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Listen to my recent 20 min. radio interview discussing the latest jobs numbers and political developments behind the scenes in the unraveling of Biden’s $3.5T Human Infrastructure bill, now down to $1.8T (my prediction months ago), and likely to be cut further–as Senator Sinema vows no support so long as taxes raises on corporations and the rich. How Sinema, Joe Manchin, and the corporate wing of the Democrat party have successfully whittled down the bill, as negotiations now enter their final stage this coming week, October 25-30.

(Watch for Dr. Rasmus’s forthcoming series of articles this week on Biden’s recent Town Hall interview by CNN, the background to the collapse of the $3.5T Human Infrastructure bill, and the centrality of Corporate-Investor tax cuts in the rollback of fiscal stimulus)

To Listen GO TO:

https://drive.google.com/file/d/1DLHVjIoY5B5Utkg-UUFlW-QD3H-dRWqJ/view

Pundits left and right are calling the current situation in the US labor markets a ‘general strike’. They are wrong and reveal their misunderstanding of labor history. But it is a Great Strike Wave, the most significant since 1970-71.

Listen to my Alternative Visions radio show of October 15 where I follow up commentary of my recent print publication on ‘The Great Strike of 2021’–and also begin an analysis of the emerging inflation wave and why it’s not ‘temporary’ as the Fed and others have been saying.

The Covid induced Great Recession of 2020-21 has fundamentally restructured the US (and global) economies in ways mainstream economists and politicians do not yet understand. The current recession has entered a new phase of weak recovery of the real economy (a ‘rebound’ not sustained recovery as I call it) that will be followed by a ‘relapse’ of the real economy again fourth quarter 2021, i.e. a repeat of last year’s 2020 trajectory of the economy in which a summer rebound due to reopening the economy was followed by a relapse and near stagnation of growth in the second half of the year (as is now occurring again). Forget using GDP as an indicator of recession. It is flawed and only defines a phase of a recession. The current US and global condition is a Great Recession 2.0, which is defined–like all Great Recessions–by a major initial crash (early 2020) followed by short, shallow and partial recoveries which are then punctuated by further periods of anemic real growth, growth stagnation, or even double digit contractions in the weakest global economies. Great Recessions are also associated with severe financial side instability. But that financial instability may occur either ‘before’ the real economy’s crash (as in 2008) or may occur after it (2022-23?)

To Listen to the Radio Show GO TO:

https://alternativevisions.podbean.com/e/alternative-visions-the-great-strike-of-2021-inflation-wave/

SHOW ANNOUNCEMENT

Dr. Rasmus discusses his article, published last Monday, ‘The Great Strike of 2021’. Why are 5 million US workers not returning to work? Rasmus explains why and how they’re coping ‘withholding their labor’ as the economy reopens. It’s a strike wave of the lowest paid and most abused US workers. Signs their strike example may be spilling over to union workers now striking as well. Rasmus compares the 2021 strike wave with the last strike waves of 1970-71 and 1945-46. (Check out his blog, http://jackrasmus.com for recent articles on the subject).  In the second half of the show the current escalation of inflation is discussed. Why Biden’s recent measures to put LA ports on 24/7 work schedule will not have much affect. Why the capitalist global supply chain is in chaos and why supply-driven inflation will not be temporary but continue well into 2022. Rasmus explains ‘stagflation’ likely coming, as US GDP and economic recovery is faltering 3rd quarter 2021 while inflation continues to escalate.

A reader of my recent post, ‘The Great Strike of 2021’, asked the important question, if so many workers are withholding their labor (i.e. on strike) how then are they financially surviving? Here’s my brief reply of some of the possible ways they’re doing it:

“In answer, probably a combination of ways: perhaps a second family member is still working; or worker refusing to return is still getting unemployment benefits (note: extra pandemic benefits were cut but not traditional state benefits); or maybe his costs associated with returning to work are greater than not–i.e. if he’s low paid and has no health coverage at work or has to commute long hours, then it makes more sense to stay home and continue getting Medicaid or COBRA subsidy and save on transport costs; or makes more sense to collect the new child care benefits, stay home, and pocket the govt payments (can’t find child care anyway so why not); or maybe he saved a little from past stimulus checks, from rent assistance, and from extra pandemic unemployment benefits (now ended of course). Or maybe he sold a second car he doesn’t need any longer; Or refinanced the house if he has one; Or he’s working off the books somewhere in the underground economy, as you note. (lots of restaurants paying bartenders under the table for now since they’re unsure if demand will be permanent & Covid really over. Etc. etc. Workers are pretty resilient and figure ways to financial make ends meet even in a crisis. Just talk to anyone who’s been on strike for more than a month. They’ll let you know the ‘tricks’.

October 11, 2021
By Dr. Jack Rasmus

The best definition of a strike is when ‘workers withhold their labor’ for better wages and working conditions. The conventional wisdom is that unions go on strike. But that is incorrect. Workers go on strike and they don’t necessarily need to be members of unions. That fact is evident today as millions of US workers are refusing to return to their jobs. They are ‘withholding their labor’ searching for better pay and a future.

We are witnessing the ‘Great Strike of 2021’ and it’s composed mostly of millions low paid non-unionized workers!

Workers returned to jobs at a rate of 889,000 a month during the 2nd quarter 2021 (April-June) as the economy reopened. That average fell to only 280,000 per month in the just completed 3rd quarter 2021 (July-Sept), according to the Economic Policy Institute.

The most recent September month figure was only 194,000 jobs were refilled, according to the US Labor Department’s monthly ‘Employment Situation Report. That missed mainstream economists’ prediction of 500,000.

According to various Tables in the US Labor Department’s monthly ‘Employment Situation Reports’ (A-1, A-13, B-1), only half of the workers who were jobless at the start of 2021 have returned to work. Officially, per the Labor Dept. more than 5 million still have not. But that 5 million is a gross under-estimation. It doesn’t count the 3 millions more who have dropped out of the labor force altogether and are no less jobless than those officially recorded as unemployed. Nor does the 5 million include a several million or so workers who were mis-classified by the Labor Dept. as employed in March 2020 when the pandemic began simply because they indicated when surveyed by the government that they expected to return to work even though they weren’t working at the time of survey. The Labor Dept. soon thereafter acknowledged it was an error to count them as employed, but to date it has still refused to correct the numbers. That number of mis-classified as employed today remains around 1 million or so.

So there are somewhere around 8 to 10 million workers in the US still without any work at all, (which doesn’t account for the millions more who are underemployed working part time or a few hours a week here and there).

Many of the 9 million or so are not returning to work out of choice—i.e. they are ‘withholding their labor’. They are in effect on strike for something better.

While most are low paid, their ranks aren’t limited to just those industries that first come to mind—like hospitality or retail work. The ranks of the low paid are common across nearly all industries in the US today, not just hospitality or retail.

Comparing the US Labor Dept.’s level of employment as of September 2021 to the pre-pandemic months of January-February 2020, number show workers withholding their labor is widespread across industries and occupations: Leisure & Hospitality shows 1.6 million fewer working today, in September 2021, compared with pre-pandemic months of January-February 2020. But the Health Care industry, with hundreds of thousands low paid workers in home health care and clinics, shows 524,000 fewer employed today compared to January 2020. Professional & Personal business services shortfall is 385,000; Education services—with its hundreds of thousands of adjuncts in higher education and millions of K-12 teachers paid low wages in small non-union school districts—is down by no fewer than 676,000. One would think manufacturing was a case to the contrary. But no. Millions of manufacturing workers are employed as ‘temps’ with low pay and no benefits—even in union contracts. Manufacturing has 353,000 fewer jobs today than it had in early January 2020. Ditto for Construction, with 201,000 fewer. And so on.

That’s more than 5 million fewer—not counting those having dropped out of the labor force altogether or those still mis-classified as working.

It’s safe to assume that at least half of the 9 million with no work whatsoever are refusing to return to work out of choice. That’s 4 to 5 million who are de facto ‘on strike’. The USA is in the midst of the ‘Great Strike of 2021’, involving millions of the low paid and super-exploited US workers across virtually all US industries!

Signs are beginning to appear that their example may now be spreading to the unionized workforce as well. Union contract renewals are being rejected—and strikes imminent or in progress—in industries from food processing (Kellog workers) to agricultural equipment (John Deere) to hospitals and healthcare on the west coast. These are large union bargaining units involving thousands, and tens of thousands of union workers.

Capitalist Ideology: Reversing Cause & Effect

Employers, business media, politicians and most mainstream economists won’t acknowledge they’re in a strike wave of both the unorganized and organized. They are united, however, in trying to blame the workers for what is a de facto walk out by millions. They are all lamenting, and scratching their heads, with no answers as to why so many workers are not returning to their jobs or willing to leave them—especially now that vaccines are available and employers are advertising job openings.

Their explanation earlier this past summer was unemployment benefits were too generous and were thus responsible for keeping millions of workers not returning to work. This theme was especially popular among politicians in the Red states. Starting last June 2021 many Red state governors and legislatures unilaterally and pre-emptively cut unemployment benefits, even though the benefits were to continue until September. The then went silent as data over the summer showed that the few ‘blue’ states that did not cut benefits early—like California, New Jersey, etc.—actually showed a greater rate of return of workers to their jobs over the summer than did Red states that cut unemployment benefits early. So much for that argument.

Now the drumbeat by employers, politicians, and Red states is that child care benefits and improvement in food stamps are keeping workers from returning. It’s the old employer strike strategy: starve them out and they’ll come back to work.

In other words, workers’ refusing to return to work has nothing to do with unlivable low wages, with lack of alternative health care for themselves and their families since returning to work means loss of government COBRA payments or Medicaid, with unavailable or unaffordable child care. It has nothing to do with employers offering many workers to return to work but at fewer hours and no guarantee of hours needed to ensure sufficient weekly earnings to cover their bills. It has nothing to do with employers insisting on unstable family-destroying work schedules, no civilized paid leave, and in general no hope for the future ever getting out of what is in effect a system of modern work indenture afflicting tens of millions of US workers today.

According to many employers, their media, and their politicians, it’s the fault of the workers themselves. They’ve been given too much during the pandemic and now they don’t want to work! That’s the Capitalist mantra and explanation for the millions refusing to return.

With that explanation, employers, media, politicians and mainstream economists turn reality on its head! As is typical of the language games played by capitalist ideology, they have reversed cause and effect. The victims—the workers—are the cause of the problem and not the result or effect. Workers are the cause of the rate of job returns falling by two-thirds the past three months compared to the previous April-June period. Left unmentioned is the decades-long practices of paying unlivable low wages, few or no benefits, and working conditions so inadequate that virtually all other advanced capitalist economy have abandoned them years ago (i.e. no paid leave, child care, national health care, etc.).
The more accurate way to look at what’s going on is that perhaps as many as half of the 9 to 10 million still without any work today are withholding their labor and looking for better wages, benefits, conditions, and new jobs that provide some hope for the future. 4 to 5 million US workers are in effect ‘On Strike’.

The Great Strike Wave of 1970-71

The last great strike wave in America was 50 years ago, in 1970-71. At that time it was union workers who walked out en masse in construction, trucking, auto, on the docks and in dozens of other big manufacturing, construction and transport companies.

This working class history has largely been ignored by academics and the capitalist media. Probably because the strikes were so successful, in nearly all instances the striking workers and their unions winning big victories! On average, that strike wave resulted in 25% immediate increases in wages and benefits in no more than three year term agreements. The workers and unions could not be stopped by employers. They were so successful the companies had to turn to the US government to halt the successful strikes and contract settlements. They turned to Nixon, president at the time, in the summer of 1971 who quickly issued emergency executive orders to freeze wages won by the strikes and then roll back the 25% wage and benefit gains to no more than 5.5%.

The wage freeze and rollbacks were central elements to Nixon’s so-called New Economic Program (NEP) issued that same August 1971 along with the wage freeze. In the NEP Nixon also attacked US Capitalist competitors in Europe and elsewhere with various trade measures and by ended the guarantee of exchanging the US dollar, 32 US dollars per ounce of gold. That blew up what was called the ‘Bretton Woods’ international capitalist system that the US itself had set up in 1944.

In the former great strike wave of 1970-71 there were 10,800 strikes during the two years, with more than 6.6 million workers participating and 114 million work days lost due to the strikes. The 1970-71 strike wave was in some ways as great as the preceding big wave of 1945-46. In that period there were approximately 9,750 strikes involving 8.1 million workers resulting in an even larger 154 million work days lost due to the strikes. (Source: Analysis of Work Stoppages, US Department of Labor, Bulletin 1777, 1973)

Fast forward another half century, to the present day. There are almost as many workers ‘withholding their labor’ at around 4 to 5 million—with the number possibly rising as union workers join their ranks as their contracts expire. Number of work days lost is still to be estimated. But there is no doubt that there’s a new militancy rising, as workers take their fate into their own hands—or should one say ‘with their feet’ as they walk away from their jobs and withhold their labor!

What’s different today is today’s Great Strike of 2021 is not led by the unions. Private sector unions in the US have been decimated and almost destroyed since 1980 as a consequence of Neoliberal policies of decades of offshoring of jobs, free trade agreements, and massive government tax subsidies to corporations to replace workers with automation, machinery, and new capital equipment.
Replacing this job destruction the past four decades were tens of millions of low paid minimum wage and substandard service, temp, part-time, gig and similar indentured ‘precariate’ jobs as they are called. The recent Covid crisis exacerbated and deepened the economic contraction of 2020-21. And now the low paid, precarious, and de facto indentured work force are in revolt.
Many industries and companies are now having to raise their wages and pay recall or hiring bonuses to try to get workers to return, as they continue to withhold their labor and create a labor supply shortage. Shortages of labor supply usually mean wages must rise. But the practice is uneven across industries and still largely anecdotal.

Historical Significance of the Great Strike of 2021

The US is in the midst of an historical event. Sections of the US working class may be awakening—on their own—and not led by unions that have either been destroyed or are being led by senior union leaders who don’t want to strike out of concern it might ‘embarrass’ their Democrat Party senior friends.

The great strike of 2021 is composed, in contrast, of mostly the non-unionized workforce—lower paid service workers, independent long haul truckers, delivery drivers in the cities, hospitality workers in hotel and restaurant service, workers in retail, on local construction projects, teachers and school bus drivers, nurses ‘burned out’ by chronic overtime, warehouse and food processing workers pushed to the limit for the past 18 months, home care aide workers exploited by US middleman ‘coyotes’, and so on. The list is long.

Mainstream economists and politicians have very little understanding of the fundamental, structural changes to production processes and to product-service markets that the Covid period and deep contraction has wrought. Those changes are still be revealed. And many will prove profound. The restructuring of US labor markets now appearing is just the beginning The Great Strike of 2021 is but the symptom. Product markets and global distribution of goods and services are under similar great stress and change as well. Not least, the full effect of financial asset markets—i.e. stocks, bonds, derivatives, forex, digital currency, etc.—is yet to be felt as well. That one is yet to come and when it does may prove the most de-stabilizing of all.

Jack Rasmus blogs at http://jackrasmus.com and hosts the weekly radio show, Alternative Visions, on the Progressive Radio Network every Friday at 2pm eastern time. Join him at twitter for daily updates at @drjackrasmus.

This past week 3 important announcements were made: Friday’s monthly jobs numbers from the US Labor Dept; Debt Ceiling Vote in Congress; and 15% minimum global corporate tax agreement. Friday’s jobs shows US jobs recovery slowing rapidly. Debt Ceiling deal kicks can down the road for just 2 months and shows how it’s used to check social spending bills and ensure no tax cuts on rich and corporations. 15% minimum global tax on corporations no big deal; has to pass US Senate which is won’t unless further US domestic tax relief for US corporations also passes.

TO LISTEN GO TO:

https://alternativevisions.podbean.com/e/alternative-visions-what-s-behind-3-announcements-debt-ceiling-september-jobs-global-15-minimum-corporate-tax/

SHOW ANNOUNCEMENT:

Dr. Rasmus takes on three important economic announcements in past 2 days to explain what’s behind the hype. Is the Debt Ceiling really an issue? Why not. So why is hyped in the media and in Congress that it is? What is history of US deficits & debt run up from 2000 to 2020. What does debt & debt ceiling have to do with ensuring US economic empire? Next: the just released jobs report for Sept and why recall of pandemic jobs has now ‘hit a wall’. Real reasons why US workers not returning to work. Is this the ‘great strike of 2021’? Next: What’s happening to Biden’s Build Back Better bill and why is it going to be cut from $3.5T to less than $2T? Next: Announcement of global minimum 15% corporate tax agreement. Why US Senate will use it to cut domestic US corporate taxes next year from Biden’s proposed 26%.

Listen to my commentary on the fiscal debate in Congress–Infrastructure bill, Build Back Better bill, & Debt Ceiling–from my last friday, October 1, 2021 Alternative Visions radio show, and then read below it my twitter commentary this past week, Oct. 1-7 as well, on the same topics:

To Listen GO TO:

https://alternativevisions.podbean.com/e/alternative-visions-fiscal-faction-fights-in-democratic-party/

Alternative Visions RADIO SHOW of October 1, 2021

SHOW ANNOUNCEMENT – Fiscal Faction Fights in Democratic Party

Dr. Rasmus describes this past week’s latest maneuvers within the Democratic party with regard to the Infrastructure, Reconciliation & Debt Ceiling bills. Pelosi’s reneging on agreements with the party’s progressives this past week and what it means. Rasmus explains the evolution of Progressives’ positions since last March, agreements made this past July, and why Pelosi has decided on separate votes for Infrastructure and Reconciliation bills. Why the debt ceiling, passed yesterday, was never an issue and why the US can never default on its bonds. The party’s corporate wing strategy to pass Infrastructure and slash Reconciliation. Manchin’s ‘secret memo’ of July and positions. Likely scenarios ahead by Pelosi-Schumer to pass the Infrastructure bill and reconstitute the Reconciliation bill. Why progressives will get outmaneuvered again. The lack of additional economic stimulus amid the slowing of the US economy. The show concludes with comments about the continuing problem of Evergrande to the global capitalist financial economy.

TWITTER COMMENTARY, Oct. 1-7, 2021

Oct 7
#USFiscalFollies When was the last time debt ceiling threatened to shut down the US govt? 2011 & 2013. In 2011 when Republicans forced Obama to cave and cut social programs by $1.5 trillion; in 2013, when Obama caved & agreed to extend the Bush tax cuts another 10 yrs, at cost of $5T
#DebtCeilinglimit: So McConnell now agrees to delay debt ceiling vote 2 months. Surprise. Surprise. Why only 2? He’ll wait until Infrastructure & BBB bills pass then claim Biden’s raising debt to cover them too (though not true). Even Yellen agrees with me: abolish debt ceiling fiction

Oct 6
#DebtCeilinglimit: is a political farce perpetrated by both parties. Its purpose is to thwart social spending or raising taxes on rich & corps. Only becomes an issue when either spending or tax hikes are on the agenda. Debt limit is irrelevant. Always passes in end. Default never occurs

Oct 6
#DebtCeilinglimit: For every debt there’s a corresponding asset. (You buy a home, incur loan-debt, but the value of your house is the asset backing the debt). So why does the debt debate never mention assets created by the debt? Or decline in debt servicing costs from 3% to 1.8% of GDP.

Oct 6
#DebitCeilinglimit: Dems voted in past to raise debt ceiling to enable Trump’s $5T tax cuts in 2017. Now they want Republicans to do same to share responsibility for 2020 spending/tax cuts. But McConnell giving them the ‘finger’. So who are the fools here, Dems or Repubs? Both?

Oct 6
#US Government debt: has risen from $4T in 2000 to $9T in 2008 to $17T in 2017 to $21T start of 2020. Why? $15T in tax cuts since 2001 & slow econ growth after 2008 (both reducing tax revenues) + $7T in war spending by 2001-20. There’s your $22T US debt, now going to $28.5T due to Covid 2020

Oct 5
#DebtCeilinglimit: would be $ trillions lower today if Trump’s 2017 tax cuts did not happen. Heather Boushey of Council of Economic Advisors finally admits today Trump cuts cost $5 trillion, just as I’ve been saying since 2018. Not the phony $1.5T estimate peddled by the US press

Oct 5
As an addendum to this post, Trump promised in March 2016 during election if elected he’d cut corp-investor taxes by $5T. He did as promised Dec. 2017. McConnell passed bill via budget reconciliation within a week, after no Senate debate. No complaints about deficit & debt then

Oct 5
#DebtCeilinglimit: debate is a farce. Govt controls currency & can print money if necessary to pay bills. Not so for households, businesses, local govts, and countries whose currency is not the global reserve & trading currency–i.e. US dollar. Fiction federal govt must balance budget

Oct 5
#DebtCeilingLimit: Debt level alone is never the problem–whether govt, households or business. It’s servicing that debt (i.e. meeting payments due). Especially when asset prices & bubbles collapse, wages stagnate, revenues fall, tax collection decline. Liquidity & solvency crises follow

Oct 5
#BuildBackBetterBill: Manchin today says he’s open to a package of $1.9T-$2.2T. Biden yesterday said need to cut from $3.5T to $2.1T. Whaddya think? They cut a deal when the two last met, or what? It’s all a nicely coordinated policy dance by the corporate wing of the Dem Party.

Oct 4
#BuildBackBetterBill: Biden today says final package likely about $2T (down from $1.5T and up $.5T from Manchin’s $1.5T)-i.e. three ($1.5T cut in tax hikes) for them; one ($.5T) for the rest of us. Dems getting closer to my predicted no more than $1.8T (if they can even get that!)

Oct 4
#BuildBackBetterBill: Make no mistake. Big US capitalists like Manchin’s stand. Ken Griffin, CEO of private equity, Citadel, interviewed today on Bloomberg TV says “thank god for Joe Manchin”. Gets extended ovation from business attendees audience. Most of his class united behind Joe.

Oct 3
#BuildBackBetterBill: it’s comical to watch progressives try to repackage their $3.5T. AOC says they could cut it to 5 yrs instead of 10 & spend half $3.5T that way. Really! Corp shills in party will accept tax hikes for half the time? Hey AOC: “It’s the Trump tax cuts, stupid!”

Oct 3
#BuildBackBetterBill: Pundits & progressives lump Manchin & Sinema in same shit bag; assume Sinema is Manchin’s echo. Manchin wants deal for coal companies & will agree to some tax hikes. Sinema wants no tax hikes, no spending, no deal. She’s already cut one–with her corp donors

Oct 3
#BuildBackBetterBill: formerly Reconciliation bill. Pelosi-Schumer think Manchin-Sinema will now ‘bargain up’ from Manchin’s $1.5T. Don’t bet on it. Joe will ‘move the goal posts’ backward to make the $1.5T more unattractive to progressives (ex: spend more on oil corp credits)

Oct 2
#BuildBackBetterBill: Manchin can be ‘bought off’ to support final bill with a couple hundred billion for tax credits & subsidies for his coal companies. Sinema not so pragmatic & unknown. Want to know what it’ll take? Ask the big corp donors she’s been meeting with regularly.

Oct 2
#BuildBackBetterBill: Biden plants new ‘stake in the ground’ of $2.3T–i.e. cuts out $1.2T unilaterally. Same move and amount he cut during start of debate on Infrastructure bill last March to get $1.1T. Watch opponents negotiate down from there again. Likely $1.8T endgame, no more

Oct 2
#BuildBackBetterBill: Why is mainstream media focusing just on Manchin-Sinema and not on the corp lobbyists meeting with them weekly and almost daily via phone, email, etc.? Or those leaders of Dem Party supporting them? (“It’s the (Trump) tax cuts, stupid!”, to borrow a phrase)

Oct 2
#BuildBackBetterBill: Pelosi-Schumer retreat & regroup on Infrastructure vote. New vote deadline 10-31. Corporate wing of Dems (Manchin-Sinema) digging in. Meanwhile, no new stimulus as old fades. Deja Vu fall 2020? As supply, inflation, consumer spending, slowing GDP issues grow.

Oct 1
#USeconomy: After consumer spending rose 2nd quarter by 12%, projections are for real spending to grow 3rd quarter by only 1% annual rate (0.25% for quarter). Consumer spending = 68% of US GDP. Other negative economic effects on GDP from ‘net exports’, ending of govt stimulus, and chronic supply side inflation

Oct 1
#BuildBackBetterBill: Pelosi delays vote. Progressives signal they’re interested in framework not a $3.5T number–i.e. they’ll go lower just not publicly for now. How low? $2.5T? So yesterday’s vote deadline was just a test to see if progressives blinked. They did, but not publicly

Listen to my three radio interviews this past week, Tuesday to Friday, on Democrats’ internal factions’ moves on the Infrastructure & Reconciliation bills . Why progressives keep getting outmaneuvered in the Democratic party. With vote delayed, what’s next in coming days?

TO LISTEN GO TO:

https://drive.google.com/file/d/1Isi6iVY73HpviiDqxenjYlJTpoX4hlNs/view

https://drive.google.com/file/d/1jXvOw_xpa08-8cbDnYMaYPTblfhVFtxA/view

https://www.spreaker.com/user/radiosputnik/by-any-means-1278-seg1a1-rasmus-spreaker

This past week maneuvers within the Democratic party intensified over the content and magnitude of the two pending fiscal stimulus bills–the Infrastructure Bill (with $550B of net new spending) and the Reconciliation Bill ( with initial $3.5T ‘human infrastructure & climate change’ spending). While the maneuvering appears as a deep difference of views between progressives in the US House and Senate demanding both bills pass simultaneously and Democrat Senators, Manchin and Senema in that body blocking both bills in current form, the actual conflict is really between the corporate wing of the Democratic party (in both the Senate and House) vs. the wing that sees passage of both bills in current form as necessary to ensure a sustained economic recovery in 2022–and thus the Democrats retaining majorities in the House and Senate in the November 2022 midterm elections.

Manchin-Senema in the Senate and Cuellar and his ten associates in the House are really the point persons for the corporate wing.  The differences and split within the Democratic party are not about individual Senators or Representatives; it’s about the corporate forces that dominate and control the majority of that party (as they have since 1990) and those same corporate interests intent on ensuring the two spending bills are not so large that taxes will have to be significantly raised in order to pay for them. More specifically, ensuring that the Trump $4.5T tax cuts of 2017 are not rolled back.

Those corporate interests in the Democratic party have already prevailed in rolling back the Infrastructure bill to a level of only $550B in new spending (from its original $2.3T) to ensure paying for the $550B is not done by raising any taxes on corporations, investors and wealthiest Americans. They already succeeded. Now the same fight is underway to prevent the Reconciliation bill requiring tax hikes on the same capital incomes. To ensure no tax hikes for that bill, spending will have to be significantly cut or delayed, or perhaps both.

In other words, the split in the party and fight is not just over stimulus spending; it’s over taxes and rolling back the Trump tax cuts. The corporate wing of the Democratic Party is as opposed to the tax hikes as are the Republican party & McConnell. To borrow a phrase from the 1990s: “it’s the tax cuts, stupid!”.

The next step in the corporate wing’s anti-tax hike offensive will occur in the US House early next week. Pelosi had promised weeks ago not to break out the two bills for separate votes, but vote on both at the same time. That was the promise made to the party’s progressive forces months back, in order to get Sanders and progressives in the Senate and the progressive caucus in the House to go along and remove trillions of dollars in spending on human infrastructure measures from the original Infrastructure bill and reduce that bill from $2.3T to only $550B in new spending on traditional infrastructure only.

That made the Infrastructure bill palatable to the corporate wing in the party since paying for it could now be done by ‘smoke & mirrors’ financing that involved no tax hikes. The corporate wing wants separate votes now on the two bills, the remaining Infrastructure bill first. Passing the watered down Infrastructure bill first would leave the $3.5T Reconciliation bill with weakened support and unable to pass–for certain in the Senate and maybe even in the House as well. Human infrastructure spending on Medicare, Education, Elderly-Child care, and climate change mitigation and prevention–and the tax hikes to pay for it–would be dead in the water.

The progressive caucus in the House and the Sanders-Warren faction in the Senate are demanding, however, that Pelosi honor her earlier pledge to vote on both bills at the same time. But will she? If she renegs on that promise and the House votes up both bills, the corporate wing in the Senate–represented by Manchin-Senema–will never vote for budget reconciliation (50 + 1 vote) to pass either of the two bills. The Senate likely will then vote on the Infrastructure bill and let the $3.5T Reconciliation bill die. That will put Pelosi and the House progressives behind the eight ball, as they say: refuse to vote for the Senate passed Infrastructure bill or take the heat in elections for refusing to pass anything. One can guess what the pragmatists will then do, including Pelosi.

So what are the possible scenarios in the House this coming week?

One will be for Pelosi to vote on both bills as promised. While possible, it is the least likely to happen, however.

A second is to reduce the $3.5T spending total dramatically. The progressive caucus won’t go along with that, however.

How then to ‘reconcile the reconciliation bill’?

A more likely compromise outcome may be to backload most of the $3.5T (or a reduced amount). That is, make the Reconciliation bill spending take effect over a ten or even fifteen year period, with most of the spending occurring five to ten years into the 10-15 year bill. So maybe spend $1.5T over the first five to 7 years (Manchin’s signal he might accept) and the rest not taking effect until 2027 or after. In turn, make the proposed tax hikes to pay for it to take effect in the latter years as well.

That way Pelosi can placate the progressive caucus and the Democrats can still say they passed a big ‘human infrastructure’ Reconciliation bill.  Backloading might then satisfy Manchin, Cuellar, Senema, and the party’s corporate wing. They can say they ‘won’, since the spending and taxing is only on paper. Republicans and McConnell will later cut the backload spending and delete the tax hikes once they take over again. That scenario could satisfy the Democrats’ corporate wing.

Another scenario may be for Pelosi not to hold a simultaneous dual vote because her progressive caucus won’t support a breaking out of the votes and will vote against the Infrastructure bill if held separate. In this case, Pelosi and the Democrats will then revert to the tried and true Democrat party ‘fall back’ message saying they’ll return to the vote on both bills after the 2022 midterms. That means everyone should vote for more Democrats in 2022 in order to pass both bills in 2023. But that’s a high risk strategy, since it will clearly appear that Biden and the Democrats can’t deliver on their election promises–especially if the US economic recovery is not robust by fall of 2022 due to lack of fiscal stimulus in fall of 2021, which is very likely since the current summer 2021 rebound of the economy already appears to be slowing.

So summing up: the three scenarios in the House are: Pelosi votes both bills up same time and they both pass; Pelosi renegs and holds separate votes and progressives vote down both bills; Pelosi and progressives agree on a ‘smoke & mirrors’ compromise and backload most of Reconciliation bill spending and taxing.

The first scenario almost ensures Manchin-Senema will never compromise and vote for Senate budget reconciliation on either bills. The second means Biden and Democrats are ‘toast’ in 2022 midterms. Something like the third may therefore be the most likely outcome.

Whatever the scenario, it was already decided by party leaders last week when Biden called Shumer and Pelosi into his office, reportedly in a closed door meeting that no one else attended.  Biden thereafter called in separately a group of progressives and then a group of ‘moderates’ (i.e. what the mainstream media calls the corporate wing). Reportedly both Shumer and Pelosi came out of the meeting smiling and upbeat. What did they agree to with Biden? Not even Democrat members in the House or Senate know, since Pelosi-Shumer aren’t even telling them.

It all should become clearer this coming week. But one thing is certain: the final $3.5T Reconciliation bill with its spending on human infrastructure and climate change will be either significantly reduced or backloaded into out years so that the spending & tax measures can be safely deleted.

The Democrat corporate wing is as adamantly opposed to the spending–and the tax hikes it would require–as are McConnell and his Republicans. Thousands of corporate lobbyists have invaded Washington D.C.  in recent months, with the single purpose of demanding the Democrats don’t touch the Trump tax cuts.  They have already convinced both Republicans and the Democrat’s corporate wing not to raise their taxes. So watch for ‘smoke & mirrors’ financing in a final, much reduced spending Reconciliation bill–just as the same was previously engineered with the Infrastructure bill.

Dr. Jack Rasmus
September 26, 2021

ADDENDUM

(Note: interested readers should follow my on twitter for my daily commentary on events regarding the bills at @drjackrasmus. The following addendum to this post are some of my running commentary last week on twitter.  Also posted are my two most recent radio interviews of the past week where I discussed the pending negotiations, among other related economic developments)

(TWITTER Commentary @drjackrasmus)

Sep 23
#Reconciliationbill Watch for ‘smoke & mirrors’ in Pelosi-Shumer ‘deal’. One possibility: approve $1.5T now and the rest not to begin taking effect until 5 yrs from now. Ditto for tax hikes: token now & real hikes years out! Of course, between now and 2026 it’ll all disappear

Sep 23
#Reconciliationbill Reported today, Shumer and Pelosi both believe they ‘have a deal’ on $3.5T Reconciliation & .550T infrastructure bills. Notably, however, they refuse to say what it is–not just publicly but even to other members of Congress! Be suspicious.

Sep 23
#Reconciliationbill Will Dem progressive caucuses in House and Senate now do what they warned they would, and not vote for the massive cuts? Or will they in the end cave? My bet is the latter. Excuse will be: vote for more of us in 2022 and we’ll finish the job! The old refrain.

Sep 23
#Austerity Don’t you find it interesting yesterday Fed signaled continued $120B/mo. free money & near zero rates for bankers for 9 more months, while Dems in Congress are busy cutting spending proposals by $trillions for households? Dems on road to be ‘toast’ in 2022 midterms!

Sep 23
#ReconciliationBill Former political hacks for Obama and Clinton admins (mouthpieces for corporate wing of Dem party) now all jumping on the bandwagon to say $3.5T must be cut, now that Biden admin. has signaled support for same. Bill will be what Manchin-Senema want (corp wing).

Sep 23
#Reconciliationbill Biden press sec’y, Psaki, signals today the $3.5T bill will have to be reduced. Decision likely made yesterday when Biden met with Pelosi-Shumer, Sanders, & Manchin. Watch for final bill close to Manchin’s $1T. Forget Medicare, Education, & other proposals

Sep 22
#reconciliationbill (aka American Families $3.5T bill). Watch Biden today tell Pelosi-Shumer to do separate votes on $550B Infrastructure bill and $3.5T Reconciliation bill. Why does media call Manchin-Senema ‘moderates’ when they should be called ‘corporate wing’ of Dem party?

Sep 20
#Infrastructure & $3.5T Family bills: latest Dem retreat strategy building: Shelve it all in 2021. Raise again in 2022. Manchin in Senate & Clyburn in House pushing this ‘solution’. No stimulus 2021 + Fed rate hike + China slowing & Asia in funk= double dip recession coming 1Q22

Sep 19
#Stimulus Former $3.5T ‘American Families Plan/Human Infrastructure’ bill now called ‘Reconciliation’ bill by both parties. True, it’s all about ‘reconciling’ how to cut $2.5T from the $3.5T in order not to have to recover (i.e. raise) any of Trump’s $4.5T 2017 tax cuts

Sep 16
#Stimulus Top measures most likely to be cut from Biden’s $3.5T stimulus: Higher education ($445B). Paid family & medical leave ($225B ). Health Insurance Tax credits ($163B). Earned Income Tax Credit ($105B). IRS enforcement of tax evaders ($460B) + Climate Change mitigation (?)

(RADIO INTERVIEW, Week of Sept. 20-25, 2021)

https://drive.google.com/file/d/1OYah3bY466BoAdHL5L3cSYbEiMYo4Z0F/view

https://drive.google.com/file/d/1zbZM5GpCunG31548WYmtCi1353H43V0j/view

Dr. Rasmus gives a 70 minute audio interview describing what a Socialist Economy in America would look like as a critical element of a Socialist America.

Rasmus discusses what parts of the US economy would have to be completely nationalized and therefore subject to a national economic plan. What might be the role for a system of public investment corporations and a national public banking system. Apart from controlling the ‘commanding heights’ of the economy by these means, Rasmus describes how the rest of the economy–including most medium and large corporations–might be managed in order to ensure capitalists as a class no longer exercised their hegemony, dominance and control over the economy.

Considering that last point, Rasmus explains how medium and large corporations that were not nationalized would be publicly controlled by means of a radical reconstruction of the tax system, by intense and comprehensive regulation, and by means of community and workers’ representation both on corporate boards of directors as well as in committees of community-workers representatives in these companies at the point of production and in services. A third broad segment of the economy, comprised of very small businesses, would remain subject to markets with some greater degree of regulation and taxation on behalf of society at large.

This scenario of three levels of an initial stage of socialist restructuring of the economy–i.e. by a combination of 1) nationalized corporations with economic planning; 2) medium-large corporations highly taxed, regulated, and with majority worker-community representatives both on their boards of directors and on worker-community committees overseeing their operations at the level of production & services delivery; and 3) small and very small businesses mostly remaining subject to market forces–describes the minimal requirements for an initial socialist economic restructuring.

Following this 3-level description of the initial stage of socialist economic restructuring, Dr. Rasmus explains the changes further required in economic policy that would have to occur in a Socialist Economy as well–including in banking policy, in the retirement system(social security, pensions), in public education (K-12, colleges, non college job training), in the healthcare system (Medicare for All), in housing (public, homeless, price controls for residential), foreign trade (exports-imports-currency), to restore union and collective bargaining, minimum wage and labor market policies, Federal Reserve monetary policy, and so on.

The interview addresses how a Socialist Economy must evolve over time in stages, with the initial stage focused on breaking the economic power and hegemony of big corporations and capitalist investors–just as how the Capitalist Economy originated within the Feudal 500 years ago and thereafter grew in stages as well, until capitalists became dominant over the landed feudal aristocracy of feudalism, which disappeared only in stages over centuries.

The fundamental objective of a socialist economy, Rasmus explains, would be to break the dominance and hegemony of the capitalist class in the economy, and replace it with the hegemony of the working class and community interests  in order to ensure production for the public good, not for individual profit.

Rasmus concludes by noting a fundamental restructuring of political institutions would also have to occur in tandem with the economic restructuring as well. Discussion of the political changes required in a Socialist America is left, however, for a subsequent interview.

TO LISTEN To the Interview GO TO:

https://www.spreaker.com/user/9119584/empire-episode82-jackrasmus

Two Video Interviews

Watch my recent one hour video interview on ‘The State of the US Economy‘ as of early September 2021, with Ed Dodson of the Henry George School of Social Science in New York, now available on YouTube

GO TO: https://youtu.be/gbIsTbvUf8I

Watch as well a second interview on YouTube with grass roots socialists at ‘This Is Revolution’ group in Oakland, CA, on the topics of Biden’s Infrastructure Bill and the theme ‘Is Biden the New FDR?’ (Note: first half hour is interview with with economist, Alastair Bair. Dr. Rasmus’s interview follows after Bair’s for the remaining 45 minutes of the show)

For VIDEO for this show GO TO: https://youtu.be/w31fX0wG21I

For AUDIO ONLY for this show GO TO: https://youtu.be/WeRt-06YcDo