Jack Rasmus

Listen to my three most recent radio interviews on the US economy, jobs, fiscal negotiations, etc. this past week, Sept. 6-13, 2021

GO TO:

https://drive.google.com/file/d/14PntcwtZYCGjemtalTdkf1sj48G0Oeil/view

https://www.spreaker.com/user/radiosputnik/by-any-means-1258-seg1a1-rasmus-spreaker

https://drive.google.com/file/d/1LME-p81RCAojIrixTUvxyQvZOHdQtQlC/view

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Since at least this past spring 2021, it’s been clear that the corporate wing of the Democratic party (in basic agreement with McConnell and the Republicans) has been pursuing a strategy of chipping away at fiscal spending proposals promised during the 2020 elections and introduced by Biden upon entering office last January-February.

While most of media attention has focused on the negotiations between Biden’s Democrats and McConnell’s Republicans in Congress, much less attention has been given to the second set of negotiations–i.e. within the factions of the Democratic party itself and specifically between its corporate wing and its so-called progressives.

Three Fiscal Rescue Plans

There were three fiscal spending initiatives introduced by Biden when he took office in late January 2021: The first was the Covid relief measure called the American Rescue Plan (ARP). It’s projected spending was set at $1.9 trillion. However, the amount of authorized spending will be less than $1.9T, according to the Congressional Budget Office (CBO). And even the authorized amount per the CBO will likely get cut over time as arcane Congressional spending rules take effect in 2022 and beyond that put annual limits on spending even what was authorized.

For 2021-22, the CBO’s indicates only $1T spending is actually authorized to be spent. But much less than that will be spent due to more than 20 states discontinuing unemployment benefits early, failure of distribution of rent assistance due to landlord resistance, and other early terminations of programs.  Unemployment benefits have already ended, stimulus checks were distributed and spent months ago, increases in food stamp benefits expire this month as well, $85 billion in assistance grants to small businesses have been largely made, and $403 billion in funds to state and local governments mostly distributed.

Despite all these distributions, the net economic effects so far this year appear to have dissipated or had little impact on the economic recovery, which shows signs of fading as of September 2021. A much more aggressive fiscal stimulus is needed as a follow on to the ARP which, in retrospect now, appears more like a ‘mitigation’ fiscal measure than a bona fide ‘stimulus’ measure. The more aggressive fiscal stimulus measures were to be the second and third fiscal ‘plans’ announced by Biden early in the year. These were the Infrastructure spending bill and an initially less well defined ‘Family’ support fiscal spending bill.

The second fiscal spending initiative–the Infrastructure bill–is called the American Jobs Plan (AJP).  It was initially intended to spend $2.3 trillion on various traditional as well as new ‘human infrastructure’ initiatives.  The latter human infrastructure initiatives, however, were quickly stripped out, leaving only traditional fiscal spending measures on roads, bridges, water, etc. to comprise the what’s called the Infrastructure bill.  The stripped out programs were then repackaged into a revision of the third fiscal spending proposal called the ‘Family’ Act, with an initial spending cost of $3.5 trillion.

Over the past summer the $2.3 trillion Infrastructure bill was drastically cut to only $550 billion in actual new spending, to which was appended roughly another $600 billion in previously authorized spending on highways and other. The media and politicians ‘spun’ the already authorized spending as ‘new’ and part of the Infrastructure bill, thus boosting the total to $1.1 trillion or so. Even with the best assumptions, the much reduced net new spending of $550 billion will not get into the US economy until late 2022 and in 2023. So its impact on the slowing recovery today will have no effect whatsoever. The $3.5 trillion ‘catch-all’ human infrastructure proposal (including spending on climate change, medicare, education, etc.) stands even less chance of passage–in this year or next.

So what exists as fiscal stimulus this year is on average only $50 billion a month in government social program spending, in an economy of $2.2 trillion! That’s hardly an economic ‘drop in the bucket’ and won’t move the recovery needle much, if at all. Especially in the final months of 2021 given that nearly all of it has either been spent or discontinued.

Why then is the Biden fiscal stimulus and Covid wracked US economy plan about to fail?

One answer is the three proposals amount to insufficient fiscal stimulus to generate a sustained economic recovery. What remains is just a rebound of the economy as it reopened this summer. And ‘rebounds’ are not ‘sustained recoveries. Fiscal measure #1, the ARP, is already mostly spent or is being discontinued. And the other two fiscal spending proposals are either ‘dead in the water’ in terms of Congressional passage, in worst case scenario, or, should they eventually pass in some form, the magnitudes will be too little too late.

What’s happened the past six months is that the 1st measure, the ARP, was undermined and cut either by Republican states (unemployment benefits early terminations) or by the US Supreme Court (rent moratorium ruled unconstitutional), or inept administration of funds and landlord resistance (rent assistance), or state and local governments sitting on hiring workers with the $400 billion they received from ARP.

The second and third measures (Infrastructure & Family plans) in turn have been sharply reduced or blocked altogether by corporate interests and the corporate wings of both parties, Democrat and Republican alike. This has been evident in the evolution of the Infrastructure bill and negotiations dramatically reducing its projected spending amount from an initial $2.3 trillion to only $550 billion actual new spending.  The same sharp reduction in spending is about to occur with the $3.5 trillion Family plan in coming weeks that was witnessed with the evisceration of the $2.3 trillion original Infrastructure bill.

How Corporate Interests Gutted the $2.3 Trillion Infrastructure Bill

This writer warned back in March, as the fight over the $2.3 trillion original infrastructure bill ratcheted up, that corporate interests in the Democratic party would collude with the Republicans to dramatically cut the Infrastructure bill. The $2.3 trillion would be gutted and deeply reduced, leaving it a shell of its original proposals. That of course is exactly what happened. The net new spending both sides agreed would be $550 billion–not $2.3 trillion.

To cover up the nearly $1.8 trillion in cuts, the spin by the corporate wing in both parties was the Infrastructure bill spending was reduced only to $1.1 trillion. But that $1.1 trillion amount was the result of including in the final bill spending on highway and transport previously authorized in legislation passed well before Biden’s original infrastructure proposals. The actual new spending thus was only $550 billion.

The reduction of $1.8 trillion made it possible to fund the final $550 billion new money Infrastructure bill by means of ‘smoke and mirrors’ and thus avoid raising taxes on corporations and investors, which the original $2.3 trillion would have required. And that’s the crux of all the reductions in the three fiscal spending proposals. Neither the Republicans nor the corporate wing of the Democratic party want to spend big on social programs because it will mean taxes will have to be raised on corporations and investors in order to pay for the programs. And they don’t want to raise taxes–which means reverse some of the $4.5 trillion in Trump tax cuts passed in 2017-18.

Avoiding raising taxes has been, and remains, the number one objective of corporate interests in both the Democratic and Republican parties. They got their way with Biden’s Infrastructure bill. None of the Trump tax cuts were reversed. The Infrastructure bill is to be paid for by ‘smoke and mirrors’ measures but not taxes.

Now corporate wings in both parties are intent on doing the same with the $3.5 Trillion ‘human’ infrastructure/climate change/healthcare reform bill (aka the de facto Sanders bill). The corporate goal once again is to prevent funding via taxes.

There were always two negotiations underway simultaneously as Biden’s original $2.3 trillion Infrastructure bill was reduced to $550 billion: one negotiating track in which Biden, in the name of ‘bipartisanship, made concession after concession to McConnell in order to get Republican support to pass the Infrastructure bill without having to end the filibuster or do a budget reconciliation; the other track was the negotiation within the Democratic Party itself over the size and scope of the original Infrastructure proposal as well.

The internal negotiation was led by Senators Manchin and Senema, who were point persons for the corporate wing of their party that was, like the Republicans, intent on paring down the spending on infrastructure.

In the end the Democrats’ corporate wing prevailed: the original $2.3 trillion infrastructure bill was cut to only $550 billion in actual new spending. That was the Republican position all along. McConnell and Republicans got their way: no actual tax hikes (meaning no cuts to Trump’s massive $4.5 trillion 2017 tax cuts). And the Democrat corporate wing got its way as well which was the same objective of no corporate or investor tax hikes. Corporate interests in both parties wanted the same and they got it: reduce the spending enough to avoid raising taxes.

How Corporate Interests Will do the Same with the $3.5 Trillion

Manchin and Senema were leading the charge to reduce spending on infrastructure, and were there to serve as ‘cover’ for the corporate wing. It appeared as if Manchin-Senema were responsible for the slashing of the infrastructure bill from its original $2.3 trillion to $550 billion. However, the negotiations within the Democratic party were really corporate interests vs. the progressives. Manchin-Senema were the corporate wing’s ‘stalking horses’.

Clearly aligned with the broader corporate interests in his party, and not the progressives, Biden gladly cut out much of his original Infrastructure $2.3 trillion. To placate the progressives in the party (Sanders, Warren, etc.), he agreed to shift most of the cuts to a new, repackaged family human infrastructure bill. That’s the $3.5 trillion now on the table. Sanders was satisfied with the move.

So too were Pelosi and the House Progressives. The progressives in the House were placated with Pelosi declaring the two fiscal bills would have to be voted on together: the $550B in new spending on infrastructure and whatever amount resulted of the $3.5 trillion Family bill after negotiations gutted it as well–as shall be evident in the coming weeks.

The same process of gutting the Infrastructure bill that occurred in the Senate will now be replicated with the $3.5 trillion human infrastructure bill; namely, the $3.5T will be reduced in stages in both the House and Senate until corporate interests in both the Democratic and Republican parties are satisfied the final funding will not require big tax hikes.

In fact, the slashing the $3.5T has already begun. Early last week Joe Manchin called for a ‘pause’ in negotiations on the $3.5T saying it was too large for him to support. That formulation signaled he might accept it but not in its present form or size. Yesterday Manchin followed up saying the $3.5T should be reduced to no more than $1.5 trillion over ten years.

It what looks like a nicely coordinated initial position by corporate party interests in the House, Manchin was quickly followed by Jim Clyburn, a power broker in the House, who just declared the $3.5T should be considered only a ‘wish list’ and just a start point for negotiations. In other words, let’s negotiate down from there.

So here we go: just as occurred in the Senate with the original $2.3 trillion traditional Infrastructure bill, the $3.5T human infrastructure/family bill will be slashed in stages in coming weeks, in a nicely choreographed effort by Democratic party corporate interests in the Senate and the House.

McConnell and Republicans will look on with a big smile on their face, nodding their heads, silently urging their corporate cousins in the Democratic party to do their work for them again, and bring them a bill that requires no rollback of Trump’s $4.5 trillion massive 2017 tax cuts.

Meanwhile, what existed of fiscal stimulus this past spring is quickly dissipating. Consumer and retail spending continue to weaken, as unemployment benefits are cut, rent assistance is blocked, employers pull back on job hiring, distribution of funds by state and local governments are hoarded, supply chain bottlenecks globally continue, most of Asia is slipping into recession, business price gouging continues to push up inflation, and the Covid delta wave accelerates.

But hey, what the hell. It’s not all bad. The stock market keeps hitting records. Corporations plan to distribute a record $1.5 trillion this year in stock buybacks and dividend payouts to their shareholders. Corporate spending on global mergers and acquisitions is projected to hit record levels. And the Federal Reserve keeps the financial bubbles going with its $120 billion a month QE free money to bankers and investors.

Dr. Jack Rasmus
September 9, 2021

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(Note to reader: for an audio discussion of the themes in the following posted article, click on the link at the end of this article)

“Today, September 6, 2021, Labor Day in the USA, brings nothing to celebrate for American workers.

As the most recent Labor Department monthly job report a few days ago revealed, job recovery has hit a wall. After averaging 750,000 jobs over each of the preceding three months, from May to July, job recovery this past August fell by more than two-thirds, to only 235,000.

The jobs numbers were particularly weak for job recovery in the service occupations, which were hit hard by Covid resurgence. Jobs in hotels, bars, and restaurants in late July-early August–i.e. the period covered by the latest government jobs reports–began contracting once again following three months of recovery May to mid-July. Moreover, due to the Covid delta variant intensifying during August, the numbers will likely worsen further through August and into September, given that only 53% of Americans are vaccinated. Reaching even a modest level of 60% appears increasingly unlikely.

Capitalist Ideology: Make the Victim the Cause

Capitalist ideology always blames the victim for the cause of the crisis. And it’s no different this time around. Right wing, conservative, and anti-Labor business interests—along with their politicians and media—are consistently blaming workers for the faltering job numbers and for not going back to work when they could.

The mantra throughout the summer has been unemployment benefits were too generous and that’s keeping job recovery from growing. But the data just don’t support that argument.

For example, the state of Texas, one of the first to cut off unemployment benefits this past June, had payroll gains of 2.5% over the past three months; whereas California, which continued the extra unemployment benefits, saw payroll gains of 4.2% over the same period.

Similar data applies to the large Leisure & Hospitality industry, one of the most important service industries employing more than 15 million workers in the US: States like Texas, that arbitrarily cut off unemployment benefits early in June, saw that industry’s payrolls rise 4.6% from May to mid-July; whereas California, continuing to pay benefits, witnessed a growth of 6.5% of payrolls in the industry. The facts simply don’t support the view that too generous unemployment benefits is why more workers aren’t returning to their jobs and job recovery is faltering.

Another favorite false argument one hears is that there are more than 10 million open jobs available and only 8 million unemployed workers. So why don’t the 8 million just take the 10 million jobs? They’ve been spoiled by the fiscal stimulus, the argument goes. Once again, the worker is the cause of the problem—not the victim.

It is obvious, however, that the 8 million officially jobless are not necessarily in the same industries as the 10 million openings; nor in the same geographical area. As economists like to say, there’s a ‘structural mismatch’ between the available jobs and the unemployed. There are other problems with this fake argument as well.

First, many of the 10 million openings are in tech industries and companies. It is a well-known practice in that industry that companies post jobs they have no intention to fill in the short run. They post the openings just to see what the qualifications of available workers and availability might be. Tech companies also over-post openings to convince the US government there just isn’t enough highly skilled workers available in the US. It’s an argument the companies use to get the government to allow them to import foreign workers (often from their offshore subsidiaries) on H1-B and L-1 visas. Apart from the tech sector, for decades US business in general has refused to train in-house a generation of workers in manufacturing, construction, and trucking—as it once did. So now business finds itself short of all kinds of skilled and semi-skilled critical labor.

Another problem with the 8 million vs. 10 million openings is that the 8 million jobless is a gross underestimation of the total workers currently unemployed. The 8 million refers only to former full time workers who have become unemployed–i.e. what the Labor Department calls its ‘U-3’ unemployment rate.

But other government stats indicate that no fewer than 12 million workers are currently receiving unemployment benefits. Certainly they too are unemployed or they couldn’t be getting the benefits. That number still does not count the 2-3 million who have been thrown off unemployment benefits in the ‘red’ states since June. Maybe a million of them no doubt have still not found employment. So that’s at least a cumulative 14 million. Also not counted are at least 3 million workers who have dropped out of the labor force altogether, per government data, since Covid began to wreck the labor markets in early 2020 (and with it, I might add, the accuracy of US labor statistics in general). That adds up to 17 million. But that still does it include the 1-2 million who the Labor Department has misclassified since Covid began as “unemployed with expectation of return” to work. This latter group are workers who have been ‘furloughed’ from their workplace, are therefore at home not working, aren’t being paid but have not been officially laid off by their companies. They expect to return to their jobs. So the Labor Department says they are ‘employed’ because they have ‘expectation of return’. The Department admits the error but refuses to change the new category. It continues to count them as employed instead of unemployed.

For all these reasons, the actual number of workers truly jobless and unemployed today is at least 16-18 million. That’s about double the official 8.3 million. And it means the official U-3 unemployment rate of 5.2% continually bandied about in the media, press, and by politicians is actually in the range of 11%-12% today.

Arguing that 10 million jobs exist for 8 million jobless is therefore nonsense. There are far fewer than 10 million actual openings and there are at least double the 8 million actually unemployed at around 16-18 million!

Faltering Job Recovery

Leisure & hospitality industry jobs—i.e. hotels, restaurants, bars, entertainment, recreation, sports events, gambling, amusement parks, etc.—initially gained jobs through May to mid-July as the US economy began to reopen. That was especially true of the biggest employment category in Leisure & Hospitality called Accommodations—i.e. hotels, bars, restaurants—that employ 13 million of the industry’s roughly 15 million workers. But after mid-July employment in hotels, bars, & restaurants crashed. Jobs actually contracted by 41,500 this past month, after having gained hundreds of thousands of jobs each month prior, May to mid-July! The US labor market hit a wall in August.

Something began to happen in the closing weeks of July, thereafter accelerating into early August. The job growth will almost certainly slow further into September. So if the fading job recovery picture is not due to overly generous unemployment benefits, what’s happened?

Why have jobs crashed in key sectors in the latest August employment report last week? The collapse of employment in key service industries and occupations has been due to several causes unrelated to excess unemployment benefits.

Among the real reasons are: the lack of affordability and availability of child care for workers wanting to return to work; concern of many workers in occupations serving the public of the spread of the more highly contagious Covid Delta variant; workers fed up with service jobs that are low paid and unstable in terms of job security as the new Covid wave began to surge this summer; workers likely being offered their jobs back by their former employers but with fewer weekly hours of work (and thus less weekly pay); decisions by older workers to get off the job seesaw and retire early; young workers fed up with service employment with no future who have decided to seek new careers more stable and better paid; workers still fearful of future school shutdowns and, almost as unstable, periodic quarantines of students.

Cutting Unemployment Benefits

As job recovery has now begun to seriously falter, overlaid on it is the second great ‘gift’ to American workers this sad Labor Day: the formal cut off of unemployment benefits this week of September 6-13 of unemployment benefits for 11.2 million. 7.5 million will lose the $300 weekly benefit altogether. Another 3.7 million will lose the $300 as a supplement to their traditional state unemployment benefits.

Terminating the $300 will especially impact workers who are freelancers, independent contractors, temps on contract, gig workers and related employment. They are part of what the Labor Department defines as the 10 million ‘unincorporated self-employed’.

Before Covid these 10 million were not considered workers eligible for unemployment benefits, but were defined instead as small businesses. But they were, and remain, small business in name only and mis-defined as such. They are workers. They are occupations like independent truck drivers, freelance professionals, the Uber & Lyft at large ‘chauffeurs’; they are the new ‘shape up’ industry workers who await calls from ‘Taskrabbit’ and similar companies to do ‘handyman work’ each day; they are on-call home aide workers awaiting a call each morning by the new ‘coyote’ home health care companies for an assignment to take care of the elderly and infirm. Before Covid they were ineligible for unemployment benefits. Starting in March 2020,however, they became eligible under what’s called the Pandemic Unemployment Assistance program (PUA). This was the $600 per week original benefit started March 2020 under the ‘Cares Act’ that month that was discontinued in August 2020, thereafter resurrected under the December 2020 ‘Consolidation’ Act on an emergency basis for two more months when it became clear the US economy has stalled almost completely in December 2020 and policy makers feared a double dip recession was likely in the first quarter of 2021.

When the 8 weeks extension of PUA benefits expired in February 2021, Biden’s $1.9 Trillion emergency Covid relief Act (aka American Rescue Plan) was enacted in March 2021. The ARP once again resurrected the PUA benefit for the 10 million, as well as for workers on the state unemployment benefits system as a supplement to their state benefits. The $600 benefit of the Cares Act was reduced to $300 in the ‘Consolidation’ and the Biden American Rescue Plan Acts. Now,however, even that $300 is being discontinued as of September 2021 as well—just as the jobs market is hitting a wall once again!

Massaging & Cherry-Picking the Jobs Numbers

The actual number of workers truly jobless and unemployed today is not the 8.2 million indicated in the last August Labor Department report; it’s at least 16 million and possibly as high as 18 million. That means the official U-3 unemployment rate of 5.2% bandied about in the media, press, and by politicians is a cherry picked, low balled number. It’s not false. It’s just a subset of what is a truer, larger number. It’s the product of certain narrow definitions of terms, convenient assumptions and statistical manipulations. As previously noted, the true unemployment rate today is in the range of 11%-12%.

The monthly Labor Department jobs reports contain multiple data points. The media and politicians like to ‘cherry pick’ the best statistic to put a shiny spin on the numbers and make it appear the labor market is healthier than it actually is. The U-3 unemployment rate of 5.2% is perhaps the most notorious ‘cherry pick’. But there are others as well. For example, assuming last month that only 350,000 workers are ‘discouraged’ about finding a job and have given up actively searching for one. Or that out of a total labor force of 161 million in the US only 4.4 million workers are employed part time but would like full time work.

Then there’s questionable methods used to estimate employment by the Department using ‘seasonality adjustment’ methods. For example, this past June the Labor Department assumed that 220,000 K-12 teachers were ‘newly employed’ when they were just teachers who, given the late reopening of the schools in spring, continued to teach through June to try to catch up for lost classroom time. But the Department’s seasonality adjustment methods assumed, as in years past, teachers no longer were employed in the classroom after early June. So when they continued to work, they were classified as new employment. Ditto to a lesser extent for auto workers, who typically in years past were temporarily laid off at the beginning of summer as their companies re-tooled for fall production. But this year, 2021, they continued to work through June without retooling shutdowns. Seasonality assumptions in the Labor Department therefore counted them as net new auto jobs.

Ignoring the ‘cherry picked’ stats and the questionable seasonality adjustments in general in the monthly employment reports, other data points in the August jobs report showed some very serious weakening of the employment picture beginning this past month. Looking at the actual, raw (not seasonally adjusted) employment numbers in the report, the total number of employed actually declined. In the private sector, for example, total employment in the July (mid-June to mid-July period) report was 121,489,000. In the latest August (mid-July to mid-August) report, however, it had FALLEN to 120,904,000. That’s a DROP in total employment of -585,000. So what is one to believe? Did the economy gain in the number of jobs by 235,000? Or did total employment decline by -585,000?

Ending Rent Moratorium & Assistance

This labor day workers are not only facing a faltering jobs market recovery and the elimination of still very much needed unemployment benefits, but also millions of them—mostly low paid and workers of color—are facing the prospect at the same time of being evicted from their homes.

While more than 11 million are having their unemployment benefits terminated, another 7 million have begun experiencing the end of the moratorium on rent payments. That’s 7 million households, and likely 15 million or more family members.

At the beginning of this year, 2021, Moody’s Analytics, a noted business research source, estimated that $70 billion was owed in back rent. The US Census estimated 15 million people were involved. Since January, many states (Texas et. al.) have continued to process rent evictions, despite the US government’s CDC moratorium on evictions. That CDC moratorium never affected all renters, however. It was always a subset, for rental properties that in some way received funding assistance directly or indirectly from the US government.

In late December, the Consolidation Act passed that month provided for $25 billion in rent assistance. Biden’s American Rescue Plan passed by Congress in March 2021 added a further $21 billion, for a total of $46 billion. Yet by August more than $40 billion was still not distributed to landlords to cover at least half of the back rent owed. The main reason is many landlords ‘went on strike’.

It is generally not known, but to get a rent assistance payment to pay down back rent owed both the renter and the landlord must file forms. The forms are very complicated for the average renter, much like filing for a mortgage. Many renters have never confronted the mountain of paperwork and income verifications required. That’s one explanation for the fact that so little of the $46 billion has been distributed. But the other major reason is that landlords in many cases refuse to file the required parallel forms. Why wouldn’t they not want to get paid for back rent owed? For several reasons.

First, the rent assistance programs pays them for only 80% of back rent owed. To receive it they have to agree not to pursue the other 20% from the renter. Nor can they evict the renter if there are late payments due to renters’ Covid related reductions in income. In addition, many landlords want to sell their rented properties given the escalating home prices instead of taking the rent assistance payments. That’s particularly true of small renters with two or three homes. There’s also the problem off big finance equity firms wanting to buy up properties en masse, further driving up sale prices of apartments and rented homes and thereby encouraging landlords to sell instead of accepting the rental assistance.

The majority of renters facing eviction and rising rent prices are working class families. They are low wage, mostly service workers, whose incomes have been severely impacted by Covid. They are often the same workers whose unemployment benefits are being cut off. And who now face prospects of declining job opportunities as Covid delta surges once again. At least 7 million of them and their families are facing eviction. Once evicted, it will be almost impossible to get a decent reference to get another rent.

This Labor Day tens of millions of workers are facing a triple crisis of a faltering jobs market, elimination of unemployment benefits, and rent eviction.

Creeping Austerity

What all this represents is that a ‘creeping austerity’ has already begun. Capitalists and their politicians believe the economy is reopening and that’s sufficient to generate a sustained recovery. Thus, programs of fiscal stimulus provided to working families in the depths of the crisis and economic shutdowns can be rolled back and phased out.

That’s what they believed last summer 2020 as well—only to find out that the economy stalled in the fourth quarter of 2020 at year end and almost tripped into a double dip recession in early 2021. The ‘Consolidation Act’ at year end threw another round of emergency stimulus into the economy to avert disaster and buy a couple more months. (That temporary emergency legislation to buy time made that Act a ‘mitigation’ bill and not a true stimulus).

This past March the Biden administration introduced its initial emergency legislation as the Consolidation Act began to fade, passing the American Rescue Plan (ARP). But the major stimulus elements of the ARP have also now dissipated or are now being discontinued: the $1400 stimulus checks have been spent. The unemployment benefits are being discontinued. The rent assistance is not getting into the economy. And continuing the creeping austerity trend, the much vaunted child care payments that began this past July are slated to end in December and suspension of payments on student loans in January.

Meanwhile, Biden’s two big fiscal stimulus bills on the table—the $550 billion Infrastructure Bill and the $3.5 trillion Family Plan Bill—appear stalled in Congress. Filibuster will continue in the Senate, and the refusal of key Senate Democrats like Manchin and Senema to allow ‘budget reconciliation’ means both bills—Infrastructure and Family Plan—are likely dead on arrival. While the Infrastructure bill may eventually pass it won’t impact the economy until 2023. The Family Plan, however, will almost certainly fail due to filibuster and failure of budget reconciliation.

That means no significant fiscal stimulus on the horizon as workers this Labor Day face a resurging Covid threat, a faltering jobs recovery, millions of evictions, and the cut off of unemployment benefits.

It is an interesting contrast to this ‘creeping austerity’ that there’s no complaining by leaders of either party–Republican or Democrat–when it comes to the Federal Reserve Bank providing $120 billion in free money to bankers and investors every month since March 2020 and continuing to do so for the foreseeable future. A little more than half of that $120 billion per month would cover all the $70 billion in back rent owed. A month or two more would provide unemployment benefits for the 11 million until well into 2022.

Another ‘Rebound’ Without ‘Recovery’?

Last summer 2020 the US economy slipped into stagnation as Trump and the Congress failed to pass a true follow up stimulus once the first March 2020 Cares Act dissipated by late summer 2020. The result was the attempted reopening of the economy late last summer became a temporary ‘rebound’ of the economy, not a sustained ‘recovery’. The two are quite different. A similar scenario now seems once again possible a year later in summer 2021.

The economy has now reopened a second time. Capitalists once again believe that will be sufficient to generate a sustained recovery this time, even though it didn’t last summer. This time it will be different, they say. There’s the vaccine, they say. But there’s also the more virulent delta variant causing infection rates as serious as last winter’s prior wave, in the summer when the effects are supposed to have moderated. Most importantly, there is no further fiscal stimulus on the horizon when previous stimulus measures have faded or are being cut off.

What we have today is the emergence of a ‘creeping austerity—as Covid is resurging in a more contagious delta form while only 53% of the country is vaccinated and at least 40% is adamantly opposed to ever becoming so. What we have this Labor Day is therefore a likely repeat of the economic scenario of last year’s Labor Day. A temporary economic rebound and not a sustained recovery.  The evidence is accumulating in the form of a sharp decline in retail sales, consumer spending, and consumer expectations data that has recently occurred this past month, along with the disturbing data on job growth, evictions and benefits cut off.

In the words of the great philosopher, Yogi Berra, it’s beginning to seem déjà vu all over again.

Jack Rasmus
September 6, 2021

(To Listen to a further audio presentation on these themes discussed on my Alternative Visions radio show of September 3, 2021, go to the link:at https://alternativevisions.podbean.com/e/alternative-visions-working-class-labor-day-2021/ 

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Listen to my friday, August 27, Alternative Visions radio show presentation on Fed chair, Jerome Powell’s, decision to continue flow of QE $120B/mo. ‘free money to banks and investors. What happens if and when QE slows and interest rates rise? What’s impact on US economy, domestically and via global economy currency crises when taper begins?

TO LISTEN GO TO:

https://alternativevisions.podbean.com/e/alternative-visions-the-fed-the-taper-the-real-us-economy/

SHOW ANNOUNCEMENT:

Dr. Rasmus reviews Fed chairman Powell’s decision today, as the Jackson Hole, WY meeting of central bankers kicks off. Powell signals in his opening statement a possible earlier ‘taper’ of the Fed’s $120 billion/mo. injection of free money into the banks and investors ($4T since Covid recession began). Why the Fed continues to ‘pre bail out’ investors when they don’t need it (and never have). Rasmus examines Powell’s statement and claims regarding employment gains, inflation, and Covid effects. What’s the real picture re. inflation, employment, and the state of the US and global economies. Early warning signs of slowing US recovery as Asia economies, including China, slip into another recession or stagnate. Why the Fed may not be able to really ‘taper’ without setting off a major global currency crisis. Why are more foreign govts adopting Bitcoin and crypto currencies as a defense against the dollar and why will this destabilize their economies even further in the end.

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Listen to my two latest radio interviews on union organizing resistance, management restricting of worker rights, why more workers aren’t returning to work (not due to too generous unemployment benefits), how US billionaires have fared during the recession, and what’s really behind opposition to Biden’s $3.5T human infrastructure spending bill.

AUGUST 26 RADIO INTERVIEW:

Why unions lose in government managed union elections, at Amazon and elsewhere. The role of state Right to Work laws discouraging unionization. Growing trend of management forcing more workers to sign ‘noncompete’ agreements as condition of hire.

TO LISTEN GO TO:

https://drive.google.com/file/d/1oIb89OxDhS_wfh_JK77XoO7L5cqSvTTk/view

AUGUST 25 RADIO INTERVIEW

Why cutting off unemployment benefits has not resulted in more workers returning to work vs. other explanations why workers are reluctant to return to work. On 708 US billionaires gaining 62% wealth the past year of recession (from $3T to $4.8T). Why opposition to the $3.5T Biden-Sanders human infrastructure bill fight is really about retaining Trump’s 2017 $4.5T tax cuts for investors and corporations.

https://drive.google.com/file/d/1PYo07NotEf9kLsRjZuJ9Nua7c1pppm5X/view

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As an addendum to my written piece last week, listen to my discussion of the same topic–Afghanistan & why the US is leaving–in my Alternative Visions radio show of friday, August 20, 2021:

TO LISTEN GO TO:

https://alternativevisions.podbean.com/e/alternative-visions-afghanistan-the-american-imperial-project/

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On August 16, 2021 President Biden addressed the nation to explain why the US military is pulling out of Afghanistan. To a lesser extent, he also tried to explain why the Afghan government and its 300,000 military forces imploded over the past weekend. With the Afghan State’s quick disappearing act, in a puff of smoke up went as well the more than $1 trillion spent by the US in Afghanistan since 2001.

Biden glossed over the real answer to the first point why the US is now pulling out. The second he never really answered.

The real answer to the first point is simple: the USA as global hegemon can no longer afford the financial cost of remaining in that country, so it is pulling out. New projected costs of maintaining US global empire in the decade ahead have risen dramatically since the Afghan war began in fall of 2001. US elites now realize they can longer afford the new rising costs of Empire elsewhere, while simultaneously keep throwing money down the 20 year financial black hole called Afghanistan. The US is pulling out because, for the first time since 1945, it has decided to cut its costs in less strategic areas in order to be able to finance the growing costs of empire elsewhere.

The new areas are:

• the rapidly rising costs of investing in next generation technologies needed to compete with China, both militarily and economically;
• the costs of cybersecurity investments needed to deal with Russia, China, and with select lesser cyber challengers;
• and the investments needed to answer the threat to US security from the new emerging War with Nature (sometimes called Climate Change)
In all three new challenges, the USA is currently behind the curve. Nature’s reaction to capitalist production in the form of climate warming means Nature is winning the early skirmishes and the US thus far has not even been able to mount a serious counter-response. Russia, China and other apparent state-less challengers are also winning the cybersecurity war. The US can’t even protect its basic infrastructure and businesses from hacking and ransomware that has the potential of shutting down wide sectors of its economy. And so far as next generation technologies, like Artificial Intelligence and 5G wireless, is concerned the fight with China—and a lesser extent with Russia over new tech weaponry—has only just begun.

All three areas represent costly strategic challenges to US global hegemony, requiring massive new capital investments by US government and the US State. US imperial interests increasingly realize they cannot continue to throw away trillions of dollars more in wars in Afghanistan, let alone the broader middle east—whether Iraq, Libya, Syria/Isis, Iran containment, or financing Arab states’ war in Yemen.

An Empire Built on Fiscal Sand

How the US financed the wars in Afghanistan and elsewhere in the middle east as it exercised its global hegemony since 2000 is another obstacle to meeting the new strategic challenges. That method of imperial finance—like the war in Afghanistan itself—is no longer sustainable.

The first two decades of the 21st century is the first time in the entire history of the USA that wars have been financed without raising taxes and, indeed, while the US has simultaneously implemented massive tax cuts.

Up to and including Vietnam, taxes have always been raised to pay for war costs at least in part. But not in the 21st century! Not for the wars for the middle east. Since 2000 and the USA’s middle east war adventures, it has spent $ trillions of dollars on wars while cutting taxes by even $ trillions more. This had never happened before. It became a formula for eventual disaster—driven ultimately by US elites’ greed combined with an historic hubris of mistaken military invincibility.

That tax cutting since 2000 has amounted to at least $15 trillion! For the record:

George W. Bush cut taxes, largely on behalf of wealthy investors and businesses, by more than $4 trillion over the first decade, 2001-10. Barack Obama added over a $1 trillion more in his first two years in office 2009-2010—in the form of $288 billion new tax cuts in 2009 and by continuing the Bush tax cuts another $803 billion for two years, 2011-2012—after the Bush tax cuts had been set to expire in 2010. Obama then struck a deal with Republicans at the end of 2012 to extend the Bush tax cuts for another 8 years. That cost another $5 trillion. Donald Trump in December 2017 then added yet another layer of tax cuts on the Bush-Obama prior $10 trillion. Trump’s contribution amounted to $4.5 trillion for another decade, 2018 to 2028. Each tax cut layer provided even more of the total to investors, corporations and wealthy households. Trump’s went almost exclusively to investors, wealthy households, and especially to multinational US corporations. In the latest addition, Congress cut taxes another $650 billion in its ‘Cares Act’ passed in March 2020. That’s more than $15 trillion tax cuts in total!

Tax cutting since 2000 contributed in turn to massively annual budget deficits and the consequent explosion of the federal national debt.

But $15 trillion in tax cutting was not the only cause of a deep decline in potential tax revenues, chronic budget deficits and rising national debt, however. A chronically weak US economy, especially after 2008 and continuing throughout the Obama years, has also sharply reduced potential federal tax revenues. The average annual US growth since 2007 has barely reached 1% a year. Tax revenues—from both cutting taxes and inadequate economic growth—account for at least 60% of deficits and thus for the national debt, according to many studies.

Concurrent with the unprecedented drumbeat of constant tax cuts for capitalists large, medium and small has been the equally unprecedented rise in defense/war spending to pay for the wars since 2000—abroad and at home (homeland security costs, war on immigrants costs, militarization of policing, etc.). The wars abroad since 2001 alone cost an estimated $7 trillion.

$15 trillion in tax cuts plus $7 trillion in war spending since 2001 roughly equals the total US national debt by the end of the second decade of the 21st century. As a result of tax cutting and defense spending, the US national debt rose from roughly $4 trillion in 2000 to $9 trillion by end of 2008 (as Bush left office) to $17 trillion by 2016 (as Obama left office) and thereafter to $21 trillion when Trump left office by January 2020. The budget deficit this year, 2021, will rise another $2.5 to $3 trillion!

It is now projected to rise to at least $28 trillion by end of the current decade! For added to the tax cuts and war spending excesses must be as well the costs of the 2008-09 great recession, the chronic slow economic growth that followed under Obama for years after, and most recently the costs of legislation and programs to contain the Covid related 2020-21 crash and second great recession now underway. Should chronic slow growth follow the current second great recession—as it did its predecessor in 2008-09—the $28 trillion national debt estimate by end of decade will almost certainly be passed.

In this fiscal system built on sand, US imperial interests must somehow find the capital and resources to finance massive investments to wage its growing technological-economic war with China, its cybersecurity war with Russia and others, and its war with Nature.

Empires are seldom conquered from without. They always rot from the inside first. And the rot is well underway in the USA’s.

US Costs of Empire Are Rising

The US economic empire is under increasing economic stress because the options to finance it going forward are in decline. Massive new costs loom on the horizon. Next generation technologies will determine both economic and military dominance by 2030. Artificial Intelligence, Cyber Security, and 5G wireless broadband are all necessary for the development of smart, hypersonic weapons, as well as for disrupting an opponent’s domestic communications, power systems infrastructure, and even key production systems. The USA knows this. China knows this. Russia knows this. (Europeans and Japanese know it too but simply cannot compete and are not even in the game any more). The above triad of technologies are also key to the development of new industries and thus for economic growth as well in the decade ahead.

The US empire today faces a massive bill of investment over the next decade. In some ways it already lags behind China, as a result of US corporations moving off shore (to China), building R&D and production partnerships in China and elsewhere offshore, and allowing China to penetrate US R&D in the USA, at least until recently. In other ways it is also behind Russia technologically (especially in hypersonic missile and tactical missile defense technologies).

As the US global empire has weakened over the past decade, it has thrown more money into defense/war spending, cumulatively at least $7 trillion. That spending—of which Afghanistan contributed $1 trillion at minimum—US elites know will now have to be redirected to the new ‘wars’: the technology-economic war with China, the cybersecurity war with Russia, and the war with Nature itself in the form of investments directed to climate change mitigation.

Apart from the costs of these new wars of 2020-2030, it is more likely than not that more economic crises will arise. After two consecutive great recessions in roughly a decade (2008-09 and 2020-21) it is likely a third cannot be avoided either. Trillions of dollars more in emergency social program spending to contain the collapse of household consumption and small businesses once again is more likely than not.

It is therefore not at all surprising that Biden, and US empire elites in general, have concluded it’s best to cut losses in Afghanistan and get out now. Ditto for general costs of empire throughout the middle east. There’ll be no more traditional wars there for the USA. Such adventures are no longer affordable. Nor necessary, since the USA is now the largest producer of oil and gas in the world as result of new fracking technology at home, exceeding both Russia and Saudi Arabia. The main strategic reason for US wars in the middle east—i.e. oil—is no longer a consideration
In summary: the cost of wars in the middle east (Iraq, Afghanistan, Syria, Somalia, Iran containment, etc.) are being substituted for by the technology-economic war with China, the cybersecurity war with Russia, plus the need for expected additional commitments for the ‘war with nature’ (climate change costs).

The US empire can simply no longer afford the total bill for all the above. And that is the number one reason why the US is exiting Afghanistan altogether. That’s why Biden’s cutting US losses in Afghanistan and getting out. As he signaled in his TV address to the nation on August 16 that war is no longer in the US global interests. There are more important tasks. Tasks that will take even more funds. US interests have shifted. So must its expenditures of empire. That’s why it’s finally getting out of Afghanistan.

Is US Empire in Rapid Decline?

US elites realize that they can’t have their cake and eat it any longer. They can’t have unprecedented tax cutting, jump into civil wars everywhere around the globe, precipitate excuses for military intervention for domestic political purposes, and deal with the increasingly frequent deep recessions while financing the new ‘wars’ on the horizon with China, Russia, and nature itself. That’s what the US exit from Afghanistan fundamentally represents. It is an early indicator of the future decline of the US global hegemony. However, that decline is still in its very early stages and should not be over-estimated.

The US empire and global hegemony rests on its economic power in the global economy. The US empire is not like that of the former British or the older European colonial empires. It wields political power indirectly over indigenous economic elites. It does not directly run the political systems of its client countries. Or at least rarely resorts to that. It wields political power through its economic power. And that economic power resides in its dominance of its global currency, the US dollar; in its control of the (SWIFT) international payments system; in the influence of its central bank, the Federal Reserve, over other countries’ central banks; in the dominance of its banks and financial institutions worldwide; and its ultimate control of global economic institutions like the International Monetary Fund and World Bank.

Until the US dollar is seriously challenged as the world’s reserve and trading currency, until its control of the global payments system is supplanted by an alternative, until the dominance of its banks and financial institutions is broken, and until dual institutions challenging the IMF and World Bank are an effective alternative—the US global economic empire will continue and exercise hegemony.

Afghanistan represents not the end and defeat of the US imperial project. At most, it is a marker for the USA having peaked perhaps as global hegemon. Instead, it represents a fundamental shift at best and the start of a new phase in the history of the US empire.

As noted previously, global empires are rarely conquered from without militarily. Military failures or successes are not evidence of imperial virility. All empires rot internally before decline. And they begin a period of decline only when they cannot any longer afford to finance themselves.

Rome’s collapse in its west after 400 C.E. began when Germanic invaders seized Rome’s agricultural grain surplus base in Spain, Sicily and North Africa as the eastern Roman empire also cut off its grain surplus in Egypt. That agriculture base was the source of its taxation and in turn the funding of its military legions.

The British empire began its decades-long decline when its colonies began to disappear in the 20th century as result of economic war costs after 1918 and 1945. Basically bankrupted by wars, after World War II it no longer had the finances to hold onto its colonies. Some, like India, simply went independent. Others were ceded to the USA de facto as a condition of loans from America to Britain during and immediately after the second World War. Britain’s colonial empire could not be economically sustained any longer.

The Soviet Union’s de facto empire collapsed only after a decade of economic stagnation in the 1980s and after Gorbachov signaled to opportunist Communist Party leaders in charge of the economy it was ok to convert to capitalists as they continued their management of the economy. The apparatchiks virtually overnight became oligarchs, threw out Gorbachov, and brought in US capitalists as partners in exploitation and capitalist restoration. A decade of severe economic depression followed throughout the 1990s. The Soviet Union empire spun apart politically thereafter—first in east Europe, then the Baltics, then the Caucasus, then Belarus-Ukraine. And that was that.

The USA is in the very early stages of something similar. It has not yet lost control of its foreign resources and markets, as did ancient Rome. It has not yet bankrupted itself with wars, as did Britain in the 20th century. Its elites have not yet turned on the system itself, although the splits between the Trump forces and traditional US capitalists has been clearly intensifying. So too are divisions rapidly growing between its populace, at state and local levels. Wide sections of the populace no longer believe in the system, its traditional values and ideology, nor its fundamental institutions. That has all occurred rapidly in just a couple decades. That scenario clearly signals something similar to past imperial systems’ internal rot is underway within the USA. However, the US political elites and dominant capitalists behind them still wield significant resources, economic and political.

Afghanistan does not represent the beginning of the end but rather, along with US domestic trends, the end of the phase of the shift to Neoliberal financing of the empire created in the late 1970s-early 1980s, in response to the economic crises and stagnation of the 1970s. The US is now at another juncture. Neoliberal economic policies no longer suffice to sustain the empire and US global hegemony. What comes next this decade is yet to be determined.

But whatever the current decade portends, it is clear that after 20 years of wasting nearly $30 trillion on wars, tax cuts, and dealing with two great recessions and their economic aftermath, US elites realize they cannot pay any longer for middle east wars and confront simultaneously the costs of the new challenges to maintain the empire. The focus henceforth will be on the Great Technology War with China, cybersecurity conflicts with Russia, while attempting to raise investment as well to deal with the other war the US is now clearly losing: Climate Change. These are the key strategic interests of the American Empire in this decade and beyond—not Afghanistan.

Dr. Jack Rasmus
August 17, 2021

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This past June & July I presented two 3-part talks on what Keynes and Marx really said on my Alternative Visions radio show. Each series ofs 3 talks is about 2.5 hrs. duration. The main focus of both the shows was to debunk misrepresentations by mainstream economics of what both the two economists actually said. What was ‘Keynes’ Economics’ as opposed to what parades as ‘Keynesian Economics’ today; and what is ‘Marx’s Economics’ in contrast to what both critics & advocates say is ‘Marxian Economics’.

These 3 shows are now combined into a single talk for each. If now interested in listening to the combined presentation–parts of which were posted on this blog previously–the combined talks for each are available on my website, kyklosproductions.com

TO LISTEN GO TO: http://www.kyklosproductions.com/talks.html

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We hear a lot lately about the US billionaires increasing their wealth by more than $1 trillion over the past year, as Covid precipitated the most severe recession since the 1930s of the real economy over the past year–from the spring quarter of 2020 last year through the spring quarter 2021.

Over the same period, however, US stock markets surged to record levels. This past week in early August they attained record breaking levels nearly every consecutive day.

Much of that record surge in stock and other financial markets has been due to the US central bank, the Federal Reserve, over the past year pumping almost $4 trillion in virtually free money into the banks and big corporations even though they were flush with excess cash.

The Fed in effect ‘pre-bailed out’ the banks even when they weren’t in trouble.

Moreover, the Fed has indicated its intent to continue to pump free money into the banks and even non-banks at the rate of $120 billion per month, through 2022 at a minimum. That’s more than $2 trillion after the past year’s nearly $4 trillion–even though no banks are in trouble or need it.

But bankers and billionaires were not the only big beneficiaries of government bail out policies over the past year.

So were the vast majority of largest US corporations. Starting in January and February 2020, medium and large non-bank corporations began to raise trillions of dollars in cash by selling their corporate bonds at dirt cheap rates made possible by the Fed driving interest rates to near zero. Added to this cash hoard created by low Fed rates and record corporate bond rates, the same medium-large US corporations drew down hundreds of billions more from their credit lines with banks, then got $650 billion in new tax breaks from Congress in March 2020. They also got to cut their operating costs big time (especially wages and facilities costs) dramatically due to the shutdowns. The combined result was record income gains for big US corporations–not only for US billionaires! How big?

Reports just released in recent days reveal 89% of the Fortune 500 companies increased their revenue this latest quarter (April-June 2021) by no less than 24.7% over the same quarter in 2020 when the Covid induced recession began.

That 24.7% revenue explosion compares, by the way, to an average quarterly revenue gain of 4.5% over the past 5 (non-recession) years; and 3.4% average over the preceding 10 years after the last official recession ended in 2009.

So Corporate America did fantastically well as result of the recession, not just the ‘tip of the wealth receiving iceberg’, US billionaires!

In contrast to the record gains of billionaires, stock shareholders, and big corporations in general, over the same past year, more than 35 million American workers lost their jobs at one time or another. And at least 17 million are still jobless: 12m are still collecting unemployment benefits + 3m dropped out of the labor force + 1.5m are still improperly classified as ‘furloughed but working’ by the US Labor Dept. (which it admits was incorrect but still refuses to correct).

That 17m is twice the ‘official’ number of 8.7m jobless being pushed by the government and parroted by the mainstream media. Both numbers are from government sources, but politicians & media like to cherry pick the best number even though it represents only part of the total picture.

Most of the US work force this past year also experienced big wage cuts, due in part to the massive unemployment (no job equals a total wage cut), or reduced hours of work (millions converted to part time from full time work), or just lower hourly pay over the same period. Wage collapse at the middle to lower end of the structure of wages in the US left the highest paid, still working, receiving their higher salaries and pay. That raised the average pay in general while the vast majority saw their actual wages collapse. (Government & media also like to report this distorted figure of rising wages over the past year as well).

As the economy has begun to reopen again this summer 2021, some workers have returned to work but now it appears that pace is slowing.

The June & July jobs reports by the labor dept reflect a pick up of rehiring as many service industry workers have begun returning to work. But these aren’t ‘job gains’ or new jobs in the economy. They are ‘job returns’. Moreover, signs are now emerging that the rehiring is beginning to slow. Many industries and companies do not have plans to return all laid off this past year back to work. They have already begun to implement AI and other technologies that allow them to displace workers with machines and software. And they are doing so.

Just as important, millions of workers who have returned have done so to jobs providing fewer hours of work per week and therefore less weekly earnings than before the recession. That’s likely a major reason why many laid off service workers are resisting returning to work. They’ll actually see less weekly pay due to hours of work per week reduced. Others can’t return because affordable child care is not available. Others aren’t simply because they’ve come to realize their service occupations were dead-end low paid and unstable jobs. Future waves of Covid could once again throw them out on the street. Who can blame them for not returning!

As for small businesses, they too have been on the negative receiving end of the recession, like the workers and unlike their medium and large corporate cousins.

Most accounts show around a million small businesses have gone under despite the Government’s fiscal bailout having provided about $1 trillion in guaranteed loans and outright grants since March 2020! With nearly a million small business failures, one can only conclude from that much of the $1T loans and grants bailout money did not get to those needing it most. Exposing how much of the bailout of small business was ‘gamed’ and by whom is a work in progress but will certainly be revealed at some point.

Like workers and small businesses, the nearly 75 million renters (in 48 million rental units) have also been bearing the economic brunt of the pandemic. Many have been evicted this past year, despite the CDC-federal govt ‘moratorium’ on rent payments. That moratorium–extended several times but now set to completely end by October 2021–has never been total. It has only covered rental units that have been supported some way by federal subsidies or rules. Millions have already fallen through the moratorium cracks. And the floor will collapse for all come October. (Only six states have supplemental state rent moratoria in place–none in the south or midwest).

In recent weeks the fight over evicting renters has emerged in the media, along with reports that $47 billion of the March 2020 ‘Cares Act’ $52B earmarked for renter assistance has yet to get into the economy. The media likes to portray this as due to government bureaucratic bungling. But it ignores the fact that resistance by landlords to process the rent assistance is likely the real cause of the failure to disburse funds. Some landlords don’t like the fact that the government assistance funds only cover 80% of the back rent. Others don’t want to give up the right to collect all back payments in the future; others want to sell or convert the rental units others want to retain the right to evict even though receiving the assistance payments and others want to continue to evict if even one late payment occurs. The public does not know–and media generally refuses to explain–that rental assistance payments must be filed both by the renter and the landlord. And millions of landlords have refused to file. Thus, the real cause of the $47 billion not being paid.

Then there’s the much publicized child care assistance payments that began this past July, as part of the Biden ‘American Rescue Plan’ (aka March 2021 $1.8T Covid Relief Act). While a positive program to make up for the discontinuation of supplemental unemployment benefits and rent assistance, what most Americans don’t realize it is only to run through December 2021 then expires as well. Furthermore, it is not actual new real money payments to households, but a pulling forward into July-December 2021 child care payments that would have been received anyway from the IRS next April 2022 when filing with the IRS for the 2021 period child care tax credit.

With recent developments–like the cutting off of unemployment benefits, the expiring of rent assistance, the gaming of small business bailouts, and the soon to expire child care benefits and end of student loan forbearance–one can conclude that a period of ‘creeping incremental austerity’ for the many has already begun–exempting of course bankers, businesses & investors for whom it appears the free money will continue to flow. Fortune 500 companies, banks, and US billionaires who have reaped massive income gains over the past year, appear exempted from any future austerity.

Dr. Jack Rasmus
copyright 2021

Follow Dr. Rasmus on his blog, jackrasmus.com, on Twitter at @drjackrasmus, or listen to his Alternative Visions radio show on the Progressive Radio Network every Friday at 2pm eastern time.

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2 interviews of the last week on evictions moratorium, smoke & mirrors in Biden’s fiscal spending bills, Sanders’ $3.5T v. Trump’s $4T tax cuts, the crisis of retirement system, elderly care, and other topics.

https://drive.google.com/file/d/1wFTCJDJ2VyphriW_h0sNUS30BObqTQhK/view

https://drive.google.com/file/d/1gdxqEv7Dc0nrbQUniN8e_3m-CzRHUxKc/view

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