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Listen to my extended interview on the events of January 6 (and predictions for after) with Parallax Views podcast and host, J.G. Michael:

GO TO:
<br https://parallaxviews.podbean.com/e/capitolchaos/

Parallax Show Announcement: On this bonus edition of Parallax Views, economist Dr. Jack Rasmus, host of the Alternative Visions radio show and author of The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump, joins us to put the January 6th 2021 pro-Trump mob breach of Capitol Hill. On January 4th, 2021, Dr. Rasmus published an article entitled “What Happens January 6th, 20th & After? America’s Declining Democracy” (also available on Counterpunch as “America’s Continuing Crisis of Democracy” in which he offered his thoughts on Trump and his cohorts like Ted Cruz’s game plan for January 6th and January 20th when he is slated to leave the White House. In said op-ed Dr. Rasmus commented on how the Proud Boys and other pro-Trump elements would be on-hand at Washington, D.C. on the 6th in droves. What, though, is the end game? Dr. Rasmus offers that it is not about keeping Trump in office past January 20th, but instead part of a longer term strategy on the Trump loyalists within the GOP to keep control of the Republican Party and further mobilize and radicalize its base going into 2022 and eventually 2024. In this conversation Dr. Rasmus lay out his thoughts from this article as well giving his comment on the events of January 6th, 2021.
Listen to my January 7, 2021 Alternative Visions Radio Show where I summarize Trump’s toxic legacies afrer 4 years that will continue to rot the economy and US body politic for years to come.

TO LISTEN GO TO:

https://alternativevisions.podbean.com/e/alternative-visions-trump-s-toxic-economic-political-legacies/

SHOW ANNOUNCEMENT

Dr. Rasmus sums up the major economic and political legacies of Trump’s 4 years in office, discussing Trump’s accomplishments on behalf of big corporations, investors and the wealthy 1% and their impact on the rests of us: his $4T tax cuts, gutting deregulation, trade wars, China tech war, intimidation of the Fed & free money, stock market bubbles, funding of military industrial complex, etc. Political legacies include not only breaching formerly sacrosanct legislative branch (Congress) with recent incitement of mob assault but long list of Trump measures chipping away at US Democracy, stacking the US Supreme Court with ultra conservatives, institutionalizing white nationalism in Republican Party, demonization of immigrants, wrecking prior US imperial relationships with its allies, and de-legitimizing US electoral process for tens of millions of US voters. What next for US economy & political system after Jan. 20?
This past week’s events are a harbinger of worse to come on January 6th and 20th. Contrary to Democrat Party leaders, the political crisis will not end on January 6, 2021 when Congress confirms the electoral college vote; nor on January 20 when they say Trump will be removed from the White House.

These two milestone dates will simply reveal how deep the crisis of America’s truncated, capitalist form of limited Democracy has become. And how likely it will continue and deepen into 2021 and beyond.

January 6 and 20 is not the ‘endgame’ of the attack on Democracy by Trump and his radical right wing supporters. Those dates may mark the beginning of renewed attack on a new level and the commencement of a more dangerous period thereafter.

Last week at least a dozen Republican Senators—led by Ted Cruz the heir apparent and would-be ‘prince of Trumpism’—publicly declared they will challenge the electoral college results on January 6. In the US House, Kevin McCarthy, Cruz’s echo, will lead a group of at least 140 Republican Representatives parroting the same challenge. Behind them stand tens of millions of American voters who have been convinced by Trump and his Congressional allies that the recent election was stolen—a theme reminiscent of Weimar Germany in the 1920s when millions were similarly convinced by the Nazis that victory in World War I was ripped from them by the ‘liberal’ politicians back in Berlin who ‘stabbed them in the back’. They did not lose. Victory was ‘stolen’.

The Trumpublicans in the Senate and House will not succeed in over-turning the Biden election. But they know that. So why are they proceeding on January 6? Is it just out of fear that Trump will retain enough influence with their base sufficient to deny them their next primary endorsement? Are they just pandering to future Trump base voters? Or is there something more to it longer term. Something more beyond what the mainstream media and the Democrats say is a futile attempt to disrupt the election results on January 6? Are Cruz and friends so politically dumb they can’t see the futility of an overturn of the election results on January 6? Or are they not so dumb maybe! And their game is about what comes after January 6?

The Maybe ‘Not So Dumb’ 12 & 140

There may be a longer term strategy behind the chaos that will happen on January 6. And make no mistake, January 20 will prove no less chaotic.
The Cruz-McCarthy led circus that will take place on January 6 may be about building momentum and support for a January 20 protest in DC in the short run. And something even bigger in the longer run. The January 6 events will clearly define the line in the sand between Trump loyalists and traditional Republicans in the Senate and House for all the Republican base to clearly see. Who’s ‘with us and who’s against us’. The vote January 6 will be relevant to running for House seats in 2022 and for Senators up for re-election that year as well.

Cruz & McCarthy know they can’t overturn the results on January 6. Apart from shaking out Republican Senators and Reps still on the fence by forcing a vote on the 6th, what’s their longer run game? The more support Trump sycophants in Congress can gather on January 6—i.e. the more defections in the Senate and House beyond the 12 and 140 they can get on the 6th— the greater the call to the radical forces in Trump’s base to come to Washington on the 20th to defend the president! The greater the vote against the electoral college results, even if insufficient to change the Biden election, the more Cruz & McCarthy legitimize Trump’s message the election was stolen. And that encourages a greater turnout of Trump supporters on the 20th, with who knows what other ‘calls to action’.

Democrats keep saying Trump will have to leave office on the 20th or ‘he’ll be removed’. But Trump isn’t calling his Proud Boys to Washington on the 6th to be mere observers? That call is a warning to intimidate Republican fence sitters and to prep the protestors for an even greater turnout on the 20th? The era of street politics and its manipulation by elites has come to America!

As this writer has been forewarning since this past summer, Trump will likely encourage his Proud Boy and street thug friends to come to DC on the 20th in order to physically defend him in the White House. What police force, local or federal, will then want to crash the Proud Boys defense line around the White House and drag Trump kicking and yelling from his oval office in front of nation-wide media coverage? It will certainly make great video fodder for Trump’s political base and the radical right, to be used again and again to mobilize and further radicalize his followers in the weeks and months that follow.

None of this is an impossible scenario come January 6 and January 20. It should be clear by now there are no lengths to which Trump will go to hold onto power or to protect himself and his financial interests once out of office.

In short, what’s going on this past week, and what will likely transpire on the 6th and 20th, is not just Trump’s attempt to over-turn the Biden election. That may be the appearance. However, in essence it’s about his fight to ensure his continued control of the Republican party. Only continued control of the party after January will check the Democrats going after him legally and financially, and ensure him a second run at the presidency in 2024. If he loses control of the party, all bets are off he can weather the counter-offensive by his opponents or secure the nomination for another run at the presidency.

Trump certainly knows the traditional Republican establishment will try to marginalize him when he’s out of office. To protect himself he will even risk splitting the Republican party if he has to, driving more of the moderates out while retaining himself control of the party apparatus, thereafter rebuilding it in his image even more so before the 2022 election. It is a process purging and then rebuilding a party in his image not unlike that pursued by Hitler within the Nazi party in the mid-1920s, when challengers and moderates were purged or driven out after 1925. Hitler only became the indisputable leader in 1926-27 after that process was completed. Trump must hold onto control of the party to protect himself legally while out of office and to ensure his ability to define who gets to run under its banner for Congress in 2022. Only then can he re-run for the presidency in 2024 himself.

Epigones, Sycophants & Opportunists

By their announced plans for January 6, Cruz and McCarthy have signaled they are on board with Trump for the next political cycle in 2022 and 2024. They are committed to ensuring his and their control of the Republican party by forcing a vote in Congress to reject the Biden election on the 6th, a move which, in turn, will likely exacerbate events on the 20th.

Trump needs more chaos on the 6th and 20th, not less. The message to the Republican base on the 6th and 20th will be: not only has the ‘deep state’ denied Trump the election but a large and growing percentage of Reps and Senators in Congress agreed on January 6 the election was stolen. Come out on the 6th to give more of them courage to come forth and support Trump. The second message to the radical right base is the same deep state is planning to physically attack Trump on January 20, so come out and defend him in the White House. By implication this latter message to the base is the deep state will soon come after you too and physically take away your freedoms as well. So defend Trump now in order to defend yourselves next.

The ideologues around Trump see that by creating more visible chaos around January 6 and 20 it will raise the opportunity to build an even more radical movement in 2021-22, with growing influence both within Congress as well as without.

Dual Power as Pre-Revolutionary Situation

The obvious objective of the Cruz-McCarthy faction in Congress is to de-legitimize the Biden administration and the Democrat Congress in the House (and Senate should they win Georgia’s runoff elections on January 5) among the 74 million of Trump’s political base. The stronger that de-legitimization is achieved, the more possible it will be for Trump forces to get red state legislatures and other government state institutions to refuse to cooperate on various levels with the Biden administration once it is in power.

That de-legitimization leads to a situation called ‘dual power’, a condition not seen in the USA since the 1850s when the legislatures in the Confederate Southern states simply ignored federal laws and executive directives from Washington and governed independently for a period. When they moved to eject all federal forces from the southern territory that precipitated the military phase of the civil war. But preceding that phase, civil war in the form of exercising of dual power at the state level was already occurring. ‘Dual power’ thus refers to a set of competing authorities and institutions that vie for legitimacy as the sole authority with the sole right to govern. A situation of dual power is a clear indicator of a pre-revolutionary situation. But in this case, the pre-revolution is a right wing radical and often proto-fascist revolutionary condition.

Trump As Shadow President?

Over the weekend Trump has upped the stakes for his followers in the Senate and US House. A recording of his conversation with Georgia State election commission officials, Raffensberger, and his legal team, revealed how far Trump is prepared to go to refuse to acknowledge the electoral college results and to refuse to leave office.

According to the Washington Post that obtained a copy of the recording of Trump’s call to Raffensberger (and CNN’s leaking of parts of the conversation this weekend on air), Trump demanded that Raffensberger ‘find’ the votes necessary to overturn the election in Georgia in his favor—despite three vote counts with paper trail having been conducted in Georgia since November 3. Trump then warned Raffensberger if he didn’t find the necessary votes, it would be a criminal act on his, Raffensberger’s, part. In other words, if you Republicans don’t do as I ask, then some day you’ll legally pay for it. Trump’s recorded conversation with Raffensberger is a signal fence sitting Republicans should not ally with the Deep State and stab Trump in the back. Should they do so, then a price will be paid and collected at some future date for such “criminal activity”, as Trump called it.

It is not an impossibility that, after January 20, Trump will attempt to act like he’s a “shadow president”. And some red state legislatures might follow him, depending how strong the Cruz-McCarthy vote is on January 6 and what chaotic events take place around January 20 and after.

Trump as shadow president could ‘govern’ by issuing Executive Orders and national emergency declarations. Some red states with deep Trump support may follow his lead and legislate in support of Trump’s orders and declarations in turn. That would then require the Biden government to challenge those states in Court—a long drawn out process—or even have Congress pass new laws to clearly over-ride those states’ legislation—also a process that might not get the support in Congress needed given Trump’s supporters there. The same could apply to those rogue states’ courts. They could issue decisions in support of Trump and their legislatures, requiring higher federal courts to overturn. That would mean more delay. In the interim, the Trump ideology media machine would continue to deepen its conspiracy theories among Trump’s grass roots followers, and use the crisis to still further de-legitimize the Biden administration and the US government in general.

It should not be forgotten that behind Trump, behind his sycophants in Congress, and behind the ideological apparatus are Trump’s media arm of Breitbarts, NewsMax, QAnon, and Fox News evening talking heads. And behind that lies the big money radical capitalists that have supported Trump from the very beginning—and still do. That includes the Mercer family (Cruz’s big money source as well), the Adelsons, Singers, and all the rest of the radical finance capitalists who want to see a further truncated form of Democracy in America in order to ensure their recently amassed wealth is not threatened.

Roots of US Democracy’s Decline

What’s happening to limited Democracy in America this year, and next, is not an isolated development. This is not just about Trump and the 2020 election. The process of destruction of Democracy in America has been underway for at least a quarter century. It is only now accelerating at a faster rate for all to see.

The process first erupted into the open with the success of New Gingrich’s ‘Contract for America’ movement in the early 1990s when he and his radical friends wrested control of the US House of Representatives with the 1994 election. Gingrich publicly declared at the time his objective thereafter would be “to create a dysfunctional government” that the public would lose faith in. Then there was the election of 2000, when Al Gore lost to George W. Bush as a result of the US Supreme Court stopping the recounting of votes in Florida, in effect ‘selecting’ George W. Bush. Gore and the Democrats let it happen, deciding it was a ‘one off’ event and that the system would return to the political shell game in which the competing elites would trade off ruling every four or eight years.

Then came the ‘Citizens United’ decision of the Supreme Court in 2010 that declared dollars spent by corporations were a form of ‘free speech’ protected by the Constitution’ 1st amendment. Corporations were ‘people’ and had the same rights as the rest of us, even though they never died and amassed massive dollars and thus votes. In 2013 that same Supreme Court gutted the 1965 civil right act, opening the door to widespread voter suppression that ensured in dozens of red state Republican legislatures, that would thereafter used their entrenched control to gerrymander and ensure their control for decades to come. That too was endorsed by the Supreme Court. The Patriot Act after 2001 then sliced away long standing protections of civil liberties and civil rights for US citizens, measures later extended annually by National Defense Authorization Acts.

Not least, technology developments in the last decade have solidified control of broad segments of public opinion in favor of Trump forces and right wing interests in general. Without the Facebooks, YouTubes, and the Internet it would not have been possible to create the 70 million adherents to Trumpism in today’s US body politic or the countless conspiracy theories that serve as a kind of secular religion that ties the congregation to the interests of their clever politician priests. Naïve techies promised that technology and the internet would deepen democracy in America; time will show, as it is already, that technology has instead deepened government surveillance of the public, assisted tighter control of public assembly and protests, and enabled the manipulation of the electoral process as never before. Technology too is undermining Democracy in America and the clever elites and radicals know it.

All that was needed for this political conflagration was the proper fire lit under tens of millions of Americans desperate for change. The match was lit by the deep discontent across America with the direction of governance by the elites, Republican and Democrat alike. That discontent developed since the mid-1990s as well, in parallel with the rise of the radical right, with the offshoring and destruction of millions of decent paying jobs, the hollowing out of industrial America and the middle class, the destruction of Unions, and the replacing good paying jobs with low pay/few benefits tens of millions of part time, temp, and gig work.

To the collapse of jobs and wages was added the privatization of health care with its ever rising costs that denied access health access for 50 million and rising premiums, copays and deductibles for the rest; the destruction of the once decent pension and retirement system; and the indebting of a generation grasping at a chance at higher education to escape it all. Meanwhile, $15 trillion in tax cuts were granted to corporations, investors and the wealthiest 1% households starting in 2001 and continuing to this day. Alongside that massive income shift was the launching of never ending wars and war spending for the next 20 years costing at least $7 trillion more. (Both of which add up to about the $22 trillion in US national debt as of 2019).

Then came the 2008-09 great recession and crash, from which tens of millions of average Americans never recovered, while banks and corporations were quickly bailed out by fiscal and monetary policies that accelerated income and wealth inequalities in America several fold. As tens of millions struggled to stay afloat during the so-called ‘Obama recovery’, corporations distributed more than a $trillion dollars a year—every year for a decade on average—in dividends and stock buybacks to their investors. Obama era policies not only failed to mend this conditions, but exacerbated it, thus further providing the ideological fodder for the radical right and the rise of Trump and Trump’s political base.

All this too has been part of the decline of Democracy in America—by providing the conditions for the evolution and deepening of anti-Democratic impulses and support for radical right alternatives by wide segments of the American public.
In short, the elites in general—traditional Republican and Democrat—have created the conditions over the past quarter century for the assault on Democracy that is now intensifying throughout the USA. Their shared failure explains why there is such intense political hatred of elites of both parties in the country, on both the right and left, and in turn why wide swaths of the public is willing to abort the remnants of Democracy. Democracy hasn’t been working for them. So why defend it. And they see little evidence it will change. So they throw in with clever politicians like Trump, Cruz, and others who are willing to use failing Democracy as the excuse for their discontent.

Get rid of the liberals and we’ll return to a former period of prosperity, aka MAGA—i.e. the exact same claim of the Nazis in the mid-1920s. The main target of Fascism in the period of its rise and support by the public is always the ‘liberal politicians’ who are responsible for the system not delivering, i.e. who are ‘stabbing us in the back’.

Biden and the Democrats have only 12-18 months to fundamentally change the conditions that are giving rise to the attack on what little is left of US Democracy. However, the likely scenario is not optimistic. Should they not win in Georgia, it will be a continuation of Grinch McConnell’s Senate preventing any significant change in policies. McConnell will only pass small measures for which he can extract on behalf of further concessions for investors, the wealthy, and their corporations. And should the Democrats win both seats in Georgia on January 5, it is likely that Biden’s policies and measures will still be minimalist and thus insufficient. He will resurrect Obama’s ‘bipartisanship’ approach which resulted in little basic changes then and even less now. Biden will gain little from McConnell even with Republicans in a minority role in the Senate. And 50-50 is hardly a minority position at that. Pelosi in the House will achieve not much more with her minimal 11 vote margin either- a sliver thin margin that the recent Census 2020 will erode to a mere half dozen.

With Biden championing ‘bipartisanship’ with McConnell it is unlikely he’ll be aggressive with Executive Orders and other tactics. The most likely outcome is therefore not the fundamental measures and change desperately needed in 2021-22, but a minimalist ‘go slow’ approach similar to Obama’s in 2009-10. Obama’s bipartisan approach resulted in working households waiting for six years to recover lost jobs and then at wages well below that of pre-2008—while investors and stock holders amassed literally trillions in dividends and stock buybacks.

As Biden fails to create fundamental change, the emerging Trump-Cruz-McCarthy forces will attack him and the Democrats ever more aggressively as they move toward building a ‘dual power’ situation within the red states legislatures, Governorships, and state courts.

The more likely scenario is the 2022 midterm elections will be a disaster for Democrats, much like 2010 was for them as well. After that, the same cycle returns. But this time with tens of millions far worse off than before and with an even more radical right entrenched in Congress and a majority base in the heartland.

Clearly both wings of the Corporate Party of America—Trumpublicans and Democrats—share responsibility for how we got here. And even more for where we may be going.

Dr. Jack Rasmus
January 3, 2021

This evening, Tuesday, December 22, Trump threw an industrial sized wrench into the political works in Congress involving the passage of the $900 Billion so-called Covid economic relief bill. In a video address from the White House he publicly warned he would veto the bill if it didn’t include $2000 emergency checks instead of the $600 now provided by the bill. So what’s up? There are several possible explanations. First, his move may be part of a broader plan to curry popular support for moves to challenge the confirmation of the recent election in Congress on January 6 or even to refuse to leave the White House on January 20. Second, it may represent a move to deepen his control of the Republican Party as he fights with traditional Republican elites to wrest control from him. Third, he may just be pissed off with Mitch McConnell and other Republicans who have begun to abandon him and accepting Biden’s winning. Or all three (and possibly other reasons as well). Whatever, the explanation the coming weeks will be of interest both politically and economically.

By injecting himself into the outcome of the $900B he will in effect cause a realignment of forces behind the bill. It will become clear what politicians in either party, Republican and Democrat, are intent on throwing crumbs to workers, renters, the unemployed, and small businesses vs. those in both parties who are primarily aligned with corporate interests. Trump’s move will no doubt upset the cozy deal making between the money interests in both parties.

TO LISTEN TO MY LATEST Radio Interviews on the $900B proposal’s content, GO TO the following 3 interviews (and read my preceding two print articles published in recent days posted here before):

https://soundcloud.com/user-879607737/122120-stimulus-droops-barr-no-fraud-mutant-bug-cops-busted#t=11:12 

(WBAI New York)

https://www.spreaker.com/user/radiosputnik/economist-underwhelming-covid-relief-pac

(BY ANY MEANS NECESSARY Radio, Washington DC)

https://drive.google.com/file/d/1DLVmili2-0KUlQfX_iweBx-To1KXdC_p/view 

(CRITICAL HOUR Radio, Washington DC>)

As the 2020 year closes, Congress is about to pass a $900B Covid Relief spending bill. But make no mistake. It’s Senate leader Mitch McConnell’s proposal. And it will hardly dent the rapidly slowing US economy this 4th quarter and the increasingly forecasted coming double dip recession early next year.

The new spending shouldn’t be confused as a ‘stimulus’ bill. It won’t stimulate the economy much, if at all. A stimulus requires significant net new spending. Most of the deal is just a continuation of past spending levels, and in some notable examples it’s a reduction in spending levels. The same can be said for the companion legislation to keep the US federal government funded. That’s another $1.4 trillion. But that too is just continuation spending. Nevertheless, we hear from the mainstream media it’s a $2.3 trillion total spending package, the second largest in US history (the first largest being the past March Cares Act which the same media keeps misrepresenting as a $3 trillion package).

For the record, the $3T Cares Act amounted only to $1.4 trillion actual spending that got into the US economy. More than $1 trillion in loans initially earmarked for medium and large corporations, and 11 financial markets, never got spent by the Federal Reserve. In addition, $650 billion of the $3T was actually tax cuts for investors and businesses. That’s mostly been hoarded. The only actual spending that got into the real economy and GDP was the $500 billion for income checks and unemployment benefits for workers, plus $525 billion in loans and grants for 5 million of the 31.7 million US small businesses, plus another $100B or so to the Federal Reserve’s ‘Main St.’ lending programs and less than $100B for other Fed lending. So the much touted March Cares Act actual spending was less than half the media’s reported $3T.

It’s Mitch McConnell’s Bill

Since the passage of the Cares Act in March (with a supplement in April), McConnell has insisted a follow up package would be no more than $500 billion. That’s been his position since last June. The Pelosi-Shumer team passed a $3.2 trillion true stimulus proposal in the US House called the Heroes Act in late May. McConnell rejected it out of hand and has done so for the past six months.

Pelosi-Shumer reduced their $3.2 trillion to $2.2 trillion in August. That too was rejected by McConnell and the Trump administration, who have been engaged in a phony tactical ‘hard cop/soft cop’ negotiation since July designed to break down the Democrats’ proposals. They have finally succeeded in the $900 billion deal about to be signed. The Democrats, as they guessed, finally capitulated at the 11th hour.

Here’s why the $900B is McConnell’s proposal: It amounts to the $500 billion he insisted on since last June plus the $435 billion that Treasury Secretary, Mnuchin, clawed back from the Federal Reserve earlier this month. That’s the roughly $900 billion that McConnell has agreed to.

The $435B clawed back from the Fed was money the Democrats agreed to in the March Cares Act to be given to the Fed to loan out to medium and big corps, theoretically to companies that would invest it and expand production and hiring. It didn’t happen. Big corporations in particular didn’t want the money from the Fed and its banks. They were already flush with cash. In terms of corporate bonds alone, Fortune 500 corporations alone had raised more than $2.2 trillion—thanks to the Fed’s other policy of reducing interest rates (and bond rates) to near zero.

So the money parked with the Fed in March was never used, and Mnuchin simply took it back earlier this month, gave it to McConnell, which the latter added to his $500 billion. And there you have it. Voila! The $900B forthcoming deal.

The McConnell package

• $325 billion for small business grants ($135 billion of which was left over from March)
• $166B in $600 one time income checks (cut by half from $1200) for working families with incomes less than $100k/year
• $120B in $300/wk. unemployment benefits (for 90 days, & at half former $600/wk)
• $45B for transport (including $15B for airlines already sitting on $billions of cash)
• $13B for food stamps (despite 20% American families now officially food deprived)
• $25B for rent assistance (for one month moratorium on rent evictions for 11.4 million behind on their rents owed totaling more than $70 billion)
• The rest for schools, vaccine distribution, hospitals, and other spending

The reduction in the level of the unemployment benefits and the one time
income checks represents at least $150B to $200B a month, every month, taken out of previous levels of household spending. That’s not counting its ‘multiplier effect’. That’s a hundreds of billions of dollars of reduction in consumer spending and therefore US GDP that will hit the economy come January!

Just maintaining prior levels of spending has already resulted in a rapidly slowing US economy this fourth quarter 2020.

US Economy Sliding into Double Dip

After having collapsed quarter to quarter by -10.5% in early 2020, the economy briefly rebounded in part as the economy prematurely reopened in the third quarter 2020. That was a 7.4% rebound off the -10.5% collapse. In other words, only 2/3 of what was lost in GDP terms. But that tepid rebound (not to be confused with a sustained recovery) has relapsed seriously this current 4th quarter. Many economists’ estimates, even mainstreamers, is the US GDP will grow at best around 1.5% this quarter—i.e. down from 7.4%.

Retail sales turned slightly negative in October and then sharply fell by -1.1% for the recent month of November. It will likely turn even more negative in December. Even the much announced gains in Manufacturing and Construction—together barely 20% of the economy—are now showing signs of slowing. Indicators of industrial production and manufacturing in the Chicago area and Mid-Atlantic states are slowing sharply.

More economists are forecasting a broad economic contraction—i.e. a technical double dip recession—in the coming January-March period. That includes JP Morgan bank’s research. A condition that this writer predicted last March when the economic crisis emerged. As in all cases of Great Recessions, double dips typically occur, and sometimes triple dips. The 2020 Great Recession 2.0 today is no exception.

It is in this context of a sharply slowing US economy fourth quarter, and a growing likelihood of a second bona fide contraction in early 2021, that Congress is about to pass the $900 billion McConnell package.

It’s important to understand that it’s not at all an economic stimulus proposal. It’s the weakest of possible ‘mitigation’ bills. Mitigation is about just buying time (30-90 days) until a real stimulus can be passed. Even the Cares Act of last March was acknowledged as a mitigation measure, not a stimulus, bill by its Congressional proponents.

This McConnell $900B proposal is even less a mitigation measure. It’s more a temporary palliative at best, buying 60 days of a partial offset to a coming contraction.

Moreover, one should not assume all the $900B—or even a part of it—will actually get in to the real US economy. Apart from the reduction in unemployment benefit levels, not all of the $325B money earmarked for small business PPP will be spent soon, or even at all. Studies and research shows that the PPP program of last March did not all go to those small businesses that needed it most. And much of it was used not to retain workers and wages, as the legislation proposed in March, but went to pay down business debt or was used to increase business savings that were subsequently then stuffed into business bank accounts by those businesses that scammed and skimmed off the PPP funding.

With virtually no oversight in the case of the $525B PPP from last March’s Cares Act having occurred over the past nine months, it will be significant if even half of the $325 billion is actually spent. The same can be said for much of the $44B now allocated for the airlines and other transport businesses. And even in the case of the $82B targeted for schools and colleges. It won’t all be actually spent and therefore will provide no actual stimulus or mitigation to the real economy.

In short, out of the $900B will be 2/3 at best actually spent and entering the US economy and GDP next quarter. That’s not much of even a ‘mitigation’, given the accelerating slowdown of the US economy at year’s end 2020 now underway.

The Corporate Democrats’ Spin is In

Nevertheless, Democrat party leaders—i.e. the corporate wing of that party—are spinning the capitulation to McConnell as just the first of further coming legislation after Biden is inaugurated January 20, 2021. That’s how they’re selling it to John Q. Public.

But don’t expect much in terms of fiscal spending legislation forthcoming after January 2021. That’s especially true if McConnell remains in control of the Senate, which is more likely than not, and it’s especially the case if Republicans win at least one of the Georgia Senate run off elections on January 5, 2021. McConnell will continue to say ‘No No No’ to just about everything proposed in Congress should he retain control of the Senate.

Democrats are naïve to think that, after having agreed to $900B, that McConnell after only 45 days will agree to anything more in terms of emergency fiscal spending come February-March 2021!

In this scenario, as the US economy likely slips into a double dip recession next year Biden will be relegated to any new spending via Executive Order and other presidential actions. But his already announced policy of resurrecting bipartisanship with McConnell will ensure Biden will go slow, if go at all, in terms of governing by Executive Order. He could do a lot, but he won’t. He’ll extend the bipartisan hand to McConnell again, as had Obama for years; and again the Republican dog will bite the hand and little will change.

In summary, what we have in the pending $900B ‘relief bill’ is virtually no relief at all. Even for the next 90 days; it’s a partial relief, a palliative that barely even qualifies as a mitigation. The $900B will definitely not turn around the impetus and trajectory of a rapidly slowing US economy and the likely coming double dip recession approaching in 2021.

But what’s to worry? The stock markets are hitting records daily. Money from the Fed for investing by corporations, hedge funds, private equity firms, and other professional speculators is virtually free. More business tax cuts are being added in the pending legislation to the $650B passed last March in the Cares Act (and the $4T passed before that in 2018-19). The 651 US billionaires added $1T to their wealth in just the last eight months!

Besides, Trump’s leaving the White House…maybe! (if he doesn’t declare martial law first).

Dr. Jack Rasmus
December 21, 2020

Jack Rasmus is author of ’The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump, Clarity Press, January 2020. He blogs at jackrasmus.com and hosts the weekly radio show, Alternative Visions on the Progressive Radio Network on Fridays at 2pm est. His twitter handle is @drjackrasmus.

By Dr. Jack Rasmus
copyright 2020

As of mid-December 2020 the US economy has begun showing increasing signs of an exceptionally weak 4th quarter, October-December, growth. After having collapsed -10.5% in the March-June 2020 period, followed by a partial ‘rebound’ (not sustained recovery) in the 3rd quarter, July-September 2020, the economy is now slowing rapidly once again.

Dismal reports of consumer and especially retail sales in October-November appear driving the slowing growth—in turn driven by rising unemployment claims, a growing number of permanent layoffs by large businesses as the economy structurally changes long term, and, shorter term, by a sharp rise in Covid deaths, infections, and consequent partial shutdown of the services sector of the US economy throughout the US.

This scenario and trends has pushed more economists, mainstream included, to predict an even sharper 1st quarter 2021, contraction in the economy. Even a normally conservative forecast source like JPM Chase Bank’s research has raised the likelihood of a bona fide 2nd contraction of the US economy early next year—i.e. a ‘double dip’ recession, that this writer has been predicting since last March 2020.

The failure of both parties in Congress to pass a fiscal stimulus bill as late as mid-December 2020 has exacerbated the slowing economy and likelihood of a further contraction.

Ranks of Unemployed Rising; Benefits Falling

Latest initial unemployment benefit claims have risen, from the steady 1 million per week through the fall, to 1.28 million in early December, a weekly rise of 28%. As claims rise, a steady million per week have been exhausting their benefits for months. This is about to accelerate greatly, as a large block of 12 million are scheduled to end benefits by the last week of December.
Despite the US Labor Department’s monthly ‘low ball’ estimates of a jobless total of only 10.5 million and 6.7% unemployment rate, more than 20 million without jobs are still collecting unemployment benefits—twice the number the Labor Department and media consistently repeat as total jobless today!

Simultaneously, the ranks of the jobless without benefits, or having exhausted benefits, continues to rise as well. Four million workers have dropped out of the labor force altogether. Another 1-2 million have had to quit, in order to manage their K-6 grade children’s remote education. Millions are ‘furloughed’ at home with hope of at some point returning to work but not yet—a status the Labor Department erroneously calls working, and not unemployed, even though they aren’t being paid by their employers. (An error the Labor Dept. has made since last April, acknowledged it was an error, but has refused to correct nonetheless).

Easily at minimum 25 million American workers today as of December 2020 are jobless, either with or without benefits, not 10.5 million. And the unemployment rate is thus closer to 18%-19%–i.e. not even remotely close to the official, cherry-picked low ball number of 6.7% reported monthly by the Labor Department, which even most mainstream economists now ignore.

The Trump administration allowed the expiration of the supplemental $600/week unemployment benefits for millions of jobless last August. That reduced GDP spending by $65 billion a month (not counting multiplier effects on GDP of roughly 2X that amount). Some of that was restored for 5 weeks with $300 supplement unemployment benefits by Trump Executive Order in August. But the money was funded by reducing other government spending elsewhere, so there was no effective positive impact on total spending. That $65 billion (times 2X) negative spending effect on the US economy continued through December, and has no doubt played a part in the 4th quarter US consumer-retail spending slowdown.

The negative impact of reduced unemployment benefits is about to get much worse, however. The 12 million more that will lose benefits on December 26, 2020 is estimated to reduce household spending by another $150 billion per month (plus multiplier). Should current proposals restore half of that $600/wk., the negative household spending impact will still be $75 billion more in addition to the previous $65 billion reduction since August.

Renters’ Crisis Deepening

The real economy’s actual deteriorating condition is further illustrated by the renter crisis gaining momentum weekly. Of the 43 million total rental units in the US, 11.4 million are behind in their rents, averaging around $5,800 per household, for a total of $70 billion, according to the business research company, Moodys Analytics. As evictions moratorium ends in January 2021 many renters (mostly still unemployed) will not only have to start paying rents once again, but will have to make up the $70B in lost rent payments or still face evictions. Even after having been evicted, landlords will still legally pursue back payments.

The renewal of rent payments by renters, while still jobless, combined with back payments, will have a devastating impact on household spending and consumption in 2021, the latter of which accounts for 68% of all US economic spending and GDP.

Contrary to the media reporting, millions are already undergoing evictions and facing legal orders to repay back rents. The initial rent moratorium passed last March as part of the Cares Act (‘mitigation bill 1.0’) did not cover all renters, as the mainstream media consistently suggests, but covered mostly those whose housing was associated with government aid by the HUD and FHA agencies. States and cities in some cases had initiated local moratoria . But most of those local moratoria expired months ago. Trump’s Executive Order last August 2020 extended rent moratorium on federally supported rent units, but only until end of December 2020.

Issued by the Trump administration’s CDC in September, Trump’s EO for rent moratorium expiration will result in 2.4 to 5 million of renters evicted in January 2021 alone, with millions more per month thereafter, according the Wall St. Journal. Moreover, the Trump EO did not prevent landlords from initiating legal action to evict. Hundreds of thousands of evictions are already in progress and legally proceeding in cities across the US, per the Princeton University Evictions Lab. Most heavily impacted are minority households. A recent survey by the US Census Bureau indicates 32% of black renters and 18% of Hispanic renters were behind on rent payments, and about 12% of white renting households.

Homeowners Mortgages Crisis Brewing

While the picture is not as dire for homeowners as for renters, it too is deteriorating and will be intensifying in 2021.

There are 82 million single homes in the US. 49 million (62%) have mortgages. At present 3.6 million are in forbearance, meaning mortgage payments have been temporarily suspended. Suspended payments will have to resume in 2021, however, much like rent back payments suspended require payment. Like renters, homeowners may have to double up on mortgage payments, in whole or part, commencing 2021. It is estimated that 6.8% of homeowners have missed payments in 2020. That’s 5.5 million of homeowners—i.e. the 3.6 million in forbearance but another 1.9 million not and who have been missing monthly mortgage payments.

The percentages and totals for mortgage payments in arrears may seem less a problem than the renters’ missed payments. But the totals are actually far greater in terms of back money owed: all the deferred and missed mortgage payments amount to $752 billion in back payments that have to be made up. That make up will reduce household spending by another hundreds of billions of dollars in 2021, with further negative impact on US GDP in 2021.

Student Loan Forbearance Ending

Like renters and homeowners, the March 2020 Cares Act permitted suspension and deferral of student loan payments until year end 2020. Also like rent and mortgages, however, that deferral is scheduled to end in 2021. Students will have to make up payments and in effect ‘double down’ on payments in most cases.
The negative impact on ‘doubling down’ and making up lost payments is massive. There are 44.7 million student loans in the US, averaging $36,500. Hundreds of thousands own much more. Many more than $100,000. 35 million of the 44.7 million student loans were in forbearance in 2020 and the deferred principal will have to be repaid. The total principal alone, temporarily deferred, amounts to $777 billion in arrears.

Payroll Tax Deferrals

When Trump and his negotiators abruptly broke off negotiations on the fiscal stimulus bill in August 2020, they issued 4 Executive Orders with 24 hours (thus indicating they had planned to do so from the beginning, after having lured Pelosi-Shumer and the Democrats to reduce their May 2020 $3.2 trillion original stimulus proposal called the Heroes Act by $1 trillion).
Among the Trump four EOs was one that deferred payroll taxes of 6.2% for workers for the rest of 2020. (The other three EOs were the temporary substitution of $300/wk. supplemental unemployment benefits for five weeks; extending student loan forbearance to end of December; and the CDC’s partial extension of rent moratorium for 5 million renters). The EO affecting payroll taxes was clearly unconstitutional. Only Congress could change tax laws. But Trump went ahead anyway with the 6.2% payroll tax deferral. Not all businesses followed suit, however.

Since employers by law are responsible for collective payroll taxes, they knew they were on the hook to repay the deferred 6.2% in 2021. They would have to add 6.2% to their employer share of 6.2% nonetheless in 2020 and then repay that in 2021. That meant doubling up on paying their share and their workers’ share of 6.2% (deferred September to December 2020) starting January 2021.

It could mean paying payroll taxes of twice that 12.4% in 2021, however. Employers were allowed to temporary suspend their 6.2% payroll taxes since March 2020, and starting repaying that deferred amount plus new payroll taxes by end of 2021. Not many wanted to face the prospect of paying double payroll taxes for both themselves, the company, and collecting and paying double for their workers as well—or 24.8% in payroll taxes. So most opted out of the Trump EO and didn’t stop their workers from paying the 6.2% in 2020.

Most large corporations opted out, including GM, UPS, Fedex, Costco, grocery chains, health companies, big Pharma, utilities, and many states as well. Trump forced federal government employees to suspend their payroll tax payments, September-December 2020. Other states and local governments did so as well. Starting January 2021 now many will have to start paying double payroll taxes. That will in turn reduce millions of public employees’ available disposable income for consumption in 2021. And that too will reduce US GDP in 2021.

Small Business Collapsing

Even greater magnitude of potential negative impact on the US economy is the current accelerating closing of many small businesses. There are an estimated 30 million small businesses in the US economy, which include millions of small ‘independent contractors’. Estimates by the National Federation of Independent Businesses, the trade organization for small business, are 3.3 million have permanently closed as of November 1, 2020. More than 110,000 restaurants, or every one of six. Hundreds of thousands more restaurants, bars, entertainment, travel, and related service small businesses are likely to close over the coming winter months. The impact on consumption, as well as business spending and unemployment, promises to be significant—and in addition to all the preceding negative effects on the US economy.

What is especially concerning about this scenario is that ever since August 2020 the Trump administration has sat on $135 billion in unspent funds allocated by the March 2020 Cares Act for loans and grants for small businesses assistance. $670 billion total was approved by the Cares Act for the PPP program, as it was called, to provide assistance to small business. Much of that was siphoned off and redirected to larger businesses. Millions of very small businesses received nothing. Despite the need in August, the program was ended in August with $135 billion unspent.

From Stimulus to Mitigation 2.0 Negotiations

What started out as a true economic stimulus bill in the form of the Heroes Act, passed by the US House last May 2020, has by mid-December collapsed into a partial economic ‘mitigation’ bill. Mitigation means just buying time until a true fiscal stimulus can be introduced. Mitigations simply slow down the economic collapse and crisis temporarily, to buy time. True stimulus proposals do just that: generate economic growth that is sustained for months and years to come.

The May 2020 Heroes Act was a true stimulus, proposing $3.2 trillion in new spending across a broad set of programs. It was immediately rejected by McConnell and the Trump administration, both of whom then played ‘hard cop/soft cop’ in negotiations with Democrats over the next six months. In August 2020 Democrat negotiators, Pelosi and Shumer, were lured into reducing their package of Heroes Act spending by $1 Trillion, down to $2.2T, in expectation—signaled by the Trump administration it would similarly respond with a major counteroffer to the Democrats $1 trillion proposal reduction. But they didn’t. Trump’s negotiators, Mnuchin and Meadows, simply walked out of negotiations after Pelosi-Shumer had come down $1 trillion. Meanwhile, McConnell sat back watching the show, holding firm on his no more than $500 billion spending proposal he offered in June.

As the 2020 election grew closer, Trump-Mnuchin offered several new proposals—without any details—to ensure it appeared they were interested in a deal. The latest in October was reportedly as high as $1.8 trillion. It appeared a deal was possible, with the Democrats at $2.2 trillion since August. However, McConnell scuttled the negotiations by making it clear he would not approve more than his $500 billion. Having been burned the previous August, Pelosi and Shumer did not ‘bite’ at the Trump shadow offer, correctly assuming it was pre-election posturing. Had they done so, Trump would have taken credit; no deal would have been reached; and McConnell would have stalled discussions—as he has ever since to the present.

Following the election in November 3, the next development was Mnuchin recalling $455 billion in unused funds from the Federal Reserve given to the central bank the preceding April as part of the Cares Act. That was to be used to help bail out businesses. The Fed did not use much of the Cares Act given it by the US Treasury and Congress, including $135 billion unspent on the small business aid program called the Payroll Protection Program, PPP. That program ended in August, but the Fed held onto the $135 billion, as well as other funds for medium sized and larger businesses and various financial markets. The total unspent came to $455 billion, which Mnuchin then told the Fed to return to the Treasury, which it did. Both Mnuchin and McConnell would use the $455 billion to pay for McConnell’s $500 billion long-standing offer in stimulus negotiations in December.

To attempt to break the bargaining logjam, in December a bipartisan group of Senators and Representatives offered a compromise package of $908 billion. There were no $1200 income checks, only half of unemployment benefits for only 90 days, no aid to state and local governments, and numerous other provisions missing from the Democrats’ $2.2 trillion package on the bargaining table. Nevertheless, McConnell still rejected the $908B compromise. He then cleverly offered to drop his ‘stalking horse’ proposal for business blanket liability if the Democrats dropped their $160 billion in aid to state and local governments.

In the latest iteration of the negotiation charade, the bipartisan group on December 14, 2020 revised their $908B proposal, reducing it to $748 billion by taking out the $160B for state and local government. It split its prior single $908B offer into two parts: one with the state-local government aid and the business liability; the other with all the remaining proposals it had originally offered.

As of mid-December, the proposal on the table by the bipartisan group, accepted in principle by the Democrats but not McConnell, is as follows:

• Unemployment half benefits at $300/wk through March 2021
• PPP small business funding of $300B, now with no need to use to pay workers’ wages
• $45B for airlines & transport businesses (despite airlines with $billions of cash on hand)
• No $1200 checks
• Student loan forbearance continued for 3 more months
• Renter evictions moratorium continued for one month
• $82 billion for education
• $13 billion for emergency food assistance
• $35 billion for health care providers
• $13 billion more for farmers & agribusiness (after receiving $70B since 2019)
• $25 billion rent assistance (payable to landlords)

The important point of the total $748B, however, is that it too is a temporary ‘mitigation’ proposal—not a true stimulus bill.

Like the March 2020 Cares Act, also a mitigation bill, it will only buy a little more time for an economy clearly in a deep slowdown in the 4th quarter and on the brink of another double dip recession in 2021, if one were to agree with Chase bank!

The Cares Act of March was only $1.1 to $1.5 trillion in actual spending—not the $3 trillion mainstream media often noted. $650 billion of $3 trillion was business tax cuts that were mostly hoarded. And more than $1.1 trillion for medium and big business bailouts that didn’t happen by the Fed loans, the funds of which were returned to the Treasury in December. Big businesses were bailed out, but via Fed other $3 trillion plus money injections into the banks and markets—not by the Cares Act.

So the Cares Act was a temporary mitigation bill that ran out of spending by late summer. And the bipartisan group proposal of $748 billion is an even smaller mitigation bill that will run out of funds well before next spring.

There is, and there has been, no fiscal stimulus since the crisis began. Nor is a stimulus on the horizon. More importantly, what this means for the economy is that the lack of a true fiscal stimulus for 2021 means the double dip recession looms ever larger on the horizon now! Unemployed workers, renters and homeowners, student debt, double taxed workers, and small businesses will get another temporary partial assistance. And should the Democrats not win both seats in the Georgia Senate runoff elections on January 5, 2021, McConnell will retain control of the Senate and it will be four more years of ‘No, No, No’ in help to those truly in need. The implications of that for the US economy, and for Democrats in 2022 mid-term elections, is obvious. But that’s the likely intention and game plan of McConnell and the Trumpublicans no doubt.


Dr. Jack Rasmus
December 15, 2020

With McConnell & Republicans stonewalling any settlement on passing a fiscal stimulus bill in Congress, the real economy continues to deteriorate (while 651 US billionaires increase their wealth by $1T since March and US stock markets reach daily record highs). The consequences of failure to pass a fiscal stimulus bill in Congress reaps daily ever-deepening hardships on real people–especially the 25m still unemployed (now rising weekly), the 11.4m renters unable to make payments, the 3.6m homeowners behind on the mortgages, the 35m students who soon will have to repay $777B in student loans in arrears, the more than 3.3m small businesses already permanently closed as of October, and the millions of workers who will have to start paying double payroll taxes come January. Despite the crisis, McConnell & Republicans refuse to budge off of their $500B offer unchanged since last June, as Democrats agree to reduce their $2.2T to the $908B ‘bipartisan’ Senate proposal (a second time they reduced proposals by $1T since August). What’s behind the refusal to negotiate by McConnell & Trumpublicans? Why no stimulus deal will mean a relapse into a double dip recession in January-March (predicted as well by Chase bank).

Listen to my two radio discussions on this last friday, December 11, 2020. The first in my hour long Alternative Visions radio show; the second a 15 min. short version interview with Critical Hour radio host, Wilmer Leon.

TO LISTEN GO TO:

https://alternativevisions.podbean.com/e/alternative-visions-economics-consequences-of-a-failed-stimulus-trump-s-plan-b/

https://drive.google.com/file/d/1FBlp7JhdTWauobJSIrt_wo–ZuRaTbDQ/view

Listen to my 12 min. interview today with Critical Hour radio explaining how Mitch McConnell is successfully manipulating splits in the Democrat party to get Pelosi-Shumer to lower their proposals still further. Meanwhile, the real US economy stumbles toward a brink as unemployment rises, benefits run out, rent forebearance ends, rent payments double, and evictions grow, and 35m students face double payments in January. In first quarter 2021 US economy will take a hit to GDP of more than $500B throwing it into a double dip recession, according to JP Morgan Bank research

TO LISTEN GO TO:

https://drive.google.com/file/d/1I0oqfwuUmYA1j2ePxbgjdfBSj_zrxMvy/view

Three Radio Interviews: Equal Time Radio of Vermont, Critical Hour Radio, & By Any Means Necessary Radio in Washington DC.

Why last Friday’s Labor Dept. ‘Jobs Numbers’ Grossly Understate the 20 million plus Unemployment, why the stimulus program in Congress will be an insufficient ‘mitigation 2.0’ bill, and why new wireless technology being trialed by the USAF will expand government spying of citizens. Listen to Critical Hour Radio at:

https://drive.google.com/file/d/17t-TGVpEYoBAtG19i5soCAfHItMAtTYx/view

Dr. Jack Rasmus about the Prospects for Coronavirus Stimulus, the Economy & the Impending Loss of Unemployment Benefits & Paid Sick/Family leave for Millions of Workers, plus an Assessment of Biden’s policies and appointments. Listen to Equal Time Radio at:

https://equaltimeradio.transistor.fm/episodes/2020-election-and-the-prospects-for-coronavirus-stimulus

Why Congress Will ‘Low-Ball’ the next fiscal ‘stimulus’. Listen to By Any Means Necessary Radio at:

https://www.spreaker.com/user/radiosputnik/help-from-congress-looking-less-likely-a

Following are 3 short (15-20 min.) radio interviews of this past week on topics of the US economy, jobs, stimulus, Fed, and other

https://drive.google.com/file/d/1EZ4tWVvrXHMGqW_TqSDEnCo08GZeFX_O/view

Critical_Hour_606_Seg_2.mp3

https://www.spreaker.com/user/radiosputnik/economist-explains-why-little-coronaviru