Feeds:
Posts
Comments

To listen to my March 17 radio show dedicated to analyzing the Fed’s latest rate hike, go to:

http://prn.fm/?s=Alternative+Visions

SHOW ANNOUNCEMENT:

The Fed raised interest rates again this past week. Jack explains it has little to do with it having reached its inflation or employment targets, but represents the major policy shift underway by US economic elites. From Fed low interest policy for eight years subsidizing stock, bond and financial assets—and thereby corporate and investor profits and incomes of the wealthiest 1%–the shift now underway is to subsidize profits and incomes of the 1% by cutting taxes, deregulation, and moderate infrastructure spending. Sustained low Fed rates were beginning to cause more instability in financial markets after 8 years. They played their part in boosting profits and incomes; now another policy ‘mix’ is emerging. Jack shows how Fed 2% inflation and job targets are phony justifications for Fed low rate policy continuation; how and why long term rates which the Fed doesn’t control will continue to rise, and what the global responses and effects in Europe, Japan and China will be to the new Fed direction. Will the Fed be used by the US economic elite to check Trump? Possibly.

By Jack Rasmus
copyright 2017

While Republicans on the Right and the Far Right wrangle over whether to repeal the Obamacare Affordable Care Act, or just revise it, the Ryan proposal does both. How can that be? Revise and yet repeal?

The repeal is every dollar and cent that the Obamacare Act taxed the rich and their corporations. The rest, the non-funding features is what’s being revised. Only in the past 24 hours is the corporate press even discussing the tax increases under the ACA now being totally repealed by the Ryan-Trump bill. That’s because they can no longer ignore it, since it was reported today by the Congressional Budget Office (CBO). But they knew the details weeks ago. So did the Democrats in Congress. Yet they said nothing. How much in taxes were being cut for the wealthiest individuals and their corporations are we talking about? Over $590 billion over the decade.

About a fourth of the total cost of the ACA, was paid by tax cuts on wealthy households that was repealed. That included a repeal of the 3.8% tax on earned income of the wealthy. Another repeal of the tax on net investment income by the same. Both are gone by the end of this year. Add to that the following business tax cuts also now totally repealed: the tax on prescription drug makers that provided $25 billion in annual revenue. The $145 billion repeal of the annual fee on Insurance companies. And the $20 billion on medical device makers. That’s another $190 billion tax cuts for businesses. But there’s still more tax repeal. The employer mandate is also repealed. If companies didn’t provide their own employer health insurance, they too had to pay into the system. The CBO report estimates the mandates—employer and individual (also repealed) amounted to $156 million in 2017 alone. That’s inflation adjusted. So the market price is at least 5% higher, for a total of around $165 million. The mix in the employer-individual contribution from the mandates, let’s assume, is 50-50. So the corporate tax cut is at least $82.5 million from the repeal of the employer mandate.

Added all up, the total reductions for businesses and the wealthy, according to the CBO’s own estimate, is $592 billion, “mostly by reducing tax revenues”.

What we have in exchange for the $592 billion tax cuts on the rich is a de facto tax hike on the 10 million plus consumers who bought plans on the exchanges, in the form of the elimination of the subsidies that had been provided to help them purchase plans. Subsidy repeal is just a tax hike by another name. How much ‘savings’ per the CBO from the repeal of all premium subsidies and assistance under the ACA? CBO estimates $673 billion.

So the Ryan-Trump Taxman taketh $673 billion from the 10 million consumers who bought plans and he giveth $592 billion to the wealthy and their corporations who, heavens knows, need it more than the rest of us. After all, their corporate profits only tripled since 2010 and the wealthy captured only 95% of all the national income gains since 2010, according to studies by the University of California, Berkeley economists (based on IRS data). And the rest of us have done so much better! (By the way, here’s another business-health care trivia item: companies that provide employer health insurance get to write off their contribution costs. Their workers don’t get to write off their share deducted from their wages, but the companies do. Their tax cut savings amounts to $260 billion a year). Employers already providing health plans were supposed to pay an excise tax on their plans, but even the Obama administration put that one off, so the Ryan-Trumpcare delay of that excise tax hike until 2026 is not really a new tax cut or part of the $592 billion.

As the slick marketers on the online sales channels say, ‘But wait, there’s more. There’s a two for one offer!’ The double whammy offer in the Ryan-Trumpcare plan is an additional whopping $880 billion cut in Medicaid spending by the government. Another 10 million of those citizens most in need of health care services—composed mostly of the elderly, the disabled, and single mothers heads of households—will be now thrown under the Trumpcare bus as virtually the entire change in Medicaid will be, yes, repealed.

The ‘Multiplier Effect’ Is Bad News for Ryan-Trumpcare

So how does the $673 billion in subsidy assistance spending cuts and $880 billion in Medicaid spending cuts, plus $592 billion in wealthy-corporate tax cuts, and the new spending of $303 billion, impact the US economy in net terms? It will be a big negative hit on economic growth as measured in Gross Domestic Product terms. Here’s why.

There’s this thing called the ‘multiplier effect’ in calculating GDP. It’s not a theory. It’s an empirical observation. A fact. A dollar in spending gets spent several times over and the total at the end of the year adds up to more than a dollar added to GDP. Spending on lower and middle income groups results in a bigger ‘multiplier’. Spending on the wealthier a smaller. They save more than the net change in income they receive than do lower income households. Furthermore, empirical observation shows that tax cuts of any kind (business, investor, or consumer) have less a ‘multiplier’ effect than do spending, and tax cuts for the wealthy and for corporations even less an effect than consumer tax cuts. Ok. That’s all ‘economics 101’ but it’s true.

The Ryan-Trumpcare plan gives the wealthy and their corporations $582 billion in tax cuts. Will they spend all that? No. Their ‘multiplier’ is about 0.4 according to best estimates. Give the rich a tax cut, in other words, and they’ll spend 40% of it. That 40% means they will spend in the US economy about $230 billion over the course of the decade, or $23 billion a year on average due to their tax cuts. (They may spend more offshore, of course, especially the corporations, but offshore spending adds nothing to US economy and GDP growth).

Unlike the wealthy and corporations, the average consumer has a multiplier of at least 2.0, and the poor on Medicaid higher than that. But let’s conservatively estimate the government spending multiplier for consumers on the $673 billion spending for insurance subsidies and the $880 billion in Medicaid spending is only 2.0. That means a contribution to GDP of $1.55 trillion ($673 billion plus $880 billion) is times two, or $3 trillion total over the decade. That’s $300 billion a year contribution to GDP. But that subsidies and Medicaid spending is now repealed so it’s a reduction of $3 trillion, or $300 billion a year.

In net terms, we therefore get $23 billion a year in wealthy-corporate added contribution to GDP due to their tax cuts and $300 billion a year reduction in GDP due to the repeal of the subsidies and Medicaid. That’s a net reduction of about $275 billion a year from GDP, which occurs in 2018 and every year thereafter (on average) until 2026.

Based on the US current $20 trillion annual GDP, $275 billion annual net reduction is a little over 1% of the total GDP growth, which according to official government estimates is about 2% annually. The annual reduction in GDP from the Trumpcare proposal is likely around .2%, including ‘knock on’ effects, reducing annual GDP to around 1.8%.

And what are the further ‘knock on’ effects to consider as well?

Premium and Price Inflation

The Ryan-Trumpcare proposal will almost certainly result in higher premiums and higher out of pocket costs for healthcare services. The higher inflation will reduce consumer household disposable income. That will leave households less income to spend on other items. Since the inflation in health care spending adds nothing to ‘real’ GDP, there’s no gain in GDP from that. But the reductions in household other items, in order to afford paying for the higher cost health insurance, will reduce ‘real’ GDP. So the net inflationary effect is significantly negative, depending on how much health insurance premiums (and deductibles, co-pays, etc.) actually rise.

Ryan and Republicans claim that premiums are already rising rapidly under Obamacare, which is true, especially the past year. But that is likely to continue. The Health Insurance companies have been ‘gaming’ the system and the Obama administration did little to stop them. They will continue to do so in the transition to Ryan-Trumpcare and under it going forward as well.

The Ryan-Trumpcare proposal allows insurance companies to hike premiums for older customers up to five times more than premiums charged to younger customers. That’s up from three times under Obama. Trumpcare also now allows insurers to offer ‘barebones’ plans, with lower premiums but with hardly any coverage whatsoever. This trend was a growing problem under Obamacare, as consumers were signing up for super-high deductible plans ($3 to $5,000 per year) just to be able to afford the lower premiums. They were essentially ‘disaster-only’, called “leaners”, super-stripped down health care plans. The new ‘barebones’ policies will cover even less. This less and less coverage for the same (and sometimes higher) premium is in effect a price hike. Less for the same price is a de facto price hike in premiums. The Trumpcare plan also now permits insurers to charge a 30% surcharge for consumers who drop and then re-enroll. It assumes that premiums will decline, according to the CBO, after 2020. Sure, after 30 years of constant health insurance premium hikes, sometimes double digit, now the insurance companies four years from now will start reducing premiums! If anyone believes that, there’s a bridge on sale in Brooklyn they might look into.

What About the US Budget and Deficits?

The Ryan-Trumpcare proposal takes $673 billion and $880 billion out of spending by government and households (not counting ‘knock on’ negative effects on household consumption) and another $592 billion out in tax cuts for the wealthy and their corporations. That’s a $2.145 trillion hit to the US budget over the next decade. The Trumpcare advocates claim the wealthy-investor-corporate tax cuts will stimulate the economy and therefore tax revenues. But the 0.4 multiplier effect suggests only a fraction of that will positively affect the economy and tax revenue growth.

The Trumpcare advocates also claim their plan proposes to give tax credits costing $361 billion to consumers to buy insurance. But that starts only in 2020, so it’s really only $180 billion averaged over the decade. They further point out that another $80 billion in spending will occur in a grant for New Patient State Stability Fund to the States to spend, plus another $43 billion in government spending to hospitals to cover Medicare costs. So that’s about a total of $303 billion new spending to offset the $1.553 trillion spending cuts.

So there’s hundreds of billions in net loss from the tax cuts and the net spending. That means massive increases in the US Budget deficit, and consequent rise in US debt, now more than $20 trillion. The CBO summarizes the net deficit growth of only $336 billion. That is ridiculously low.

It should be noted that this net deficit, driven by tax cuts for the wealthy and their corporations, will be quickly followed by another, more massive general corporate tax cut now working its way through Congress as well. That one is estimated to cost more than $6 trillion over the coming decade. It and the Trumpcare tax cuts are in addition.

And both Trumpcare and the daddy of all tax cuts coming follows on more than $10 trillion in business-investor-wealthy tax cuts that have already occurred under George W. Bush and Barack Obama.

No wonder the wealthiest 1% households captured 95% of all income gains since 2009? And if Ryan-Trump have their way, they’ll get to keep at least that much for another decade. America is addicted to tax cuts for the rich, perpetual wars around the world, and the destruction of decent employment and what’s left of any social safety net for the rest. The current political circus in Washington is just the latest iteration of the policy shift to the wealthy and their corporations at the expense of the rest. There’s more yet to come. And it will be even worse.

Dr. Jack Rasmus is author of the forthcoming book, ‘Central Bankers on the Ropes’, by Clarity Press, June 2017, and the recent 2016 publications, also by Clarity, ‘Looting Greece: A New Financial Imperialism Emerges’, and ‘Systemic Fragility in the Global Economy’. He blogs at jackrasmus.com, where reviews are available.

To listen to my March 10 Alternative Visions radio show analysis of the just announced details of Congress proposals to repeal and gut the Affordable Care Act (and the $500 billion in tax cuts for corporations and the wealthy that it includes), go to:

http://alternativevisions.podbean.com

or to:

http://prn.fm/?s=Alternative+Visions

SHOW ANNOUNCEMENT:

Jack Rasmus dissects the Republican/Ryan proposal of this past week to repeal and replace the Obamacare Act. The proposal is first and foremost a $500 billion a year tax cut for corporations and the wealthiest 1%, as they no longer have to contribute anything to the Ryan-Republican repeal plan. Other provisions of the proposals are described, including the freeze and dismantling of the Medicaid elements, the end of all mandates, ending the sliding scale of in come for credits, etc. This is a tax cut bill, as well as a further privatization of healthcare bill, and should be viewed as the first of a sequence of medical related bills that will make everyone ‘pay more for less’. Next Trump-Republican target: Medicare. Rasmus reviews the pluses and minuses of the Obama ACA, and why it was doomed from the start due to inability to control health cost increases rising since Bill Clinton’s concessions to health insurers. The show concludes with an analysis of the origins of escalating health costs since the 1990s, which have their roots in health insurance companies’ and drug companies’ mergers and acquisitions drive to buy out competitors, and Wall St.’s requiring more profitability in exchange for loans to buy up their competitors. The result for a quarter century has been increasing privatization and rationing of health care costs and services. And it’s about to become worse. (Next week: The Federal Reserve’s next interest rate hike next week and its impact)

Trump is not a new phenomenon. He is the latest, and most aggressive to date, repackaging of corporate-radical right attempts to reassert corporate hegemony and control over the global economy and US society. His antecedents are the policies and strategies of Nixon, Reagan and Gingrich’s ‘Contract for America’ in the 1990s.

Trump has of course added his ‘new elements’ to the mix. He’s integrated the Teaparty elements left over from their purge by Republican Party elites after the 2012 national elections. He’s unified some of the more aggressive elements of the finance capital elites from hedge funds, commercial real estate, private equity, securities speculators and their ilk—i.e. the Adelsons, Singers, Mercers, and Schwarzman’s. He’s captured, for the moment at least, important elements of the white industrial working class in the Midwest and South, co-opted union leaders from the building trades, and even neutralized top union leaders in some manufacturing industries with fake promises of a new manufacturing renaissance in the US. He’s firmly united the gun lobby of the NRA and the religious right now with the Breitbart propaganda machine and the so-called ‘Alt-Right’ fringe.

Trump is a political and economic reaction to the crisis in the US economy in the 21st century, which the Obama administration could not effectively address after the 2008-09 crash. Trump shares this historical role with Nixon, who was a response to another decline in US corporate-economic political power in the early 1970s; with Reagan who was a response to the economic stagnation of the late 1970s; and with the ‘Contract for America’, a program associated with a takeover of Congress by the radical right in 1994, after the US housing and savings and loan crash and recession in 1989-1992. All these antecedents find their expression in the Trump movement and the policy and program positions that are now taking form under the Trump regime.

American economic and political elites are not reluctant to either change the rules of the game in their favor whenever warranted to ensure their hegemony, targeting not only foreign capitalist competitors when their influence grows too large but also potential domestic opposition by workers and unions, minorities, and even liberals who try to step out of their role as junior partners in rule.

This restructuring of rule has occurred not only in the early 1970s, early 1980s, mid 1990s, but now as well post Obama—i.e. a regime that failed to contain both foreign competition and domestic restlessness. US elites did it before in the 20th century as well, on an even grander scale in 1944-47 and before that again during the decade of the first world war.

What’s noteworthy of the current, latest restructuring is its even greater nastiness and aggressiveness compared to earlier similar efforts to restore control.
Trump’s policies and strategies reflect new elements in the policy and politics mix. He’s rearranged the corporate-right wing base—bringing in new forces and challenging others to go along or get out. New proposals and programs reflect that base change–i.e. in immigration, trade, appeals to white working class jobs, economic nationalism in general, etc. But Trump’s fundamental policies and strategy share a clear continuity with past restructurings introduced before him by Nixon and Reagan in the early 1970s and 1980s, respectively.

NIXON-TRUMP

Like his predecessors, Trump arose in response to major foreign capitalist and domestic popular challenges to the Neoliberal corporate agenda. Nixon may have come to office on the wave of splits and disarray in the Democratic party over Vietnam in 1968, but he was clearly financed and promoted by big corporate elements convinced that a more aggressive response to global economic challenges by Europe and domestic protest movements were required. European capitalists in the late 1960s were becoming increasingly competitive with American, both in Europe and in the US. The dollar was over-valued and US exports were losing ground. And middle east elites were nationalizing their oil fields. Domestically, American workers and unions launched the second biggest strike wave in US history in 1969-71, winning contract settlements 20%-25% increases in wages and benefits. Mass social movements led by environmentalists, women, and minorities were expanding. Social legislation like job safety and health laws were being passed.

Nixon’s response to these foreign and domestic challenges was to counterattack foreign competitors by launching his ‘New Economic Program’ (NEP) in 1971 and to stop and rollback union gains. Not unlike Trump today, the primary focus of NEP was to improve the competitiveness of US corporations in world markets.

• To this effect the US dollar was devalued as the US intentionally imploded the post-1945 Bretton Woods international monetary system. Trump wants to force foreign competitors to raise the value of their currencies, in effect achieving a dollar devaluation simply by another means. The means may be different, but the goal is the same.
• Nixon imposed a 10% import tax, not unlike Trump’s proposed 20% border tax today.
• Nixon proposed subsidies and tax cuts for US auto companies and other manufacturers; Trump has been promising Ford, Carrier Corp., Boeing and others the same, in exchange for token statements they’ll reduce (not stop or reverse) offshoring of jobs.
• Nixon introduced a 7% investment tax credit for businesses without verification that he claimed would stimulate business spending in the US; Trump is going beyond, adding multi-trillion dollar tax cuts for business and investors, while saying more tax cuts for businesses and investors is needed to create jobs, even though historically there’s no empirical evidence whatsoever for the claim.
• Nixon froze union wages and then rolled back their 1969-71 20% contract gains to 5.5%; Trump attacks unions by encourage state level ‘right to work’ business legislation that will outlaw workers requiring to join unions or pay dues.
• Nixon accelerated defense spending while refusing to spend money on social programs by ‘impounding’ the funds authorized by Congress; Trump has just announced an historic record 9% increase in defense spending, while proposing to gut spending on education, health, and social programs by the same 9% amount.
• Nixon’s economic policies screwed up the US economy, leading to the worst inflation and worst recession since the great depression; So too will Trump’s.
Similarities between Nixon and Trump abound in the political realm as well.
• Nixon fought and railed against the media; so now too is Trump. The only difference was one used a telephone and the other his iphone.
• Nixon declared he had a mandate, and the ‘silent majority’ of middle America was behind him; Trump claims his ‘forgotten man’ of middle America put him in office.
• Nixon bragged construction worker ‘hard hats’ backed him, as he encouraged construction companies to form their anti-union Construction Industry Roundtable’ group; Trump welcomes construction union leaders to the White House while he supports reducing ‘prevailing wage’ for construction work.
• Nixon continually promoted ‘law and order’ and attempted to repress social movements and protests by means of the Cointelpro program FBI-CIA spying on citizens, while developing plans for rollout in his second term to intensify repression of protestors and social movements; Trump tweets police can do no wrong (whom he loves second only to his generals)and calls for new investigations of protestors, mandatory jail sentences for protestors and flagburners, and encourages governors to propose repressive legislation to limit exercise of First Amendment rights of free assembly.
• Trump’s also calling for an investigation of election voting fraud, which will serve as cover to propose even more State level limits on voters rights.
• Nixon undertook a major shift in US foreign policy, establishing relations with Communist China—a move designed to split the Soviet Union (Russia) further from China; Trump is just flipping Nixon’s strategy around, trying to establish better relations with Russia as a preliminary to intensifying attacks on China.
• Anticipating defeat in Southeast Asia, Nixon declared victory and walked away from Vietnam; Trump will do the same in Syria, Iraq and the Middle East.
• The now infamous ‘Powell Memorandum’ was written on Nixon’s watch, (within days of Nixon’s August 1971 NEP announcement)—a plan for corporate America to launch an aggressive economic and social offensive to rollback unions and progressive movements and to restore corporate hegemony over US society; an equivalent Trump ‘Bannon Memorandum’ strategic plan for the same will no doubt eventually be made public after the fact as well.
• Nixon was a crook; so will be Trump branded, but not until they release his taxes and identify payments (emoluments) received by his global businesses from foreign governments and security services. But this won’t happen until corporate America gets its historic tax cuts, deregulation, and new bilateral free trade agreements from Trump.

REAGAN-TRUMP

The parallels in economic policy and political strategy are too many and too similar to consider merely coincidental. Nixon is Trump’s policy and strategy mentor.

Similar comparisons can be made between Trump and Reagan, given a different twist here, a change in emphasis there.

• Reagan introduced a major increase in defense spending, including a 600 ship navy, more missiles and nuclear warheads, and a military front in space called ‘star wars’; Trump loves generals and promises them his record 9% increase in war spending as well, paid for by equal cuts in social programs.
• Reagan introduced a $700 billion plus tax cut for business and investors in 1981, and an even more generous investment tax credit and accelerated depreciation allowances (tax cuts); Trump promises to cut business tax rates by half, end all taxes on their offshore profits, end all inheritance taxes, keep investor offshore tax loopholes, etc.—more than $6 trillion worth– while eliminating wage earners’ tax credits.
• Reagan cut social spending by tens of billions; Trump has proposed even more tens of billions.
• Reagan promised to balance the US budget but gave us accelerating annual budget deficits, fueled by record defense spending and the tax cuts for business of more than $700 billion (on a GDP of $4 trillion), the largest cuts in US history up to that time; Trump’s budget deficit from $6 trillion in business tax cuts and war spending escalation will make Reagan’s pale in comparison.
• Reagan’s trade policy to reverse deteriorating US trade with Japan and Europe, was to directly attack Japan and Europe ( 1985 Plaza Accord and Louvre Accord trade agreements), forcing Japan-Europe to over-stimulate their economies and inflate their prices to give US companies an export cost competitive advantage; Trump’s policy simply changes the target countries to Mexico, Germany and China. Each will have its very own ‘Accord’ deal with Trump-US.
• The first free trade NAFTA deal with Canada was signed on Reagan’s watch; Trump only wants to ‘rearrange the deck chairs’ on the free trade ‘Titanic’ and replace multilateral free trade with bilateral deals he negotiates and can claim personal credit for.
• Reagan encouraged speculators to gut workers’ pension plans and he shifted the burden of social security taxation onto workers to create a ‘social security trust fund’ surplus the government could then steal; Trump promises not to propose cutting social security, but refuses to say if the Republicans in Congress attach cuts to other legislation he’ll veto it.
• Reagan deregulated banks, airlines, utilities, trucking and other businesses, which led to financial crises in the late 1980s and the 1990-91 recession; Trump has championed repeal of the even token 2010 Dodd-Frank bank regulation act, and has deregulated by executive order even more than Reagan or Nixon.
• Stock market, junk bond market, and housing markets crashed in the wake of Reagan’s financial deregulation initiatives; the so-called ‘Trump Trade’ since the election have escalated stock and junk bond valuations to bubble heights.
• Reagan bragged of his working class Republican supporters, and busted unions like the Air Traffic Controllers, while encouraging legal attacks on union and worker rights; Trump has his ‘forgotten man’, and courts union leaders in the White House while encouraging states to push ‘right to work’ laws that prohibited requiring workers to join unions or pay dues.
• Reagan replaced his chair of the Federal Reserve Bank, Paul Volcker, when he wouldn’t go along with Reagan-James Baker (Treasury Secretary) plans on reducing interest rates; Trump will replace current chair, Janet Yellen, when her term as chair expires next year.

Then there are the emerging political parallels between Reagan and Trump as well:

• Even before the 1980 national election was even held, Reagan’s future staff members met secretly with foreign government of Iran to request they not release the 300 American hostages there before the 1980 election; Trump staff (i.e. General Flynn), apparently after the election, met with Russian representatives to discuss relations before confirmed by Congress. Reagan’s boys got off; Flynn didn’t. Events are similar, though outcomes different.
• Reagan attacked the liberal media. Much less aggressively perhaps than Trump today, but nevertheless the once liberal-progressive Public Broadcasting Company was chastised, under threat by the government of budget cuts or outright privatization. It responded by inviting fewer left of center guest opinions to the show. So too thereafter did mainstream television Sunday talk shows (‘Meet the Press’, etc.); Trump’s attack on the media is more aggressive, aiming not to tame the media but de-legitimize it. He has proposed to privatize the Public Broadcasting Corporation.
• Reagan staff directly violated Congressional laws by arranging drug money seizures from Latin America by the CIA to pay for Iranian arms bought for the US by Israel, that were then distributed to the ‘contras’ in Nicaragua to launch a civil war against their duly elected left government. Nixon had his ‘Watergate’, Reagan his ‘Irangate’. Next ‘gate’ will be Trump’s.
• Reagan’s offensive against the environment was notorious, including appointments of cabinet members who declared publicly their intent to dismantle the department and gutting the EPA budget; Trump’s appointments and budget slashing now follow the same path.
• If Nixon’s policy was court China-challenge Russia, Reagan’s was court Russia-isolate China; Trump’s policy is to return to a Nixonian court Russia-confront China.

The corporate-radical right alliance continued after Reagan, re-emerging once again in the 1994 so-called ‘Contract With America’, as Clinton’s Democrats lost 54 seats in the US House of Representatives to the Republican right after backtracking on notable Democrat campaign promises made in the 1992 elections. The landslide was a harbinger of things to come in a later Obama administration in 2010.

The Contract for America proposed a program that shares similar policies with the Trump administration. It was basically a plagiarism of a Reagan 1985 speech. But it provided program continuity through the 1990s, re-emerging in a more aggressive grass roots form in the Teaparty movement in 2008.

TRUMP’s ‘Breitbartification’ of NIXON-REAGAN

Trump is more than just Nixon-Reagan on steroids. Trump is taking the content and the tone of the conservative-radical right to a more aggressive level. The aggressiveness and new elements added to the radical right conservative perspective in the case of Trump are the consequence of adding a Breitbart-Steve Bannon strategic (and even tactical) overlay to the basic Nixon-Reagan programmatic foundation.

The influence of Bannon on Trump strategy, programs, policy and even tactics cannot be underestimated. This is the new key element, missing with Nixon, Reagan, and the Contract with America. The Breitbart strategy is to introduce a major dose of ‘economic nationalism’, heretofore missing in the radical right. This is designed to expand the radical right’s appeal to the traditional working class–a key step on the road to establishing a true Fascist grass roots populist movement in the future.

The appearance of opposition to free trade, protectionism, reshoring of jobs, cuts in foreign aid, direct publicity attacks on Mexico, China, Germany and even Australia are all expressions of Trump’s new element of economic nationalism.

Another element of Bannonism is to identify as ‘the enemy’ the neoliberal institutions—the media and mainstream press, the elites two parties, and even the Judiciary whenever it stands up to Trump policies.

Added to the ‘enemy’ is the ‘danger within’, which is the foreigner, the immigrant, both inside and outside the country. The immigrant is the potential ‘new jew’ in the Trump regime. This too comes from Breitbart-Bannon.

Another strategic element brought by Bannon to the Trump table is the expanded hiring and tightening of ties to various police organizations nationwide and the glorification of the police while denigrating anyone who stands up to them. No more investigations of police brutality by the federal government under Trump.

Still another Breitbart strategic element is to attack the character of democracy itself, raising issues of fraud in voting, and undermining popular understanding of what constitutes the right to assembly and free speech. That is all a prelude to legitimizing further state level limitations and restrictions on voting rights, already gaining momentum before Trump.

Even the military is not exempt from the Bannon-Breitbart strategy: high level military and defense establishment figures who haven’t wholeheartedly come over to the Trump regime are replaced with non-conformist and opportunist generals from the military establishment.

Bannon-Breitbart is the conduit to the various grass roots right wing radical elements, that will be organized and mobilized if necessary, should the old elites, media and their supporters choose to challenge Trump directly with impeachment or other ‘nuclear’ options.

Nixon and Reagan both restructured the political and economic US capitalist system. But they did so within the rules of the game within that system. Trump differs by attacking the rules of the game, and the established elites and their institutions, while offering those same elites the opportunity for great economic personal gain if they go along. Some are, and some still aren’t. The ‘showdown’ is yet to come, and not until 2018 at the earliest.

Trump should be viewed as a continuation of the corporate-radical right alliance that has been growing in the US since the 1970s. The difference today is that that alliance is firmly entrenched at all levels and in all institutions now, unlike in the past, and inside as well as outside the government. And the opposition to it today is far weaker than in the 1970s, 80s, or 90s: the Democratic Party has virtually collapsed outside Washington DC as it continues myopically on its neoliberal path with its recent selection of Perez as national chair by the Clinton-Obama-Big Donor wing (i.e. the former Democratic leadership Conference faction that captured the party back in 1992) still firmly in control of that party; the unions are but a shadow of their past selves and split, with some actually supporting Trump; the so-called liberal press has been thoroughly corporatized and shows it has no idea how to confront the challenge, feeding the Trump movement instead of weakening it; grass root minority, ethnic, and progressive movements are fragmented and isolated from each other like never before, locked into their mutually isolated identity politics protests; and what was once the ‘far left’ of socialists have virtually disappeared organizationally, condemning the growing millions of youth who express a favorable view of socialism to have to learn the lessons of political organizing from scratch all over again. But they will learn. Trump and friends will teach them.

As I predicted in the book reviewed below, the Greek Debt Crisis is about to emerge again (4th time). The Troika have launched a repeat of their 2016 maneuvers to force Greece into more austerity concessions. Last year it was to put to rest a possible Greek debt crisis in summer 2016, before the Brexit vote might lead to unknown Greek follow up efforts to reject the austerity. This year a repeat is in progress, with IMF, German ministers, and ECB suggesting another austerity increase is necessary–this time before French, Dutch, and Italian elections this coming April-June (and German elections thereafter).

The following accurate review of my late 2016 book, ‘Looting Greece’, just appeared in the Winter 2017 edition of New Politics journal. It’s a fair assessment of the themes and predictions of the book (notably another Greek debt crisis was inevitable). The review by Aaron Amaral is offered here below. (watch this blog in coming weeks for my follow up article on the coming next Greek debt crisis, as well as forthcoming articles on the French elections).

“By Aaron Amaral
Aaron Amaral is a New York City-based labor lawyer and socialist activist. He is a member of AKNY-Greece Solidarity Movement (New York), writes for Socialist Worker and the International Socialist Review, and is a member of the New Politics editorial board.

Reflections on Opportunity Lost
Greece and the Syriza Experience

Looting Greece: A New Financial Imperialism Emerges
By: Jack Rasmus
Clarity Press, 2016, 315 pp., $24.95.

Stylistically, Looting Greece departs sharply from the memoir-like quality of Helena Sheehan’s book. Yet in writing such an analytically clear, historical account of the European and Greek debt crises, Jack Rasmus also has made a valuable contribution.

The book is divided into ten chapters, the first five of which deal with the evolution of the debt crisis prior to the coming to power of the Syriza government in January 2015. Chapters six through nine offer a blow-by-blow account of the failed strategy of Syriza in its dance with the creditors. The last chapter provides a broader overview and comparative analysis of how and why the Troika prevailed. Finally, in an extended conclusion, Rasmus puts forward an argument for financial imperialism as a new and growing form of imperialism.

For Europe, the creation of the European Monetary Union (EMU) and European Central Bank (ECB) in 1999, and the Lisbon Strategy, mark the origin of the current debt crisis. The ECB embarked on a devaluation of the EMU that led to external devaluation, which boosted trade.

Simultaneously, internal devaluation occurred through labor market flexibility, that is, reducing labor security, wages, and benefit costs. Germany was the first to engage in neoliberal policies, with internal labor market changes known as Hartz reforms undertaken by a Social Democratic government; these kept German wages stagnant for nearly a decade and created a base for the production of cheap exports. With the German Bundesbank essentially dictating policy to the ECB, and cheap money and cheap goods flowing into the European periphery, the structures of the European economies were transformed. And so long as the money flowed back to the European central economies, primarily Germany, it was a virtuous circle for European capital. However, with onset of the 2008 economic crisis, this dynamic changed:

In addition to bank-provided money capital, German private foreign direct investment into Greece also rose from 1.4 billion euros in 2005 to more than 10 billion by 2008. As the money and capital to Greece was recycled back to Germany and the northern core economies in the form of exports, Germany got business profits, economic growth, and its money capital returned to it. In addition, as financial intermediaries in the recycling of money capital, both core and Greek banks got interest payments from the Greek loans and Greek bonds, Greeks got German and core export goods for a few years, but loaded up on credit and debt in the process for what appears will remain an interminable period of debt repayments well into the future (63-64).

When the banking and financial systems froze up in the aftermath of 2008, the cycle and flow of credit and money stopped between the European core and periphery. And when the peripheral (Spanish, Portuguese, Greek, and other) economies started to slow down, German exports and investment began to shift overseas. This further slowed the flow of credit. As Greece had been running an internal trade deficit with Germany, the initial impact of the credit crunch in Greece was that private banks became loaded with debt, monies that had been borrowed to facilitate imports from Germany.

Rasmus does a good job of showing that this trade deficit was caused neither by higher wages to the Greek working class nor by escalation in Greek consumer spending. Rather the debt was driven up by European Union and ECB policy, in the interest of European capital.

Looting Greece then takes the reader, in exacting if painful detail, through the distinct though compounding circumstances that led to each of the three austerity memoranda.

The first memorandum provided that a total of 110 billion euros was “lent” to the Greek government, 91 percent of which went to bailing out the banks that had been left with bad loans following the 2008 crash. The initial austerity measures demanded by the Troika were premised on unrealistic economic projections of growth but caused very real cuts in wages, pensions, and social security. And the result was a shifting of the massive debt load, mainly from the private banks onto the Greek government.

Then the second memorandum, argues Rasmus, “was primarily to refinance, pay off, and reduce Greek debt held by … private investors” (99), many of whom had already taken advantage of the bond markets to ramp up interest rates paid on Greek debt. Looting Greece does a great job in explaining the ways in which both the rules adopted by the ECB and the neoliberal ideology of “the German Hypothesis” (91), which drove their adoption, played a role in the cycle of debt and austerity that led to a humanitarian catastrophe in Greece.

Chapters five through nine offer an account of the rise of Syriza and a blow-by-blow telling of their approach to the problem of debt and austerity and the process of negotiations once the party came to power in January 2015. Rasmus’ account of the “institutional taming” of the Syriza government is painful to relive, but offers strong support for his argument that in the run up to the third Greek debt restructuring deal of 2015, Syriza and Tsipras would discover there was no option to return to social democracy and social democratic policies without austerity. The choice was either to leave the euro and the neoliberal regime, or remain caretakers for that regime on the system’s periphery, condemned to some degree of perpetual indebtedness, austerity, and long-run negative economic growth (118).

The last chapter provides an explicit assessment of the relative strategies of Syriza and the Troika and the structural/institutional straitjacket within which Syriza was attempting to negotiate. It also unequivocally answers yes to the likelihood of a fourth memorandum, given the logic of indebtedness and austerity and the current strategic course of the Greek government:

To have succeeded in negotiations with the Troika, Syriza would have had to achieve one or more of the following: expand the space for fiscal spending on its domestic economy, end the dominance and control of the ECB by the German coalition, restore Greece’s central bank independence from the ECB, or end the control of its own Greek private banking system from northern Europe core banks. None of these objectives could have been achieved by Syriza alone. Syriza’s grand error, however, was to think that it could rally the remnants of European social democracy to its side and support and together achieve these goals (228-29).

An extended conclusion to Looting Greece is entitled “A New Financial Imperialism Emerges.” In part, Rasmus argues that the views found in Lenin, Bukharin, and Hilferding, that finance capital is subordinate to industrial capital, need to be revised. The space devoted to this argument, however, is limited. While he argues that Greece has become a state dominated by the supra-national imperialist state of the Troika, given the degree to which sections of the Greek left have historically argued for Greece as a neo-colony, or one for which national oppression is primary, the full implications are not untangled by Rasmus.

After one month of the Trump administration, the internecine fight between two wings of the US elite continues to intensify. What’s behind the ‘Flynn Resignation’ and has the ‘Taming of Trump’ now begun? Listen to my analysis from the February 19, Alternative Visions Radio show.

Go to:

http://www.alternativevisions.podbean.com

or to:

http://prn.fm/?s=Alternative+Visions

SHOW ANNOUNCEMENT

Dr. Rasmus discusses how the intensifying attacks on Trump administration represent an historic internecine conflict between old and new wings of the US ruling elites and not ‘democracy vs. fascism’. Rasmus offers an analysis of the first month of the Trump regime and its growing conflicts with the Media, the ‘deep state’ 17 intelligence communities, federal state bureaucracies, and political parties of Democrats and moderate Republicans. Revisiting his November article ‘Tameing Trump’, Rasmus explains the meaning of last week’s firing of NSA Flynn, Trump’s backtracking on China, his reassuring Canada and Japan prime ministers on trade, and his revisiting of his muslim country travel bans. How the Flynn affair was a warning ‘shot across the bow’ for Trump to back off his proposed foreign policy changes with Russia and NATO. How the US spends $700billion a year subsidizing NATO and Europe and how US control of NATO is key to control of Europe politically and economically. The policy areas of conflicts between Trump and the old elites. Rasmus explains how old neoliberal elites (media, parties, spy agencies, state bureaucracies) continue to build a case on Trump and either ‘tame’ him or dump him—but only after he delivers on massive corporate-investor tax cuts, deregulation of healthcare and banks, and checking his trade initiatives. The grass roots base of Trump vs. old elites is discussed.

I was recently asked to make a presentation on Free Trade to the Henry George Society on February 9, 2017. A video recording of about 70 minutes of that presentation is now available from my website. To view,

GO TO:

http://www.kyklosproductions.com/videos.html

(Click on the flashing TV icon to play)

For a limited time the presentation may also be available on Youtube at:

PRESENTATION ANNOUNCEMENT:

Dr. Rasmus explains the real facts about free trade and how it’s more about money capital flows, multinational corporations’ foreign direct investment, and job offshoring. Why free trade is a centerpiece of Neoliberal policy since Reagan. The origins of modern free trade in the 1970s-80s and its evolution From Reagan to Obama and now Trump. Free trade and the creation of US ‘twin deficits’ (trade and budget). How free trade and twin deficits enable massive corporate tax cuts and war spending by the US. Trump as free trader not protectionist. How free trade is destroying national sovereignty and representative democracy. Free trade as emerging global corporate government. Why free trade does not ‘benefit all’ and who are the losers and gainers. Rasmus debunks economists’ holy grail of ‘comparative advantage theory’ and how the economic ideology of free trade has served as the theoretical justification of free trade in practice. Free trade as economic lynchpin for neoliberal global economic policy.