be repaid in 2021.

Both sides maneuvered in the press thereafter, as the US economy weakened further throughout September and into October–and as the Covid 19 infection rates surged once again. The Virus was not cooperating with economic recovery. And there was no stimulus to assist in that either. Meanwhile, millions more were becoming unemployed–at least 30 to 35 million remained jobless as of mid October. Food deprivation worsened and food lines began emerging again. Rent evictions were now escalating as well. Hundreds of thousands more small businesses were closing their doors, with predictions by the National Federation of Independent Business that millions would fail in coming months–even as bankers, big corporations, and stock and financial markets attained record levels.

Trump then shot himself in the foot by declaring there would be no further negotiations on a stimulus until after the November 3 election. McConnell said that was fine since 20% of his Republicans were against any further stimulus out of concern of its negative impact on the US deficit, which by October hit a record $3.1 trillion for the 2020 fiscal year–the largest in modern history.

Trump’s walking away from any further negotiations hurt his political chances, since not only were workers, renters, and small businesses being ‘thrown under the bus’, but the announcement had serious negative effects on stock market values. Now big corporations were worried too. So Trump back-tracked and made another bargaining offer.

Which brings us to events of the last 10 days. Trump offered Pelosi-Shumer an $1.8 trillion counter offer–complete with loophole language permitting him to renege on items of his choice. $350B of the $1.8T was just carry over of unspent Cares Act funds. So Trump’s offer last week was the same $1.5T of the July HEALS ACT. But it was an offer he now couldn’t deliver. McConnell in the Senate quickly added he wouldn’t even bring the $1.8T up for a Senate vote because he couldn’t get it passed within his own Republican ranks.

What the $1.8T did achieve was to get the corporate wing of the Democrat party, including its mainstream media arms–MSNBC, CNN, etc.–to raise the pressure on Pelosi to accept Trump’s phony $1.8T offer that he couldn’t deliver. What Trump wanted, and still wants, is just an announcement of a ‘deal’ that he can take credit for as he campaigns across the country before the election. What big business wants is the same, an announcement, not necessarily a deal right now. Stock prices and especially tech sector stocks have begun seriously wavering on news of no stimulus negotiations. An announcement would quell that issue and ensure stock prices remain strong through the election. Even some ‘left’ Democrats like Rho Khanna and Andrew Yang–both from silicon valley–chimed in and demanded Pelosi accept the Trump offer.

So what happens next, this week? Trump’s negotiator, Treasury Secretary Mnuchin and Pelosi have begun to talk yet again. Trump wants to announce a deal before the next presidential debate with Joe Biden this thursday, only 72 hrs away. Today, October 20, Trump reportedly has instructed Mnuchin to increase his offer to $2T. (He even said he’d go higher than $2.2T to get a deal). He knows he’s got nothing to lose, and he knows McConnell’s ‘hard cop’ is there backing him up to stop (or at least change the terms of any tentative deal) for him. Trump gains a campaign message. McConnell blocks any deal. And Pelosi and the Democrats get nothing once again except more negotiations, now with McConnell. It’s a clever ‘double-teaming’ of the Democrats by the Republicans, once again!

Apparently getting wise to Trump-McConnell games, Pelosi on Tuesday said language likely can’t be finalized on a deal until Friday–thus denying Trump the opportunity to claim ‘he got the deal’ in this coming Thursday night final presidential debate with Biden.

(For a daily, sometimes hourly, update on the negotiations join Dr. Rasmus on Twitter at @drjackrasmus)

Jack Rasmus is author of ’The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump, Clarity Press, January 2020. He blogs at jackrasmus.com and hosts the weekly radio show, Alternative Visions on the Progressive Radio Network on Fridays at 2pm est. His twitter handle is @drjackrasmus.

posted October 13, 2020
Trump Scuttles Stimulus Negotiations…Again!

Last Tuesday, October 6, Trump pulled the plug once again—a second time—on negotiations on a fiscal stimulus between House speaker, Pelosi, and his Treasury Secretary, Steve Mnuchin.

Before Trump scuttled negotiations on the stimulus for a second time, Pelosi and Mnuchin had reportedly been quietly negotiating toward a compromise fiscal stimulus package and were making progress while Trump was in the hospital with his Covid infection. But as soon as Trump returned to the White House, one of his first moves was to scuttle the negotiations. On Tuesday, October 6, he dramatically declared the negotiations were over. Furthermore, he added, there would be no stimulus until sometime after the November elections.

This was not the first time House speaker, Pelosi, and Mnuchin were growing closer to a deal and Trump abruptly intervened unexpectedly and broke off bargaining.

In an almost identical event earlier this past August Trump intervened and declared the negotiations over. Negotiating with Mnuchin in July and early August, Pelosi had reduced her original fiscal stimulus package costing $3.4 trillion—i.e. the Democrats ‘Heroes Act’ passed way back in late May—to a proposal costing $2 Trillion. That was a drop of $1.4 trillion. The Republican position at the time was the Republican Senate’s so-called ‘Heals Act’, with a cost of $1.5 trillion. Thus the parties were only about $500 billion apart and a deal looked possible in early August.

But once Pelosi-Shumer cut their offer to $2 trillion, Trump had his lead negotiator, chief of staff Mark Meadows, who had taken over as lead negotiator from Mnuchin, abruptly break off negotiations and walk out. That was done without making a counter-offer to Pelosi. In bargaining parlance, Trump had thus ‘sandbagged’ Pelosi with a cheap bargaining trick: namely, get your opponent to make a major move, then instead of countering, break off negotiations altogether. Should negotiations ever resume, your opponent then has to make a second move and concession while you consider only one.

In less than 24 hours after breaking off negotiations in early August, Trump quickly announced his four Executive Orders (EOs). That overnight response strongly suggests Trump had pre-planned to scuttle the August negotiations and had his four Executive Orders already in his pocket, ready to go. Scuttling the negotiations was planned well in advance with the intent of Trump personally taking over the bargaining agenda and thereby to deny Pelosi-Shumer any credit for any eventual stimulus.

Trump’s Executive Orders were largely smoke and mirrors and provided virtually no fiscal stimulus. Clearly Trump wanted to be identified with the public as the guy who delivered a deal and no one else—especially Pelosi and the Democrats. There would be no shared responsibility for stimulus benefits.

Here’s why Trump’s August EOs were more smoke and mirrors, however:

The first Executive Order recommendation that governors could, if they wished, extend the moratorium on rent evictions that was contained in the March 2020 Cares Act passed by Congress. Trump’s EO did not provide for a continuation of a moratorium; just a recommendation, and only if a governor wanted. And few would subsequently prove they wanted.

Trump’s second August EO provided a supplemental unemployment benefit of $300 a week, to replace the $600/wk. benefit that expired at the end of July. That $600 expiration meant $65 billion a month in income for consumption by households was taken out of the economy, starting in August and every month thereafter. In fact, when a standard fiscal multiplier effect of 2X is applied, it reduced potential GDP spending by $130 billion a month. With few states offering even half of that, the US economy lost nearly $100 billion a month, every month, in spending with Trump’s second EO.

But there was more ‘smoke’. Trump’s $300/wk. substitution benefit would apply only if a state threw in another $100. Many state unemployment benefit funds were broke or near busted and many states could not afford the $100, so their workers never got the $300.

More interesting still, the $300 was taken from the fund for disaster relief, which had only $50 billion or so in it. So the $300 was a transfer of funds—from the disaster relief fund to unemployment benefits. That thus offered no net fiscal stimulus spending to the economy. At only $50 billion, the fund was exhausted anyway in just six weeks, by mid-to-late September. By October, moreover, the western fires season reached record levels while the southeast coast hurricane season recorded more hurricanes than there were names available from letters of the alphabet. By October both the disaster relief fund was now depleted as well as the six weeks of $300!

An even greater ‘bag of policy worms’ was Trump’s third EO. It called for a cut in workers’ payroll tax for social security and Medicare. Apart from the unconstitutionality of the Executive branch of government introducing a tax measure unilaterally—when such tax legislation may only arise in the US House of Representatives per the US Constitution—Trump’s payroll tax cut EO was not really a tax cut. It was a payroll tax deferral. (Note that business’s share of the payroll tax was already deferred to the end of 2021 by the March Cares Act). So workers, like businesses, have to pay double payroll taxes sometime in 2021 according to Trump’s payroll tax EO. Given that businesses are legally responsible for collecting and distributing workers’ share of the payroll tax to government, many businesses complained if they cut the workers share of the payroll tax legally they might be liable for paying for both deferrals in 2021—i.e. their deferred tax share and their workers’ deferred tax. So many have since decided to not cut their workers payroll tax. To this date, little research is available summarizing how much payroll taxes for workers have actually been cut.

But Trump nevertheless still claimed publicly when campaigning in blue collar states that he’s cutting their taxes—not just deferring them. Most will not realize they will eventually have to pay double payroll taxes in 2021. When questioned about this possibility, Trump replied he would later make the payroll tax deferral permanent, if he were re-elected. But that’s not likely without Congress approval (which is highly unlikely) and even more unlikely if he’s not elected. Workers will get stuck with paying double payroll taxes in 2021, which will have a double negative impact on household spending and the US GDP.

The payroll tax EO is also an insidious way of undermining social security and Medicare—one of Trump’s and Republicans’ major policy objectives: i.e. reduce the revenues necessary to make social security retirement benefits and Medicare payments for retirees in 2021. Then call for massive social security and Medicare benefit cuts to make up the difference.

Trump’s fourth EO extended the deferral of payments on students’ government education debt until the end of December 2020. With record and rising levels of defaults on the $1.7 trillion current student debt, the extension only recognized the obvious: that debt payments wouldn’t be made for the overwhelming majority of the unemployed anyway.

These four Executive Orders, issued in mid-August, represent Trump’s taking over control of the bargaining agenda for the fiscal stimulus. Pelosi-Shumer and company were cleverly set up and then ‘punked’, as they say. Trump now looked like he had the real control over whether a fiscal stimulus would happen or not, and that he alone was powerful enough to deliver any stimulus. It would be his stimulus. The problem was, the four EOs amounted no stimulus at all! His stimulus via EOs was no stimulus and key sectors of the US economy have continued to weaken in August and after.

More than a million and a half workers every week, from mid-August to early October, have continued to file every week for first time unemployment benefits. That’s more than 10 million. As that million and a half applied weekly for benefits for the first time, another million a week began exhausting the unemployment benefits they had been collecting since March-April. By October more than 20 million workers would be considered long-duration jobless, and thus unlikely to ever get their jobs back. More than 5 million workers dropped out of the labor force, giving up on getting jobs. And 4.3 million in two paycheck families would have to quit work to manage their K-6 grade children struggling with remote education from home. The jobs picture was worsening, not improving. But that’s not the only indicator of the failure of Trump’s EOs as a fiscal stimulus.

Commencing in August and subsequent months, tens of millions of working families started being evicted from their rents, and hundreds of thousands of lower income family home ownersbegan to default and go into foreclosure as well.

Meanwhile, millions of small businesses began filing for bankruptcy by late summer and closing or preparing to do so. According to the National Federation of Independent Businesses (NFIB), a trade association for small businesses, no fewer than 21% of the approximate 30 million small businesses in the US had closed, or would close, in the coming months!
In other words, Trump’s feeble four Executive Orders had virtually no positive on the economy by September-October 2020—as jobs, unemployed, rent evictions, foreclosures, business closings all began to deteriorate by late 3rd quarter 2020.

Given these conditions, Pelosi-Shumer and Treasury Secretary, Steve Mnuchin, attempted one last time in early October to try to reach a deal on a stimulus bill before the November 3 elections. Mnuchin reportedly raised his offer from his late July $1.5 trillion position to $1.6 trillion. Pelosi-Shumer’s position as of early October was $2.2 (having raised it slight from $2 trillion in response to Trump’s breaking off negotiations in August after the Democrats reduced their proposals to $2 trillion). Reportedly as well, however, they again considered $2 trillion.

With around only $400-$500 billion difference in terms of final cost of a fiscal package both parties—Pelosi and Mnuchin—were not so far apart they couldn’t reach an agreement. That is, until Trump abruptly intervened again and called off the Pelosi-Mnuchin negotiations.

In early October, as in August previously, the main sticking points to an agreement appeared to be the Democrats’ demand to bail out State and Local governments, which were soon to have to layoff hundreds of thousands of public employees due to tax revenue collapse. The Trump-McConnell position has always been to deny any funds for state-local government since, in their view, most would go to the larger ‘blue’ states. The other sticky qualitative issue was the Republican-Trump demand that businesses be absolved from all liability claims during the pandemic period. Democrats feared this blanket liability exclusion would allow businesses exemption from all liabilities for health and safety of their workers or the local communities in which they did business.

Despite both negotiating parties closing the gap toward a deal, Trump abruptly broke off the negotiations once again, a second time, on October 6 and declared the negotiations dead until after the election.

As in August, Trump again a second time personally took over control of the bargaining agenda on October 6. But by saying ‘no further negotiations until after the election’ he set off a shit storm of complaints from his business base. The stock markets, which had been hundreds of points up on October 6, after Trump’s theatrical return from the hospital to the White House, in late hours tanked hundreds of points into the red after Trump’s announcement of no stimulus until after the elections.

So Trump put on his twitter hat after the markets closed and slung out a series of tweets, including retracting his earlier announcement of no new negotiations until after November 3.

But that was not all. Further tweets challenged Pelosi-Shumer to agree to separate bills on the content of the Pelosi-Mnuching talks. He taunted Pelosi to agree to a bill just to bail out the airlines. Another just to provide a second round of $1,200 income checks. Another to provide more grants for small businesses. And so on. The not so clever intent here was obviously to suck Pelosi and Shumer in and get them to break up their package proposal and negotiate directly with Trump, item by item. But to do so would concede all their bargaining leverage, as they say. Trump would be in a position to cherry pick and agree to the separate provisions he wants, and veto line by line the ones he doesn’t. It was evidence that Trump just can’t let any one else take credit for a deal. It has to be all his to brag about.

It will be interesting to see if Pelosi and the Democrats fall for Trump’s latest bargaining trick. He’s proven in the past not to be a trustful good faith bargainer. They enter Trump’s latest fools game at their risk!

But regardless whether they fall for Trump’s latest trick or not, should anything result it will appear as if Trump delivered the deal—not Congress and Mnuchin. Trump the great negotiator! Knows the ‘Art of the Deal’! But that’s all Trump: Take the credit always, appear responsible for everything positive, and throw everyone else under the bus should anything fail! And never, never negotiate in good faith. That’s only for “suckers and losers”, in Trump parlance.

Like his obviously staged return from the hospital to the White House, Trump is all drama and theater. To borrow a well worn literary phrase, “there’s no there there”.

But the US economy now more than ever needs something ‘there’, it needs a real fiscal stimulus not phony theater. It has entered the fourth quarter of 2020 with ominous negative economic signs on the horizon: large corporations are now announcing permanent layoffs (not furloughs) by the tens of thousands. Unemployment claims have begun to clearly rise again. Evictions and foreclosures and business closures are now escalating as well. A second Covid 19 wave is beginning to appear in the US, just as it has in Europe and elsewhere. That will mean more shutdowns, even if only partial. And more reluctance by consumers to spend on services like travel, leisure, hospitality, restaurants, movies, theater, entertainment, shopping at malls, buying gas, sports events, to name but the most obvious.

The combination of no fiscal stimulus and a Covid resurgence is ominous for the US economy. Even more ominous is the growing likelihood of major political instability erupting—institutionally and in the streets—around Trump’s oft-stated intent not to recognize the outcome of the November elections should he lose, driven by his unsubstantiated claim of fraudulent mail in ballot voting.

Trump has already begun moving his political chess pieces to challenge the election and refuse to leave office. Teams of his lawyers are filing hundreds of court injunctions against counting mail in ballots, in particular in the swing states. Pro-Trump red state legislators meanwhile are throwing hundreds of thousands of voters off the voting rolls, reducing polling locations in minority neighborhoods, eliminating drop boxes for ballots in some cases to one per city, sending ‘observers’ to intimidate voters at polling stations. Simultaneously, Mitch McConnell in the Senate is rushing to confirm Trump’s latest Supreme Court nominee, to ensure he has a 6-3 safe majority on the Court should it come down to the Supreme Court calling for a halt to counting mail in ballots, especially in swing states that will determine the election; or to legitimize other tactical moves by Trump lawyers trying to prevent mail in ballot vote counting.

A most likely scenario is the following: Trump lawyers in swing states get recent McConnell appointed pro-Trump district and appeals court judges to declare mail in ballots cannot be accurately counted for various reasons. With mail in ballot counting suspended, Trump lawyers then ask Republican controlled state legislators to pick the ‘electors’ for the electoral college, who would almost certainly vote for Trump. That way the Supreme Court may not have to directly ‘select’ Trump, as they did with George W. Bush in 2000. But they would indirectly, by enabling the state legislators to select the electors that then select Trump. (This was the way Senators used to be ‘elected’ before the US Constitution was amended to provide for direct election of Senators).

The more economic, political, and health crises and confusion there is around November 3 and after, the more likely the Courts will defer to the above scenario in the name of restoring social order.

So it just may be that Trump doesn’t really want a fiscal stimulus before November 3. A deeper economic crisis may better serve his political strategy. Maybe his latest ‘line by line’ tweets are just that—a delaying tactic.

Dr. Jack Rasmus
October 6, 2020

UPDATE October 13: Signs that the ranks of the Democrats may be crumbling began to appear this week after the October 6 break up of negotiations. An organized effort of the more moderate ranks of the party joined together with mainstream media, like CNN, to try to force Pelosi-Shumer to capitulate to Trump-Mnuchin’s most recent offer. California silicon valley Democrats, like Yang and Sanders’ support, Rho Khanna, have also joined the ‘take the offer’ and negotiate the rest later position. Tech-based Democrats like Yang and Khanna are no doubt getting pressure from big Tech in California, worried that a failure to get a stimulus would soon tank tech stocks. But the Trump-Mnuchin latest offer of October 12 amounts to the same offer Republicans made back in July 2020 with the so-called ‘Heals Act’. That amounted to $1.5T. The latest offer is reportedly $1.88T. But it’s really the $1.5T plus the funds for small business that have not been spent by the Trump administration from last March’s Cares Act. Should Pelosi-Shumer accept what was on the bargaining table last July, it would amount to a capitulation not a negotiation. Moreover, it is highly likely Trump will once again renege on the offer once accepted, just as he did back in early August when he broke off negotiations the firsts time–after getting Pelosi-Shumer to first reduce their package from $3.4T to $2T. Mindful of Trump’s typical unreliable bargaining practices, Pelosi-Shumer have thus far refused to fall for Trump’s trick again. But more naive elements of the Democrat Party–Yang, Khanna and others–are nonetheless pushing for a capitulation. It will prove interesting to see what Pelosi-Shumer do this coming week: call Trump’s latest bluff or capitulate!

Follow Jack Rasmus on his blog, jackrasmus.com, for weekly articles, on Twitter for daily commentary at @drjackrasmus, and on his weekly radio show, Alternative Visions, on the Progressive Radio Network every Friday at 2pm eastern time. His various interviews, book reviews, videos, plays and longer articles are available on his website, http://kyklosproductions.com

posted October 1, 2020
1st Presidential Debate: Worse Is Yet to Come

The 1st Presidential debate of 2020 held last night, September 29, was a reflection of the growing systemic social crisis in the USA. This is what we saw:

1) a refusal of the representatives (Trump & Biden) of the two wings of the Corporate Party of America to propose any actual solutions to the multiple crises now all intensifying across the country—health, economic, racism, and climate.

2) identity politics run amuck, now writ large at the highest political levels—i.e. the Great Distraction in full force, crowding out and preventing solutions to the crises.

3) a harbinger of political chaos just around the corner—at both a street level and in the major political institutions of the country—and the collapse of Democracy before our eyes.

The commentary of the media following the chaotic exchange (none dare call it a debate) focused on the ‘form’ rather than the content of the exchange: Trump went wild interrupting Biden and stealing much of Biden’s time. The moderator, Fox News’ Chris Wallace, was either incompetent in his inability to stop Trump or else willing to let him continue and intervening only when Trump had succeeded in drowning out most of Biden’s talk. Biden too was unable to deal with Trump’s antics, at times taking Trump’s bait and falling into his trap.

But what’s so new about all that? That’s Trump, who came to give a speech to his 40% voter ‘red’ base—i.e. the third party at the debate!

Nevertheless, the media talking heads were shocked that Trump would engage in such an egotistical, disrespectful disregard for the rules of the debate which he had pre-agreed to. To the media the ‘form’ of the debate was thus more important than any content that might have addressed today’s multiple real crises.

1) The Multiple Crises Ignored (Economic, Health, Race, Climate)

Biden raised the New York Times’ story released over the weekend in which Trump’s tax returns showed Trump paid only $750 in total federal income taxes over two years, 2016-2017. Trump of course denied it as ‘fake news’. And that was that. There was no follow up discussing the four decades long tax system rip off. Nor about why both parties (i.e. both wings of the one party) since 2001 have given investors, corporations, and the wealthiest US households more than $15 trillion in tax cuts. GW Bush $4.7T, Obama $6.1T, Trump $5T with both parties agreeing to another $650B just last March.

Nor was there any mention of the escalating income inequality on both Republican & Democrat watches that was enabled by the $15 trillion tax redistribution to corporations and the rich. Nothing was said why Trump’s tax rip off resulted in wealthy investors getting $3.4 trillion in stock buybacks and dividend payouts in just the last three years; or why under Obama they got more than $6 trillion in buybacks & dividends on his watch!

And nothing was said by either of them why there are still 40 million American workers jobless, or why tens of millions of those lost jobs will never return, or why a long line of big corporations are now announcing permanent layoffs by the tens of thousands.

Biden never bothered to raise the point why millions of small businesses have gone under and millions more are about to do so. He could have quoted the National Federation of Independent Businesses (NFIB), the trade association arm of small businesses in the US, and its recent forecast that 21% of the roughly 30 million small businesses have already, or soon will close, if no real fiscal stimulus and bailout is passed. Trump of course ignored that altogether. He no doubt would have called the NFIB survey ‘fake news’.

There was a brief exchange on US manufacturing by both candidates, but both were wrong on the facts. The business cycle in 2008-10 destroyed millions of manufacturing jobs, only some of which came back and then mostly as two tiered, temp, low paid, no benefits jobs. The current recession is now in repeat mode in manufacturing. Production is up but jobs aren’t being restored. Biden could have indicated manufacturing was in a recession for the six months prior to Covid but he didn’t. And neither candidate discussed why free trade deals, in addition to the recessions, have destroyed at least 4 million US manufacturing jobs. Biden clearly will not go there since he and the Democrats, like the Republicans, are champions of free trade deals. The Dems praised the recent phony NAFTA 2.0 agreement negotiated by Trump. Trump’s promise to bring back those jobs in 2016 has been all smoke and mirrors. But did Biden bother to cite the facts?

And what about trade? Trump claimed his trade wars have been a glowing success. Is that why he’s had to subsidize the farm sector with $49 billion in cash handouts since 2018 (with $17B more promised)! If his trade wars have been so successful, why has he had to funnel billions of dollars in hand outs to his agribusiness buddies? Why have more than 10,000 small farmers gone bankrupt annually in recent years? Biden said nothing of the subsidy to agribusinesses still earning billions in profits or the bankruptcies of small family farms. For Biden the ‘trade problem’ is not the escalating subsidies to business or the destruction of jobs in the millions; it’s just a China deficit issue, the numbers of which he couldn’t even quote correctly.

So far as the health/Covid crisis is concerned, there was an exchange in last night’s ‘debate’. But it came down to Biden saying we should wear masks and Trump saying a vaccine was around the corner. That’s it. Biden noted correctly, of course, that Trump has grossly mismanaged the handling of the virus response. To which Trump simply retorted Biden would close down the entire economy again. Trump’s position is ‘Horror of horrors! We can’t save grandma and grandpa if the profits of our nail salons are the cost’! Biden’s position: Yes we can. Let’s all wear masks.

But where was the discussion that the US total reliance on private businesses and ‘markets’ has in large part been responsible for the magnitude of the Covid crisis in the US? The US had outsourced its production of PPE to China and elsewhere before the crisis. There was no mention of that, because both parties have agreed for decades to provide business tax incentives to move operations offshore. There was not a word about the responsibility of US businesses that conveniently offshored critical US goods like PPE and now testing agents to ensure greater profits for themselves. Now, with a second Covid wave imminent this winter, the US still lacks reagents and other pharmaceutical materials needed to do effective testing. Six months into the Covid crisis US business continues to offshore production of critical health supplies, despite US deaths are now predicted to exceed 400,000 by year’s end. That’s more US dead in less than a year than occurred during nearly four years of World War II. But still no war production plan is in place in the US. Neither Trump or Biden has proposed one. Trump, the great admirer of private business and stock markets, is still reluctant act like a ‘war president’ in the worst war confronting the US since 1941. Why? Because he knows that means stepping on the toes of his business buddies and election campaign contributors. For the same reason Biden won’t go there.

For Biden to propose putting the US on a war production footing would mean seizing the necessary production assets of private business, including big pharma companies, and returning it all to the US under a central war production plan. His wing of the Corporate Party of America is no more interested in doing that than Trump’s wing. Nor Trump or Biden explained how a vaccine might be fairly distributed to all Americans next year, or how a million tests a day would be produced and administered.

Biden not surprisingly defended Obamacare, the ACA, focusing on how it protected pre-existing conditions. Trump bragged about how he gutted it by ending the individual mandate.

But what did either say about the fact nearly 50 million workers and families are again uninsured? And at least another 30-40 million grossly under-insured? Biden’s answer was to add the ‘public option’ to Obamacare—which Obama himself pulled from the ACA in 2010. That way private employers can keep their tax write offs for continuing to provide their employees health insurance while the health insurers can continue to reap record profits from both private employer plans and the ACA. Biden specifically rejected any notion of Medicare for All. Trump said he had an alternative plan to replace ACA—which he’s been saying for three years but not showing!

In short, both candidates provided no answer to how to manage the continuing Covid crisis, nor to the even worse general health crisis in the US. The USA remains in the ranks of 3rd world banana republics when it comes to the health security of all but the wealthiest of its citizens.

And what about the discussion of race relations and policing in America? Here a heated exchange did occur. Biden’s answer was to get local police departments, politicians and select community leaders together to ‘unite America’. Somehow that would end systemic racism and institutionalized police repression. Trump attacked that idea as well as race ‘sensitivity’ training programs in general, which he recently declared cancelled. According to Trump, the programs were demeaning to whites and suggested they were reverse racists. White folks don’t want to be reminded of that, he said. Even more, they don’t want to be forced to ‘role play’ as blacks. It’s demeaning. And that was that, i.e. the full extent of the discussion of systemic racism in America: let’s do more sensitivity training (Biden); let’s not because it’s reverse racism and might make his white folk political base uncomfortable. They don’t like being role played as black (Trump).

And climate change? Biden’s answer was to rejoin the Paris Accords and maybe spend some more money on alternative energy infrastructure, as he went out of his way to reiterate his rejection of the notion of a ‘Green New Deal’. Trump’s answer to climate warming was it was too expensive for American business, even though they’re reaping historical maximum profits and getting trillions of dollars of tax cuts and subsidies every year. Trump then attacked Biden for California being consumed by forest fires, saying the Dems there have mismanaged the forest floor by not raking up enough leaves. Biden said nothing in return about the fact that 65% of California’s forests are federal land, and if anyone was responsible for not ‘raking the leaves’ it was Trump’s own Interior Department. But he did say there were larger storms in Iowa, whatever that meant. Neither candidate has a clue what to do about the climate crisis.

In summary, neither Trump or Biden addressed the real issues or proposed any credible solutions to the multiple crises afflicting America today— multiple crises now intensifying, converging, and exacerbating each other.

2) Identity Politics Run Amuck

What we also saw in the first presidential debate is a reflection—at the highest level of politics and within the US elite itself—of the country’s descent into the muck of identity politics.

US society is becoming mired in the plague of identity politics. At all levels, the focus is increasingly on extreme individualism—often at the expense of the public good. Rational discussion and solutions to collective crises are crowded out of public discourse. Replaced by fear-mongering appeals to identity among their political supporters by the politicians and elites of both wings of the Corporate Party of America.

White European Americans are fearful their culture, jobs, and ‘way of life’ is about to give way to the ‘others’—i.e. all the peoples of color whether Latin, Muslim, and other immigrants coming into the country; and to those of color (African Americans) already here but growing in number as well.

Like the Jews in Germany, large sections of white European Americans see black Americans as the ‘others’ living within our midst but not really one of us. Like the German Jews, they are the foreigners allowed to come here by past politicians. As in Germany, the ‘others’ become the ‘enemy within’ and the symbol of all the causes of their economic and social fears, insecurity, and anxiety—as politicians and elites re-direct the cause of social decay from their policies to the ‘others’—i.e. the Latin immigrants, blacks, LGBTQ, etc. Immigrants, blacks, and gays are the cause of their declining standard of living, their culture, and their way of life—so say the Trumpublicans and their media; white European ‘deplorables’ are preventing you people of color from achieving your rightful identity as equals to white European Americans—so say the Democrats and their media.

It’s all part of the ‘Great Distraction’, designed to allow the elites of both wings to continue to pick all our pockets while we’re preoccupied with identity issues and politics. So long as we’re immersed in issues of identity that separate us there’s no need to divide and conquer so they can continue to pick our pockets. Identity means by definition we’ve divided ourselves from each other.

Technology of course plays a conscious role in enabling the descent into extreme individualism and dead end identity.

The youngest are mesmerized by their electronic gadgets that enable them to focus neurotically on themselves for hours upon hour every day, absorbing most of their waking lives. Young adults are immersed in social media sourced news and pseudo-facts. As they come to realize they are condemned for life to lives of indentured, low pay, part time and temp service employment, they desperately seek and embrace simplistic ideologies as an explanation for their plight. Middle age adults become increasingly insecure and fearful as they see their families’ futures dim and realize they are approaching older age and retirement without pensions and sufficient income to keep themselves from poverty. They look for a ‘strongman’ to save them quickly.

They all become fodder for clever manipulation, fear mongering by media talking heads, and conspiracy theories multiplying daily on social media that substitute for the thinking and the evaluating of facts and opinions that is necessary for rational thought. The network does the thinking for them. People fearful and in crisis grab the nearest exit and short cut to explain their situation and grab a solution.

The capitalist media no longer consists of objective presenters of facts and events but subjective interpreters and spinners of facts and events. The subjective media is the new priest providing the congregation of the fearful and desperate the answers it wants them to absorb—except now it all occurs on a daily and by the minute basis instead of just on Sunday mornings. The result is predictable: when confronted with objective facts, such facts are rejected since they don’t conform to their rapidly expanding fantasy world of conspiracies and the messaging of media spin doctors.

Tell me what I already believe or I’ll listen to someone else who will! Don’t tell me what I don’t want to hear’. Tell me something so that I can cheer: ‘Hooray for our side’.

People are so concerned trying to understand who they are that they are unable to see who they are becoming, manipulated by the political elites who have found playing the identity card works well for keeping folks—white and non-white—from understanding the real source of their fears, their anxieties, their growing angst. That real source originates in the policies of both parties that are ever-enriching their wealthy elites at the expense of the rest of society.

Identity politics is the Heroin fix necessary to create the social stupor of the Great Distraction. And the flip side of the Great Distraction of identity politics is the Big Rip-off—where the same elites and politicians of both wings of the Corporate Party of America pick our pockets.

What we’ve just seen at the highest level in yesterday’s 1st presidential debate is the same focus on Identity politics, albeit now write large at the highest level. The same Great Distraction that has been intensifying in America for years. The same Big Rip Off in action!

In the first presidential debate both Biden and Trump immersed themselves in a personality food fight, like teenagers in a high school cafeteria: Trump attacked Biden as ‘sleepy Joe’ who Trump even suggested failed to graduate from college. Adding that to Trump’s pre-debate comments that Joe has early onset dementia and has to take performance drugs to stay awake and debate. Biden in turn declared Trump a clown. A neurotic egotist. Sick. Mentally unfit. And told him to just ‘shut up’.

The disease of identity politics in America has thus bubbled up like foul smelling swamp gas from society at large, to the very top echelons of the American political elite. Every election cycle we say the quality of the candidates put up to represent can’t get worse; but it does.

Listening to the media commentators at CNN and other outlets after the ‘debate’, the talking head experts were perplexed and repeatedly asked each other why any voter would continue to support Trump after his childish performance in last night’s debate? Conversely, at Fox the spin was his performance was precisely why his base continues to support him. What the former don’t understand, and the latter won’t admit, is that Trump’s 40% base remains solid no matter what he says, how he says it, or what he does. And that’s for a fundamental reason that also has to do with Identity.

For white European Americans, Trump is the bulwark against the ‘others’. He stands unequivocally against the changing demographic where White Europeans will soon no longer constitute the majority. They fear should that happen, not only their jobs but their culture, their values, their religion, and ‘their America’ will be no more! That single, fundamental reason is why they overlook everything about Trump and still support him regardless of his racism, his misogyny, his proto-fascist inclinations, his disrespect for democratic practices and norms, his verbal slips about ‘suckers and losers’ in the military, and all the rest. Nothing matters except he hold back the wave of colored folks of varying hues that will take away their America.

And with more than 350 million guns in America (and more than 15 million assault rifles) many of them are prepared to go to violent extremes if need be. Many are just waiting for the ‘Big Dog Whistle’ from Trump.

3) A Political Crisis of Unimaginable Dimensions

In an essay entitled, ‘A Most Dire Warning’ a couple weeks ago this writer predicted the most likely scenario following the November 3 election. It included Trump taking legal action to stop the mail in ballot vote counting by turning to his now many Federal District and Appeals court judge appointees. The scenario includes Trump declaring himself the winner on November 3-4, knowing that more Republicans will vote directly that day than will mail in ballots than Biden supporters will vote directly. CNN polls show 66% of Trump supporters will vote directly vs. only 22% Biden supporters. That means Trump will likely show an early lead, supported by exit polling. But he must stop the mail ballot counting or he may lose in the end. He will rely on his soon 6-3 US Supreme Court majority to support Appeals court decisions to stop the voting in select swing or blue states. There is a precedent for this already. It’s exactly what the Supreme Court did in 2000 to ‘select’ George W. Bush as president. It stopped the vote recount in Florida to give Bush the presidency. Only this time it will be multiple states and the original mail in ballot vote counting that may be halted. Protests that erupt will be met with physical police force. That too is being planned. Protestors will be identified as ‘Antifa’ and ‘BLM’ militants and repressed. The federal police force created in 2002 for the first time in US history—called the DHS—are the favored instruments. But Trump may call on his radical fascist street supporters to assist where necessary as well. And the more the street level social chaos the more likely the Supreme Court will tend to try to settle the dispute to end the street chaos.

In yesterday’s debate, the moderator asked Trump if he would call on his street supporters to not get involved. To this he answered, “Proud Boys ( a widespread neo-fascist group in America today) Stand Back. Stand By”. Immediately the radical right, hearing these words, began to mobilize and prepare for Trump’s ‘big dog whistle’ on November 4.

Trump will not accept the outcome should he lose on November 3. Nor in January 2021. He said “we might not know for months” the final vote count. That means well beyond January 2021. In the meantime, he further noted he’s “counting on the Supreme Court to look at the ballots”. Will the SCOTUS review the tens of millions of mail in ballots directly! Trump concluded “This is not going to end well”.

For his part, Biden declared to the TV audience “He can’t stop you from the outcome of this election”. If we get the votes, he’s not going to stay in power”. But what Biden fails to understand is we may not get all the votes if the mail ballots end up not being counted—as happened in 2000 in Florida thanks to the same Supreme Court that is soon even more in Trump’s camp today than it was in Bush’s in 2000! Biden’s pre-debate statement that the US military will ‘escort him out of the White House’ was wishful thinking as well. The Pentagon generals the next day publicly stated they would not get involved. So who will ‘escort’ Trump out? The Democrats have no executive arm; Trump does: the DHS swat teams and most of the police departments in the country that support his election. And then there’s the Proud Boys neo-fascists who may just descend upon Washington D.C. and take up positions around the White House, armed with their AR-15s when Trump blows his whistle. Who’s going to try to escort Trump out in that scenario?

The exchange by Trump and Biden on what each would do on the day of the election and after was undoubtedly the most important exchange of the entire 1st presidential debate. All the rest was irrelevant verbal bombast, appeals to identity politics, and personality clash. Viewers of the debate learned nothing about how America might extract itself from its intensifying multiple crises. What they learned is that a political crisis may be coming, the likes of which haven’t been seen in America since 1860.

Dr. Jack Rasmus
September 30, 2020

posted September 27, 2020
Trump’s ‘Plan B’: 2 Articles on Trump’s Plans to Refuse to Accept the Results of Nov. 3 Election

A Most Dire Warning, by Dr. Jack Rasmus, September 22, 2020

The rumor today is that Romney will reportedly say he’ll support Trump’s 3rd SCOTUS vote. So there you have it! 2020 election Game Over!

Trump will now get his 3rd Supreme Court nominee accepted by McConnell’s Senate–either before Nov. 3 or after. It doesn’t matter when so long as before January.

A SCOTUS 6-3 Trump majority now positions Trump’s SCOTUS majority to stop the mail in ballot vote count in Trump targeted blue and swing states, which would heavily favor Biden.

CNN poll shows 66% of Trump supporters will vote in person on Nov. 3 but only 22% of Biden supporters vote in person. (53% Biden supports to vote by mail). Trump will appear to win on Nov. 3 based on direct in person voting. He’ll declare victory and then move quickly to have Barr and the Justice Dept. stop the counting of mail in ballots in key swing states.

His lawyers are already fanning out and filing motions for injunctions against mail in voting. They will flood swing-blue states mail in ballot vote counting to delay the counting still further. States where Republican governors (and State secretaries of state who manage those states’ vote counting) will meanwhile throw out millions of mail in ballots based on technicalities like signatures failing to dot i’s or cross t’s to ensure Trump ‘red’ states turn in pro-Trump decisions.

Examples of US post office chaos & claims of lost vote ballots, etc. will be used by Trump lawyers to make legal argument that mail in ballots cannot be used to determine the final vote count. Injunctions will be filed to require states to disregard mail ballots. Further delays in mail in ballot counting will occur.

Disputes and legal action by Dems in response will be quickly sent up by Trump federal district judges (appointed by hundreds under McConnell since 2013) to the Supreme Court, now 6-3 in Trump’s pocket. Trump’s Supreme Court will repeat its Florida 2000 decision stopping the vote count–this time counting original votes not a recount. Only swing and blue states will be targeted, not red states already pro-Trump.

Street protests will erupt after Nov. 3 protesting the legal coup d’etat in progress. Trump has already called protestors “insurrectionists” and identified all protests as ‘antifa’ or ‘communist’. His attorney general, Barr, has also already pre-labeled protestors as “treasonous” and traitors who should be forcibly repressed and jailed

The US executive branch since 2002 now has its own executive police force called the Dept. Homeland Security (DHS), with de facto military swat teams who’ve been doing ‘dry runs’ in Seattle, Chicago, Portland and elsewhere. They will be used to suppress protests, aided by pro-Trump local police departments (e.g. New York City, etc.) and perhaps even welcoming right wing radical supportors as provocateurs to attack protestors and thus allow DHS-Police to declare protests riots and directly quash protests.

Contrary to Joe Biden declaring the US military will remove Trump from office if necessary, the US military has said publicly it ‘won’t get involved’.

Democrats will file multiple legal responses to efforts to stop the mail in vote counting that will get delayed in the lower federal court system until Trump is sworn in again in January. Trump’s 6-3 SCOTUS majority will eventually declare them unconstitutional after the fact.

Democrats’ US House of Representatives will once again impeach Trump but it will be ignored once again. Dems will not win Senate as their challengers in Senate will also be stopped from taking office after winning Nov. 3 by mail ballot count cancellation. Mail in ballot vote counting will never be concluded–as in Florida 2000. Americans will never know who actually won the election, as was the case in Florida in 2000.

Trump will gloat and restate what he’s been saying in his recent election speeches: ‘We’ll win in November and after that maybe look at another four years, or even more”!

He’ll then govern mostly by executive order in his second term, ignoring the US House, and moving money around in the US budget to wherever he wants (already doing it) in direct violation of the US Constitution.

In US foreign policy, should Trump win, watch for a total naval blockades launched against Iran and Venezuela after January 2021, if not before as an ‘October Surprise’. In 2021 the US will also engage in massive military buildup in the western pacific to confront and intimidate China.

In 2021 the US economy will relapse and contract after election due to US growing ‘Triple Crisis’ of intensifying political instability and Constitutional crisis, lack of further fiscal stimulus 4th quarter 2020, and possible Covid 19 resurgence.

Trump’s second term 2021 solution will be even more tax cuts for investors, business, and corporations–paid for by cuts in education, social safety net, social security and medicare-medicaid, and tax hikes on middle class.

Failure of the Democrats to have stopped Trump the past four years will likely usher in a basic political party re-alignment in the US as a form of authoritarian government takes hold under Trump quite different from even the limited Democracy form that has itself been slowly atrophying since the early 1990s.

The social condition during the last six months, that some liken socially to a kind of ‘low grade’ war, may well worsen in multiple ways over the coming six months into spring 2021.

Dr. Jack Rasmus
September 22, 2020

Ginsburg’s Death & Trump’s Emerging Legal Coup D’Etat, by Dr. Jack Rasmus, September 18, 2020

Yesterday Supreme Ct. Justice, Ginsburg, died. McConnell & Trump now moving rapidly to replace with 3rd right wing nominee to SCOTUS. Democrats mount feeble and futile defense, saying McConnell should not proceed with nomination based on McConnell’s own argument back in Feb. 2016 used to thwart the nomination of Obama’s Garland candidate; McConnell in reply expediting the nomination and promises Trump decision before Nov. 3 election.

The death of Ginsburg and quick replacement of another ultra conservative to SCOTUS has big implications for November’s election: it strengthens Trump’s strategy and plan to contest the election voting by mail process, declare it fraudulent (in select blue states), try to stop the counting of mail ballots, and have the Supreme Ct.–now in his pocket with 6-3 majority–cut off the vote counting, just as happened in Florida in 2000. Only this time not just in one state but across multiple states.

Trump’s strategy has become increasingly clear: create the public impression mail in voting is fraudulent and the basis for stopping the counting of mail ballots. This will be supported by what polls show as the likely way direct in person voting vs. mail voting will occur:

CNN polls show 53% of Biden supporters expect to vote by mail, while only 21% of Trump supporters will vote by mail. This will mean November 3 voting will show Trump winning by significant margins due to direct voting, confirmed by exit polls at the time. As mail in ballots will be counted, his lead will begin to fade in blue and swing states (though not likely in most red states due to widespread voter suppression). But before the mail in ballots do wipe out his lead, he’ll raise the ‘fraudulent’ voting claim, get Attorney General Barr to file injunctions to stop the vote count of mail in ballots, and push to the Supreme Court the approval to stop the vote count.

This is Florida’s 2000 election deja vu, except now in multiple states and not just involving voting irregularities in 3 counties in that state.

In 2000 the outcome was the Supreme Court de facto ‘selected’ the president, George W. Bush, with its 5-4 decision to stop the vote recount in Florida.

In 2020 the Supreme Court will be even more likely do the same–i.e. stop the vote count and ‘select’ Trump’– with a 6-3 vote. Except this time it will not even be a vote recount; it will be a first count of mail in ballot votes.

The 6-3 clear majority now gives Trump even more encouragement to implement this strategy: stop the vote count, direct the decision to the Supreme Court, and keep any resolution out of the US House of Representatives where, constitutionally it belongs.

Democrat leadership will be easily outmaneuvered in the Supreme Court nomination process about to begin. They will be outmaneuvered as well, I predict, in the post November 3 vote counting. The Democrats once again will prove themselves strategically and tactically inept in stopping Trump, as they have the entire previous four years.

One more nail will soon be hammered into the coffin of American Democracy, and this time a very large one.

Since the Republican and Democratic Party conventions in August I have been following and commenting on the unfolding of Trump’s strategy to engineer a legal de facto coup d’etat surrounding the November 3 elections. I have shared these reflections and observations in my almost daily tweets on the revealing of Trump’s strategy–as well as his statements showing his intent to destroy even the remaining remnants, as few as they are, of democratic and civil rights in America today in order to stay in power. Indeed, as he has publicly declared in his campaign speeches, he’s planning not only to win in November but is considering, as he put, “four more years after that, and maybe even four more, we’ll see”. In lock-step, his Attorney General, Bill Barr, has also publicly declared that protestors (including those protesting a future coup no doubt) should be considered “treasonous” and prosecuted under the sedition acts. For Trump too, protestors are “insurrectionists”, which means terrorists and ‘enemy combatants’ under the Patriot Act.

A political crisis, the dimensions of which have no precedent in America’s history, may be just around the corner. It’s negative impact on the present economic Great Recession 2.0 will be no less profound. It will ensure a further economic relapse and the W-Shape trajectory I’ve been predicting, or worse!

Dr. Jack Rasmus, September 18, 2020

posted September 9, 2020
America’s Current Jobs ‘Great Depression’

Two well-known and highly respected mainstream economists, Carmen Reinhart, a chief economist for the World Bank, and Vincent Reinhart, chief economist for Morgan Stanley bank, have recently published an article in the widely read capitalist source, Foreign Affairs, entitled ‘The Pandemic Depression’. Arguing primarily from a global perspective, the economists have concluded the US economy as of the 3rd quarter 2020 is not merely now experiencing a ‘great recession’ but now qualifies as another Great Depression.

There is another perspective, however, from which to also argue the US economy is in a bona fide Great Depression. It is from the perspective of the US Labor Market. For as of the late 3rd quarter 2020 the US economy suffers from an unemployment rate of no less than 25%–i.e. the same rate during the worst years and quarters of 1932-33, the depths of the 1930s Great Depression. Yet what we hear from the media and politicians of both wings of the Corporate Party of America—aka the Republicans and Democrats—is that unemployment is only 8.4%! That’s barely one-third of 25%.

Republicans and Trump have used the low-balled number of 8.4% as the main excuse to prevent the passage by Congress of any further economic stimulus. The Democrats have voiced no effective rebuttal since they too have accepted the 8.4%. So what is it? 8.4% and not even a great recession any longer? Or 25% and the possibility the ranks of unemployed are about to grow even further?
What follows is a debunking of the 8.4% unemployment rate and a quantitative explanation why that rate is 25%–as well as a statement of the forces that will likely result in an even further deterioration in the unemployment rate in the 2020-21 period ahead.

(25% & 40 Million Still Unemployed)

After the massive job implosion last spring, a weak rebound in jobs has occurred as the economy reopened over the early summer. But that jobs rebound has shown clear signs of faltering by late July and has clearly deteriorated by late August as unemployment claims have risen in recent weeks. Even more ominous, as that has near term condition of jobs has worsened, parallel indications show the emergence of a second, more permanent phase of job loss on the horizon.
Since early March 2020, more than 55m workers have filed for, and received, unemployment insurance benefits.

According to official government data, as of the end of August, 29.5 million US workers were still getting benefits. That 29.5m reflects 18.4% workers clearly unemployed. But it’s also a subset of the total jobless, since millions haven’t been able to get benefits. So the actual number of jobless as of labor day 2020 is north of 29.5m and 18.4% Nevertheless, the statistic we hear is 8.4% unemployment rate and 13.4 million unemployed. What gives?

Some of the 55 million who received benefits at some point over the course of the last six months of the pandemic began returning to work starting in May. The number returning grew in June, but then began slowing once again in July and August as the rebound in jobs began to falter in July-August.

Others of the 55 million have simply exhausted their benefits. Many are still unemployed but no longer part of the 29.5 million that remain on benefits.
In addition, millions more workers since March have entered the labor force for the first time but they too have not been eligible to receive benefits due to lack of prior work history as first time job seekers—which precludes them from receiving unemployment benefits. Like those having exhausted their benefits, they too are unemployed but not part of the 29.5m still getting benefits at the end of August.

Joining the ranks of those unemployed but not receiving benefits are the millions who never got benefits because they simply gave up looking for work for various reasons and dropped out of the labor force—which puts them in a category in which, according to US labor department methodology, they aren’t counted as unemployed. They may be out of work, but given the oxymoronic way the US defines unemployed they aren’t considered unemployed for purposes of calculating the unemployment rate!

Finally, there are the additional millions more who never were able to get benefits since March even though they tried, due to various bureaucratic reasons.
Whether having exhausted their benefits, or first time entrants to the labor force not eligible for benefits, or whether they’ve dropped out of the labor force, or were denied benefits for bureaucratic reasons—all these groups are nonetheless part of the unemployed, even though they are not counted among the 29.5m still getting unemployment benefits.

In short, the 55m who got benefits at some point since March, and the 29.5m who are still getting them, are in both cases just a subset of a much larger number of jobless. There are millions more unemployed who never got on the unemployment benefits rolls since March and still not able to get benefits. There’s at least 10-15 million more jobless but without benefits. That means an unemployment rate, at minimum, of 25%–not the 8.4% peddled by the media apologists for Wall St. and the politicians of the Corporate Party of America (aka Trumpublicans and Democrat wings of that party).

Last April 2020 perhaps as much as 50% of the total US labor force of 160 million workers was jobless for approximately two months. As of today, Labor Day 2020, at minimum a fourth, or 25%, still remains so.

That 25% is about the same jobless rate as occurred during the worst years of the 1930s Great Depression, 1932-33!

Here’s why it’s 25% at minimum today, Labor Day, and quite possibly even more:

(Dissecting the Government’s Low-Ball U-3/8.4% Unemployment Rate)

Despite an actual 25% unemployment rate (i.e. 40 million still jobless) what we hear from the media and politicians is that the unemployment rate is only 8.4%. And thus the total unemployed is only 13.4 million. (When 8.4% is calculated on the 160 million total US labor force, the number unemployed comes to 13.4 million).

The official government statistic of 8.4% jobless is repeated ad nauseam in the media. It’s then picked up by politicians, commentators, and even progressives who should know better and parroted back to the public. But 8.4% is nonsense. A purposely low-balled, cherry-picked number for public consumption. Here’s why:
To begin with, the 8.4% is the government’s official U-3 unemployment rate. The problem with U-3, however, is that it represents only full time workers who became unemployed. But there are at least 50 million workers in the US economy who are not ‘full time’, but part time, discouraged and what the government calls the ‘missing labor force’. The government adds these groups to its U-3 and 8.4%. That raises the unemployment rate in August to 14.2%–not 8.4%. And that translates to a total unemployed of 22.7 million—not 13.4 million.

The 14.2%/22.7 million numbers are carefully avoided in media reporting. One almost never hears the 14.2% and virtually always only the 8.4%, regardless that both are official government statistics.

But even that 14.2%/22.7m is grossly under-estimating the total unemployed. Remember that other government statistic, i.e. those receiving unemployment benefits? Workers receiving benefits as of late August was 29.5 million. And that represents a 18.4% jobless rate. Obviously, if a worker is getting benefits, he/she must be unemployed, right? But you’ll hear 29.5 million and 18.4% in the media even less than the 14.2% and 22.7 million.

In the case of the 29.5 million, moreover, we have another example of ‘low-balling’ and cherry-picking a statistic –not unlike cherry-picking the U-3 stat instead of the U-6. The media reports the number of workers getting benefits at only 16 or 17 million, not 29.5 million!

But here’s what they don’t explain when citing only 16-17 million getting benefits: That number accounts only for workers receiving unemployment benefits under the traditional State Unemployment Benefits system. The 16-17 million excludes independent contract workers, gig, freelance, and others getting benefits under the supplemental Pandemic Unemployment Insurance (PUC) program created last March as part of the Cares Act. In other words, there’s two unemployment benefits systems and the media typically chooses to report only the one when indicating workers getting benefits. There’s the traditional State Unemployment Benefits system and the new Supplemental PUC system that for the first time ever has provided benefits for the 50m non-traditional workers who were before March never eligible for benefits but are now and will continue to be eligible at least through December 2020 when that PUC system expires. Once again, it’s media cherry-picking and number low-balling time.

The State system and the PUC system together comprise the 29.5 million workers still getting unemployment benefits. 29.5m receiving benefits is certainly more than 22.7m (U-6) and even more so than 13.4m. It’s not that the government job statistics consciously lie (although in some cases they come quite close). It’s just that the government produces low ball numbers for the media to pick up, which they do and pound away at. And then commentators, politicians, business sources play their role of spreading the low ball numbers and conveniently ignoring other data.

How then did the US economy get to 29.5 million and 18.4%? Here’s the trajectory: In April more than 6 million workers filed for benefits every week for two weeks, followed by 3-5 million more for several more weeks thereafter! The weekly new benefits filing rate declined as the economy began to reopen in May. However, after May new State unemployment benefit claims still averaged 1 to 2 million every week through July; In addition, the number of PUC initial benefit claims per week also exceeded 1 million a week, every week, through July as well.

The combined totals of the two programs—State and PUC— thus never fell below 2 million initial filings a week throughout the period of the reopening of the economy, from May through July. It has also remained a combined more than 1.5m/week throughout August. That’s 6 million new unemployment filing claims—i.e. 6 million newly unemployed—in just the last month of August. Bringing the total on unemployment benefits to the 29.5 million.

But wait! The 29.5m represents only unemployed workers who were able to get benefits. There’s many more workers who became jobless but were unable to successfully get benefits; or who gave up even trying in the first place and simply dropped out of the labor force altogether. Who are they? And how great are their numbers?

Their numbers are well north of even the 29.5 million and 18.4% unemployment rate. The true total jobless includes their numbers plus the 29.5 million.

For the 29.5m receiving benefits as of Labor Day 2020 excludes those jobless who were unable to get benefits in the first place, who filed unsuccessfully for benefits, who got lost in the bureaucratic process of filing and never got benefits, or who just couldn’t figure out how to file and were not helped and gave up. The 29.5m also represents those having exhausted benefits during the last six months. And those who chose not to file even though unemployed. Finally, the 29.5m excludes new entrants to the labor force over the past six months who weren’t eligible for benefits but haven’t been able nonetheless to find work given the collapse of the economy! All these categories of jobless workers represent the unemployed as much as those receiving benefits include the obviously unemployed. So the number of jobless is actually much higher than even 29.5 million. The 29.5m is therefore just a subset of the true total unemployed.
So how many more are jobless but not getting benefits as of Labor Day 2020?

(Estimating the Actual Jobless—With & Without Benefits)

You won’t get an accurate number from the government of the total unemployed who didn’t get benefits but have been, and remain, nonetheless jobless since February 2020.

However, private research surveys do give us an idea. MarketWatch, a business research and media company, published an interesting feature story in Fidelity.com this past week, based on its survey of the Philadephia/Mid-Atlantic region of the economy. That case example survey provides a reasonable estimate of the magnitude of those jobless since March 2020 but not among the 29.5m that succeeded in obtaining unemployment benefits.

Of the total number of workers in the Philadelphia, Mid-Atlantic US region who lost their jobs since February, MarketWatch reports that only 87% actually filed successfully for benefits. And of that 87%, only 65% who bothered to file actually ended up getting benefits. That means only 52%, or roughly half of the unemployed in the Philadelphia area, actually got unemployment benefits. The other 48% were just as much out of work, but without benefits.

If Philadelphia represents a microcosm and relatively accurate sample of the entire US economy labor market, simple extrapolation means that the 55 million who successfully got benefits since March 2020 may represent barely half of the total of those who have been unemployed since March!

That means the 29.5 million still getting benefits may represent barely half of all those still unemployed. There may therefore be between 40 and 50 million workers in America still jobless—those still getting benefits (the 29.5m) and those without benefits (10m to 20m).

Thus, the oft-reported official US numbers of 8.4% unemployment rate and 13.4 million total out of work is dwarfed not only by the government’s own alternative U-6 data, as well as by its own data showing 29.5 million jobless getting benefits, but also by the fact the total jobless without benefits may be nearly as large as those with benefits.

Assuming the low-end estimate of 10 million still jobless but without benefits, and adding that to the government data that shows 29.5 million still on benefits, a total jobless of at least 40 million is the result. And that’s the low end assumption. It may be well over 40 million as of end of August 2020.

40 million is 25% of the labor force. And it’s far greater than the 8.4% and 13.4 million that the media and politicians keep drumming into our ears. What the media and politicians are telling us is only one-third of the total unemployed!
Corroborating this estimate of at least 25% unemployed today is yet another government statistic called the labor force participation rate, or LFPR. It represents workers who have dropped out of the labor force altogether. It’s in addition to the 29.5m and 18.4% rate since, by government guidelines and definitions, those who drop out of the labor force cannot receive benefits.

(Labor Force Participation Rate Suggests 5.5 Million Dropped Out)

The Labor Force Participation Rate (LFPR) is the percent of working age Americans who have left the Labor Force. They are neither working nor actively looking for work. But they are jobless nonetheless and should be considered among the unemployed. The LFPR was 63.4% of the 164.5 million civilian labor force in February 2020. By August the LFPR dropped to 61.7% out of a 160 million labor force. The difference translates into approximately 5.5 million workers who dropped out of the labor force since February 2020. Having dropped out they are not actively looking for work and therefore not considered unemployed by the government for purposes of calculating unemployment rates. Nor are they eligible to receive benefits since, as drop outs, they are not actively looking for work. However they are nevertheless unemployed and their 5.5 million are additional to the 13.4 million U-3 and 22.7 million U-6 unemployed or the 29.5 million getting benefits. They are among the ‘other’ 10-20 million jobless but not counted by the U-3/U-6 or included in those receiving benefits. Their number strongly corroborates that there are many millions more unemployed—not getting benefits or ignored by the government’s official monthly jobless numbers.

Let’s look at the latest of those government monthly employment numbers. Once again what appears is a fudging and manipulation of the numbers in yet other ways as well.

(August 2020 Government Employment Report)

The first thing to know about the August Employment Report is that it isn’t for the month of August. It is only for the first two weeks of the month (and the last two weeks of July). The data cuts off around the 12th of the month. So what we’re looking at in a ‘August’ report is really July 13 to August 12 jobs data—i.e. before unemployment claims began to rise again in late August.

Second, it’s important to understand that the August jobs numbers are not the actual number of jobs created July 13-August 12. It is not the raw data of actual jobs created or lost that’s reported—for August or for any month in the Labor Dept jobs reports.

The government takes the actual raw data and performs various statistical operations on that raw jobs data and reports that adjusted statistic as the actual number of jobs, even though it isn’t. But that’s what all statistics are—an operation and adjustment on the actual raw data. Moreover, the August raw data itself may be over-stated as well, not just altered by the statistical operation(s).

Raw (actual) jobs data comes from several sources: Large businesses report to the government changes in employment, layoffs, hires, etc. (called the Establishment Survey) The government also surveys a sample of households monthly (called the Population Survey). But there’s a third, more questionable source, based on data from the creation and destruction of small businesses, called the (net) New Business Development survey (NBD). That NBD data, however, represents businesses destroyed or created 6 to 9 months before the month in question—i.e. in this case August. So we get six to nine month old data integrated with current data from the Establishment and Population surveys. Mixing such older data with more recent is a questionable statistical practice. It means adding positive net new business development pre-March and Covid, in January-February, to current jobs data. That has the effect of dampening the actual numbers of August jobs unemployment. That is, it adds to and over-estimates the number of jobs created in August. If net business development for July were used—not January/February—it would mean integrating massive small business destruction that has occurred under Covid since March. That would have the opposite effect: it would dampen job creation numbers in August and increase unemployment numbers.

That’s just one example how ‘statistical operations’ on data can serve to exaggerate job growth and under-estimate unemployment.

Another sometimes questionable statistical operation is called the Seasonality adjustment. The seasonality statistical adjustment in August reduced the number of new filings for unemployment benefits in just the last week of August by 130,000. The government then reported a ‘seasonally adjusted’ 881,000 new unemployment claims for the week ending August 29, when the actual number was 1,011,000.

Similarly, in August there were 9,118,000 reported as unemployed in August when the actual data, not seasonally adjusted, for August showed 9,286,000 actually unemployed—i.e. a difference of 168,000. Put another way, there were 168,000 more jobless in actuality than reported as unemployed. 168,000 were artificially reduced from the unemployed ranks due to statistical operations involving just seasonality alone!

The statistical models assume more return to work at the end of summer than, say for instance, at the end of spring. But the point is these models are based on assumptions developed in normal times under normal conditions. Since Covid neither times or conditions are ‘normal’. Yet the government continues to use the same assumptions, models, and statistical operations to change the actual data, the actual number of employed and unemployed, to the statistical representations of the actual numbers!

The latest August official Labor Dept. job data report says 1.37m new jobs were created. This is the statistic. But the actual data, for above reasons, is far fewer new jobs and far more unemployed.

The August Report is biased in yet another way. It purports to show the condition of the US private sector economy. But 238,000 new US census workers were hired in August who’ll be gone by October. Take away the seasonality adjustment of 168,000 jobs and the 238,000 very temporary government Census workers, and the private sector actual job gain in August was roughly 964,000 not 1.37m. Even without the deduction of seasonality, the private job report company, ADP, often cited as a check on government job reports, reported only 428,000 net jobs growth in August—i.e. less than half of the government’s August jobs report.

1.37m new jobs reported, minus the 168,000 seasonal upward adjustment and minus the 238,000 Census workers, and the difference is 964,000 actual net private sector jobs created in August, or about half a million fewer than in July.

Even accepting the government’s own inflated monthly jobs numbers, the rate of monthly job growth has been slowing rapidly since May 2020: In May 3.4 million new jobs were reported as created. In June, as the economy reopened virtually everywhere, 4.7 million new jobs. But in July, as the economic rebound began to fade, only 1.5 million, and now as of August 12, only 1.37m. In short, even questionable statistical operations cannot total cover up the obvious downward trend.

Perhaps a better indicator of this downward trend post-August 12, is the more than 4 million workers who have newly filed for unemployment benefits the last three weeks, and undoubtedly hundreds of thousands more were also newly jobless but who were not able to get benefits or just dropped out of the labor force giving up searching for a job in today’s deeply depressed labor market.
And yet we read and hear from the media and politicians that the job market is healing rapidly and job recovery is accelerating—even as data show it is in fact deteriorating. We hear unemployment is declining fast when in fact it has begun to rise once again.

(Summing Up Jobs: March Through August 2020)

To sum up the bigger true picture of jobless during the first six months of the Covid era:

• 55 million filed for benefits, state and PUC, since last February, out of 160m labor force
• Tens of millions more failed to file or filed unsuccessfully and didn’t get benefits
• 29+ million are still getting benefits as of September Labor Day 2020
• 10-20 million still unemployed but not getting benefits as of Labor Day 2020
• 1.5 million are continuing to file first time for benefits weekly as of early September
• 8.4%/13.4m official U-3 jobless rate is the preferred ‘cherry picked’ media number
• 14.2%/22.7m is government’s alternative data (U-6) yet ignored by media & politicians
• 13.4 or 22.7m still falls far short of the 29.5m/18.4% actually still getting benefits
• At least 5.5m dropped out of labor force the past 6 mo. but not considered unemployed
• The actual unemployment rate is 25% and 40 million are still jobless, at minimum
• Even government monthly stats show a sharp slowing of new jobs added each month
As bad as the picture looks for Phase 1 (March-to Labor Day 2020) of the current crisis, future prospects for jobs for American workers after Labor Day 2020 appear even bleaker.

(2nd Wave of Restructuring & Permanent Job Loss)

The Covid virus did not cause the current economic crisis—i.e. the 2nd Great Recession. It did precipitate and accelerate and deepen that crisis, however. The US economy was weakening steadily throughout 2019, with the important sectors of business investment and manufacturing actually contracting throughout the year. Should the virus therefore disappear overnight, the deep wounds to the US economy will remain. Many of the 40 million furloughed starting in March and still jobless will not soon be recalled to their prior work—if at all. Entire industries like travel, entertainment, food & lodging, and others will not return to the ‘old normal’ of pre-Covid. A new normal will occur, but it will be one based on a much reduced output in various industries and companies and therefore employment.

Many major corporations have already announced thousands—and in some cases tens of thousands—of permanent layoffs that will take effect in the coming months. These layoffs will be permanent. They represent the leading edge of a coming second wave of job loss.

Industries deepest affected by the growing permanent restructuring and downsizing include Airlines, surface transportation, cruise lines, resorts and hotels, casinos, malls and retail services, education services, local food services, and many sectors of manufacturing that support all these industries with products and maintenance services. This is a large swath of the US economy, in both GDP and employment terms. A clearer picture of which industries, and how deeply impacted, will be clearer after September 30 when the government publishes its quarterly industry-specific statistics for the second quarter 2020.

In the meantime, announcements of thousands of planned layoffs are being announced weekly by United, American, and other airlines; by Boeing and other aerospace suppliers; by big box mall-based retail companies like JC Penneys, Kohls, Nieman Marcus and others; Movie Theater chains AMC and Cinemark; oil drilling and fracking companies; hospitals’ non-Covid related services health workers; beverage suppliers to hotels and restaurants like Coca Cola—to mention just those making front business page news in recent weeks. Tech companies are all restructuring despite healthy profits performance, shifting to remote employment on a major scale that reduces employment costs via layoffs. They will require therefore fewer building support and operations employees. Many other businesses may also shift to remote activity, with the result that urban office buildings will become less employment populated and much of the local city support services for the office building sector will dramatically downsize in employment as well.

The Federal Reserve Bank’s latest ‘Beige Book’ summary of the US economy warned that millions of workers temporarily furloughed since March may have been permanently laid off by August and more may become so. This shift of temporary laid off to permanent layoff status is corroborated by a survey that showed 3.4 million workers believe they won’t be recalled because their companies have either permanently closed or said they planned to close.

Added to this leading edge of the next wave of layoffs due to business restructuring and downsizing is the likelihood of millions more public sector state and local government layoffs. More than a million government workers have been already laid off since March. Budget and deficit problems accelerating rapidly for state and local governments due to the Covid pandemic (i.e. more expenses amidst collapsing tax revenues) will result in still more public employee layoffs. It’s been estimated these governments will need between $500 billion and $940 billion in bailout rescue in a new stimulus bill from Congress to avoid the mass layoffs. However, it appears extremely unlikely they’ll get much, if anything, in a next Congressional stimulus bill in 2020. Layoffs are therefore inevitable and in some of the larger states and cities they will be significant and forthcoming before 2020 year end.

Small business failures and permanent closures are already rising significantly. As small businesses close, jobs associated with them will disappear. And the numbers could easily amount in the millions by the end of 2021.

There are roughly 30 million small businesses in the US economy. Millions of those temporarily closed since March will fail to reopen. And the worse may be yet to come. The National Federation of Independent Businesses, an industry trade group for small business, forecasts 21% will likely fail within another six months. That’s one-fifth of the 30 million or about 6 million. Even if a high end estimate, the number is still unprecedented. At the low end is the US Census ‘Business Pulse’ survey that predicts a 5% small business job loss. That’s 1.5 million closures. Whether 6 or 1.5 million, it’s a large number with an even larger number of employees thrown out of work as the businesses close in coming months.

Other forces driving a second wave of layoffs are more difficult to estimate but no less likely. Among them include the Covid related requirement that K-12 schools implement home remote school education services. Many working class households are two-parent wage earners. They lack resources to pay for babysitters or nannies. Those with K-6 year old children in particular will be forced to have one parent quit and stay at home to ensure home schooling. These ‘quits’ will not show up as unemployed, since the parent is ‘out of work’ but not actively ‘looking for work’. They will show up as labor force drop outs. But they will be unemployed nonetheless! It’s uncertain how wide spread the remote K-8 education services will be this fall, or how long it will last. One recent estimate, however, by Brevan Howard Asset Management to its investors, concluded no fewer than 4.3 million US workers could stay home given lack of child care arrangements. A resurgence of Covid may mean millions more may have to quit their jobs and choose unemployment in order to provide their young children education via remote learning.

Another development that for now is difficult to estimate as well is the impact on employment of the lack of a necessary fiscal stimulus for households. The elimination of the $600 supplement pandemic unemployment benefit at the end of July has resulted in a reduction of no less than $65 billion in consumption spending per month starting this past August. Evictions and mortgage foreclosures will also have a negative impact on consumer household spending, which is nearly 70% of the economy and US GDP. Already the loss of the $600 benefit, combined with rising evictions, is having a major effect on consumer confidence which in August began falling again sharply. This could be exacerbated by an inadequate stimulus bill in September. Reduced working class benefits and household incomes will have an impact on consumer demand for products and services in the economy across the board, affecting nearly all sectors of businesses. And as that demand drops, it will almost certainly lead in turn to less consumer spending and in turn to more layoffs.

The preceding five forces—i.e. large corporate restructurings and permanent downsizing, a sharp rise in public sector layoffs, unprecedented business closures, remote schooling requirements of two working parent families, and general demand reduction due to inadequate next stimulus—all translate into a second wave of layoffs now emerging.

These longer term job reduction forces mean the recent tepid rebound in jobs during May-July will likely give way to a relapse in the US labor markets in coming months and a rise in unemployment. The trend may already be appearing as of late August as first time claims for unemployment benefits have begun to rise once again.

And then there are still the ‘known unknowns’ that could exacerbate conditions further: the increasingly likelihood of a historic political crisis surrounding the November 3 elections. That will breed massive uncertainty and potentially an even worse economic crisis and associated layoffs. Or the Covid virus could resurge significantly once again as winter sets in, as many fear will happen. That too will lead to more shutdowns and furloughing of jobs once again. Even further down the road is the 2021 ‘black swan’ event of another financial crisis, as businesses, households, and local governments begin to default on their debts and precipitate another financial crisis similar to 2008-09.

Jack Rasmus
September 8, 2020

posted August 20, 2020
Trump’s Executive Orders: EOs as PR and FUs

Less than 24 hours after Trump broke off negotiations on the economic stimulus package with Congressional Democrat leaders, Pelosi and Shumer, last Friday August 7, Trump issued a series of Executive Orders (EOs) that he had been signaling and threatening all last week well before the break up.

Almost certainly the legal crafting of the EOs were written long before negotiations were dramatically ended by Trump’s hatchet man leading his negotiating team, staffer Mark Meadows. Trump clearly planned the break up and his EOs some time ago.

Trump, Meadows, Mnuchin and McConnell cleverly set up and sucked in Pelosi and Shumer into negotiations last week, never planning to conclude a deal by Friday, in the process getting them to reveal their priority demands and securing from them major concessions worth $1 trillion—for which the Democrat leaders apparently got nothing in return.

A day later, Trump dropped the hammer and issued his EOs, which are designed more as PR for his election campaign. They certainly won’t provide anything remotely necessary as fiscal stimulus to confront the US economy’s emerging fading rebound in recent weeks.
Upon close inspection the EOs are therefore mostly smoke and mirrors, designed to produce useful electoral soundbites for his campaign between now and November. The EOs are more PR for public relations purposes, while also serving as FUs (F*** You) to the Democrats.

EO #1: Payroll Tax Cut

The EO that has gotten the most media attention thus far is his proposal to introduce a payroll tax cut, which neither the Republicans or Democrats in Congress were calling for. Why were they not? Because they had both already agreed to an alternative measure far more lucrative for business: an expansion and extension of the ‘Retention Tax Credit’ passed in March as part of the CARES ACT stimulus. The retention tax credit has provided a direct tax cut to business worth $55 billion since March. Businesses get the tax credit by simply saying they didn’t lay off workers they might have. But any business can make that claim, even if they had no plans to lay off, and thus get the credit. In the current negotiations that were in progress until last Friday, both sides—Republicans and Democrats—had agreed to expand and extend the ‘Retention Tax Credit’ costing another $194 billion in addition to the $55 billion to date.

Another reason why even the Republicans in Congress weren’t all that interested in Trump’s Payroll Tax Cut was that Business had already been allowed to defer their share of the payroll tax in the CARES ACT. Payroll taxes are paid for by both employers and workers, each contributing half the total 15.3% to Social Security and Medicare. (6.2% of the payroll tax goes to social security plus another 1.45% for Medicare). Employers have already therefore had their share of the payroll tax deferred (but not yet permanently cut). Deferral means employers have to start paying it back by the end of 2021. The media hasn’t provided much attention to that. But the employer tax ‘cut’ is really a tax ‘deferral’ that has to be restored at a later date to the social security and Medicare trust funds.

Trump wants not only a deferral of the 7.65% workers’ share immediately, but also to make it permanent later. That means the trust funds will never see the money restored. And if that’s his plan for the workers’ 7.65% share, it will presumably mean the same for the employers’ 7.65% as well. That translates into an end of the social security and Medicare programs! Ending the programs means, in turn that 50 million American households would be immediately thrust into poverty. Consumption would collapse. And economic depression would almost immediately result. But no matter to Trump, so long as he can spin it for re-election purposes in the interim.

Trump administration mouthpieces have been trying desperately to ‘walk back’, as they say, Trump’s disastrous declaration to make the payroll tax cuts permanent and thus destroy social security and Medicare. Mouthpiece #1, Larry Kudlow, says he didn’t mean permanent in fact.

Trump is caught between a rock and a hard place. By deferring the payroll tax the likely response by employers, as others have pointed out, is that the employers, who are responsible for collecting the payroll tax from workers, may do so and just sit on the collected payroll taxes from their employees.

Employers by law are responsible to collect and send the taxes to the government. If they don’t collect from their workers, thus allowing them to realize a real wage increase in their paychecks equal to 7.65%, then the same employers will be liable to pay out of their own profits what they didn’t collect once the deferral period ends. Employers will have to make up the payroll tax loss in 2021—at the same time they have to pay back the deferral on their own 7.65% share by the end of 2021!

Another related problem is that should workers have their 7.65% deferred and realize a wage increase in 2020 from it, they’ll have to declare that as income and pay taxes on it come April 2021. So it won’t be a 7.65% net income gain for them either.

Apparently Trump’s gambit on the payroll tax has had even some Republican Senators choking on the stupidity of the measure. Republican Senator from Nebraska, Ben Sasse, quickly called it “unconstitutional slop”!

EO #2: $400 Supplemental Unemployment Benefits

The supplement Pandemic Unemployment Compensation program, PUC, introduced last March in the CARES ACT provided for an extra federal $600/week benefit in addition to the States’ Unemployment Benefit programs. Those state programs provide up to $450 a week (California) to as little as $235 a week (Mississippi). The $600 was designed to help unemployed stay in their rental apartments and homes. $235 a week, or about $10,000 or so a year, is grossly inadequate to keep people in their homes during the pandemic. So the $600 was added, and not just to cover household living costs but also to stimulate consumption and the economic recovery. Studies show households earning less than $25,000 who received the $600 spent it all. Other university studies show the $600 has not discouraged workers from returning to their jobs.

Trump’s EO proposes to cut the $600 to $400 a week. But not even $400. The federal government will pay $300 and the states will have to kick in the other $100. If they do not, the government $300 may not even be available, according to some sources. The $600 since March has benefited between 14m and 28m unemployed. It generated $85 billion/month in consumer spending and thus GDP to the US economy. Reducing it to $300 a week—as Trump’s EO proposes—cuts that in half, which means at least $40 billion a month will be taken out of the economy and US GDP. Some stimulus that!

And where will the finances to provide the $300/week benefit come from? It is unclear, although Trump administration mouthpieces have raised the possibility the money will be diverted from the Disaster Relief Fund’s $44 billion—i.e. just as the hurricane season arrives! But $44B will only fund the $300/week for about five weeks at most. Not to mention that transferring funds from a program authorized by Congress is also another unconstitutional action—just as is Trump’s payroll tax cut proposal. It too is just another indication of Trump’s intention to run roughshod over any constitutional requirement that gives authority to Congress, and especially the US House of Representatives.

EO#3: Moratorium on Evictions

There are 108 million Americans living in approximately 48 million rental units in the US. The CARES ACT of last March provided for evictions moratorium in only about one third that total, specifically in apartments subject to federal housing finance programs. So evictions have been continuing ever since the pandemic and great recession began. But they have begun accelerating in July as even the limited moratorium expired on July 25. Estimates are that 12.5 million are potential evictions in the federal covered programs–11 million of which in 2020. Other estimates of potential evictions rise to as much as 30 million plus.

Trump’s eviction moratorium Executive Order does not prohibit evictions at all. It just says states should “consider” suspending or limiting evictions. This particular EO is just typical Trump smoke and mirrors, allowing him to say something in his tweets and public appearances that he’s stopped the evictions. In this case, the EO is just normal Trump BS.

EO#4: Student Loan Deferral

Whereas the March CARES ACT provided for the suspension of student loan payments and zero interest accrual through September 30, 2020. Trump’s EO merely extends it up to the end of December 2020. Or possibly earlier, since the EO states: “It is therefore appropriate to extend this policy until such time that the economy has stabilized, schools have re-opened, and the crisis brought on by the COVID-19 pandemic has subsided.” What’s ‘stabilized’? How many schools must ‘reopen’ and what constitutes ‘pandemic has subsided’? In other words, there’s no guarantee even the suspension is extended through 2020.

The current crisis provides no better opportunity for the US government to simply expunge federal student loan balances and obligations. The program is a travesty. It charges students, now in debt to the tune of $1.6 trillion, interest rates as high as 6.7%. That compares to the ability of businesses to obtain 10 year equivalent loans at interest rates as low as 2% today. Why is the federal government charging millions of students such usurious interest rates? Because it wants to push them off the Dept. of Education loan system into the arms of the private banks to re-consolidate their government education loans. Banks charge now about 4% to consolidate, less than the government’s 6.7% but far more than the 2% they charge their business customers for equivalent loans. Abolishing the $1.6 trillion debt load on students will have no effect whatsoever on US government finances and US economic output. In fact, it would likely result in a major stimulus to consumption and therefore economic growth. But Trump’s EO does nothing except allow him to say he improved relief on student debt by some weeks before the November elections.

Executive Orders & Deepening US Constitutional Crisis

While running for president before 2016 Trump continually attacked Obama for trying to legislate immigration reform by Executive Order. Now he is doing the same, expanded by magnitudes. Trump has revealed time and again plans to govern by bypassing Congress. He has cornered the Federal Judiciary. Not just the Supreme Court majority but hundreds of his ideological appointees to the Federal Judiciary at all levels are now in his pocket. He clearly believes he can abrogate Congressional legislative authority and govern by decree: executive orders as well as national emergency declarations and similar legal maneuvers no doubt already being planned by Bill Barr and Steven Miller. The current flurry of EOs should be viewed as just the latest tactics in his broader strategy. They are largely public relations measures introduced primarily with his eye on the November elections.

They are also ‘FUs’ directed at the Democrats, declaring his intent to step on them at every opportunity in the run up to the November elections. It’s as if he’s saying and taunting them: “See, I outmaneuvered you guys again. I set you up allowing my hatchet men, Meadows and McConnell, to extract concessions from you in negotiations. I let you think you could get a deal. Now I’ll announce those measures and you can agree to them or not. I’ll spin it and take the political credit. Now you can come back to the bargaining table and give me some more concessions that I’ll take credit for as well. I’m going to string you along like this until November. I’ll look like I’m doing something and you’ll look like you can’t get anything done”.

A Trump De Facto Coup Scenario

Trump will never accede to the results of the upcoming November elections, should he lose. His strategy becomes increasingly evident with every passing week and action. The EOs are just the latest event in that strategy.

The mostly likely scenario for November is his plan to declare on November 4 that the voting has been tampered with as a result of mail ballots and the US post office refusing to process and mail millions of ballots. He’ll declare the November results null and void, and declare the US Supreme Court should decide in his favor for a second term—just as it did (unconstitutionally) in 2000 when the Court stopped the voting count in Florida. This time he’ll challenge the voting count in every state he’ll lose, but not in those he’ll win.

It is not beyond the possible he’ll also call for his radical right, gun-toting friends to come to Washington to surround and protect the White House while the crisis intensifies in December-January. His DHS troops and ICE cops are also available to provide physical protection. Democrats in Congress will rant and rail about it all, but have no executive force to stop him or drag him out of the White House in January when he refuses to leave. Nor will the Washington DC police, or FBI, or US military units want to confront a White House surrounded by his armed supporters. As time drags on, his position will become stronger.

Make no mistake. This is not an impossible scenario. Democrats and moderates think he cannot thus flout the US Constitution and law. Yes he can. And he likely will.

Jack Rasmus is author of the recently published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, January 2020. He blogs at jackrasmus.com and his twitter handle is @drjackrasmus. His website is http://kyklosproductions.com.

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