Getting Biden's Build Back Better Plan Over the Finish Line
by John Lawrence
These guys are experienced negotiators. You'd think by now they would have designed multiple plans containing most of the things progressives want and most of the things Joe Manchin wants. Obviously, he has to approve the final plan. There are various ways to get the cost down from eliminating entire programs to shortening the lengths of some or all programs. Also, as Manchin wants, you can means test some of the programs. I think the emphasis should be on children. That means the expansion of Medicare could go by the wayside. As a Medicare recipient, I wouldn't be too upset to see that happen. In its place, at a later time, I would like to see legislation to implement Biden's agenda item that calls for an increase in social security benefits. Under his plan, eligible workers would get a guaranteed minimum benefit equal to at least 125% of the federal poverty level. People who have received benefits for at least 20 years would get a 5% bump.Widows and widowers would receive about 20% more per month. The Federal poverty level for a single person is $12,760. 125% of that would be $15,950. The cost of living increase would add another 5.9% or $941.05 for a total of $16,891.05. This comes out to be $1407.59 a month. For 2020, the minimum Social Security benefit at 62 was $628. So Biden's agenda would call for more than doubling it. Of course the cost for Medicare Part B, which is $148.50 is deducted from your monthly social security check. This means that the minimum social security monthly check for some people is less than $500., hardly a living wage at the present time.
So leaving out benefits for seniors and means testing pre-K and community college could bring the price tag for Biden's Build Back Better plan considerably lower. Manchin wants to scale back the climate change component, but he's not wanting to cancel it altogether. Again, this item can be revisited later or as part of a separate bill. The child tax credits, which benefit lower income families, should be left in as well as the Child and Dependent Care Tax Credit. The Earned Income Tax Credit Expansion could stay in as well as the benefit that lets seniors receive care at home rather than having to go to a nursing home. In short there are a lot of things in the American Families plan that could be modified or left out or revisited later. Climate change will be an ongoing issue that won't be resolved for at least 50 years. Since climate change is the main sticking point as far as Manchin is concerned, that provision, as important as it is, for sure needs to be modified.
Since there a lot of moving parts in the Build Back Better plan, there are lots of modifications that can be made. Several versions of these plans should be set out with the proviso that at least one of them needs to be agreed upon by all parties. The fact that Manchin and possibly Sinema has veto power needs to be accepted as reality, but some plan needs to be nailed down and soon. Playing chicken with Biden's Build Back Better plan is not acceptable. Democrats need to accept a win for all parties. They can't let the perfect be the enemy of the good. Watson-Watt, who developed early warning radar in Britain to counter the rapid growth of the Luftwaffe, propounded a "cult of the imperfect", which he stated as "Give them the third best to go on with; the second best comes too late, the best never comes." Economist George Stigler says that "If you never miss a plane, you're spending too much time at the airport." Democrats need to pay the pipers (Manchin and Sinema) and get on with it. They are wasting too much time. It should be obvious where the compromise lines are to be drawn by this time.
Sen. Kyrsten Sinema (D-Ariz.) attends an event hosted by the Arizona Chamber of Commerce & Industry at the Arizona Biltmore Resort in Phoenix on May 17, 2019. (Photo: Gage Skidmore/Flickr/cc)
"She might as well start fundraising for McConnell at this point."
With President Joe Biden's popular legislative agenda hanging in the balance largely due to her obstruction, Democratic Sen. Kyrsten Sinema left the country this week to raise campaign cash in Europe—a trip that was reported as new polling showed she is completely underwater with Arizona voters.
"She's not only endangering her own reelection, but the reelection of Dems across the board."
According to survey results
>released Thursday by the progressive polling outfit Data for Progress, 70% of likely Democratic primary voters in Arizona disapprove of Sinema's job performance and overwhelmingly prefer candidates floated as potential primary challengers—a sign that she's poised to lose her seat in 2024, assuming she runs for reelection.
Infuriated by Sinema's conduct throughout the reconciliation talks, Arizona activists who helped elect the Democratic senator are already laying the groundwork for a primary in an effort to ensure she doesn't win another six-year term.
"While 2024 may seem a long way away, the damage Sinema is doing is happening right now, and she’s acting this way because she thinks she won’t face political consequences," political strategist Steve Phillips wrote in a column for The Nation on Wednesday. "In fact, she thinks these actions will add up to electoral success. But her math is wrong, as is her moral compass."
In a summary of its new findings, Data for Progress noted that "Arizona Democratic primary voters say they would be more likely to support a candidate who votes in favor of every major provision of the Build Back Better plan we tested."
"From universal pre-K to expanding Medicare benefits," the group said, "Arizona voters—those Sinema would be courting in a 2024 primary—express they are more likely to support candidates who back these Build Back Better agenda items by wide-ranging margins."
Rahna Epting, executive director of MoveOn, warned Thursday that by threatening tank Biden's popular Build Back Better reconciliation proposal, Sinema putting both her own political career and her party's fragile control of Congress at risk.
"She's not only endangering her own reelection, but the reelection of Dems across the board—thereby making it easier for the MAGA-hijacked GOP to regain power in '22," Epting argued on Twitter, pointing to the upcoming midterm elections.
Responding to Sinema's trip to Europe in the middle of negotiations over the reconciliation bill that she's holding up, Epting quipped, "She might as well start fundraising for [Republican Senate Minority Leader Mitch] McConnell at this point."
American Troops Have Left Afghanistan. So Has American Money - $300 Million Per Day
by John Lawrence
Afghanistan's economy must be in freefall. The US was spending $300 million a day each and every day there for 20 years! Now the US is spending nothing. American troops have left and, more importantly, American money has left. So can we now cut the defense budget? It would have been better if, instead of sending in American troops 20 years ago, we had sent in the Peace Corps for a fraction of the money the American military presence has cost. By now much could have been accomplished like roads, bridges, schools, hospitals, water and sewage systems and other critical infrastructure. Instead we spent $300 million a day for 20 years blowing things up and getting blown up ourselves. It's a testament to the folly of warfare. Now, hopefully, diplomacy and resettlement of refugees and building infrastructure will take place both there and here at home where efforts in the domain of Peace are badly in need as well. The US has infrastructure needs, resettlement of refugee needs (think the growing homeless population), both hard and human infrastructure needs, building things up instead of blowing things up.
All the generals who were shuffled in and out of Afghanistan couldn't think of what we could have done better there because all they could think was in military terms. They couldn't conceive of the possibility that the reason they were all so unsuccessful was precisely because any and all military solutions were not the right ones. They could not conceive of building peace there, only fighting an enemy. Well, it got them substantial pay raises, and it made money for the military-industrial complex. Now we need a peace-industrial complex. If we want to save the planet and not just indulge the present American inhabitants of planet earth to the max, we need to build green infrastructure all over the world. But even before we do that, we need to solve the worldwide pandemic which we can not seem to solve even here at home because there are so many people who won't believe in the obvious solution until one of their family members dies.
Forever wars have stunted the mindsets of the American people leading them to embracing far right jingoistic and chauvinistic militarism. The mindset would be considerably different if the US had put as much energy as it has put into militarism into peace activities, if peace had even been given due consideration as an alternative to war. In fact it's not too much of a stretch to say War is Us. This mindset came to fruition on January 6 with the insurrection. Biden is trying to turn the corner but he can only do so much per unit time. He has done considerable so far ending the war in Afghanistan and doing everything humanly possible to end the pandemic. His human and hard infrastructure agenda is still pending, but I believe it will eventually pass because it has been set up in such a way that either everybody wins if it passes or everybody loses if it doesn't. The way the twin bills were constructed, one that will pass by budget reconciliation and one bipartisan, represents political ingenuity. It's making the most of the slim Democratic majorities in both Houses of Congress. Even after those twin bills pass and get made into law, there is much to be done, voting rights reform in particular. I think Biden will get the major part of his agenda accomplished - probably in 2 years. After that who knows what will happen if Republicans win one or both Houses in the midterm elections.
Right now, Democrats are working to pass a $3.5 trillion package that will provide long overdue help for working Americans.
The final bill hasn’t yet been determined, so we don’t know the exact dollar amounts for all its policies. We’ll probably find that out in late September or early October. For now, the Democrats’ budget resolution frames what’s in the bill.
First, on families:
The bill would make permanent key benefits for working families, including the expanded child tax credit in the pandemic relief plan that sends families up to $300 per child each month but is now set to expire in December, and is estimated to cut child poverty by half.
It would also establish universal child care, for which low- and middle-income households would pay no more than 7 percent of their incomes.
And provide a national program of paid leave — worth up to $4,000 a month — for workers who take time off because they are ill or caring for a relative.
Next, on education:
The bill would reduce educational inequality by establishing universal pre-K for all 3- and 4-year-olds, benefiting an estimated 5 million children, and providing tuition-free community college – essentially expanding free public education from 12 years to 16 years.
It will also invest in historically Black colleges and universities and increase the maximum amount of Pell grants for students from lower-income families.
On health care:
The bill expands Medicare to include dental, vision, and hearing benefits and lowers the eligibility age. It also expands Medicaid to cover people living in the 12 states that have not yet expanded Medicaid, and makes critical investments to improve healthcare for people of color.
The big question is how far it will go to reduce prescription drug prices by, for example, allowing Medicare to negotiate prices with pharmaceutical companies. That could reduce Medicare and Medicaid spending, and free up more money for other parts of the bill. But Big Pharma is dead-set against this.
Big corporations and the rich picking up the tab:
In another step toward fairness, all of these are to be financed by higher taxes on the rich and big corporations.
The bill would also increase the Internal Revenue Service’s funding so the agency can properly audit wealthy tax cheats, who fail to report about a fifth of their income every year, thereby costing the government $105 billion annually.
In addition, the bill tackles the climate crisis, which also especially burdens lower-income Americans:
There are a range of solutions – subsidizing the use of solar, wind, nuclear and other forms of clean energy while financially penalizing the use of dirty energy like coal; helping families pay for electric cars and energy-efficient homes.
The bill might include something known as a carbon border adjustment tax — a tax on imports whose production was carbon-intensive, like many from China.
The bill would also establish a Civilian Climate Corps, and invest in communities that bear the brunt of the climate crisis.
And the bill helps American workers:
It will hopefully contain much of the PRO Act, the toughest labor law reform in a generation.
Finally, the bill includes a pathway to citizenship for undocumented immigrants. This is all about making America fairer.
Remember: we won’t know the exact details of the bill for at least a month, but these are the main areas that it will focus on. The big challenge will be ensuring Senate Democrats remain united to get it passed. All of us will need to fight like hell.
Don’t listen to spending hawks who claim it’s too expensive or too radical. For far too long, our government has ignored the needs of everyday Americans, catering instead to the demands of corporations and the super-rich. No more.
It’s time to get this landmark bill passed and build a fairer America.
Good on President Biden for Using His Visit to the Flood Zones to Give a Tutorial on Climate Change
by John Lawrence
Previously, after a natural disaster no one mentioned climate change. There was much bemoaning and commiserating, but Biden took a different tack. He lectured the American people about climate change and how it contributed to the disasters that had befallen the unfortunate. What's more he said they would continue and get worse unless we undertake to do something about it. No more attributing the disasters to one in 500 year events. That language is totally out the window. No more statements like "I've never seen anything like this my entire life." Get used to it. People are going to see a lot more of these climate disasters from now on. As President Biden said, we can't prevent these disasters from happening on a regular basis, but we can do something about them getting a lot worse. Meanwhile the fossil fuel industry is running ads on TV about how wonderful the oil and gas industry is, and they are lobbying their evil little hearts out to get politicians on their side.
“The nation and the world are in peril,” President Biden said after touring storm damage in New York and Jersey. “And that’s not hyperbole. That is a fact.”
"Folks — and we have to take some bold action now to tackle the accelerating effects of climate. If we don’t act — now I’m going to be heading, as Chuck knows, as the senator knows, I’m going to be heading from here to Glasgow, Scotland, for the COP meeting [United Nations Climate Change Conference], which is all the nations of the world getting together to decide what we are going to do about climate change. And John Kerry, the former secretary of state, is leading our effort, putting it together.
"We are determined, we are determined that we are going to deal with climate change and have zero emissions, net emissions by 2050. By 2020 [sic] (he meant 2030), make sure all our electricity is zero emissions. We’re going to be able to do these things. But we’ve got to move. We’ve got to move. And we’ve got to move the rest of the world. It’s not just the United States of America.
"And so, folks, this summer alone, communities with over 100 million Americans — 100 million Americans call home — have been struck by extreme weather. One in every three Americans has been victimized by severe weather. The hurricanes along the Gulf, the East Coast, up through this community. And I saw the human and physical cost firsthand, as I said, in Louisiana.
"And, folks, the evidence is clear. Climate change poses an existential threat to our lives, to our economy, and the threat is here, it’s not going to get any better. The question: Can it get worse? We can stop it from getting worse.
"And when I talk about building back better — and Chuck is fighting for my program, for our program on the Hill — when I talk about building back better, I mean you can’t build to what it was before this last storm. You got to build better so that if the storm occurred again, there would be no damage. There would be.
"But that’s not going to stop us, though, because if we just do that, it’s just going to get worse and worse and worse. Because the storms are going to get worse and worse and worse. And so, folks, we’ve got to listen to the scientists and the economists and the national security experts. They all tell us this is code red.
"The nation and the world are in peril. And that’s not hyperbole. That is a fact. They’ve been warning us the extreme weather would get more extreme over the decade, and we’re living in it real time now."
Biden is telling it like it is. The American people are in for a lot more of these climate disasters, and we can't stop them immediately. It's going to take decades to get this problem under control, and that's only if we go full steam ahead by taking measures to get it under control. Meanwhile, there are measures which can be taken to mitigate the costs both human and financial from these climate disasters. People must move out of flood plains and areas prone to forest fires. We must underground utilities so that the power doesn't go out during hurricanes and wildfires. That goes for cell phones and cable TV too. People have to have secure means of communication even during a climate disaster. Building codes need to be upgraded. Water management needs to improve so that torrential rains do not just become runoff that turns into floods. That water is precious and needs to be transported to parts of the country that are in more or less perpetual drought. The power grid needs to be hardened. Transportation needs to be electrified. Power generation needs to use renewable sources, and advanced nuclear needs to be developed. Ways of making steel and concrete need to be developed that don't use fossil fuels and the methods of doing so need to be scaled up and spread throughout the whole world. Agriculture needs to be made organic and factory farms eliminated. It's not enough for the US and the developed world to do the right things. Green infrastructure must be developed and spread to the whole world. We must partner with China in a Green Belt and Road Initiative. They are very advanced in building infrastructure throughout the world. While the US has been fighting needless wars, China has been building infrastructure albeit not green infrastructure. From now on coal fired power plants in India and China need to be eliminated and replaced with renewable energy and advanced nuclear power generation.
People Will Not Even Get a Vaccination to Fight the Pandemic. Would They Put Up With Rationing to Fight Climate Change?
by John Lawrence
In World War II, Americans sacrificed for the common good. Today some will not even get a free vaccination for the common good. On August 28, 1941, President Roosevelt’s Executive Order 8875 created the Office of Price Administration (OPA). The OPA’s main responsibility was to place a ceiling on prices of most goods, and to limit consumption by rationing. The OPA rationed automobiles, tires, gasoline, fuel oil, coal, firewood, nylon, silk, and shoes. Americans used their ration cards and stamps to take their meager share of household staples including meat, dairy, coffee, dried fruits, jams, jellies, lard, shortening, and oils. Resources were devoted to the war effort and not to Americans' consumption. Today we live in a consumer society. Would Americans resist if they lost their freedom to consume? That's what freedom means to most Americans. What if those resources were needed in the fight against climate change?
Would Americans put up with a shift from a consumer society to an all hands on deck building infrastructure to mitigate climate change society? Advertising budgets would dry up because the purpose of advertising is to get you to buy more stuff. What if your consumption was limited to essentials as it was during WW II? Freedom in America is the freedom to consume whatever you have the money to buy. What if you couldn't do that any more? What if the purveyors of nonessential products didn't have the freedom to sell you stuff that you really don't need in order to devote resources both human and material to Biden's building back better agenda? Is it some people's right to consume while other people are wiped out due to extreme weather events like fires and flooding? Should the rich be restricted from spending their money on luxury items like private jets and yachts? Should they be taxed heavily to provide the financial resources for mitigation and adaptation to global warming? Would billionaires have to give up their rocket ships? Do thy even care about the world that our children and grandchildren will inherit?
So if people are protesting that getting a free vaccination is against their concept of what being a free American is, how much more are they going to complain if they had to go without some consumer activity that they have become accustomed to? They are just not the type to roll up their sleeves and pitch in to do their part to mitigate or adapt to global warming. Just as the dying unvaccinated finally wish that they had heeded the warnings and got vaccinated, as long as some extreme weather event hasn't destroyed their home or impacted them in any way, they will continue to stick their heads in the sand and deny that global warming really exists. For them it will just be another government conspiracy theory while they will find charlatans in social media who will reassure them that global warming is still a hoax.
A shipment of fossil fuel-free steel, produced by a joint venture between three Swedish firms, was ... [+] HYBRIT/Magnus Kryssare
Sweden has delivered the world’s first shipment of steel produced without the use of fossil fuels, a major milestone on the road towards cutting carbon emissions from industry.
A shipment of the steel was delivered to Swedish truck maker Volvo AB, but industrial quantities of the stuff won’t be available until 2026.
The news is significant in the context of efforts to limit climate change. While much emphasis has been placed on the role of fossil fuels in electricity generation, research published by Carbon Brief shows that just 553 conventional steel plants worldwide are responsible for 9% of all carbon dioxide emissions, owing to the large quantities of fossil fuels—in particular coking coal—used to produce the alloy. The IEA forecasts that steel production globally will grow by a third through to 2050.
Speaking at a press conference, the Swedish minister for business, industry and innovation Ibrahim Baylan said he was “happy to be minister for enterprise and energy in a country where industry is bubbling with energy for a [green] reset.”
Baylan further noted: “Industry and especially the steel industry create large emissions but are also an important part of the solution.”
The steel was created by a joint venture between Swedish steelmaker SSAB, energy company Vattenfall, and iron ore miner LKAB. A technology dubbed HYBRIT—a contraction of Hydrogen Breakthrough Ironmaking Technology—replaces fossil fuels both in the production of the iron pellets that are the key ingredient of steel, and in the removal of oxygen from the iron by replacing carbon and coke with green hydrogen. SSAB then uses that iron to produce steel slabs for delivery.
Baylan further noted: “Industry and especially the steel industry create large emissions but are also an important part of the solution.”
The steel was created by a joint venture between Swedish steelmaker SSAB, energy company Vattenfall, and iron ore miner LKAB. A technology dubbed HYBRIT—a contraction of Hydrogen Breakthrough Ironmaking Technology—replaces fossil fuels both in the production of the iron pellets that are the key ingredient of steel, and in the removal of oxygen from the iron by replacing carbon and coke with green hydrogen. SSAB then uses that iron to produce steel slabs for delivery.
Comparison of conventional fossil fuel-based steelmaking process versus the new approach from ... [+]
HYBRIT
The whole country of Sweden produced just over 45 million metric tons of CO2 emissions in 2020, but across all its operations SSAB was responsible for almost 9 million. HYBRIT claims that by eliminating fossil fuels from the steelmaking process, it could reduce Sweden’s total CO2 emissions by “at least” 10%.
Martin Lindqvist, CEO of SSAB, told media: “The first fossil-free steel in the world is not only a breakthrough for SSAB, it represents proof that it’s possible to make the transition and significantly reduce the global carbon footprint of the steel industry. We hope that this will inspire others to also want to speed up the green transition.”
Anna Borg, CEO of Vattenfall, which is also responsible for some of Europe’s largest wind farms, said HYBRIT “shows how partnerships and collaboration can contribute to reducing emissions and building competitiveness for industries.”
SSAB, LKAB and Vattenfall say they will begin full industrial production of the new steel in 2026. Earlier this year, Volvo announced that it would be the first manufacturer to produce vehicles from fossil-free steel.
While this project might be the first to deliver, it’s far from the only project working on the challenge to create “green steel.” Other Swedes are racing to be the first to create industrial quantities, with H2 Green Steel claiming it will be up and running by 2024.
Outside Europe, China’s Baowu, the world’s largest steelmaker, has committed to achieving net zero carbon emissions by 2050, and is beginning to develop hydrogen technologies as a way to cut fossil fuels out of production. India’s Tata steel has developed what it calls the HIsarna process, which still uses coal but claims to reduce emissions by 20%. Meanwhile, Japan’s COURSE 50 project uses a range of technologies to reduce emissions from the blast furnace.
Update 08/23/2021 BST0933: This post has been updated to clarify that the HYBRIT process covers the iron pelletizing and ironmaking stages of the process.
Reps. Ilhan Omar (D-Minn.) and Pramila Jayapal (D-Wash.) listen during an event on June 17, 2021 on Capitol Hill in Washington, D.C. (Photo: Joshua Roberts/Getty Images)
An effort by nine conservative House Democrats to force a quick vote on a bipartisan infrastructure bill reportedly began to collapse over the weekend as progressive lawmakers—and Speaker Nancy Pelosi—made clear that they would not allow the legislation to advance until the Senate also passes a sweeping reconciliation package, a centerpiece of the majority party's agenda.
Earlier this month, Rep. Josh Gottheimer (D-N.J.) and eight other Democrats sent a letter to Pelosi (D-Calif.) threatening to vote down a $3.5 trillion budget resolution—a measure that sets the stage for the reconciliation package—unless the House first passes a $550 billion bipartisan infrastructure bill that the Senate approved on August 11. Their stance won the support of powerful actors in Washington, most prominently the U.S. Chamber of Commerce, the biggest-spending corporate lobbying organization in the country.
"This is the path forward: we're passing the bipartisan infrastructure bill alongside the jobs and families package. Period." —Rep. Pramila Jayapal
But with the House set to reconvene Monday to take up the multitrillion-dollar budget resolution, "several" members of the conservative group have decided to drop their threat to vote against the measure, the American Prospectreported.
While the Prospect's David Dayen stressed that "the situation is very malleable and fluid," it appears that House progressives' firm support for delaying a vote on the bipartisan bill is beginning to pay off.
On August 10, just days before Gottheimer's group sent its letter, the nearly 100-member Congressional Progressive Caucus (CPC) announced that a majority of respondents to an internal survey said they would be willing to withhold their votes for the bipartisan legislation until the Senate also passes a reconciliation bill, a move that's not expected until next month.
"This is the path forward: we're passing the bipartisan infrastructure bill alongside the jobs and families package. Period," Rep. Pramila Jayapal (D-Wash.), the chair of the CPC, said last week. "The American people expect us to deliver on child care, paid leave, housing, healthcare, climate action, and more—and we must."
Progressives have openly voiced concern that passing the bipartisan measure before the Senate approves a reconciliation package would free conservative Democrats to vote against the latter bill, potentially imperiling trillions of dollars in green energy spending, Medicare expansion, paid family and medical leave, and other priorities.
"To my moderate colleagues: A vote against the Biden agenda this week is not only a slap in the face to the president, it will obstruct any shot at adopting the policies that define us as Democrats," Rep. Ro Khanna (D-Calif.), a CPC member, tweeted Sunday.
Pelosi, for her part, has said for weeks that the bipartisan measure and the reconciliation package—which Democrats plan to pass without any Republican support—must move at the same time in order to ensure the passage of both, a position that progressive lawmakers and outside advocacy groups have endorsed.
"We cannot afford any political maneuvers that undermine a guaranteed path towards at least $3.5 trillion of investments to combat climate change, uplift American families, expand healthcare, and secure our economic future," the youth-led Sunrise Movement and other progressive organizations wrote to Pelosi last week, urging the Speaker to stick to her position.
On Monday, progressive groups launched a six-figure ad buy targeting the nine right-wing Democrats.
During a private call with her leadership team last week, Pelosi—who has just three votes to spare—derided the group of nine conservative Democrats, saying, "This is no time for amateur hour."
At least two of the letter's nine signatories—Reps. Carolyn Bourdeaux (D-Ga.) and Vicente Gonzalez (D-Texas)—attended Pelosi's annual fundraiser in Napa, California over the weekend, but it's unclear whether they were among the conservative Democrats who have reportedly dropped their threat to tank the budget resolution. It's also not clear what may have compelled the conservative Democrats to flip; the Washington Postreported Sunday that some of the nine lawmakers "sought to negotiate a potential end to the standoff" with Democratic leaders, but no deal has been publicized as of yet.
On Sunday night, the nine conservative Democrats penned an op-ed in the Post "urging House leadership and the president to move [the bipartisan infrastructure legislation] through the House quickly, sign the bill, and get shovels in the ground and people to work." They also raised "concerns about the level of spending" in the budget resolution and warned against holding the bipartisan bill "hostage to reconciliation," an indication that House Democrats could still have trouble passing the resolution this week.
In a letter to the House Democratic caucus on Saturday, Pelosi reiterated her commitment to passing "both the Build Back Better Plan and the bipartisan infrastructure bill before October 1st."
"Any delay to passing the budget resolution threatens the timetable for delivering the historic progress and the transformative vision that Democrats share," Pelosi wrote. "In support of President [Joe] Biden's vision to Build Back Better, we must move quickly to pass the budget resolution this week. It is essential that our caucus proceeds unified in our determination to deliver once-in-a-century progress for the children."
The House is expected to begin the process of approving the budget resolution on Monday. Passage of the measure would set in motion the process of converting top-line spending figures into legislative text, a likely contentious effort that progressive lawmakers hope will yield historic investments in climate action, healthcare, affordable housing, and more.
"Rebuilding our crumbling physical infrastructure is very important," Sen. Bernie Sanders (I-Vt.), the chief architect of the $3.5 trillion budget resolution, said on Sunday. "Rebuilding our human infrastructure, the needs of working families, the children, the elderly, and the sick, is more important. No bipartisan infrastructure bill without the reconciliation bill. They go together."
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The wellspring of Lake Mead created by the dam’s blocking of the Colorado River has plummeted to an historic low as states in the west face hefty cuts in their water supplies
Had the formidable white arc of the Hoover dam never held back the Colorado River, the US west would probably have no Los Angeles or Las Vegas as we know them today. No sprawling food bowl of wheat, alfalfa and corn. No dreams of relocating to live in a tamed desert. The river, and dam, made the west; now the climate crisis threatens to break it.
The situation here is emblematic of a planet slowly, inexorably overheating. And the catastrophic consequences of the extreme weather this brings.
Hoover dam is the height of a 60-story building and is 45ft thick at the top and 660ft at the bottom. Its construction, in the teeth of the Great Depression, was a source of such national pride that thousands of people journeyed through the hostile desert to witness the arrival of what has become an enduring monument to collective effort for the public good.
The engineering might of Hoover dam undoubtably reshaped America’s story, harnessing a raucous river to help carve huge cities and vast fields of crops into unforgiving terrain. But the wellspring of Lake Mead, created by the dam’s blocking of the Colorado River and with the capacity to hold enough water to cover the entire state of Connecticut 10ft deep, has now plummeted to an historic low. The states of the west, primarily Arizona and Nevada, now face hefty cuts in their water supplies amid a two-decade drought fiercer than anything seen in a millennium.
“We bent nature to suit our own needs,” said Brad Udall, a climate and water expert at Colorado State University. “And now nature is going to bend us.”
Surveying the dam’s sloping face from its curved parapet, Michael Bernardo, river operations manager at the US Bureau of Reclamation, admits the scarcity of water is out of bounds with historical norms. While there is no “average” year on the Colorado River, Bernardo and his colleagues were always able to estimate its flow within a certain range.
But since 2000, scientists say the river’s flow has dwindled by 20% compared to the previous century’s average. This year is the second driest on record, with the flow into Lake Mead just a quarter of what would be considered normal.
“These are scenarios that aren’t necessarily where we expect to be in our models,” said Bernardo, whose work helps deliver a reliable level of water to thirsty western states. Nearly 40 million people, including dozens of tribes, depend on the river’s water. “We’re getting those years that are at the extreme ends of the bell curve. We’ve seen extremes we haven’t seen before, we now have scenarios that are very, very dry.”
In June, the level of Lake Mead plunged below 1,075ft, a point that will trigger, for the first time, federally mandated cuts in water allocations next year. The Bureau of Reclamation (the government agency originally tasked with “reclaiming” this arid place for a new utopia of farmland and a booming western population), expects this historic low to spiral further, dropping to about 1,048ft by the end of 2022, a shallowness unprecedented since Lake Mead started filling up in the 1930s following Hoover dam’s completion. This will provoke a second, harsher, round of cuts.
“We’ve known this point will arrive because we’ve continued to use more water than the river provides for years,” said Kathryn Sorensen, a water policy expert at Arizona State University. “Things look pretty grim. Humans have always been good at moving water around but right now everyone will need to do what it takes to prevent the system from crashing.”
Seven states – California, Utah, Arizona, Colorado, Wyoming, New Mexico and Nevada – and Mexico are bound by agreements that parcel out the river’s water but those considered “junior” partners in this arrangement will be hit first.
Should second tier cuts occur, Arizona will lose nearly a fifth of the water it gets from the Colorado River. Nevada’s first-round cut of 21,000 acre-ft (an acre-ft is an acre of water, one foot deep) is smaller, but its share is already diminutive due to an archaic allotment drawn up a century ago when the state was sparsely populated.
The latest era of cooperation between states that rely upon the Colorado River has now entered the “realm of lose-lose”, according to Colby Pellegrino, deputy general manager of resources for the Southern Nevada Water Authority. “Everyone’s going to have to do more with less, and that’s really going to be challenging for people,” she said. “‘Drought’ suggests to a lot of people something temporary we have to respond to, but this could permanently be the type of flows we see.”
The decline of Lake Mead is apparent even at a cursory glance. The US’s largest reservoir is now barely a third full, the dark basalt rock of its canyon walls blanched by a distinctive white calcium ring where the water level once was. This level has plunged by about 130ft in the past 20 years and is currently receding by about a foot a week as farms hit their peak irrigation period.
Guardian graphic | Source: Elevation data from Bureau of Reclamation Records for Lower Colorado River Operations.
The pace of change has been jarring to the millions of people who regularly boat, fish and swim on the lake, with the National Park Service recently laying down new steel platforms to extend launch ramps that no longer reach the water. Some marinas have been wrenched from their moorings and moved because they have been left marooned in baking sediment.
Seen from above in time lapse over the years, Lake Mead looks like a spindly puddle withering away in the Mojave Desert, as nearby Las Vegas, which gets almost all of its water from the lake and went a record 240 days last year without rain, balloons in size. The west’s ambitions have crunched into the searing reality of the Anthropocene.
The Colorado River rises in the lofty Rocky Mountains, before tumbling through 1,450 miles of mountains, canyons and deserts until it reaches the Sea of Cortez in Mexico. Seasonally melting snow has traditionally replenished the river but snowpack on mountaintops in the west has declined by an average of 19% since the 1950s, while soaring temperatures have dried out soils and caused more water to evaporate.
This morphing climate, plus the rampant extraction of water for everything from golf courses in Phoenix to vegetables growing in California to gardens in Denver, means the Colorado fizzles out in dry riverbed before it even reaches its Mexican delta.
Only 1.8% of the west is not in some level of drought, with California, Arizona and New Mexico all experiencing their lowest rainfalls on record over the previous 12 months. Lakes in Arizona are now so low they can’t be used to fight the fires themselves spurred by drought, while the retreat of Lake Folsom in California uncovered the wreckage of a plane that crashed 56 years ago. The governor of Utah has resorted to asking people to pray for rain.
The heat has been otherworldly, with Phoenix recently enduring a record six straight days above 115F (46.1C). A “heat dome” that settled over the usually mild Pacific north-west pushed temperatures to reach a record 108F (42.2C) in Seattle and caused power lines to melt and roads to buckle in Portland. A few hundred miles north, a fast-moving wildfire incinerated the town of Lytton in British Columbia the day after it set a Canadian temperature record of 121F (49.4C). Barely into summer, hundreds of people have already died from the heat along the west coast.
The west has gone through periods like this “megadrought” , with only occasional respite, for the past two decades. But scientists have made clear the current conditions would be virtually impossible without human-caused climate change, pointing to a longer-term “aridification” of the region. All of the water conservation efforts that have kept shortages at bay until now risk being surpassed by the rising heat.
“The amount of water now available across the US west is well below that of any time in modern civilization,” said Park Williams, a hydroclimatologist at Columbia University. Research by Williams and colleagues last year analyzed tree rings to discover the current dry period is rivaled only by a spell in the late 1500s in a history of drought that reaches back to around 800, with the climate crisis doubling the severity of the modern-day drought.
“As the globe warms up, the west will dry out,” said Williams. “The past two years have been shocking to me, I never thought I would see downtown LA reach 111F as it’s so close to the ocean, but we have some of the driest conditions in 1,200 years so the dice are loaded for more heatwaves and fires. This could be the tip of the iceberg, we may well see much longer, tougher droughts.”
In the guts of the Hoover dam, down bronze-clad elevators and through terrazzo corridors, a line of enormous turbines help funnel water out downstream, creating hydro-power electricity for more than 1m households in the process. Five of the 17 turbines, each weighing the same as seven blue whales, have been replaced in recent years with new fittings more suited to operating in lower lake levels.
Even with these adaptions, however, the decline of Lake Mead has caused the amount of hydro power generated by the dam to drop by around 25%. The drought is expected to cause the hydro facility at Lake Oroville, California, to completely shut down, prompting a warning from the United States Energy Association that a “megadrought-induced electricity shortage could be catastrophic, affecting everything from food production to industrial manufacturing”. The association added that such a scenario could even force people to move east, in what it called a “reverse Dust Bowl exodus”.
Bernardo said a similar shutdown of the Hoover dam would require more than 100ft in further water level retreat, which is not anticipated, although he finds himself constantly hoping for the rains that would ease the tightening shortages.
“We all want the nice weather but we need those good storms to build everything back up,” he said.
“We’d need three or four above average years, back to back, to restore the lake. Your guess is as good as mine whether we’ll get that. I’ll continue to watch the weather, every day.”
Joe Biden's Infrastructure Deal is Pure Political Genius
by John Lawrence
Joe Biden is a consummate deal maker. With slim majorities in Congress he is going to get his massive infrastrucure deal including human infrastructure done in a 2 step process. First he gets Manchin to agree that, if there's a bipartisan deal on conventional infrastructure, he will vote for an all Democrat budget reconciliation bill for human infrastructure. The genius is putting 11 Republicans on the bipartisan committee and then getting them to agree on the bill. That way they know that those 11 Republicans will vote for it in the Senate giving Democrats a veto proof win there (even if one renegs) and also proving that bipartisanship is possible. So the $1.2 trillion conventional infrastructure deal is locked in, and also Manchin is locked into the $3.5 trillion all Democrat reconciliation bill for human infrastructure. So it's a win-win in two steps - first getting 10 Republicans to vote for something, and then getting Joe Manchin to vote with Democrats so that they have 50 votes plus Kamala's tie breaking vote in the Senate for human infrastructure. Furthermore, part of the deal is that, if more than one of the 11 Republicans on the bipartisan committee renegs on their vote, Manchin will be on board with adding that $1.2 trillion to the $3.5 trillion for the budget reconciliation bill. It's pure political genius, and it had to revolve around Joe Manchin. It doesn't matter to Biden that he had to go out of his way to placate Manchin as long as in the final analysis his landmark infrastructure bill gets done.
So all the behind the scenes sausage making has paid off. It's a done deal even though all the i's have not yet bee dotted nor have all the t's been crossed. Chuck Schumer expects the legislation to be on Biden's desk before the August break. So this all bodes well for future legislation as Biden will continue to outsmart and outfox Republicans. Look next on the voting rights act. It will need either another budget reconciliation or a carve out of the filibuster. Again Manchin will be the key player that will have to be placated. Here's how it could happen. Another bipartisan committee that will settle on Manchin's own voting rights act, something Manchin has already put forward and which Stacey Abrams approves of. Shazam! Another done deal or else, if there is no successful outcome for the projected bipartisan committee, Manchin will agree to a carve out of the filibuster. The argument that, if Democrats negate the filibuster, then they will not have it as their prerogative when they are the minority party, is specious. Just because Democrats keep the filibuster in place is no guarantee that Republicans will not do away with it when they are the majority party. It can be eliminated by a simple majority vote of the party in power. And you can't count on any "gentlemen's agreements" with Republicans. So Democrats should do carve outs if Manchin will agree to them if he gets his own voting bill passed and after some bipartisan maneuverings that don't pan out.
So the lesson is let's be patient and let Biden and his teams work their political magic. I think it will work despite hostile Republican opposition to everything Democrats put forward. Democrats might as well go for broke on voting rights, immigration reform, police reform, gun reform and everything else they want to do providing they can placate the sentiments of Joe Manchin's sensibilities. They have learned their lesson that you can't expect any help from Republicans - that is unless you form a bipartisan committee first and then maybe not even then. But as long as you have all Democrats on board anything is possible. I also expect Biden to forgive student loan debt at least a portion of it as was his campaign promise right before the 2024 election if not before. Also please, Mr Biden, do what you promised regarding social security.
Sen. Bernie Sanders (I-Vt.) speaks at a "We Cant Wait Rally" on the National Mall on June 24, 2021 in Washington, D.C. (Photo: Anna Moneymaker/Getty Images)
"There will not be a bipartisan infrastructure deal without a reconciliation bill that substantially improves the lives of working families and combats the existential threat of climate change."
Vermont Sen. Bernie Sanders, chair of the Senate Budget Committee, said Sunday that he will not support the bipartisan infrastructure plan that the Biden White House endorsed last week if it is not paired with a broader legislative package containing major investments in climate action and other progressive priorities.
"Let me be clear: There will not be a bipartisan infrastructure deal without a reconciliation bill that substantially improves the lives of working families and combats the existential threat of climate change," Sanders tweeted. "No reconciliation bill, no deal. We need transformative change NOW."
"No reconciliation bill, no deal. We need transformative change NOW." —Sen. Bernie Sanders
Sanders' comments came shortly after President Joe Biden walked back earlier remarks indicating he would not sign the bipartisan infrastructure legislation if it reached his desk without a reconciliation package that includes elements of his American Families Plan, a $1.8 trillion safety-net proposal that Republicans unanimously oppose.
Biden's comments last week characterizing the bipartisan infrastructure bill and a reconciliation package as components of a "tandem" deal that cannot be separated set off a firestorm of GOP outrage, with Republicans threatening to withdraw their support from the bipartisan measure without clarification from the White House.
The president soon obliged, issuing a statement Saturday in which he said he was not "issuing a veto threat" against the $579 billion bipartisan deal, which progressives have criticized for proposing inadequate spending and pay-fors that could lead to the privatization of public assets and cuts to unemployment insurance.
"I intend to work hard to get both of them passed, because our country needs both—and I ran a winning campaign for president that promised to deliver on both," Biden said, referring to the bipartisan bill and the reconciliation package. "No one should be surprised that that is precisely what I am doing."
The size and scope of the reconciliation package—so named because of the arcane budget process Democrats will attempt to use to pass it without Republican support—remain unclear as senators and House members haggle over the details in public and behind closed doors.
House Speaker Nancy Pelosi (D-Calif.) vowed last week that her chamber will not take up the bipartisan infrastructure measure until the Senate also passes a reconciliation bill.
Sanders—who, as chair of the Senate's budget panel, has significant influence over the reconciliation process—is reportedly working to assemble a $6 trillion reconciliation package that would include an expansion of Medicare and investments in green energy, among other proposals.
In a tweet on Sunday, Sanders' staff director Warren Gunnels outlined progressive priorities for the emerging legislation:
Rep. Jamaal Bowman (D-N.Y.), a freshman lawmaker, joined Sanders on Sunday in expressing his opposition to moving ahead with a bipartisan infrastructure package without simultaneously advancing a sweeping reconciliation bill that invests in green energy and other key areas that the bipartisan deal fails to address.
"We have to go big on infrastructure, we have to go big on climate, and we have to go big on racial equity and racial justice," Bowman said in an appearance on MSNBC Sunday morning.
The New York Democrat is expected to join hundreds of activists with the youth-led Sunrise Movement for a protest in front of the White House on Monday.
"That's fine if we want to have a bipartisan agreement," Bowman said Sunday. "But it has to be coupled with an agreement that's going to be very big, that Republicans probably are not going to agree to. But at this moment, Democrats were sent to Washington to do the work of the American people. That's our job. And we have to push very aggressively and boldly to get that done."
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Sen. Ed Markey (D-Mass.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) talk as they arrive for a discussion about the potential benefits of a Civilian Climate Corps at the U.S. Capitol on June 23, 2021. (Photo: Drew Angerer/Getty Images)
She says to "rebuild infrastructure and draw down carbon, lower the age of Medicare and extend it to cover vision and dental, expand childcare and housing accessibility, and serve the American people."
Some progressives are celebrating President Joe Biden's commitment to a two-track approach to infrastructure despite reports of GOP "fury" over his comments that the $579 billion bipartisan deal and a Democratic reconciliation bill must come to his desk "in tandem."
In a pair of Friday tweets about the Republican reaction to Biden's remarks, Rep. Alexandria Ocasio-Cortez (D-N.Y.) addressed some of the progressive priorities that are expected in a reconciliation bill that could be passed by Democrats without any GOP support.
"It's time to move forward, rebuild infrastructure and draw down carbon, lower the age of Medicare and extend it to cover vision and dental, expand childcare and housing accessibility, and serve the American people," she said. "That is bipartisan too, with two-party support among the electorate."
The congresswoman also accused GOP lawmakers who may now withdraw their support of the bipartisan infrastructure deal—which focuses on physical infrastructure like roads and bridges and is far smaller than Biden's American Jobs Plan—of negotiating with the White House in bad faith:
Josh Miller-Lewis of More Perfect Union responded to her tweets with a video from Sen. Ed Markey (D-Mass.)—who co-sponsors various climate legislation with Ocasio-Cortez—highlighting GOP behavior on a key climate bill over a decade ago.
"The last time Democrats were in power in Washington, I watched as climate action took a backseat to other legislative priorities, wasting precious time and political power," said Markey, then a member of the House. "We are in danger of making the same mistake."
Even though Democratic leadership in Congress has long been working on the dual-track approach, Biden's confirmation Thursday—the same day the bipartisan deal was officially announced—that he wouldn't sign just one of the bills thrilled progressives but outraged Republicans, including some who were involved in the recent negotiations.
The Washington Postrevealed that senators who negotiated the bipartisan deal held a call about the president's position Friday afternoon.
"Many in the group were irritated about having stuck their necks out to back Biden's agreement in the first place and having just been at the White House less than 24 hours before," reportedCNN. "Agreeing to the bipartisan deal was always going to put them at odds with some of their conservative colleagues, and they viewed the president's words as having undercut their good-faith deal."
According toPolitico, "Democrats were privately confident afterward that their Republican colleagues would stay on board and that their outrage would pass."
Biden ally Sen. Chris Coons (D-Del.), who endorsed the deal, told the outlet that "having spoken with several colleagues, I'm optimistic that despite some hiccups, the historic scope and widespread public support for this bipartisan infrastructure deal will keep it moving forward."
Despite that optimism, Biden's promise to block bipartisan legislation without a reconciliation bill could be "a potential dealbreaker" for Republicans, Politico noted, citing GOP aides:
One aide said that clearly linking the two infrastructure bills was never discussed—not within the group of 10 senators who met Biden on Thursday, the bigger group of 21 senators who endorsed their work, or with the White House. A second aide said that frustrations run far deeper than Sen. Lindsey Graham (R-S.C.), who began griping publicly late Thursday.
"In endorsing the deal, Biden praised the group for 'keeping their word,' but then immediately broke his," said a third Republican aide.
"No deal by extortion!" Graham, who had endorsed the deal, tweeted Friday. "It was never suggested to me during these negotiations that President Biden was holding hostage the bipartisan infrastructure proposal unless a liberal reconciliation package was also passed."
In a series of tweets, NBC News policy editor Benjy Sarlin noted that while everyone involved with the talks knew a reconciliation effort was possible, Biden's clear requirement that the bills come together is new.
Ocasio-Cortez and others, meanwhile, pointed to previous comments from the president as well as GOP lawmakers that suggested everyone involved expected both a bipartisan deal and a reconciliation bill.
In a call Friday with Sen. Kyrsten Sinema (D-Ariz.), who led the bipartisan talks along with Sen. Rob Portman (R-Ohio), "the president reiterated strong support for both the bipartisan infrastructure bill and a reconciliation bill containing the American Families Plan moving forward on a two-track system," according to a readout from the White House.
White House Press Secretary Jen Psaki echoed that message during a Friday briefing, telling reporters, "I think the American people are quite focused on how we're getting work done on their behalf—less focused on the mechanics of the process."
"Now, it is up to Republicans… to decide if they are going to vote against a historic investment in infrastructure that's going to rebuild roads and railways and bridges in their communities simply because they don't like the mechanics of the process," she added. "That's a pretty absurd argument for them to make. Good luck on the political front on that argument."
Though progressives welcomed Biden's commitment to a reconciliation bill Thursday, the bipartisan deal has generated concerns on several fronts—including its potential impact on unemployment benefits, its push for privatization, and the fact that it could exacerbate the climate emergency.
"On infrastructure, the Biden administration has now presented a package where the contents are so far from what needs to be done it's impossible to even celebrate the dollar value," Alexander Sammon wrote Thursday for The American Prospect.
"It would be better to let the country's crumbling, outmoded, fossil fuel-heavy infrastructure continue to fall into disrepair," Sammon suggested, "than to take a deal that would extend the life and use of calamitous land and water use patterns further."
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There is the parable in the Bible about the person who built their house on a rock. The floods came, the rain fell, the wind blew and the house still stood. But as for the person who built their house on sand, it couldn't withstand the floods, rain and wind and it came tumbling down. Pretty much an exact analogy to the fallen condo in Florida. They even had a 3 year old structural engineer's report of the dire consequences of not acting to immediately shore up the structure. Evidently, the condo owners were too cheap to spend the money immediately with dire consequences. This high rise structure was built right on the beach close to salt water that can corrode concrete and steel. Sunny day flooding in Florida results in salt water coming up through the ground even on sunny days as the ocean water permeates under the structures. In addition the area was subject to subsidence which means that the ground was sinking. Since the building was supported by pillars, if the subsidence was uneven, some pillars would be supporting more weight than they were designed to support. "This collapse is a classic column failure. Which means the building itself was supported by a series of pillars. If the pillars fail, everything fails," said Kit Miyamoto, a structural engineer and California Seismic Safety Commission chairman.
Climate change and sea level rise are threatening not only this but a multitude of other beach front and seaside properties not only in Florida but all over the US. Multi story properties should not be built except on bedrock. There should be only shacks and houses built on Miami Beach real estate, but the fact that it so valuable means that developers want to capitalize on the value of the property by building multi story properties. As climate change continues to increase flooding, wind and rain, all these structures are at risk especially structures built on pillars where all the weight is concentrated in only a few places instead of spread out over the whole footprint of the building. If even one of these pillars fails or subsides unevenly, the whole structure is at risk.
Sunny day flooding puts all these buildings at risk. Sunny day flooding takes place because of climate change. According to NOAA:
"Coastal communities across the U.S. continued to see record-setting high-tide flooding last year, forcing their residents and visitors to deal with flooded shorelines, streets and basements — a trend that is expected to continue into 2021. The elevated water levels affected coastal economies, tourism and crucial infrastructure like waste and stormwater systems, according to a new NOAA report.
"High-tide flooding, often referred to as "nuisance" or “sunny day” flooding, is increasingly common due to years of relative sea level increases. It occurs when tides reach anywhere from 1.75 to 2 feet above the daily average high tide and start spilling onto streets or bubbling up from storm drains. As sea level rise continues, damaging floods that decades ago happened only during a storm now happen more regularly, such as during a full-moon tide or with a change in prevailing winds or currents.
“America’s coastal communities and their economies are suffering from the effects of high tide flooding, and it’s only going to increase in the future,” said Nicole LeBoeuf, acting director of NOAA’s National Ocean Service. “NOAA is committed to working with coastal communities to provide the information and data they need to tackle the problem of high tide flooding, both now and in the coming years as sea levels continue to rise.”"
The owners of the Champlain Towers South condos would have had to foot the very expensive bill for structural repairs to the condo. They weren't renters; evidently, they were owners. They could have proceeded with those repairs and a concomitant increase in their HOA dues immediately after the 2018 structural engineer's report, but they didn't. So there is really nobody that can be sued over this situation. No one is at fault except the condo owners themselves. NBC News reported:
"One condo owner sued the unit association for failing to fix the cracks in the outside wall of her unit in 2015, according to a lawsuit filed in Miami-Dade County. The condo owner, who could not be reached for comment, said the cracks led to water damage that cost $15,000. The court documents noted that because the cracks were a structural issue the building association was liable for the expense. Americans have built approximately $3 trillion worth of property on barrier islands and coastal floodplains, according to “The Geography of Risk,” a book by Pulitzer Prize winner Gilbert Gaul that analyzes the real estate investment in beach communities over the past century."
The whole Miami Beach barrier island community which contains trillions of dollars of real estate is a house built on sand. As climate change increases the likelihood that these expensive high rise condos are at risk of collapse, the developers themselves might be at risk of a law suit. At the very least insurance rates are going to go up. The best bet now is that there will be a flurry of activity by structural engineers examining in detail every building in the area. The best advice is for the owners of these condos not to hesitate if defects in the structure of their condo are pointed out.
Sen. Elizabeth Warren (D-Mass.) speaks to reporters prior to a vote on June 22, 2021 in Washington, D.C. (Photo: Olivier Douliery/AFP via Getty Images)
"We can't let the infrastructure train leave the station while child care and clean energy get left on the platform—or while billionaires and big corporations don't pay their fair share in taxes."
Massachusetts Sen. Elizabeth Warren made clear late Wednesday that she will not go along with a newly announced bipartisan infrastructure framework unless the Democratic leadership simultaneously presses ahead with a legislative package that includes child care, major investments in green energy, and other progressive priorities that are excluded from the emerging deal with Republicans.
"They may be voted separately, but it is one infrastructure deal," Warren said in an appearance on MSNBC. "I can't vote for some small subset that, you know—the infrastructure train leaves the station and child care gets left on the platform, green energy gets left on the platform."
"It's that all of the pieces have to move because, ultimately, it's one deal," added the Massachusetts Democrat, who also cited tax hikes on the wealthy as a necessary component of any infrastructure agreement.
Warren's comments came just as a bipartisan group of senators led by Rob Portman (R-Ohio) and Kyrsten Sinema (D-Ariz.) announced a tentative deal with White House aides on an infrastructure blueprint calling for $559 billion in new spending over the next five years—a package far smaller than President Joe Biden's original $2.2 trillion American Jobs Plan.
"We demand no climate, no deal. Any Democrat who votes for this inadequate version of an infrastructure bill that doesn’t channel massive investments towards stopping the climate crisis is betraying our generation." —Lauren Maunus, Sunrise Movement
While senators in the 21-member bipartisan group stressed that details still need to be ironed out at a meeting with Biden on Thursday, one unnamed source familiar with the negotiations toldPolitico that the agreement "is basically cooked."
"All that's left are the handshakes," Politico reported.
House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Chuck Schumer (D-N.Y.), the two top Democrats in Congress, told reporters Wednesday that they "support the concepts that we have heard about" but are awaiting additional details on the bipartisan framework.
In an apparent effort to assuage progressives' fears that climate action and other key priorities could be left on the cutting room floor, the Democratic leaders vowed Wednesday to use the filibuster-proof budget reconciliation process to simultaneously advance legislation that includes key agenda items omitted from the bipartisan deal. Given Democrats' slim margins in the House and Senate, they cannot afford many defections, meaning progressives have significant leverage over infrastructure developments if they're willing to use it.
"We can't get the bipartisan bill done unless we're sure we're getting the budget reconciliation bill done," said Schumer, who has been working with Sen. Bernie Sanders (I-Vt.) on a sprawling $6 trillion reconciliation package that includes Medicare expansion and major climate investments.
"We can't get the budget reconciliation bill done unless we're sure of the bipartisan," Schumer added, alluding to conservative Democrats' opposition to using reconciliation without a bipartisan infrastructure deal in hand. "I think our members are—you know, across the spectrum, realize that."
Asked when the public can expect a vote on the bipartisan deal in the House, Pelosi responded, "As soon as we see a reconciliation bill."
Pelosi made similar comments to reporters on Thursday. "We will not take up a bill in the House until the Senate passes the bipartisan bill and a reconciliation bill," she said. "If there is no bipartisan bill then we'll just go when the Senate passes a reconciliation bill. But I'm hopeful that we will have the bipartisan bill."
Rep. Ilhan Omar (D-Minn.), the whip for the nearly 100-member Congressional Progressive Caucus (CPC), welcomed Pelosi and Schumer's remarks as a positive sign, noting that "it was always unlikely for many members to support a bipartisan bill on infrastructure without a guarantee on a bold reconciliation bill moving simultaneously."
"It's time to deliver big on behalf of our constituents," Omar added.
Speaking to Punchbowl News on Wednesday, CPC chair Rep. Pramila Jayapal (D-Wash.) stressed that both the bipartisan package and the Democrat-only reconciliation bill—which can pass with a simple-majority vote—must advance at the same time to win her support, preemptively rejecting any leadership promises to tackle the reconciliation bill at some later date.
“We don't have a lot of faith in, 'I promise I'll do this,'" said Jayapal.
Huge questions remain about the contents of both packages as lawmakers continue to haggle over the details and demand inclusion of their priorities.
In recent days, as Common Dreamsreported, advocacy organizations have raised concerns about the bipartisan group's proposal to finance their infrastructure package using so-called public-private partnerships and "asset recycling," practices that progressives rejected as thinly veiled attempts to hand public infrastructure over to corporations and Wall Street investors.
It's unclear whether progressives in Congress would be willing to tank the bipartisan deal over objections to those proposed pay-fors, which have not yet been finalized.
In a statement on Thursday, the youth-led Sunrise Movement reiterated its position that any agreement on infrastructure must come with substantial public investments in combating the climate crisis as the Western United States experiences a record-breaking heat wave and atmospheric carbon dioxide levels reach all-time highs.
"Not since 2009 have Democrats held control of both houses of Congress and the White House. This is a historic, narrow opportunity to combat the climate crisis, and we can't afford to kick the can down the road any further," said Lauren Maunus, Sunrise's advocacy director. "We demand no climate, no deal. Any Democrat who votes for this inadequate version of an infrastructure bill that doesn’t channel massive investments towards stopping the climate crisis is betraying our generation."
“Our leaders must step up," Maunus added. "We expect Schumer to pass the boldest budget resolution as soon as possible, go through reconciliation in July, and pass a robust infrastructure package by August recess. There can be no compromise and no excuses to get this done for the American people."
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Rep. Alexandria Ocasio-Cortez (D-N.Y.) appearing on CNN's "State of the Union" on Sunday morning, June 14, 2021. (Photo: Screenshot/CNN)
"The argument that we need to make here," the New York Democrat said of bipartisanship's dead end, "is that it's worth going it alone if we can do more for working people in this country."
New York Congresswoman Alexandria Ocasio-Cortez gave voice Sunday to the growing frustration among progressives due to Democratic Senators who have become the clear obstructionists in enacting the bold agenda they promised U.S. voters in last year's election.
Following a morning appearance on CNN's "State of the Union," Ocasio-Cortez said Democrats "have an obligation to do the most we can for working people, civil right, and the planet with the power people have entrusted us, and stressed during her television appearance that her side of the aisle should bend no further to the demands of a minority Republican Party that has a demonstrated history of acting in bad faith while making clear that defeating progress on key issues like infrastructure, healthcare, climate action, and pro-democracy reforms is its top priority.
"I do think that we need to talk about the elephant in the room, which is Senate Democrats blocking crucial items in a Democratic agenda for reasons that I don't think hold a lot of water."
Asked if she would possibly vote on the bipartisan infrastructure deal unveiled last week by a small group of Democrats and Republicans in the Senate—one that features just $580 billion in new spending, compared to the Biden administration's original $2.3 trillion package, and includes no new taxes—Ocasio-Cortez said, "I doubt it, frankly" as she highlighted the specific lack of climate action contained in the deal.
"I think one of the things that's really important to communicate is this isn't just $1.7 trillion," the congresswoman said. "This is about an overall investment spread out anywhere between eight and 10 years, which is a very, very low amount of money. It's not going to create the millions of union jobs that we need in this country, particularly to recover from the pandemic. And it's not going to get us closer to meeting our climate goals, which are crucially important at this point in time."
While CNN host Dana Bash pushed Ocasio-Cortez on whether she would vote for a compromised, watered-down infrastructure plan if progressives are told that's the best it's going to get, the New York Democrat responded, "Well, I think the thing is, is that this isn't the best that we can get." And then she turned her focus to Democrats like Sens. Joe Manchin of West Virginia, Kyrsten Sinema of Arizona, Jon Tester of Montana, and others in the caucus—who have refused to embrace a more bold and visionary set of policies in the name of compromise with the GOP.
"I do think that we need to talk about the elephant in the room," said Ocasio-Cortez, "which is Senate Democrats blocking crucial items in a Democratic agenda for reasons that I don't think hold a lot of water."
"And for folks saying, 'OK, where are you going to get these 50 votes?'" she continued, "I think we really need to start asking some of these Democratic senators where they plan on getting 60 votes. These 10 Republican senators that there is a theory that we're going to get support for that out there, I think, is a claim that doesn't really hold water, particularly when we can't even get 10 senators to support a January 6 commission."
Ocasio-Cortez went on to say that the U.S. is now at a "fork in the road" and asked the question: "Do we settle for much less and an infrastructure package that has been largely designed by Republicans in order to get 60 votes, or can we really transform this country, create millions of union jobs, revamp our power grid, get people's bridges fixed and schools rebuilt with 51 or 50 Democratic votes?"
"The argument that we need to make here," she said, "is that it's worth going it alone if we can do more for working people in this country. You know, with 50 votes, we have the potential to lower the age of Medicare eligibility, so that more people can be covered and guaranteed to their right to health care, as opposed to 60 votes, where we do very, very little, and the scope of that is defined by a Republican minority that has not been elected to lead."
"For folks saying, 'OK, where are you going to get these 50 votes, I think we really need to start asking some of these Democratic senators where they plan on getting 60 votes."
After the bipartisan group put out a rough framework of its infrastructure deal last week, progressive lawmakers like Sen. Ed Markey (D-Mass.) and Rep. Pramila Jayapal (D-Wash.) made clear they would oppose any bill that short-changed the climate crisis.
Asked Sunday about Manchin's stance in particular—including his opposition not only to filibuster reform and a bold infrastructure package but also his vow to block The For the People Act, the Democrat's key voting rights legislation—Ocasio-Cortez did not shy away from recent comments she made insinuating that the West Virginia Democrat's positions are due, at least in part, to his subservience to corporate interests and deep-pocketed funders like billionaire Charles Koch and his network of dark money groups.
"I believe that we have the influence of big money that impacts not just one party, but both parties in the United States Congress," she said. "And I do believe that that old way of politics has absolutely an influence in Joe Manchin's thinking and the way he navigates the body."
There's a reason, she said, that "the Koch brothers and associated organizations from the Koch brothers are really doing victory laps about Joe Manchin's opposition to the filibuster."
Watch the full interview:
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The Infrastructure Bill and How to Pay for It Are Two Separate and Distinct Issues That Have Nothing to Do With Each Other
by John Lawrence
We know that the US government does not have to tax in order to spend since the US has a sovereign currency (See Modern Monetary Theory), and the Federal Reserve can just place the requisite amount of money for the infrastructure bill in the Treasury's account at the Fed. The problem is that, according to US law, if there is not enough money in the Treasury's account to pay for stuff, it must issue and sell Treasury bonds to make up the difference. These bonds then contribute to the deficit which is added to the national debt. We also know that the national debt never needs to be paid off, but Treasury bonds do need to be paid when the holder asks for the money when they come due. In addition interest does need to be paid on them. If the Fed keeps the interest rate for Treasuries at zero, this is not a problem. So why would anyone purchase Treasury bonds if they get zero interest? Well, countries that peg their currencies to the dollar (like China) need dollars in order to conduct business. Besides if someone comes to them with a basket full of renminbi and asks for US dollars, they have to be able to pay them the dollars and accept the renminbi. So there is always a market for US Treasury bonds. Even if there wasn't, the Fed would end up purchasing them and taking them onto its balance sheet where they would essentially disappear into a black hole never having to be paid back.
So what is the problem with just having the Fed create the money and place it in the Treasury's account without "paying for" it with taxes. No problem really. Joe Biden just wants to kill two birds with one stone. The first bird is the money for infrastructure. The second bird is doing something about the widening economic inequality by taxing the rich. There is no actual need to issue Treasuries in the first place except that US law requires it. The money could just go directly on the Fed's balance sheet without the intermediate step of selling Treasuries. There are however some good reasons for not taking too much advantage of this possibility. One is inflation. As more money floods into the economy through deficit spending, inflation could heat up whether or not the money comes from taxes. The other issue is that as other countries accumulate more and more Treasury bonds with or without interest being paid on them, they start to have the ability to use those dollars to purchase US assets. It's not inconceivable that a particular country - let's say China - couldn't accumulate enough Treasuries to buy up cities.
New York City has the most valuable real estate in the U.S. at $2.8 trillion — slightly more than the entire GDP of the United Kingdom for 2019. In fact, this is greater than the GDP of all but just five countries — India, Germany, Japan, China and the United States. The value of New York is comparable to the combined market value of tech giants Apple and Microsoft. China owns about $1.1 trillion in US Treasuries. If they demanded it all tomorrow, the Fed would have no problem paying them, but then they could buy up more than a third of New York City or almost all of San Francisco valued at $1.3 trillion. This could eventually become a problem so it would be better not to even make up the difference by issuing Treasuries in the first place. The alternative is for the Fed just to create the money and place it in the Treasury's account as authorized by Congress without the Treasury having to sell bonds to make up the difference between the amount of taxes and the amount of the authorization.
Then the issue becomes inflation. There is already wage inflation as employers are forced to pay more for employees, for a number of reasons, thus raising the price of products and services. This is "good" inflation since wage earners have not seen an increase in their income for 40 years. There is also "bad" inflation in that the increasing wealth of the upper 10% , and especially the upper 1%, is causing asset inflation in terms of the increasing cost of real estate and rent. Asset inflation is also happening in the stock market although it's hard to see how this is a bad thing except for the fact that about 50% of the people don't own stocks so that gap between rich and poor is only increasing. The third form of inflation occurs when there is too much money chasing too few goods and services. This could be caused by too much deficit spending. The fourth kind is the "super bad" inflation known as hyperinflation. This is the kind of inflation that affected the Weimar republic in Germany before the Second World War and also affects poor countries. It also recently affected Greece because Greece gave up its sovereign currency when it adopted the euro. Hyperinflation occurs when a country needs to borrow money from the capital markets subject to increasing interest rates. As their economy declines interest rates go up until finally they are paying more in interest than their economies can keep up with. The US can never be put in this position since it never has to go to the capital markets to borrow money. The Federal Reserve can just issue whatever money is needed and can set its own interest rate since the US dollar is a sovereign currency.
So while there are limits to the amount of prudent deficit spending, one of them is not paying for it through taxes. The US Federal government never has to tax in order to spend. It can pass a bill to build infrastructure with the only limitation being the physical and material resources that are available to do it.
Modern Monetary Theory (MMT) points out that neither social programs nor tax cuts need to be "paid for." A government such as the US with a sovereign currency can issue the money without having to tax first. Taxes are only necessary to control inflation. The biggest amount of inflation in the economy right now is the inflation of billionaires' wealth assets because their increases in wealth are not taxable. The IRS only taxes workers' incomes, not billionaires increasing asset wealth. That's why economic inequality is growing by leaps and bounds, and we need a wealth tax. But as for infrastructure, the Fed can just create the money in the Treasury's account at the Fed with a few keystrokes on a computer like it did when it bailed out Wall Street in 2008.
"No one [on Capitol Hill] questioned the significant need for infrastructure investment. A trillion dollars, while ambitious, would have only taken a bite out of the problem. No one blanched at the price tag, but there was considerable debate about whether (and how) to pay for it.
"Before I tell you about that debate, it's important to understand what those words mean to lawmakers and their staffers on Capitol Hill. In truth, there is only one way to pay for anything. All federal spending is carried out in exactly the same way - that is, the Federal Reserve credits the appropriate bank account(s). But in Washington speak, you "pay for" your spending by showing that you can "find" enough money to cover the cost of whatever it is you're proposing to spend. It's all a game, really, and it's rooted in the flawed mental model [that the government needs to tax and/or borrow before it spends] that holds back so much of our potential. To avoid adding to the deficit, lawmakers look for ways to cover the costs of their proposed spending without borrowing. That means they usually go looking for new tax revenue."
As Kelton points out, the US doesn't need to tax before it can spend. Biden's wanting to pay for infrastructure by taxing the rich is not necessary to pay for infrastructure per se, but it is necessary to get unbounded economic inequality under control.
Kelton continues:
"So back to the debate over the trillion-dollar infrastructure ill. The conversation began with staffers being asked whether we thought a so-called pay-for should be attached to the bill. It was my first week on the job, so I was relieved when another staffer spoke up first. "No," this person began, "I think we should just do it as a clean bill." A clean bill meant writing a spending bill that didn't include any language abut how to pay for it. Another staffer agreed, and soon I echoed their sentiments. Our country desperately needed to make these investments. There was clearly enough fiscal space to do it, and infrastructure is one of the things that has traditionally enjoyed bipartisan support. Since the GOP was in control of the Senate, we reasoned, the bill would need at least some support from Republicans to pass. [Ha. Ha] Proposing a tax increase would guarantee defeat. Not everyone agreed. Another staffer objected that the press wouldn't take the legislation seriously unless it specified exactly how it would be paid for. In the end, the bill included a proposal to raise revenue by closing a variety of tax loopholes that overwhelmingly benefit the rich. Needless to say, the legislation did not pass. Meanwhile, the latest ASCE [American Society of Civil Engineers] report card shows how deferred maintenance is catching up with us, as the cost of our needed improvements has climbed to a whopping $4.59 trillion."
Is it deja vu all over again? Is it gridlock or spinning our wheels as infinitum? Is it Republicans thinking it is more important to defeat Obama's and now Biden's agendas than it is to prevent bridge collapses?
Kelton's point is that the US doesn't really need to "pay for" anything by taxing first or finding the money first. "In 2017, a 1215-page bill, known as the National Defense Authorization Act, sailed through the Senate with a vote of 89-9. The White House had requested $700 billion, but the Senate had authorized $737 billion, kicking in another $37 billion without hint of concern about where to "find" the money. They simply voted in an overwhelmingly bipartisan way to increase the Pentagon's discretionary budget."
Yet the Pentagon budget has not protected us from international ransomware attacks nor domestic terrorists. May I submit that the money is misspent and misdirected? Instead of going where the money is really needed it goes to the vested interests in the military-industrial complex who continue to justify war in order to line their own pockets.
Kelton continues: "That might seem like a double standard. As Congresswoman Alexandria Ocasio-Cortez put it, "We write unlimited blank checks for war. We just wrote a $2 trillion check for the GOP tax cut, and nobody asked those folks, 'How are they going to pay for it?' She's right. Somehow, there's always money for war and tax cuts. For just about everything else, however, lawmakers are expected to show that they can "pay for" their spending."
As MMT has shown, the US government does not need to tax or borrow in order to spend. Taxation is necessary to control inflation, to extract money from the economy if there is too much of it out there chasing too few goods or services. Right now there is too much money out there in the hands of billionaires that should be extracted in order to prevent runaway financial inequality. But it is not necessary to tax before money can be spent on infrastructure or anything else. There are limits, and the limits are the material and human resources that are available to soak up that money by providing constructive economic activity like building infrastructure. Hyperinflation like what happened in the Weimar Republic or even Greece cannot happen in the US because the US never has to go to the capital markets to borrow money at prevailng interest rates. The US central bank, the Fed, issues whatever money is necessary to pay US bills and that includes any money appropriated by Congress whether for war, tax cuts or building infrastructure.
Our Grandchildren Won't Have to Pay Back Money Spent on a Green New Deal, But They Will Pay With Their Lives if We Don't Do It Now
by John Lawrence
It's a myth that a sovereign country with a sovereign currency and a floating exchange rate has to borrow money to pay its bills. The US can just issue the money. It doesn't need to tax in order to spend. So why isn't the US as well as all the other nations with sovereign currencies such as Japan, Britain and China going all out to supply as much money as necessary to prevent global warming from "going viral" as they say? The only restraint is the question of whether the human and physical resources to do the work are available. In a society such as China, if the government wanted its people to stop whatever they were doing and become part of the work force to forestall global warming, it would be done. In the US it would not be so easy to commandeer workers to leave their jobs as servers, bartenders, chefs, dealers, workers at Disneyland, workers on cruise ships etc to leave their jobs and go to work in Joe Biden's global warming and infrastructure rebuilding work force. The businesses large and small would have a conniption fit like they're having now getting these workers back to work because their pandemic unemployment has not run out.
The only time when workers went all out to solve a major global problem was World War II. Rosie the Riveter and all the others joined the work force to defeat Hitler. They even were willing to defer consumption so that the financial and material resources that were necessary weren't spent in the consumption market thus letting the necessary physical resources be available for the war effort. Today we have a nation consisting of a bunch of spoiled brats who wouldn't do anything the government asked them to do crying that their "freedom" to do whatever they wanted was paramount. We live in a society composed of consumers who demand to be endlessly entertained by movies, TV, theme parks cruise ships, athletes, restaurants, social media and Las Vegas. Half the country works as servers, baristas, bartenders, housekeepers, actors, athletes, dealers, entertainers and such like jobs to entertain the top half. Some of these are highly paid; most are not. Such was the nature of the "full employment" society before COVID hit. It was a full employment society consisting of trivial jobs at minimum wages for the most part. Biden will have to persuade workers to leave their jobs in the "entertainment" industry in order to create actual results in the real world such as building green infrastructure. The entertainment industry will not be pleased nor will the upper half of society which demands to be continually entertained. 70% of US GNP is consumption and a lot of what people want to consume is encompassed by sports bars, travel and tourism, the leisure and hospitality industry in general. The spoiled brats think its their birthright to have such services available, and the last thing they want to do is to roll up their sleeves and join a union.
Together with the presumed right to be entertained, we have a large percentage of the country that has been processed through the military and developed this consciousness that military prerogatives should prevail uber alles. These are the insurrectionists and Trump supporters that want civilian society to reinforce military values such as command and control. They want an autocrat for President. Freedom is the only value that counts for them. Democracy, equality, fraternity, social equity don't matter. They want to preserve the American way of life which, in addition to a right to be entertained wherever and whenever they have the resources to consume, includes also the right to exclude the prerogatives of minorities for social justice. Is it any wonder that the insurrectionists in January 6 contained a large number of current and former members of the military and police forces? Their attitude is that whatever is good for the military is good for American society in general. The military has become a way of life and consciousness for them. They think that, because they served, they are entitled. Spoiled brat militarists I'll call them. The endless wars, bloated military-industrial complex budget and the military bases in practically every country in the world provides the economic and job base of the nation unfortunately.
Biden thinks he is out to prove that American democracy can compete in the civilian world on an equally competent basis with other countries. That will be a hard nut to crack. The US is dooming itself in two ways: the First and Second Amendments to the Constitution. Let's take the Second Amendment first. In no other major country in the world do citizens have a right to unlimited uncontrolled gun ownership including military style weapons. This is producing news cycles when, hardly is one mass murder out of the way, than another one comes along to dominate the news. The news channels can hardly keep up with them all. No other society including The US' major competitors would tolerate such a situation. The Second Amendment has become toxic and perverted, and in and of itself is enough to doom the US to second class status. In addition to that the First Amendment has become toxic and perverted, and the major reason for that is social media. Social media makes possible the vicious spread of toxic lies and untruths. Witness Trump's use of Twitter to corral and consolidate his followers around the thesis that he, not Biden, actually won the election. Social media allowed him to rally his supporters based on angry themes and memes connected with white supremacy and a return to the good old days when white, Protestant Anglo Saxons ran the country, the good old days when Negroes knew their place in society, the good old days when you didn't have multiple nationalities and religious groups asserting their rights under the Constitution to live freely and enjoy all the perquisites of American society, the good old days when gas guzzlers were the only vehicles in town and no one need be concerned about anything except maximizing their profits and living the American Dream, where the American Dream consisted of having more stuff than your parents did.
Joe Biden's first 100 days have been remarkable in that he has been able to get as much accomplished with slim majorities in both Houses of Congress. Is this enough though to move America forward at the pace that China, for instance, is moving? China is a more or less unified society. 99% or more of Chinese citizens are on the same page as the Chinese government. China is winning friends and allies all over the world with its Belt and Road initiative while the US withers away its resources on endless wars and confuses its allies with the possibility of radical swings with each change of administrations. China's military budget of $183.5 billion is dwarfed by a US military budget 5 times that amount. The US is a divided country where one of the major parties base their appeal on lies and deception, and its supporters are only too willing to eat it up because it's entertaining and represents military values of command and control. Good government, as Biden has illustrated, is somewhat boring because it is based on solving real human problems. Let's hope that Biden's version of reality based on truth and problem solving wins out over the lies based reality of the other side, and the US, even if it doesn't remain the world's dominant power, can become a constructive member of the world community helping to solve problems at home and abroad.
Don't worry about how to pay for it. Any nation with a sovereign currency (let alone the world's reserve currency) and a floating exchange rate can never go bankrupt. The Federal Reserve can issue the money. In fact in the real world this is exactly how it works for any budgetary legislation passed by Congress and signed by the President. Let's say, for example, Biden's $2 trillion infrastructure plan is signed by him into law. The US Treasury has an account at the Federal Reserve bank. Let's say there is only a trillion dollars in that account. What happens next is that the Fed just augments the Treasury's account by a trillion dollars by means of a few keystrokes on a computer. Bingo the government now has all the money it needs to spend on infrastructure. It didn't have to receive tax money in advance of the money it needed to spend. At the same time the Treasury Department creates a trillion dollars worth of Treasury bonds and sells them to the primary dealers who are required by law to buy them. These are mainly big Wall Street banks. These banks sell the bonds in the secondary market. If they can't find enough buyers, the Fed "adds liquidity to the market" by taking the Treasuries onto its balance sheet in return for marking up the Wall Street banks accounts at the Fed with the appropriate amounts of cash. Now everybody is happy. The US government has the money it needs in its Treasury's account at the Fed. The Wall Street banks have plenty of liquidity in their reserve accounts at the Fed, and the amazing thing is that it didn't require any money from additional taxes.
Another amazing thing is that most politicians are totally ignorant about how government financing actually works. The Republican Governor of Ohio, Mike DeWine gets on TV and opines about the fact that the US is going into too much debt and how will our grandchildren ever pay it off. "Here in Ohio," I'm paraphrasing," we have to pay our bills and pay down our debts. Every household has to be fiscally responsible and pay their debts." Well households and states are in a different category from the Federal government. They actually do have to pay their debts. So what he is claiming is a half truth. States and households cannot issue a sovereign currency whereas the Federal government can. States and households use the Federal government's currency. The big lie, however, is that the US government has to pay off its debts. It never does, and no entity can force it to do so. The other constraint that Larry Summers and others worry about is inflation or currency devaluation. Inflation could be a problem, and that problem, should it arise, can be dealt with by sucking money out of the economy by means of taxes. Biden's plan to tax the rich will suck some of their superfluous wealth out of the economy thus forestalling inflation while tending to reduce the runaway economic inequality that is now threatening democracy in the US.
The Federal government is not like a household or a state. Households and states actually do have to pay back the money they borrow plus interest. That's why it's so important that the various COVID rescue plans provide the states and municipalities with money. Otherwise, they could become financially insolvent and go bankrupt like Orange County in California did a few years ago. Birmingham, AL also got itself in hot water and went bankrupt. Countries in the Euro zone have the same problem as states in the US. They gave up their sovereign currencies when they joined the EU. So now countries like Greece and Italy have to beg the European Central Bank for relief, relief they could have provided for themselves if they had retained their sovereign currencies like Britain did. Britain will not have any problem with financial shortages because, like the US, its government can issue whatever currency is deemed necessary to weather any storm.
So in addition to the Big Lie that Trump won the election, politicians of both parties are perpetrating another Big Lie that the US actually has to borrow the money to pay for Biden's trillion dollar infrastructure and safety net programs. Some politicians, like Bernie Sanders and AOC, actually know the truth, and, evidently, they have convinced Joe Biden thereof as well although they won't actually come out and say it to the media: the US government can just issue money into the private economy. It doesn't need to borrow it or even tax for it in advance in order to spend. So the real policy of the Biden administration is not tax and spend. It's spend and maybe tax later, but target those taxes on the wealthiest among us. As opposed to the Republican philosophy of giving tax breaks to the wealthy and taking the social safety net away from the poor.
America to End Forever War in Afghanistan Thanks to Joe Biden
by John Lawrence, April 15, 2021
So far Biden is making all the right moves, and I'm sure he has more up his sleeve. He's playing 3 dimensional chess while the Republicans haven't even learned to play checkers yet. The military-industrial complex is crying, "Oh, no," because they justify the huge expenditures on them by the need for continuance of forever wars. They are aghast at the prospect that their trillion dollar annual budget will be inevitably reduced. It has become obvious that the biggest threat to the US is not international terrorism but domestic terrorism. The FBI and the National Guard will deal with that very nicely; they don't need the Pentagon. The FBI is doing a remarkable job cleaning up the terrorists who took part in the January 6 bungled coup attempt. Over 400 arrests and counting so far. The idiots self videoed their own arrest warrants.
The US spends more on defense than the next 10 countries combined. As an added service they also train the Oath Keepers, Proud Boys and the Three Percenters. The military-industrial complex has done a lot to militarize the consciousnesses of young Americans, especially young non-college bound Americans. College graduates, especially in engineering, often end up, like I did, in the military-industrial complex working for companies like Lockheed Martin, Northrup Grumman and General Dynamics. As a country we have been spending our money in all the wrong places, but the military-industrial complex wants to hang on to its prerogatives. When I was an employee of General Dynamics many years ago, they encouraged you to vote Republican. Otherwise their budgets might be cut and there might be a RIF (Reduction in Force). When the military-industrial complex is cut down to size, right sized as they say, the Republican party will lose its raison d'être, its justification, because that's all in reality that it stands for - large defense budgets and tax cuts for the wealthy.
If we really want to compete with China, then we should cut our defense budget down to the size of China's and spend our money in more constructive ways like China is doing like building infrastructure with its Belt and Road initiative. The only infrastructure the US has been doing in foreign countries has been the building of military bases of which there are approximately 800 in practically every country in the world. Meanwhile, China has one military base in a foreign country - in Djibouti! If the US wants to compete with China, it will take a page out of China's book and build infrastructure not military bases. China and the US need to cooperate on problems facing the whole earth like global warming. It's no consolation to win the competitive war while the home we all live in goes up in flames or drowns as the case may be.
Republicans want Biden to tell them how he's going to pay for all his ambitious social programs? Let's see. Let me count the ways. Taxes on the rich - that's a good one. Reduce the size of the military-industrial complex budget. Even better. Military contractors, among others, provide the campaign donations for the Republican party as long as the guys they are providing the financial jet fuel for are hardliners for a "strong" defense. Well now, maybe they should stand up for transferring the money to the FBI so they can deal with domestic terrorism instead of a useless military engaged in forever wars which are only killing civilians, destroying real estate and creating refugees. The world doesn't need an America which thinks it has the self-appointed job of being the world's policeman or moral arbiter. There is something in the Bible about taking the beam out of our own eye before telling our neighbor to take the mote out of theirs.
The US bloated military is wasting our money while militarizing the consciousness of our young men many of whom think their patriotism justifies invading and laying waste to our Capitol. Lawmakers were shocked, shocked to find out that the invaders of the People's House were present and former members of the military and police forces! Patriots! This is what happens when you define patriotism in military terms. The true patriots are the doctors and nurses, supermarket workers, delivery drivers, meat packers and others who put their lives at risk to help us get through this pandemic. True patriotism consists of reducing our military-industrial complex and defense budget to a reasonable size comparative with other countries and the real threats in the world while building up our infrastructure assets and social safety net programs as every other advanced country has already done. Joe Biden is on the road to doing this. May he prosper and prevail. And God bless our doctors and nurses.
If Republican Voters Want the Infrastructure Bill, Why Don't Republican Lawmakers?
by John Lawrence, April 12, 2021
Is this a failure of representative democracy? Polls show that a majority of Republican voters support Biden's infrastructure plan including the "care" components thereof. Yet Republican Senators are dead set against it, and the bill will probably not garner one Republican vote. It can still pass the Senate based on budget reconciliation which only requires a majority vote as long as all Democrats vote for it. Other Biden proposals involving voter's rights and gun control would require at least 10 Republican votes in the Senate under the current rules which involve the filibuster for non-budgetary items. In a representative democracy, a party should represent its voters. Otherwise, you don't really have a representative democracy which the US purports itself to be. So at present the US is in the position of being a government swerving back and forth from a representative democracy as long as Democrats control both Houses of Congress and the Presidency and a dictatorship of an elite when Republicans control either party or the Presidency.
The same applies to other issues like gun control, voter's rights and immigration which aren't subject to budgetary reconciliation and must garner 60 votes in the Senate. One of the minimum elements of democracy is majority rule. Because the filibuster is anti-majoritarian, this leaves the American democracy in the position of not really being a democracy at all in terms of non-budgetary items. So the US is on its way to being an authoritarian regime if Republicans control the Presidency and both Houses of Congress. All that would be necessary is a President like Trump with authoritarian tendencies. Then the US government becomes a government that's all about the use of power to get its way internationally and domestically, not about making the world a better place. Unfortunately, this leaves the US in the eyes of other nations as being untrustworthy since there is no consistent policy going forward. Other countries have more consistent leadership and hence are considered more trustworthy.
China, on the other hand, has very consistent policies going far into the future. China isn't perfect but most of the Chinese people and the leadership are on the same wavelength. US leadership likes to make a big deal of the plight of the Uyghurs, a Chinese minority that represents less than 1% of the Chinese population. So it's pretty remarkable that the only problem China seems to have with a minority that resents Chinese leadership is with a minority that composes 0.31% of the population. The US should be so lucky yet the US harps on the Chinese over this situation of which little is actually know by the western world. China has pilled 800 million people out of poverty since 1990, one of the outstanding feats in human history, yet the US leadership continues to harp about the Uyghurs while giving no credit to China on poverty reduction. During the same time period the wages of US workers has stagnated. Kishore Mahbubani, author of the book, "Has China Won" writes: "In contrast to America's stagnation, China's culture, self-concept, and morale are being transformed at a rapid pace - mostly for the better." Rather than China's recent success being an assessment of the comparative values of Marxist-Leninist doctrines vis a vis American democracy, The Chinese Communist Party could more appropriately be called the Chinese Civilization Party since it reflects the 2000 year history of China more than it does Communist ideology.
So the response of the US to the progress of China in the last 30 years, instead of congratulating them on their remarkable accomplishments, is to be fearful that China is getting ahead of us. Well, duh, if you compare a society that is mostly all on the same wavelength and making remarkable steps forward with one that is divided and experienced a certain segment almost accomplishing a coup d'etat in a recent insurrection which threatened the lives of lawmakers in the seat of democracy itself. However, rather than viewing the world situation as a competition between the US and China, a more fruitful approach would be to cooperate with China with regard to climate change and pandemics, two things that affect the whole world and which require fast action, not a lackadaisical approach in which maybe we'll cooperate down the road, but in the meantime we have to compete. There's no time for that. The planet earth has almost passed an inflection point after which there will be no more time available.
The Caring Component of Biden's Infrastructure Plan
by John Lawrence, April 6, 2021
It's about time that the need for a caring infrastructure is addressed. Caring used to be supplied almost entirely by wives when wives didn't work outside the house. However, they did considerable work inside the house caring for children, sick relatives and elders in addition to taking care of their husband's needs. Now that most wives are required by economic necessity to work outside the home, there is a need for child care for young children not old enough to attend school. There is a need for pre-K education plus babysitting services. Older family members have special needs for care giving as well. Who is to provide for this if wives are in the work force? Rich people can pay tuition for pre-K and child care as well as hiring caregivers for older relatives or paying for senior living facilities. For poorer people, wives have to do all this themselves in addition to working to provide income for the family.
That's why Biden's initiatives provides for a caring infrastructure. However, it is insufficient. The Guardian reported:
Just as our physical infrastructure is crumbling and requires substantial reinvestment in a 21st-century economy, our care infrastructure is fundamentally broken. As the only industrialized country in the world without a national paid family and medical leave program, only 17% of our people have paid family leave through their employers. Hundreds of thousands face daunting waitlists for essential home care. Childcare is the highest household expense for families in much of the United States. And the median annual pay of childcare and home care workers is $25,510 and $17,200, respectively, leading to high turnover and reliance on public assistance.
In the past most elderly people on Medicaid that needed care giving were forced into institutional care like nursing homes. There was no comparable funding level that provided care givers for people to stay in their own homes. Biden's care infrastructure corrects this anomaly by providing money for care givers to provide care outside of nursing homes and other institutions. However, the limitation is that people who qualify for either nursing homes or home care must be on Medicaid. Basically, this means that they have no assets. They could stay in their own home only if they don't own it. If they owned it, that would be considered an asset that would disqualify them from being on Medicaid. So older people on Medicare, but not Medicaid would not qualify under Biden's "care infrastructure" initiative. People with assets like home ownership usually want to pass those assets on to their children. It represents the intergenerational transfer of wealth. That's how white people have built wealth over the generations whereas black people, who were by and large prevented from owning their own homes after WW II, are by and large renters.
Elderly renters are mainly poor people who live off of social security which hardly provides for a decent living much less the intergenerational transfer of assets once the person dies. Biden's pre-election agenda called for an uping of social security payments so that people could have a decent existence just based on social security alone. It also called for an increased amount of social security for people who had been on social security for 20 years, in other words, the really old. The Boston Globe reported:
A critical part of Biden’s campaign plan was not only raising funds for Social Security but also expanding the benefits to reduce poverty among elderly Americans. It would, for example, ensure that benefits for workers who were in the labor force for 30 years or more would be at least 125 percent of the federal poverty line. The oldest beneficiaries would also receive a bump to offset dwindling retirement savings, and widows and widowers would receive a 20 percent increase so that their Social Security benefits don’t get cut in half when their partner dies.
The reason that Biden didn't include this in his "caring infrastructure" initiative is that the cap on wages subject to the payroll tax would (in the minds of politicians) have to be raised to "pay for" it, and Biden has promised not raising taxes on anyone making less than $400,000 annually. Right now, payroll taxes that go toward funding Social Security are capped at the first $142,800 of a taxpayer’s income. First of all the social security trust fund is basically a hoax. Money is available for social security in the same way that money is available for COVID relief, infrastructure and even tax cuts. As Modern Monetary Theory points out, the Federal Reserve creates the money without the need of taxes to pay for it. The same is true for social security. But Biden did not want to complicate the discussion around his infrastructure plan so he left his plan for social security increases behind presumably to be brought up at a later date.
There is much talk about enlisting the help of Republicans for Biden's infrastructure initiative, but it is a not a secret that Republicans will help with nothing Democrats want to do. The working across the aisle thing is a loosely held fiction. Democrats know that they must pass all Biden's bills just with the slim Democratic majority. That gives Joe Manchin of West Virginia, the most conservative Democrat, enormous power. You can bet your booty that West Virginia will get more than their fair share of roads and bridges. He wants to not raise the corporate tax rate to 28% as Biden as suggested. Big deal! Again tax money is not required for government spending. The Federal Reserve just issues the money, and then the Treasury Department sells the bonds. What bonds can't be sold to individuals or foreign governments end up on the Fed's balance sheet. The deficit between money spent and tax money collected is irrelevant. Taxes are only relevant to reduce income inequality as long as they are targeted on the rich. The Fed controls the interest rate, and as long as it keeps it at about zero, the Federal government can keep the amount of money it spends on interest under control.
Just as the big Wall Street banks are too big to fail, so now is the stock market. The stock market will never take another radical dive downward because the Federal Reserve won't let it. The way the economy is shaping up Treasury bonds, which hardly pay any interest, are just a safe place to store your money and also for foreign nations which need the world's reserve currency (the US dollar) to have a savings account because they need dollars to conduct business. There is no worry that the US will have to pay off the trillion dollars in Treasuries that China owns because they need those dollars to do business with the US and other nations. If they did want to dump all their Treasuries for some reason the Fed could just create the money to pay them and effectively take the Treasuries on its own balance sheet.
So the stock market is the only game in town for those who want to actually "invest" their money. There is so much 401(k) money in the stock market that that is reason enough to never let it fail. Instead it will continue on its merry way upward while the Fed keeps interest rates at approximately zero so that not much in the way of interest will have to be paid on US debt. There is no reason to fear that Joe Biden's $2 trillion infrastructure plan will bankrupt the US. Since the US dollar is a sovereign currency, the Fed can print as much money as it wants. If international investors don't want to buy this debt, it ends up on the Fed's balance sheet which is an effective black hole from which it never has to emerge.
Then why is there all this kibuki theater about "how to pay for it," the $2 trillion infrastructure plan I mean. It's just that most Americans including most Congressmen are under the illusion that a country with a sovereign currency like the US faces any constraints in paying for anything. Well, there is one constraint - inflation. This is probably of little concern as long as the money is targeted at the lower middle class an the poor which haven't seen wages rise in 40 years. The real inflation in the economy is the asset inflation that the rich are mostly responsible for. That includes the stock market and real estate. Inflation in the stock market will be carefully controlled by the Fed. We've seen that the stock market moved up even during the pandemic. The real problem is inflation in the real estate market which has made housing unaffordable for many. It continues to get worse as the extra dollars the wealthy have to invest are driving up prices. That's why it makes sense to tax the rich ostensibly to pay for the infrastructure bill. The real reason, however, is that inequality is getting out of hand in the American and the world economy. Taxing the rich is the only effective means to reduce inequality to a reasonable level. It will also help to bring inflation in the real estate market under control.
The real problem that Biden's infrastructure bill will have to deal with is changing the nature of the US economy. When the economy was in full employment under Trump, there were still 4% unemployed. 5% unemployment is considered "full employment," but that still leaves about 15 million people out of work. Biden's infrastructure plan will put those 5% back to work. It had been considered by conservative neoliberal economists that 5% unemployment was necessary to ward off inflation, but that theory has been debunked by Modern Monetary Theory. While inflation will still be a concern with all of Biden's stimulus spending, the main concern is restructuring the US economy from an entertainment economy to a constructive labor economy. Trump's economy was arguably a full employment economy (except for the 4% unemployed), but it was an economy the jobs of which were mainly in the entertainment and military industries. In other words, in my opinion, it was an economy based on false unbeneficial values. An economy based on labor participation rebuilding American infrastructure will be an economy based on necessary and fundamentally beneficial values. This might mean that some of those presently employed in frivolous industries might be incentivized to change jobs. Reducing the entertainment and military sectors while increasing those employed rebuilding infrastructure would be, in my opinion, be a good thing.
Biden's Infrastructure Initiative: Don't Worry About How To Pay For It
by John Lawrence, March 30, 2021
Even Republicans agree that there is a need to upgrade the infrastructure of the US. But they don't want to raise taxes to pay for it. Good news! You don't need to pay for it with tax money. The US dollar is a sovereign currency. That means that the central bank, in this case the Fed, can just create the money. In fact this is how it's always been done. The deficit is just an accounting regime. Money created by the Fed need never be paid back. It just goes on the Fed's balance sheet. This is a fact known and agreed to by most economists but many politicians and the American public are totally ignorant of this basic fact about how the economy works. Modern Monetary Theory has attempted to explain it in books like "The Deficit Myth" by Stephanie Kelton. So why does Biden also propose tax increases on the rich to pay for it? These are really two separate issues. Taxes need to be raised on the rich to try to bring into balance the skyrocketing financial inequality that has been occurring, not to pay for the infrastructure bill. Why do politicians including President Biden continue to perpetuate the myth that appropriations bills need to be "paid for." Why don't they just come out and say the truth - that a nation with a sovereign currency can never run out of money?
When just a few people own most of the wealth, we're back in a neo-feudal society where the rich control the political process, and the rest of the people are merely peons who don't really have a stake in the society at all. The Republican attempts to change the voting laws to suppress the minority vote is a way to cement that fact in American society. That's why it's so important to liberalize the voting laws so that every American citizen is encouraged to vote, not discouraged from it. So the infrastructure initiative is really two or even three pronged: rebuild infrastructure such as roads, bridges, ports, rail lines, airports and broadband thus putting millions back to work in good paying jobs. Secondly, to build back better in the sense that, insofar as possible, address the problem of global warming, and, thirdly, to make a first step in addressing economic inequality. All these things are important.
The only thing to watch out for while spending all this money is inflation, and some economists like Larry Summers are already sounding alarm bells over that. By taxing the rich and corporations money will be sucked out of the economy thus tending to reduce inflation. If sucking money out of the economy reduces inflation, then the sucking must be addressed to those areas where excess money really exists: namely, the rich and corporations who have been getting away with murder for years under both Republic and Democratic administrations. Forbes reported that "The 3 Richest Americans Hold More Wealth Than Bottom 50% Of The Country." Forbes ought to know. Perhaps with Biden's plan to tax the rich, it'll take 10 of the richest to equal the bottom 50%'s share. As for inflation, so much money in so few hands has already produced asset inflation in the form of rising housing and rent prices making it problematic for the young and the poor to support themselves especially at a minimum wage that hasn't increased in 50 years. What Summers doesn't understand is that the inflation that has occurred has been in the money that has been made by the rich which is actually wealth inflation, not in the form of wage inflation of the poor and middle class. Therefore, in turning this process around Biden's infrastructure bill is actually pointing the American economy in the correct direction.
Inflation Probably Not a Problem If Biden Programs Are Carefully Targeted
by John Lawrence, March 14, 2021
Critics have said, "Oh, My your children and grandchildren are going to have to pay back all these trillions of dollars that have been spent by both the Trump and Biden administrations on COVID relief and to get the economy going again." Not True! Modern Monetary Theory has shown that the Federal Reserve can just create the money and the Treasury Department can just spend it without ever worrying about paying it back. Finance is not the problem. The problem is potentially inflation which economist Larry Summers has sounded the alarm about. Most of Biden's relief bill is targeted at the poor which means that that money will be sucked up to pay past due rent and mortgage bills as well as providing a decent lifestyle which should not be inflationary except if you believe the nonsense of the neoliberal Phillips curve which supposedly proves that a certain segment of the population has to live in poverty and penury in order to fight inflation. That has also been debunked by Modern Monetary Theory although most politicians are still on the wavelength of neoliberal economics which has been shown to be fallacious in this and many other regards.
State and local governments likewise will just suck up the money in the relief bill to bail themselves out of debt and provide an adequate level of social services. This also is not inflationary because the money will not be just sloshing around in the economy with nowhere to go. What is inflationary is tax breaks for the rich, but this money can be sucked out of the economy by taxing the rich. What Larry Summers fails to take into account is that the US and much of the rest of the world has a two tier economy. The rich and upper middle class are doing very well, thank you, while the lower middle class and the poor are suffering. The COVID pandemic illustrated this in even starker terms with the so-called K-shaped recovery. The upper classes made money; the lower classes are on the verge of losing whatever financial gains they had made during the Trump economy. Inflation is caused by too much money sloshing around in the economic system. Most of that inflationary money is held by the rich in assets like stocks and real estate. Money injected into the economic system targeted at the poor is immediately sucked out of the system to pay debts and to provide basic necessities. There is enough physical and material capacity in the system to provide basic necessities so this money is not inflationary.
Inflation is caused when there is too much money chasing too few goods. As long as there is the material and human capacity, money directed at those sectors of the economy will not cause inflation. The real problem in future Biden administration bills involving infrastructure and the Green New Deal is that the materials to build out infrastructure, namely, steel, cement and plastics, require fossil fuels to manufacture and the manufacturing processes themselves are inherently carbon dioxide emitting. This comes about from basic chemistry which involves the carbon and oxygen atoms every step of the way. Most basic materials are composed of carbon, oxygen, hydrogen and nitrogen, and the chemistry involved in manufacturing releases large amounts of carbon dioxide. The manufacture of solar panels requires mining high quality quartz and combining it with coal. It's hard to get away from fossil fuels as the Michael Moore movie, Planet of the Humans, pointed out. For this reason spending large amounts of money on infrastructure involving cement, steel, plastics and other materials could actually produce more global warming rather than preventing it. The finances are available; the proper materials are not. The manufacture of wind turbines and solar panels require the release of large amounts of greenhouse gasses.
Because of these fundamental limitations regarding materials, it doesn't make sense to throw trillions of dollars at either infrastructure or global warming mitigation. That would be either inflationary or misguided in the sense that large projects in these areas could produce even more global warming. As Bill Gates has pointed out, money should be invested in promising startups and research that can solve these basic problems and into digital nuclear which is the only renewable energy source that won't result in a lot of greenhouse gasses being created in the first place. Advanced nuclear is the most promising source of clean energy. Gates has invested in a company TerraPower which does research on advanced nuclear reactors. Their mission statement reads:
"TerraPower was founded by Bill Gates and a group of like-minded visionaries that decided the private sector needed to take action in developing advanced nuclear energy to meet growing electricity needs, mitigate climate change and lift billions out of poverty. Advanced reactors and other isotopic applications are now possible with technology and enhanced computing capabilities that were unimaginable a few decades ago. At TerraPower, we are innovating in nuclear to improve the lives of people everywhere and to build the clean energy of tomorrow – today."
So when the Biden administration gets around to their initiatives on infrastructure and global warming, they need to heed Bill Gates' warning about traditional manufacturing methods involving cement, steel and plastic. Energy from solar and wind are inadequate to solve the problem for many reasons. Large scale demonstration and build out of nuclear energy reactors should be the order of the day, They are the only clean energy source that has the potential for diminishing the world's reliance on fossil fuels.
Green New Deal: We Have a Problem and Its Not Money
by John Lawrence, March 5, 2021
Modern Monetary Theory has shown that a nation with a sovereign currency such as the US dollar need never fear running out of money, and that Federal spending does not depend on tax receipts. However, it does depend on whether the human and material resources are available. Just pouring money on the problem will cause inflation unless it is soaked up by available resources. The problem is that the material resources are not available. As Bill Gates has pointed out in his book, How to Avoid a Climate Disaster, the problem cannot be solved by the renewable energy resources that are now available, namely wind and solar. Building wind turbines requires immense amounts of concrete for the bases and steel for the turbines, and the manufacture of those resources emits tons of greenhouse gasses. Manufacturing solar panels requires mining of quartz sand and coating with ethylene-vinyl acetate. This manufacturing requires energy—most often derived from the burning of fossil fuels, as the Michael Moore film, Planet of the Humans, has pointed out.
Solving the problem of global warming can't be undertaken by using the available resources of concrete, steel and plastic the manufacture of which emits huge amounts of greenhouse gasses. So even though the financial resources are available, the material resources are not. The human resources, however, are arguably available. Wray and Tcherneva write in a paper How to Pay for the Green New Deal:
"In the neoliberal era, we chronically operate below full employment. That is obvious in Euroland, which is probably operating 25 percent or more below full capacity. Even the US today has substantial excess capacity, in spite of claims that we have achieved full employment. Over the past quarter century, we have had to readjust our estimate for the natural rate of unemployment—the rate below which inflation is supposed to pick up—in every recovery, because inflation never arrives as unemployment falls. Most recently, in the immediate aftermath of the financial crisis, economists claimed that the natural rate of unemployment had increased to over 5 percent. Yet, the unemployment rate kept coming down, while inflation never materialized. We will not know precisely where the inflation barrier is until we ramp up aggregate demand."
So given that human resources are available, it is clear that the material resources are not. Bill Gates recommends spending the money on research to develop new non-greenhouse emitting substitutes for steel, concrete and plastic. That would require high level scientists who might be less available than low level workers. Assuming a full court press requiring large numbers of university and scientific human power, this project is probably feasible although it would not require trillions of dollars of financial resources at least in the initial phases. Later development would require more and finally building out renewable energy resources using these newly developed materials would require more money. So the problem is not that finance is not available. The problem is dispensing it in appropriate amounts over time. There is one promising energy source that would not require such a huge investment in research and development because that has largely been done and that is what we might call digital nuclear. Bill Gates has invested in a company called TerraPower which claims:
"With the growing demand for electricity, TerraPower entered the nuclear energy arena to lift billions out of poverty. Advanced reactors and other isotopic applications are possible with technology and enhanced computing capabilities that were unimaginable just a few decades ago. At TerraPower, we are ready to build the clean energy of tomorrow – today. TerraPower leads in advanced nuclear energy because it has spent the last decade investing in innovative technologies to solve some of the biggest challenges facing humanity."
Two things are clear. Much work has already been done on an advanced nuclear reactor that solves the problems of dangerous explosions such as Chernobyl, Three Mile Island and Fukushima and also the problem of spent fuel radioactive storage. Using high level computing power and advanced digital technology which wasn't available to previous generations of nuclear reactors, Gates maintains that a safe design for nuclear power generation is close to being available. Considering the problems with solar, wind and biofuels which have a longer time horizon before being solved, it seems that nuclear is further along in its development phase and also has greater potential for being a carbon free source of energy. “Nuclear has actually been safer than any other source of [power] generation,” Gates told [CNBC's Andrew] Sorkin. “You know, coal plants, coal particulate, natural gas pipelines blowing up. The deaths per unit of power on these other approaches are — are far higher,” Gates said, a fact he also references in his new book, “How to Avoid a Climate Disaster.”
In their section, “COSTING” THE GREEN NEW DEAL," Wray and Tcherneva write:
"Milton Ezrati, writing for Forbes, offers his own estimates for the various components of the GND, citing different sources (Ezrati 2019). Here we only use his estimates for “greening” projects. Based on estimates by physicist Christopher Clark, the cost of expanding renewable energy to 100 percent would be $2 trillion over 10 years. The smart power grid would cost an additional $400 billion over 10 years (estimate from the Electric Power Institute).13 Upgrading and retrofitting buildings would cost between $2.5 trillion and $3.9 trillion ($3.2 trillion midpoint estimate) over 10 years. The total cost of greening projects comes to $5.6 trillion over 10 years ($560 billion per year, or 2.87 percent of 2017 GDP)."
This is only one of the costing estimates that Wray and Tcherneva provide, but these costing estimates need to be further examined in terms of how much fossil fuels are necessary to build them out and manufacture them. Materials that require large amounts of carbon dioxide emission for their manufacture must be rejected. In the final analysis the Job Guarantee (JG) that Wray and Tcherneva advocate is partially limited to "what Tcherneva calls “care for community” and “care for people” projects: service projects related to senior and youth care, teacher’s helpers, neighborhood and park cleanup, artistic projects, and so on. Thus, the JG program can provide resources needed for green projects in an amount equal to 1 percent of GDP (and resources equal to another 1 percent of GDP for other care services). These would largely be in upgrading buildings and homes to improve energy efficiency, although some could be used in nontechnical maintenance of energy projects (landscape maintenance, for example)." So the mix of high level workers like scientists could be combined with a significant number of low level workers to provide a comprehensive approach."
The bottom line is that we had better get cracking, financing a Green New Deal is no problem because as Modern Monetary Theory has shown, the money is available, but resources must be carefully allocated to avoid the pitfalls of inflation and making the problem worse by using large amounts of traditional materials like concrete, steel and plastics. Nuclear is probably the best bet for power generation and it must be deployed quickly especially in India and China where coal fired power generating plants are still being deployed at a rapid rate.
Bill Gates Needs to Get Up To Speed on Modern Monetary Theory
by John Lawrence, February, 28, 2021
Bill Gates is a smart guy. He has singlehandedly been the most influential person on pandemics and now on climate change with his book, How to Avoid a Climate Disaster. In this book the most important thing he points out in my opinion is that it is not enough to put electric cars on the road and to use renewables to power electricity generating plants. There is also much carbon dioxide emission coming from manufacturing and agriculture. In particular the manufacture of cement, steel and plastic produce as much or more carbon dioxide ton for ton as those products themselves. In addition beef and dairy cows produce a lot of methane due to the fact that they are ruminants with a certain kind of digestive system. Gates believes that much innovation, research and development is needed to come up with substitute products in all these areas as well as electrifying everything and running it all with renewables including a new digitized nuclear system.
The one thing that this polymath doesn't seem up to speed on is Modern Monetary Theory (MMT) which is important because all this innovation, research and development requires vast amounts of money. He personally can't provide it all although he has used his fortune in very constructive ways in terms of health care around the world and also seeding promising startups. The Gates Foundation is concerned with all these problems on a world wide basis and not only in the US. He is a globalist and not an America First type of guy which is altogether appropriate because pandemics and particularly global warming are universal problems affecting every country and all people on earth, and their solutions require a world wide approach.
Bill Gates like some economists is somewhat concerned about inflation after all these trillions of dollars are spent by the US government first on COVID relief and then on infrastructure and a Green New Deal. If they study MMT they would know that MMT shares that concern, but addresses it in terms of the amount of idle resources there are in the economy. For instance, if there is 5% unemployment (what is considered full employment by conventional economists), there are still over 15 million people available for work. If there are material resources available such as cement, steel and glass, the price of these items is not likely to be bid up causing inflation. However, while some material resources are readily available, their substitutes which don't cause carbon dioxide emissions in the manufacturing process are not. A large infrastructure project which requires huge amounts of concrete with rebar such as is necessary in constructing a bridge, for example, will also cause large amounts of carbon dioxide to be emitted into the atmosphere. As Gates points out, making things which require cement, steel and plastic adds about 31% of the total of greenhouse gasses which are emitted annually. For every ton of steel produced we emit 1.8 tons of carbon dioxide. For every ton of plastic, the figure is 1.3 tons of carbon dioxide, and for every ton of cement, we emit a ton of carbon dioxide.
With figures like that how is the US going to do a $4 trillion (which is the amount our infrastructure is in deficit) infrastructure project without producing even more billions of tons of greenhouse gasses (GHGs)? We need huge R&D projects funded by the government first before we can scale up the production of carbon free products which replace these traditional construction materials. Financing the R&D is not a problem as these human resources are widely considered to be available. This would cause no inflation. Getting the material resources when little or none of them is available would cause inflation. Nevertheless, the US ramped up production of ships and airplanes for World War II without causing much inflation. To deal with global warming or climate change is a thornier problem. If money is just poured into the economy on a non-targeted basis, it will cause inflation so it makes sense at least initially to pour the money into R&D as Bill Gates suggests. Doing a large infrastructure project without using the proper materials could make global warming even worse.
Why Should Blue Collar Workers Have to Pay Taxes to Bail Out White Collar Student Loan Debt?
by John Lawrence
Short answer: There is no need for the Federal government to tax in order to spend. That has been demonstrated by Modern Monetary Theory. However, taxation, if imposed in order to fight inflation, needs to be imposed primarily on the rich and upper middle class, not on the poor or lower middle class. The smart thing for the Biden administration to do would be to decrease taxes on the lower middle class i.e. blue collar workers before 2022 thus drawing them away from the Trump camp. In general the American people need to be educated that deficits don't matter except just as accounting entries on the Fed's balance sheet. Biden's COVID relief initiative of $1.9 billion will not raise taxes nor will his follow-on trillion dollar initiative for the build-out of green infrastructure.
The question, "Can We Afford to Pay for the Green New Deal?" is equivalent to the question "Can We Afford to Pay the Costs of Avoiding Annihilation?". In the past we have been able to afford a massive build-up to pay for the Second World War. The climate challenge is the moral equivalent of war. If we lose this war we lose not just our freedom. We lose the habitability of the entire planet. Various attempts have been made to cost out the components of a Green New Deal. Green power generation and transportation are not sufficient in themselves to get to net zero carbon emission, but they are a start. As Bill Gates has pointed out in his recent book, How to Avoid a Climate Disaster, major industrial processes also generate much greenhouse gas emission. For instance, every ton of cement that is produced contributes one ton of carbon dioxide which goes into the atmosphere. Every ton of steel produced results in 1.8 tons of carbon dioxide emitted into the atmosphere, and every ton of plastics produced emits 1.3 tons of carbon dioxide. So it's not enough just to deal with green transportation (electric vehicles) and green power generation (solar and wind).
The cost of "greening" these industrial processes is pretty steep. Capturing carbon dioxide at the site of the manufacturing process is possible, but there is no cheap way to do it. Bill Gates is investing in promising start-ups and is counting on innovation to come up with new processes and materials which will not result in so much carbon dioxide being released into the air. Gates points out that we need to electrify every possible manufacturing process and make sure that all that electricity is generated cleanly. He advocates a new generation of nuclear power sources as wind and solar can not possible fill every energy need mainly because they are intermittent. Nuclear can fill the gap for consistent power generation when solar and/or wind are offline. Smart nuclear power which Bill Gates has been instrumental in developing would solve the problems encountered so far of explosion and what to do with nuclear waste. As a last resort Direct Air Capture of carbon dioxide from the air is possible but also costly.
What it all boils down to is this: we will need on the order of a trillion dollars a year for 10 years commitment to address climate change if we have a prayer for avoiding the worst consequences. What's more a lot of this commitment must be made in cooperation with China which is one of the worst polluters. Rivalry and even a Cold War must be set aside if the world is to avoid the worst outcome from global warming. India and China are building coal fired power generation plants at a rapid pace because coal fired power plants are so cheap comparatively and those countries are developing so quickly. It's not enough just to "green" the US. It has to be cooperation on a world wide basis. Competition has to be set aside and replaced by cooperation. The ownership of intellectual property is irrelevant when it comes to saving the planet.
A national budget for a Green New Deal shouldn't contribute to inflation since there are currently so many unemployed people available for work, and particularly because so many of the small businesses that were lost during the pandemic are not coming back. Also further robotizing of manufacturing processes will eliminate whatever blue collar workers are left working in those fields. In World War II there was some postponement of consumption in order to fight inflation. That may be necessary for the moral equivalent of war which the Green New Deal represents. If so, workers in certain nonessential industries may have to be repurposed and retrained for industries involved in combating climate change.
Former Energy Secretary Proposes Going to Capital Markets for Money to Upgrade Energy Grid Infrastructure: Is This Wise?
by John Lawrence, February 21, 2021
Clinton's Energy Secretary, Bill Richardson, proposes going to the capital markets since the government has been spending so much money on COVID relief. He suggests a public-private partnership. Evidently, Mr. Richardson, like most politicians and dignitaries, is totally ignorant of Modern Monetary Theory. The Federal Reserve can create interest free money with a few computer keystrokes while the capital markets will charge interest, and not only that. Once you enter the Wall Street casino you're subject to all the vagaries of the financial markets like securitzation, credit default obligations, interest rate swaps, betting against the success of various programs and much more. These are the kind of financial activities that caused the 2008 Great Recession and the bankruptcy of Orange County, Birmingham, Milan Italy and the misery in Greece. What's more going to the capital markets causes the same inflation risks as having the Fed create the money because inflation is caused by the amount of money sloshing around in the economy not who supplies it.
Larry Summers is worried about Biden's big spending bills causing inflation. What he doesn't get is that these bills are targeted. It's not just money pumped into the economy. The money going to states and municipalities, for example, is going to pay off debts. That holds for all the money going to families who are behind on their rents and mortgages. Paying off debts is deflationary not inflationary. Money going to unemployment insurance is just money that allows people to consume as if they had a job. That is not inflationary. Money going to businesses to prevent them from failing and putting employees back to work is not inflationary because having these businesses fail and employees without jobs is deflationary. All those flights and cruises not taken, all the money not spent going to movie theaters, all the money not spent on consumption when consumption is 70% of the economy - is deflationary. In fact there is so much deflation during a recession that that is the main worry - not inflation.
But reorienting priorities should also play a part in controlling inflation. Decreasing the trillion dollar budget of the military and military-industrial complex would help to offset inflation and pay for infrastructure repair. It would also free up the human resources needed for a build out of green infrastructure because wage inflation is caused by not enough human resources being available thus bidding up wages. The integrity of the US dollar could also be increased by eliminating sanctions on other countries. The US is using the fact of sanctioning other countries because the US dollar is the world's reserve currency causing the diminution of the use of the US currency as sanctioned countries find workarounds using other currencies. In America's Other Forever War, Peter Beinart explains that these sanctions do not accomplish anything except to hurt the people that happen to be living in the countries that are sanctioned. The chickens will come home to roost as the US dollar looses value in the international currency markets as the euro, yen and reminbi are used more for international trade. As Beinart writes, "“It is past time,” Joe Biden pledged last year, “to end the forever wars.” He’s right. But his definition of war is too narrow."
A careful analysis of Biden's spending plans as well as reorienting current spending priorities needs to be carried out so that runaway inflation does not occur. Certainly putting people back to work is not inflationary. Federal money targeted toward paying off debts by states, municipalities and families is not inflationary. Federal money spent on infrastructure is not inflationary providing that the human and material resources are available. Since the Federal Reserve can create US dollars without the need for taxes, Modern Monetary Theory has shown and economists widely agree that the only limit on Federal so-called "deficit" spending is inflation. Stephanie Kelton has explained that Deficits Don't Matter in her book, The Deficit Myth. People like Bill Richardson and most liberal and conservative politicians need to study up on economics. Bernie Sanders and Alexandria Ocasio-Cortez are some of the few people that already have.
The Republican party is having an identity crisis. Will it be dedicated to the adulation of Donald Trump or will it be based on conservative principles? What are conservative principles? Is the US a Republic or a Democracy or an Autocracy? This whole situation comes about because of the shifting demographics of the US. Historically, the US has been based on rule by white European Americans who have been able to keep minorities including chiefly African Americans in check by various means including slavery, Jim Crow laws, domestic terrorism, red lining, exclusion from education opportunities, even unemployment which has been used by the Federal Reserve to control inflation. That is changing because now there are more educated minorities including immigrants from all over the world gaining positions of political and economic power. 216 companies on the Fortune 500 were founded by immigrants or their children.
Is it any wonder then that poor and middle class whites want to tamp down immigration and keep black people in their place which they have always successfully been able to do until now. A lot of Trump supporters are effectively saying to hell with democracy if it means a multicultural society in which we have to tolerate multiple religions and multiple ethnicities and multiple shades of skin so it's not a question for them of having a democracy or a republic or any kind of society based on some version of popular rule. They want white European American rule like they've always had. There is also the added impetus that most of the once good paying manufacturing jobs have gone elsewhere which leads to even more insularity. So Trump supporters are the real conservatives in the respect that they want to conserve a way of life in which white people and European Americans have all the advantages. They abhor a democracy in which their lifestyle, their religion and their prerogatives are not paramount.
The Mitch McConnell conservatives overlap with the Trump conservatives, but the former stand for the privileges not of the white majority necessarily but of the white elite, of the white wealthy. They are even liberal enough to let wealthy people of different colors into their club while assuring less fortunate Americans that they too, if they work hard enough, may one day gain privileged positions of power and wealth. Basically, they represent rich people and abhor the white rabble. The problem is that this branch of the Republican party is increasingly irrelevant to the problems that America and the world faces. They stand for a strong defense which has morphed into endless wars which have gone nowhere and have only made matters worse in areas of the world in which the US has inserted itself. They stand for a bloated military-industrial-intelligence complex which has proven its incompetence in that it wasn't even able to predict an insurrection at the US Capitol, much less even defend against it once the attack was underway. They have proven to be focused on the wrong problems despite having been lavished with trillion dollar budgets.
What else do "principled" conservatives stand for? Low taxes but modern economic theory has proven that government spending need not be predicated on or limited by tax receipts. They stand for maximizing the private sector and minimizing the public sector at a time when dealing with climate change and even traditional infrastructure rebuilding demands the opposite. They stand for aiding and abetting the rich which has driven economic inequality to new heights. So what would be the role of a revamped and principled Republican party? Probably just to be a Democratic party lite or a party that criticizes Democratic programs. But that wouldn't assuage the interests of most power hungry politicians nor would it excite many members of their base who demand an entertaining leader who is focused by means of dog whistle diplomacy on white power.
The Trump party is similar to the Know Nothing movement, formally known as the Native American Party (at that time meaning descendants of colonists or settlers, rather than Indigenous Americans) before 1855 and the American Party after 1855. It was a nativist political party and movement in the United States, which operated nationwide in the mid-1850s, originally starting as a secret society. It was primarily an anti-Catholic, anti-Irish, anti-immigration, populist and xenophobic movement. So naturally they would resent an Irish Catholic President even though now there have been two of them. Adherents to the movement were to simply reply "I know nothing" when asked about its specifics by outsiders, providing the group with its common name. Qanon anyone? Supporters of the Know Nothing movement believed that an alleged "Romanist" conspiracy was being planned to subvert civil and religious liberty in the United States, and sought to politically organize native-born Protestants in what they described as a defense of their traditional religious and political values. Sure enough sounds like the Trump base to me.
The question is will the US become a full fledged democracy and live up to its vaunted principles finally even though it traditionally never has or will it revert to some version of white European American rule by electing another entertaining autocrat. That may not be Trump who has been deplatformed from Twitter, his chief propaganda tool, and faces mounting legal challenges, but there are others waiting in the wings who will offer bells and whistles instead of sound programs that really benefit the American people as a whole. But do Americans want government based on democratic principles or neverending campaign rallies with flags, banners and chants? As my Dad used to say, we shall see what we shall see.
China Has Been Taking Over the World ... Peacefully
by John Lawrence, February 11, 2021
As Trump was retreating from multilateralism with his America First approach, China was winning friends and influencing people by building infrastruture in countries around the world with its Belt and Road initiative. This model put excess Chinese labor to work pulling their families out of poverty and set up the groundwork for increased trade and friendly relations with with other countries. Latest example: Latin America. Meanwhile, the US has not even been able to build infrastructure in its own country. Every four years, the American Society of Civil Engineers (ASCE) publishes The Report Card for America’s Infrastructure, which grades the current state of national infrastructure categories on a scale of A through F. In 2017, the U.S. infrastructure earned a D+ average. Stay tuned for a new report later this year. Infrastructure looms large because now it must be built out as green infrastructure replacing fossil fuel infrastructure.
In Latin America, America's so-called back yard, 19 countries have signed up for China's Belt and Road Initiative. The value of trade between China and Brazil, Latin America's largest country is $100 billion. China is South America's largest trading partner. Only Paraguay is not on board because they're the only South American country that recognizes Taiwan and not Beijing as the legitimate Chinese government. In 2019 Chinese companies invested $12.8 billion in Latin America concentrating on regional infrastructure such as ports, roads, dams and railways. Meanwhile, America was focused on its entertainment and consumerist economy, now partially defunct due to COVID. Chinese purchases of minerals and agricultural commodities helped South America get through the worst effects of the 2008 financial crisis. While the US had an orgy of financial speculation that created the 2008 financial crisis, China was powering on keeping its shoulder to the wheel, ear to the ground and nose to the grindstone building infrastructure and providing full employment for the Chinese people. As the US was relying on its military power to maintain its influence in the world, China was employing peaceful means to expand its influence. In 2020 the US spent $738 billion on defense, an additional $35 billion on nuclear weapons and and additional $80 billion on intelligence programs, none of which by the way provided intelligence on the assault on the Capitol although it had been discussed widely and openly on the web in prior weeks. Meanwhile, China's 2020 defense budget was $178 billion.
China's Cosco Shipping is building a new $3 billion port in Peru, and there are plans for a transcontinental railroad linking South America's Atlantic and Pacific coasts. Diplomatic opportunities for China have also been opened up due to COVID since China produces most of the world's PPE. The US was caught flat footed because it had to go hat in hand to China for PPE not much of which is manufactured domestically. Mask diplomacy has caused Washington to worry that China is gaining influence during the pandemic as China has provided PPE to 150 countries and 7 international organizations around the globe. While the US struggles to get vaccine into the arms of Americans, China has agreed to provide Pakistan with half a million doses of its Sinopharm vaccine free of charge. Time magazine reported:
"Yet China has won influence not by wielding sticks but by deftly distributing carrots. In Brazil, the region’s largest economy, bilateral trade with China rose from $2 billion in 2000 to $100 billion last year. Today, Brazil sends 30% of all exports to China, including 80% of its soybean crop and 60% of its iron ore. These entanglements are typically tightest with nations with goods to sell; China has supplied over $17 billion in financing to Argentina since 2007, according to Inter-American Dialogue, and is the world’s top importer of Argentine soybeans and beef.
"China is also now a preferred lender across the region. It hosts two international development banks–the Beijing-led Asian Infrastructure Development Bank (AIIB) and the New Development Bank (NDB) in Shanghai–that are both expanding their remit across the region. “Infrastructure development has shrunk the distance between Asia and Latin America,” AIIB president Jin Liqun tells TIME in his Beijing headquarters."
While China was deftly distributing carrots, the US was wielding sticks with Trump and Secretary of State Pompeo bullying the rest of the world to get them to fall in line behind the US. The US needs to cooperate with China to stave off the next big crisis - global warming - not start a new Cold War in an effort to overtake or compete with China. For the most part China has already won any competition to speak of by gaining cooperation and friendship with the rest of the world and achieving the world's largest economy while the US still struggles with COVID, its economy in shambles. "No country has put itself in a better position to become the world's renewable energy superpower than China,"says a recent report by the Global Commission on the Geopolitics of Energy Transformation. In Brazil China's State Grid Corp. is the largest power generation and distribution company, while China's Three Gorges, the world's largest hydropower provider, controls 17 out of 48 hydro plants and 11 wind farms.
Joe Biden is doing his best to backtrack from Trump's disastrous America First policy, but American foreign policy is still on the track that it views China as a competitor rather than a nation that should be cooperated with in order to meet the challenge of global warming. Rather than gearing up for a military confrontation or quibbling and squabbling over human rights, the US must adopt a less belligerent foreign policy and learn to get along with the other nations of the world even those who have not been historic allies. The US should cut back on its bloated military and military-complex spending and devote the savings to virus research and green infrastructure implementation at home and around the world in cooperation with China and other nations.
Contrary to Larry Summers Biden's Relief Bill Will Not Cause Increased Inflation
by John Lawrence, February 8, 2021
Joe Biden's almost $2 trillion pandemic relief deal will not be inflationary despite Larry Summers' opinion. Inflation occurs when there is too much money sloshing around in the economy chasing too few goods, services and human resources. That is not the case here. First of all it will reemploy the unemployed. This is a presently unused resource. Secondly, it will suck up unused or unsold goods and services funding things that are currently unfunded like child care, and thirdly, it will serve to pay off debt and replenish savings. Any money going into savings or paying off debt is not inflationary. It's deflationary in the sense that the banks will lose money due to interest they won't collect if loans are paid off. The middle class that did have savings or credit in many cases has had to use those to survive the pandemic. That's why giving money to higher earning, but not wealthy, families is a good thing. To hear some people talk only money should be given to those who are desperate and living from paycheck to paycheck. Yes, those are the families most in need who should be given money first, but higher earning families who have depleted their savings or gone into debt need to be resuscitated also.
"First, while there are enormous uncertainties, there is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability. This will be manageable if monetary and fiscal policy can be rapidly adjusted to address the problem. But given the commitments the Fed has made, administration officials’ dismissal of even the possibility of inflation, and the difficulties in mobilizing congressional support for tax increases or spending cuts, there is the risk of inflation expectations rising sharply."
Summers fails to take into account the deflationary effects of the relief bill. Money going to states and municipalities will actually be deflationary because much of it will be used to pay down debts and loans. Many state budgets are in horrible shape and employees such as police, librarians and firemen have been laid off. People paying back rents and mortgages will have a deflationary effect on the economy. People on the lower end of the economic spectrum who are living paycheck to paycheck will be able to get a little ahead and also save. This will not add a lot to inflation. Also money can always be withdrawn from the economy by taxing the rich, those who actually added to their wealth and income during the pandemic. This is the only reason that taxes might need to be raised because the US government has the ability to spend without raising taxes. The only reason to tax would be to fight inflation and those taxes can be targeted towards wealthier families and individuals. The Federal Reserve has not been able to achieve its target rate of 2% inflation recently despite maintaining almost zero percent interest rates. It wants more money sloshing around in the economy.
There are other ways to suck money out of the economy to offset inflation. Modern Monetary Theory (MMT) recommends Medicare for All which would result in much less money spent on health care while providing better health outcomes. This would be deflationary which would counteract any inflationary propensities of government deficit spending. Conventional economic thinking is that there is a tradeoff between unemployment and inflation. The more people unemployed there are, the more inflation is diminished. Therefore, full employment as defined by economists is not really employment where everyone is employed. It is that level of unemployment which just keeps inflation in check. However, according to "The Trade-off between Inflation and Unemployment in an MMT World: An Open Economy Perspective" by Emilio Carnevali and Matteo Deleidi, MMT it is contended that inflation "occurs when the system reaches the point of full utilization of its productive capacity, both in terms of capital utilization and in terms of availability of workers. At this point, the government should curb inflation forces cooling down the effective demand. This is another fundamental task of taxes." As long as there is unused capacity in human or production terms, increased employment will not be inflationary. So Larry summers need not worry that putting all those unemployed people back to work will lead to inflation.
Biden's putting a $15.00 an hour minimum wage in the relief bill is also what MMT advocates in relation to a Federal job guarantee. Real full employment at a minimum wage of $15.00 an hour does not need to be inflationary especially if it is in areas that don't compete with already employed workers. Biden's relief bill will have the effect of putting almost everyone to work with at least an hourly pay of $15.00 an hour. People who are living paycheck to paycheck and employed at $15.00 an hour are not going to contribute to inflation since their demands on the economy are those that can be easily accommodated by existing production and easily increased production. Deficit spending is not a problem. Former Chair of the Federal Reserve Alan Greenspan said, "The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default." So the real limit on government spending is inflation which can be controlled by taxes on those sectors of the economy which are not easily upscaled to provide more supply.
There is much unused capacity in the current US economy both in human and material or physical terms. People should be put back to work with a minimum wage of $15.00 per hour. A follow-on bill that would address infrastructure rebuilding and a Green New Deal also needs to be done. Resources may have to be managed by government to control inflation, but the important thing is that work needs to be done in these areas and people need to be put back to work. Inflation can also be offset by the deflationary effect of withdrawing funds form a bloated defense sector.
The Left/Right Political Spectrum Is Irrelevant at This Point
by John Lawrence
The Extreme Right position on the pandemic is just to let it rip. This would mean ongoing disaster for the whole world into the indefinite future. The Extreme Left would advocate government spending as much money as necessary to defeat the pandemic and get the economy back to normal. The middle of the road would advocate doing half as much as necessary to sort of but not really get the pandemic under control. Result: the coronavirus would be mutating and popping back up for years just as SARS COVID-9 is a mutation of the original SARS virus and is related to the MERS virus. Whether the mutations occur in animals or in humans, it doesn't matter. Viruses mutate and doing a half ass job in getting rid of this pandemic which is the political "middle" insures that there will be more pandemics in the future. Not allocating increased funding for the study and research of viruses insures that there will be more threats to human lives and economies.
The Extreme Right position on global warming is to do nothing about it. That includes encouraging consumption of fossil fuels and not caring how many greenhouse gasses are emitted into the atmosphere. This virtually guarantees that the earth will become uninhabitable in 50 years or less. The Extreme Left position would be to do as much government spending as necessary to reduce greenhouse gas emissions to zero in about 10 years. This would prevent global temperatures from rising more than the amount that would destroy the habitability of the earth. The middle position would be to spend a piddling amount to combat global warming. The result would be that the earth would become uninhabitable in a slightly longer time frame.
Republicans want to limit Federal government expenditures to solve problems while maximizing the private sector in the economy. Problem is that dealing with the pandemic and climate change are problems private enterprise is not capable of solving or even leading the way. Is there a role for private enterprise? Certainly, but government must play the leading role or these major problems as well as a number of others will not be solved. Private enterprise won't engage in any activity for which there are no profits to be made. Some problems like the pandemic and global warming are not likely to yield much in the way of profits. Ergo, private enterprise will not be interested in dealing with them.
The COVID relief package that Biden has put forward is totally dependent on Democrats controlling both Houses of Congress. That in turn was totally dependent on the Georgia runoff elections for two Senators which produced two Democrats. Otherwise, there would be no COVID relief package or follow on projects to deal with global warming because not enough Republicans will be voting for any of Biden's projected spending to solve these problems. So the Extreme Left position of these issues which are totally necessary if they are to be dealt with successfully would not have been possible. Even successfully dealing with these two existential problems was hanging by a thread because the election of two Democratic Senators from the state of Georgia was heretofore unheard of. But now there is a chance.
What really needs to happen with regard to government spending is that the public, and that includes Senators and Representatives, need to be educated on how the economy really works. Deficit spending is not really a problem. Read The Deficit Myth by Stephanie Kelton. Republicans rely on the ignorance of the public while suggesting that adequately dealing with global warming or the pandemic will raise their taxes. It does not have to increase taxes which is the conventional understanding about it. The Federal government does not need to pay back Federal deficits because the US dollar is a sovereign currency. The Federal Reserve can just "print" the money - although it doesn't actually print it - it creates it by a few keystrokes on a computer. A household or private firm must pay back its loans. Even US states must pay back loans usually by raising taxes. Th Federal government does not have to raise taxes nor does it have to pay back loans. Treasury bonds can just end up on the Fed's balance sheet where in fact most of them do end up. So a government, any government, which has a sovereign currency can create as much money as necessary to solve any problem. The only caveat is that money creation under certain conditions can induce inflation.
Too much money sloshing around in any sector can produce inflation in that sector. What the US economy has created recently is asset inflation but not inflation in the real economy. Tax breaks for the rich has resulted in the bidding up of assets. Take the stock market, for example. Major corporations have used their tax breaks not to build production facilities but to buy back their own stock. This raises the stock price: ergo, asset inflation. The same holds for the real estate market. People, with more money than they are willing to put to productive use, use it to bid up the value of real estate. Ergo, inflation. This makes housing less affordable. The real economy has under utilized capacity in terms of all the unemployed and underemployed labor. Government spending which soaks up this capacity and puts it to productive use in converting to a reusable energy economy and upgrading to green infrastructure should not produce inflation. Neither will more government money spent on research on viruses produce inflation. What else produces asset inflation is money spent on the military-industrial complex. Think $600 toilet seats.
The US public needs to be enlightened on how the economy really works at the macro level. That being understood would take all the wind out of the sails of Republican objections to government spending. It does not have to raise your taxes because the US government can never run out of money. An understanding of Modern Monetary Theory leads to that understanding.
Which is better: A Universal Basic Income (UBI) or a Government Job Guarantee (JG)?
by John Lawrence, January 22, 2021
Modern Monetary Theory (MMT) favors a JG where the government is the employer of last resort employing people that the private economy cannot accommodate. Now Larry Summers, Secretary of Treasury for Clinton, is coming around to the MMT view. Especially now when there is so much work that needs to be done (infrastructure, renewable energy) and so many idle workers, a JG makes much sense. One might ask where will the money for this come from? Answer: from the same place it came from for Reagan's $100 billion tax cuts, Bush 1's $125 billion tax cuts, Bush 2's $1.2 trillion tax cuts and Trump's $1.5 trillion tax cuts, all of which benefited the rich a lot more than they benefited the poor. Surprisingly, MMT maintains that government spending whether in the form of tax cuts or government programs benefit the private sector economy whether or not they are "paid for" out of tax receipts. Since the US dollar is a sovereign currency, the Federal Reserve can just create the money by a few keystrokes on a computer and move it into the US Treasury's account at the Federal Reserve. This process does not depend on tax receipts or money generated from the sale of Treasury bonds.
Either way - tax cuts or government programs - benefits the private economy. It's just that tax cuts benefit the rich more and government programs benefit the poor more. The fact that both entail deficit spending is irrelevant because the Fed can never run out of money. Don't believe me? Read: The Deficit Myth by Stephanie Kelton. She explains it better. Larry Summers says:
"The impulse behind the latest “big” progressive idea of creating a federal job guarantee is entirely valid. Studies show that those without jobs are much more likely to be dissatisfied with their lives, to become addicted to alcohol or drugs and to be abusive within their families than even those working at low wages they find inadequate.
"On this point, the U.S. economy is falling short of its potential. The fraction of the adult population between ages 25 and 54 that is working or seeking work has declined over the past 20 years. Despite America’s vaunted labor-market flexibility, the chance that a 25- to 54-year-old man will be out of work is much greater than it is in France and not very different than what it is in Spain . And in sharp contrast to the rest of the world, the fraction of adult women working in the United States has been declining since 1999 .
"These trends are important causes of the increasingly bitter nature of U.S. politics and of resistance to technological change and overseas trade. President Trump received disproportionate support in parts of the country where joblessness increased most.
"If the United States could guarantee jobs in even a modestly efficient manner and in a way that significantly increased employment, it would be a very good thing. I want to be enthusiastic about job-guarantee proposals. But at a time when cynicism about government runs strong, it is important for progressives to avoid making promises that they cannot keep. We must rigorously examine the practicality of a job guarantee."
Here's how the Fed's money creation process works. Tax receipts are deposited into the US Treasury's account at the Fed. The US Congress authorizes either spending programs or tax cuts. The US government spends money. When the Treasury's account at the Fed gets down to zero (spending equals tax receipts), the Fed injects money into the Treasury's account. It is impossible for the US government to ever run out of money. Then Treasury bonds are sold by the Treasury Department which are bought by "primary dealers" (mainly big Wall Street banks) which are obligated to buy them. Some are sold to investors whether they be private individuals or governments like China and Japan.
When the point is reached that the banks don't have enough liquidity (cash - because they've been buying up Treasury bonds)), the Fed creates liquidity by buying up the Treasury bonds from the Wall Street banks in return for cash. Where did it get the money to do this? It created it by a few keystrokes on a computer. So by a roundabout process the Federal Reserve makes sure that the US government has all the money it needs as authorized by Congress regardless of any considerations for deficit spending or the total amount of the US national debt. Those are just accounting entries on the Fed's balance sheet. The Fed buys and sells Treasuries every day as a means of setting the interest rate or of providing liquidity as it did in the Great Recession of 2008. The Fed is the loaner of last resort to the US banking system, and it stands ready to create as much money as is necessary to keep it running smoothly. It also stands ready to provide the same guarantees for the US government, but the money has to be authorized first by Congress.
The takeaway is that Deficits Don't Matter. The private sector benefits from government deficit spending whether those deficits are created by tax breaks or government programs. Government spending programs primarily help the poor while tax cuts primarily help the rich. A government Job Guarantee in which the government becomes the employer of last resort is better than a Universal Basic Income because a job provides one with more dignity than a handout and there is much work to be done. Congress - not taxes - is the limitation to government spending. Republican obstructionism is the only thing that can limit economic benefits to the American people because, while the Fed can directly benefit the Big Banks without Congressional approval, it cannot benefit the American people without Congressional approval. Democrats want to benefit the American people, convert to renewable energy, provide jobs and income for the American people and prevent the earth from burning up due to climate change. Republicans want simply to hold on to political power by preventing Democrats from being successful.
Voltaire: Those who have the power to make you believe absurdities have the power to make you commit atrocities
by John Lawrence, January 19, 2020
Twitter took away Trump's source of power when it deplatformed him. He'll never have the same soapbox again. This was the most significant move in silencing Trump, more so than even an impeachment conviction. He must be deplatformed from all social media. I don't think someone who cried fire in a crowded theater is entitled to free speech just as someone who has murdered someone with a gun isn't entitled to own a gun despite the Second Amendment. So there you go. All this will happen in the background as Joe Biden rescues the US from COVID and a sucky economy. The economy is just fine for the rich. It's terrible for the poor and has been for years. For most U.S. workers, real wages have barely budged in decades. So Trump is well on his way to becoming a footnote to history, an incompetent grifter, who gained a following through entertaining lies appealing to lower middle class grievances. My prediction is that he won't pardon any of the people involved in the Capitol riot because, like him, they are losers. Winning would have been a complete takeover in a coup d'etat, not just a break-in and subsequent removal. When he told his followers "I will be there with you" what he probably meant was that he would come down there after Mike Pence had been hung and Nancy Pelosi had been executed. Then he would declare himself President for Life and install the My Pillow guy as vice President. Instead the name Trump is being eliminated from all the entities that Trump had branded like Trump Tower. The name has lost its cachet.
Joe Biden will put competent people into positions of power and responsibility not loyal political hacks like Trump did. A lot of this will go on behind the scenes while Joe implements the big initiatives: 100 million vaccinations in the first 100 days and a $1.9 trillion economic relief bill. Everything else is relatively minor. Money will be no object; incoming Treasury Secretary Janet Yellin, former Chairwoman of the Federal Reserve has said, "Go big." She knows what hitherto Fed Chairmen and Treasury Secretaries did not want you to know and that is that Deficits Don't Matter. (See The Deficit Myth by Stephanie Kelton.) They are by a roundabout process merely accounting entries on the Fed's balance sheet. As long as there is unused productive capacity in the economy, deficits can put people back to work doing productive things that the private sector will not do like building and repairing infrastructure. On Biden's first day he will rejoin the Paris climate accords. Money must be made available in a second massive economic bill after the $1.9 trillion relief bill so that the country can be transitioned from a fossil fuel economy to a renewable energy economy. So there will be a lot of deficit spending although a revision of the tax structure that makes the rich and corporations pay their fair share will offset some of this.
Trump faces a financial reckoning. In the book, Dark Towers, Deutsche Bank, Donald Trump and an Epic Tale of Destruction, we find that in 2016 "Trump by now owed the bank about $350 million, representing half of all of his outstanding debt. Deutsche was by far his biggest creditor, and Trump was the single biggest borrower from the private-banking division. To borrow that money, Trump had provided Deutsche with his personal financial guarantees. If he failed to pay the loans back, the bank could come after his personal assets, making his life—and his ability to project the public impression of massive wealth—exceedingly difficult." Those loans are coming due in about two years. Deutsche will probably take Trump to court to get their hands on that $300 million slush fund that Trump raised from his followers to supposedly "Save America." Trump's golf courses and other properties are losing money because of the pandemic. A few miles south of the namesake tower where Donald Trump began his run for president, New York prosecutors are grinding away at an investigation into his business dealings that could shadow him long after he leaves office. The probe led by Manhattan District Attorney Cyrus Vance Jr. is one of several legal entanglements likely to intensify when Trump loses power — and immunity from prosecution — upon leaving the White House.
The important and crucial consideration is what kinds of jobs does the full employment society consist of? The type and quality of the jobs is something to be concerned with. After all Hitler had a full employment society. Everyone had a job in his full employment society. Ditto for Mussolini. Once the US got involved in the Second World War, the US had a full employment society. That ended the Great Depression. Trump bragged about presiding over a full employment society pre-COVID. The question is fully employed at what? Our infrastructure is crumbling, approaching Third World status. Republican economists don't give a hoot about the composition of jobs in the US as long as they're all in the private sector and not in the public sector. Meanwhile, China has built 24,000 miles of high speed rail in its own country and a $4-billion, 470-mile-long rail line, the first electrified cross-border rail system in Africa, Ethiopia-Djibouti Railway.
Modern Monetary Theory (MMT) favors a Federal Job Guarantee. The answer to the grievance that many Americans have about the disappearance of good paying jobs is to guarantee them a job. In The Deficit Myth, Stephanie Kelton writes:
"The MMT solution to involuntary unemployment is to introduce a federal job guarantee that establishes a legal right to a good job at good wages with good benefits. This would address one of the most pernicious effects stemming from trade - the unemployment that is too often visited upon whole communities as jobs are lost to foreign competition. It's not enough just to provide training and other temporary forms of assistance to workers whose jobs are lost to foreign competition. ...something more is needed.
"That something is a federal job guarantee. By no means is it a panacea, but at a minimum, it begins to tackle the problem of unemployment directly (as opposed to subsidizing the effects of unemployment). Through the thick and thin of the business cycle, we leave tens of millions of Americans idle in the belief that this makes political, economic and social sense. ...
"The benefits of a federal job guarantee not only include the production of goods, services and income. The guarantee also features on-the-job training and skill development; poverty alleviation; community building and social networking; social, political and economic stability; ... With a program like this in place, the government would have mitigated the localized devastation of communities that directly experienced the loss of well-paying US industrial jobs.
"It may be hard to imagine an economy that doesn't allow millions to fall by the wayside. But that's because America has almost never achieved anything like true full employment. It's something we've rarely experienced outside of wartime. One of the most important features of a job guarantee program is that it maintains a form of full employment by immediately hiring the unemployed into public service work, providing them with income and the retraining required when they are displaced by trade shocks. In this way, the job guarantee can can serve as the core of a response to both "free trade" and the "trade war." With a job guarantee, free trade is no longer a threat to full employment, and trade wars are no longer necessary to prevent unemployment."
Many of the grievances of right wing workers and Trump supporters can be tied to the fact that their communities have been destroyed as good decent paying union jobs have been moved overseas where labor costs are cheaper. MMT argues that those disenfranchised workers should be automatically reemployed especially when their labor is greatly needed to build green infrastructure in order to combat climate change. That's the real war we face right now - not against an imagined enemy - but against the fossil fuel economy which, if left unchecked, will surely destroy the habitability of the planet. It should be obvious that more workers are needed to fight the pandemic and other public health crises likely to happen in the future. It's also obvious that instead of spending a trillion dollars a year on a military-industrial complex which has to instigate another cold war to justify its existence, we should be spending money subsidizing jobs that are really necessary to make the lives of Americans and others around the world better as we move forward.
Right now the US dollar is the world's reserve currency, interest rates on Federal debt are around zero, and there is no reason why the Federal Reserve cannot issue the money necessary to implement a federal jobs guarantee if there is not enough tax money available to cover it, the way it created the money with a few keystrokes on a computer to bail out the Big Banks during and after the Great Recession. The Federal Reserve is the loaner of last resort to the banks, and, since the US dollar is a sovereign currency, as much money as necessary can always be created to support a federal jobs guarantee. Taxes should function as a means to reduce economic inequality but they are not necessary to fund the government as MMT has shown. As long as productive resources in human or material terms are idle, putting them to work will not cause inflation.
The trillions created and spent by the Federal Reserve to bail out the banks have not caused inflation nor have they caused a depreciation of the dollar which is still in great demand by other nations around the world. The old thinking is that the government has to fund itself out of taxes or go into debt which it has to pay back. That certainly applies to households and states, but, with the ability to print its own sovereign currency, the US is in the position that the national debt is just an accounting entry on the Fed's balance sheet. The provision of a good paying job as a guarantee will help to ameliorate the grievances of Trump supporters and move them to the other side of the political spectrum.
Fiscal Conservatism or Saving Prerogatives of the Rich?
by John Lawrence
Republicans in Congress don't want to grant Americans $2000 in COVID relief on the grounds of fiscal conservatism. But their idea of fiscal conservatism has been entirely debunked by Modern Monetary Theory (MMT). There are no negative implications for large deficits as Stephanie Kelton has shown in The Deficit Myth. Since the US dollar is a sovereign currency, it - not the market - sets the interest rate on US Treasury bonds. The money is just "printed" (with a few keystrokes on a computer) by the Federal Reserve and voila! there is money available for any good purpose with one caveat. The physical and human resources must be available to be utilized for constructive purposes in order to not increase inflation. Right now there are plenty of human resources available due to unemployment and there are physical resources which could be used for a green infrastructure program. There is no lack of resources, only a lack of the political will to use them. Since the US GDP is based on 70% consumption, if consumers don't have the mean to consume (money), the US economy will tank while China's economy is surging ahead due to the fact that they got COVID under control early on. Republican concerns about fiscal conservatism are ill founded and obsolete. They want the status quo because it works for the rich ceteris parabus. Here's why according to The Deficit Myth:
"After we examine the faulty thinking underlying these six [deficit] myths and counter them with solid evidence, we will consider the deficits that do matter.The real crises that we're facing have nothing to do with the federal deficit or entitlements. The fact that 21 percent of all children in the United States live in poverty — that's a crisis. The fact that our infrastructure is graded at a D+ is a crisis. The fact that inequality today stands at levels last seen during America's Gilded Age is a crisis. The fact that the typical American worker has seen virtually no wage growth since the 1970s [while China has pulled 850 million out of poverty] is a crisis. The fact that forty-four million Americans are saddled with $1.7 trillion in student loan debt is a crisis. And the fact that we ultimately won't be able to "afford" anything at all if we end up exacerbating climate change and destroying the life on this planet is perhaps the biggest crisis of them all."
Meanwhile, the tax bill signed by Trump in 2017 widened inequality and provided help to those who needed it the least. It also added to the deficit, but that is the least worst thing that it did. Republicans are totally oriented that they must fight against anything benefiting the poor and middle class on the grounds that it adds to the deficit while green lighting anything that benefits the rich and the military-industrial complex. It's really about who holds crucial political power — those representing the rich or those representing the poor and middle class. It's not at all about finding the money or adding to the deficit. The Federal Reserve can print money and give it to banks without any legal or political restrictions. They don't have to ask Congress for permission to do so, and it doesn't add to the deficit. They gave the Too Big To Fail banks $4.5 trillion after the Great Recession which started in 2008. This program was known as quantitative easing (QE). Sure they took onto their balance sheet "collateral" from the banks, most of which was worthless junk and asset backed securities which the banks wanted to get rid of in the first place.
So if the legal restrictions were changed, the Federal Reserve would be able to do Quantitative Easing for the People and not just free lunch for the banks.In the meantime we are stuck with this Kabuki Theater where Congress has to agree to providing the funds which just end up mainly on the Fed's balance sheet anyway and never need to be paid back despite the moaning and crying of Republican deficit hawks. Stephanie Kelton is a deficit owl. She believes in using deficits wisely. If they don't cause inflation (did the $4.5 trillion given to the banks cause any inflation?), deficits can be used constructively to achieve positive goals for the American people in terms of a widened safety net and 21st century green infrastructure.
Republicans Will Not Vote for $2000 COVID Relief Because of the Deficit But Deficits Don't Matter
by John Lawrence, December 28, 2020
Let's say the US Treasury offers a $100,000 bond for sale because the US government needs the money to pay $100,000 worth of obligations authorized by Congress, and there aren't enough tax dollars available to cover those obligations. Let's say China buys that bond. What actually happens is that the Federal Reserve "clears" this transaction. It does this by debiting the central bank of China's account at the Federal Reserve by $100,000 and crediting the US Treasury's account at the Federal Reserve by $100,000. All US banks and most foreign central banks have accounts at the Federal Reserve and US dollars called reserves never leave there. The Fed by means of a few keystrokes on a computer moves money from one account to another. The same thing happens when you write a check. Money is moved from your bank's account at the Fed to the account of the bank of your payee at the Fed. This is how checks "clear." There are fail safe mechanisms in place so that your bank and the US Treasury can never run out of money. Money can just be "printed" by means of keystrokes on a computer. That's essentially what happened during the "liquidity" crisis of 2008 when the big banks were bailed out by the Fed. The Fed just moved sufficient funds into the big Wall Street banks' accounts to cover their commitments.
Because the Fed can never run out of money, there is no need to worry that China will demand payment for the money we owe it because, if it did, the Fed would just print the money and say to China, "here." The money would be a debit on the Fed's balance sheet but so what. The Fed took on at least $4.5 trillion in debits on its balance sheet to add liquidity to the big banks during the Great Recession of 2008. Since the Fed can just print money and no one can ever demand that the Fed reduce the amount of debt on its balance sheet, the US Treasury which funds the US government can never run out of money. That's why deficits don't matter. The Fed could just move enough money into the US Treasury's account at the Fed to cover the $2000. COVID relief checks. The only concern is that flooding the economy with money will cause inflation, but, since so many people are out of work with no or little income, this is not likely to happen. What is likely to happen is that this money will prop up the US economy which might go into recession without it since 70% of US GDP is money spent on consumption. Without consumers spending money the US economy collapses.
Money is created by the US banking system when you apply successfully for a loan. The bank just creates the money without regard to whether or not the bank has the money in deposits. It's called fractional reserve banking. So all money out there is basically created when people go into debt or the government spends money. The relevant book on the subject is Ellen Brown's Web of Debt. The bank is, however, required to have enough collateral on deposit at the Federal Reserve in its reserve account. Since not everyone is going to demand their money from the bank at the same time, fractional reserve banking actually works. In rare cases, however, the Fed stands ready to step in if there is a run on the bank. The important thing to remember is that every check you write is cleared at the Federal Reserve when money from your bank's reserve account is moved into the account of the bank of the payee to whom you wrote the check. Every bank in the world that deals in dollars has an account at the US Federal Reserve, and, since the US dollar is the world's reserve currency and most transactions are conducted in US dollars, they are all cleared at the US Federal Reserve.
This understanding about how the US Federal Reserve works and why deficits don't matter is better and more fully explained in the best book on the subject, The Deficit Myth by Stephanie Kelton. Republicans who are deficit hawks are just trying to pull the wool over your eyes when they maintain that deficits will have to be repaid by our children or grandchildren out of taxes. Of course they don't have a problem when deficits are created by tax breaks for the rich. Another book that explains how the Fed actually works is Paying Ourselves to Save the Planet by J.D. Alt. He writes that the cost of combating climate change on a time scale that will actually save the planet from destruction is about $40 trillion:
"To that number we must add the cost of subsidizing the change in consumer decisions that will be necessary to reduce the carbon emissions the sequestration efforts are striving to soak up - replacing fossil-fuel engines with electric in all private and public transport, super-insulating buildings and replacing inefficient HVAC systems, establishing regional photo-voltaic micro-grid electric networks, replacing gas cooking ranges with electric induction units, buying regenerative-produced farm products and "meatless meats," replacing all small-engine appliances and tools with battery electric power, etc. It has been estimated that this process of transitioning toward zero carbon emissions will cost $1 trillion/year in consumer subsidies in the U.S. alone. If the rest of the world is also to adopt these consumer choices - rather than the old carbon-based choices - we could reasonably double that. This brings the total cost of avoiding the worst that climate change has in store to $60 trillion between now and 2030."
So if we are to address climate change in the time frame required and with the necessary resources, it will require a huge effort reminiscent of World War II. We cannot just deal in the mind set of normal left/right politics in which these measures are considered too extreme and not amenable to the normal political framework. We must go full steam ahead and Modern Monetary Theory as expounded by Kelton, Brown, Alt and others must provide the economic substructure to make it all work.
The US Central Bank Can Print Money; The State of California Can't
by John Lawrence, December 27, 2020
One of the central tenets of Modern Monetary Currency (MMT) as explained in Stephanie Kelton's book, The Deficit Myth, is that a nation with a sovereign currency can always pay its debts by a few keystrokes on a computer at its central bank - the Federal Reserve in the US' case. A nation or a state without a sovereign currency must pay its debts by taxes or out of income. She dispels the myth that the US government pays its debts out of taxes or by Treasury bonds. However, the state of California must pay its debts the old fashioned way out of taxes and income. This reality hit hard in recent years in the case of Greece which gave up its sovereign currency, the drachma, when its joined the European Union. Unlike the UK which maintained its sovereign currency, the pound, Greece has to borrow money from private investors and pay its debts from the collection of taxes. Eventually, after much hardship the IMF and the European Central Bank helped Greece get back on its feet.
It's a myth that the US national debt must be paid off by our children or grandchildren or that we must suffer because of all the money owed via US Treasury bonds to China or Japan. Unlike Greece which saw its situation go from bad to worse as private investors demanded higher and higher rates of interest, the US Federal Reserve sets the interest rate (currently around zero) on the bonds it offers for sale. Other countries buy them because most of the world's business is conducted in dollars, and those countries need dollars which they get from Treasury bonds to conduct business. The US government is not competing with private corporations for loans because, when it needs money, it just prints it. Right now the way the rules are written the Fed can print money and give it to the banks, the way it did during the Great Recession when it just gave the banking system $4.5 trillion, but it cannot print money and give it to the US government without Congressional approval. It can provide direct relief to the banks, but it cannot provide direct relief to the American people. That's why the COVID relief package is being held up because, even though Congress did give it its stamp of approval, the law also requires that the President sign the bill which he has not.
You've probably already seen MMT's central insights in action. ... Whenever the topic of Social Security comes up, or when someone in Congress wants to put more money into education or health care, there's a lot of talk about how everything must be "paid for" to avoid adding to the federal deficit. But have you noticed this never seems to be a problem when it comes to the defense budget, bailing out banks, or giving huge tax breaks to the wealthiest Americans, even when these measures significantly raise the deficit.? As long as the votes are there, the federal government can always fund its priorities. That's how it works. Deficits didn't stop FDR from implementing the New Deal in the 1930s. They didn't dissuade John F. Kennedy from landing a man on the moon. And they never once stopped Congress from going to war.
In fact deficits don't matter as Kelton proclaims over and over again in her book. There are limits however. That limit has yet to be met as the huge bailouts of the 21st century for the Great Recession and COVID relief have yet to cause the least bit of inflation. Other big projects like a Green New Deal are pooh poohed by Congress because Congress is controlled by wealthy interests so tax breaks for the rich is no problem nor is going to war which benefits defense contractors, but anything that represents the interests of the average American is not favored by Congress. If and when Congress is controlled by the middle class, we will see large projects which promote the health and welfare of the American people in general and not just wealthy business interests.
The Chinese are building huge infrastructure projects all over China and even the rest of the world with its Belt and Road Initiative. They can do this because the Chinese renminbi is a sovereign currency and the money is available to keep the Chinese people fully employed doing constructive things. They have bought into MMT and know that Deficits Don't Matter. Besides they don't have to subject themselves to the whims of Congress. If the government wants to do it, it's full steam ahead. It seems to have worked for them as they have brought 850 million Chinese people out of poverty in the last 40 years. But as Pew Research reported, "But despite the strong labor market, wage growth has lagged economists’ expectations. In fact, despite some ups and downs over the past several decades, today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. And what wage gains there have been have mostly flowed to the highest-paid tier of workers." So to put a fine point on it, 850 million Chinese brought out of poverty in last 40 years; average Americans no wage growth in last 40 years.
It has become clear that the old way of thinking that national deficits have to be repaid out of taxes and Treasury bonds is incorrect. Any country with a sovereign currency can just print money by a few keystrokes on its central bank's computer. The US Fed does just that. The conversion to Green Infrastructure could easily be funded in this way if Congress approved. At the same time many good paying jobs could be created. Instead of competing with China by military threats or sanctions, we could instead compete by building Green infrastructure in the US and the rest of the world. Or maybe we could cooperate in saving the world from the ravages of global warming and also providing the same benefits to the average American which the average Chinese is increasingly able to enjoy.
China is the only country to land successfully on the moon in the 21st century, and has done it three times
by John Lawrence, December 19, 2020
While the US is in the midst of the greatest public health and economic crisis it has ever faced, China is surging ahead economically and in the space race. This December 2020 China's Chang’e-5 spacecraft gathered about 4.4 pounds of lunar samples in a three-week operation that underlined China’s growing prowess and ambition in space. It was China’s most successful mission to date; yet there was nothing reported about it on the nightly news. What has been reported on the nightly news is the fact that Russia has hacked into our defense department and other sensitive institutions. The fact that this is even happening represents sheer stupidity on behalf of the Defense Department. The internet is a public space that represents, as far as the Defense Department is concerned, a direct pipeline between itself and Russian hackers. It is asking for trouble.
Why hasn't the Defense Department detached itself from the internet and created a private intranet disconnected from anything Russian hackers could access? They could have an intranet which would just be a connection among those American actors and institutions that would need to interact with each other. If they need to interact with people in other parts of the world, they have had secure communication networks at least for the last 70 years. No one hacked them during the Second World War although the British were able to hack the Nazis. For American sensitive institutions to be using the public internet or even to be connected to the public internet is a travesty. There are different levels of internet communications that could be used. For nonsensitve communications and data storage a more public internet can be used, but for sensitive systems a private internet not connected to the public internet that Russian hackers have access to is more appropriate. Then hacking is a non-issue.
The US is falling behind China economically and in many other ways. China has mastered the art of using its public banks to build infrastructure at home and abroad. It has lifted 800 million people out of poverty in the last 30 years. Meanwhile, US infrastructure is rated a D+ by the American Society of Civil Engineers. Ellen Brown writes:
A publicly-owned national infrastructure bank, on the other hand, would be mandated to lend into the real economy; and if the loans were of the “self funding” sort characterizing most infrastructure projects (generating fees to pay off the loans), they would be repaid, canceling out the debt by which the money was created. That is how China built 12,000 miles of high-speed rail in a decade: credit created on the books of government-owned banks was advanced to pay for workers and materials, and the loans were repaid with profits from passenger fees.
Unlike the QE pumped into financial markets, which creates asset bubbles in stocks and housing, this sort of public credit mechanism is not inflationary. Credit money advanced for productive purposes balances the circulating money supply with new goods and services in the real economy. Supply and demand rise together, keeping prices stable. China increased its money supply by nearly 1800% over 24 years (from 1996 to 2020) without driving up price inflation, by increasing GDP in step with the money supply.
In the US the Federal Reserve has poured money into banks, hedge funds and various other financial entities but is forbidden by law from helping average Americans or Main Street businesses. There is Quantitative Easing for the banks, but not Quantitative Easing for the People. China has no such legal barriers for their central bank and public banks. While the US Congress quibbles endlessly over minuscule issues, China is going full steam ahead with economic development which benefits large majorities of its people as well as people outside of China with its Belt and Road initiative. The World Bank reports: "If implemented fully, the initiative could lift 32 million people out of moderate poverty—those who live on less than $3.20 a day, the analysis found. It could boost global trade by up to 6.2 percent, and up to 9.7 percent for corridor economies. Global income could increase by as much 2.9 percent. For low-income corridor economies, foreign direct investment could rise by as much as 7.6 percent."
While China has mastered the technique of generating money for infrastructure development inside and outside of China while also increasing world trade and economic well being, the US has only increased poverty and destroyed infrastructure with its never ending wars. It has squandered money on a military infrastructure which is larger than the next 10 countries combined. The US dollar is still the world's reserve currency and major world financial institutions like the IMF are still oriented towards the dollar. This could all change, however, as the Chinese renminbi gains ground. The US has a chance to reconstruct itself under a Biden administration and reorient itself towards a middle class democratic society which benefits its people rather than its elite. It's a tall order but maybe Joe Biden and his appointees can pull it off. A Green New Deal is necessary not only for the sake of reestablishing the middle class but also for saving the planet from global warming.
How Joe Biden and the Democrats Can Attract Trump's Base to Their Side
by John Lawrence, November28, 2020
Aside from the entertainment value of the Trump Presidency, his main appeal and the main appeal of Republicans in general is that they stand for reducing taxes. Democrats can co-opt this issue. Here's how: before the next election, they announce that, if elected, they will reduce taxes on everyone making less than $400,000. Joe said he wouldn't raise taxes on that group, but he didn't go far enough. He needs to reduce taxes on everyone making less than $400,000 while raising them on everyone making more than $400,000. Trump's base, I assume, are people making less than $400,000. They are attached party wise to the wealthy Republicans who make up the top 1% with whom they have nothing in common economically. How will Joe pay for this? Simple: the money raised by raising taxes on the rich, making corporations pay their fair share, closing loopholes like the "carried interest" loophole and a financial transactions tax (FTT). And it wouldn't have to balance out equally. In other words the money raised in increased taxes on the rich would not have to equal the money spent on tax breaks for everyone making less than $400,000. It would represent the destruction of the Republican meme: "Democrats will raise your taxes."
The Federal budget need not balance out exactly. It hasn't done that since President Clinton balanced the budget in 2001. He had budget surpluses for fiscal years 1998-2001, the only such years from 1970-2020. Clinton's final four budgets were balanced budgets with surpluses, beginning with the 1997 budget. Since then Republicans, supposedly the guarantors of fiscal conservatism, have deficit spent by means of tax cuts going mainly to the rich. Even before Clinton, Reagan deficit spent with tax cuts in the 1980s. This meme that Republicans represent tax cuts and fiscal conservatism needs to come to an end and be exposed by Democrats for what it is. Evidently, the middle class Republican voters are satisfied with a meager tax cut and don't mind that the rich are getting a more hefty one. That's why Democrats have to take over this meme by giving tax cuts to the middle class and tax raises to the rich. This is the only way finally to get economic inequality under control.
Modern Monetary Theory and the Federal Reserve's own history prove that Deficits Don't Matter. The US dollar is a sovereign currency. The Federal Reserve can just print money and spend it into the economic system without adding it to the national debt. This is exactly what Abraham Lincoln did during the Civil War when he printed greenbacks instead of borrowing the money at interest which would have created huge debts for the United States. So there are two ways that money can be created by the Fed. 1) They can buy US Treasury bonds which would require Congress to deficit spend. 2) They can just print the money and pour it into Federal coffers. This does not add to the national debt but goes on the Fed's balance sheet. The bottom line is what is the money to be used for? If it's for a good cause like building green infrastructure and creating jobs in the process if the economy is less than fully employed, it probably won't create inflation. If it's just a gift to people in an already fully employed economy, it will most definitely create inflation or even hyper inflation.
So in the long run deficits do matter in the sense that, if the money is spent frivolously, inflation and potentially a loss in the value of the dollar on international markets could occur. However, if the money is spent constructively on building and repairing of infrastructure and other useful purposes, deficits won't matter. It boils down to prudent and responsible spending by government. Is Congress up to this task? Is the Fed? At this point a deal between the Executive branch and the Fed would seem more appropriate than running the whole thing through Congress where political ambitions of one party or the other can get in the way. The problem is that there is no consensus in Congress unless one party holds control over both Houses and the Presidency. Barring that, each party will try to limit the other party's spending goals which are tax breaks for the rich (Republicans) or government spending on social programs (Democrats). One way to break this stalemate is for Democrats to be the party of tax breaks for the 99% and tax increases for the 1% while maintaining their commitments to the social safety net.
Why Janet Yellen is the Perfect Choice for Treasury Secretary?
Because as former Fed Chairman she knows where the bodies are buried, figuratively speaking of course. She was the first woman to head the Federal Reserve from 2014 to 2018, and now will be the first female Treasury Secretary. She knows that the Federal Reserve has the capacity to just print money and that money does not get added to the national debt or the deficit. The charade that goes on between Mnuchin and Nancy Pelosi represents an unnecessary exercise in futility The Fed has printed trillions of dollars to bail out the banks, and it has swallowed large amounts of Treasury bills if nobody wants to buy them at auction. The Fed's charter is 1) to insure full employment and 2) to check inflation. With all the money the Fed has printed so far with their policy of "quantitative easing", there has been no inflation. So money printing is a viable strategy to keep the economy functioning, but so far it has only functioned well for rich people. Now there can and should be a policy of "quantitative easing for the people." If Congress won't cooperate, Janet Yellen could do an end run around Congress and make a deal between her and the present Fed Chairman, Jerome Powell.
Joe Biden is going to need a lot of money to build green infrastructure, and Congress, if under Republican control, will deny him that money. Is that blunt enough? If MItch McConnell is leader of the Senate, he will make sure that what he did to Obama, he will do to Joe Biden, that is to deny him the wherewithal for any of his progressive programs even if they are less progressive than the left wing of the Democratic party wants. So let's expose this fiction that money is not available for a Green New Deal which amounts to doing what might not even be sufficient to forestall climate change. It would also create millions of good paying jobs by the way. What's wrong with that? Republicans will say that it will add trillions of dollars to the national debt. But did the trillions spent bailing out the big banks add trillions to the national debt? No, it didn't add a penny. That's because the Fed just printed the money, and it didn't increase inflation either. So the money is available for much needed social programs involving renewable energy and green infrastructure. A by product is eliminating unemployment and creating good paying jobs just like the Federal Reserve is tasked to do.
Fed Chairman Jerome Powell has spoken out to encourage more spending to help the economy. He knows that the Fed can and will pick up the slack by buying Treasury bills and deep sixing them on the Fed's balance sheet even as politicians keep up the fiction that Congressional leaders are concerned about the deficit:
Federal Reserve Chairman Jerome Powell on Tuesday urged Congress to spend more money to limit the economic damage of the COVID-19 pandemic, the latest in a chorus of current and past Fed officials to tell lawmakers that inaction could lengthen the recession.
“There’s a reasonable probability that more will be needed both from you, and from the Fed,” Powell told the Senate Banking Committee, echoing nudges he has made in nearly every public statement since the pandemic began.
Powell has noted that COVID-19’s economic devastation has fallen hardest on low-income workers — 40 percent of individuals making under $40,000 lost their jobs during the crisis.
Sen. Chris Van Hollen, D-Md., asked whether congressional spending would be a more effective response than the Fed’s monetary policy.
“In the short and medium term, yes: fiscal policy,” Powell said, adding that, in the long term, fiscal and monetary policies encouraging maximum employment were the way to go.
Powell’s urging has been voiced more explicitly by other Fed leaders past and present in recent days. Former Fed Chairman Ben Bernanke co-wrote a letter to congressional leadership Monday that was also signed by Janet Yellen, another former leader of the Fed, and 131 other economists.
“Insufficiently bold congressional policy responses to the Great Recession unnecessarily prolonged suffering and stunted economic growth,” Bernanke wrote, along with Washington Center for Equitable Growth CEO Heather Boushey and Cecilia Rouse, dean of the Woodrow Wilson School at Princeton. “Congress should not make this mistake again.”
In the past week, regional Fed presidents have also asked Congress to do more — not just to respond to the pandemic, but to encourage more inclusive growth as Black Lives Matter protests continue across the nation.
“Systemic racism is a yoke that drags on the American economy,” Raphael Bostic, president of the Atlanta Fed and the only African American to lead a regional Fed bank, wrote in a blog post on the regional bank’s website. “A commitment to an inclusive society also means a commitment to an inclusive economy.”
Those comments have been matched by the heads of the Fed’s San Francisco, Richmond and Dallas branches in recent days.
These comments reveal the barely disguised fiction that Congress has to act first in order to open up the flood gates of Federal Reserve money printing. However, even if that is the case, Congress needs to get off its butt. Because of arcane laws, the Fed can't act directly. Powell's barely disguised Fed speak is implying that money is available for bailing out the economy, and that the powers that be should just go ahead and use it. The argument that it would add to the national debt is null and void. The secret that some Congressional leaders want to maintain is that the Fed's trillion dollar bailout of the big banks in 2008 did not add to the national debt. Nevertheless, some Congressional leaders are aware of Modern Monetary Theory which maintains that Deficits Don't Matter. In 2014 the author of this book, Stephanie Kelton, was designated as Chief Economist for the Democratic Minority Staff of the Senate Budget Committee and later became an economic advisor to the Bernie Sanders campaign.
So money is available for a massive Green New Deal which will benefit both the economy and the salvation of the planet from global warming. Other aspects of Joe Biden's and Kamala Harris' agenda are also doable if the US can get off its butt and use the facilities that were available to bail out the big banks for the benefit of middle class and poor Americans and save the planet while doing it.
So what are Republicans saying about a Biden administration? That the progressive wing of the Democratic party will push him too far to the left. Well, what exact policies would be "too far to the left"? Defund the police? That's just a radical slogan that means about as much as "Lock her up." In other words it means nothing in terms of either Biden's agenda or progressives in the Democratic party. Reform the police - that would be more like where the Democratic party actually stands. As far as Medicare for All, Biden favors Medicare for All Who Want It. I guess there are those Republicans who so love their employer based health insurance that they are terrified by the possibility that it might be taken away from them and replaced with something better. So Biden's position is go ahead and keep it. He just wants to make it possible that those who do want it will be able to have it or a public option which amounts to the same thing.
So Republican concerns amount to whipping up a bunch of meaningless hysteria just like Trump has always done. It's his stock in trade. So what about the Green New Deal? Who could object to creating jobs to build infrastructure and combat global warming? Oh maybe it's that they fear their taxes will go up? There's actually no reason why anyone's taxes should go up based on the realities as they exist in the 21st century. The government has shown that any amount of money can be found and spent to bail out banks or to add to the debt to give people tax breaks. Trump's tax cuts added a trillion dollars to the debt. Quantitative easing and the money to bail out the big banks amounted to several trillion dollars and yet it has had no adverse effect on inflation or anything else. Modern Monetary Theory has shown that Deficits Don't Matter whether those deficits originate from bailing out the banks or a Green New Deal or Biden's Green Deal which is more or less the same. Expect Republicans to cry bloody murder any time government threatens to formulate a program to combat global warming or to create jobs for poor people or to raise wages for essential workers to $15. an hour.
Money spent constructively on infrastructure or other things will never cause inflation. What will cause inflation is money that is pissed away frivolously or unconstructively. Reorienting out priorities can and should be done even if deficit spending is required to do it. When the economy is rebalanced, it eventually will mean that the rich will have to pay their fair share of taxes in order to reduce inequality. That's the main thing that Republicans are afraid of - that eventually the rich will have to pay their fair share of taxes. In the meantime economic history since 2000 has demonstrated the fact that, if trillions of dollars were found to bail out the banks and give tax cuts to the rich, trillions of dollars can be found to repair and rebuild infrastructure and prevent the world from the disaster of global warming. Private enterprise has done nothing but accelerate global warming because private enterprise consists of the fossil fuel industry. Private enterprise profits from pollution that it doesn't have to compensate for. Therefore, it's up to government to balance out what private enterprise seems incapable of doing. That's not to say that private enterprise is unimportant. It does some things very well, some things that government does not do well. It's a matter of finding the correct balance between private enterprise and government enterprise.
Does any fossil fuel worker object to working in the renewable energy industry providing they are guaranteed a job in that industry? I don't think so. There's no one that loves fossil fuels per se or just because they are fossil fuels. They are not like Scrooge who just loves the look and feel of money. Are there people who so much like the look and feel of oil that they can't bear the thought of working in an industry that doesn't pollute the planet? There are new industries coming - a straw with the look and feel of a plastic straw that biodegrades and doesn't stay in the ocean for hundreds of years like the plastic straw does. These straws are being manufactured today. If government can assist in the ramping up of this private enterprise - Newlight Technologies - we will be all better off except for the plastic straw manufacturers which are using mainly robots to produce their straws so there are not that many jobs involved there.
Huntington Beach, California-based Newlight produces an ocean-degradable biopolymer called PHB using air and greenhouse gas. Newlight's methods are supported by more than a decade of research and development as well as an extensive patent portfolio. Newlight's Series F finance round coincides with the commissioning of a new commercial-scale production facility in California called Eagle 3 and the launch of branded products including a line of cutlery and drinking straws for the food-service industry. Newlight's foodware products deliver a unique level of material safety and certified sustainability, resulting in high-performance, ocean-degradable foodware that works for people and the planet.
Government can provide an assist to private enterprise as long as that enterprise is headed in a new direction which doesn't pollute and which doesn't produce greenhouse gasses. Which is more important - hanging onto the familiar past or striking out in a new direction that saves the planet and makes it better for our grandchildren? Are we pioneers and adventurers like our ancestors or what?
It may be whimsical for me, a Democrat, to speculate about the future of the Republican party, but I am a speculator at heart and curious to see how all this plays out after the demise of Donald Trump. The Republican party, as it exists today, is an unholy alliance of Trump's base - mainly white supremicists - and the financial elite, the wealthy. The party could split in two which would result in Trump's cult like following which I've labeled the WPP (white people's party) and an assortment of principled and unprincipled conservatives. The unprincipled conservatives are only in it for the money and the power. Their problem is that they are a small minority while the WPP represents the vast majority of Republicans.
But let's examine for a moment what a principled conservative represents: fiscal prudence and propriety. A principled conservative wants government to only spend the money that it takes in in taxes and no more. In other words principled conservatives don't want the government to run deficits and further increase the national debt. Given that there are still decisions to be made about what to spend the money on, that is also what conservatives need to be concerned about. Here, in the past, conservatives have mainly made the wrong decisions. In short they've mainly decided to spend it on the military instead of on the well being of the American people. This has clearly been a major mistake on the disbursement of government monies when you consider that in the last 50 years the US has engaged in two disastrous wars - the Vietnam and the Iraq wars. These wars have involved duplicity and mendacity on behalf of two US Presidents - Lyndon Johnson and George W Bush - not a particularly good track record. The money might have been better spent. Principled conservatives, who want taxpayer money spent wisely, should be more alarmed.
So going forward I see the role of principled conservatives as being making sure that the government spends its money wisely. We have seen that the issue of deficit spending is moot. If the government can add a trillion dollars to the deficit (and hence the debt) to give tax breaks to the rich, as Trump and formerly Reagan have done, and government can spent a few trillion bailing out the too big too fail banks with its continued policy of quantitative easing, it has been made clear that deficits don't matter as Modern Monetary Theorists maintain. The US has a sovereign currency and the Federal Reserve can print as much money as it wants although this power should not be used frivolously for a number of reasons. But there is much flexibility here. So if the money is available for government to spend, the question for principled conservatives is how to spend that money wisely not how little to spend. What is clear is that spending a trillion dollars a year on the military is not spending money wisely. What's also clear is that taxation policy is necessary to redress the balance between rich and poor because economic inequality is getting out of hand. This also means that there will be less and possibly no reliance on deficit spending at all.
The wise use of government money at this point in time is exactly what is contained in Joe Biden's agenda. Addressing global warming by creating green infrastructure as well as repairing and rebuilding existing infrastructure is of paramount importance. Mitigating the effects of global warming by undergrounding utilities so that violent storms don't consistently take down the power grid is important. Creating more renewable energy installations and power plants as well as modernizing the power grid is important. Repairing roads, bridges, levees and dams is important. More dams should be built in areas where considerable rainfall is experienced. This can prevent flooding and prevent potable water just going to runoff. It also generates renewable power. Wise use of government money would also be relief of student loan debtors since this would also mean that money would be in private hands which then would go into expanding GNP. Building a reasonable national health care system which contains the runaway costs of drugs and hospitalizations would be a wise use of money that conservatives should be in favor of. Other countries have better health outcomes at half the cost of the US fragmented system. Conservatives are concerned about getting the most bang for the buck. Currently, that's not the case with our health care system. Spending government money on virus research and pandemic prevention should be an obvious investment at this time.
Some people think that Trump will continue to be a major player in Republican politics, but I don't. First of all he will lose a lot of followers just because he will be proven to be a loser. Their whole ethos is based on winning and power, and, when it becomes clear that Trump has neither power nor has he won, many of his followers will turn on him. Secondly, an out of power Trump will have to face numerous lawsuits over his taxes and his debts. The hundreds of millions of debt which Trump is personally liable for (no liability limitations for this debt) cannot be paid so he will go down as not only a loser but a deadbeat debtor with millions in tax liabilities as well, not to mention lawsuits over his sexual peccadilloes. So I suspect that the thankfully shortlived Trump era will be soon over and at last sanity will be restored to the White House. Biden has a long road ahead of him restoring the respect and prestige that the US formerly had with regard to the other nations of the world, and I think he will make much progress in this area. Rejoining the Paris Accords on global warming and the JPCOA will be the first steps.
Conservatives Argue That Phasing Out Fossil Fuels is Socialism. They Argue That Saving the Planet from Global Warming is Socialism. They Argue That Universal Health Coverage is Socialism. I Say Bring It On!
by John Lawrence, October 27, 2020
So anything that would benefit the people as a whole or the planet is socialism. Creating jobs by a government sponsored infrastructure program is socialism. Yet private enterprise has not built any infrastructure. It won't do so unless the money is provided by the government. Rebuilding roads and bridges is not something private enterprise is equipped to do. If it was, they'd build roads and bridges and then charge tolls to recoup their investment. Private enterprise is good at inventing things and starting entrepreneurial enterprises, but not large picture enterprises which are properly the domain of government or require government cooperation with the private sector. A government that makes sure that everyone has health care complements private enterprise. They want healthy workers after all. Private enterprise benefits from safe roads, tunnels and bridges more so than does the average citizen. They use infrastructure in the conduct of their business.
President Reagan declared that “government is not the solution to our problem, government is the problem.” Yeah, it's the problem when it doesn't do its proper job. It's the problem when President Trump doesn't take any responsibility for the pandemic or attempts to do anything about it. Reagan also said that the nine most terrifying words in the English language were, "I'm from the government, and I'm here to help." Really? We could use a little help from the government in the midst of a pandemic. The private enterprise system is doing its part inventing a vaccine, but they're doing it with the help of government money. Pfizer got $1.95 Billion to produce a coronavirus vaccine by the end of the year. Johnson & Johnson got a billion dollars. Without government being "here to help" there would be no vaccine on the horizon. Private enterprise would not take that money out of its own research budget especially if it didn't figure to make a profit selling the vaccine.
So socialism will be responsible for developing a coronavirus vaccine and eventually ending the pandemic. It will be done with the "government help" that Ronald Reagan thought was so terrifying. The problem is that we have socialism for the rich and capitalism for the poor. The rich spend tons of money lobbying Congress to pass legislation in their favor. In a truly free market they wouldn't be spending money making sure government was doing their bidding in their interests. They would be spending money on research, development and promoting their products. Rich people don't want government so small that they can "drown it in the bathtub" as Republican lobbyist Grover Norquist said. No, they are manipulating government everyday to get government just the right size to suit their financial interests. Defense contractors lobby to get the government to spend more money on the military-industrial complex. Pharmaceutical corporations lobby to get government not to allow Medicare to negotiate with them for lower drug prices. This is something Joe Biden said he would do: allow Medicare to negotiate drug prices with Big Pharma.
Most civilized nations have universal health care. The US is the only outlier. Most civilized countries want to do something about global warming. The US under Trump is the outlier. Most civilized countries have a social safety net so that people don't suffer needlessly. At the same time most countries facilitate a partnership between government and private enterprise that works for entrepreneurs and business people and the citizenry as a whole, in partnership and cooperation. There is a balance between capitalism and socialism that works for the benefit of all the people. That's what makes for a successful nation. Right now this is very out of whack in the US. A bloated military has wasted trillions of dollars on disastrous wars that have made the nation less safe. And yet the military was absolutely impotent to do anything about COVID-19. The money would have been better spent strengthening our knowledge and preparations for a pandemic and for better health among Americans so that they don't have so many underlying conditions that have led to more deaths from the coronavirus.
As jobs are being destroyed by automation, robotization and AI, it's imperative that jobs be created addressing the needs of infrastructure and the need for renewable energy. This endeavor can be in part a joint mission for both government and private enterprise, but without government's input the nation will keep on spewing fossil fuel emissions into the atmosphere because that's what's in the interests of existing corporations. That dynamic needs to change and government has to be instrumental in bringing about that change. That's why it's important to elect Joe Biden and Kamala Harris. Many vested interests will continue making money by polluting and emitting greenhouse gasses unless government changes the dynamics of energy production. This means countering the demand of lobbyists and putting government in a direction that benefits the people as a whole and not just special interests.
Any job done in a factory will be robotized. But when you call a plumber, they will not send a robot out to your house. That's a job that will be have to be done by a human being. Same for an installer whether it be solar panels or an electrician. Any job required for a household cannot be robotized. You're not going to greet a robot at the door. Any job that does not involve routine, repetitive movements at one location will probably never be robotized. Th robots must be firmly rooted on the factory floor.
Teachers will probably never be replaced by robots although some teaching materials can be filmed and put online. Doctors, nurses and caregivers will never be replaced by robots. Any job which requires a multiplicity of different movements combined with empathy for another human being cannot be entirely robotized. Entertainers and sports players will probably always be with us. You don't want to watch a bunch of robots play football, do you? Lawyers and judges will necessarily have to be human beings and not robots. Anything that requires negotiation and coordination will have to have a human not a robot involved. In fact robots are basically only good for taking manufacturing jobs away from humans. And driving jobs which involve mostly repetitive, routine movements. Driverless 18-wheelers are already on the road. Delivery drivers will probably be replaced by drones.
Psychiatrists and psychologists will of course have to be human beings. A robot cannot understand your emotions. Janitors and maids will also have to be humans. A robot cannot make a bed. Musicians, writers and artists - anything that requires human creativity can't be automated. As well, research will always require human beings although robots and Artificial Intelligence can help to do the job, but they shouldn't be making final decisions. Installation of solar and wind farms, installation of green technology upgrading of infrastructure all require a lot of human jobs. This is why a Green New Deal or Biden's New Deal is very important for the creation of jobs. There is no lack of work that needs to be done to bring the US into the 21st century and put the US on a par with other countries that are developing infrastructure rapidly. Wind and solar technicians are the jobs forecast to grow in the immediate future. Also nurses and physical and occupational therapists.
Robots will never replace most jobs that require a specific combination of rational thinking, common sense, flexibility, manual dexterity, worldly and special knowledge, empathy, and communication skills And people prefer and trust humans over machines for all jobs which require judgment, decision-making and, complex reasoning. Because no machine can replace a REAL HUMAN, any job that requires the human heart and brain will NEVER be fully automated.
The most vulnerable jobs are low-skill positions in very structured and predictable settings, such as heavy-machinery operations and fast-food work. Significant parts of white-collar jobs that involve collecting and processing information — paralegal work, accounting and mortgage origination, for example — are also likely to be automated. “The jobs that will go away are the jobs that are routine in nature,” said Joseph B. Fuller, professor of management practice at Harvard Business School. Jobs that don’t require much deviation from a central task, he noted, are the easiest to describe in an algorithm and thus prime candidates for automation.
This is why it's important to elect Joe Biden not just to create the middle class jobs but to make sure the jobs of caregiver and janitor receive a living wage. If we can harness all of our energy and talents, and unmatchable American innovation, we can turn this threat [of global warming] into an opportunity to revitalize the U.S. energy sector and boost growth economy-wide. We can create new industries that reinvigorate our manufacturing and create high-quality, middle-class jobs in cities and towns across the United States. We can lead America to become the world’s clean energy superpower. We can export our clean-energy technology across the globe and create high-quality, middle-class jobs here at home. Getting to a 100% clean energy economy is not only an obligation, it’s an opportunity. We should fully adopt a clean energy future, not just for all of us today, but for our children and grandchildren, so their tomorrow is healthier, safer, and more just.
In her book, "Deficits Don't Matter," author Stephanie Kelton makes the case that we don't have to worry about deficit spending. That's when the US government spends more than it takes in in taxes. So in a sense taxes don't matter either at least as far as balanced budgets go. The US dollar is a sovereign currency. This means we don't have to ask anyone's permission to print money. The US dollar was taken off the gold standard in 1971 under President Nixon. It is a fiat currency meaning that it is not backed by anything other than the word of the US government. The US has experienced the phenomenon of printing money to bail out the banks in the Great Recession of 2008. As of September of this year, the Fed's balance sheet was $7.1 trillion. As of January 2008, the Fed's balance sheet was less than $1 trillion. That means that the Fed has printed money to the tune of over $6 trillion since 2008. Yet there has been no inflation in the US economy which is the danger a lot of economists had predicted from printing so much money.
The Federal Reserve bank can print US dollars just by a few keystrokes on a computer. Approximately $3.5 trillion was printed to bail out the banks during the Great Recession. Another $2.5 trillion has been printed so far to deal with the COVID pandemic. The question arises that, if the Fed can print money any time it wants, why can't there be Quantitative Easing (QE) for the people? In other words, if the Fed can bail out the banks, why can't it bail out the homeless, why can't it bail out the $4 trillion deficit in infrastructure spending, why can't it bail out the hungry and the poor? The answer is that it can do all those things, but this tool, QE, for that is what it is - a tool - should be used judiciously. It should be used to accomplish useful and necessary goals. It should not be used frivolously. It should be used in conjunction with other tools like tax policy. It should be used to promote a full employment economy and achieve socially useful goals.
Tax policy should be used to raise most of the money needed for government spending, and it should be used to redress the balance of the high amount of inequality in the American economy. Taxing the wealthy both in terms of income and wealth while giving tax breaks to the middle class and poor while implementing policies to help them build wealth is one of the major things US Federal tax policy should do. Additional money can be obtained by reducing the bloated military and military-industrial complex budget. If, however, there are additional goals that should be met like hastening the switch to renewable energy or a fuller safety net for the American people, then QE for the people should be implemented. The goal is to have a balanced and useful economy, one that promotes net zero carbon emissions, one that promotes sustainable development on other parts of the world, one that hastens the day when no child goes hungry or uneducated, one that reduces financial inequality.
It has already been demonstrated that deficits don't matter because the Great Recession of 2008 was quelled by the Fed's policy of printing money with no adverse effects on the economy. We have seen again the salubrious effects pf printing money or QE, if you want to call it that, during the COVID pandemic during which another $2.5 trillion has been printed so far. There is no reason why any country that has a sovereign currency like the US does cannot print money. Since the US dollar is the world's reserve currency, other countries and individuals are willing to buy up most if not all of US debt. But if they didn't buy up any of it, the Fed could still take it - or as much as necessary - on its balance sheet. In other words the fact that other countries are buying US debt means that the Fed doesn't have to print as much money. Any country with a sovereign currency can do the same even if their currency is not much in demand on world markets. Since the US dollar is used a lot in world trade, other countries need a supply of US dollars and are willing to buy US debt to get them.
There is no reason why any American should go hungry or be homeless or lack health care. Speaking of health care, Medicare for All would not eliminate private health care as some have suggested. Even with Medicare some doctors refuse to see patients because they don't like the reimbursement Medicare provides. There would be a private market for the wealthy who would just pay out of pocket to doctors who refused to accept Medicare patients. The wealthy don't even need health insurance. It could not be made illegal for such a market to exist. So even though everyone would have health care under a Medicare for All plan, the wealthy would still hire private and presumably better doctors at their own expense.
The policy of the Fed's buying US debt, which is equivalent to printing money, should be used wisely and the money not wasted. QE for the people combined with the fact that deficits don't matter should lead to a more productive society providing that those additional tools and resources are used in a constructive way and not used to further militarize the society and the world. Any tool can be used for good or for ill. QE for the people could be used for a more healthy, beneficial and well balanced society for all people, could eliminate poverty in the US and the world, bring US infrastructure into the modern era and combat global warming and future pandemics.
There is No Such Thing as a National Solution to a Global Crisis
by John Lawrence, October 9, 2020
The Bill and Melinda Gates foundation announced its 2020 Goalkeepers report with the above words. COVID-19 has killed more than 850,000 people worldwide. Every year until this one the world has made progress towards reducing poverty and disease. Notice the Gates foundation emphasis on the world as one coherent unified organism rather than just on US national boundaries. The pandemic knows no national boundaries. Until it's stamped out worldwide, the US is vulnerable. The foolishness of spending a trillion dollars a year on the US military which was powerless to do anything about the pandemic has been demonstrated. International cooperation is crucial to ending this pandemic, as well as others which are likely to follow, and reducing the conditions of poverty and disease in the world which breed war and terrorism. When will the US get its priorities straight?
The Goalkeepers report tracked 18 indicators included in the United Nations’ Sustainable Development Goals (SDGs). In recent years, the world has improved on every single one. This year, on the vast majority, we’ve regressed.There is also a worldwide recession that the military and military-industrial complex is powerless to do anything about. The US is not an island. Pandemics, global warming - these are problems affecting the whole world not just the US. Nations that have the resources need to assist other nations that don't have the resources. That means that the developed world has to help the developing world to combat these problems: disease, poverty, weaponization, global warming.
In 2015, 193 world leaders agreed to a series of 17 ambitious goals to end poverty, fight inequality, and stop climate change by 2030. The Global Goals are within our reach, but we must remain committed—embracing what works and addressing what doesn’t, while holding ourselves and others accountable. In 2016 President Trump dropped out of global cooperation with his America First policy. That has gotten the US nowhere. Whichever countries handle the pandemic intelligently are going to come out of the recession as world leaders. That won't be the US unless Joe Biden gets elected and is able to turn the shambles of Trump's response to the pandemic around.
The first and most important goal is ending poverty. Eradicating poverty is not a task of charity, it's an act of justice and the key to unlocking an enormous human potential. Still, nearly half of the world’s population lives in poverty, and lack of food and clean water is killing thousands every single day of the year. Together, we can feed the hungry, wipe out disease and give everyone in the world a chance to prosper and live a productive and rich life. The second goal is zero hunger. Hunger is the leading cause of death in the world. Our planet has provided us with tremendous resources, but unequal access and inefficient handling leaves millions of people malnourished. If we promote sustainable agriculture with modern technologies and fair distribution systems, we can sustain the whole world’s population and make sure that nobody will ever suffer from hunger again.
The third goal is good health and well-being. Over the last 15 years, the number of childhood deaths has been cut in half. This proves that it is possible to win the fight against almost every disease. Still, we are spending an astonishing amount of money and resources on treating illnesses that are surprisingly easy to prevent. The new goal for worldwide Good Health promotes healthy lifestyles, preventive measures and modern, efficient healthcare for everyone. The fourth goal is quality education. Education liberates the intellect, unlocks the imagination and is fundamental for self-respect. It is the key to prosperity and opens a world of opportunities, making it possible for each of us to contribute to a progressive, healthy society. Learning benefits every human being and should be available to all.
The fifth goal is gender equality. Gender bias is undermining our social fabric and devalues all of us. It is not just a human rights issue; it is a tremendous waste of the world’s human potential. By denying women equal rights, we deny half the population a chance to live life at its fullest. Political, economic and social equality for women will benefit all the world’s citizens. Together we can eradicate prejudice and work for equal rights and respect for all. The sixth goal is clean water and sanitation. This will require major infrastructure development. It's not rocket science. The techniques involved are well known in the developed world. One in three people live without sanitation. This is causing unnecessary disease and death. Although huge strides have been made with access to clean drinking water, lack of sanitation is undermining these advances. If we provide affordable equipment and education in hygiene practices, we can stop this senseless suffering and loss of life.
Actually I would put clean water and sanitation right up there with ending poverty. It would put an end to many of the diseases that occur in the underdeveloped world. The emphasis on healthy living and basic creature comforts needs to spearhead the use of resources worldwide. That means that developed nations have to give back to the underdeveloped ones instead of putting their further enjoyment and well being first which is the gist of America First. Global cooperation to combat global problems needs to take precedence over preparations for war and bullying other nations by the most powerful ones. The negligence and incompetence with which Trump has treated the COVID pandemic, the withdrawal of the US from universal institutions, almost assures that the US will assume a secondary status in the world unless the next administration can make up for the damage Trump has done and set us on a new and more constructive course.
After the vice Presidential debate last night Trump called Kamala Harris a communist. Let's be clear: communism is a system in which the government owns all property and makes all economic decisions. Let's also be clear about this: nowhere in the world today does communism exist. Not in Russia. Not in China. Not in Cuba. In Russia private ownership of enterprises and property had essentially remained illegal throughout the Soviet era, with Soviet communism emphasizing national control over all means of production. In the 1990s, during the Presidency of Boris Yeltsin, there was large-scale privatization of Russia's state-owned assets, particularly in the industrial, energy, and financial sectors. Privatization shifted Russia from the Soviet planned economy towards a market economy, and resulted in a dramatic rise in the level of economic inequality. It facilitated the transfer of significant wealth to a relatively small group of oligarchs.
In China private property and state owned enterprises co-exist. According to the NY Times: "Today, the private sector contributes nearly two-thirds of the country’s growth and nine-tenths of new jobs, according to the All-China Federation of Industry and Commerce, an official business group." In fact the reason why China has pulled 800,000 people out of poverty in the last 40 years is that the economy has been partially privatized. There are more billionaires in China than in the US. Many people in China went from being poor to middle class due to the privatization of the housing market. So although China is still ruled by the Chinese Communist Party, its government is communist in name only. They should probably eliminate the word "Communist" from the party's name.
Now consider Cuba. In 2010, Cuban leaders Fidel and Raul Castro made the decision to abandon the old Soviet model of centralized planning. In 2011, new laws were enacted to expand the right to private property. In 2019, a new Constitution was approved which officially recognizes the right to private property, while also reconfirming the central government's authority over the regulation of production and land.
So if the accusation that Kamala is a communist is ridiculous, what about socialism? There is not one definition of socialism. Many of the western democracies like France, Germany, the UK and Sweden, which are US allies, have been governed by democratic socialist parties. These societies have market economies including the encouragement of entrepreneurialism, but also have a government provided social safety net including universal health care, free or inexpensive education from pre-K through college, allowances for child care, elder care etc. Sweden's government even owned a hamburger chain until recently and owns Sweden's state-run alcohol monopoly Systembolaget. The democratic socialism advocated by Bernie Sanders and others is nothing more than a model based on Sweden where there are high taxes on the wealthy which provide a government sponsored safety net for the middle class and the poor. Today there is one more reason why there should be a strong social safety net: global warming. It is clear that private enterprise is not up to the job of reducing greenhouse gas emissions to zero within a reasonable amount of time, reasonable meaning before the earth becomes uninhabitable.
Today in the US we have a nominal capitalist or free market economy, but even in this economy the government institutes the rules within which the economy operates. The rules are set up and tweaked by those in power, those who have the money to hire lobbyists to convince legislators to write the rules in their favor, namely large corporations and the very wealthy. Don't be fooled by the meme that the powerful don't want government regulations. They do want regulations, but regulations that favor their interests and not the interests, necessarily, of the average person who doesn't have the resources to influence legislation by hiring lobbyists.
Today Kamala Harris and other Democratic progressives are really taking the realistic middle ground when they advocate for government policies which will mitigate and reduce climate change and provide a social safety net for the American people. This goes against the interests of the oil and gas industry to be sure. To advocate for universal health care is to advocate for the health care system that Canada and all our allies already have in pace. To advocate for policies that reduce the out of bounds economic inequality by taxing the rich and spending the money on raising the economic level of the poor and lower middle class only makes sense. None of these policies make Kamala Harris a communist since communism doesn't even exist in the world today. Formerly communist countries have given way to hybrid economies in which private enterprise and state owned enterprises coexist with, in the case of China, private enterprise having been the significant factor in improving the lives of the Chinese middle class.
Today, the US has gone way overboard towards an economy controlled by the rich and powerful in their own interests. Economic inequality has gotten way out of hand. The balance needs to be redressed and only a government which uses its authority to diminish the economic power of the wealthy and augment the power of the poor and middle class can provide the necessary change. Good paying jobs can be created which address infrastructure and climate change needs. So more or less a Green New Deal or whatever else you want to call it is necessary. Too bad that Republicans have gone out of their way to demonize that name as they've gone out of their way to demonize Obamacare or any other initiative progressive Democrats put forth. That is their stock and trade - not discussing the merits but demonizing the name.
China Leads the Way on Electric Vehicle Production
by John Lawrence, September 19, 2020
A Chinese company has developed an electric car that can go 438 miles without recharging. They have developed an infrastructure of charging stations. China surpassed the United States to become the world's largest automobile market in 2009 with a record 13.9 million vehicles sold in the country, compared to 10.43 million cars and light trucks sold in the United States. China leads the world in deployment of electric vehicles. At the end of June 2019, almost half the electric cars and 99% of the electric buses in the world were in China. China reached its goal of 5 million electric vehicles on the road by 2020. China is both the largest manufacturer and consumer market for electric vehicles in the world, accounting for more than half of all electric cars made and sold in the world in 2018. China also makes 99% of the world's electric buses. China manufactured and sold about 1.2 million plug-in electric vehicles in 2018, which was more than three times the sales in the US. China has become the fastest and largest growing market for electric vehicles in the world. New electric cars had a market share of 4.2% of new cars sold in China for the entire year of 2018. Big cities like Shenzhen and Beijing are rapidly adopting electric vehicles -- for example, all of Shenzhen's 16,000 public buses are now electric, and soon all of its 22,000 taxis will be electric cars as well.
You see, dear reader, the US needs to play catch up. That's exactly what Joe Biden wants to do. China subsidizes its electric vehicle industry and subsidizes the purchase of electric vehicles by the public which can be purchased for $30 to $40 thousand US before subsidies of $8000 or so making them very cost competitive with gas guzzling vehicles. So China has an industrial policy which is so far anathema in the US. For the US government to have an industrial policy or to subsidize certain industries smacks of socialism. But without Joe Biden's plan or some other plan, the US will fall far behind China in electric vehicle production and for the necessary R&D and infrastructure. China's EV production is also part of their plan for reducing greenhouse gas emissions. They also need to replace their numerous coal fired electricity generating plants with renewables.
The number of EV charging stations in China is growing rapidly. In January 2019, the Chinese Electric Vehicle Charging Infrastructure Promotion Agency (EVCIPA) reported 808,000 EV chargers in China (an 80% increase in one year). Of these, roughly 330,000 were public chargers, and 480,000 were home chargers. China has hundreds of auto manufacturers, many of which are owned in whole or in part by provincial or local governments. According to some reports, as many as 200 Chinese auto manufacturers have produced electric vehicles. In 2018, 1527 fuel cell electric vehicles also were sold in China, bringing the country’s total fuel cell electric vehicle fleet to 3428.
But it's not only China's government or SOEs (State Owned Enterprises) that are investing in China's EV market. It's China's private sector as well. In 2019 Evergrande, a Chinese firm believed to be the biggest real estate company in the world and backers of electric vehicle startups like Faraday Future and NEVS, announced a massive $23 billion investment in the production of 1 million electric cars and 500 GWh of batteries per year. With a valuation at more than $100 billion and revenues of over $40 billion, Evergrande is now looking to expand into electric vehicles. After acquiring large stakes in two electric vehicle companies, Evergrande claims to have “acquired key technologies in the sector” and now plans to launch its own production of electric vehicles in China in a big way. So why aren't American corporations making investments like these? They still seem committed to producing gas guzzlers. The Trump administration even has challenged California's attempts to set higher emissions standards. Trump revoked a longstanding waiver that allows California to set higher fuel emission standards than the federal government. The US is going backwards on greenhouse gas emissions. Meanwhile, the earth burns and floods.
The waiver revocation is also part of the Trump administration’s longstanding attempt to roll back federal fuel economy standards for cars and light trucks. Californians buy more cars than people in any other state, which means the emissions standards it sets for itself have big repercussions on the US economy as a whole. Thirteen states and the District of Columbia have also adopted California’s vehicle emissions rules. So the California waiver was a big impediment to the Trump administration’s larger goal of rolling back regulations that were implemented to combat climate change. As a global warming denier, Trump is committed to dumping more rather than less greenhouses gasses into the atmosphere.
China's economy is a fusion of a socialist and free market economy so it's somewhat unique in the world. Like the US Federal Reserve, the Chinese central bank, the People's Bank of China, can print yuan, the Chinese currency. The Chinese market is more devoted to manufacturing for both internal sales and export while the US economy is now focused more on financialization which means making money off of money or betting in the Wall Street casino. The US is devoted to making money by any means necessary which has led to increasing inequality. The Chinese market is more devoted to making money from sales of actual goods and services and is less financialized. So US capital doesn't go so much into manufacturing as it goes into financial markets. China is more dedicated to decreasing greenhouse gas emissions while the Trump administration doesn't even believe in global warming and is a full steam ahead fossil fuel supporter.
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