Jack Rasmus

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.

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

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/

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

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

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

The new areas are:

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

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

An Empire Built on Fiscal Sand

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

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

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

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

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

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

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

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

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

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

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

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

US Costs of Empire Are Rising

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

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

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

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

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

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

Is US Empire in Rapid Decline?

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

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

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

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

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

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

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

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

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

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

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

Dr. Jack Rasmus
August 17, 2021

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Dr. Jack Rasmus
copyright 2021

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

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

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

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

The just issued today Congressional Budget Office Report on income inequality for 129m households in USA in 2018–first year of Trump’s $4T 10 yr. tax cuts–were as follows:

*The richest 0.01% households’ (13k of 129m total US households) average income in 2018 was $44.5m. The richest 0.1% was $5.8m. The remaining richest 0.89% of the richest 1% households was $1.1m.

* Average after tax income for richest 1% households rose 268% since 1979 (almost 7%/yr.). In contrast, for middle classes income rose 53% (just over 1%/yr.) And that’s 1% for the middle income groups on a much smaller total income base than 7% for the richest 1% households on much higher total income base

Listen to my latest 2 radio interviews of this past week on the interim deal reached in the Senate on Infrastructure bill negotiations; and the recent Supreme Court ordered rent evictions moratorium suspension and Biden’s temporary reinstatement.

https://drive.google.com/file/d/1KjCe_MnWoILqvqA8_3jzW0fD2DpHP9Gr/view

https://www.spreaker.com/user/radiosputnik/us-eviction-ban-expires

I was recently asked my view on the expiration of rent moratorium on July 31 and, specifically, the role of the US Supreme Court in the matter. The inquirer wanted to know if the expiration, ordered by the Supreme Court, will precipitate a constitutional crisis, as the Biden administration has extended the moratorium another two months until October 3 nonetheless, despite the Court’s declaration the Executive Order establishing the initial moratorium until July 31 had to be ended on that date. What follows is my initial viewpoint on the evictions scandal set forth in my reply to the inquirer. A further, more comprehensive analysis in a written article, to be posted on this blog, will follow.

INQUIRY:

We’re discussing the announcement by the US Centers for Disease Control and Prevention that it was renewing the ban on evictions that expired on July 31, setting the stage for a constitutional showdown after the US Supreme Court ruled earlier this year that the public health agency didn’t have the authority to issue such a ban. After days of protests outside the US Capitol and appeals by federal lawmakers, US President Joe Biden has bowed to popular pressure and directed the CDC to extend the federal eviction moratorium until October 3. The move will protect perhaps 90% of American renters as more than 11 million people remain behind on their rent payments, according to CNBC. To what extent does the CDC have the right to bypass the Supreme Court decisions, and what’s next for the people who are on the eviction list, after the moratorium expires or is deemed unconstitutional and annulled?

MY REPLY:

I doubt very much this will get to the Supreme Court again by October 3. That’s why, I believe, Biden only extended it a couple months—not until the end of the year. Were it the latter, then SCOTUS might have reviewed it again. In short, I don’t see a constitutional crisis occurring as a result. Of course, there will be numerous lower court actions pushed by Republicans. But no action by the Court for the token two month extension. It won’t want to provide fodder to the commission now authorized to review the Court itself; and growing calls for reducing their terms from life to 14 years, or expanding its numbers. The Court won’t want a direct conflict with Congress or the Executive.

As for the evictions themselves, the 11m is an understatement. As I understand, that’s the potential number for renters whose housing is someway supported by federal financing or other support. There are actually 48m or so rental units in the US, and I’ve heard actual renters about 80 million. Evictions have been going on for millions since the beginning of this year, especially in states (mostly ‘red’) controlled by Republican legislatures and governors who have been engaging in a quiet ‘austerity’ campaign, cutting back rent support for non-federal rental units, pandemic unemployment assistance, small business loans, etc.

As for rental payments in arrears, there are those in forbearance and those not but behind in rent payments more than 60-90 days. The actual numbers are not accurately reported by the press. It depends whether you include forbearance, in arrears 60 days, or 90 days, or more, and if you include federal supported rental units or all rental units. Earlier this year I saw figures that the total back rent owed was $75 billion. Biden’s American Rescue Plan authorized $52B I think. But only $3B has been distributed. All we get from the mainstream press is that it’s due to bureaucracy. That’s too simplistic.

As I’ve been informing my radio show listeners and my blog audience, the $40B or so unspent on rent assistance to date compares to the Federal Reserve’s continuing $120B/mo essentially ‘free money’ being distributed to banks, businesses and investors at negative (real ) interest rates. No one, including SCOTUS, is concerned about that are they? The Fed will continue doing so until at least a year more, probably after that as well. We can make the same point with the $53B in unemployment benefits assistance authorized in the American Rescue Plan that will now be diverted to pay for the Infrastructure bill, along with other diversions and smoke and mirrors financing of Infrastructure in order to avoid restoring a few of Trump’s tax cuts!

The real Constitutional issue is SCOTUS itself. Nowhere in the Constitution is the right given to the court to declare Executive Orders or Laws unconstitutional. But Congress has allowed it to continue. We see a series of decisions in recent decades where the Court it slashing away at what’s left of democracy in America: the evictions case is just the latest. Not long before, there’s the support for voter suppression by further gutting the Voting Rights Act; there’s decisions endorsing further gerrymandering; there’s Citizens United and its further similar decisions; and of course there was the ‘selection’ of George Bush Jr. in 2000. Some refer to the Imperial Presidency. The Imperial SCOTUS is just as much a problem. SCOTUS itself is the constitutional issue. But of course mainstream media won’t go there.

It’s unfortunate the evictions are occurring (notwithstanding the 60 day moratorium extension on some rental units), just as unemployment benefit assistance has been cut (in some states early), as the small business loan programs have ended, and as inflation is growing. Republicans and the corporate wing of the Democrats are betting that the economy, now opening up again (as it did last summer) will be sufficient to generate a sustained recovery this time with the aid of the vaccination campaign. However, the economy growth is slowing, and I’m betting it will relapse again by end of year. We have a ‘rebound’ going on, but not yet a sustained recovery. And we have a premature shadow austerity policy shift emerging as it slows. The American Rescue Plan stimulus is fading. The Infrastructure bill is too small and won’t take effect until well into 2022. And the $3.5T Family plan will never see a budget resolution vote to get it passed. It’s already DOA. And Delta Covid is taking off, in the US and globally. These drags on the recovery may well negate the effects of the reopening eventually. We could have another repeat of the rebound of summer 2020 relapsing by year end once again. Although probably not as strong a relapse this year as in 2020, since there won’t be any closure of business this time.

Dr. Jack Rasmus
August 4, 2021