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 Dr. Rasmus addresses the rising chorus from conservative politicians, media, and ‘paid for’ economists that the Fiscal stimulus bills being proposed ($1.8T American Rescue Plan, $2.2T American (Infrastructure) Jobs Plan, and $1T American Families Plan) will soon overheat the US economy and cause rapid rise in inflation. What are the actual forces driving/not driving prices today in 2021? What’s wrong with the way the US government estimates inflation? Why does it underestimate it in order to overestimate real GDP growth? Why are the government’s methodology for estimating inflation kept a ‘secret’ from the public?  Dr. Rasmus also comments on today’s Labor Dept. Jobs Report that missed forecasts of jobs created in April by more than 1 million. What’s going on? And what about that phony argument that workers are getting too much unemployment benefits, causing them to refuse to return to work at poverty level minimum wages ($7.25/hr. or $2.13/hr. for restaurant workers). Check out Dr. Rasmus’s latest print publication, “US 1st Quarter GDP: Recovery or Just Another Rebound’, at http://jackrasmus.com.

 Today’s show dissects US GDP for January-March just reported and explains why the media’s hyping of 6.4% is actually less than 1.6%. What’s really happening with consumption, business spending, government spending, and the trade balance drag on the economy.  Biden’s recent speech announcing his 3rd leg of his fiscal spending stool, the American Families Plan, is then broken down in detail. How much of the three fiscal programs—American Rescue Plan, American Jobs Plan, American Families Plan—will actually impact the US economy this year 2021? What are the major ways Biden proposes to pay for the spending and how much of Trump’s $4.5 trillion 2018 tax cuts be rolled back in the Biden plan.

 This past week Biden proposed to raise the capital gains tax (on profits from stocks, bonds, real estate sales, financial assets, etc.) from its current 20% to 39.6% on all capital gains profits over $1 million. Business and investor reaction has been apoplectic and immediate. Raising the tax, they claim, will collapse business investment and cut short any economic recovery, they and the business press are proclaiming! But what are the facts on how capital gains effects the real economy, jobs, incomes, business and consumer spending, and therefore US GDP and growth? Today’s Alternative Visions show addresses the growing debate on taxing capital gains by the Biden administration in particular, as well as raising taxes in general to pay for Biden’s Infrastructure plan (aka ‘American Jobs Act’) and his soon to be announced additional ‘Family Act’

 Dr. Rasmus follows up last week’s analysis of the Union defeat at Amazon by placing it in historic context, from the growth of union membership in the 1930s and 1940s to the great strike wave of 1970-71 and the Great Detour and decline of unions under Neoliberal industrial parties that began with Reagan in the 1980s and continues to this day. How the 1947 Taft Hartley and 1959 Landrum Griffin Acts stopped union strikes for recognition in their tracks and how Employer-State strategy cooperation in the 1970s and beyond have rolled back union membership in the private sector from its peak of 35% (80% in basic industries like auto, steel, transport, etc.) to its barely 5% today. Rasmus explains the strategies and tactics used by employers, with aid of government, to prevent unionization in NLRB elections, such as recently occurred at Amazon. How these strategies and tactics—along with offshoring, free trade, onshoring of H1-B visas, outsourcing, contingent, gig, and other work—have together resulted in a near collapse of private sector unionization in America. Rasmus concludes with a comment on the failure of Obama administration do reform the problem of de-unionization and pass ‘card check’, as well as a review of the Biden administration’s recent PRO Act bill recently passed by the US House of Representatives but all but dead in the US Senate committee.

 Dr. Rasmus reviews the notable economic events and data of the past week. Included are Treasury Secretary, Yellen, proposes for a minimum global corporate tax for the 20 advanced economies, in the latest effort to stop the corporate manipulation of taxes and ‘race to the bottom’ globally in corporate tax revenues; the IMF’s proposal to raise $650 billion in Special drawing rights (SDRs) in anticipation of more sovereign debt defaults coming in emerging market economies; Larry Summers’ latest defense of corporations by critiquing plans to raise corporate taxes; latest jobs data showing a million new jobless claims every week despite the growing media puffery about the US economy now booming; growing signs of financial fragility globally and looming future defaults in the US from leisure & hospitality to urban office buildings; dangerous new strains of Covid spreading; and the recent union vote at Amazon.

today’s show focuses on Biden’s just announced Infrastructure Plan. Called a jobs plan, it will produce few jobs in 2021-22 and have virtually no impact on the near term 2021 economic recovery effort. Estimated by the Wall St. Journal at $2.3T, over 8 yrs., very little will hit the US economy in the much needed early stage of recovery in 2021. At best it will be passed no sooner that 3rd quarter 2021 and not then if filibuster in Senate is upheld. Composed of two phases, the second will not likely be passed (if at all) until 2022. Combined with the Biden prior Covid 19 Relief bill (American Rescue Plan) which projects less than $1T spending in 2021, the combined two fiscal spending bills (ARP and now American Jobs Plan, aka Infrastructure bill) will provide roughly $1 trillion stimulus to US economy in 2021, as it reopens aggressively in coming months. Dr. Rasmus discusses the outlines of Biden’s Tax plan, designed to cover part of the cost of the two stimulus bills. (see last week’s show for more details on Biden’s tax proposals).

Dr. Rasmus provides a first look at President Biden’s Tax proposals, designed to roll back the worst of Trump’s $4T tax cuts in 2018 for businesses and investors. Rasmus describes the 40 year historical tax shift in favor of the 1% wealthiest households, their businesses and their investments—a key hallmark of Neoliberalism policy since 1981.  Biden’s 3-part economic recovery program—the $1.8T recent stimulus, the $2T-$3T infrastructure bill to be announced next week, and the tax proposals to help pay for both—are described in context of a struggling US economy and a global deterioration in Europe and elsewhere of the fight against Covid 19 and another economic downturn in many economies. What’s happening in Europe and the prospects of a third wave of Covid based on new and more dangerous variants from UK, So. Africa, and Brazil. Rasmus introduces the show with commentary on the current, intensifying fight to retain even limited democracy in America—as Republicans launch voter suppression legislation in 43 states and as Democrats offer HR 1 in Congress to ensure absentee and mail in voting. America’s ‘triple crises’ of Covid, a faltering economy, and a declining democracy are not over. Is a new phase in each on the horizon?

 Now that the Biden $1.9T (actually $1.8T) fiscal stimulus has passed, mainstream economists and media are pumping up the rhetoric it will soon lead to excess inflation and rising interest rates that will endanger the economic recovery. Rasmus debunks the notion that deficits and debt—or ‘too much money chasing too few goods’ cause inflation, as well as related ideological notions of mainstream economics. What has been the actually deficits in 2020-2021 due to the three bouts of economic fiscal stimulus during the pandemic (March, December, and now March again)? What have been the actual causes of the deficits (besides the fiscal stimulus)? What’s the likelihood of inflation in 2021 and beyond and its real causes apart from deficit spending? What are financial markets reacting now so negatively driving up long term Treasury interest rates? And what instability might that lead to?

Wall St., Financial Bubbles, & Financial Instability

February 15, 2021 by jackrasmus

Recently I was asked to explain by Michael Albert and ‘Revolution Z’ media how Wall St. stock markets work, what’s up with the recent Gamestop bubble, what’s financial speculation, what causes financial instability and crises–and how they are all related to, or unrelated to, the real economy. Presented in simple terms, the interview clarifies for laypersons how the current capitalist financial system functions to make investors ever richer, while the rest of the real economy experiences periodic great recessions, wages stagnate and fall, and the quality and quantity of jobs deteriorates.

https://www.patreon.com/posts/47552141

 

 Dr. Rasmus discusses the various warning signs in the US economy now emerging, despite the official talk of GDP recovery underway this quarter: the Fed’s warning this week of rising ‘insolvency risk’ and business bankruptcies coming; new claims for jobless benefits rising again and consistently more than 1 million/week since October; the recent retail sales bump as really a warning not good news; financial market bubbles churning as investors chase ever more risky yield in cryptocurrencies and worthless stocks; China’s introduction of its own digital currency; and growing indications of Biden’s ‘bipartisan back-tracking’.

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