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Yesterday Supreme Ct. Justice, Ginsburg, died. McConnell & Trump now moving rapidly to replace and fill her position on the US Supreme Court with a 3rd right wing nominee. Democrats immediately mounted a feeble and futile defense, saying that McConnell should not proceed with a nomination before the election. Their argument was based on McConnell’s own argument, back in Feb. 2016, that he used to thwart the nomination of Obama’s Supreme Court candidate, Garland, at that time; McConnell within hours replied that he is expediting the nomination and promises Trump his Senate will have a final decision before Nov. 3 election.

The death of Ginsburg and the quick replacement of another ultra conservative to the SCOTUS has big implications for the upcoming November 3 election: it strengthens Trump’s strategy and his plan to contest the election’s voting by mail process, to declare it fraudulent (in select blue states), and to try to stop the counting of mail ballots and have the Supreme Ct.–now in his pocket with 6-3 majority–cut off the vote counting. That’s just as happened in Florida in 2000 only this time not in one state (Florida) but across multiple states.

Trump’s strategy in recent weeks is becoming increasingly clear: create the public impression that mail in voting is fraudulent and use that claim of fraudulent as the basis for stopping the counting of mail ballots–especially in select ‘blue’ and swing states. This strategy will be supported by polls showing big discrepancies in direct in person voting vs. mail voting on November 3-4:

Recent CNN polls show 53% of Biden supporters expect to vote by mail, while only 21% of Trump supporters will vote by mail. 66% of Trump voters will show up and vote in person. This will mean November 3 voting will show Trump winning by significant margins due to direct voting. Exit polls will appear to confirm Trump in the lead at the time. But as mail in ballots are counted, Trump’s lead will begin to fade in blue and swing states (though not likely in most red states due to widespread voter suppression going on. 800,000 potential voters have been purged in Florida and 190,000 in George, for example). But before the mail in ballots wipe out Trump’s initial lead, he’ll raise the ‘fraudulent’ voting claim, get Attorney General Barr to file injunctions to stop the vote count of mail in ballots, and push for his now 6-3 majority Supreme Court to stop the mail in vote count.

This is Florida’s 2000 election deja vu, except now in multiple states and not just involving voting irregularities in 3 counties in that state.

In 2000 the outcome was the Supreme Court de facto ‘selected’ the president, George W. Bush, with its 5-4 decision by stopping the vote recount in Florida.

In 2020 the Supreme Court will be even more likely do the same–i.e. stop the vote count and ‘select’ Trump’. Except this time it will not even be a vote recount; it will be on the first count of mail in ballot votes.

The 6-3 clear majority now gives Trump even more encouragement to implement this strategy: stop the vote count, direct the decision to the Supreme Court, and keep any resolution out of the US House of Representatives where, constitutionally it belongs.

Democrat leadership will be easily outmaneuvered in the Supreme Court nomination process about to begin, I predict. They think they will get the support of centrist Republicans like Romney, Alexander, and at least another. They won’t. They will be outmaneuvered as well in the post November 3 vote mail-in vote counting. Republican radical right judges in federal district and appeals courts, put in place in the last three years by McConnell’s Senate, will be easily convinced to issue injunctions to stop the mail in ballot counting. The Democrats once again will prove themselves strategically and tactically inept in stopping Trump, as they have the entire previous four years.

One more nail will soon be hammered into the coffin of American Democracy, and this time a very large one.

Since the Republican and Democratic Party conventions in August I have been following and commenting on the unfolding of Trump’s strategy to engineer a legal de facto coup d’etat surrounding the November 3 elections. I have shared these reflections and observations in my almost daily tweets on the revealing of Trump’s strategy–as well as his statements showing his intent to destroy even the remaining remnants, as few as they are, of democratic and civil rights in America today in order to stay in power. Indeed, as he has publicly declared in his campaign speeches, he’s planning not only to win in November but is considering, as he put, “four more years after that, and maybe even four more, we’ll see”. In lock-step, his Attorney General, Bill Barr, has also publicly declared that protestors (including those protesting a future coup no doubt) should be considered “treasonous” and prosecuted under the sedition acts. For Trump too, protestors are “insurrectionists”, which means terrorists and ‘enemy combatants’ under the Patriot Act.

A political crisis, the dimensions of which have no precedent in America’s history, may be just around the corner. It’s negative impact on the present economic Great Recession 2.0 will be no less profound. It will ensure a further economic relapse and the W-Shape trajectory I’ve been predicting, or worse!

The following are my comments on twitter ever since the two parties’ conventions, as it was becoming increasingly clear what Trump, Barr, McConnell, and the others have in mind, and are planning, for the November elections and its aftermath.

(Join me for my future day by day comments on Twitter as Trump’s legal coup d’etat continues to unfold. Sign in to my Twitter account at @drjackrasmus)

COMMENTARIES & REFLECTIONS ON TWITTER

Sep 19
In less than 12 hrs my previous post prediction confirmed: McConnell & Trump both say they’ll move rapidly toward confirming Trump’s 3rd nominee to SCOTUS. McConnell outmaneuvering Dems saying no Committee debate; he’ll move decision immediately to full Senate vote

Sep 18
Democrats will put up another feeble fight against McConnell/Trump’s 3rd nominee to SCOTUS. Dems will argue Mitch shot down Garland in Feb 2016 saying no nomination in election year & should do same in Oct 2020. Mitch’ll laugh and ram through nomination in <30 days

Sep 18
Justice Ginsburg has died. Trump will soon have 6-3 majority on SCOTUS. >55% Dems will vote by mail; only 21% Repubs. Trump will appear winner Nov. 3, but mail-ins reverse that. He’ll claim fraud & ask his 6-3 court to stop count in select blue states, like FL 2000

Sep 16
AG Barr today said protestors should be prosecuted for treason, meaning post Nov. 3 if you protest Trump’s de facto coup d’etat you’ll be prosecuted and thrown in jail. So much for the Bill of Rights in a post November USA world!

Sep 16
CNN poll shows Biden and Trump tied in a dead heat in battleground states–and the debates haven’t even begun yet! If Dems can’t win this election they should close up shop, dissolve, and disappear!

Sep 16
CNN poll shows election day voting (Biden 22% supporters vote, Trump 66%); voting by mail (Biden 53%, Trump 21%)=Trump appears to win Nov 3 but slowly loses as mail ballots counted. Trump declares fraud. Asks SCOTUS to stop mail ballot counting. Florida 2000 deja vu

Sep 15
200+ electoral college votes in red states where intense gerrymandering & forms of voter suppression have been increasing since 2010 Republican-McConnell Senate takeover. Fed courts in red states upholding it, after fast-tracking of right wing court majorities there

Sep 15
Florida McConnell appointed Appeals Court overturns Florida district court ordering 800,000 former felons be allowed to vote. All this following Florida statewide initiative where two-thirds of Florida voters approved right to vote after having served one’s sentence

Sep 15
Trump says Nov. election won’t be known “for months or for years”. So who’ll decide president during “months…years” Sup. Ct. or Congress? Trump Senate will block Congress; Sup.Ct. as in 2000. Biden says US military will remove him. Pentagon says won’t get involved

Sep 14
Trump Plan A (Focus swing states; ensure red states via voter suppression; foment violence to dampen blue states voter turnout. Plan B (use mail crisis & SCOTUS to stay in power). Plan C:”After we win 4 more years we’ll ask for maybe another 4 or so.”(Trump 9-13-20)

Sep 13
Hitler’s path to power: capture Nazi party & make it his personal vehicle; attack liberal parties & leaders blame them for crisis; encourage his thugs to fight & kill socialists in streets; pull off a quasi-legal coup; then jail & kill all opposed. Parallels today?

Sep 13
Roger Stone, Trump election adviser, convicted & pardoned by Trump, today echoed Trump’s naming protestors “insurrectionists”: said if Trump loses he should seize power and jail Clintons, Zuckerberg, etc. Stone represents wide radical neo-fascist wing of bus. elite?

Sep 12
Red states now control Electoral College. #Electors same as # Congress: 535. Raise #US House members>425. US Const. requires more #House reps as popul rises. Last time done? 1913. No need abolish electoral college. Just increase #House reps to end Red state control

Sep 12
Trump just said in public interview if protests occur on November 4 he’ll consider them “insurrections” (his word) and will put them down with force. As I’ve said, police state USA being planned and prepared for. So what will Biden/Dems do? What Gore, Kerry did. Zip

Sep 8
by my count Trump has 220 electoral votes tied up in red states (where voter suppression also rampant). He needs only 270. There are about 90 votes up for grabs in PA, MI, WI, MN, AZ, NV, VA. (Dems’ only dreaming re. winning FL, TX, NC, GA). Much depends on debates

Sep 8
Trump playing 2016 jobs vs. free trade card in swing states again. Even after phony NAFTA 2.0 deal did nothing to return jobs & while 1,800 factories left USA in 2017-18 alone, per EPI study. But Americans have short memories and tend to believe lying politicians.

Sep 8
National polls Biden/Trump totally irrelevant. Only swing states important. CNN’s latest has Trump even with Biden in 18 battleground states as Trump now promising radical measures again to protect jobs from imports. Resonating again in swing states. And Biden’s?

Sep 2
McConnell-Trump strategy clearly to prevent Dems for taking credit for any stimulus before Nov 3. Create econ chaos & blame Dems: less job benefits & more evictions & small bus. closures. Of 30m US small bus. Homebase small bus. survey shows 20% (600k) now closed.

Sep 2
Watching Biden speak is frustrating. I want to kick him in the pants & shout “Speak up Joe. Show some energy. Get angry. You sound like a local priest giving a sermon.” Someone needs to teach Joe the 6 principles of an effective agitational speech.

Aug 31
You can’t campaign giving speeches from a TV studio! Biden better get out to swing states soon & not pull punches proposing real solutions to working class & small bus. folks who are really hurting. Ah, but the Dems corp. wing won’t let him say what needs to be said

Aug 31
Dems convinced Sanders last spring to throw in the towel, after he’d told supporters he’d fight all the way to the convention; he didn’t. He then told them fight for the platform; they were crushed. You can still hear the air of energy deflating from the Dem balloon

Aug 31
Trump has successfully stolen agenda from Dems, slow & tepid in their response. Covid & economy as issues buried. Trump daily criss-crosses the swing states; Biden still on his butt. Biden incapable of showing energy & fighting spirit people want to see in a crisis

Aug 31
For my Nov. 2018 analysis of US midterm 2018 elections & why Dems ‘suburbia’ strategy will fail in a 2020 general election, read my ‘None Dare Call It Victory’ (11-6) and ‘Democrats Suburbia Strategy Disassembled’ (11-17) at my blog,

Aug 30
Dem strategy in 2018 targeted suburban women & professionals. I warned then it would not work in general election in 2020 if repeated. Biden now losing ground in swing states where more aggressive blue collar prgm needed. Dems no longer know how to speak to them

Aug 30
Anyone think car rallies of Trump supporters popping up in big cities everywhere this weekend is just a coincidental spontaneous event? Who’s behind the coordination? Expect these weekend shows to continue through Nov. As predicted, election now moving to the street

Aug 30
Trump’s just an exaggeration of long time Republican election strategy: run on dual racist-crime theme. Remember 1988? Dukakis way ahead in polls, until infamous ‘Willy Horton’ ad by Bush. (Horton: former black criminal released from prison). Horton now: BLM-Antifa

Aug 29
Biden & Dems who say FBI or military will remove Trump from White House & US House has final say are wrong both accounts. US House decides only if Pres-VP ‘incapacitated’. Vote irregularities go to courts. FBI-military will prevaricate if armed supporters defend WH

Aug 29
Trump’s PLAN B (cont.): 5) get US Sup. Ct to decide vote (keep it out of US House); 6) declare national emergency & refuse to leave White House; 7) call on supporters to Washington to mass counter-demonstrate; 8) have armed members defend White House perimeter;

Aug 29
Trump’s PLAN B: 1) Exacerbate econ & political crises pre 11-3; 2) delegitimize the election process outcome (fraud, stolen, post office, etc); 3) court challenge mail ballots in key blue states pre 11-3; 4) stop or slow vote count in blue states (not red) post 11-3

Aug 28
Trump PLAN A: 1) Punish Blue states economically & politically to reduce turnout 2) Keep Red states safe by voter suppression 3) Campaign in person mostly in 8 swing states 4) Label Biden as Sanders’ puppet 5) Appeal to his white European base fears of the ‘Others’

Aug 27
#RepublicanConvention For Kudlow-Trump prediction of Vshape recovery by November election, given -5% and -31.7% collapse of US GDP in first half 2020 US economy will have to grow by +22% next four months! Haha. Wanna buy a bridge? Kudlow has one to sell if you want to believe him

Aug 27
#RepublicConvention Source of Kudlow’s ‘boom in housing’: 1. pent up demand from spring shelter in place 2. wealthy urban apartment, town-home, condo owners fleeing cities to suburbs/exurbs. Builders rushing to build more houses there. Result: major price deflation in city RE now
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Aug 26
#RepublicanConvention Trump claims economy was great until Covid. Yeah? 2019=6 mo. manufacturing recession, 9 mos. contraction of bus. investment, stagnant real wages & doubling of credit card defaults, falling exports due to China trade war. But dividends-buybacks record $1.2T.

Aug 24
Trump has been buying farm sector votes with massive subsidies of taxpayer money. In 2018-19 during China trade war he gave $29B in direct subsidies. In March 2020 Cares Act gave another $19B. Mostly to big agribusiness buddies, not family farmers now going under.

Aug 24
Trump says farmers doing great. But Wall St. Journal headline today declared: ‘US Farmers Are Suffering’ (p. B9): “Bankruptcies are high in farm country” mostly “small family farms” & “Farm loan payments are expected to fall precipitously in the next three months”.

Aug 22
Most conspiracies are purposely create by smart people, with the objective of diverting attention from realities like 80m Americans without affordable health care, 45m still jobless, 10m+ small bus. closing, 20m+ being evicted, millions hungry, 310m dead by Dec.

Aug 22
Being ignorant is excusable; just means someone’s keeping the facts from you. Ditto gullible; means you’re too trusting of answers from those in authority. But stupid? Means one can’t perform simple logical thinking to come to conclusions of their own. (30 million?)

Aug 22
The daddy of all conspiracies now emerging from the right wing blogosphere: ‘The Nov. 3 election will be a catastrophe because an asteroid is coming to earth on that same date’. Def. of conspiracy theory: an easy answer for folks incapable of thinking for themselves

Aug 22
US House to pass $25B for US postal office today. Trump says he’ll veto. McConnell says won’t take it up in Senate. USPS General, DeJoy, tells Congress he’ll restore 600 mail sorters removed from USPS offices. But workers receive letter they can’t restore them

Aug 20
Dems are already trying to lower expectations of stimulus if they win Nov 3. Biden’s transition team head, Kaufman, today says ‘pantry will be bare’ and ‘deficits large’. Dems will be ‘limited’ in what they can do. (Obama 2009 economic ‘minimalism’ all over again).

Aug 20
Both Trump & Biden should chew on this: “Harris Poll conducted days before the convention found that 59% of 18 to 39 year olds said they would rather live in a socialist country than a capitalist one, up 9 percentage points since last year”(Fin. Times, Aug.20,p.16)

Aug 18
Dems got Sanders to bail out of race early last spring (after he promised to fight all the way to the convention), then screwed his followers on party platform last week. Dem leaders now clear to trot out Republicans for Biden at convention. ‘Deja vu all over again.

Aug 18
Big reason Hillary lost 2016: failure to campaign in swing states. Nat’l polls irrelevant. Only 8 swing states matter. Trump already campaigning hard there. Will continue. So Where’s Biden-Harris in swing states? Will they campaign there? Or will Dems repeat 2016?

Aug 14
What’s behind Trump’s Israel-UAE agt.? More than meets the eye. As deal was announced, US seized 4 Iran ships on way to Venezuela. IS Israel-UAE part of US plan to prepare region US allies for ‘October Surprise’ re. US policy toward Iran? Is US-Iran conflict coming?

Jul 30
What if 72 hrs before Nov. 3 Trump tells his supporters to not vote & invokes emergency powers act to halt the election? Constitution says he can’t change the date. So what. How will Dems stop him? Trump has Barr, DHS troops + support of most mid-level officer corps

Jul 26
Even if Biden wins 6 key swing states, the electoral college vote will still be close. If close, Trump will cry fraud & refuse to leave, plunging USA into deep Const. Crisis. Why he’ll refuse to leave? If he loses, knows he’ll be indicted on tax fraud and convicted

Jul 19
Trump’s Plan B? Create street chaos as DHS troops provoke fights w. antifa/BLM/protestors; Covid deaths spike & voters stay home; polling stations close w/o older folks to run; challenge & delay mail in ballot count; Trump rejects results 11-4 & asks Sup.Ct. decide


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Listen to three follow on radio interviews this past week to my recent publication, “America’s Current Jobs ‘Great Depression'” where discussion goes in depth to discuss the implications of the media’s downplaying of current unemployment and the emerging 2nd wave of layoffs by big corporations that haven’t been directly impacted, in many cases, by the Covid virus.

    KGO RADIO Interview
Sept. 14, 2020

https://omny.fm/shows/the-pat-thurston-show/september-14-2020-america-s-current-jobs-great-dep

    CRITICAL HOUR RADIO
Interview Sept. 11, 2020

Critical_Hour_554_Seg_2.mp3

    BY ANY MEANS NECESSARY RADIO
Interview Sept. 9, 2020
https://www.spreaker.com/user/radiosputnik/economist-dour-unemployment-numbers-unde

Read Full Post »

Two well-known and highly respected mainstream economists, Carmen Reinhart, a chief economist for the World Bank, and Vincent Reinhart, chief economist for Morgan Stanley bank, have recently published an article in the widely read capitalist source, Foreign Affairs, entitled ‘The Pandemic Depression’. Arguing primarily from a global perspective, the economists have concluded the US economy as of the 3rd quarter 2020 is not merely now experiencing a ‘great recession’ but now qualifies as another Great Depression.

There is another perspective, however, from which to also argue the US economy is in a bona fide Great Depression. It is from the perspective of the US Labor Market. For as of the late 3rd quarter 2020 the US economy suffers from an unemployment rate of no less than 25%–i.e. the same rate during the worst years and quarters of 1932-33, the depths of the 1930s Great Depression. Yet what we hear from the media and politicians of both wings of the Corporate Party of America—aka the Republicans and Democrats—is that unemployment is only 8.4%! That’s barely one-third of 25%.

Republicans and Trump have used the low-balled number of 8.4% as the main excuse to prevent the passage by Congress of any further economic stimulus. The Democrats have voiced no effective rebuttal since they too have accepted the 8.4%. So what is it? 8.4% and not even a great recession any longer? Or 25% and the possibility the ranks of unemployed are about to grow even further?
What follows is a debunking of the 8.4% unemployment rate and a quantitative explanation why that rate is 25%–as well as a statement of the forces that will likely result in an even further deterioration in the unemployment rate in the 2020-21 period ahead.

(25% & 40 Million Still Unemployed)

After the massive job implosion last spring, a weak rebound in jobs has occurred as the economy reopened over the early summer. But that jobs rebound has shown clear signs of faltering by late July and has clearly deteriorated by late August as unemployment claims have risen in recent weeks. Even more ominous, as that has near term condition of jobs has worsened, parallel indications show the emergence of a second, more permanent phase of job loss on the horizon.
Since early March 2020, more than 55m workers have filed for, and received, unemployment insurance benefits.

According to official government data, as of the end of August, 29.5 million US workers were still getting benefits. That 29.5m reflects 18.4% workers clearly unemployed. But it’s also a subset of the total jobless, since millions haven’t been able to get benefits. So the actual number of jobless as of labor day 2020 is north of 29.5m and 18.4% Nevertheless, the statistic we hear is 8.4% unemployment rate and 13.4 million unemployed. What gives?

Some of the 55 million who received benefits at some point over the course of the last six months of the pandemic began returning to work starting in May. The number returning grew in June, but then began slowing once again in July and August as the rebound in jobs began to falter in July-August.

Others of the 55 million have simply exhausted their benefits. Many are still unemployed but no longer part of the 29.5 million that remain on benefits.
In addition, millions more workers since March have entered the labor force for the first time but they too have not been eligible to receive benefits due to lack of prior work history as first time job seekers—which precludes them from receiving unemployment benefits. Like those having exhausted their benefits, they too are unemployed but not part of the 29.5m still getting benefits at the end of August.

Joining the ranks of those unemployed but not receiving benefits are the millions who never got benefits because they simply gave up looking for work for various reasons and dropped out of the labor force—which puts them in a category in which, according to US labor department methodology, they aren’t counted as unemployed. They may be out of work, but given the oxymoronic way the US defines unemployed they aren’t considered unemployed for purposes of calculating the unemployment rate!

Finally, there are the additional millions more who never were able to get benefits since March even though they tried, due to various bureaucratic reasons.
Whether having exhausted their benefits, or first time entrants to the labor force not eligible for benefits, or whether they’ve dropped out of the labor force, or were denied benefits for bureaucratic reasons—all these groups are nonetheless part of the unemployed, even though they are not counted among the 29.5m still getting unemployment benefits.

In short, the 55m who got benefits at some point since March, and the 29.5m who are still getting them, are in both cases just a subset of a much larger number of jobless. There are millions more unemployed who never got on the unemployment benefits rolls since March and still not able to get benefits. There’s at least 10-15 million more jobless but without benefits. That means an unemployment rate, at minimum, of 25%–not the 8.4% peddled by the media apologists for Wall St. and the politicians of the Corporate Party of America (aka Trumpublicans and Democrat wings of that party).

Last April 2020 perhaps as much as 50% of the total US labor force of 160 million workers was jobless for approximately two months. As of today, Labor Day 2020, at minimum a fourth, or 25%, still remains so.

That 25% is about the same jobless rate as occurred during the worst years of the 1930s Great Depression, 1932-33!

Here’s why it’s 25% at minimum today, Labor Day, and quite possibly even more:

(Dissecting the Government’s Low-Ball U-3/8.4% Unemployment Rate)

Despite an actual 25% unemployment rate (i.e. 40 million still jobless) what we hear from the media and politicians is that the unemployment rate is only 8.4%. And thus the total unemployed is only 13.4 million. (When 8.4% is calculated on the 160 million total US labor force, the number unemployed comes to 13.4 million).

The official government statistic of 8.4% jobless is repeated ad nauseam in the media. It’s then picked up by politicians, commentators, and even progressives who should know better and parroted back to the public. But 8.4% is nonsense. A purposely low-balled, cherry-picked number for public consumption. Here’s why:
To begin with, the 8.4% is the government’s official U-3 unemployment rate. The problem with U-3, however, is that it represents only full time workers who became unemployed. But there are at least 50 million workers in the US economy who are not ‘full time’, but part time, discouraged and what the government calls the ‘missing labor force’. The government adds these groups to its U-3 and 8.4%. That raises the unemployment rate in August to 14.2%–not 8.4%. And that translates to a total unemployed of 22.7 million—not 13.4 million.

The 14.2%/22.7 million numbers are carefully avoided in media reporting. One almost never hears the 14.2% and virtually always only the 8.4%, regardless that both are official government statistics.

But even that 14.2%/22.7m is grossly under-estimating the total unemployed. Remember that other government statistic, i.e. those receiving unemployment benefits? Workers receiving benefits as of late August was 29.5 million. And that represents a 18.4% jobless rate. Obviously, if a worker is getting benefits, he/she must be unemployed, right? But you’ll hear 29.5 million and 18.4% in the media even less than the 14.2% and 22.7 million.

In the case of the 29.5 million, moreover, we have another example of ‘low-balling’ and cherry-picking a statistic –not unlike cherry-picking the U-3 stat instead of the U-6. The media reports the number of workers getting benefits at only 16 or 17 million, not 29.5 million!

But here’s what they don’t explain when citing only 16-17 million getting benefits: That number accounts only for workers receiving unemployment benefits under the traditional State Unemployment Benefits system. The 16-17 million excludes independent contract workers, gig, freelance, and others getting benefits under the supplemental Pandemic Unemployment Insurance (PUC) program created last March as part of the Cares Act. In other words, there’s two unemployment benefits systems and the media typically chooses to report only the one when indicating workers getting benefits. There’s the traditional State Unemployment Benefits system and the new Supplemental PUC system that for the first time ever has provided benefits for the 50m non-traditional workers who were before March never eligible for benefits but are now and will continue to be eligible at least through December 2020 when that PUC system expires. Once again, it’s media cherry-picking and number low-balling time.

The State system and the PUC system together comprise the 29.5 million workers still getting unemployment benefits. 29.5m receiving benefits is certainly more than 22.7m (U-6) and even more so than 13.4m. It’s not that the government job statistics consciously lie (although in some cases they come quite close). It’s just that the government produces low ball numbers for the media to pick up, which they do and pound away at. And then commentators, politicians, business sources play their role of spreading the low ball numbers and conveniently ignoring other data.

How then did the US economy get to 29.5 million and 18.4%? Here’s the trajectory: In April more than 6 million workers filed for benefits every week for two weeks, followed by 3-5 million more for several more weeks thereafter! The weekly new benefits filing rate declined as the economy began to reopen in May. However, after May new State unemployment benefit claims still averaged 1 to 2 million every week through July; In addition, the number of PUC initial benefit claims per week also exceeded 1 million a week, every week, through July as well.

The combined totals of the two programs—State and PUC— thus never fell below 2 million initial filings a week throughout the period of the reopening of the economy, from May through July. It has also remained a combined more than 1.5m/week throughout August. That’s 6 million new unemployment filing claims—i.e. 6 million newly unemployed—in just the last month of August. Bringing the total on unemployment benefits to the 29.5 million.

But wait! The 29.5m represents only unemployed workers who were able to get benefits. There’s many more workers who became jobless but were unable to successfully get benefits; or who gave up even trying in the first place and simply dropped out of the labor force altogether. Who are they? And how great are their numbers?

Their numbers are well north of even the 29.5 million and 18.4% unemployment rate. The true total jobless includes their numbers plus the 29.5 million.

For the 29.5m receiving benefits as of Labor Day 2020 excludes those jobless who were unable to get benefits in the first place, who filed unsuccessfully for benefits, who got lost in the bureaucratic process of filing and never got benefits, or who just couldn’t figure out how to file and were not helped and gave up. The 29.5m also represents those having exhausted benefits during the last six months. And those who chose not to file even though unemployed. Finally, the 29.5m excludes new entrants to the labor force over the past six months who weren’t eligible for benefits but haven’t been able nonetheless to find work given the collapse of the economy! All these categories of jobless workers represent the unemployed as much as those receiving benefits include the obviously unemployed. So the number of jobless is actually much higher than even 29.5 million. The 29.5m is therefore just a subset of the true total unemployed.
So how many more are jobless but not getting benefits as of Labor Day 2020?

(Estimating the Actual Jobless—With & Without Benefits)

You won’t get an accurate number from the government of the total unemployed who didn’t get benefits but have been, and remain, nonetheless jobless since February 2020.

However, private research surveys do give us an idea. MarketWatch, a business research and media company, published an interesting feature story in Fidelity.com this past week, based on its survey of the Philadephia/Mid-Atlantic region of the economy. That case example survey provides a reasonable estimate of the magnitude of those jobless since March 2020 but not among the 29.5m that succeeded in obtaining unemployment benefits.

Of the total number of workers in the Philadelphia, Mid-Atlantic US region who lost their jobs since February, MarketWatch reports that only 87% actually filed successfully for benefits. And of that 87%, only 65% who bothered to file actually ended up getting benefits. That means only 52%, or roughly half of the unemployed in the Philadelphia area, actually got unemployment benefits. The other 48% were just as much out of work, but without benefits.

If Philadelphia represents a microcosm and relatively accurate sample of the entire US economy labor market, simple extrapolation means that the 55 million who successfully got benefits since March 2020 may represent barely half of the total of those who have been unemployed since March!

That means the 29.5 million still getting benefits may represent barely half of all those still unemployed. There may therefore be between 40 and 50 million workers in America still jobless—those still getting benefits (the 29.5m) and those without benefits (10m to 20m).

Thus, the oft-reported official US numbers of 8.4% unemployment rate and 13.4 million total out of work is dwarfed not only by the government’s own alternative U-6 data, as well as by its own data showing 29.5 million jobless getting benefits, but also by the fact the total jobless without benefits may be nearly as large as those with benefits.

Assuming the low-end estimate of 10 million still jobless but without benefits, and adding that to the government data that shows 29.5 million still on benefits, a total jobless of at least 40 million is the result. And that’s the low end assumption. It may be well over 40 million as of end of August 2020.

40 million is 25% of the labor force. And it’s far greater than the 8.4% and 13.4 million that the media and politicians keep drumming into our ears. What the media and politicians are telling us is only one-third of the total unemployed!
Corroborating this estimate of at least 25% unemployed today is yet another government statistic called the labor force participation rate, or LFPR. It represents workers who have dropped out of the labor force altogether. It’s in addition to the 29.5m and 18.4% rate since, by government guidelines and definitions, those who drop out of the labor force cannot receive benefits.

(Labor Force Participation Rate Suggests 5.5 Million Dropped Out)

The Labor Force Participation Rate (LFPR) is the percent of working age Americans who have left the Labor Force. They are neither working nor actively looking for work. But they are jobless nonetheless and should be considered among the unemployed. The LFPR was 63.4% of the 164.5 million civilian labor force in February 2020. By August the LFPR dropped to 61.7% out of a 160 million labor force. The difference translates into approximately 5.5 million workers who dropped out of the labor force since February 2020. Having dropped out they are not actively looking for work and therefore not considered unemployed by the government for purposes of calculating unemployment rates. Nor are they eligible to receive benefits since, as drop outs, they are not actively looking for work. However they are nevertheless unemployed and their 5.5 million are additional to the 13.4 million U-3 and 22.7 million U-6 unemployed or the 29.5 million getting benefits. They are among the ‘other’ 10-20 million jobless but not counted by the U-3/U-6 or included in those receiving benefits. Their number strongly corroborates that there are many millions more unemployed—not getting benefits or ignored by the government’s official monthly jobless numbers.

Let’s look at the latest of those government monthly employment numbers. Once again what appears is a fudging and manipulation of the numbers in yet other ways as well.

(August 2020 Government Employment Report)

The first thing to know about the August Employment Report is that it isn’t for the month of August. It is only for the first two weeks of the month (and the last two weeks of July). The data cuts off around the 12th of the month. So what we’re looking at in a ‘August’ report is really July 13 to August 12 jobs data—i.e. before unemployment claims began to rise again in late August.

Second, it’s important to understand that the August jobs numbers are not the actual number of jobs created July 13-August 12. It is not the raw data of actual jobs created or lost that’s reported—for August or for any month in the Labor Dept jobs reports.

The government takes the actual raw data and performs various statistical operations on that raw jobs data and reports that adjusted statistic as the actual number of jobs, even though it isn’t. But that’s what all statistics are—an operation and adjustment on the actual raw data. Moreover, the August raw data itself may be over-stated as well, not just altered by the statistical operation(s).

Raw (actual) jobs data comes from several sources: Large businesses report to the government changes in employment, layoffs, hires, etc. (called the Establishment Survey) The government also surveys a sample of households monthly (called the Population Survey). But there’s a third, more questionable source, based on data from the creation and destruction of small businesses, called the (net) New Business Development survey (NBD). That NBD data, however, represents businesses destroyed or created 6 to 9 months before the month in question—i.e. in this case August. So we get six to nine month old data integrated with current data from the Establishment and Population surveys. Mixing such older data with more recent is a questionable statistical practice. It means adding positive net new business development pre-March and Covid, in January-February, to current jobs data. That has the effect of dampening the actual numbers of August jobs unemployment. That is, it adds to and over-estimates the number of jobs created in August. If net business development for July were used—not January/February—it would mean integrating massive small business destruction that has occurred under Covid since March. That would have the opposite effect: it would dampen job creation numbers in August and increase unemployment numbers.

That’s just one example how ‘statistical operations’ on data can serve to exaggerate job growth and under-estimate unemployment.

Another sometimes questionable statistical operation is called the Seasonality adjustment. The seasonality statistical adjustment in August reduced the number of new filings for unemployment benefits in just the last week of August by 130,000. The government then reported a ‘seasonally adjusted’ 881,000 new unemployment claims for the week ending August 29, when the actual number was 1,011,000.

Similarly, in August there were 9,118,000 reported as unemployed in August when the actual data, not seasonally adjusted, for August showed 9,286,000 actually unemployed—i.e. a difference of 168,000. Put another way, there were 168,000 more jobless in actuality than reported as unemployed. 168,000 were artificially reduced from the unemployed ranks due to statistical operations involving just seasonality alone!

The statistical models assume more return to work at the end of summer than, say for instance, at the end of spring. But the point is these models are based on assumptions developed in normal times under normal conditions. Since Covid neither times or conditions are ‘normal’. Yet the government continues to use the same assumptions, models, and statistical operations to change the actual data, the actual number of employed and unemployed, to the statistical representations of the actual numbers!

The latest August official Labor Dept. job data report says 1.37m new jobs were created. This is the statistic. But the actual data, for above reasons, is far fewer new jobs and far more unemployed.

The August Report is biased in yet another way. It purports to show the condition of the US private sector economy. But 238,000 new US census workers were hired in August who’ll be gone by October. Take away the seasonality adjustment of 168,000 jobs and the 238,000 very temporary government Census workers, and the private sector actual job gain in August was roughly 964,000 not 1.37m. Even without the deduction of seasonality, the private job report company, ADP, often cited as a check on government job reports, reported only 428,000 net jobs growth in August—i.e. less than half of the government’s August jobs report.

1.37m new jobs reported, minus the 168,000 seasonal upward adjustment and minus the 238,000 Census workers, and the difference is 964,000 actual net private sector jobs created in August, or about half a million fewer than in July.

Even accepting the government’s own inflated monthly jobs numbers, the rate of monthly job growth has been slowing rapidly since May 2020: In May 3.4 million new jobs were reported as created. In June, as the economy reopened virtually everywhere, 4.7 million new jobs. But in July, as the economic rebound began to fade, only 1.5 million, and now as of August 12, only 1.37m. In short, even questionable statistical operations cannot total cover up the obvious downward trend.

Perhaps a better indicator of this downward trend post-August 12, is the more than 4 million workers who have newly filed for unemployment benefits the last three weeks, and undoubtedly hundreds of thousands more were also newly jobless but who were not able to get benefits or just dropped out of the labor force giving up searching for a job in today’s deeply depressed labor market.
And yet we read and hear from the media and politicians that the job market is healing rapidly and job recovery is accelerating—even as data show it is in fact deteriorating. We hear unemployment is declining fast when in fact it has begun to rise once again.

(Summing Up Jobs: March Through August 2020)

To sum up the bigger true picture of jobless during the first six months of the Covid era:

• 55 million filed for benefits, state and PUC, since last February, out of 160m labor force
• Tens of millions more failed to file or filed unsuccessfully and didn’t get benefits
• 29+ million are still getting benefits as of September Labor Day 2020
• 10-20 million still unemployed but not getting benefits as of Labor Day 2020
• 1.5 million are continuing to file first time for benefits weekly as of early September
• 8.4%/13.4m official U-3 jobless rate is the preferred ‘cherry picked’ media number
• 14.2%/22.7m is government’s alternative data (U-6) yet ignored by media & politicians
• 13.4 or 22.7m still falls far short of the 29.5m/18.4% actually still getting benefits
• At least 5.5m dropped out of labor force the past 6 mo. but not considered unemployed
• The actual unemployment rate is 25% and 40 million are still jobless, at minimum
• Even government monthly stats show a sharp slowing of new jobs added each month
As bad as the picture looks for Phase 1 (March-to Labor Day 2020) of the current crisis, future prospects for jobs for American workers after Labor Day 2020 appear even bleaker.

(2nd Wave of Restructuring & Permanent Job Loss)

The Covid virus did not cause the current economic crisis—i.e. the 2nd Great Recession. It did precipitate and accelerate and deepen that crisis, however. The US economy was weakening steadily throughout 2019, with the important sectors of business investment and manufacturing actually contracting throughout the year. Should the virus therefore disappear overnight, the deep wounds to the US economy will remain. Many of the 40 million furloughed starting in March and still jobless will not soon be recalled to their prior work—if at all. Entire industries like travel, entertainment, food & lodging, and others will not return to the ‘old normal’ of pre-Covid. A new normal will occur, but it will be one based on a much reduced output in various industries and companies and therefore employment.

Many major corporations have already announced thousands—and in some cases tens of thousands—of permanent layoffs that will take effect in the coming months. These layoffs will be permanent. They represent the leading edge of a coming second wave of job loss.

Industries deepest affected by the growing permanent restructuring and downsizing include Airlines, surface transportation, cruise lines, resorts and hotels, casinos, malls and retail services, education services, local food services, and many sectors of manufacturing that support all these industries with products and maintenance services. This is a large swath of the US economy, in both GDP and employment terms. A clearer picture of which industries, and how deeply impacted, will be clearer after September 30 when the government publishes its quarterly industry-specific statistics for the second quarter 2020.

In the meantime, announcements of thousands of planned layoffs are being announced weekly by United, American, and other airlines; by Boeing and other aerospace suppliers; by big box mall-based retail companies like JC Penneys, Kohls, Nieman Marcus and others; Movie Theater chains AMC and Cinemark; oil drilling and fracking companies; hospitals’ non-Covid related services health workers; beverage suppliers to hotels and restaurants like Coca Cola—to mention just those making front business page news in recent weeks. Tech companies are all restructuring despite healthy profits performance, shifting to remote employment on a major scale that reduces employment costs via layoffs. They will require therefore fewer building support and operations employees. Many other businesses may also shift to remote activity, with the result that urban office buildings will become less employment populated and much of the local city support services for the office building sector will dramatically downsize in employment as well.

The Federal Reserve Bank’s latest ‘Beige Book’ summary of the US economy warned that millions of workers temporarily furloughed since March may have been permanently laid off by August and more may become so. This shift of temporary laid off to permanent layoff status is corroborated by a survey that showed 3.4 million workers believe they won’t be recalled because their companies have either permanently closed or said they planned to close.

Added to this leading edge of the next wave of layoffs due to business restructuring and downsizing is the likelihood of millions more public sector state and local government layoffs. More than a million government workers have been already laid off since March. Budget and deficit problems accelerating rapidly for state and local governments due to the Covid pandemic (i.e. more expenses amidst collapsing tax revenues) will result in still more public employee layoffs. It’s been estimated these governments will need between $500 billion and $940 billion in bailout rescue in a new stimulus bill from Congress to avoid the mass layoffs. However, it appears extremely unlikely they’ll get much, if anything, in a next Congressional stimulus bill in 2020. Layoffs are therefore inevitable and in some of the larger states and cities they will be significant and forthcoming before 2020 year end.

Small business failures and permanent closures are already rising significantly. As small businesses close, jobs associated with them will disappear. And the numbers could easily amount in the millions by the end of 2021.

There are roughly 30 million small businesses in the US economy. Millions of those temporarily closed since March will fail to reopen. And the worse may be yet to come. The National Federation of Independent Businesses, an industry trade group for small business, forecasts 21% will likely fail within another six months. That’s one-fifth of the 30 million or about 6 million. Even if a high end estimate, the number is still unprecedented. At the low end is the US Census ‘Business Pulse’ survey that predicts a 5% small business job loss. That’s 1.5 million closures. Whether 6 or 1.5 million, it’s a large number with an even larger number of employees thrown out of work as the businesses close in coming months.

Other forces driving a second wave of layoffs are more difficult to estimate but no less likely. Among them include the Covid related requirement that K-12 schools implement home remote school education services. Many working class households are two-parent wage earners. They lack resources to pay for babysitters or nannies. Those with K-6 year old children in particular will be forced to have one parent quit and stay at home to ensure home schooling. These ‘quits’ will not show up as unemployed, since the parent is ‘out of work’ but not actively ‘looking for work’. They will show up as labor force drop outs. But they will be unemployed nonetheless! It’s uncertain how wide spread the remote K-8 education services will be this fall, or how long it will last. One recent estimate, however, by Brevan Howard Asset Management to its investors, concluded no fewer than 4.3 million US workers could stay home given lack of child care arrangements. A resurgence of Covid may mean millions more may have to quit their jobs and choose unemployment in order to provide their young children education via remote learning.

Another development that for now is difficult to estimate as well is the impact on employment of the lack of a necessary fiscal stimulus for households. The elimination of the $600 supplement pandemic unemployment benefit at the end of July has resulted in a reduction of no less than $65 billion in consumption spending per month starting this past August. Evictions and mortgage foreclosures will also have a negative impact on consumer household spending, which is nearly 70% of the economy and US GDP. Already the loss of the $600 benefit, combined with rising evictions, is having a major effect on consumer confidence which in August began falling again sharply. This could be exacerbated by an inadequate stimulus bill in September. Reduced working class benefits and household incomes will have an impact on consumer demand for products and services in the economy across the board, affecting nearly all sectors of businesses. And as that demand drops, it will almost certainly lead in turn to less consumer spending and in turn to more layoffs.

The preceding five forces—i.e. large corporate restructurings and permanent downsizing, a sharp rise in public sector layoffs, unprecedented business closures, remote schooling requirements of two working parent families, and general demand reduction due to inadequate next stimulus—all translate into a second wave of layoffs now emerging.

These longer term job reduction forces mean the recent tepid rebound in jobs during May-July will likely give way to a relapse in the US labor markets in coming months and a rise in unemployment. The trend may already be appearing as of late August as first time claims for unemployment benefits have begun to rise once again.

And then there are still the ‘known unknowns’ that could exacerbate conditions further: the increasingly likelihood of a historic political crisis surrounding the November 3 elections. That will breed massive uncertainty and potentially an even worse economic crisis and associated layoffs. Or the Covid virus could resurge significantly once again as winter sets in, as many fear will happen. That too will lead to more shutdowns and furloughing of jobs once again. Even further down the road is the 2021 ‘black swan’ event of another financial crisis, as businesses, households, and local governments begin to default on their debts and precipitate another financial crisis similar to 2008-09.

Jack Rasmus
September 8, 2020

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For my analysis of today’s August 2020 job numbers, plus Jobs since March and forecast of second wave of unemployment coming–as well as the condition of American Labor this Labor Day 2020–listen to my Alternative Visions radio show podcast today, 9-4-20

    TO LISTEN GO TO
:

https://alternativevisions.podbean.com/e/alternative-visions-labor-day-in-the-era-of-covid/

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In mid-August 2020 I was interviewed in depth with host, James Kunstler, on various topics related to the current Great Recession–i.e. what constitutes a bona fide fiscal stimulus, how the current contraction compares to 2008-09, 1929-30, and 1907-13 similar great recessions, how the March Cares Act hasn’t been spent by big business, nor has any real fiscal stimulus passed as yet. The three ‘tail risks’ of inadequate fiscal stimulus, political instability in the US around a contested election, and forces developing toward a potential major financial instability in 2021 as defaults and bankruptcies rise is discussed. Why delinquency rates in housing are rising as evictions also escalate.

To Listen to the hour long interview GO TO:

https://kunstler.com/podcast/kunstlercast-333-confab-with-political-economist-dr-jack-rasmus/

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Listen to my August 21 Alternative Visions radio show dedicated to reviewing recent articles by mainstream economists who are now increasingly predicting a great depression–including World Bank and Mellon Bank chief economists, Carmen and Vincent Reinhart, who argue we’re in it already.

    TO LISTEN GO TO
:

https://alternativevisions.podbean.com/e/alternative-visions-more-economists-predicting-great-depression/

    Show Announcement
:

Dr. Rasmus reviews the growing number of mainstream economists now beginning to predict the current economic crisis, either is now or soon may become, another Great Depression. World Bank and Mellon Bank chief economists, Carmen and Vincent Reinhart’s forthcoming essay in the prestigious Foreign Affairs Journal is reviewed. Rasmus notes how their analysis is similar to points he’s been making since March 2020. Other views similar by liberal dean of economics, Paul Krugman, who calls today’s crisis ‘The Greater Recession’ and others are noted. Few mainstream economists now call it a V-shape recovery, unlike this past spring. Rasmus then reviews actual GDP contractions world wide in 2020 and why they suggest a ‘great recession’ that is weakening at best in the 3rd quarter. Why the current economy will weaken: more Covid 19 problems, basic restructuring of the economy, coming political instability, and financial crisis potentially in 2021. (check out my articles at jackrasmus.com blog for updates).

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Listen to my hour interview today, August 21, with J. Michaels on Parallax Views podcast on the current state of America’s Triple Crisis. How Covid 19, the recession, and coming US Constitutional crisis and conflict are inter-related and mutually exacerbating. Why all 3 are about to get worse. Why together they may precipitate a financial crisis in 2021.

    To Listen GO TO
:

https://parallaxviews.podbean.com/e/jrasmus/

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Today’s show addresses the permanent collapse and breakdown of negotiations on an economic stimulus and a discussion of the elements of Trump’s Plan B for the November elections–the outline of which is becoming clearer by the day. Plan B: how Trump, should he lose the November election, may be planning to exploit growing political, economic and health chaos to remain in office in 2021.

To Listen to my hour long presentation

GO TO:

https://alternativevisions.podbean.com/e/alternative-visions-trump-s-election-plan-b/

    SHOW ANNOUNCEMENT
:

As Congress goes home it now appears negotiations on a stimulus plan have collapsed, not just broken off. There may be no stimulus package before the November 3 elections. Severing negotiations means Trump’s plan not to negotiate with Democrats and Congress is no longer tactical but strategic. What’s the bigger strategy behind the growing triple crisis in America: Health, Economic and Political? Dr. Rasmus speculates on the elements of Trump’s strategy for November now taking form. How it assumes a continuation of the Covid, Economic, and Constitutional confrontation with Congress. What’s the possible role of a foreign policy crisis in October in a ‘Plan B’? With a deepening Constitutional challenge with the US House of Representatives. What are some scenarios possible after November 3? (Check out Dr. Rasmus’s blog, jackrasmus.com, and his twitter posts for day to day developments, at @drjackrasmus

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By Dr, Jack Rasmus
Copyright 2020

(Author’s Note: the following is an addendum to this writer’s recently published article, “Trumps Scuttles Stimulus Negotiations-What Next?”)

Less than 24 hours after Trump broke off negotiations on the economic stimulus package with Congressional Democrat leaders, Pelosi and Shumer, last Friday August 7, Trump issued a series of Executive Orders (EOs) that he had been signaling and threatening all last week well before the break up.

Almost certainly the legal crafting of the EOs were written long before negotiations were dramatically ended by Trump’s hatchet man leading his negotiating team, staffer Mark Meadows. Trump clearly planned the break up and his EOs some time ago.

Trump, Meadows, Mnuchin and McConnell cleverly set up and sucked in Pelosi and Shumer into negotiations last week, never planning to conclude a deal by Friday, in the process getting them to reveal their priority demands and securing from them major concessions worth $1 trillion—for which the Democrat leaders apparently got nothing in return.

A day later, Trump dropped the hammer and issued his EOs, which are designed more as PR for his election campaign. They certainly won’t provide anything remotely necessary as fiscal stimulus to confront the US economy’s emerging fading rebound in recent weeks.

Upon close inspection the EOs are therefore mostly smoke and mirrors, designed to produce useful electoral soundbites for his campaign between now and November. The EOs are more PR for public relations purposes, while also serving as FUs (F*** You) to the Democrats.

EO #1: Payroll Tax Cut

The EO that has gotten the most media attention thus far is his proposal to introduce a payroll tax cut, which neither the Republicans or Democrats in Congress were calling for. Why were they not? Because they had both already agreed to an alternative measure far more lucrative for business: an expansion and extension of the ‘Retention Tax Credit’ passed in March as part of the CARES ACT stimulus. The retention tax credit has provided a direct tax cut to business worth $55 billion since March. Businesses get the tax credit by simply saying they didn’t lay off workers they might have. But any business can make that claim, even if they had no plans to lay off, and thus get the credit. In the current negotiations that were in progress until last Friday, both sides—Republicans and Democrats—had agreed to expand and extend the ‘Retention Tax Credit’ costing another $194 billion in addition to the $55 billion to date.

Another reason why even the Republicans in Congress weren’t all that interested in Trump’s Payroll Tax Cut was that Business had already been given a payroll tax cut in the CARES ACT. Payroll taxes are paid for by both employers and workers, each contributing half the total 15.3% to Social Security and Medicare. (6.2% of the payroll tax goes to social security plus another 1.45% for Medicare). Employers have already therefore had their share of the payroll tax deferred (but not yet permanently cut). Deferral means employers have to start paying it back by the end of 2021. The media hasn’t provided much attention to that. But the employer tax ‘cut’ is really a tax ‘deferral’ that has to be restored at a later date to the social security and Medicare trust funds.

Trump wants not only a deferral of the 7.65% workers’ share immediately, but also to make it permanent later. That means the trust funds will never see the money restored. And if that’s his plan for the workers’ 7.65% share, it will presumably mean the same for the employers’ 7.65% as well. That translates into an end of the social security and Medicare programs! Ending the programs means, in turn that 50 million American households would be immediately thrust into poverty. Consumption would collapse. And economic depression would almost immediately result. But no matter to Trump, so long as he can spin it for re-election purposes in the interim.

Trump administration mouthpieces have been trying desperately to ‘walk back’, as they say, Trump’s disastrous declaration to make the payroll tax cuts permanent and thus destroy social security and Medicare. Mouthpiece #1, Larry Kudlow, says he didn’t mean permanent in fact.

Trump is caught between a rock and a hard place, as they say. By deferring the payroll tax the likely response by employers, as others have pointed out, is that the employers, who are responsible for collecting the payroll tax from workers, may do so and just sit on the collected payroll taxes from their employees.

Employers by law are responsible to collect and send the taxes to the government. If they don’t collect from their workers, thus allowing them to realize a real wage increase in their paychecks equal to 7.65%, then the same employers will be liable to pay out of their own profits what they didn’t collect once the deferral period ends. Employers will have to make up the payroll tax loss in 2021—at the same time they have to pay back the deferral on their own 7.65% share by the end of 2021!

Another related problem is that should workers have their 7.65% deferred and realize a wage increase in 2020 from it, they’ll have to declare that as income and pay taxes on it come April 2021. So it won’t be a 7.65% net income gain for them either.

Apparently Trump’s gambit on the payroll tax has had even some Republican Senators choking on the stupidity of the measure. Republican Senator from Nebraska, Ben Sasse, quickly called it “unconstitutional slop”!

EO #2: $400 Supplemental Unemployment Benefits

The supplement Pandemic Unemployment Compensation program, PUC, introduced last March in the CARES ACT provided for an extra federal $600/week benefit in addition to the States’ Unemployment Benefit programs. Those state programs provide up to $450 a week (California) to as little as $235 a week (Mississippi). The $600 was designed to help unemployed stay in their rental apartments and homes. $235 a week, or about $10,000 or so a year, is grossly inadequate to keep people in their homes during the pandemic. So the $600 was added, and not just to cover household living costs but also to stimulate consumption and the economic recovery. Studies show households earning less than $25,000 who received the $600 spent it all. Other university studies show the $600 has not discouraged workers from returning to their jobs.

Trump’s EO proposes to cut the $600 to $400 a week. But not even $400. The federal government will pay $300 and the states will have to kick in the other $100. If they do not, the government $300 may not even be available, according to some sources. The $600 since March has benefited between 14m and 28m unemployed. It generated $85 billion/month in consumer spending and thus GDP to the US economy. Reducing it to $300 a week—as Trump’s EO proposes—cuts that in half, which means at least $40 billion a month will be taken out of the economy and US GDP. Some stimulus that!

And where will the finances to provide the $300/week benefit come from? It is unclear, although Trump administration mouthpieces have raised the possibility the money will be diverted from the Disaster Relief Fund’s $44 billion—i.e. just as the hurricane season arrives! But $44B will only fund the $300/week for about five weeks at most. Not to mention that transferring funds from a program authorized by Congress is also another unconstitutional action—just as is Trump’s payroll tax cut proposal. It too is just another indication of Trump’s intention to run roughshod over any constitutional requirement that gives authority to Congress, and especially the US House of Representatives.

EO#3: Moratorium on Evictions

There are 108 million Americans living in approximately 48 million rental units in the US. The CARES ACT of last March provided for evictions moratorium in only about one third that total, specifically in apartments subject to federal housing finance programs. So evictions have been continuing ever since the pandemic and great recession began. But they have begun accelerating in July as even the limited moratorium expired on July 25. Estimates are that 12.5 million are potential evictions in the federal covered programs–11 million of which in 2020. Other estimates of potential evictions rise to as much as 30 million plus.

Trump’s eviction moratorium Executive Order does not prohibit evictions at all. It just says states should “consider” suspending or limiting evictions. This particular EO is just typical Trump smoke and mirrors, allowing him to say something in his tweets and public appearances that he’s stopped the evictions. In this case, the EO is just normal Trump BS.

EO#4: Student Loan Deferral

Whereas the March CARES ACT provided for the suspension of student loan payments and zero interest accrual through September 30, 2020. Trump’s EO merely extends it up to the end of December 2020. Or possibly earlier, since the EO states: “It is therefore appropriate to extend this policy until such time that the economy has stabilized, schools have re-opened, and the crisis brought on by the COVID-19 pandemic has subsided.” What’s ‘stabilized’? How many schools must ‘reopen’ and what constitutes ‘pandemic has subsided’? In other words, there’s no guarantee even the suspension is extended through 2020.

The current crisis provides no better opportunity for the US government to simply expunge federal student loan balances and obligations. The program is a travesty. It charges students, now in debt to the tune of $1.6 trillion, interest rates as high as 6.7%. That compares to the ability of businesses to obtain 10 year equivalent loans at interest rates as low as 2% today. Why is the federal government charging millions of students such usurious interest rates? Because it wants to push them off the Dept. of Education loan system into the arms of the private banks to re-consolidate their government education loans. Banks charge now about 4% to consolidate, less than the government’s 6.7% but far more than the 2% they charge their business customers for equivalent loans. Abolishing the $1.6 trillion debt load on students will have no effect whatsoever on US government finances and US economic output. In fact, it would likely result in a major stimulus to consumption and therefore economic growth. But Trump’s EO does nothing except allow him to say he improved relief on student debt by a few weeks before the November elections.

Executive Orders & Deepening US Constitutional Crisis

While running for president before 2016 Trump continually attacked Obama for trying to legislate immigration reform by Executive Order. Now he is doing the same, expanded by magnitudes. Trump has revealed time and again plans to govern by bypassing Congress. He has cornered the Federal Judiciary. Not just the Supreme Court majority but hundreds of his ideological appointees to the Federal Judiciary at all levels are now in his pocket. He clearly believes he can abrogate Congressional legislative authority and govern by decree: executive orders as well as national emergency declarations and similar legal maneuvers no doubt already being planned by Bill Barr and Steven Miller. The current flurry of EOs should be viewed as just the latest tactics in his broader strategy. They are largely public relations measures introduced primarily with his eye on the November elections.

They are also ‘FUs’ directed at the Democrats, declaring his intent to step on them at every opportunity in the run up to the November elections. It’s as if he’s saying and taunting them: “See, I outmaneuvered you guys again. I set you up allowing my hatchet men, Meadows and McConnell, to extract concessions from you in negotiations. I let you think you could get a deal. Now I’ll announce those measures and you can agree to them or not. I’ll spin it and take the political credit. Now you can come back to the bargaining table and give me some more concessions that I’ll take credit for as well. I’m going to string you along like this until November. I’ll look like I’m doing something and you’ll look like you can’t get anything done”.

A Trump De Facto Coup Scenario

Trump will never accede to the results of the upcoming November elections, should he lose. His strategy becomes increasingly evident with every passing week and action. The EOs are just the latest event in that strategy.

The mostly likely scenario for November is his plan to declare on November 4 that the voting has been tampered with as a result of mail ballots and the US post office refusing to process and mail millions of ballots. He’ll declare the November results null and void, and declare the US Supreme Court should decide in his favor for a second term—just as it did (unconstitutionally) in 2000 when the Court stopped the voting count in Florida. This time he’ll challenge the voting count in every state he’ll lose, but not in those he’ll win.That’s why he’s recently said mail in ballots are OK in Florida but a problem elsewhere.

It is not beyond the possible he’ll also call for his radical right, gun-toting friends to come to Washington to surround and protect the White House while the crisis intensifies in December-January. His DHS troops and ICE cops are also available to provide physical protection. Democrats in Congress will rant and rail about it all, but have no executive force to stop him or drag him out of the White House in January when he refuses to leave. Nor will the Washington DC police, or FBI, or US military units want to confront a White House surrounded by his armed supporters. As time drags on, his position will become stronger.

Make no mistake. This is not an impossible scenario. Democrats and moderates think he cannot thus flout the US Constitution and law. Yes he can. And he likely will.

Dr. Jack Rasmus August 9, 2020

Dr. Rasmus is author of the recently published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, January 2020. He blogs at jackrasmus.com. His twitter handle is @drjackrasmus.

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By Dr. Jack Rasmus
August 7, 2020

Today, August 7, 2020 negotiations on an economic stimulus package between US House Democrats and the White House broke down and broke off. What’s behind it?

In recent days the Democrats’ leaders, Nancy Pelosi and Chuck Shumer, reportedly reduced the cost of their original ‘Heroes Act’ proposals by $1 trillion. Instead of the original cost of $3T in the Heroes Act passed last June, they were willing to agree to a reduced package of $2 trillion. Never mind the attempt to reach a compromise on some middle ground. The White House, Thru his assigned negotiator, staffer Mark Meadows, Trump rejected the Dems offer.

Meadows reportedly slammed the table (a two-bit amateur negotiating tactic) and walked out of negotiations with Pelosi-Shumer in a huff. Meadows’ walkout appears a well planned set up in the works for some time.

What does this mean? Politically and for the economy, now showing clear signs of the mild rebound of May-June dissipating in recent weeks?

On one level it’s clearly a typical Trump negotiating tactic: Bring a deal to a near close, then make a big show and angrily walk away. Trump’s done that before on numerous occasions. We saw it in the trade negotiations with China in 2018 and again 2019. It didn’t work then with the Chinese trade negotiators, and will likely not work here again—assuming the Dems don’t lose their backbone and fall for the set up, which has been known to happen in the past.

Trump coyly stayed on the sidelines in the early phase of the negotiations between the Dems and McConnell in the Senate and Mnuchin at Treasury.

He let McConnell in the Senate carry the early bargaining water. But McConnell’s extreme ideologue wing, led by Rand Paul and others, revolted. They said they couldn’t support any kind of new stimulus because of its impact on the government’s deficit and debt. However, this same Rand Paul-led crew in just one day last week quickly approved a record $760B Pentagon spending bill. Nor did these same folks have any problem approving tax cuts worth $5 trillion in the past two years under Trump. Nothing said about that impact on the budget and national debt.

And its these same hypocrites in the Senate who have been arguing the $600/wk. unemployment benefits for workers under the March 2020 Cares Act were ‘too generous’. The benefit was keeping workers from returning to work, although at least a half dozen university studies—from Harvard, Yale and Princeton—concluded it’s not so.

McConnell’s withdrawal to the sidelines in negotiations in early July—allowing Trump, Meadows and Mnuchin to take the lead in negotiations on the stimulus—may be part of the Republican strategy as well. UP until recent weeks, McConnell and Mnuchin were respectively playing ‘hard cop’ and ‘soft cop’ with Pelosi-Shumer. McConnell wouldn’t budge, which let the Dems pursue compromise with Mnuchin as lead for the Trump negotiations. Mnuchin and the Dems actually made some headway and some compromises. Mnuchin sucked them in, getting them to reduce their original Heroes Act $3T proposals to $2T. They were being set up.

Then Mark Meadows, Trump’s hatched man, joined in taking over the negotiations and played hard cop to Mnuchin’s soft cop. Now Meadows broke off discussions and stomped out today, August 7. The tactic is transparently designed to get the Dems to reduce their position even further. Propose more than the $1 trillion concessions already made this past week as the cost of getting Meadows to return to the bargaining table. If they do, it makes Trump look tough and in control of the negotiations agenda. And if they don’t, then Trump moves on to legislative by executive action—which also puts him in the appearance of control and the sole person producing the stimulus package.

Trump also wants to put his ‘mark’ on the negotiations, as is always the case. He wants it to look like the parties couldn’t come together, but he was able to hammer out a deal. ‘The Art of the Deal’, right?

And there’s another more insidious objective here. Trump’s been signaling for weeks he’d like to inject his own pet demands and is ready to do so by executive order once again if necessary. He wants to legislate by executive order. He pulled it off before, setting a precedent. That was when he spent money for his wall by shifting it from the Defense Dept., prepared to restore the diverted funds back to the Defense Dept. at a later date. Republican proposals on the table, by the way, provide another $29 billion for the Pentagon—over and above the just awarded Pentagon spending of $760 billion. Now he’ll make a similar move: he’ll divert funds by executive action to pay for his new tax cuts and other measures taking money from some other pot, present or future, to pay for it. Dems in Congress will be left standing saying ‘hey, you can’t do that’, but it’ll already be done.

Breaking off negotiations now gives Trump the opportunity to introduce his proposals by executive order. To do so is clearly unconstitutional but that means nothing to Trump. He’ll soon announce his own stimulus proposals and start executive orders implementation . He’ll use that fait accompli to force the Dems to agree to them if they want to be part of any final stimulus deal. And if they don’t,” so what” he’ll say. “They couldn’t get it passed. I did.”

But as the failure to pass a new fiscal stimulus drags on, 14 million workers will lose their supplemental $600/wk. unemployment benefits. That’s roughly $85 billion a month taken out of US GDP, in reduced household consumption. Failure to pass a stimulus also means that 12.3 million renters will be evicted before November, according to the most conservative survey. Some surveys estimate as many as 28 million will be evicted. And no more money for state and local governments facing a growing fiscal crisis that will soon require them to start mass layoffs in September.

The McConnell-Trump strategy is not to bail out state and local governments. It’s about making the high urban population centers—located largely in ‘blue’ states—to bear the brunt of the continuing economic crisis. If they need more money, let them go to the municipal bond market and borrow more. It’s a blue state problem, they argue. Let them sink with it is the Republican view. Or else cut their too generous public employee benefits and pensions.

To sum up, the strategic objectives behind Trump’s ordering his man, Meadows, to break off negotiations are several: inject Trump to the center of the negotiations in the last phase of bargaining so he can take credit for any subsequent deal. Second, allow Trump to raise his pet proposals—like making the payroll tax cut permanent—to the top of the bargaining agenda with the Dems. Third, let McConnell off the hook and avoid creating a split within his Republican ranks over deficits in order to forge a deal. Fourth, expand Trump’s attack on the legislative and purse strings authority of the US House of Representatives, and thereby push the presidency toward usurping legislative authority still further than it already has.

Trump is not only a tyrant—i.e. someone who sees himself above the law—as witnessed by his recent pardons and his own numerous public statements about himself as president; he is also a classic usurper, attempting to shift legislative authority via executive action from Congress to himself; and he is also moving toward rule by decree—aka a dictator—which is a hallmark of all authoritarian and would-be fascist rulers.

And we should watch out for more ‘rule by decree’ attempts in coming months as he invokes one or more ‘national emergency declarations’ to deal with America’s current triple crises—political as well as economic and health.
With Trump forcing a break-up of the recent fiscal stimulus negotiations, and his to be announced executive orders, the political-constitutional and economic crises in America are becoming increasingly entangled. It almost seems as if Trump’s grand strategy may be to exacerbate the deepening crises as much as possible before November 3, in order to create a pretext for him to declare the election void and challenge the results.

Dr. Jack Rasmus
August 7, 2020

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