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America’s Deja Vu 2026 Midterm Election

November 2, 2026 by jackrasmus

by Dr. Jack Rasmus

November 1, 2026

The French have a saying: “Plus ca change; rien ca change”. Translated it means ‘everything changes, nothing changes’; or, depending on your French, ‘everything changes but everything remains the same’.

That likely describes the current midterm 2026 US elections.

Whichever party takes the House or the Senate, the policies of recent years will not change much. US foreign policy under Trump’s last two years will remain on its current disaster trajectory. And the domestic policy excesses of the past two years will remain mostly intact.

Trump Will Simply Ignore the House

Should the Democrats retake the House, Trump will continue his imperialist wars and regime change operations. That includes any renewed impeachment proceedings or tepid War Powers resolutions. He will simply ignore them, should they even occur. For reasons explained shortly, don’t hold your breath for anything significant coming out of a Democrat House in either regard the next two years. Moreover, a Democrat House will continue as it has in the past supporting Israel and may even increase US support for the Ukraine war. And it will grant Trump much of his requests for the Pentagon in 2027-28. So ‘rien ca change’ here in foreign policy, folks.

So far as domestic US policy is concerned, he doesn’t need US House support for any new major initiatives. Trump has already achieved his main domestic policy objectives in 2025-26—i.e. getting his $5 trillion corporate-investor tax cuts passed; $191 billion for thousands of more immigration police, ICE agents, and ‘detention’ centers; cuts of more than a trillion dollars in Medicaid, ACA and other health care spending; and 426,000 US federal workers laid off or driven from their jobs in the past eighteen months.

Nor does Trump need Democrat House support to continue to pursue his tariffs policy. He may have been forced by the Supreme Cour to return some of the $288 billion in tariffs revenue but he can easily find a legal workaround by relying on other past legislation. Congress has been, and will remain, a non-player in tariff policy.

Not least, a Democrat House (and Senate) will go along with funding most of Trump’s requested $400 billion increase in Pentagon spending, which is already at $1.1 trillion and rising. And there’s more for other defense spending categories like Veterans benefits, CIA, Homeland Security, Nuclear Weapons development, secret weapons projects, and defense spendings share of interest on the national debt. The Democrats will more than go along to refund the US military’s current seriously depleted stock of missiles inventory, loss of equipment in the Iran conflict, new offshore military base development, and a program of crash funding to develop next generation AI enabled autonomous weapons, drones and hypersonic missiles—in all of which categories the US now lags behind Russia and China.

In short, Trump does not need a Democrat controlled US House to pass new legislation for him in 2027-28. And he knows the Dems will give him most of what he wants in new defense spending.

Impeachment as Political Marketing

Then there’s the hot issue of a Democrat controlled US House impeaching him. Will they or won’t they?  Trump doesn’t care. As the saying goes: ‘Been there, done that’.  He weathered two prior impeachment efforts. It’s doubtful he cares about a third. Here’s why:

First, it’s only 50-50 the Democrats will even bother to impeach him. They’ll act like they are going to. Lots of talk. Committee hearings. But bringing a vote will be drag and delay until late in 2027. And by late 2027, with only a year left in Trump’s term, the US House Dem leadership—Hakeem Jeffries and the oligarchs who run the party’s central committee—will argue to their party ranks in the House that he’ll be gone in twelve months anyway, so it’s a waste of time to impeach. They’ll point to the Senate where the Dems—at best may have no more than a two seat majority—will argue they don’t have the votes to convict Trump, and that he’ll be gone in a year.

The Democrats will use the threat of impeachment to keep the issues justifying it before the public the net two years—i.e. his illegal wars, his personal financial corruption, violations of the US Constitution, abuse of executive authority, destruction of democratic norms, etc. The talk of impeaching is politically more useful than the act, Dem leaders will argue.

In recent decades impeachment has become a political marketing tool of the parties and not really a constitutional means for removing a president. In that latter regard it has clearly failed as a provision of the US Constitution. James Madison and Thomas Jefferson would no doubt agree. They warned about it, and how what they called ‘factions’—aka parties—controlled by a small group or one person would undermine the idea of institutional ‘checks and balances’.

More likely than pushing to impeach Trump, Jeffries & Company will throw a bone to their Democrat party rank and file and instead impeach Defense Secretary Pete Hegseth. That would help put a Trump impeachment on a back burner and create the delay to put off impeaching Trump in his last months in office.  Trump might even favor a Hegseth impeachment and removal. It would give him cover to extricate from the Iran conflict. Blame Hegseth for the fiasco as the architect who lied to him (Trump) and throw him ‘under the political bus’. In Trump typical fashion, he’ll then blame the Democrats for the Hegseth removal.

In summary, there are good reasons to argue Trump will just not care all that much if the Democrats take the House. It won’t have any appreciable impact on his policies domestic or foreign, regardless of the Democrat vote margin. And an impeachment vote by the House won’t get very far in the Senate, he’ll conclude. So let ‘em rant and rave about impeachment. It’s just political theater.

He might care more if the Democrats achieve a major majority of seats in the Senate. But a one or two seat Democrat Senate majority—which is the best case outcome for the Democrats in the election—will never result in an impeachment trial, let alone a conviction, and Trump knows it.

But there’ll be no ‘blue wave’ in the Senate election. The numbers and polls just don’t support it. The mainstream media—CNN in this case—predicts a 52-48 Democrat majority in the Senate. In other words, a barely significant political pendulum swing… once again.

If Trump was all that concerned about losing Congress, he would have campaigned more aggressively on behalf of Republican candidates in recent weeks. He campaigned very little for Republican House candidates. And only occasionally went out and campaigned for Senate members of his party. He just doesn’t care about the party either.

Trump may not even care that even if the Senate held a trial following the unlikely event of House impeachment. Holding a trial in the Senate is one thing; voting to convict is another thing. It is extremely unlikely there will ever be either in the Senate, especially with a 52-48 Democrat majority. He knows that.

In short, the odds of the House impeaching Trump are low; of the Senate taking it to trial even lower; and voting a conviction virtually nil!

So Trump may not care all that much what happens on November 3, 2026. He’ll just stonewall away after the election pursuing his disastrous foreign wars and policies. And blame everyone else for the failures. And should the AI boom implode and the real economy contract—which is beginning to appear increasingly likely in recent weeks—he’ll just find someone else to blame as well. Probably Scott Bessent, whose departure would be no great intellectual loss for the country in any event.

Notwithstanding all this, what’s the likely actual outcome of the midterm elections in the US House and Senate on November 3?

The mainstream media-CNN forecast is optimistic for the Democrats.  Mainstream media polling has historically in recent years over-estimating outcomes in favor of the Democrats. And it will likely repeat that error shortly.   

Likely US House of Representatives Election Outcomes

If one were to believe mainstream media, it’s going to be a ‘blue wave’ in the House on November 3. CNN’s latest polling predicts the current 218 to 214 margin favoring Republicans will result in a final 237 Democrats to 198 Republicans seat distribution.  But that’s a Democrat gain of only 23 net seats! Hardly a blue wave.

Most pundits agree only 40-45 seats in the House are ‘in play’, as they say. It is a sad state of American Democracy today that no more than 10% of the 435 House seats are ever up for change. That’s because of the recent decades of gerrymandering of the US House of Representatives by BOTH parties. Republicans and Democrats alike have ensconced themselves into safe seats by cleverly redefining House districts. They then financially and legally gang up on anyone who dares to run as an independent or from any other party. Ballot denial of all challengers is a game both play. The American voting public has been institutionally disenfranchised by the extreme gerrymandering in recent years—all of which has been endorsed and legitimized by the US Supreme Court.

Likely US Senate 2026 Election

As difficult as it is for a large majority shift to occur in the US House, it’s even more difficult in the US Senate. Party majority swings in the Senate are typically no more than 2 or 3 seats at most. That’s likely the case in 2026 as well. And it doesn’t take more than a couple party crossovers to thwart a meaningful policy change when the ‘out’ party regains a temporary majority in the Senate.

A good example of how a few crossover votes thwart change in the Senate is what occurred under the Biden administration when just two Democrat Senators, Joe Manchin and Kyrsten Sinema, blocked all attempts to reverse Trump’s $4 trillion 2018 tax cut handout to corporations and investors.

Biden and Democrat party leadership in the Senate did little to pressure them to back off from blocking tax reform at the time. Trump’s 2018 tax cuts were left in place and thereafter expanded and made permanent in 2025. That cost another $5 trillion, according to the Congressional Budget Office.

Here’s why little will change in the Senate election, apart from maybe a couple seat Democrat majority at best:

The 2026 Senate election involves 35 of its 100 seats. No more than 9 seats are actually competitive and flippable. These include the 7 Republican Senate seats in the following states: Alaska, Texas, Ohio, Kansas, Iowa, North Carolina, Maine. Competitive races where Democrats hold seats they may lose involve Michigan and Georgia. So only 9 of the 35 seats are competitive. Once again, only about 10% of the Senate’s 100 seats are up for change in the election, much like the House’s 40-45.

To get a majority in the Senate, Democrats must hold onto seats in Michigan and Georgia which are ‘in play’ and competitive, according to polls, and must win a net of four of the seven contested Republican Senate seats.

Polling shows a solid Democrat lead in Georgia and a narrower lead in Michigan as challenger Abdul El-Sayed, a progressive, contends with a Republican opponent. The outcome of the Michigan race race is less certain than Georgia but both are a must ‘hold’ for the Democrats.

El-Sayed has faced significant Democrat party, corporate oligarch and Zionist opposition as well as unfriendly mainstream media propaganda. Trump has also gone public strongly opposing El-Sayed. Even El-Sayed’s defeated Democrat party primary competitor has jumped the Dem party ship and endorsed El-Sayed’s Republican opponent. More than $400 million reportedly has been spent thus far on the Michigan race—much of it from business and Zionist sources, domestic and foreign, and much spent against El-Sayed. The final spending will likely be closer to $1 billion than to $500 million once all the campaign Ad spending is counted. While El-Sayed has a small lead in the polls, the mountain of money committed against him by Zionist and business interests leaves the race too close to call. But the Democrats must win Michigan (and Georgia) or their numbers for taking back the Senate collapse.

In Georgia, incumbent Democrat Ossof appears to have a commanding lead for re-election. So that’s one definite Democrat and one uncertain.

That leaves the remaining seven Republican held seats. To achieve a net four seat margin in these seven races, the Democrats must therefore win at least six seats to the Republicans’ remaining two. That will give them a narrow 51 seat majority in the Senate. That’s six of the following seats: Alaska, Texas, Ohio, Kansas, North Carolina, Iowa and Maine.

Most likely Democrat wins are Maine, North Carolina, Kansas and maybe Ohio. That’s an optimistic four.

That leaves a remaining three—Texas, Alaska and Iowa—of which the Democrats must win two.

Iowa is highly unlikely given its decades long history and the latest tight polling.

That means the Democrats must take both Alaska and Texas. That’s an uphill battle for the following reasons:

Alaska is an interesting case, in that the Trump administration is already preparing to intervene and overturn the election there should the Democrat Senate candidate, Mary Peltola, win against Republican incumbent Dan Sullivan. Another third party candidate also named Dan Sullivan is apparently on the ballot. Trump administration argues it was a tactical ploy by the Democrats to put the second Dan Sullivan on the ballot. Should Republican Sullivan lose, Trump forces will argue it was interference and campaign fraud. Courts have already ruled Sullivan #2 has as much right as a citizen to run as Republican Sullivan. But this won’t stop legal action by Trump to negate the Alaska election and demand a re-run.

The second must win is in Texas, which has not elected a Democrat Senator since 1988. Apart from the El-Sayed Michigan race, mountains of oligarch money has poured into the Texas race as well. More than $500 million has been spent to date on the Texas race. That’s more than $1 billion in just two states: Michigan and Texas. (And another $450 million in Ohio). Can anyone imagine this happening without the Supreme Court’s 2010 Citizen United case that ruled corporations were people and that their spending money on elections was a form of ‘free speech’ under the US Constitution!

In short, the Democrats must take both Texas and Alaska in order to win even a narrow 51 majority in the Senate. And if by chance Democrat Talarico wins in Texas, then one can be sure the outcome of who controls the Senate will be determined by a long drawn out court fight over the ‘two Sullivan’s’ issue in the Alaska race. And no seating of an Alaskan Senator means one less seat for the Democrats’ pursuit of a Senate majority.

What this all means is that Trump has little to fear from the Senate in the highly unlikely event of a House impeachment vote—i.e. a trial or conviction on impeachment by the US Senate. One suspects, therefore, he probably cares little about what happens in the 2026 midterm election in either House of Congress.

So the immediate post election scenario is not some kind of severe constitutional crisis of the system a la January 2021, as some commentaries and pundits are pushing. There’s little chance of impeachment, and no trial in the Senate.  Therefore more of the same Trump foreign policies of wars, more budget deficit busting war spending, more regime change operations (especially against weak countries in the western hemisphere), and more aggressive action toward Canada, Greenland and Cuba.

Trump will not try to overturn or generally subvert the elections process, impound ballots or engage in other constitutionally challenging tactics. At most, possibly in Alaska. He doesn’t need to. He’ll just ignore the US House outcome and, at worst case, tie up the Senate results in the courts. He doesn’t care about House support to introduce new domestic legislation. And he’ll just ignore any Congressional interference with his war mongering foreign policies.

2026 is another ‘Ho-Hum’ US election that will change little of any real consequence for the American public. Another example of the bi-annual ‘shell game’ where one wing of the Corporate Party of America—the Democrats—takes over from the other Republican wing. Another switch back to Republicans will occur in 2028 when more Democrat Senate seats are up for re-election than Republican. And another couple dozen gerrymandered House seats will flip flop again.

Election 2026 is just Déjà vu. Another ‘rien ca change’. Just as it has been for the past three decades now. And mainstream media dares call it American Democracy.

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‘Twilight of American Imperialism’ New Book Interview and Discussion

November 1, 2026 by jackrasmus

Watch my half hour interview with british economist Michael Roberts on my just released new book, “The Twilight of American Imperialism”, Clarity Press, 2026, as we discuss the main themes and conclusions of the book–and its quantitative evidence indicating the material causes for the current decline of the American Empire. The three main determinants of decline–the growing funding crisis of Empire, the underperforming Institutions and the failing Practices (how the Empire maintains hegemony) are discussed. Why under Trump the decline is now accelerating, as the expenses of Empire rise to $3 trillion annually by 2028 while former main sources of funding costs fail to rise as fast.

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Is the American Empire Going Broke–What Next?

October 22, 2026 by jackrasmus

October 21, 2026

By Dr. Jack Rasmus

There is increasing public discussion today, in the US and globally, about the trajectory of the American Empire.

The discussion frequently cites the American Empire’s increasingly apparent unwinnable wars in Iran and Ukraine; the Empire’s failure to check the rise of China economically, politically and technologically; the challenge to American global economic hegemony by the BRICS; growing splits in the NATO alliance between Europe and the US; the fracturing of long term economic and political relations with historically closest ally Canada; and the Empire’s resort to aggressive military and economic action within the western hemisphere—to name but the more obvious.

A large part of the commentary pointing to these and other developments argues, correctly, they are signs of America’s imperial decline. Some extrapolate and hyperbolically argue—incorrectly—that the developments are signs of Empire collapse.

But ‘signs’ aren’t necessarily causal explanations of decline and certainly not of collapse. More often the ‘signs’ are symptoms of more fundamental, underlying causal forces responsible for the increasingly obvious trajectory of American imperial decline—while extrapolations concluding collapse are impressionistic and distorted by wishful thinking.

Empires do not decline because they lose wars, are abandoned by allies and client states, or are increasingly opposed by state challengers to their hegemony.

Empires decline because they can no longer afford the expanding costs of maintaining their hegemony: the accelerating costs of waging constant wars of expansion and/or containment, the demands of financing a bloated expanding military bureaucracy, the inability to afford or develop new generations of weaponry, the necessity of supporting weakened and increasingly economically dependent allies, the costs of bribing foreign elites to continue to accept Empire leadership and rules, and the inability to maintain dominance over global goods and money asset flows.

Empires are expensive to maintain and defend. That’s been true historically. It’s no less true of the American Empire today.

The costs of the American Empire have been rising steadily since 2001. They accelerated after 2021, intensified further 2025-26 under the Trump regime. And promise to grow even faster the next two fiscal years, 2027-28.

But accelerating costs is only half of the problem of imperial finance. Empire costs can rise and even accelerate so long as revenues continue to rise sufficiently to fund Empire institutions, its military and geopolitical practices.

When revenues no longer rise proportionately to the rising costs—a Funding Gap necessarily arises. Insufficient revenue generation required in order to pay for the accelerating costs of Empire together create the Funding Gap.

And the American Empire today is experiencing a sharply expanding Funding Gap, as its costs accelerate faster than its ability to generate sufficient revenue to cover the accelerating costs.

In the 1990s decade there was no Funding gap. Rising expenses of Empire were financed by nearly 4% annual GDP growth and tax revenues from that growth. The transformation to a professional army, and the consequent reduction of 500,000 troops, also released significant cost savings. There was no resort to debt financing. In the latter three years of the decade the US actually ran a budget surplus. The decade represented the era of high ‘unipolarity’ of the American Empire.

The situation began to change after 2000. Costs of Empire accelerated as US neocons launched ‘forever wars’. Economic growth annually slowed by nearly half. Simultaneously, American imperial elites embarked on a massive tax cutting experiment that would eventually delete $20 trillion from the US Treasury over the next quarter century. A Funding Gap began to emerge, relatively slowly at first. And the Empire began resorting to debt financing of that gap.

The cost acceleration slowed in the first half of the second decade of the 21st century, as government finances in general were diverted to the economic bailout in the wake of the great recession and banking crash of 2008-09. By the end of that decade, however, Empire costs began to rise more rapidly once again. Economic growth recovered slowly and weakly, as did revenues from taxation which were further impacted negatively by Trump’s 2017 $4 trillion tax cuts.

Then came the Covid crash of 2020-21 and further bailouts even more costly than 2008-09. Overlaid on this was a renewed acceleration in Empire costs at the fastest rate yet, as wars in the Middle East, Ukraine, and military buildup for planned war in Taiwan accelerated defense spending once again.

The spending on war and defense accelerated further in 2025-26 as Trump launched no fewer than eight imperial offensives in 2025. The cost side of Empire promises to accelerate still further as Trump proposed to add hundreds of billions of dollars more to Pentagon and defense spending in 2027-28.

While the costs of Empire continued to accelerate out of control, the revenue side of Empire began experiencing severe problems as well.

Revenues to fund imperial activity may come from tax revenues from robust general economic growth. Or from debt sources as the Empire resorts to borrowing to cover its costs. Or some combination of revenues from both taxation and borrowing.

But as costs of Empire have accelerated in the 21st century, tax sources have struggled to fill the emerging cost acceleration. Despite a $10 trillion fiscal-monetary stimulus in 2020-22, economic growth only modestly rose above 2% annually after 2021. A Trump second $5 trillion tax cut mostly on capital incomes in 2025 exacerbated the pressure on tax revenues as a funding source. The consequence was an even greater resort to debt financing of the rising costs and Funding Gap. Annual budget deficits exceeded $2 trillion on average after 2021, driving the national debt from $29.6 trillion in 2021 to more than $40.1 trillion in 2026. That’s an average of more than $2 trillion rise in national debt per year. The rise in deficits and debt in turn resulted in interest payments on the debt escalating from $562 billion in 2021 to $1.36 trillion in 2026.

In other words, debt financing of the accelerating costs of Empire is fast approaching its limits—just as tepid economic growth and continued massive tax cutting further reduces tax revenues as a source of funding.

Debt financing occurs primarily via the federal US government sale of US Treasury securities annually to foreign and domestic US buyers. The former constitute 32% of total Treasury holdings; the latter the remaining 68%.

As costs of Empire accelerated rapidly in the past five years, debt financing was able to continue to fund the slack and cover the chronic multi-trillion annual deficits and national debt. However, events in 2026 indicate debt financing through Treasury sales may have entered a crisis period as well.

Treasuries sales managed to continue to rise after 2021 as costs of Empire accelerated—even as China and other foreign buyers of US Treasuries reduced their purchases.  China alone reduced its holdings of Treasuries from $1.2 trillion by half to $.6 trillion over the five year period.

The empire’s closest ally, Japan, continued to purchase Treasuries, however, maintaining more than $1 trillion in total Treasury holdings. Meanwhile, Empire European allies accelerated their Treasury purchasing. Many EU countries (and Canada) doubled their purchases of Treasuries from 2021 to 2025.

In short, the Empire’s closest ‘core’ allies largely funded the accelerating costs of Empire from 2021 through 2025. But this may be coming to an end in 2026, raising the specter the Empire can no long debt finance its runaway costs of Empire.

In 2026 Japan began shifting from buying more US Treasuries to buying more of its own government bonds—as what is called the Yen ‘carrying trade’ collapsed and US Treasury Dept. intervention failed to restore the carrying trade. Simultaneously, the Empire’s European allies appear to have begun reducing their massive purchasing and holdings of US Treasuries—as their costs of funding their support for their Ukraine war required new bond issuance of $90 billion with a purported additional $177 billion in EU bond issuance to follow. In addition, Europe plans to fund a $1 trillion rise in European military production promises to add more to their bond debt load. With these developments, continued Europe (and Canada) buying of US Treasuries is highly unlikely—putting pressure on the Empire generating more Treasury sales from domestic US buyers.

The Trump administration has tried to supplement Treasury sales with Tariff revenues. In 2024 total US revenue from tariffs was $88 billion. This initially rose to $288 billion in 2025 due to Trump’s initial tariff wars. But US Supreme Court decisions in 2026 required the return of $145 billion of that $288 billion. Trump tariff policies have therefore failed as a significant new revenue generating source to offset the slowing and possibly even decline of debt revenue from Treasury sales to foreign buyers.

Foreign sales of Treasuries remain the primary source of funding of Empire costs, however. With purchases by China, Japan and Europe growing more uncertain, the Empire must sell even more Treasuries to domestic US buyers (banks, businesses, wealthy investors, etc.).

But that source of debt financing too may be confronting a separate set of concurrent problems of its own.

The bubble in the Artificial Intelligence financial markets has been ‘sucking up’ money capital in 2026 at an astounding rate. The big 7 tech companies alone project the need to raise $1 trillion in 2026 (and another $1 trillion in 2027) in order to fund investments in data centers, chips, AI agents, etc. The big Tech companies have largely committed their former mass of cash holdings and even resorted to raising equity (new stock) to generate additional revenues to invest in AI.

They have also begun borrowing at a level as never before. Some estimates are that $200-$300 billion is being borrowed from private capital sources to fund the AI boom. If so, that amount will likely ‘crowd out’ and discourage further private US domestic purchases of US Treasuries in 2026-27.

That development will further exacerbate the problem of debt financing of the Empire via Treasury sales, as costs of Empire continue to accelerate further under Trump, 2027-28.

In other words, just as the costs of Empire accelerated after 2021, rose faster in 2025-26 and are projected to accelerate still faster in 2027-28, the ability of the Empire to finance its rising costs from traditional Treasury sales (foreign and domestic) is becoming increasingly problematic!

The American Empire’s current Funding Gap is therefore likely to grow—as costs continue to accelerate and the primary (Treasury sales) and even secondary (tariff revenues) sources prove insufficient to keep up!

In this writer’s just released new book, ‘The Twilight of American Imperialism’, Clarity Press, September 2026, the data on costs of Empire and revenue sources—i.e. the Funding Gap of Empire—is provided in detail, with sources, for the period 1992 through 2026 (with projections beyond).

The following Table 5.1 is from Chapter Five, ‘The Crisis of Imperial Finance’, of the book. It summarizes the accelerating total costs of Empire since 2019.

Together, the trends in Empire costs vs. revenues reveal the American Empire’s Funding Gap is about to become unsustainable. The book further concludes, the Empire will subsequently have to cut costs by retreating to the western hemisphere and Central Pacific; or raise more revenue from taxation; or divert revenues from social programs to Empire expenditures. Or likely some combination of all the above.

Like Empires before it—from the Roman to the British—it is the crisis in imperial finance which is ultimately driving the decline of the American Empire. The military failures, failed regime change operations, fracturing geopolitical alliances and geoeconomic developments are but symptoms and ‘signs’ of Empire decline. The Empire’s deteriorating financial base, reflected in its growing Funding Gap, is the underlying fundamental driver and determinant of the decline of Empire now emerging.

Table 5.1[1]: Total Defense Spending & Costs of Empire 2019-2026 ($bil)

 20192020202120222023202420252026*2027*
Defense (NIPA) 734738742910916923114314211600
 Defense (Fred)86391491395510341122115914301600
Veterans207218243269301326367453488
Homeland617092768289112191131
CIA/NIP8185848999106101115132
Foreign Aid 49525379100822025741
NATO/Alliances 271720212224242322
US Bases Abroad 283033424555595045
NNSA   151919222225283033
Defense Share Debt1088082108136189268*300*400
Interest Payments  80 828487 90 95 98102110
Black Budget138114151451170318131920222027422993
TOTAL DEFENSE 151015911612174819312119223627513002

About the Author

jack_rasmusDr. Jack Rasmus is the author of several books on the United States and the global economy, including The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump (2020), Systemic Fragility in the Global Economy (2016), and The Twilight of American Imperialism (2026) all from Clarity Press. He is a host for the radio show Alternative Visions on the Progressive Radio Network, a journalist, a playwright, and a former professor of economics at St. Mary’s College (retired). He worked for 20 years for various tech start-ups and global companies, prior to which he served for 15 years as an organizer and local union president with several American unions.

Reference

[1]BEA.gov, GDP Table 1.1.5. Fred, https://St.louisfed.org/series/FDEFX.  Defense NIPA & Defense Fred estimates both assume for 2026 the same average annual rate of increase in spending equal to the prior average for the 3 years 2022-25, plus the $200 Hegseth request in spring 2026 for supplemental spending for Iran-Venezuela military actions and weapons replacement. DoD spending for 2027 is from Trump’s initial budget requests calling for a $400 billion Pentagon increase over baseline 2026, supplemented by $100B for OCO costs for continuing war in Ukraine and Iran in 2027. For Veterans and other categories for 2026 sources and calculation methods are as indicated in footnote for Tables 3.1 and 4.1 in prior chapters; that is spending enacted and authorized by Congress. Estimates for defense spending share of debt interest payments are based on assumption Fed rates on US Treasuries sales remain in 4% to 6% range.

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How US Inflation Numbers Are Low-Balled: Some Examples

October 2, 2026 by jackrasmus

For years in my articles and on my radio show I’ve been explaining how US inflation numbers–both CPI and PCE but especially the latter–have been grossly under-reporting inflation in the US. The reasons have to do with the methodologies, and assumptions in those methodologies, calculate price increases. The government keeps indicating prices are rising only a few percentages over the year. The PCE is up only 3.4%. Everyone knows, however, through their personal experience many categories of prices are rising far faster, and not just energy and food but transportation, utility services, insurances and interest rates (i.e. the ‘price’ of money) as government rates (benchmark 10 yr. bond) were up 19% in one month in August 2026 alone! Mortgage rates have risen from 5.9% at the beginning of 2026 to 7.3% today.

Each category of prices are often calculated differently. Using different base year, different weights, different data gathering. Often prices are just ‘inputed’ by government bureaucrats who do the monthly inflation calculation. That is, just made up and plugged into the totals. A good example is the estimation of half of the total price of rents. In other cases, the bureaucrats assume a price for a good has declined when consumers in real time actually pay more. Prices for PCs, Iphones and other electronics and even new cars to some extent are reduced this way.

This bureaucratic manipulation of real inflation is exacerbated by government shutdowns when no data gathering occurs for weeks at a time, as during the fall 2025. When shutdowns are over the government plugs in a number based on pre-shutdown assumptions of trends. Post-shutdown periods price changes are reduced in turn due to imputed plug ins.

Another government shutdown has just begun October 1 in part. Data gathering will be impacted again. More plug in of inflation numbers will follow.

The low-balling of the PCE index has further consequences. For example, it is used to estimate real GDP. The lower the PCE, the higher real GDP and economic growth is reported. US GDP for third quarter 2026 is suspended again due to the current shutdown and suspension of price data gathering. If GDP is eventually reported as rising at a 2% rate, for example, then the low-balled PCE inflation adjustment, off by 1%-1.5% in my opinion, results in an actual GDP of about 0.5% to 1.0%. The economy is nearly stagnating, in other words. The only growth going on, everyone knows, is in AI business investment in data centers, chips, and agents.

A member of my audience recently asked me a very typical question. A colleague of his told him prices were rising only 3.4% according to the government (PCE annual rate). Is that true, he asked, when he himself feels he’s been paying higher prices across the board? Here’s my explanation to him which clarifies some of the questionable ways the government estimates different categories of prices to get the PCE:

Your colleague clearly is satisfied relying 100% on official government statistics re. inflation. Apparently the PCE index around 3%. The CPI is around 4%. Both low ball the actually inflation rate for consumers by 1-2% at minimum. The PCE partly relies on CPI data and cherry picks that and then estimates the rest by mashing together 20 other price sources. It also uses what’s called ‘chain pricing’. That changes the base period every year, which results in lower inflation.

The PCE is not the result of any actual survey of prices. It doesn’t ask consumers what they bought and prices they paid. It asks businesses what they sold. It starts from business sales revenue and extrapolates back to estimate prices employing questionable methodologies and assumptions designed to low ball prices.

For example, did you know the PCE estimates insurance costs by extrapolating from insurance company profits (which the companies under-report)? That it estimates airline prices not by what you and I pay for a ticket but by passenger miles flown. Or utility electrical services by KW hours or therms? Or that it states that rising prices for PCs, Iphones, laptops and even new cars are consistently falling not rising every month? You and I pay the higher price in fact. Forget that. The government bureaucrats say that rising features and functionality mean that prices have fallen. That’s called hedonic pricing. A bureaucrat’s euphemism to say higher prices are actually lower.

And how about interest rates. That’s the ‘price’ we all pay for mortgages, auto loans, credit cards, student loans, etc. right? And that price is escalating isn’t it? But wait. Interest rates (price for money) is not included in the PCE, or CPI. Nor are rising local government fees and taxes.

How about housing inflation? PCE doesn’t include either rising mortgages or prices of home sales. It also reduces rent costs by plugging into total rent inflation an assumed low rent that home owners pay themselves. In other words, it employs the oxymoron idea that 40 million+ home owners allegedly pay themselves a rent. The plug in number they give is arbitrary and lower than the rent actual renters pay. The two estimates are then combined to get a rent price. That lowers the total denominator for actual rent real renters pay their landlords. So the rent price comes out lower. Also, rents hikes are only counted in a new rental contract. If your landlord raised your existing rent by 20% this year, that’s not counted as a rent hike at all in the PCE or CPI.Moreover, the rent inflation numbers the PCE indicates are lagged from six months earlier, not current actual rent hikes. Rent prices are surveyed only twice a year, not monthly.

Are you paying more for beef hamburgers or steaks? Not as much as you think. The bureaucrats assume to change from beef to chicken when the price of beef get too high. That lowers the price of beef they report as a price hike for beef.That’s one of the 20 other price sources they use to calculate the PCE, called the Paasche substitute price index.

PCE assumes different weights than CPI for which goods and services we buy most. And how about drug prices? Drug companies simply move a particular drug into a higher range of their formulary. You and I pay more but it’s not a price increase per PCE. And price of gasoline at the pump? It’s a national average for regular gas, not the unleaded premium we have to buy.

I could go on with numerous further examples of how the assumptions and methodology in both the inflation indexes are constructed so to reduce the general price level reported.

Tell your colleague who believes what the government tells him to start thinking for himself. Investigate the methods and assumptions in the government inflation indexes and he’ll find some surprising stuff that might change his mind that the government always tells the truth and the mainstream media accurately always reports the same!

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End of Alternative Visions Show & Forthcoming Future Publications by Dr. Jack Rasmus

October 1, 2026 by jackrasmus

As the saying goes, ‘All Good Things Come to An End’. And so it has with regard to my 14 year stint as a host on the Alternative Visions show, on the Progressive Radio Network out of New York.

My last Friday, September 25, 2026 show was the last (see podcast link below), as PRN abruptly informed me I had to wrap it up in one week! The show covered my latest comments on the topics of the Decline of the US Empire–a subject more fully addressed in my just published 500p. book, “Twilight of American Imperialism“, now available at discount from the publisher, Clarity Press, and next week or so on Amazon, I’m told. And

Below you’ll find the link to the last show and the announcement for it. You can listen to the podcast for it (and all my prior shows) on podbean, spotify, apple and elsewhere. As the show announcement indicates, while the show is now over I will continue to write and publish articles on topics of current concern the show has been consistently addressing–i.e. the Decline of Empire, AI impact on jobs and incomes,Trump policies and the current crisis of electoral democracy in America, and the recent re-emerging of financial instability in US markets and threat of another financial crash.

Follow me on my written articles and various TV interviews that will continue to be posted on my blog, https://jackrasmus.com; as well as my new X and substack accounts to appear shortly. The show’s last announcement that follows indicates my near term publishing plans–articles, anthologies, and forthcoming Memoir, Victory Heights.

Here’s the link and show announcement to the final Alternative Visions show last week:

https://alternativevisions.podbean.com/e/alternative-visions-9-25-26

SHOW ANNOUNCEMENT

Dr. Rasmus announces final show and reviews the past themes and contributions of the show. He can be reached via his blog, jackrasmus.com; email drjackrasmus@gmail.com; new forthcoming substack and X accounts, and his weekly published articles on Counterpunch, World Financial Review, LA Progressive, Znet, World Review of Political Economy, and URPE forum. In the second half of the show, Dr. Rasmus reviewed the major themes and conclusions of his just published new book, Twilight of American Imperialism, and provided some final predictions on the current course of Empire, AI tech developments, financial markets instability, US elections, and wars of Empire. Thanks to all the followers of the show, real time and via podcasts. Follow me on the sources indicated for continuing analysis.

I’m also appending here my recent reply to one of the show’s frequent listeners, David Baker, which indicates in part my future plans to continue communicating with audiences interested in the topics of my concern:

“Thanks David. Please continue to add your comments to my published articles that appear on my blog, jackrasmus.com. Your views are much appreciated.

As for Keynes, I’m planning to pull together my various written articles last two decades on mainstream economic theory and my critiques, probably entitled ‘Engaging Mainstream Economics’. Also, a companion anthology of articles on contemporary Marxist economics, entitled ‘Engaging Marxist Economics’.

However, in the interim will be a series of articles summarizing my analysis and predictions in my just published book, ‘Twilight of American Imperialism‘, Clarity Press, Sept. 2026, now available at discount via the publisher and in another week or so on Amazon, I’m told.

After that, my publication plans are to gather my various articles published since 2012 on US imperialist regime change operations, entitled “Echoes of Imperialism’, a companion piece to the ‘Twilight’ book.  And a similar anthology of my articles on the Ukraine war, entitled “Ukraine and the Next European War”. 

Finally, I’ve just finished a 500p personal Memoir, “Victory Heights“, about growing up in postwar America from the 1950s to 2008 as a working class kid. Contacting agents at the present.

So stay tuned. More coming even though PRN knocked me off their network abruptly. I suspect it may have something to do with my vociferous and unequivocal criticism of Zionist influence over US politics today, foreign and domestic. But who can confirm a smoking gun! So be it. Moving on….

Keep in touch

Jack“

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Fed Rate Hike & the Financial Crisis of Empire

September 28, 2026 by jackrasmus

https://alternativevisions.podbean.com/e/alternative-visions-fed-rate-hike-crisis-of-empire

Today’s show discusses this week’s Fed rate hike and why it won’t have any effect on inflation. Why monetary policy no longer affects the economy—either inflation reduction or economic growth stimulation—due to long term financialization, globalization and now Trump policies as well. Why the US Treasury market is approaching crisis and needs higher interest rates by the Fed. Why sales of Treasuries to fund the US budget deficit may not occur. Result is deeper US economic crisis and inability to finance rising deficit spending.

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Fed Rate Hike, US Treasury Market & Crisis of Empire

September 19, 2026 by jackrasmus

September 19, 2026

By Dr. Jack Rasmus

This past week the Federal Reserve raised its benchmark short term interest (Federal Funds) rate a minimal quarter point, .25, from 3.75% to 4.00%. Expectations are strong for yet another .25 hike before the end of 2026.

Goods and services inflation in the US has recently begun to accelerate and the conventional wisdom in the mainstream media is that the Fed is raising rates in order to dampen inflation.

But is that the case? Or is there something else behind the rate hikes?

As the argument goes, Interest rate hikes dampen Consumer and Business demand for loans and thus consumption and investment in turn. Higher rates mean less spending by consumers on mortgages and big ticket items like cars; higher rates dampen business borrowing demand, so the theory goes.

It’s Supply Stupid

But the current inflation surge is not due to excess Demand. It’s a Supply problem. The Fed has little influence over supply, especially if it involves the global economy. And that’s exactly what’s driving up prices: the escalation of global oil and energy prices which translate into higher costs of gasoline for consumers, diesel for truckers and railroads, aviation fuel for airlines and much of electricity and natural gas services throughout the economy. And those prices eventually bleed into higher food prices with a lag.

To repeat: the higher energy prices driving US domestic inflation are a consequence of rising global energy prices—and those global prices in turn are the result of Trump war policies in the now spreading Middle East wars, Trump sanctions policy and tariff wars.

The Fed raising rates to dampen Demand has no effect on rising energy prices due to Supply and US war and related policies.

Current rising US inflation is a Supply problem that the Fed can do little about by raising rates and targeting Demand. Demand driving inflation are actually receding for months in the US, as real wages for households decline and unemployment rises in the Tech and now other industries. US job growth in 2026 has all but collapsed. In addition, as costs of borrowing rise—and in turn interest on credit cards, auto loans, student loans, mortgages, etc.—household Demand has slowed further.

Interest on that $18.5 trillion household debt load is a drag on household consumption. So too is the $23.7 trillion corporate and non-corporate business debt on investment. And that’s not counting the additional $43.8 total government debt, federal and state and local or the additional Federal Reserve balance sheet debt of $6.8 trillion. That’s a total combined debt of $106.2 trillion.

All that is money paid to wealthy capitalist investors that otherwise might be spent or invested on goods and services, to create jobs, and generate income for the many instead of the few. Assuming an average interest rate from all sources, that’s $7 trillion a year accruing to investors from interest alone. Interest payment on the Federal national debt alone is now more than $1.2 trillion a year.

Summing up: the problem of rising prices in the US today therefore is not excess Demand. And Fed price hikes, targeting Demand, will have no effect on inflation driven by Supply of global energy and other commodities caused largely by Trump policies.

On the other hand, the higher rates will have an added negative economic impact—as interest rates in general suck up and divert money capital from consumers, government and even some businesses to the super-wealthy investor class minority.

Fed Rates vs. Capitalism’s Financial & Global Restructuring

There’s more. Even if one assumes Fed higher interest rates will dampen consumer-business demand and thereby slow inflation, changes in the US and global economy the past quarter century show that Fed rate hikes have had a declining impact on dampening inflation. Conversely as well, Fed rate cuts have declining impact on stimulating consumption and business investment.

In economists’ parlance: interest rates have become increasingly inelastic stimulating as well as slowing the economy. Why is this so?

The ultimate causes for interest rate (i.e. monetary policy) growing relative ineffectiveness have to do with the growing financialization and globalization of the US and international economies since the 1990s. This phenomenon is addressed in more detail in my just released book, ‘The Twilight of American Imperialism’, Clarity Press, September 2026.

But to summarize in brief: lowering interest rates have been having a declining effect on stimulating economic growth because most of the rate cuts get redirected to investing in the expanding financial asset markets in 21st century  capitalism in the US and general Empire abroad. It is more profitable for businesses and investors to borrow money from the Fed’s affiliated banks (at lower rates) and reinvest that borrowed money in financial asset markets (in US and globally), rather than to invest in real assets in the US that produce goods and services (and in turn jobs and incomes). There are of course exceptions to the rule. But the exceptions represent a declining share of the real economy. Capitalism is changing and monetary policy has been declining in effectiveness as a result.  Fed rate hikes (or cuts) have had less effect in stabilizing the US economy.

For example: the Fed reduced interest rates to 0.11 to 0.40% from 2009 through 2016 and additionally injected $4 trillion in Federal Reserve bond buying into the economy. What happened to US GDP real growth? Annual growth rates averaged 1.43% from 2008 through 2016. One cannot argue therefore than lowering rates stimulated the real economy. They didn’t. But they subsidized a lot of investors with low cost money and made them richer.

The same applies vice-versa: the historical record in the US since 2016 shows raising rates do little to dampen inflation. What that record does show, however, is that when Federal Reserve long term bond rates hit 5.5%-6% they provoke a financial crash. That happened in 2000 just before the dotcom bust, in 2007 before the subprime mortgage-derivatives crash, in 2019 when the Repo market threaten to implode, and in 2023 when the regional banks in the US began to go belly up. Those long term US bond rates are now about 5.4% and rising!  

Rising rates make the rich richer and destabilize the financial system, while doing little to nothing to dampen global supply side inflation driven by US policies.

Fed Rates vs. Trump’s War, Trade & Sanctions

Today in 2026 another global development is rendering Fed interest rate policy ineffective: Trump’s Middle East wars, sanctions and trade policies, and the consequent decline of the US dollar, are all responsible for driving up global energy and commodity prices. It has nothing to do with domestic Demand.

While the US domestic economy is essentially self sufficient in oil and energy, the global economy is not. That’s especially true for Europe and northeast Asia (Japan, South Korea).

Trump’s war in Iran, now spreading throughout the Middle East region, has resulted in a serious shortage of energy (oil and natural gas) In Europe in particular. The US initially exported large quantities of US (and Venezuela) oil and gas to Europe when the Iran war began. Much of the US release of its Strategic Petroleum Reserve (SPR) was exported to Europe. However, now the SPR reserve release is running low and Europe oil supply from US exports is in trouble. Global oil and gas prices have therefore begun accelerating again, and US prices in turn as US oil companies price their sales on global prices not domestic supply.

US sanctions policy—in particular on Russia and Iran—is also driving up global energy prices. So is Trump’s tariff wars raising import prices. And the devaluation of the US dollar which is doing the same.

But if the Federal Reserve’s raising rates has no effect on US and global energy supply and thus no effect on US domestic inflation, why is the Fed raising rates nonetheless?

US Inflation & US Treasury Market Crisis

The US Treasury and its agent selling Treasury bonds, the Federal Reserve, need to raise interest rates. Why? To offer higher returns to buyers of US Treasuries and thereby provide an incentive to buy more US Treasuries.

So why does the Fed and US Treasury have to sell more bonds and securities?

Because the sale of Treasuries to buyers domestic (2/3s) and foreign (1/3) are the primary means by which the US covers its annual budget deficit. This year the 2026 deficit will exceed $2 trillion. It has done so since 2020. Total US defense and war spending is the largest cost element in the annual US budget deficit. Pentagon spending is already over $1 trillion and Trump has requested $1.5 trillion in 2027 to cover the continuing cost of wars, replenishing exhausted US weapons supplies, and to fund new weapons systems like drones, hypersonic missiles, autonomous weapons, etc. Interest rates on past Treasury sales now costs the US more than $1.2 trillion a year and rising as the US national debt escalates past $40 trillion.

 In short, the US must now sell even more Treasuries in order to cover the rising budget deficit driven by ever higher defense and war spending. (Either that or Congress must raise taxes on the rich which it won’t do).

But in order to sell more Treasuries, the Fed needs to raise interest rates it pays borrowers (buyers) of the Treasury securities.

One may argue that the Federal Reserve knows it must raise rates not so much to dampen inflation (which higher rates won’t do), but to sell more Treasuries to pay for US war driven escalating budget deficits and accelerating interest payments on the national debt.

There’s yet another twist to the Federal Reserve’s rate dilemma: Not only must it sell more Treasuries to cover the rising budget deficit and debt, but it faces a growing challenge to even maintain current levels of Treasury sales.

Forces are developing which indicate that key groups of foreign buyers of Treasuries (1/3 of all buyers) are retreating from purchasing US Treasuries.

The Fed must raise rates not only to cover a rising budget deficit. It must raise rates to attract more domestic US buyers of Treasuries as foreign buyers of Treasuries retreat.

The retreat from holding Treasuries has been underway for some time by China. Once having held $1.2 trillion in US securities just a decade ago, latest data show China holds only $.63 trillion. It continues to steadily divest itself of Treasuries, not buying new and allowing old to mature and roll off. Other economies of the global south are beginning to do the same. Blame US sanctions and trade war policies for much of this development. They are replacing Treasuries with gold, and soon digital currencies as well.

For example, recent events in Japan indicate Japan, once a stalwart purchaser of US Treasuries, may be about to join China and reduce its Treasury holdings. A constant holder of more than $1 trillion, the largest foreign buyer, of Treasuries, Japan began to slow its purchasing in 2026. The reason? Japan’s own government bond rates are rising for the first time in more than a decade. Japan’s currency value was formerly zero. Its investors, and global investors, used to buy Japan Yen cheap and use it to buy US dollars and in turn US Treasuries. That was called the carrying trade. That is ending. Japan’s bonds are rising above 3%. Its Yen is also rising. With the government bond rate differential between Japan and US Treasuries narrowing, global investors are now buying Japan bonds instead of US Treasuries. That is why US Treasury Secretary Bessent last month entered the Yen market to buy Yen (with Euros by the way, saving US dollars for other purchases). He did that to prop up the Yen, keep Japan bonds from rising further, and ensure foreign investors continue buying US Treasuries.

However, events in September thus far show Bessent has failed. Japan may therefore buy fewer Treasuries—i.e. at a time that China is buying less and the US needs to sell even more Treasuries to cover its accelerating annual budget deficit!

There’s a third reason why foreign Treasury sales may be entering a crisis. In recent years, as China reduced its buying and Japan didn’t increase its, Europe stepped in to fill the gap, accelerate its buying of US Treasuries, and to help the US cover its US budget deficits as US war spending accelerated after 2021.

European countries in many cases more than doubled their purchases of US Treasuries from 2021 through 2026: Britain increased its holdings of Treasuries from $412 billion in 2020 to $865 billion in 2025; Belgium from $135 billion to $466 billion. Luxembourg from $197 to $431 billion; France from $49 billion to $376 billion and so forth.

One may argue Europe did so in exchange for continuing US military support for NATO in Europe and for Europe-NATO’s war in Ukraine. But with Trump’s decline of support for NATO funding and Ukraine war spending, Europe now has to fund the Ukraine war itself. To that end it has thus far raised or committed $176 billion in Euro bonds. Will it—indeed can it—continue to buy US Treasuries at the same rate as before? Not likely for several reasons.

First, it’s less likely given that Trump and Europe are feuding over Greenland; Trump is attacking Europe with tariffs; And Trump is angry with Europe’s lack of support for his war in Iran. Europe has a number of incentives therefore to reduce its prior level of purchases of US Treasuries.

Evidence is beginning to appear Europe plans not to continue purchasing US Treasuries at past rates. France, Belgium, Britain and other European countries in recent weeks have begun moving their physical gold stocks from the US back to Europe. That likely means it plans to substitute gold in lieu of buying US Treasuries. More outright shifts are also occurring. The huge Norwegian Sovereign Wealth Fund has reportedly begun selling its Treasuries.

A countervailing force, however, is that Europe has nowhere to go for oil and natural gas other than the US. Oil and energy from the Middle East to Europe continues to decline. The US has backfilled much of Europe’s oil needs in the first half of 2026 with SPR exports. With SPR now running low, that export may slow. In turn, Europe energy prices have begun to escalate still further.

In parallel to Europe, Canada has begun orienting toward Europe as result of a deep trade dispute with Trump. It has become an associate member of the EU. Like Europe, Canada previously increased is buying of US Treasuries from $69 billion in 2020 to $475 billion in 2025. And like Europe, it is unlikely it will continue to do so as the trade dispute between Canada and Trump further deteriorates.

The point of this preceding analysis is that a crisis in the US Treasury market is brewing. Foreign purchases of Treasuries are likely to slow across the board—at a time when the US needs to sell even more to foreign buyers to cover its further escalating war cost driven budget deficits.

That means the US Treasury needs to sell even more to US domestic buyers of Treasuries. For that it needs to raise the rates it pays buyers of US bonds and other securities, to entice them to buy even more and not just at prior rates.

The Treasury Market and Accelerating Decline of Empire

This is where financial instability in the massive Treasury market comes in. The US has to sell more Treasuries to domestic buyers in particular. But who are those buyers? In recent years they have been the increasingly unstable US financial institutions like hedge funds and other so-called and unregulated ‘shadow banks’.

Should the US real economy slow—or worse the AI investment bubble go bust—hedge funds and their ilk may begin to retreat from the Treasury market. The result could be the eruption of a major crisis in the Treasury market, which would reverberate across all financial markets rapidly. One may argue that’s perhaps why Bessent also recently began to provide an extra $8 billion a week to Treasury investors.

A crisis in the Treasury markets would drive Fed rates even higher—perhaps beyond that 6% long bond rate that history shows since 2000 is a tipping point for precipitating a general financial crash. Should that occur, a deep contraction of the US real economy would be certain. That contraction would then exacerbates even further the ability of the US empire to fund its projected war spending.

The Empire would have to accelerate its geopolitical retreat, already underway, as its funding collapses. Empires and their military cannot sustain themselves without sufficient funding. Slowing US Treasury sales and a contracting real economy and deep recession ensure the US Empire would have to retreat and consolidate—to the western hemisphere and central Pacific at minimum.

About the Author

Dr. Jack Rasmus is the author of several books on the United States and the global economy, including The Twilight of American Imperialism, Clarity Press, 2026; The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump, Clarity Press 2020, and Systemic Fragility in the Global Economy, Clarity Press, (2016). He is a host for the radio show Alternative Visions on the Progressive Radio Network, a journalist, a playwright, and a former professor of economics at St. Mary’s College (retired).

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State of the Working Class in the Era of the Agentic AI Armageddon

September 9, 2026 by jackrasmus

Trump brags how great the economy is doing and that American workers never had it so good, in terms of both jobs and pay. But the US government’s own data shows that since 2007 both jobs and wages for the working class have barely grown, forcing millions to leave the labor force altogether. The picture has worsened under Trump 2025-26. Job growth has slowed to a crawl and pay stagnated on average, while declining for millions at the median and below. The article then explains how this dire situation is about to get much worse, as next generation Agentic AI in 2026 is slashing millions of jobs this year and more the next.

Dr. Jack Rasmus

Copyright 2026

The Trump administration brags almost daily how great the US economy is and how well American workers are now doing. But the facts dramatically state otherwise. Here’s the facts about the current state of jobs and wages for the working class in America as of Labor Day 2026—and why the next two years both jobs and wages will get significantly worse. (All data is from the US government’s Federal Reserve and Labor Department databases or the Wall St. Journal).

There is nothing more important to a worker than having a job. Next important is a job that pays decently to allow a reasonable standard of living for his/her family. Third, a job with some promise of permanency—i.e. job security.

On all counts the state of the US working class this Labor Day 2026 is dire.

The Corporate Profits Picture

In contrast, corporate America the economy is booming. It’s never had it so good.  In 2008, corporate profits as part of US national income amounted to $943 billion. By 2012 it had more than doubled to $2.2 trillion. Just prior to the Covid crash of 2020-21, in 2019 profits were $2.43 trillion. They then blew through the Covid recession and rose to $3.5 trillion in 2020-21. Big business did quite well during the Covid crash.

It didn’t stop there. Under Biden, profits continued to rise to $4.12 trillion by the time he left office in late 2024. And under Trump, rose to $4.53 trillion at year end 2025. Based on the first half of 2026, profits are on track to top $6trillion by the end of 2026. That’s almost a tripling since 2019!

With the massive near tripling of corporate profits since 2019, one would think job creation and wage gains followed suite. Maybe not a tripling. Of even a doubling. But at least an increase in low double digits. But they didn’t. Not even close. Not since 2008; nor since 2019; nor during the past 20 months 2025-26 under Trump.

The Long Term Jobs & Wage Picture: 2007-2026

(JOBS)

Let’s look at how the working class has fared in terms of jobs. Let’s start with the year 2007. That’s a peak year in employment, well before the crash of 2008-09 and the collapse and loss of tens of millions of jobs those years.

In 2007 the total size of the US Civilian Labor Force—i.e. all those employed and jobless but looking for work (in the US you can be out of work but not looking for work in which case you aren’t considered technically ‘unemployed’ and don’t show up in the unemployment rate statistics)—was 153.9 million.

According to the latest US jobs report for August 2026, there were 169.7 million in the Civilian Labor Force.

That means over the past 18.67 years, from 2007 through August 2026, the US created 15.8 million jobs. That’s roughly 850,000 jobs a year. Divided by months, it’s only 73,800 jobs a month.

Economists generally assume on average 125,000 new entrants enter the labor force monthly. These are students entering the labor market, former retirees having to return to work because they can’t make it financially, youths entering for the first time, and other categories of returnees.

In other words, since 2007 the US can’t sufficiently find jobs for citizens who want to enter the labor force and work.

So where did they go? They mostly dropped out of the civilian labor force altogether. The US government has a statistic for that. It’s called the Labor Force Participation Rate. It estimated 66% of the working age population in 2007 was in the labor force. It’s now 61.6%. That’s 4.5% fewer today. That’s 4.5% of a roughly 170 million today. Or about 7.6 million who’ve dropped out of the labor force altogether since 2007. By the way, they are without jobs but aren’t considered unemployed according to the way the US government calculates unemployment rates. Which means the current unemployment rate of 4.1% in August 2026 should be double that 4.1% at least.

Another labor department measure reveals the scope of the problem that the US is increasingly unable to find jobs for all its citizens who want to work.

It is called the Employment-Population Ratio. Given the rise in the US population, it estimates the percent of the population able to find work. Like the Labor Force Participation, that measure too is falling long term. As the US population rose from 303 million in 2007 to 343 million today, that ratio has fallen as well—from 62.7 to 59.1.

In other words, The US can’t create jobs to keep its population employed as it used to. More and more who can’t find work simply drop out—and are not counted in the unemployment rolls.

This is not about losing jobs due to recessions. That’s another separate cause. This is structural. It’s about an economy that can’t provide sufficient jobs long term for workers entering the labor force and wanting to work.

The past four and a half decades also shows a pattern of collaboration by politicians and corporations to consistently undermine full time job creation. In the 1980s millions of involuntary part time jobs were legally permitted for the first time in lieu of full time jobs. Their wages were less and few benefits were the norm. In the 1990s, millions more temp jobs were created with little or no benefits and no job security. Both part time and temp were legally excluded from the union contracts, where they existed. Free trade agreements after 1989 exported millions more full time jobs offshore. The advent of gig work after 2000 threw workers off regular company payrolls and adrift to find work as independent contractors—often contracted back by the same companies that fired them. Massive business tax cutting after 2001 further encouraged companies to replace millions of their workers with capital equipment. The government eventually reimbursing businesses for the full cost of the equipment that laid off the workers.

Tens of millions of US full time workers lost their jobs since 1980 to these various forces, or else were reduced to part time-temp-gig work at lower pay with few if any benefits and no semblance of job security whatsoever.

All these developments are examples of what’s called structural unemployment. They are apart and in addition to job losses due to recessions and business cycles, i.e. cyclical unemployment. Overlaid on the chronic, long term weakness in job creation, tens of millions lost work in the great crashes of 2008-09 and 2020-21, not to mention smaller recessions and periods of economic stagnation.

This weak long term, and growing weaker, US economy job creation record is about to get worse, much worse. It already is, in fact. The cause is the Artificial Intelligence technology revolution which began to have an impact in 2022-23 and now in 2026 is accelerating in its negative impact on jobs and wages of the US working class. More on which shortly below.

(WAGES)

The US Working Class has not fared any better since 2007 in terms of real wages.

If we’re talking about the working class, one should not include the salary and compensation gains for managers, CEOs and incorporated self employed like doctors, lawyers, small business, etc. The mainstream media likes to throw in their wages and compensation to make the overall wage numbers look better than they are.

The closes statistic of relevance for the working class is wages for what’s called Production and Non-Supervisory workers (PNSW), a subset of about 110 million workers who comprise roughly 81% of the US total private nonfarm workforce.

Real hourly wages for PSNW in 1983 was $8.03 (when adjusted for inflation using the government’s own base year of 1982-84, the most frequently cited statistic for adjusting for inflation). By August 2026 this had risen to $9.94.

That’s a real wage increase of about 4.4 cents/hr. raise a year since 1983!

That’s also likely an over-estimate for several reasons. First, it’s an average. Of the 110 million PNSW workers, those at the median were getting less than the top 10% and those well below the median even less. Second, there’s the question of the inflation index used, the Consumer Price Index, to get the real wage after adjusting for inflation. This author’s estimates conclude the CPI under-estimates actual inflation by at least another 1% a year. Third, even if not an average and if properly adjusted for inflation, it still does not mean the worker has $9.94 to spend. Take home pay after rising taxes and other deductions reduces the $1.14 gain even further. All this means real wages have not even risen the paltry 4.4 cents an hour per the government figures.

Real Weekly Earnings are another measure of pay. Weekly earnings are determined by the number of hours worked per week multiplied by the hourly wage and thereafter adjusted for inflation by the Consumer Price Index.

The results are similar to the hourly wage. The average weekly earnings for PNSW in 1983 was $272 a week. By August 2026 it was $336. That’s an increase of about $1.49 per year in weekly earnings.

The Short Term Under Trump: 2025-2026

Defining short term as the past 20 months of the Trump administration, January 2025 through August 2026, the data show both job creation and wages have slowed still further.

(JOBS)

Private Nonfarm Employment from January 2025 through August 2026 rose from 131.9 million to 132.7 million. That’s 800,000, or an average of 40,000 jobs a month, i.e. about half the monthly average of 74,000 over the longer term since 2007. In other words, nonfarm non-government jobs are being created at half the rate under Trump compared to the longer term since 2007. And don’t forget, that longer term since 2007 includes two massive periods of job loss in 2008-09 and 2020-21.

Government sector jobs not only did not grow at half the monthly rate under Trump but declined. Government employment in all sectors—federal, state, local—declined from 23.5 million in January 2025 to 23.3 million in August 2026, a 200,000 decline.

Both the Labor Force Participation Rate and the Employment-Population Ratio have also continued to fall under Trump—the former from 62.5% to 61.6% and the latter from 59.9 to 59.1.  More workers thus continued to leave the labor force, or did not bother to enter, or else failed to find jobs and gave up. However, none of their numbers show up in the official US government unemployment figures. They are simply considered ‘missing’ by the government and never included in the calculation of the unemployment rate. Which is one reason why the unemployment rate hardly changes at all year to year now, despite the increasingly weak job creation picture.

Breaking down the aggregate Private Nonfarm Employment numbers by industry since 2025 shows little or no net job growth, or actual decline. Manufacturing jobs fell from 12.6 million to 12.4 million. Professional and Business and Retail Trade, two very large areas of employment, were both stagnant since January 2025 with no job growth: the former at 22.5 million and the latter at 15.4 million today as well as 20 months ago. Only the general services sector, where many unskilled and entry level jobs dominate, showed any gain—from 136.5 to 137.4 million. This is important to note since the current escalating impact of AI on jobs has begun to impact this sector of employment first and hardest.

For a number of reasons due to methodologies and data collection, the US monthly job reports tend to grossly overstate the number of jobs created. Those reports (based on two surveys called the Current Population Survey and the Current Establishment Survey) are later adjusted the following year by considering new data from the States’ unemployment insurance data.

In the last two years of the Biden administration, for example, the monthly job reports over-stated the actual number of jobs created by 598,000 and 898,000 jobs, respectively, according to the US Quarterly Census of Employment and Wages (QCEW).

In 2025 the total growth in jobs was estimated at 584,000 by the monthly jobs reports. That was adjusted down by -403,000 jobs for an actual total of only 181,000 jobs created the entire year 2025.

In the summer of 2025, even according to the monthly job reports, the US economy created only 35,000 jobs a month over three months. Big losses were recorded in key sectors like manufacturing, professional & business services, and government. In August 2025 Trump freaked out and declared the Bureau of Labor Statistics management was faking the numbers to make him look bad and he fired the director, McEntarfar.

In the summer 2026 job creation collapsed again, resulting in less than 30,000 new jobs in both June and July, although August numbers rose again to 162,000. However, the composition of the 162,000 is questionable—given that more than 100,000 of that number are attributable to bars & restaurants workers (59,000 gain) and teachers (42,000). Some economists note that the  59,000 was due to the one time surge to accommodate the world cup soccer events in the summer. Another 42,000 was attributed to education. One wonders how teachers returning to work in August is not considered a seasonality adjustment. Did K-12 education really grow that fast in one month?  

It remains to be seen what the QCEW downward adjusted job numbers for 2026 will be when released in February 2027. Will Trump’s politics play a role? Or will the downward trend in job creation adjustment continue?

(WAGES)

The picture for short term wages under Trump since January 2025 is more certain.

There have been no gain the past 20 months under Trump in inflation adjusted hourly wages or weekly earnings for Production & Non-Supervisory Workers in the US.

The inflation adjusted average hourly wage was $9.93 in December 2024 and $9.94 in August 2026. Ditto for average weekly earnings: $335 in December 2024 and $336 today.

That means since 2007 the real hourly wage for PNSW workers was only 2.6 cents and hour. Compared to the 4.4 cents per hour average over the longer period, 1983-2026, the period 2007 to 2026 shows an even slower rate of real wage gain at 2.6 cents. As paltry as the amount is, the gains are declining over time.

And under Trump 2025-26, the gains have totally stagnated for both real hourly and real weekly earnings—in other words no gains whatsoever. And if inflation were more accurately estimated, or the median instead of the average considered, the real hourly and weekly pay would indicate a decline under Trump. Take home pay would fare even worse.

If the job creation and real wage picture for the Working Class is dire in 2025-26, what about the intermediate and longer term, 2027 through 2030?

As bad as it is today 2026 for the working class, it’s about to get worse—and quickly. The current trends in Artificial Intelligence are destined to accelerate the crisis in jobs and wages for the American Working Class. Here’s why.

The Agentic AI Jobs Armageddon

The AI Revolution is occurring in stages. The first stage emerged around late 2022 with the introduction of the AI model called ChatGPT. This was simple AI. Someone programmed the model to do a task. Gave it a result to achieve. Identified tools for it to get and use. Where to go for the data. Then set it in motion with a human user prompt. The user defined the parameters and ChatGPT performed the task faster than any human. And as it performed more, it got more accurate with fewer errors. Moreover, it worked 24/7. No breaks. Holidays. Vacations. No benefits. Faster and cheaper meant more productivity. That meant reduced unit costs and that translated into more profits. Not just from productivity but because it also resulted in significant layoffs of real workers. AI is about making money by reducing labor costs and boosting productivity.

ChatGPT and its competitors targeted the replacement of simply decision making jobs formerly done by humans. Jobs that required little skill. Where the decision process was clearly defined, unambiguous and repetitive. This meant a lot of entry level service as well as manufacturing jobs.

Research sources like Goldman Sachs bank and McKinsey Consulting issued early predictions of the potential job loss due to AI. Goldman predicted 300 million worldwide.  Dozens of other sources have since issued forecasts and predictions of job loss. Nearly all talk of hundreds of millions lost plus more jobs de-skilled and downgraded (and therefore lower paid).

Occupations like data entry clerks, telemarketers, customer service reps, cashiers, medical transcribers, translators, copy and content writers, insurance underwriters, paralegals, basic software coding and many others were the initial jobs impacted by first generation AI ChatGPT 3-4 and its clones. By 2026 these occupations have already been decimated by millions with more job destruction in progress.

The second generation AI appeared in 2026. Its job impact will prove much greater than first generation ChatGPT. It’s called ‘Agentic AI’. And its target is jobs involved in the entire workflow of companies in general. Not just certain industries. Agentic AI is not industry specific. Agentic AI doesn’t depend on repetitive prompts from a human user, like ChatGPT. Agentic AI operates autonomously. Give it a final objective, it seeks out tools and databases wherever it needs them to complete its objective.

Agentic AI is about AI managing AI. It is AI scaled manyfold. Its scalability is potentially unlimited. It is AI that eliminates jobs involving not just simple decision making jobs but what’s sometimes called knowledge workers. It is AI moving up the skilled and complex decision making chain.

Agentic AI hit the economy in early 2026 with a force and a rapidity experienced by no other technology. It is just nine months old and its effect is intensifying. The lure of significant cost reduction and profits expansion has resulted in management rushing its implementation regardless of unknown disruptive consequences.

Agentic AI means an ‘orchestrator’ AI agent directs and manages the tasks of countless other agents under its direction. Emphasize ‘countless’. It is applicable to workflow management throughout all industries and companies. Job functions like project managers, product managers, marketing managers and middle to upper management in general are becoming, or soon will become, superfluous. Much of human resource functions, marketing, accounting, legal and other ‘back office’ work become redundant. Research analyst jobs of all kinds, including stock market analysts market research analysts, systems analysts, etc are all on the Agentic AI block. Traditional quality control jobs are destined to disappear. Agentic AI manages its own quality control tasks. If it makes an error it self corrects its code.

These are not entry-level or simple decision making jobs. They are jobs critical for managing the overall flow of work within virtually every company in every industry.

Most creative work within businesses is also subject to displacement by Agentic AI. Recent surveys showed, for example, that 40% of all song creation in the first half of 2026 had some element of AI in its production, and 20% of all songs were totally AI generated. TV and movie script writing is being similarly impacted right now as well.

Wherever an activity report is issued to or by management in a company—that activity and report can be potentially done by AI.

Earlier this spring 2026, META’s CEO, Zuckerberg, attempted to take the lead by implementing agentic AI throughout the company. His ‘Project OT’ (OT=Organization Transformation) planned to gut most middle layers of the company—including middle managers, project team leaders, software developers, etc.—and have agentic AI replace their tasks. Reports were up to 60% of META jobs would be eliminated or announced cut by November 2026. The META workforce heard of the plan and threatened to leave or demonstrate or even unionize. Zuckerberg backed off and reduced the 20% scheduled spring job cuts to 10% and cancelled planned November layoffs. META couldn’t afford an employee revolt, given its need to secure investor commitments and borrowing to fund its massive AI investing plans.

In recent interviews, Microsoft’s Bill Gates and Google’s Eric Schmidt, made predictions about the impact of this latest stage of Agentic AI on employment in general.

Gates noted the unprecedented rapid pace of AI development with Agentic AI and warned 50% of all entry level jobs will be gone in two years. That’s tens of millions of US jobs. The unemployment rate, now stuck at around 4% in recent years, will range between 10%-20%.

Eric Schmidt, former CEO of Google, has publicly declared people “have no idea what’s coming in 2027.” Only 10% of the impacts of AI are now known, according to Schmidt. There will be an unlimited number of AI agents in two years, he warned. Already, Anthropic Corp’s ‘Claude’ leading edge Agentic AI is doing 80% of all software coding, he added.

Whereas first AI generation ChatGPT eliminated simple service decision making, Agentic AI targets the huge Business & Professional Services sector of the US economy with its 22.5 million jobs. (jobs already not growing in recent years per earlier data).  The target is also the 20 million current US middle-upper management jobs. Both sectors are especially vulnerable to next generation AI replacement.

Agentic AI has also begun to transform ground transportation and manufacturing sectors, and by 2030 will begin to displace the 4 million K-12 public school teachers as well.

AI is already impacting the 2.2 million long haul truck driving industry. 18 wheeler trucks are already traveling across Texas without drivers in the cab. There’s another 1.3 million short haul truckers’ jobs also eventually at risk as well. Uber has 1 million ride-sharing drivers. UPS 100,000 drivers. 134,000 deliver for Amazon. 250,000 drive trucks for the US post office. With Agentic AI, each self-driving vehicle becomes an AI agent with an ‘orchestrator’ AI agent located at company headquarters directing them, planning and changing to the most efficient routes on the fly, avoiding congested traffic flows—all tracked simultaneously via a company’s access to dedicated low orbit satellites.

As knowledge workers, K-12 teachers are well adaptable to displacement by Agentic AI. One can easily imagine State governments defining centralized lesson plans for most academic subjects in K-12 public schools and delivering teaching services by various multi-media devices in the classrooms. Skilled teachers today replaced by lower paid, less skilled humans in the classroom operating the machines and monitoring classroom behaviors. Teachers become babysitters and classroom machine operators. Those that remain in the less skilled roles will consequently be paid less.

Then there’s what’s called ‘Physical AI’, i.e. robots. One has only to view the videos of the current level of AI development in China to understand the rapid pace of development of ‘physical’ AI now underway. And it’s only beginning. The use of human-like AI engineered robots is accelerating exponentially. Already humanoid robots are directing traffic in crowded inner-cities in China.

Not least, the use of Agentic AI in the military is unlimited. It too will negatively impact jobs. Agentic AI is perfectly adaptable to battlefield management. Hundreds and thousands of airborne drones today already engage daily in the war in Ukraine. Swarms of underwater and land-based drones are being prepared. Battlefield management by Agentic AI of individual AI agent military vehicles, weapons systems and robots is on the drawing boards by all major military powers—China, Russia, the US in particular. Fewer human recruits to the military in the US will be required within five years. Today’s 1.3 million active US military force will be reduced by tens and hundreds of thousands of human recruits. The US military recruited 163,000 in 2025.  That level will no longer be needed and will be reduced by tens of thousands annually. Those rejected will be forced to enter the labor force instead, at a time of massive structural unemployment due to accelerating next generation AI.

How do all these impacts current and imminent result in job destruction due to Agentic AI and whatever comes next, 3rd generation?

If Gates is accurate in predicting the unemployment rate will surge to 10%-20%, that means the current 7 million unemployed full time workers today in the US (i.e. the 4.1%) will total 25 million unemployed—assuming just a 15% unemployment rate.  And if Schmidt is right, that’s potentially within the next two years, by the time of the next US general election in 2028.

And that 25 million will not count any unemployment driven by a business cycle contraction and next recession that this writer predicts will occur before 2028. But that’s another story.

Dr. Jack Rasmus

September 7, 2026  

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Condition of the Working Class in the Era of the AI Armageddon

September 5, 2026 by jackrasmus

https://alternativevisions.podbean.com/e/alternative-visions-condition-of-the-working-class-2026-in-era-of-ai-armageddon

What is the state of the US working class in terms of jobs, wages, etc. as of Labor Day 2026? The picture per latest US jobs report for August 2026. Wages. What’s the emerging impact of AI on the American Working Class? Not just in terms of job loss but in conditions of work. What is ‘Agentic AI” now doing to the work force? Show continues with Treasury Secretary Scott Bessent’s last week interventions in the global currency and US bond markets, the chaos results in the recent G20 finance ministers meeting and latest claim the US will ‘grow’ out of its current $40 trillion debt crisis. What’s the actual record of US GDP growth long term?

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The Decline of American Empire Part 1: The Funding Gap

September 1, 2026 by jackrasmus

https://alternativevisions.podbean.com/e/alternative-visions-8-28-26

Today’s show takes up the topic of the American Empire in decline. It’s the first summary preview of my forthcoming book, available in early September, “The Twilight of American Imperialism“, Clarity Press, 2026.  What does it mean to say ‘decline’? What are the indicators? They’re not just geopolitical—i.e. rise of BRICS, lost US wars, disputes with allies, fracturing military alliances, etc. All empires run on money and the American is running out of enough to fund the accelerating costs of empire. It is now experiencing an accelerating financial crisis as costs of Empire accelerate faster than revenues to fund it. As a result, the empire’s Practices have begun to fail and its Institutions under-perform. The book covers the period 1992 through 2026, focusing in large part on Trump 2025-26 and policies now accelerating the decline. Today’s show concludes by revisiting the crisis in the US Treasury market—the main means for debt financing of the Empire–emerging in recent weeks and explains how it is related to the main theme of the book.

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