Wolff Responds: No "Tradeoff" Between Fighting COVID-19 and the Economy

 

https://www.youtube.com/watch?v=W875dUMa0QM&ab_channel=RichardDWolff

Bidenomics: boom or bust?

by michael roberts




With just two days to go, all the public opinion polls indicate that Democratic Party candidate Joe Biden is going to win the US presidential election and oust incumbent Donald Trump. The Democrats will also solidify their majority in the lower house of the US Congress, the House of Representatives; and perhaps take over the upper house, the Senate. But even without the latter, Biden and the Democrats will have the political power to change the course of the COVID pandemic and the US economy over the next few years. But can they or will they do so?

First, let us remind ourselves of the challenges they face. The US economy is suffering the worst economic slump since the 1930s. The US Q3 GDP figures released a few days ago show that the US economy is still well below its pre-pandemic level.



US GDP is still 3.5% below its pre-pandemic level, while business investment is still some 5% below. Indeed, US real GDP is really back only to levels near the bottom of the last slump in the Great Recession of 2008-9.



And out of more than 22 million jobs lost in March and April during the lockdowns, only around 11.3 million have been recovered so far, while a new stimulus bill in the old Congress supposedly to help the unemployed was never approved.

Employed persons (000s)



While the Federal government has been supplied with funds from Congress, raised by the Federal Reserve through the purchase of government bonds, the states and local counties have been starved of funds and forced to lay off hundreds of thousands of public employees.

Meanwhile, the COVID pandemic continues to rage across the country with infection rates at record highs, encouraging people to stay at home to work (if they can); not to meet up, travel or spend on restaurants and leisure activities - even if many state governors continue to say it is fine to do so. As a result, the recovery in transactions and activities that began over the summer has stopped in its tracks. And there is still no ‘silver bullet’ of an effective vaccine in sight.



With business investment in productive activities showing little sign of recovery and employment well down, a return to the pre-pandemic trajectory of economic growth and employment is years away. Indeed, according to Oxford Economics, real GDP growth won't return to its previous trend at all. Far from a V-shaped economic recovery, or even a U-shaped one, it's a reverse square root trajectory, as I argued it would be.



It’s the same trajectory of economic growth that emerged after the Great Recession of 2008-9 that I spelt out in my book, The Long Depression. The US and other major capitalist economies appear to be entering another leg of that depression, ie low growth, low productive investment, low wage employment and, behind all that, low profitability in productive assets - even if the pandemic comes under control.

Remember before this pandemic erupted across the world, most capitalist economies, including the US, were already tipping into a recession, with investment slowing or even falling and production and trade stagnating.

Can a Biden administration do anything about this and is it willing to do so? According to the Biden economic team, the administration plans to increase public sector spending to compensate for the capitalist sector ‘investment strike’. Biden proposes to spend $2trn on infrastructure spending (something Trump never got round to) including ‘clean energy’ projects; just under $2trn on education and child care; $1.6trn on health care; $700bn on research and development; and $500bn on social security and housing. That’s a total of $6.8trn., or just over 30% of current GDP.

Wow! That sounds great. But hold your train; this spend is over 10 years! And this is just a proposal. Nobody expects all of this extra 2% of GDP spending a year to be implemented by Congress. Most estimates reckon that Biden’s proposals would be cut by 60% to about $3tn. The infrastructure and education proposals would be reduced by half, the health proposals would be lowered by 60% and the proposals to invest in R&D and buy American goods would be cut by two-thirds.

And then there is the method of paying for this. Biden proposes to raise taxes by $2.4trn over ten year (or $1.2trn if the spend measures are reduced). So nearly half of the spending plans would be clawed back in taxation. Most of the tax revenue would come from the top income earners particularly those in the million-dollar bracket. Also, corporation tax would be raised from the current 21% under Trump to 24% - but it would still be well under the 28% under Obama, so corporations would continue to benefit from windfall profits. Indeed, the increase would raise only a paltry $725bn over ten years. There would be no increases in property taxes for the rich. Overall, the most likely net spend after taxes under the Biden plan would be just around $1.8tn over 10 years, or no more than 0.8% of GDP a year!

So everything depends on the 'Keynesian multiplier' ie the increase in real GDP growth induced from an increase in government spending. Say the multiplier was as high as 2 or even 3 in the slump environment (that’s way higher than most studies show it would be ‘normally’ - it could be much lower than one), then Biden’s plan would boost real GDP growth next year by say 2% pts above the current likely growth rate next year. Biden’s plans also include boosting net immigration and pulling back on some of the tariffs on Chinese imports. Putting all this together, Oxford Economics reckons Biden’s plans would lead to a real GDP growth rate of 4.9-5.7% in 2021 compared to the status quo under Trump of 2.3-3.7%.

So even if it worked, Biden’s boom would amount to a maximum 2-2.5% pt of GDP boost to the economy over the next two years. That may get the US economy back to pre-COVID levels by the end of next year, but thereafter the growth trajectory would sink below even the weak pre-COVID growth path. The US economy would be trundling along at 1.5% a year for the foreseeable future and under 1% a year per capita GDP growth (after population increase is accounted for).



But these plans are unlikely to deliver anyway. Capitalist economies depend on investment by the capitalist sector. Capitalist investment in the US is about 15% of GDP, while government investment is less than 3% of GDP - that’s five times smaller. So it is the former that decides the pace of real GDP growth. Biden’s plans imply, at the maximum, an extra 1% of GDP in government investment; that's not to be ignored, but hardly enough to compensate for any stagnation or decline in capitalist investment.

And that stagnation is likely unless the profitability of capitalist productive investment rises sharply under Biden. US corporate profitability is currently at a post 1945 low. Don’t be fooled by the huge profits being made by the likes of Apple, Microsoft, Facebook, Google, Netflix etc. The profits of the FAANGs are the exception that proves the rule. Outside this charmed circle, US companies are struggling to make sufficient profit to expand investment, despite historic low interest rates in order to borrow funds for investment. If interest rates do start to rise again in any recovery, particularly for small to medium sized companies which can only just service existing debts (so-called zombie companies), then far from a recovery, there could be a financial bust.



And then there is the public sector debt. Under Biden’s plan, the US Federal budget deficit will rise a cumulative $2 trillion during his first term. Publicly traded federal debt as a percent of GDP will increase from 108% when he takes office to 120% by the end of his term and 130% of GDP by the end of the decade. So even if the Federal Reserve maintains its current ‘zero interest rate’ policy and long-term bond yields remain low, the interest on government debt will rise by at least 1% of GDP. That will eat into available revenue to spend on public services. As public debt and the cost of servicing it rises, the pressure will mount on the Biden administration to ‘balance the budget’, revoke the spending plans and/or apply more tax increases on the general public.

You might say that politicians and mainstream economic policy have learnt their lesson and now realise that ‘austerity’ only makes things worse by reducing spending and ‘effective demand’. So austerity policies won’t be revived. After all, even the IMF is saying ‘spend as much as necessary and don’t worry about the consequences for debt now’. But that’s now - in the depth of the pandemic slump. When debt costs and government measures mount on the capitalist sector, capitalism will look to protect already weak profits by cutting government taxes and spending.

The supporters of Modern Monetary Theory may cry out at this point and argue that governments do not need to borrow money through debt issuance and so run up interest costs. They can just get the central banks to ‘print’ the currency and put it in the government coffers. Rising public debt is then not an obstacle to government investment and spending in order to boost the economy and deliver full employment. In a way, that is right if government spending is productive for the economy. But what is an obstacle is the willingness and capability of the capitalist sector to invest if profitability is low.

How much government investment would be necessary to replace capitalist investment and get the US economy growing at rates that restore and raise real wages, achieve full employment and apply resources and innovation to combat climate change? It would require ‘war economy’ levels when federal government investment rose to 23% of GDP and the government controlled and directed the capitalist sector to invest.

That is not on Biden’s agenda or, for that matter, on the agenda of MMT supporters, because such a move would be way more than just ‘stimulating’ the capitalist sector but actually mean ‘replacing’ its investment role. It would mean an economic revolution not wanted by Biden, and not envisaged by MMT.

In an editorial entitled “Bidenomics can preserve support for capitalism”, the Financial Times put it thus: “Since John Maynard Keynes, the best case for state intervention has not been to abolish the market, but to preserve public support for it”; and while “if implemented, Bidenomics would make life more burdensome for business and for high-earners, it might also avert a larger reckoning further down the line.”

That's the aim of Bidenomics.

David Sirota's Warning

 

https://www.youtube.com/watch?v=udEki7YuWMQ&ab_channel=KatieHalper

Chris Hedges on Biden vs. Trump & the Coming Economic Hunger Games

 

https://www.youtube.com/watch?v=_I2hqcOhmDE&ab_channel=StatusCoup

How Our Politics Came Undone

Under Trump, our notion of shared truth has been shattered. In its place, monsters have swarmed.



MILES KAMPF-LASSIN OCTOBER 30, 2020https://inthesetimes.com/article/trump-bannon-biden-qanon-election-2020




America’s frac­tured real­i­ties are now cen­ter stage. Just tour some of the major sto­ries being spun through groomed algo­rithms into news feeds across the country:

There’s the Tuck­er Carl­son-fueled scan­dal claim­ing the Covid-19 virus was actu­al­ly cre­at­ed in a lab­o­ra­to­ry in Wuhan, Chi­na, poten­tial­ly for use as a ​“bioweapon.” Then there are tales of a ​“com­ing coup” that Democ­rats are alleged­ly plan­ning after the elec­tion — a the­o­ry pushed by a for­mer Trump nation­al secu­ri­ty advis­er and cir­cu­lat­ed across extrem­ist online com­mu­ni­ties claim­ing a sea of ​“har­vest­ed bal­lots” will be used to steal the pres­i­den­cy from Don­ald Trump. And, more dark­ly, there are charges that Hunter Biden, the for­mer vice president’s son, is some­how involved in a child sex tor­ture traf­fick­ing ring — a con­spir­a­cy that’s been spec­u­lat­ed upon not just by con­ser­v­a­tive pun­dits but also sit­ting Repub­li­can mem­bers of Congress.

Such is a sam­pling of the mes­sag­ing strat­e­gy being car­ried out by lack­eys of the Trump cam­paign ahead of Elec­tion Day 2020, a bar­rage of false accu­sa­tions that side­step the dis­as­trous record of the incum­bent pres­i­dent and instead seek to por­tray his Demo­c­ra­t­ic oppo­nent Joe Biden as both wicked and a threat to the Amer­i­can way of life.

Nev­er mind that, under Trump, a rapid­ly surg­ing pan­dem­ic has already claimed over 225,000 Amer­i­can lives, with small busi­ness­es clos­ing en masse while tens of mil­lions sit out of work, fac­ing the threat of evic­tion. Pay no atten­tion to the mil­lions more who have been thrown off of their health insur­ance amid the cri­sis, or the fact that hunger — espe­cial­ly among chil­dren — has ​“sky­rock­et­ed,” accord­ing to the Cen­ter on Bud­get and Pol­i­cy Pri­or­i­ties. The real issue fac­ing vot­ers this elec­tion, accord­ing to pro-Trump con­spir­a­cy hawk­ers, is a lap­top they claim belongs to Hunter Biden — and the QAnon-inspired the­o­ries that its con­tents avowed­ly bear out.

While spu­ri­ous, these claims have cir­cu­lat­ed beyond just the right-wing media echo cham­ber and are now pen­e­trat­ing into tele­vi­sion sets and social media accounts nation­wide. While some con­sumers of this actu­al fake news will undoubt­ed­ly decide to cast a bal­lot for Trump, the true aim is arguably more sin­is­ter — to dis­ori­ent and upset poten­tial vot­ers, caus­ing them to dis­en­gage from pol­i­tics entire­ly, and to sim­ply turn away.

In many ways, this strat­e­gy is mere­ly a con­tin­u­a­tion of what the Trump cam­paign pur­sued four years ago under the tute­lage of pro­pa­gan­dist extra­or­di­naire Stephen K. Ban­non. An archi­tect of polit­i­cal dis­in­for­ma­tion, Ban­non infa­mous­ly laid out his doc­trine in 2018, report­ed­ly stat­ing, ​“The Democ­rats don’t mat­ter. The real oppo­si­tion is the media. And the way to deal with them is to flood the zone with shit.”

As Trump’s 2016 cam­paign CEO and lat­er White House chief strate­gist, Ban­non brought with him lessons he gleaned as the for­mer exec­u­tive chair­man of Bre­it­bart News: make up sto­ries with explo­sive alle­ga­tions against polit­i­cal ene­mies, attempt to get them picked up by main­stream out­lets, and reap the prof­its. But par­ti­san­ship and per­son­al enrich­ment aren’t Bannon’s sole moti­va­tions — he also seeks to cre­ate chaos, so that fact and fic­tion are hard­er to differentiate.

In this sense, Ban­non is fol­low­ing in the foot­steps of anoth­er polit­i­cal Sven­gali, Russia’s Vladislav Surkov. As a top aide to Russ­ian Pres­i­dent Vladimir Putin, over the 2000s, Surkov sought to cre­ate a sys­tem where, as film­mak­er Adam Cur­tis explained in his 2016 doc­u­men­tary Hyper­Nor­mal­i­sa­tion, ​“no one was sure what was real or what was fake.” Surkov achieved this by spon­sor­ing all sorts of oppo­si­tion­al orga­ni­za­tions and cam­paigns in the coun­try — from neo-Nazi skin­heads to anti-fas­cist net­works — cre­at­ing an atmos­phere of bewil­der­ment among the pop­u­la­tion in order to push through author­i­tar­i­an aims.

The intent of this strat­e­gy was to cre­ate a form of ​“man­aged democ­ra­cy” where­in cit­i­zens have a right to express them­selves, but with­out real­ly being able to change — or even under­stand — polit­i­cal deci­sion-mak­ing, or outcomes.

The premise stems in part from the con­cept of ​“ket­tle log­ic” as laid out in the late 1990s by French the­o­rist Jacques Der­ri­da, ref­er­enc­ing Sig­mund Freud’s famous sto­ry from his book The Inter­pre­ta­tion of Dreams. As the sto­ry goes, in return­ing a dam­aged ket­tle to his neigh­bor, the wreck­er offers a series of con­flict­ing expla­na­tions: ​“It’s not actu­al­ly dam­aged; it was already dam­aged when you offered it to me; I nev­er bor­rowed your ket­tle.” Freud called this a form of dream log­ic. And as Der­ri­da point­ed out, it’s also an effec­tive argu­men­ta­tive device, as the para­dox­i­cal accounts chip away at the notion of objec­tive truth, lead­ing to con­fu­sion and, ulti­mate­ly, acquiescence.

In Putin’s Rus­sia, Surkov helped move this con­cept from post-mod­ern the­o­ry into the real world of pol­i­tics. And through his efforts on the Trump cam­paign, Ban­non par­al­leled Surkov’s strat­e­gy in the Unit­ed States, unleash­ing a bar­rage of fal­la­cious and mis­lead­ing sto­ries into the media ecosys­tem. As Ned Resnikoff report­ed in 2016, ​“the sheer vol­ume of these sto­ries had their intend­ed effect. When fake news becomes omnipresent, all news becomes sus­pect. Every­thing starts to look like a lie.”

Flash to today, and Ban­non is back at it. Though he may no longer be an offi­cial mem­ber of the Trump admin­is­tra­tion, he’s been hard at work push­ing out the same type of dis­in­for­ma­tion that helped ele­vate a swarm of white nation­al­ists into the White House four years ago.

That dis­cred­it­ed report about coro­n­avirus orig­i­nat­ing in a Wuhan lab? Ban­non was one of the tac­ti­cians behind it, and on his pod­cast, he even (with­out evi­dence) sug­gest­ed that Chi­na inten­tion­al­ly infect­ed Pres­i­dent Trump with the dis­ease. It’s a sim­i­lar sto­ry with the lap­top child sex scan­dal which Ban­non has been pro­mot­ing since late Sep­tem­ber, telling a Dutch TV sta­tion at the time (again with­out evi­dence): ​“I have the hard dri­ve of Hunter Biden.”

You don’t have to believe these sto­ries for them to have their intend­ed effect. Rather, by such mes­sages cas­cad­ing across our screens and inun­dat­ing our con­scious­ness, their man­u­fac­tur­ers have already suc­ceed­ed, build­ing a wall of decep­tions that leads audi­ences to retreat from the polit­i­cal are­na, see­ing all of its actors as lying cons.



Regard­less of what hap­pens on Elec­tion Day, this attack on our notion of shared real­i­ty will stand — along­side a suite of racist, anti-work­er actions and judi­cial appoint­ments — as a stark lega­cy of the Trump admin­is­tra­tion. In truth, the polit­i­cal strat­e­gy is tied direct­ly to the con­tent of pol­i­cy. After all, Ban­non was an engi­neer of Trump’s xeno­pho­bic Mus­lim trav­el ban, a vocal pro­po­nent of build­ing a mas­sive wall on the South­ern bor­der and a defend­er of exit­ing the Paris Cli­mate Accord. Now, Bannon’s for­mer pro­tégé and cur­rent Trump advis­er Stephen Miller report­ed­ly plans a ​“blitz” of anti-immi­grant exec­u­tive orders — includ­ing end­ing birthright cit­i­zen­ship and slash­ing refugee admis­sions to zero — if the pres­i­dent wins reelection.

With polls show­ing Biden lead­ing both nation­al­ly and in bat­tle­ground states, that out­come appears in doubt. But Ban­non has a plan for that, too.

At an Octo­ber 10 forum host­ed by the Young Repub­li­can Fed­er­a­tion of Vir­ginia, Ban­non stat­ed: ​“At 10 o’clock or 11 o’clock… on Novem­ber 3, Don­ald J. Trump is going to walk into the Oval Office, and he may hit a tweet before he goes in there… and he’s going to sit there, hav­ing won Ohio, and being up in Penn­syl­va­nia and Flori­da, and he’s going to say, ​‘Hey, game’s over.’ ”

The pos­si­bil­i­ty of Trump declar­ing vic­to­ry before all of the votes are count­ed in an anti-demo­c­ra­t­ic pow­er grab has been a con­cern in Demo­c­ra­t­ic cir­cles for months, but the president’s for­mer chief strate­gist pre­view­ing such an out­come gives it fresh cre­dence. And, Ban­non con­tin­ued, ​“Once we set that pred­i­cate that Trump’s the win­ner on Elec­tion Day, that is mighty hard to unwind… He [Trump] is not going to go qui­et­ly into that good night, trust me.”

Is this pre­dic­tion a promise, or just more dis­in­for­ma­tion meant to gum up the elec­toral process and turn poten­tial vot­ers away from the polls, believ­ing it all to be a big fraud?

Pathol­o­giz­ing Ban­non may be a fool’s errand, but one thing’s for sure: He stands to ben­e­fit enor­mous­ly from Trump’s reelec­tion. With the far-right mas­ter­mind fac­ing counts of fraud for alleged­ly siphon­ing off hun­dreds of thou­sands of dol­lars from donors to the ​“We Build the Wall” online fundrais­ing cam­paign — charges that car­ry a lengthy prison term — Ban­non is like­ly hop­ing for a pres­i­den­tial par­don of the type received by fel­low MAGA spin­meis­ter Roger Stone.

In 2019, Surkov wrote an arti­cle in a Russ­ian news­pa­per claim­ing that, as a result of years of fraud­u­lent media and polit­i­cal tumult, those of us in the West ​“don’t know how to deal with their own altered con­scious­ness.” That’s cer­tain­ly the hope of Ban­non and oth­er devo­tees of Trump­ism. It’s up to us to learn how to deal with this new unwieldy ter­rain, and take con­trol of our pol­i­tics — before we’re lost in the flood.

Willie Nelson - Vote 'Em Out

 

https://www.youtube.com/watch?v=7CjH7hOuq_Q&ab_channel=WillieNelsonVEVO

If Trump Loses COVID-19 Will Likely Get a LOT Worse Until He Leaves Office on Jan. 20th

 

https://www.youtube.com/watch?v=PVujx0gAhHI&ab_channel=TheHumanistReport