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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

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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

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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

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(The following are my reflections on the 20 year anniversary of the 9-11 attacks)

Today, September 11, 2021 marks the 20th anniversary of the Afghan war. But which one?

There were actually two Afghan wars. The first began within a few weeks of the 9-11 tragedy, when the US was attacked by Al Queda with the assistance of elements of the Saudi Arabia ruling elite.

In the first war US forces invaded Afghanistan behind the excuse its mission and goal was to capture Bin Laden and deny Al Queda a base in that country, even though there is ample evidence the Taliban had offered to kick Bin Laden out in exchange for no US invasion. The Bush administration rejected the Taliban offer because its actual mission and objective was always greater than just capturing Bin Laden, or even occupying Afghanistan.

The first Afghan war was over in a matter of a few months, when US forces drove the Taliban out of government in Afghanistan and into the countryside while sending forces of Bin Laden’s Al Queda retreating into the mountains bordering Pakistan (the latter the USA’s erstwhile ‘ally’ but actually ally of Bin Laden’s Al Qaeda as well as the Taliban).
The second Afghan war—the often mentioned 20 year war that Biden just ended—began with USA military forces occupying Afghanistan and remaining there on the ground, beginning in 2002 and continuing until August 31, 2021.

The US may have won the first Afghan war; but it even more clearly lost the second!

On August 31, 2021 President Biden addressed the nation giving his reasons for the pull out of Afghanistan, thus ending America’s second war in that country. However, Biden was announcing much more than the final Afghan pullout.

The mission of the second Afghan war was quite different than the first, and it was never publicly acknowledged by the US imperial elite represented by the Cheney-Rumsfeld-Bush faction of American imperialists at the time. The 2nd Afghan war’s mission was to extend the USA empire deep into the broader region of central asia in order to challenge both Russia and China on their weakest flanks.

Cheney-Rumsfeld-Bush intended to keep US forces in Afghanistan to use as a base for extending USA’s influence and hegemony permanently throughout the entire central asia region.

By 2001 Russia was weakened after a decade of economic depression in the 1990s. Its leadership, under Boris Yeltsin in that period, was willing to do whatever the USA wanted. Putin was not yet fully in charge and US imperial elites likely assumed Putin could be managed in a similar fashion as Yeltsin had. At the time Putin’s ascendance in Russia politics was just beginning and he gave the USA assurances the USA-Russia 1990s relationship of unequals would continue. Cheney-Rumsfeld-Bush thus envisioned an historic opportunity of penetrating the former Soviet Union empire ‘from the east’, just as it was doing at the time through the Baltics and the Caucasus. USA imperial strategy was always to keep Russia weakened by stoking insurrections and political instability on that country’s periphery. Afghanistan provided the potential for doing so from yet another direction: Russia’s former central asia partners.

Dominating central asia provided US imperialists a similar useful geographic leverage on China’s far western border, especially with China’s western muslims. Establishing US hegemony over the region would ensure US strategic advantages on Iran’s eastern border as well. US imperialists had much to gain,in other words, by occupying Afghanistan, and by deepening its influence and hegemony throughout central asia on behalf of the US global empire.

The USA’s 20-year second war in Afghanistan was thus a war of intended permanent occupation of that country as a base for further extension and deepening of US imperial interests throughout central asia. On the surface it all appeared as ‘nation building’ in Afghanistan, but in essence it was USA ‘empire building’ with the intent of weakening Russian interests in central asia permanently, while simultaneously challenging China on its western-most flank and opening a ‘second front’ against Iran on its eastern border. Afghanistan was the strategic lynchpin, but US imperial hegemony in central asia the real objective.

The USA lost the 2nd Afghan war, however, and it has now been driven out of central asia altogether, not just out of Afghanistan. The Cheney-Rumsfeld-Bush central asia imperial project has been defeated. That is the real historic significance of the US retreat from Afghanistan.

In his August 31, 2021 address to the nation on the Afghan pullout, Biden referred to the exit as due to the doomed mission of ‘nation building’. But nation building is only the appearance. What was doomed was the Bush-Cheney-Rumsfeld imperial adventure and over-reach. What failed was the attempt to expand USA imperial hegemony over central asia—i.e. a much greater defeat than just an exit from Afghanistan.

It is somewhat ironic historically that the USA invaded that country in response to around 2500 Americans killed on September 11, 2001 but then expended another roughly 2900 lives of Americans in Afghanistan over the next 20 years (not to mention hundreds of thousands of Afghan lives in the process). So the crimes of the Saudi terrorists who crashed aircraft into buildings in the USA on September 11, 2001 were no greater than the crimes of Bush-Cheney-Rumsfeld who wasted even more US lives in their failed imperial venture into Central Asia.

In justifying the final pull out, Biden admitted the cost of the 20 year war was more than $2.3 trillion. Just days before in his prior address he referred to a $1 trillion cost. The former, more accurate number is from a Brown University study, to which Biden finally referred. Other total costs of the combined Central Asia & Middle East military adventure the past 20 years are estimated between $6.4 and 10 trillion, depending on the source.

The most important passage in Biden’s August 31 speech was his statement that “the world has changed” since 2001. In his next breathe Biden then signaled the most important of those changes: China’s growing economic influence, military, and technological capacity as well as Russia’s clearly growing cybersecurity capabilities. These ‘changes’ are the new threats to USA global economic control, hegemony, and technological supremacy—not wars to establish USA regional geographic supremacy in central asia. The US ruling elite has come to understand this. That’s why you don’t hear Republicans attacking the fact of the pullout; just the way Biden managed and executed it.

Central Asia—and Middle East wars one might add—have been proven cost ineffective to the extreme for US ruling elites. The USA likely expended around $10 trillion in total costs in those wars. And it has nothing to show for it in the end.

The defeats and pullout in Afghanistan, central asia, and soon the middle east are magnitudes more significant than the US defeat and pullout from Vietnam. The US recovered from the latter by restructuring its global economic empire and hegemony along Neoliberal lines. It quickly checked challenges from Japan and Europe in the 1980s. The Soviet Union began to unravel at the same time, and China was not yet a challenger. The US and its empire recovered quickly. The same cannot be said, however, of the current defeat and pullout from Afghanistan and central asia. China is a significant challenger to the US economically, increasingly politically, and eventually militarily. Russia has recovered and rebuilt its military, made important advances in new military technology, checked US advances into its periphery, and has begun extending its political influence globally once again as well. Both China and Russia are ascendant once again, unlike the post Vietnam period.

And now $trillions of dollars more must be spent by US imperial interests in order to meet the challenge of the new ‘wars’ with China and Russia, requiring massive economic and military investment at least as great as the $10 trillion the US expended in central asia and middle east since 2001.

The USA can no longer afford to have both: military adventures abroad while competing technologically and militarily with China and Russia. Biden said as much directly to the American public in his August 31, 2021 address to the nation.

US imperialist strategy is always first and foremost to maintain its global hegemony economically and politically. However, the Cheney-Bush-Rumsfeld attempted to expand and deepen those US imperial interests geographically into central asia and the middle east by military means. That military adventure has proven an historic failure. Indeed, the Bush regime’s military adventures have undermined USA global hegemony, not expanded or more deeply secured it. The cost of the Bush-Cheney-Rumsfeld imperial adventures became unsustainable—especially now that trillions of dollars in investment are needed to contain and compete with China and Russia.

In other words, the costs of maintaining empire have now become greater than the costs of extending empire for the US. It’s a cost of empire and a juncture the US had never faced since 1944-45.

The USA can no longer absorb the costs of both expanding and maintaining empire. That’s what Biden really meant when he said to the American public in his August 31 pullout speech: “things have changed in the last 20 years”.

What’s ‘changed’ as well is that US domestic costs of dealing with a major economic crises every decade—first in 2008-10 and now again in 2020-21—have been growing ever greater as well. Those periodic economic crises add greatly to the difficulty of financing competition with China and Russia to maintain empire. And that’s not all. There’s still another, 3rd de facto ‘war’—i.e. the war with Nature—and the need to finance even trillions more to battle climate change.

The spending and investment needed to technologically, economically and militarily compete with China and Russia, to address chronic growing domestic US economic instability, and to somehow simultaneously pay for the war on climate change all add up to tens of trillions of dollars over the next decade. Even with the elimination of trillions of dollars expenditure in central asia and the middle east, it is not certain the US will be able to finance these three ‘new’ wars of technological competition with China-Russia, domestic economic stability, and climate change. A fiscal crisis of the US capitalist State may be unavoidable in any event.

Added to the growing demands of maintaining empire is yet another fiscal problem: US capitalists have become increasingly addicted to chronic, massive tax cuts since 2001. That makes financing of empire even even more difficult. Empire cannot be sustained simply by the US State issuing more Treasury bonds and undertaking even more debt financing. Thus growing US revenue problems add to the challenges of financing empire and for the US maintaining global hegemony.

The USA is clearly now entering a new era in its imperial project. However, the retreat from empire politically and militarily has only just begun. That retreat will be a protracted process. But the peaking of US global economic and political power is past. The Bush regime’s failed military adventures are largely responsible. As was the Obama administration’s continuation of Bush’s central asia & middle east failed adventures when Obama had the opportunity in 2011 to pull out but instead went in deeper in Afghanistan, Syria and of course Libya.

History will show the imperial adventures of the Cheney-Rumsfeld-Bush wing of the US capitalist elites—into the middle east and then into central asia—have all but wrecked the global US imperial expansion which began in 1944-45. That expansion has now abruptly come to an end. The USA will have great difficulty just maintaining empire henceforth.

As the costs of financing the new technology ‘wars’ with China and Russia rise in the years immediately ahead, it is inevitable the USA will have to withdraw further as well from Iraq and elsewhere in the middle east: The Trump era buildup toward war with Iran has ended. US efforts to slow North Korea’s nuclear development are done. US plans to further disrupt and even invade Venezuela through proxies is finished history, as the US instructs its puppet, Guido, to cut the best deal he can with the socialist regime there. New plans to destabilize Cuba will occur in word only, for domestic US election purposes. Europe will begin looking toward new ways to develop and fund its own military defense, and early indications are it is already considering so. USA allies in northeast asia will drift toward more neutral relations with China longer term.

Domestically the USA will restructure its military investments and expenditures. And it probably cannot avoid retracting at least some of the $15 trillion in tax cuts for investors, corporations, and businesses it passed from 2001 through 2020 if it hopes to finance the new wars of technology with China and Russia, restore economic stability in the US, and confront the growing costs of climate change.

The USA has not simply pulled out of Afghanistan. Even more important, it is pulling out from central asia and has abandoned its imperial plans for that entire region. The central asia pullout will be replicated in the middle east, albeit more slowly and less publicly evident. Military adventures elsewhere are no longer on the agenda anywhere.

The US empire can no longer fund imperial expansion, and at the same finance the new defense of its empire in the face of rising costly challenges from China and Russia and other existential challenges. The empire no longer has sufficient financial resources.

Perhaps not yet naked, the emperor is nonetheless shedding his clothes. Or at least in the process of changing attire.

Dr. Jack Rasmus
September 11, 2021

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Three Radio Interviews

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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Gutting the Fiscal Stimulus

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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