California Free Press

Off the Top of My Head

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.

https://www.cnbc.com/video/2019/03/01/stephanie-kelton-explains-modern-monetary-theory.html

 

Off the Top of My Head

How to Pay For Infrastructure

by John Lawrence

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.

In The Deficit Myth, Stephanie Kelton writes (circa 2015):

"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.

https://www.youtube.com/watch?v=a9pAPIUYXxQ

 

Off the Top of My Head

“The choice is so clear,” said one Cheney ally. “Is it okay to be in leadership and tell the truth?"

by John Lawrence

It seems that the only Republican with guts enough to tell the truth is Liz Cheney. Every other Republican bows down and kisses the ring of Donald Trump. This just illustrates what a bunch of sycophants the Republican party really is. Their only interest is political power and money. They are not the least bit interested in the American people much less in the vulnerable, poor and people of color. Not that Liz Cheney is really interested in helping the most disadvantaged among us either. She is just against Donald Trump and is standing up for telling the truth. She's opposed to basing the Republican party on a bunch of lies. No other Republican is willing to do so. They are all shameless hypocrites and their mendacity is appalling. They are willing to sell their souls for money and power.

And then there is Mitch McConnell, the leader of the Senate Republicans who is devoting his entire efforts not to help the American people but to stop Joe Biden from helping the American people. "One-hundred percent of our focus is on stopping this new administration," McConnell said. Vanity Fair reported:

"Something you’ve probably picked up on by now is that Senate Minority Leader Mitch McConnell literally cares about nothing but amassing and maintaining power. Whereas even some of the worst people in Washington typically have something they care about beyond power for power’s sake, or a set of beliefs to guide them, the Kentucky lawmaker truly has none. “Give up,” someone who knows McConnell well told The New Yorker’s Jane Mayer last year when she set out to find “the larger principles or sense of purpose that animates” the senator. “You can look and look for something more in him, but it isn’t there. I wish I could tell you that there is some secret thing that he really believes in, but he doesn’t.”

"Perhaps to remind people that, despite being an elected official ostensibly sent to D.C. to work on behalf of the Americans who pay his salary, he doesn’t give a fuck about anything but his own interests, McConnell on Wednesday told reporters that while he could spend his time helping to end the pandemic, or aiding the economic recovery, or stopping mass shootings, he’s actually got something else in mind: blocking Joe Biden’s entire agenda. “One hundred percent of my focus is standing up to this administration,” the Kentucky Republican said at a press conference in his state in response to questions about fighting among House Republicans. “What we have in the United States Senate is total unity from Susan Collins to Ted Cruz in opposition to what the new Biden administration is trying to do to this country,” he said, referring to his colleagues from Maine and Texas. What sort of things has Biden proposed that McConnell is dead set on opposing? In a word, everything."

Well put: "Mitch McConnell doesn't give a fuck about anything but his own interests." Can you say that on CBS? Who cares. Maybe Liz Cheney should say the same thing about Donald Trump. She is intent about calling him out, and she's not going to relent even if she's removed from her leadership position. So what? She's still a member of Congress, right? She can still speak out, right? She is still Vice President Dick Cheney's daughter, right? If anyone can take down Donald Trump and diminish his place in Republican politics, she can. Meanwhile, Joe Biden is soldiering on even though Trump supporting Republicans don't give a fuck about all the good stuff he's trying to do. They only care about themselves. That's America's downfall. So many of us have adopted the Ayn Rand philosophy of selfishness, even solipsistic selfishness. Freedom has become synonymous with selfishness. Some 40% of Republicans will not get the COVID vaccine simply because Joe Biden wants them to do it. These A-holes are only shooting themselves in the foot because it is they who will be doing the dying in the waning days of COVID infectiousness.

I trust that Joe Biden has his agenda carefully planned out for his first two years since this may be the only time period he will get anything done if Republicans take control of the House or the Senate in 2022. He has a limited time frame in which to work, and very slim majorities in both the House and the Senate with which to work. I imagine he will get the big budget stuff done first since he can get that passed in the Senate with only Democratic support - 51 votes including Kamala Harris' tie breaker although he will have to water it down because of Joe Manchin. Then I imagine he will have to talk Joe Manchin into supporting a filibuster carve out for voting rights, police reform and immigration reform. Let's hope all goes well.

Off the Top of My Head

Republicans Represent a Diasporized Ku Klu Klan

by John Lawrence

America First was also a credo of the white supremacist Ku Klux Klan organization. This assertion rated true by Snopes. Now Marjorie Taylor Greene and Matt Gaetz are embarking on an "America First" tour of the USA. It seems that the US can not get over its racist past. Republicans are basing their party on lies like that Trump won the election. Maybe the biggest lie was the one Thomas Jefferson wrote when he penned the preamble to the Constitution: All men are created equal. That was patently a lie because Jefferson himself was a slave owner as was George Washington and many of the other Founding Fathers.Obviously, Native Americans were not created equal. Neither were African Americans. So why did Jefferson create the first BIG LIE which Trump and the likes of Marjorie Taylor Greene are only perpetuating. On the other hand the sentiments embodied in Jefferson's preamble can be seen as aspirational and that is the tack the Democratic party is taking at the present time. Let's make this a country where all men, women and children are in fact created equal.

The Ku Klux Klan has become normalized in the Republican party which pretends to exemplify our Anglo Saxon heritage. So let's just go back to the era of King George, why don't we? Republicans could change their name to the Tory party. The term Tory or "Loyalist" was used in the American Revolution for those who remained loyal to the British Crown. Since early in the 18th century, Tory had described those upholding the right of the King over Parliament. During the war of independence, particularly after the Declaration of Independence in 1776, this use was extended to cover anyone who remained loyal to the British Crown. The US has already become a neo-feudal society with great wealth concentrated in the upper one percent, and great poverty concentrated among black and brown people. "America First" is just a slogan for perpetuating the idea that those who are superior by dint of their having acquired great wealth should be the nobiity and the lesser among us should just be content with their lot of a few crumbs from the table. They surely shouldn't be given de facto equal rights despite the fact that the Constitution says that they were created equal.

A diaspora is a spreading out of a people or a philosophy. The Ku Klux Klan used to be concentrated mainly in the South. The Republican party is still based there, but the philosophy has metastasized to include white supremacists in the heartland as well. "Republican" is a more respectable name for a philosophy that bears an eerie resemblance to that of the Ku Klux Klan. "America First: really means "white people first." Let's just keep the example that white people were the ones that first officiated over the construction of a so-called democracy, one that denied women, African Americans and Native Americans the vote. The only reason they let in eastern and southern  Europeans was that they needed their labor power. Asians were discriminated against and even put in concentration camps during the Second World War. What has been consistent about America is the fact that white people have held the reins of power ever since the country began. African Americans, who have been here as long as white people have, were first enslaved and then subjected to Jim Crow laws. Native Americans were herded onto reservations.

At the beginning of the 1830s, nearly 125,000 Native Americans lived on millions of acres of land in Georgia, Tennessee, Alabama, North Carolina and Florida–land their ancestors had occupied and cultivated for generations. By the end of the decade, very few natives remained anywhere in the southeastern United States. Working on behalf of white settlers who wanted to grow cotton on the Indians’ land using black slaves as labor power, the federal government forced them to leave their homelands and walk hundreds of miles to a specially designated “Indian territory” across the Mississippi River. This difficult and sometimes deadly journey is known as the Trail of Tears.

So get the picture? All men, let alone women, were not created equal in fact despite Jefferson's words which he didn't really believe himself. At best they were aspirational. Well how long do some people have to wait for aspirations to become realized? Joe Biden's administration is trying to correct some of these historical wrongs which go back to the BIG LIE that was embodied in the US Constitution with the flowery words of Thomas Jefferson. Today Trump supporters like Marjorrie Taylor Greene and Matt Gaetz with their America First tour are only trying to perpetuate the BIG LIES that go back to the beginning of the country. They didn't start with Trump. He only exemplified them, and now Republicans are doing their best to carry on that American tradition.

Off the Top of My Head

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.

The Guardian view on Biden’s 100 days: going big, but not big enough

from the Guardian:

The US president is right to spend, but shrinking the federal deficit is not the priority

‘Mr Biden’s economic team understands that a strong economy benefits the bottom half of America most.’ Photograph: Brendan Smialowski/AFP/Getty Images

Fri 30 Apr 2021 12.51 EDT

Last modified on Sat 1 May 2021 01.31 EDT

Joe Biden’s first 100 days in office signalled that the future does not have to be a rerun of the past. The US president’s speech to Congress this week made it clear that Trumpism was a warning from history, a reminder that no republic is guaranteed to last. The US remains in danger – its decline accelerated by an iniquitous economic model, and by leaders unable or unwilling to remedy it. It is a relief to find in the White House a president who wants to bridge divisions rather than widen them. Mr Biden should be praised for saying he will stop the rot and recognising the challenge to democracy posed by autocracy. But his response risks being undone by an obsession with containing non-existent fiscal risks.

The Biden White House proposes spending $4trn, with about half the money used to rewrite the social contract. The rest will create jobs, with infrastructure investments to repurpose the post-Covid economy for a zero-carbon world. The problem is not that money is being spent to fix a broken society. Neither is it wrong to ask the rich to pay their fair share of tax. The problem is that Mr Biden says spending must be balanced by tax rises or savings from other government programmes.

This is a self-imposed and self-defeating constraint. It seems bad economics to pay for every dollar invested in early childhood education when each greenback yields $7.30 in benefits. A number of centrist Democrats have already signalled their opposition to the proposed tax hikes. If Mr Biden wanted cash, he could back the Internal Revenue Service to go after the $1tn in unpaid taxes every year. With a razor-thin Democratic majority in the US Senate, there is a risk that privileging arbitrary fiscal limits will lead to laws not being enacted or spending being pared back to match reduced revenues.

Mr Biden’s intention to bust a failed economic paradigm is a good one. It would be a scandal if it were sacrificed on the altar of budget neutrality. The threat to liberal democracy is not from fiscal incontinence but political polarisation. America has spent decades running up large deficits with no adverse macroeconomic consequences. In Washington, a debt crisis always seems to be coming. Yet it never arrives. The nation is increasingly endangered by growing levels of inequality, financial instability and ecological calamity. The Gilded Age looks egalitarian compared with the emerging concentration of riches. Either democracy must be renewed by freeing the state from ideological restrictions or wealth is likely to cement a less democratic regime.

It makes little sense for Mr Biden to elevate balanced budgets when the country faces existential choices, a point recently made by two Obama-era White House economic advisers. No one doubts the sincerity of the Biden team. The question is whether they have subordinated the scale of the crises to congressional politicking. Columbia University’s Adam Tooze pointed out that the president’s climate spending amounts to about 0.5% of US GDP, an amount 10 times smaller than that required to decarbonise the economy. The economist Stephanie Kelton wrote that to accommodate such large expenditures, the Biden administration “would have to develop a robust plan with a focus on containing inflationary pressures”. These are the arguments that Mr Biden should be having with his party, not whether the wealthiest ought to pay for anti-poverty programmes.

It is better to let the government’s fiscal balance settle to whatever level is required to deal with the multiple emergencies the US faces, given the spending and portfolio decisions of the private sector. It is not the case that the government’s ability to spend is constrained by budgetary accounting or temporary while interest rates remain low. The US Federal Reserve’s bond-purchasing programmes can control yields. Mr Biden’s economic team understands that a strong economy benefits the bottom half of America most. However, his spending plans threaten to centre the debate on reducing the deficit rather than rescuing the country.

Biden Can Go Bigger and Not ‘Pay for It’ the Old Way

By focusing on how much revenue they hope to raise from tax increases on the well-off, Democrats risk limiting the scope of their ambitions.

by Stephanie Kelton, April 7, 2021

Last week, President Biden introduced a $2.2 trillion infrastructure plan in a speech, calling it “a once-in-a-generation investment in America.” And on Wednesday, he and the Treasury Department outlined many of the package’s details, including how to “pay for” it. A close look at those so-called pay-fors, however, shows Democrats are thinking about fiscal responsibility the wrong way. They could be on the verge of sparking some unpleasant short-term overheating of the economy, in which price increases accelerate and the purchasing power of our dollars falls somewhat. If the final legislation were to grow much larger — toward the $10 trillion level many progressives in Congress are pushing — it could send such inflation soaring.

In an interview on MSNBC last week, Representative Alexandria Ocasio-Cortez of New York explained her mixed feelings about the president’s proposal, saying she has “serious concerns that it’s not enough to realize the very inspiring vision that Mr. Biden has advanced.” Rather than spending roughly $2 trillion over eight years, Ms. Ocasio Cortez and many of her Progressive Caucus colleagues would prefer “to go way higher” and on a shorter timeline.

She’s right that it is possible for Congress and the Biden administration to go bigger, faster — but only by shifting to a completely different budgeting framework: Instead of passing legislation that leans on taxing corporations and the rich to keep spending from increasing the deficit, they would have to develop a robust plan with a focus on containing inflationary pressures as that heightened government spending hits the real economy.

The president called his plan “fiscally responsible” during his speech simply because it will raise more revenue than what he’s proposing to spend. On paper, and according to conventional wisdom, this is a balanced policy. It may satisfy the scorekeepers at the Congressional Budget Office or even earn high marks from deficit hawks. But because these proposed hikes fall exclusively on corporations and more affluent Americans — who have a relatively high marginal propensity to save rather than spend — the taxes may not diminish enough private sector spending to prevent the government’s own increased outlays from igniting some inflationary overheating, especially if Congress does “go way higher.”

Off the Top of My Head

Joe Biden's Trillion Dollar Budget Plan

by John Lawrence

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.

Off the Top of My Head

Sadness for a Good Man Leaving After a Life Well Lived Contrasted With the Sadness for Victims of Mass Murders Gone Before Their Time

by John Lawrence

Prince Philip lived a good, successful and honorable life to the age of 99. It is sad to see him go, but that is tempered by the nobility of his life and the fact that we all have to go at some time. On the other hand, the US is in the throes of mass murders on a daily basis killing people senselessly before their time on earth was up. Is there nostalgia for a monarchy to replace the chaos that the descendants of the rebels against the British monarchy have created? Did the emphasis on liberty and the Second Amendment make this inevitable? Now we have politicians whose sole purpose in life is to fund raise off the chaos that they themselves have created. The First and Second Amendments are killing us. That includes the "peaceful protests" that turn into rioting and looting when the sum goes down. God save the queen.

The US is alone in the civilized world with an unrestricted right to gun ownership. The only other countries which have a right to bear arms written into their Constitution are Mexico and Guatemala, Six other countries used to have a constitutional right to bear arms, but they've since repealed those laws. The US should do the same. The US is the only country with a right to keep and bear arms with no constitutional restrictions. Americans own nearly half of all the civilian-owned guns in the world, and on a per capita basis, the US has far more guns than any other nation.

Just south of the US border, the Mexican government has a strict hold over civilian gun ownership. Although Mexicans have a right to buy a gun, bureaucratic hurdles, long delays, and narrow restrictions make it extremely difficult to do so. Article 10 of the 1857 Mexican Constitution guaranteed that "every man has the right to keep and to carry arms for his security and legitimate defense." But 60 years later in 1917, lawmakers amended it following Mexico's bloody revolution. During the rewriting of the constitution, the government placed more severe restrictions on the right to buy guns. The law precluded citizens from buying firearms "reserved for use by the military" and forbid them from carrying "arms within inhabited places without complying with police regulations." Today, Mexicans still have a right to buy guns, but they must contend with a vague federal law that determines "the cases, conditions, requirements, and places in which the carrying of arms will be authorized."

In Guatemala individuals who want to purchase a gun for private security purposes need approval from the government. They are also limited in how much ammunition they can own, and they must re-apply and re-qualify for their firearm licenses every one to three years, according to GunPolicy.org. A license also requires proof that the applicant has a clean police record, does not suffer from mental illness, and has not deserted the army or police. Although Guatemalans are not allowed to own fully automatic weapons, they are allowed to buy semi-automatic weapons, handguns, rifles, and shotguns if they obtain a permit. Still, that can be difficult.

Although Mexico and Guatemala both have a constitutional right to bear arms, the US is in a league of its own, because it is the only country without any restrictions on gun ownership in its Constitution. The US makes up 4.4 percent of the world’s population but has almost half of the civilian-owned guns around the world. The horror show of mass violence will continue until there is gun control at the Federal level or gun restrictions are written into the Constitution. The latter is probably not possible. The Second Amendment to the Constitution in and of itself is probably enough to doom the US to the fate of a second class nation or worse. In the People's Republic of China, access by the general public to firearms is subject to some of the strictest control measures in the world. With the exception of individuals with hunting permits and some ethnic minorities, civilian firearm ownership is restricted to non-individual entities. China is surging ahead of the US economically and doesn't have to deal on a daily basis with the spectacle of mass violence committed by its citizens on other citizens. As Joe Biden said, mass murders are a national embarrassment.

The conclusion is that most of the world's nations are much more sensible about gun control. The US is the outlier, and it's turning the US into a police state not because police own all the weapons but because the citizens own so many of them and are using them on fellow citizens with increasing frequency. This is having a destabilizing effect on the whole citizenry because no one knows who may be next to suffer a random act of mass violence. Lenin once famously remarked that businessmen would happily sell for a profit the rope that would later be used to hang them. American businessmen who sell guns and ammunition are now happily selling American citizens the guns with which on a daily basis they are slaughtering each other senselessly and for no reason at all. The US is degenerating into a nation dragging itself down and destabilizing itself into a black hole that seemingly it can't recover from.

Off the Top of My Head

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.

Off the Top of My Head

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.

Off the Top of My Head

Joe Manchin Is Living in La La Land

by John Lawrence, April 8, 2021

Joe Manchin is not facing the reality that exists in the US today. He is nostalgic for a day when a bipartisan consensus was possible. Today it's not. The best we can do is to go ahead with Joe Biden's agenda with the slim majority Democrats possess in the Senate, but Manchin is essentially siding with Republicans, the Party of No. Manchin wants stability in American governing, but his vision of stability is one in which Republicans will negate every attempt Biden makes to bring the US into the 21st century and effectively compete with China. Yes, America will swerve back and forth policywise if Federal control switches between parties. But that's the best that American democracy is capable of at this point in time. The alternative that Manchin suggests is a stability of no progress. China has no such problem. Their society is basically all on the same long term wavelength. They will go full steam ahead with progress.

In his recent op-ed in the Washington Post, Manchin states: "The time has come to end these political games, and to usher a new era of bipartisanship where we find common ground on the major policy debates facing our nation." Is he kidding? "usher a new era of bipartisanship where we find common ground" There is no way that is going to happen in the current political environment. There is very little to no common ground. Democrats want to get things done for the American people to improve their lot. Republicans only seek political power because their personal fortunes go up to the extent that they hold political power, and all they care about is their personal power and fortunes. Republicans have determined that their personal power increases to the extent that they make the Democratic agenda fail. Mitch McConnell actually stated this when Obama was President. McConnell was quoted as saying: "The single most important thing we want to achieve is for President Obama to be a one-term president." That's pretty clear. It's not about helping the American people except for the wealthy class of which they themselves are members. It's about making the other party fail.

So Joe Manchin has his head up his ass if he thinks there is going to be a new age of bipartisan consensus. It's wishful thinking. It's not going to happen right now or any time in the near future. Maybe some day, but right now the best hope is for the Democrats to go ahead and make improvements in American society while they hold power. Any other course only dooms the US to fall further behind the rest of the world, doom earth to catastrophic climate change and lets China zoom ahead in making progress. Joe Manchin is incredibly naive or else he wants to be the main power broker in the US Senate. "Generations of senators who came before us put their heads down and their pride aside to solve the complex issues facing our country. We must do the same. The issues facing our democracy today are not insurmountable if we choose to tackle them together." Doesn't he realize that the only issue Republicans want to face is how to make themselves and the rich even richer? Doesn't he realize that the only thing Republicans are interested in is political power? They will lie and cheat, create conspiracy theories and do anything that's even quasi legal to achieve and maintain political power.

Manchin is playing his role as the skunk at the party which is too bad. Biden's job is not trying to form a bipartisan consensus with Republicans. It's trying to appease Joe Manchin in order to get anything done. The only hope for America is to go big when Democrats hold power which they do only by a miracle in the fact that two Democratic Senators were elected in runoffs in the state of Georgia. Somehow Biden will get Manchin to go along with most of his agenda that Republicans will not be able to undo if and when they control the Federal government again. The atmosphere has already set the record this year of 420 parts per million of carbon dioxide making it unlikely that our planet will not face the worst consequences of global warming. Only cooperation with China, not only on this but on future pandemicsand other issues, will give our grandchildren the slightest chance at a decent life. To the extent Republicans control the Federal government this chance will be reduced to zero.

 

 

Off the Top of My Head

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.

Off the Top of My Head

Unlike Trump, Biden's New Deal Will Actually Make America Great Again

by John Lawrence, April 4, 2021

GDP is the measure of national economic activity and is composed of 4 components: private consumer consumption, business investment, government investment and net of imports and exports. America's economy is 70% consumption compared to about 50% for most of our western allies. Government spending is about 17% compared to 40-50% for most of our allies. In fact for Norway, Belgium, Finland and France it's over 50%. Joe Biden's infrastructure plan will change all that bringing government spending on infrastructure both material and human more in line with the rest of the developed world. While most of our allies spend around 50% on consumption, America is primarily a consumer economy at 70%. That's about to change under Biden's New Deal. Government consumption and employment will increase while private consumption and employment will decrease. This is a good thing, but Republicans and states' rights advocates disagree. American infrastructure is falling to Third World status while Americans entertain themselves to death. Nothing has been invested and everything has been consumed. Biden's attempted change in these dynamics, which Mitch McConnell has vowed to fight "every step of the way" is a bid to preserve first world status for the US which is rapidly diminishing.

The one thing the US has going for itself right now is the fact that the US dollar is the world's reserve currency. As such the US can spend large sums - trillions of dollars in fact - without fear of the dollar losing its value. So it might as well "go big" on spending because the dollar may not always retain that status. China is becoming the world's largest economy with major spending on infrastructure not only in China, but, with its Belt and Road Initiative, around the world. Meanwhile, what the US has to offer in that regard is using its bloated military to police the world. So if you were President of your country, which would you rather have - policing or investment. The answer seems clear to many, even to many US allies. China is consistent and values stability and unanimity of its citizens. The US government is subject to radical change every 2 or 4 years with deep divides among its populace, and more and more can't be counted upon by its allies even to the extent that a sizable number of US citizens invaded its Capitol! Autocratic countries may be brutal towards political dissidents, but they would never tolerate a threat to their very existence.

Some Americans will have to be brought kicking and screaming into the Biden economy. Just as they were cavalier about wearing masks, they could care less about good jobs at good wages. They just want good beer and football games. Cruises, spectator sports and abundant entertainment is what Americans have come to expect, and they prefer that to safer roads and rebuilt bridges. They are viscerally opposed to doing anything to prevent climate change or global warming. They don't want to work hard to make America great again. They want it all given to them on a silver platter preferably by an entertaining and charismatic President rather than a plodder who has their welfare at heart. There is a looming war between states rights Republicans who want the US to remain a private consumption economy and Democratic neo-New Dealers who want government to play a larger role in investing in American infrastructure, both material and human.There will be more and better paying jobs working in government infrastructure projects than there will be working in the entertainment industry. This infuriates some people.

Taxing the rich also brings Republicans out of the woodwork to proclaim that Biden will end up taxing the middle class as well "to pay for it" even though he has said that everyone making under $400,000 a year will not pay one penny more in taxes. Republican lawmakers will chomp at the bit to naysay that bit of profundity by saying over and over on their media outlets that it is not true. The truth is that Biden wants to construct a stronger safety net while rebuilding and extending American infrastructure, and a lot of Trump supporters just don't care about any of those things. They just want to be entertained and to eat out while watching spectator sports.

Off the Top of My Head

The Stock Market is Too Big to Fail

by John Lawrence, April 2, 2021

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.

 

Off the Top of My Head

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.

Off the Top of My Head

Biden's Agenda

by John Lawrence, March 27, 2021

Biden has a definite agenda and a time table for putting it forward. His first two massive bills, COVID relief and infrastructure will go forward as planned because they can be passed with only a majority in Congress due to the budget reconciliation process. Other bills like voting rights and immigration are more dicey because they are subject to the filibuster. It's clear that Democrats will not get even one vote in the Senate for any bill subject to the filibuster. Biden will keep alive the meme that he "wants to work across the aisle" even though he knows that is impossible because he wants to at least appear moderate and cooperative. He doesn't want to alarm anyone, but push will come to shove inevitably when it becomes time to get a voting rights bill passed which is absolutely necessary if Democrats ever want to hold power again and accomplish anything. The coming figurative Civil War will be over voting rights. If Republicans are successful in rolling back voting rights for the poor and minorities, they will continue to hold power. If there is a Federal voting rights bill that will not only expand the way people can vote as was put into place because of the pandemic but also eliminate gerrymandering, then Democrats will continue to hold power because of the changing demographics of the American electorate. That's why a voting rights bill is so critical.

Republicans have devised different methods for voter suppression over the years not the least of which is gerrymandering. If they control how the voting districts are drawn on the map, they can insure that a Republican will be elected from each district. So expanding the voting franchise in a fair way is absolutely critical. If that is done, Democrats will hold and gain power for the foreseeable future. If not, Republicans will continue to hold power even as a minority party. So the stakes involved are huge. Biden has his timetable laid out. Do the easy stuff first. Two massive trillion dollar bills are the easy stuff because they can be passed in Congress with just a majority and without any Republican votes. When it comes time to pass a voting rights act, Democrats will have to attack the filibuster, and Mitch McConnell will go apoplectic. Be prepared for all kinds of threats from Republicans because they know that their time in power and the time when white people have controlled American politics is passed. America is becoming a multi-ethnic, multi-religious and very diverse society and American political power will reflect that if democracy and majority rule holds sway. Republicans and white people in general will do everything they can to hold onto power. American history demonstrates that.

However, Democrats, who have the slimmest of majorities in the Senate, have the power in their hands to change the filibuster rule or to eliminate it altogether, and I'm sure they will do whatever is necessary to pass their agenda. Their only problem is with the two conservative Democrats in the Senate, Joe Manchin of West Virginia and Kyrsten Sinema of Arizona. They will have to make sure that these two will come on board with whatever the Democrats decide to do. Biden has two of the best leaders on his side in terms of Nancy Pelosi in the House and Chuck Schumer in the Senate. They will figure out a way to outsmart the Republicans and bring the American people to their side as well. Republicans will be furious, no doubt. Fortunately, they blew their wad with the failed coup attempt popularly known as an insurrection. Now the FBI and the Department of Homeland Security is focused on their case. It won't happen again.

Biden only has two years for certain in which to enact his agenda. The special election in Georgia which elected Warnock and Ossof was critical to the success of the Biden administration. Warnock only has two years to serve until the next state election in Georgia to fill his seat whereas Ossoff was elected to a 6 year term. That's why there is a furious attempt to change the voting laws in Georgia so that a Republican senator will be elected there in 2022 and Democrats will lose their majority in the Senate which will again be controlled by Republicans. It was a happy coincidence for Democrats that Ossoff and Warnock were both elected; it was an anomaly for the state of Georgia, and Republicans are determined that it won't happen again. The success of the Biden administration hangs on his first two years to get his agenda done, and, if he wants to get anything done in the last two years from 2022 to 2024, it is critical that Federal voting rights are established which will roll back the white supremicist Jim Crow voting legislation currently being passed in Georgia and other states.

So the critical issue really is the filibuster. If Democrats don't go all out and eliminate it or at least create carve outs for voting rights legislation, they will lose control of the Federal government in 2022, and Biden's agenda will be defenestrated. It's all about the future of American politics and who will hold power - the Democrats who will serve the American people especially the poor and the middle class or the Republicans who will serve the rich and the white supremicists.

Off the Top of My Head

Ending the Filibuster is Necessary for Voting Reform and Other Crucial Initiatives

by John Lawrence, March 18, 2020

Voting reform at the Federal level is necessary to counter all the state efforts to restrict voting. This is as important as Biden's COVID relief bill which was passed by budget reconciliation and only needed a majority vote. It is important to note how precarious the COVID relief bill was because it got zero Republican votes. If even one of the two Senators from Georgia had not won in the runoffs, there would be no COVID relief bill or Democratic majority in the Senate. The Republican party is the party of NO. Biden's trope of "working across the aisle" is a total fiction and he knows it, but he's trying to keep it alive for appearances sake as it makes him seem more moderate. He knows that he will get no Republican votes for any legislation he wants to get passed, but he will seem less extreme if he at least keeps the idea alive. But when it comes right down to it, Biden will do what he needs to do to get his legislation passed into law. He's  not naive.

So Republican Mitch McConnell has threatened a "scorched earth" policy if Republicans ever regain control of the Senate. He even threatened to defund Planned Parenthood. Golly gee! I'll take that in return for comprehensive national voting reform including eliminating gerrymandering and overruling state efforts to restrict voting. Democrats have a lot on their agenda for helping Americans; Republicans have nothing. Here is McConnell’s complete account of the horrors that await the country were the legislative filibuster to perish:

“As soon as Republicans wound up back in the saddle, we wouldn’t just erase every liberal change that hurt the country. We’d strengthen America with all kinds of conservative policies with zero input from the other side. Nationwide right-to-work for working Americans. Defunding Planned Parenthood and sanctuary cities on day one. A whole new era of domestic energy production. Sweeping new protections for conscience and the right to life of the unborn. Concealed-carry reciprocity in all 50 states and the District of Columbia. Massive hardening of security on our southern border.”

Jeesh, Mitch, I'm totally terrified! I say go ahead and abolish the filibuster. When you weigh all the good Democrats can do for the country against all the bad Republicans can do, the scales are tipped heavily in favor of ending the filibuster which is an archaic Jim Crow rule anyway. Any democracy worthy of the name should at least stand for majority rule. The things that Republicans are against are only manufactured pipe dreams anyway for the most part. If we have to give up Planned parenthood and sanctuary cities in return for solving the problem of global warming, I say go ahead and do it. There is so much important business that has to get done that Democrats are capable of doing. Biden learned his lesson under Obama when for 8 years Republicans slow walked him through a futile Presidency. Biden learned his lesson then although he still wants to seem moderate so he will appear to be just that. After Republican intransigence has been conclusively demonstrated, however, Biden will, as a seeming last resort, abolish the filibuster in order to get the job that he came to do done.

The For the People Act (also known as H.R. 1) is a bill in the United States Congress to expand voting rights, change campaign finance laws to reduce the influence of money in politics, limit partisan gerrymandering, and create new ethics rules for federal officeholders. This is the minimum of what needs to be done that will require ending the filibuster. Much needed and much delayed immigration reform will also require that. The question is will the US be a nation that accomplished big things or one in which nothing gets done. Republicans can threaten all they want. Their agenda is a big nothing burger. If HR 1 is enacted into law, they may never be back in power again. Their access to power is based on restricting voting rights. Democratic access to power is based on expanding them. The real question is is the United States going to stand for a real democracy or is it going to retreat into an autocracy. The rest of the world including primarily China is moving ahead while head in the sand Republicans are challenging and threatening Americans with their damaging policies. Biden and the Democrats should not take that bait, and, having learned their lesson from the Obama years, go ahead and do what's necessary to get America on the move again towards a more equitable and rational nation which makes a positive contribution in world affairs.

Biden Must Get Manchin and Sinema to Fall in Line

by Robert Reich

 

Tuesday, March 9, 2021

America is at a turning point on voting rights – one that’s almost as critical as the mid-1960s when the Civil Rights and Voting Rights Acts were passed. 

The present choice is whether to expand voting rights and strengthen our democracy, or allow the GOP to enact even more restrictive voting laws and partisan gerrymandering — cementing themselves in minority rule for years to come. 

Just as in the mid-1960s, presidential leadership will be a decisive factor.

Across the country, state Republicans have introduced over 250 bills restricting the right to vote. As a lawyer for the Arizona GOP recently admitted before the Supreme Court in seeking to defend the state’s voting restrictions, if they’re eliminated, “it puts us at a competitive disadvantage relative to Democrats.”

Democrats in Congress are fighting back against this anti-democratic agenda with their For the People Act and the John Lewis Voting Rights Advancement Act. 

These bills would automatically register new voters, outlaw gerrymandering, expand early voting, ban restrictions on mail-in ballots, reform campaign finance laws, and restore the 1965 Voting Rights Act.

Mitch McConnell calls it a “power grab.” It is a power grab – grabbing power back for the people.

Yet although Democrats now possess a razor-thin majority in the Senate, these efforts don’t stand a chance unless Democrats overcome two obstacles there.

The first is the filibuster, a rule requiring 60 votes to pass regular legislation. The filibuster is not in the Constitution and not even in law. It’s just a Senate rule, which Democrats can and must end with their 51-vote bare majority.

The filibuster has historically been used against civil rights and voting rights. So it’s appropriate that Democrats finally end it in order to protect and expand these rights in the face of state efforts to restrict them.

Which raises the second obstacle. Two Democratic senators – West Virginia’s Joe Manchin and Arizona’s Kyrsten Sinema – have said they won’t vote to end the filibuster, presumably because they want to preserve their centrist image and appeal to Republican voters in their states.

Well, I’m sorry. The stakes are too high. We are talking about the future of civil and voting rights — critical to fighting racism and preserving American democracy. There is no excuse for two Democratic senators to allow Republicans to stomp on our democracy and entrench their minority rule for generations.

And there is no reason President Joe Biden should let them. It’s time for him to assert the leadership that President Lyndon Baines Johnson asserted more than a half-century ago.

When someone tried to persuade LBJ not to waste his time on civil and voting rights, he replied, “Well, what the hell’s the presidency for?” Johnson worked to break the southern filibuster – lobbying recalcitrant senators and pressuring their colleagues to do the same. As Senator Hubert Humphrey later described it, “the president grabbed me by my shoulder and damn near broke my arm.”

Historians tell us that Johnson’s efforts may have shifted the votes of close to a dozen senators, breaking the longest filibuster in Senate history and clearing the way for passage of the Civil Rights Act of 1964 and Voting Rights Act of 1965.

We are once again at a crucial juncture for civil rights and voting rights, one that will shape our nation for decades to come. Joe Biden must learn from LBJ, and wield the power of the presidency to make senators fall in line with the larger goals of the nation. Otherwise, as LBJ asked, “what the hell’s the presidency for?”

Off the Top of My Head

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.

Off the Top of My Head

Democrats Should Get Rid of the Filibuster No Matter What They Have to Promise Joe Manchin

by John Lawrence, March3, 2021

They have nothing to lose by ending the filibuster and much to gain. Democrats are the party of getting stuff done, stuff that the country and the world needs. On the other hand Republicans are the party of No. With the filibuster in effect they will say no to everything. There is much that needs to get done that will go undone if the filibuster remains in effect. Democrats have nothing to lose, but they need the votes of every Democrat in the Senate including Joe Manchin who has said he's against ending the filibuster. What would Republican do if they were in power without the filibuster? Not much more than they have already done with the filibuster - give tax breaks to the rich which they can do with the budget reconciliation process which effectively nullifies the filibuster for budget related legislation. So Democrats don't have much to fear if Republicans regain control without the filibuster. But the Biden administration needs to do much more than budget related stuff. For example, a national voting rights act which clarifies on a national level voting procedures. Right now each state is rolling back voting procedures in an attempt to massively suppress poor and black and brown voters.

Also the Senate parliamentarian has ruled that the $15 an hour minimum wage increase cannot be part of the $1.9 trillion COVID relief act. She could be overruled by the President of the Senate, Kamala Harris, but this close to the beginning of his administration Biden doesn't want to do anything that radical. However, he has a deadline and that is 2022 when, if history is any guide, Republicans could regain control of one or both Houses of Congress. If that is the case, Biden will be neutered until his term is up in 2024 and will probably not be reelected after Republicans get done harping on him for 2 years that he has got nothing done (thanks to them). Unlike China which has continuity over 5 to 10 years in its policies, the US is in a situation now where it could likely swerve back and forth from left to right every 4 years. That does not lead to much admiration and respect from the other countries of the world which are already doubting how much they should trust and emulate America.

Trump undid as much as he could of what Obama had done by executive order, and now Biden has undid everything that Trump did also by executive order. Trump may have been an anomaly so that from now on good, consistent and stable leadership will prevail. But there is not much reason to believe in this happy scenario. Trump voters seem to be as hostile to the vision of Democrats as Democrats are hostile to the vision of Trump supporters. The two parties are at loggerheads. Will we swerve from belief in the necessity of doing something about global warming to denying global warming exists every four years? Will we go from extolling the benefits of fossil fuels to trying to get rid of fossil fuels every four years. Will we go from concern about the environment to allowing corporations to despoil the environment with impunity every four years? Will we go from tax breaks for the rich to government programs to support the poor every four years?

I'm thinking that, once Biden realizes that Republicans will not support his agenda on anything, he may support removal of the filibuster in 2022 before the next election so that he can force through all the legislation on his list that can't be passed by budget reconciliation. He'll have to buy off Joe Manchin somehow. His vaunted style of "working across the aisle" has been shown to be ineffectual even in his own eyes. That's the painful lesson he learned during the Obama administration when Republicans stalled and slow walked Obama for eight years, and, while they were doing it, they were at the same time putting Obama down for not getting anything done when they were not outright demonizing him. They will attempt the same thing with Biden, but I think Biden has learned his lesson. He will keep up the facade of wanting to work with Republicans, but he won't compromise in any significant way just to be a nice guy and get their support. The Republicans will not cooperate on anything unless they can diminish it and water it down. Obama thought he had to do just that. Biden has lost his naivete.

Off the Top of My Head

Republicans Are Restricting Voting Laws

by John Lawrence, February27, 2021

Republicans know that, if all eligible voters actually vote, they will lose. So they are busy at work at the state level to enact more restrictive voting laws making it as difficult as possible for people to vote. This will primarily affect Democratic voters, and they know that. They have been using voter suppression techniques ever since black people won the right to vote. They know that making voting easier will encourage more Democratic voters because many of them can't take a day off to go to the polls. So mail-in voting which was facilitated in many states because of the pandemic worked to their disadvantage. They are hurrying to correct that. Since Republicans control many state legislatures which set the voting rules, they are having a field day changing the laws so that they don't suffer any more humiliating defeats.

So Joe Biden needs to make the best of the two years he has during which Democrats control both Houses of Congress. Assuming that a Republican will be elected President in 2024, the nation will swerve to the right and disassemble all the Executive orders Biden has put in place. As a result of this division America will be seen, if it's not seen that way already, as unstable and inconsistent. World leaders will increasingly turn towards China for leadership because what China values most in consistency and stability. The US can't decide whether it wants to be a democracy or a republic. Democrats want a democracy in which it would seem appropriate that every citizen over the age of 18 should cast a vote. This should be made as easy and accessible as possible. Republicans, on the other hand, want a republic in which the levers of power are controlled by white Americans of European descant like they always have been and which the time honored methods of voter suppression of minorities and poor people remain fully in effect.

Paul Weyrich was an American conservative political activist and commentator, most notable for co-founding the Heritage Foundation and the Free Congress Foundation, both conservative think tanks.He famously said: "So many of our Christians have what I call the goo-goo syndrome: good government. They want everybody to vote. I don't want everybody to vote. Elections are not won by a majority of people, they never have been from the beginning of our country and they are not now. As a matter of fact, our leverage in the elections quite candidly goes up as the voting populace goes down." Quite a revealing quote. He identifies with "Christians" but chastens them that they shouldn't want everyone to vote. The question I ask is 'what would Jesus say?' Would Jesus want everyone to vote or not? Probably Jesus would be in favor of democracy as compared with a conservative minority that wants everything kept the way it has always been "from the beginning of our country." It makes me doubt the validity of the Christian religion as practiced by the "moral majority" of right wing Christians in this country. Jesus was for the poor and disenfranchised. They're not.

America can not remain a great country on the world stage if it swerves back and forth every two years between Democrats who genuinely want to make America and the world a better place and "America First" Republicans who don't give a hoot about the rest of the world except to dominate it with an outsized military establishment. The US is veering on the edge of autocracy if 74 million voters want Trump as their President in 2024 and Republicans are successful in suppressing 7 million voters because that was the margin between Biden and Trump. Trump did considerable damage not only to the US reputation vis a vis the rest of the world, but also within the US itself. It is a question of whether the US is a fact based country run by intelligent people or a no nothing country based on lies and conspiracy theories while the rich steal everything in sight and Republicans give their hoi polloi supporters political entertainment to keep their anger stoked. The rest of the world has looked to America as the Rock of Gibralter in the past because of its consistency and stability and its promotion of human rights (except the human rights having to do with economic rights). They may be looking now towards China for stability and consistency and be more concerned about intelligent leadership and economic human rights, especially if they observe that America's touting of human rights eliminates those of black people.

Off the Top of My Head

How to Throw Republicans for a Loop: Biden Should Propose Tax Breaks for the Middle Class and Tax Increases for the Rich

by John Lawrence, February 25, 2021

The proper use of taxation is to reduce income and wealth inequality. Instead Republicans use tax breaks to primarily benefit the rich. Democrats should modify this playbook. The increasing income and wealth inequality among American citizens cries out for redress. Robin Hood needs to come out and play. There's no law that says tax breaks have to go primarily to the wealthy or be based on some proportionate percentage over all incomes. Democrats should get into the tax break game too. We know that taxes aren't necessary to fund the government. Sure they're part of it, but the government can spend whatever Congress authorizes regardless of whether or not there is money from taxes to pay for it. The shortfall is made up with Treasury bonds most of which end up on the balance sheet of the Federal Reserve just like the Fed used Quantitative Easing (QE), a fancy name that signified that the Fed issued trillions of dollars to bail out the Wall Street banks in 2008. In that case the Fed took MBSs (Mortgage Backed Securities), most of which were worthless onto its balance sheet as "collateral." The Fed can lend money to any entity it likes as long as it takes collateral onto its balance sheet. Much of this collateral is worthless such as defunct MBSs and even old bicycles!

In the article, "Modern Monetary Theory and the Changing Role of Tax in Society," by Andrew Baker and Richard Murphy, published online by Cambridge University Press we find the following:

"Tax is traditionally viewed as the main funding mechanism for government spending. Consequently, social policy is often seen as something determined and constrained by tax revenue. Modern Monetary Theory (‘MMT’) presents a reversal of the tax-spend cycle, by identifying a spend-tax cycle. Using the UK as an example, we highlight that one of MMT’s most important, but under-explored, contributions is its potential to re-frame the role of tax from both a macroeconomic and social policy perspective. We use insights on the money removal, or cancellation function of taxes, derived from MMT, to demonstrate how this also creates possibilities for using tax to achieve social objectives such as mitigating income and wealth inequality, increasing access to housing, or funding a Green New Deal. For social policy researchers the challenge arising is to use these insights to re-engineer tax systems and redesign social tax expenditures (STEs) for creative social policy purposes."

MMT is a game changer. Conventional thinking is that government can only spend money collected from taxes. But that is not how the system really works. As a sovereign currency, the Fed can just create US dollars with a few keystrokes on a computer. The budget deficit and national debt just become accounting entries on the Fed's balance sheet. We are not mortgaging our children's and grandchildren's future. This is money that never needs to be paid back, that our children never need to pay back. China is not holding this debt over our heads; China could be paid back tomorrow if need be. The US government operates on a different set of principles than the US states, European countries in the Euro zone, and households. All these entities do need to pay back loans. The US government does not because it can just create or issue the money which is how the Fed operates on a daily basis. Even local banks create money when a loan is taken out without the need for deposits. They just have to have collateral - usually 10% of deposits - in their reserve account at the Fed. So money can just be created by the Federal Reserve, but, obviously, it does not do so willy nilly. Like alcohol, this facility must be used responsibly. So that is what the debate should be about, not the size of the deficit or the national debt.

The national debt was a problem when the US dollar was on a gold standard. The US promised to redeem dollars - paper currency - for gold up until 1971. Obviously, there was not enough gold if, all of a sudden, China, let's say, wanted to take all its US dollars and demand gold at $35 an ounce. But in 1971 President Nixon took the US off the gold standard. He said the US would forevermore not redeem US currency for gold. At that point the US dollar became a "fiat" currency. That means that a dollar was worth a dollar just because the US government said it was. The US dollar did not become immediately worthless. People continued to use it, and it continued to retain its value vis a vis other currencies. In fact it's the world's reserve currency as Nixon made a deal with the Saudis only to accept payment for oil in US dollars. That alone meant that the other countries of the world needed US dollars if for no other reason than to buy oil. As a matter of fact today most business dealings of foreign countries are settled in US dollars. So the US dollar has a bright future at least for now.

The conclusion is that US households, businesses, US states and European nations that use the Euro need to pay back loans when they borrow money. A nation with a sovereign currency such as the US, the UK, Japan, China and others creates its money when its central bank issues it by means of keystrokes. No one can demand repayment or exchange of dollars for gold or anything else. If China wants to be paid back for the Treasury bonds it holds, the money in its Treasuries (savings) account at the Fed will be debited and credited to its checking account at the Fed. It's as simple as that. That money can be exchanged for Chinese currency on the open market at the prevailing exchange rate. But probably the Chinese would want to keep much of their financial assets in dollars rather than renminbi since their currency is pegged to the dollar and many of their business dealings are settled in dollars.

Off the Top of My Head

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.

'Words Are Not Enough': Biden Pushed to Take Bold Climate Action as US Returns to Paris Agreement

Published on Friday, February 19, 2021

by Common Dreams

"The livelihoods and dignity of billions of people who didn't create the climate crisis require that the Biden administration takes immediate and far-reaching climate action driven by justice, equity, and science."

by Jessica Corbett, staff writer

 

29 Comments

Activists demanding climate and racial justice marched in New York City on September 20, 2020. (Photo: Steve Sanchez/Pacific Press/LightRocket via Getty Images)

While Democrats and scientists across the United States applauded the Biden administration for officially rejoining the Paris climate agreement on Friday and figures from around the world said "welcome back America," climate campaigners and experts emphasized that the nation now needs to take bold, immediate action.

As the advocacy group Public Citizen put it: "We have a tremendous amount of catching up to do."

On his first day in office, President Joe Biden delivered on his campaign promise to begin the process of returning to the deal—ditched by his predecessor the day after the November presidential election—which aims to limit global temperature rise this century to "well below" 2°C, and preferably 1.5°C, compared to pre-industrial levels.

"We can no longer delay or do the bare minimum to address climate change. This is a global, existential crisis, and we'll all suffer—we'll all suffer the consequences if we fail," Biden declared Friday, addressing the virtual Munich Security Conference. "We have to rapidly accelerate our commitments to aggressively curb our emissions and to hold one another accountable for meeting our goals and increasing our ambitions."

Similar messages came from key members of the Biden administration. U.S. Secretary of State Antony Blinken said in a statement that "addressing the real threats from climate change and listening to our scientists is at the center of our domestic and foreign policy priorities. It is vital in our discussions of national security, migration, international health efforts, and in our economic diplomacy and trade talks."

Climate Envoy John Kerry—who, as the country's top diplomat during the Obama administration, played a key role of making the Paris agreement a reality—called climate change "among the most complex security issues we've ever faced." Pointing to the compounding crises in Texas this week, he added that "what these extreme weather events translate to on the ground should concern every single one of us."

Advocates of ambitious climate action welcomed the comments from the president and his allies, but they also made clear that "words are not enough."

"In a climate emergency, the only thing that will do is decisive action to dismantle the weapons of mass destruction that are #FossilFuels," tweeted Jennifer Morgan, executive director of Greenpeace International. "Now is the time to really act."

While thanking Biden for keeping his promise, Andrea McGimsey, senior director for Environment America's Global Warming Solutions campaign, said Friday that "as pleased as we are with our return to the Paris agreement, it must only be a start."

"From getting more electric buses on the road to installing more charging stations in our national parks, so much can and must be done," she continued. "We'll also need to electrify our buildings and all of our appliances, and power them with clean renewable energy. And it's time to stop subsidizing fossil fuels with Americans' tax dollars."

"Extreme weather continues to hammer communities across the country," added McGimsey, as Texans endured power, food, and water problems due to a winter storm. "It's clear that to protect our families' health and well-being today—and to achieve a stable climate for our children and grandchildren—we need to lean in now to meet the commitments of the Paris agreement and go far further."

Leading up to Friday, tens of thousands of people and scores of advocacy organizations backed a demand that the Biden administration commit the United States to doing its "fair share" to combat the climate crisis—both in terms of reducing emissions at home and helping developing countries reach their goals.

That call and the U.S. return to the agreement follow a study released last week which warned that countries' Paris pledges to cut emissions—called nationally determined contributions (NDCs)—should increase by 80% to meet even the deal's dangerously inadequate 2°C target.

As Rachel Cleetus, policy director and lead economist for climate and energy at the Union of Concerned Scientists, wrote Thursday:

On April 22, Earth Day, President Biden will host a Leaders' Climate Summit, aiming to catalyze greater ambition ahead of COP26. The major emitters will be urged to raise their emissions reductions pledges for 2030 and add more detail on the domestic policies they will implement to achieve them. Developing countries—members of the Climate Vulnerable Forum—will also be there to remind the world of their dire plight and the moral imperative for richer countries to act quickly and boldly to help stave off existential threats to people and the planet.

The U.S. is expected to announce its updated NDC ahead of that summit. An ambitious U.S. NDC is the strongest signal the nation can send to show the global community that we are not just back in the Paris agreement, but in it to do our fair share. It is the single most important thing we can do to reestablish our credibility, foster trust, and catalyze greater action from other nations.

In an opinion piece for CNN on Friday, Alok Sharma, president of COP26—which was delayed until this November because of the coronavirus pandemic—celebrated the U.S. return to the Paris agreement and said, "I have been extremely encouraged by the conversations I have had with Kerry and White House National Climate Adviser Gina McCarthy—both formidable allies in the fight against climate change."

Sharma also emphasized that at the summit in Scotland, world leaders must contend with the fact that "developing nations, particularly those most vulnerable to the consequences of climate change, need financial support from developed countries to tackle its causes and effects—especially smaller island states like in the Pacific."

"Tackling climate change is a shared endeavor. And the clock is ticking ever closer to the point of no return," he wrote. "And so, I look forward to working as a matter of urgency with President Biden's administration and governments around the world, to deliver decisive climate action on the road to and at Glasgow. We owe that to current and future generations."

Organizers worldwide echoed that call for the Biden administration to approach the climate crisis on a global scale.

Meena Raman of Friends of the Earth Malaysia asserted that "the U.S. must not repeat its earlier bullying stance of blocking and undermining developing countries on issues such as equity between countries and the transfer of finance and technology, including for loss and damage."

"To be taken seriously, President Biden must go far beyond just rejoining the Paris agreement—he must listen and work cooperatively with developing countries in addressing the challenges they face in implementing more climate action in the face of the pandemic and growing indebtedness," said Raman. "The U.S. must be seen as a cooperative player, taking responsibility for its historical emissions and doing its fair share of action to phase out fossil fuels and increase its financial contributions."

Dipti Bhatnagar, international program coordinator for climate justice and energy with Friends of the Earth International, noted that "the United States' refusal to accept and address the high level of responsibility it bears for the climate crisis and encouragement of high-carbon lifestyles has resulted in untold suffering for women, men, and children throughout the developing world."

"Droughts are destroying crops, cyclones are leveling homes, and whole nations are literally disappearing," added Bhatnagar, who is from Mozambique. "The livelihoods and dignity of billions of people who didn't create the climate crisis require that the Biden administration takes immediate and far-reaching climate action driven by justice, equity, and science."

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Off the Top of My Head

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.

Off the Top of My Head

Despite All the Talk, Practically Nothing Has Been Done About Global Warming

by John Lawrence

Every year 51 billion tons of Greenhouse Gasses (GHGs) go into the atmosphere. There has been no decrease in that number despite the Paris Accords, despite more hybrid cars, despite the build up of solar and wind renewables. 197 countries adopted the Paris Agreement at the COP21 in Paris on 12 December 2015, over 5 years ago and yet there has been no improvement in the number of tons of GHGs dumped into the atmosphere per year. Well, a couple of tons less this year due to the pandemic. In general it is slightly increasing according to Bill Gates in his new book, "How to Avoid a Climate Disaster." At the rate we are going, there is no way that the earth can escape the dire consequences of global warming. Should we just give up and enjoy the few remaining years of a habitable earth? I don't think so. What will it take to forestall catastrophe? Basically, it will take a Green New Deal or should we call it the Green Equivalent of World War II?

During World War II there was a huge amount of government deficit spending. Modern Monetary Theory has shown that this is no problem because a government such as the US which issues its own sovereign currency can never run out of money whether or not there are tax receipts to cover the spending. The problem is inflation which occurred in WW I despite more modest outlays. In the WW II years there were wage and price controls which effectively controlled inflation. There was also rationing. These measures made sure that all resources both human and material were devoted to the war effort. Everyone was on the same page. Is that possible for a Moral Equivalent of War (MEOW) today? Would people be willing to give up anything so that resources could be devoted to a MEOW as far as Global Warming is concerned? Many Americans are not even willing to wear a mask during a pandemic, and many also believe that global warming is a hoax. Would they sacrifice for a MEOW?

Bill Gates has invested his money in a variety of start-ups which have some promise of addressing the global warming issue. One of them is Direct Air Capture (DAC) in which carbon dioxide is removed directly out of the air. This is a feasible alternative which is already in use on a small scale. The problem is that it's the most expensive alternative out there. A combination of other methods to ameliorate GHGs in the atmosphere would not only be more feasible but cheaper. He estimates that removing 51 billion tons of GHGs per year would cost $5.1 trillion per year. This would be an upper bound on the cost of getting to zero GHG emissions. Actually this does not seem too unreasonable given the fact that between 2008 and 2015, the Fed’s balance sheet, its total assets, ballooned from $900 billion to $4.5 trillion. That means that the Fed "printed" $3.4 trillion with its Quantitative Easing (QE) program. The Fed has "printed" $3.5 trillion just in the year 2020 in response to the coronavirus pandemic to keep the economy from falling apart. This is the amount of money authorized by Congress in several spending bills. Add to that Joe Biden's $1.9 trillion COVID relief bill and you get a total of $5.4 trillion. And yet there has been no inflation.

So there is a little hocus pocus going on in the relationship between the Fed and the Treasury. The Fed by law is not allowed to buy US debt directly from the Treasury department. How it works is Congress authorizes a spending bill. The Treasury issues a Treasury bond if there aren't enough taxes to cover it. That bond is sold to the "primary dealers" which are mainly big Wall Street banks, and then the Fed buys the bond on the "open market" which means it buys them from the primary dealers. So by a roundabout method, the Fed buys up US debt by means of "printing" money although it's actually by means of a few keystrokes on a computer crediting the Treasury's account at the Fed and the Fed takes the bonds onto its balance sheet from which theoretically it could sell them some day. One little distinction: this is not QE. QE was a term coined when the Fed "printed" money to bail out the big banks aka providing liquidity. The Fed took all the toxic junk of mortgage backed securities and other assets onto its balance sheet and gave the banks all the money they needed to cover bets on credit default obligations and interest rate swaps and other casino garbage. So while it amounts to the same thing - the Fed "printing" money and adding it into the economy - the money injected now is going into the real economy whereas the QE went into the Wall Street economy.

But I digress. So Bill Gates says it would require at most $5.1 trillion to get our GHGs down to zero on an annual basis. In other words keep the goddam fossil fuels, cow farts and Keystone pipeline and just get those DAC machines humming. Seems reasonable to me. The Fed can just print up that $5.1 trillion and we're home clear. J.D. Alt estimates that solving the global warming crisis will cost $60 trillion over 10 years which is about the same amount per year that Bill Gates estimates although supposedly we will reach some point at which renewables and other technologies will result in zero emissions so we will not have to go on spending that amount in perpetuity. So why don't we just go ahead and do it? The Fed could just print the money. No inflation is in sight. Modern Monetary Theory has shown that any country with a sovereign currency (such as the US dollar) can never run out of money and as long as the resources are available (both human and material) the financial resources will always be available. The only problem is the stupidity of most of the US Congress (mainly Republicans) whose only response to any Democratic initiative is just to Just Say No as well as their economic ignorance. So it is of paramount importance that next year after the pandemic is over and before Republicans take over (hope not) one of the branches of Congress in 2022, that Congress passes a $5 trillion per year Green New Deal or a $50 trillion GND spread over 10 years.

Off the Top of My Head

Where Will the Republican Party Go From Here?

by John Lawrence

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.

Off the Top of My Head

A Job Guarantee Would Win Over Trump Voters and Also Address Black Lives Matter

by John Lawrence, February 14, 2021

Joe Biden can win over disgruntled Trump voters with a job guarantee. There has been a lot of research indicating that, if government were the Employer of Last Resort (ELR) at say a wage of $15.00 an hour, this would save money on unemployment as well as setting a minimum wage. It's also the minimum wage called for in Biden's COVID relief bill. Robert Reich, Clinton's labor secretary says:

"[G]ive Republicans and independents every incentive to abandon the Trump cult.

"White working-class voters without college degrees who now comprise a large portion of it need good jobs and better futures. Many are understandably angry after being left behind in vast enclaves of unemployment and despair. They should not have to depend on Trump’s fact-free fanaticism in order to feel visible and respected.

"A jobs program on the scale necessary to bring many of them around will be expensive but worth the cost, especially when democracy hangs in the balance."

Dr. Martin Luther King Jr. said in his last letter requesting support for the “March on Washington for Jobs and Freedom”:

“It was obdurate government callousness to misery that first stoked the flames of rage and frustration. With unemployment a scourge in Negro ghettoes, the government still tinkers with half-hearted measures, refuses still to become employer of last resort. It asks the business community to solve the problems as though its past failures qualified it for success.”

It's clear that an ELT program would solve many problems not the least of which is wooing Trump voters to the Democratic party. Trump's appeal to them was partly that they had been left behind because jobs had been moved to China and Mexico and he was going to bring good paying manufacturing jobs back to America, something he never did or had a clue how to do. The ELR program will act as an automatic stabilizer adding jobs during a recession and eliminating them during an expansion when jobs will shift back to the private sector. All private employers would have to do is pay a wage slightly higher than the program wage of the ELR program which would effectively set the minimum wage. It has been thought that a certain level of unemployment was necessary to fight inflation, but that's not necessarily the case as jobs in the ELR program would not compete with jobs in the private sector. The program wage would be a floor below which wages could not drop.

The so-called "Phillips Curve" maintained that there was a trade-off between employment and inflation, that to achieve lower inflation you had to increase unemployment. The Bureau of Labor Statistics defines full employment as an economy in which the unemployment rate equals the nonaccelerating inflation rate of unemployment (NAIRU), no cyclical unemployment exists, and GDP is at its [full] potential. The Federal Reserve considers a base unemployment rate (the U-3 rate) of 5.0 to 5.2 percent as “full employment” in the economy. So government economists have been willing to trade off the misery of approximately 16 million unemployed people in order to achieve stable money. Those 16 million are mainly composed of African Americans. However, Modern Monetary Theory claims that this is not necessary. There are other policy tools to fight inflation. Taxes, for example, mainly targeted on the rich. Other countries such as Argentine and India have implemented ELR programs. The money spent would eliminate the need for food stamps, unemployment insurance and other government programs necessary to deal with poverty and homelessness. Anyone wanting a job could have one, and these jobs would be in areas like child and elder care where there is a need for additional workers.

Off the Top of My Head

The Two Strands of Modern Economic Theory

by John Lawrence, February 12, 2021

Ellen Brown with her book Web of Debt pointed out that public banks could save states and municipalities millions in interest compared to Wall Street banks. She also pointed out that money is created by banks when they make loans with fractional reserve banking. They just create the money with keystrokes; it doesn't come out of deposits. Ergo, all money comes from debt, but that's only half the story. The other strand explains how the Federal Reserve just creates money by keystrokes. In The Deficit Myth, Stephanie Kelton explains how countries with sovereign currencies can create money that really is not debt, despite the fact that conventional thinking says it is. When households or states or countries in the Euro zone take on debt, they do have to pay it back. When countries with sovereign currencies create money, they don't have to pay it back. It's as simple as that.

When European countries gave up their sovereign currencies and adopted the Euro, they gave up the right to create the money they needed to pay bills so they need to borrow on capital markets which can charge them whatever interest they want. This is how Greece and Italy and other European countries got into problems. On the other hand the U.K. which never gave up its sovereign currency can just create the money it needs without going to the debt markets. In the same way Orange County and other US municipalities got into trouble with spiraling debt which had to be paid back. This can get out of hand because the more indebted a debtor gets, the higher interest rate they get charged so that in the worst case they are just borrowing money to pay interest. The US can never get in this debt trap because it never has to borrow money on the open market and the Fed can set interest rates however it wants. Once authorized by Congress and required by law Treasury bonds are issued and can always be paid because the Fed can just create the money to pay them.

Modern Monetary Theory (MMT) has established that deficit spending, whether that comes from tax breaks or government programs or currently for coronavirus relief, is just an accounting entry on the Fed's balance sheet. The national debt never needs to be paid off. Also any country that owns Treasuries - for instance, China - could have them paid off tomorrow if they chose to cash them all in by the Fed just debiting money from the savings account of the People's Bank of China at the Fed and crediting their cash account also at the Fed. Countries with sovereign currencies, ^i.e. the US dollar, the British pound, the Japanese yen etc, can all create money in this way by having their central banks do it with keystrokes on a computer. Greece, Italy, California and New York can't do this because they don't have sovereign currencies.

So there is a difference between debt acquired by households, firms and countries which don't issue their own sovereign currency and countries which have central banks that do. The US Federal Reserve can buy up Treasury bonds as necessary to provide as much money as is authorized by Congress to the US Treasury. By law they can't buy them directly from the Treasury but must buy them on the open market. However, US primary dealers - mainly Wall Street banks - are required to buy them and the Fed can buy them from the primary dealers by providing "liquidity" - dollars which the Fed creates with keystrokes - to the Wall Street banks. The Fed also controls interest rates which at this time are 0.25% or almost zero. So the $1.9 trillion relief package proposed by Biden is no problem either for the US Treasury or the Fed. That money could just end up on the Fed's balance sheet the way the trillions of dollars it created to bail out the Big Banks in the Great Financial Crisis of 2008 did. The fact is that, when the US government deficit spends, that adds money to the private economy, and right now the private economy is hurting because so many are out of work and not able to pay rent or mortgages or car payments. Money added to the economy by deficit spending (deficit being really a misnomer) can be readily absorbed by unemployed workers to pay their bills. The point is that taxes are not necessary for government spending.

So Web of Debt applies to the private economy and The Deficit Myth applies to the national economy. The first book advocates public banking which can save states and municipalities money on interest because they do have to pay their debts. The second book describes how governments with sovereign currencies can just create money which need never be paid off. However, this money creation facility should, like alcohol, be used responsibly; otherwise, inflation can occur. But when huge numbers of people are unemployed and states are having a hard time paying their bills, it is incumbent on the central government to help them. The same applies to European countries in the Euro zone. US lawmakers need to get up to date on how the real economy actually works. In truth Republicans have lost all legitimacy when it comes to their harping on deficit spending.

Off the Top of My Head

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.

Off the Top of My Head

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.

So here is what Larry Summers says about inflation:

"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.

Off the Top of My Head

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.

Off the Top of My Head

Republicans: The Party of No to Democratic Values

by John Lawrence, January 30, 2921

As Joe Biden goes through the Kibuki theater of trying to get Republicans to sign on to the COVID relief bill, realpolitik Democrats are preparing to pass it using budget reconciliation. Republicans will likely vote in a bloc against the bill, but they won't be able to use the filibuster to nix it. Good thing that the cliffhanger in Georgia produced two Democratic Senators which made Democrats the majority in the Senate. Now all Democrats have to do is vote in a bloc to pass it. But will they? There are a few conservative Democrats who don't always vote with the rest, the most notable of which is Joe Manchin of West Virginia. How is he going to vote? I suspect he will vote with the rest of the Democrats because West Virginia has a lot of poor, suffering people who need relief.

Republicans will lose this vote so why will they all vote against it? Aren't they concerned that some of their constituents will hold it against them - especially the ones who really need the relief? Evidently not. They believe they have a lock on power in their own states. Georgia should be a wake up call for them. Republicans at this point stand for nothing except loyalty to a would be dictator. They don't care about fiscal prudence or anything else except pure raw political and economic power and campaign donations from the rich. The rich want deregulation and tax cuts so that's what they stand for. They certainly don't stand for anything of value for most Americans. Supposedly, they are against deficit spending although they have no problem with deficit spending when it comes to tax cuts which benefit the rich.

So it comes to light that a great many of the insurrectionists were military or ex-military. Why should that be surprising? People that are processed through the military are proto-fascists because the military is not a democratic institution. It's a top-down command and control organization where people are trained to kill. This is the mindset to which they are trained and instructed. On the other hand I venture to guess that not too many of the insurrectionists were previously Peace Corps members. It's a totally different mindset when the group you belong too is structured so as to help people rather than to hurt, maim, kill or dominate them. The insurrectionists are jingoes, and this is the definition from dictionary.com which suits them to a T: "a person who professes his or her patriotism loudly and excessively, favoring vigilant preparedness for war and an aggressive foreign policy; bellicose chauvinist." Bellicose chauvinists are people trained in the military because the military trains them to be unquestionably subservient to those above them in command and unquestionably threatening towards anyone perceived to be the enemy. Social media and conservative media has made no bones about who they consider to be the enemy. That would be any prominent Democrat past or present.

For many ex-military their identity was forged in the military. Take retired Lieutenant Colonel Larry Rendall Brock, Jr., a Texas-based Air Force Academy graduate and combat veteran, for example. Brock was videoed in the Senate Chamber "wearing several patches on his combat helmet and body armor, including one bearing a yellow fleur de lis, the insignia of the 706th Fighter Squadron. He also wore several symbols suggesting that he lived in Texas, including a vinyl tag of the Texas flag overlaid on the skull logo of the Punisher, the Marvel comic-book character. The Punisher has been adopted by police and Army groups and, more recently, by white supremacists and followers of QAnon. ... Also found [was] a recently deleted Twitter account associated with Brock, with a Crusader as its avatar. “All those things together, it’s like looking at a person’s C.V. ..." And his C.V. was forged in the military.

The US needs to own up to the fact that it has trained generations of bellicose chauvinist jingoes because it has become, despite General Eisenhower's warnings, a militaristic state that seeks to control the whole world with bullying tactics whether they be sanctions or actual military force. Despite recently closing hundreds of bases in Iraq and Afghanistan, the United States still maintains nearly 800 military bases in more than 70 countries and territories abroad—from giant “Little Americas” to small radar facilities. The insurrectionists that attacked the Capitol were just trying to make US domestic policy mirror US foreign policy most exemplified by Mike Pompeo dictating orders to other countries. They liked the military; they loved the military, and they want US domestic policy to reflect the life they knew in the military. That's where their characters were formed, not in the Peace Corps. The Republican party has become a party of proto-militarists who yearn for a strong Commander-in-Chief who demonstrates military values. That would be a dictator or Supreme General as exemplified by Donald Trump or so they thought.

Off the Top of My Head

Taxing the Rich Will Lessen the Need for Deficit Spending

by John Lawrence, January 29, 2021

Billionaires are upset because their hedge fund ploys in the Wall Street casino went awry when a group of average Joes countered their short sales of GameStop. Oh the tears that were shed. Billionaires losing millions gambling? Outrageous! Bernie Sanders tweeted: "Oh look, another billionaire is mad that he might have to pay more taxes while children in America go hungry and veterans sleep on the street. Cry me a river," Joe Biden's $1.9 trillion COVID relief bill will mean a lot of deficit spending which can be offset, however, by taxing these billionaires. A financial transaction tax would raise $2.4 trillion over the next decade—"enough to make public colleges tuition free and cancel student debt."

Casino Capitalism Lesson 1: Selling short. Here's how billionaire hedge fund managers planned to make a killing. They knew that GameStop was losing money and probably going out of business. GameStop closed 321 stores in 2019 alone and planned on closing even more stores by the end of 2020. So knowing that GameStop's stock was going down (it didn't take a big brain to figure that out), they sold its stock short. What that means is that they "borrowed" the stock from people that already owned it. Then they sold the stock at its value at that time. Some time later when they would have to "return" the stock to those they borrowed it from, they planned to buy it back at a lower price (it having gone down in the meantime) and pocket the difference. One might ask why the original owners of the stock would loan it in the first place since they must have known that the stock would be worth less when it was returned to them.

However, a group of "amateur" investors foiled the plans of the billionaires by buying GameStop stock thereby bidding up the price making it worth more when the short sellers had to return it, not less. That would mean that the short sellers would lose money instead of making money. That's when the billionaires cried, "Ouch!" Then the "amateurs" who bid up the stock could sell it at the higher price and make money. Woo Haa! Leon Cooperman, whose net worth is estimated to be around $3 billion, sniffed that "the reason the market is doing what it's doing is, people are sitting at home, getting their checks from the government, basically trading for no commissions and no interest rates." In other words average people trading stocks are making the money that billionaires like him should have made. Boo Hoo!

Modern Monetary Theory maintains that all the money for the COVID relief bill could be raised from deficit spending because deficits don't matter without any need for increased taxation. Yet it would be prudent to raise taxes on the mega rich in order to decrease economic inequality which represents an enormous chasm between the billionaire class and everyone else. A new report found that the world’s 2,153 billionaires have more wealth than 4.6 billion people, underscoring the degree of global inequality. This would also offset any decrease in the value of the dollar that large deficit spending might bring about. In The Deficit Myth by Stephanie Kelton, she points out that the Federal Reserve which creates US dollars can never run out of money since the US dollar is a sovereign currency, but there is a concern about inflation if too much money is created which doesn't have a productive purpose in the economy. Since so many are unemployed and since there is a huge infrastructure deficit, this is not in danger of happening any time soon. There is no lack of money for government programs since they don't depend on tax flows, and money created by the Federal Reserve that ends up on the Fed's balance sheet never has to be paid back.

While the Fed can create as much money as it likes to bail out the banks without Congressional approval, which it did during the 2008 banking crisis, money created for government spending, such as the $1.9 trillion COVID relief bill, must have Congressional authorization. Fortunately, there is a process known as budget reconciliation which only requires a majority vote and the Democrats have the majority in the Senate. Therefore, the COVID relief bill cannot be filibustered by Republicans which they surely would do if they were in the majority. So it's clear that Republicans only represent the interests of the rich who will contribute to their campaigns and enrich them in return as long as they vote to nullify everything that might help the average person or raise taxes on them.

10 Bold Moves Biden Can Make Without Congress

by Robert Reich

 

Tuesday, January 19, 2021

We did it. We took control of the Senate from Mitch McConnell. Even so, Republicans may still be able to block key parts of Joe Biden’s agenda. But there are plenty of critical policies he can and must enact without them.

Biden’s first task is to undo Trump’s litany of cruel and disastrous executive orders. He has already announced he’ll rejoin the Paris Climate Accord, re-enter the World Health Organization, and repeal Trump’s discriminatory Muslim travel ban. And there are at least 48 other Trump policies that he can reverse on day one.

In addition, here are 10 critical policies Biden can implement without Congress:

FIRST: He can lower drug prices through Section 1498 of the federal code, which gives the government the power to revoke a company’s exclusive right to a drug and license the patent to a generic manufacturer instead. 

SECOND: He can forgive federal student loans – thereby helping to close the racial wealth gap, giving a financial boost to millions, and delivering a major stimulus to the economy. 

THIRD: He can use existing antitrust laws to break up monopolies and prevent mergers -- especially in Big Tech and the largest Wall Street banks.

FOURTH: He can institute pro-worker policies for federal contractors – who are responsible for a fifth of the economy – such as requiring a $15 minimum wage and paid family leave, and refusing to contract with non-union companies.

FIFTH: He can empower the Labor Department to aggressively monitor and penalize companies that engage in wage theft and unpaid overtime, and who misclassify employees as independent contractors – as Uber and Lyft do.

SIXTH: He can make it easier for people to get health care by eliminating Medicaid work requirements, reinstating federal funding to Planned Parenthood, and expanding access to Affordable Care Act plans. Then it’ll be up to us to push him to enact Medicare for All.

SEVENTH: He can ban the sale of public lands and waters for oil and gas drilling. He can further tackle the climate crisis by reinstating the 125 environmental regulations rolled back by Trump and directing federal agencies to deny permits for new fossil fuel projects, and halting all fossil fuel lease sales and permits.

EIGHTH: His Securities and Exchange Commission can reinstate its ban on stock buybacks – so that corporations are more likely to use their cash to invest in workers instead of enrich their shareholders. And he can rein in Wall Street by strengthening the Consumer Financial Protection Bureau and other financial regulators, while his Treasury Department can close many tax loopholes.

NINTH: He can address the cruelty of capital punishment by granting clemency to everyone on federal death row, effectively ending the death penalty with the stroke of a pen. He can address other injustices by having the Department of Justice implement mass commutations for low-level drug offenders, strengthening the department’s Civil Rights Division, and reining in rampant police misconduct through consent decrees. And he can undo some of the damage wrought by the racist war on drugs by directing his Attorney General to reclassify marijuana as a non-dangerous drug.

TENTH: He can reverse Trump’s cruel immigration agenda by restoring and expanding DACA and raising the yearly number of refugees who can be admitted. 

Even with control of the Senate, Democrats’ slim majority means that Republicans can still obstruct Biden’s policy agenda at every turn. Biden can and must wield his presidential powers through Executive Orders and regulations. The problems America is facing demand it. 

Off the Top of My Head

Why Joe Manchin is Crucial to Biden's Climate Plan

by John Lawrence, January27, 2021

Joe Manchin is a conservative Democrat from West Virginia, probably the most conservative Democrat in the Senate. So why would Joe, who has already signaled his opposition to getting rid of the filibuster, and represents a coal mining state, go along with Biden's climate plan? The answer is that Biden's plan for converting to renewable energy will create a helluva lot of jobs in West Virginia transitioning all those coal related jobs to renewable energy jobs. Make no mistake. Joe Manchin will become a team player after these assurances of massive job creation in West Virginia. Similarly, Biden will target other fossil fuel generating states and communities with massive renewable energy projects so that workers in the fossil fuel industry will be placated and mollified. They will become his biggest fans as millions of good paying, union jobs are created for them. The oil industry's attempts to push back will be futile. They can save money by not lobbying because it won't get them anywhere. Joe Biden holds all the cards.

The genius of going all out for climate change is that Biden is making it an issue of job creation. Not that climate change in and of itself is not the main issue of paramount importance. It's just that reframing it as a jobs issue will take the air out of the oil industry profiteers who are making millions off of the status quo. They like things just the way they are despite the global warming catastrophe that awaits us if we don't act post haste. Joe Biden: "When I think of climate change, I think of jobs." Making John Kerry a Climate Change Envoy to the rest of the world is important because climate change cannot be forestalled within the borders of the US alone. There must be a coordinated, cooperative effort, and, in particular, China, Russia and India must be brought into the deal. What, you mean we can't afford to have any more enemies? We must make friends out of enemies using diplomacy rather than the bullying tactics of the Trump administration if we and the rest of the planet are to survive. Yes and it will nullify the ratinale of the bloated military-industrial complex. Instead of defunding the police, we should defund or reduce the funding of it to help pay for the Green New Deal.

So how are we going to pay for it? That seems to be the outstanding question. Thankfully, we have a former Chairman of the Federal Reserve as Treasury Secretary, Janet Yellin. She knows where the bodies are buried, so to speak, at the Fed. She knows that taxes do not have to be raised to pay or it, at least taxes on the poor and middle class. Taxes on the rich need to be raised, but more to reduce inequality than to pay for the response to climate change. Modern Monetary Theory has demonstrated that the US can never run out of money because it is a sovereign currency issuer. The Fed, as Janet Yellin well knows, can just create the money with a few keystrokes on a computer. This power, however, cannot be used irresponsibly. Inflation must be dealt with, and there are a number of arrows in the Fed's quiver to do this as was done during the build-up to WW II. As Stephanie Kelton has pointed out in her book The Deficit Myth, deficits don't matter. They are simply an accounting entry on the Fed's balance sheet. An unlimited amount of money was available when the banking crisis that caused the Great Recession in 2008 occurred. The Fed doesn't need tax receipts in order to create money which can then be transferred to the Treasury's account at the Fed. However, such transfers do have to be authorized by congress whereas the bank bail-outs did not require such authorization since the Fed is the loaner of last resort to the banks. The Fed can provide liquidity to the banking system whenever it thinks that that is prudent.

In the How to Pay for the Green New Deal the authors write: "Further, in what follows we do not assume that we need to raise taxes simply because government spending rises. The position we take is that taxes should be raised to fight inflation that would result from excess demands on resources. We would not raise taxes merely to balance spending with tax revenue. If more spending does not generate inflationary pressure, we do not need to raise taxes. In any event, we argue below that tax hikes are not necessarily the best way to counteract inflationary pressures should they arise." So tax increases are not necessary to fund a Green New Deal except possibly if the increased government spending would cause increased inflation, but there are other tools available to deal with inflation. Tax increases on the rich, however, are necessary in order that inequality doesn't get even worse than it is now. A recent report showed: "At $4.1 trillion, the total wealth of America’s 660 billionaires is two-thirds higher than the $2.4 trillion in total wealth held by the bottom half of the population, 165 million Americans." Creating new jobs to fight global warming ill help to mitigate both the climate crisis and the inequality crisis, but taxes on the rich will both decrease the need for money creation by the Fed and help to fund a Green New Deal.

Off the Top of My Head

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.

Off the Top of My Head

Was the Insurrection a Blessing in Disguise?

by John Lawrence, January 21, 2021

What could have been a horrible tragedy ended up being just a horrible spectacle. But what if, instead of showing up January 6, the mob showed up January 20 catching security off guard the way they did at the Capitol?  As it turned out, Congress persons, in a show of defiance, went ahead with their business on the same day, and the inauguration went off without a hitch restoring hope and confidence in government. Result: insurrection defeated with very little loss of blood. The second thing is that now domestic terrorists and white supremacists are on the FBI's radar the way they never were before.Those who broke into the Capitol will be rooted out and sent to jail. Others will be closely watched. I never thought I'd be singing the praises of the FBI, but I'm so happy that they, the Intelligence agencies and the American people are finally aware of the real threats to America and not just imagined ones.

The one possible shred of a rationale that the election was stolen from Trump is that election laws were changed—legally—by the states to allow more mail-in balloting. This was motivated by a need to save people from congregating due to the coronavirus. The net effect was that more people, especially poor working people, got to vote than ever before. This probably made the difference in who won, but in a democratic society ideally every legally qualified voter should be able to vote. Republicans have always used voter suppression techniques to prevent this from happening. Republican operative Paul Weyrich famously said, "I don't want everybody to vote. Elections are not won by a majority of the people. They never have been from the beginning of our country and they are not now. As a matter of fact, our leverage in the elections quite candidly goes up as the voting populace goes down." Well, in this election, unfortunately for Trump, pretty close to a majority of people actually voted. Now Republicans will be doing everything in their power to roll back those election laws so that mail-in voting will not be available in the next election. Democrats need to work very hard to make sure that mail-in voting stays in place permanently and even is expanded. This will insure that the demographic change that favors Democrats will be reflected in the electorate.

I thought that, since the Democrats had majorities in both Houses of Congress, getting legislation passed and signed into law would be a breeze. The only hang-up would be the filibuster, but the filibuster can be nullified by a simple majority vote. Easy peasy. Well, not so fast. There are a couple of conservative Democrats, the most notorious of which is Joe Manchin, Democrat of West Virginia. He has already said he won't vote to suspend the filibuster rule. This leaves budget reconciliation as the only way to get a bill passed by majority rule in the Senate. This will probably be used for the COVID relief bill which will probably pass. It's unclear if it can be used a second time, and, if it were, would Manchin vote with the Democrats? Even then budget reconciliation cannot be used for non budgetary issues.  What it boils down to is that this one man, Joe Manchin, has extraordinary control over the legislative process. Republicans will probably be united in the Senate and be as obstructionist to Democratic initiatives as they were during the Obama administration.

Meanwhile, the FBI is rounding up the mob that violated the Capitol. I want every one of them that went beyond the police barrier, even if they didn't go into the Capitol, rounded up and brought to justice. Some of them are so stupid like one real estate agent from Dallas who even advertised her business live on social media as she was entering the Capitol! Shaman Qanon begged Trump for a pardon. Trump could have blanket pardoned all of them if he had wanted to. After all they attacked the Capitol in Trump's name and at his urging. But when all was said and done, Trump abandoned them to their own fates, something they can ponder while spending 20 years in jail. Something else - I want the FBI to track down everyone who calls or emails someone with a death threat. It seems that a lot of this is happening, and I want the FBI to track down and prosecute all these bozos too. If it takes a Federal law to make this legally all encompassing, then one should be enacted.

Off the Top of My Head

The Sweet Serendipity of Joe Biden

by John Lawrence, January 20, 2021

He is no longer a young man with raging ambition, but an old man trying to reconstruct democracy. His young man ambitions didn't pan out, but he was still available to save a nation from itself. Biden comes to the Presidency after the most destructive administration in American history. Biden is there to serve, not to aggrandize himself. There is so much low hanging fruit that Biden will go down as a great President just for picking up the pieces. There is so much to do and there is so much that will get done rather quickly. Biden is known for working across the aisle, but don't be fooled that that will be a sign of weakness. He won't have to go hat in hand to Republicans this time. If Republicans don't want to cooperate, the Democrats have the tools to say "OK, we're going to go ahead and do it anyway." They won't be able to slow Joe down the way they slow walked Barack Obama for 8 years. They won't be able to get him to "triangulate" the way they had Clinton do. No, Democrats are wise to Republican obstructionism. In short Republicans will not be able to block the Democratic agenda.

Finally we have an administration that wants to just get the work done as opposed to one that just wanted to aggrandize itself. That version of solipsism flamed out  two weeks ago when a bunch of wahoos tried to take over the US Capitol, egged on by the last President. So America has turned a page, and the stark difference is black and white. Instead of "making America great again" Trump trashed America. Now it is up to Joe Biden and his fellow Democrats to actually make America great again both at home and in the eyes of the rest of the world. And it's not just about America. It's about whether or not the planet is to survive as a habitable home for human beings. This means cooperating with other countries, not ginning up another Cold War to justify a bloated military establishment. In a sense the outcome of the militarization of America was seen two weeks ago as many of its products tried to perform a coup d'etat and the military establishment itself was caught flat footed.

So much has become evident in a very short time. The FBI is tracking down the rioters who will soon face American justice in a jail cell. I don't think Trump pardoned the Shaman who had his face all over the media despite his plea to his "great leader". America is about to be saved from itself. Even most of those who voted for Trump are suffering from economic inequality and the ravages of COVID. Their problem is that they will have to adjust to a demographic shift in American society. It doesn't mean that they will be lesser, but they will have to be content with being equal and sharing this remarkable country with brown, black and people of foreign cultures. As their lots in life improve during an administration that will do its best to lift up all Americans especially the poor, impoverished and lower middle class "deplorables", their mindsets will change. They will start to realize how they've been duped by the last President. As media outlets that spew conspiracy theories and lies are clamped down on, their diet of angry raw meat will dry up. Twitter feeds will vanish. As Americans realize that their military and intelligence establishments are misdirected, the true threats to America will be acknowledged and budgets will be right sized. White supremacy and domestic terrorism are finally on the radar of the FBI and American intelligence establishments. They've had their moment in time when they were encouraged and enabled by an American President.

Joe Biden is a devout Catholic. I admire the Catholic church for its emphasis on Jesus' social gospel although I'm not a member. I'm not a member of any church although to the extent that any religion is in the business of lifting up "the least of us", I honor it. The words of Pope Francis are appropriate here.

"True, a worldwide tragedy like the Covid-19 pandemic momentarily revived the sense that we are a global community, all in the same boat, where one person’s problems are the problems of all. Once more we realized that no one is saved alone; we can only be saved together. As I said in those days, “the storm has exposed our vulnerability and uncovered those false and superfluous certainties around which we constructed our daily schedules, our projects, our habits and priorities… Amid this storm, the façade of those stereotypes with which we camouflaged our egos, always worrying about appearances, has fallen away, revealing once more the ineluctable and blessed awareness that we are part of one another, that we are brothers and sisters of one another”."

Joe Biden is here to serve, to make the world a better place. You can't ask for more than that. There is much to be done.

From Reconciliation to a 'Nuclear Strike on the Filibuster': Progressive Memo Details Steps Biden Can Take to Defeat GOP Obstruction

Published on Tuesday, January 19, 2021

by Common Dreams

"Biden was elected with a mandate to break gridlock and deliver results. He should use it."

by Jake Johnson, staff writer

 

21 Comments

President-elect Joe Biden, with Vice President-elect Kamala Harris, introduces nominees for their science team on January 16, 2021 in Wilmington, Delaware. (Photo: Angela Weiss/ AFP via Getty Images)

With Senate Republicans already indicating that they will attempt to block passage of President-elect Joe Biden's newly released $1.9 trillion coronavirus relief package, a trio of progressive organizations on Monday released a memo outlining steps the incoming president can take to overcome GOP obstruction and "deliver tangible results that improve Americans' lives."

"We are glad President-elect Biden is ready to start addressing the desperate needs of the American people and put forth a Covid aid proposal which begins to address the many issues we face," reads the document (pdf) crafted by Justice Democrats, the youth-led Sunrise Movement, and New Deal Strategies. "We hope ten Senate Republicans will support it, but are not holding our breath. The big question is, what happens when Republicans block Biden?"

With Democrats set to take unified control of the federal government thanks to runoff victories by Sens.-elect Raphael Warnock and Jon Ossoff of Georgia earlier this month, progressives have argued that the party can no longer point to Republican intransigence as an excuse for failing to advance its agenda.

"A quick strike against the filibuster in January will set Biden up to shepherd his entire agenda through regular order, with full committee involvement and proper levels of oversight and transparency."
—Justice Democrats, Sunrise Movement, New Deal Strategies

In their new memo, the progressive organizations outlined several strategic paths available to the incoming Biden administration should Republicans stand in the way of coronavirus relief and other key legislation.

One option, the groups said, is to weaken the $1.9 trillion coronavirus relief offer in a bid to win Republican support, which Biden has committed to seeking out despite warnings against compromising with the party that abetted the deadly January 6 assault on the U.S. Capitol.

"We hope Biden rejects the first option out of hand," the groups said. "Watering down the proposals in a hunt for Republican support is a bad idea on both substance and politics. The package Biden has proposed is a start to the aid America needs and it is popular. We should not play into Republicans' hands by delivering less aid while making the bill less popular."

An alternative to watering down a relief proposal that has already been criticized as inadequate is to try to pass the package through budget reconciliation, an expedited process that is not subject to the filibuster and therefore requires only a simple majority vote.

The trio of progressive groups argued that "reconciliation is a tempting option but it is ultimately a path to creating two classes of issues, with civil rights, D.C. statehood, and many other critical issues relegated to second-class status," given Senate rules limiting the kinds of legislation that can be passed through reconciliation.

"If Biden uses reconciliation, which we hope he does not, he must do so aggressively," the groups said, "with the intent of using it as a backdoor to eliminating the supermajority threshold for all issues."

By far the best way to defeat GOP stonewalling, the progressive coalition argued, is to "get rid of the filibuster immediately," a rule change that would require a simple majority vote. To achieve that, every Senate Democrat would need to vote yes and Vice President-elect Kamala Harris would have to break the tie, assuming all Republicans oppose the move.

"A quick strike against the filibuster in January will set Biden up to shepherd his entire agenda through regular order, with full committee involvement and proper levels of oversight and transparency," the groups said.

While Biden has said he would be open to eliminating the filibuster, several Democratic senators—including Sens. Joe Manchin (D-W.Va.), Kyrsten Sinema (D-Ariz.), and Jon Tester (D-Mont.)—have voiced opposition to such a reform despite its popularity among Democratic voters.

Justice Democrats, Sunrise, and New Deal Strategies argued that Biden "has the credibility and the political capital to bring along" the senators currently opposed to scrapping the filibuster.

"Every other path leads to needless complications and worse results for the American people," the groups warned. "Biden was elected with a mandate to break gridlock and deliver results. He should use it."

Read the full memo:

We are glad President-elect Biden is ready to start addressing the desperate needs of the American people and put forth a Covid aid proposal which begins to address the many issues we face. We hope ten Senate Republicans will support it, but are not holding our breath. The big question is, what happens when Republicans block Biden? Biden has chosen to reject austerity politics. We hope that he will continue to stick to that approach, and ​go big always​.

When Republicans deny Biden the ten GOP votes he will need to advance his Covid aid package, Biden will have three options:

1. Dramatically weaken the aid package and deliver worse results for the American people
2. Seek to pass the entire package through budget reconciliation
3. Reform Senate rules to get rid of the supermajority threshold, and pass the package through regular order.

Do not water down. ​We hope Biden rejects the first option out of hand. Watering down the proposals in a hunt for Republican support is a bad idea on both substance and politics. The package Biden has proposed is a start to the aid America needs and it is popular. We should not play into Republicans' hands by delivering less aid while making the bill less popular. When the Obama administration decided to deliver a smaller ARRA package in exchange for paltry Republican support, it was a bad trade. Democrats got no credit politically for a bipartisan deal,and Americans judged Democrats harshly in the 2010 midterms in large part because they did not see enough improvement in their own economic situation. The same is true now: Democrats will be judged in the 2022 midterms on whether they deliver tangible results that improve Americans' lives. Their guiding principle should be to always go big. As former Obama strategist David Plouffe ​said​, "If you do small things and you do the bare minimum, you're probably going to pay a price for that. It's bad for the country and bad politics."

Do not waste precious time. ​President Obama recently admitted that he and Democratic Party leadership wasted precious time negotiating with moderate Republicans like Chuck Grassley and Olympia Snowe in order to provide the Affordable Care Act bipartisan cover. Biden and Democratic Party leadership have essentially nine months to act before the 2022 election cycle kicks into gear. There's nothing that would please Mitch McConnell more than to allow Republicans to run out the legislative clock on key Democratic priorities.

Reconciliation relegates critical issues to second-class status. ​Reconciliation is a tempting option but it is ultimately a path to creating two classes of issues, with civil rights, D.C. statehood, and many other critical issues relegated to second-class status. If Biden uses reconciliation, which we hope he does not, he must do so aggressively, with the intent of using it as a backdoor to eliminating the supermajority threshold for all issues. While much of this bill might be able to be achieved through reconciliation, a package of this size is likely to run afoul of the rules. If Biden does use reconciliation, he should apply the principle of going big always, and be prepared to go nuclear to change reconciliation rules if and when the Senate Parliamentarian strikes down key provisions, rather than abandoning them.

The larger problem with reconciliation is that if we only use reconciliation and do not reform the filibuster, certain kinds of legislation will be allowed to avoid the filibuster while other critical issues like civil rights and statehood are left to die by the filibuster. This creates a first- and second-class status for progressive issues, with civil rights, statehood and many climate change solutions relegated to second-class status.

If reconciliation is pursued, it must be with a mind to either limbering up Senate Democrats for a full-blown nuclear strike on the filibuster, or expanding the use of reconciliation so extensively that it can be used for all issues (which is, in effect, going nuclear).

Get rid of the filibuster. ​It would be far healthier, cleaner, and easier to explain politically to simply reform or get rid of the filibuster immediately, and proceed to pass Biden's agenda through regular order—including must-pass civil rights bills, climate solutions and statehood. A quick strike against the filibuster in January will set Biden up to shepherd his entire agenda through regular order, with full committee involvement and proper levels of oversight and transparency. Biden has the credibility and the political capital to bring along the small number of wavering senators. Every other path leads to needless complications and worse results for the American people. Biden was elected with a mandate to break gridlock and deliver results. He should use it. Just do it—reform the filibuster and deliver results to the American people.

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Why Biden Can’t Govern from the Center

by Robert Reich
Sunday, January 17, 2021

I keep hearing that Joe Biden will govern from the “center.” He has no choice, they say, because he’ll have razor-thin majorities in Congress and the Republican party has moved to the right.

Rubbish. I’ve served several Democratic presidents who have needed Republican votes. But the Republicans now in Congress are nothing like those I’ve dealt with. Most of today’s GOP live in a parallel universe. There’s no “center” between the reality-based world and theirs.

Last Wednesday, fully 95% of House Republicans voted against impeaching Trump for inciting insurrection, even after his attempted coup threatened their very lives.

The week before, immediately following the raid on the Capitol, more than 100 House Republicans and several Republican senators objected to the certification of Biden electors in two states on the basis of Trump’s lies about widespread fraud.

Prior to the raid, several Republican members of Congress repeated those lies on television and Twitter and at “Stop the Steal” events.

Trump has remade the Republican party into a white supremacist cult living within a counter-factual wonderland of lies and conspiracies.

According to various surveys, more than half of Republican voters – almost 40 million people – believe Trump won the 2020 race or aren’t sure who won; 45% support the storming of the Capitol; 57% say he should be the Republican candidate in 2024.

In this hermetically sealed cosmos, most Republicans believe Black Lives Matter protesters are violent, immigrants are dangerous and climate change doesn’t pose a threat. A growing fringe openly talks of redressing grievances through violence, including QAnon conspiracy theorists, of whom two are newly elected to Congress, who think Democrats are running a global child sex-trafficking operation.

How can Biden possibly be a “centrist” in this new political world?

There is no middle ground between lies and facts. There is no halfway point between civil discourse and violence. There is no midrange between democracy and fascism.

Biden must boldly and unreservedly speak truth, refuse to compromise with violent Trumpism and ceaselessly fight for democracy and inclusion.

Speaking truth means responding to the world as it is and denouncing the poisonous deceptions engulfing the right. It means repudiating false equivalences and “both sidesism” that gives equal weight to trumpery and truth. It means protecting and advancing science, standing on the side of logic, calling out deceit and impugning baseless conspiracy theories and those who abet them.

Refusing to compromise with violent Trumpism means renouncing the lawlessness of Trump and his enablers and punishing all who looted the public trust. It means convicting Trump of impeachable offenses and ensuring he can never again hold public office – not as a “distraction” from Biden’s agenda but as a central means of reestablishing civility, which must be a cornerstone of that agenda.

Strengthening democracy means getting big money out of politics, strengthening voting rights and fighting voter suppression in all its forms.

It means boldly advancing the needs of average people over the plutocrats and oligarchs, of the white working class as well as Black and Latino people. It means embracing the ongoing struggle for racial justice and the struggle of blue-collar workers whose fortunes have been declining for decades.

The moment calls for public investment on a scale far greater than necessary for Covid relief or “stimulus” – large enough to begin the restructuring of the economy. America needs to create a vast number of new jobs leading to higher wages, reversing racial exclusion as well as the downward trajectory of Americans whose anger and resentment Trump cynically exploited.

This would include universal early childhood education, universal access to the internet, world-class schools and public universities accessible to all. Converting to solar and wind energy and making America’s entire stock of housing and commercial buildings carbon neutral. Investing in basic research – the gateway to the technologies of the future as well as national security – along with public health and universal healthcare.

It is not a question of affordability. Such an agenda won’t burden future generations. It will reduce the burden on future generations.

It is a question of political will. It requires a recognition that there is no longer a “center” but a future based either on lies, violence and authoritarianism or on unyielding truth, unshakeable civility and radical inclusion. And it requires a passionate, uncompromising commitment to the latter.

Off the Top of My Head

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.

Off the Top of My Head

Bernie Sanders, Budget Reconciliation and Modern Monetary Theory

by John Lawrence, January 18, 2021

Joe Biden will have no trouble from Congress in passing his $1.9 trillion relief bill. That's because Democrats control all 3 branches, and the filibuster is neutered due to "budget reconciliation." This allows a spending bill to be fast tracked through Congress without the possibility of a filibuster. According to the Center on Budget and Policy Priorities: "The Senate can consider and pass reconciliation bills relatively quickly and with only a simple majority, rather than the three-fifths majority often needed for controversial legislation. That’s because reconciliation legislation isn’t subject to filibuster. Under general Senate rules, legislation can be stalled by virtually unlimited debate and the offering of numerous amendments, with a three-fifths majority vote required to invoke “cloture,” thereby limiting debate and blocking non-germane amendments. For a reconciliation bill, however, the Congressional Budget Act limits Senate debate on the bill to 20 hours and limits debate on the subsequent compromise between the two houses to ten hours."

Modern Monetary Theory (MMT) has shown that deficits don't matter. At least George W Bush didn't think so when he used the budget reconciliation process to give huge tax breaks to the rich which significantly increased the deficit and reduced income to the Federal government from taxes. The use of budget reconciliation did an end run around PAYGO which requires the Federal government to balance its budget and the debt limit which also constrains Federal spending. Both conservatives and liberals will be enthused over the fact that MMT proclaims that either tax reduction or government spending is good for American society (up to a point) even though the debt limit or PAYGO may be violated. This is because government is effectively adding money to the private sector which drives economic activity.

Bernie Sanders and Alexandria Ocasio-Cortez are very familiar with not only budget reconciliation but also MMT because one of its chief adherents, Stephanie Kelton who wrote the book, The Deficit Myth, previously was a Senate advisor to Bernie on the Senate Budget Committee. On December 26, 2014, Kelton was designated as Chief Economist for the Democratic Minority Staff of the Senate Budget Committee, a post that she held in 2015 and early 2016, when she left that position to become an economic advisor to the Bernie Sanders campaign. So the American economy is about to get a shot in the arm that will mostly benefit poor and middle class people (whereas the Bush tax cuts primarily benefited the rich) much to the chagrin of conservatives that hold to the idea that government deficit spending should only benefit the rich through tax cuts.

MMT contends that, since the Federal Reserve creates money by keystokes on a computer and the US dollar is a sovereign currency, the US government can never run out of money. Treasury bonds can always be sold to cover deficits, and, if they can't be sold to the general public, they will end up on the Fed's balance sheet where they may remain forever as an accounting entry. Even the interest paid on Treasury bonds, which is now approximately zero, is not a consideration. Interest on Treasuries owned by the Fed is remitted to the Federal government anyway. So now is the time for massive spending by the US Federal government to 1) expedite recovery from COVID; 2) jump start the economy; and 3) expedite a global response to global warming by converting to renewable energy on all levels including:

"replacing fossil-fuel engines with electric in all public and private 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"

And this is not to mention that solar, wind and other forms of renewable energy need to replace fossil fuel electric generating plants.

There is no time to lose. The incoming administration has a lot on its plate. In addition to that they have to run an impeachment trial in the Senate. Let's hope it doesn't slow down any of Joe Biden's initiatives. With Bernie as the Chairman of the Senate Budget Committee, armed with a knowledge of MMT, we can look forward to restoring the US' standing in the world community as well as restoring an economy that works for the poor and not just the well heeled, getting the pandemic under control and mitigating climate change. Thank you Bernie and Alexandria Ocasio-Cortez.

Off the Top of My Head

Problems of American Democracy

by John Lawrence, January 16, 2021

My Dad taught a course once with the above name. The major problem now is social media. Social media allows like minded folks to find each other, and, if they are the type that wants to overthrow the government, social media allows them to organize. In addition the First and Second Amendments enable them. Free Speech must be limited and those limitations need to be made clear and evident. As for the Second Amendment, it has to be made clear that this doesn't give gun owners carte blanche. It's ridiculous that they should be able to open carry inside a state Capitol. As for social media, their algorithms encourage the gathering of like minded domestic terrorists in the same way it allowed ISIS to conspire and attract disaffected Muslims.

Facebook in particular has allowed white supremacist and domestic terrorist groups to find each other, conspire and flourish. They encourage like minded people to "friend" as many people as possible. Then if one of them makes a cleverly hateful or conspiratorial poster, they can "share" it with everyone in their group of friends. Even a Russian hacker could put up a hateful poster and share it among hundreds or thousands of people. The more people it's shared among, the more Facebook brings eyeballs to their app, and the more money they make. Facebook's profits are predicated on an advertising model in which they get paid every time a person clicks on their app. People are routinely notified by email and other means that one of their "friends" has posted something even though their friend may only have "shared" it. Empty headed sympathizers of domestic terrorists or white supremacists have only to share someone else's original creations. Meanwhile, Facebook doesn't want to diminish their profits by either changing their highly profitable algorithms or hiring more people to police their site and take down hate speech, untruthful conspiracy theories or the organizing of domestic terrorists. That would diminish their profits.

Time magazine reported:

"At a hearing of the House Committee on Homeland Security in September 2019, Soufan urged lawmakers to take the threat more seriously. The following month, 40 members of Congress signed a letter calling—unsuccessfully—for the U.S. State Department to designate Azov [ a right wing group based in Ukraine] a foreign terrorist organization. “Azov has been recruiting, radicalizing, and training American citizens for years,” the letter said. Christopher Wray, the director of the FBI, later confirmed in testimony to the U.S. Senate that American white supremacists are “actually traveling overseas to train.”

"The hearings on Capitol Hill glossed over a crucial question: How did Azov, an obscure militia started in 2014 with only a few dozen members, become so influential in the global web of far-right extremism? TIME, in more than a dozen interviews with Azov’s leaders and recruits, found that the key to its international growth has been its pervasive use of social media, especially Facebook, which has struggled to keep the group off its platform. “Facebook is the main channel,” says Furholm, the recruiter.

"In a statement to TIME, Facebook defended its recent attempts to deal with the proliferation of right-wing extremists, saying it has banned more than 250 white-supremacist groups, including Azov. “As they evolve their efforts to return to the platform, we update our enforcement methods with technology and human expertise to keep them off,” the statement said."

Well, I guess Facebook isn't trying hard enough. It doesn't want to change its lucrative model and the lucrative and profitable algorithms that have made them billions of dollars. What was purportedly supposed to be a platform for sharing family pictures among real actual friends and perhaps original free speech has become a model that's used by groups seeking to organize to overthrow governments. Facebook and YouTube played a role in creating, aiding and abetting ISIS. As the story continues:

"[Azov adherents] were not the only extremists to embrace social media in 2014. When the Islamic State declared a caliphate in the Middle East that year, it began posting propaganda on social networks—mashing together memes, religious verses and scenes of gratuitous violence. The approach took the platforms by surprise, and for a time the caliphate was able to lure a class of disaffected young Muslims to fight. But by 2017, both Facebook and YouTube had developed algorithms to detect Islamic extremist material, after facing significant pressure from Western governments to act.

"No government, least of all that of the U.S., put similar pressure on social media platforms to stamp out white supremacy. One legacy of the 9/11 attacks was that many counter-terrorism agencies equated terrorism with Islamic extremism, allowing white supremacy to fly under the radar just as social media platforms like Facebook were giving the movement access to a bigger audience than ever before. “In a way, Facebook tracked the failed counter-terrorism policies of the Western world,” says Heidi Beirich, the director of an advocacy group called the Global Project Against Hate and Extremism.

"In its statement to TIME, Facebook said it began using its algorithms to detect Azov content after designating it a dangerous organization in 2016. But well after that date, members of white-supremacist groups, including Azov, were still able to evangelize on the platform.

"In some cases, Facebook’s algorithms actually nudged users into joining these groups. In an internal presentation in 2016, its analysts looked at the German political groups on the platform where racist content was thriving. They found that within this segment of Facebook, 64% of the people joining extremist groups were finding them through the platform’s own recommendation tools. “Our recommendation systems grow the problem,” the analysis states, according to a report in the Wall Street Journal that cited the internal document. In its statement to TIME, Facebook said the report was limited in scope and suggested the findings were misleading. It said it had adjusted its algorithms to stop pushing people toward known extremist groups."

Facebook has allowed right wing hate groups to proliferate on its platforms while doing too little, too late to eliminate their presence. It and other social media giants need to be regulated by government in order to rid the world of the threats to domestic order and constitutional government that they represent. “Because this material was allowed to proliferate so long, in particular on Facebook, we now have thousands, millions of people who have been sucked into the world of white supremacy and other forms of extremism,” says Beirich. “That problem now exists. That’s the fallout from not having acted originally.” Meanwhile, social media allows "friends" to schedule "events" that may or may not be gathering places for domestic terrorists and white supremacists. Friends, indeed!

Off the Top of My Head

Pence Will Likely Not Pardon Trump Even If He Resigns

by John Lawrence, January 11, 2021

When Richard Nixon resigned his Presidency in 1974, his successor, Gerald Ford pardoned him for any and all crimes connected with the Watergate break-in. But this will not happen in Trump's case because he threw Pence under the bus in the January 6 insurrection. Trump has immense criminal and legal liability for his actions on that day. As Pence presided over the Senate, domestic terrorists were breaking in and chanting "Hang Mike Pence." Pence's life as well as those of Congress persons, staff and others were in danger. Pence's wife, daughter and other family members were in the Capitol that day. Yet Trump never called Pence to warn him, check on him, see how he was doing, make sure he and his family were safe. Reportedly, he hasn't spoken to Pence since.

So it remains to be seen how many people Trump will pardon on his way out the door. Probably family members and Rudy Giuliani but not any of the rioters. Even though they were doing his bidding, he cares nothing for them. He used them; they were just tools as far as he was concerned. The people who spoke at Trump's "Save America" rally, including Congressman Mo Brooks of Alabama who declared: “Today is the day American patriots start taking down names and kicking ass", are certainly culpable. But I don't think Trump will pardon him. He'll just be thrown under the bus like many of Trump's other friends and associates.

The people marching through the halls of Congress carrying flags and chanting "USA. USA." are not patriots. To be a patriot it is not enough to carry a flag and shout USA. The true patriots were the Congress persons themselves who didn't let a little insurrection that put their lives in danger prevent or deter them from carrying out the nation's business certifying Joe Biden and Kamala Harris as the next President and Vice President of the United States. I wrote previously, "What is patriotism? Is it just saluting the flag, singing the national anthem, getting choked up when the US wins a gold medal at the Olympics, stuff like that? All these expressions of patriotism are merely lip service. They are insubstantial. Or is it patriotic, as George W Bush said, to go shopping?"  I have suggested that what we need is a planetary patriotism. We must care about the whole planet and its peoples especially in view of the threats which affect the whole planet: pandemics and global warming. We need also to be concerned about people living in poverty planet wide, and about the 70 million people who are refugees largely due to US started wars in the Middle East and their continuations.

The US has lost the moral high ground and shouldn't be lecturing the rest of the world about human rights. The US has many human rights problems itself including the disenfranchisement of African American and Native Americans both politically and economically. I expect that the Biden administration will do much more to create peace in the world and use diplomacy than the Trump administration, which attempted to bully other countries. Sanctions also should be taken off the table. If we can have treaties with Russia over nuclear weapons, why can't we have a treaty over internet hacking? The  trillion dollars a year we spend on the military-industrial complex did nothing to stop the pandemic or domestic terrorism. The enemy is not so much out there as it is in here. The US needs to get on the right track and associate peacefully with other countries in order to combat our mutual enemy - global warming. We need to create peace in the world, not fuel petty animosities and cold wars. The true threat is domestic terrorism not terrorism from abroad. Money needs to be spent on the former rather than the latter.

I wrote previously:

Patriotism as now defined is based on militarism. Patriotic displays are expressions of militarism. Love of country is expressed in jingoistic terms: "We're number one!" Instead, war and militarism should be thought of as necessary evils instead of exalting them. The goal should be to eliminate them while at the same time building the foundations for peace and prosperity in the world. There should be opportunities for those who want to serve their country by eliminating poverty, building infrastructure, saving the environment, curing the sick and extending helping hands to the underserved and downtrodden."

"God bless America."

Off the Top of My Head

My Horse, My Horse, My Kingdom for a Horse

by John Lawrence, January 9, 2021

Only in Trump's case: My Twitter Account, My Twitter Account, My Kingdom for a Twitter Account. Trump has been emasculated. He's been banned from Twitter, Facebook, Shopify and God knows what else. As well he should be. This guy was not so much a President as he was a Tweeter-in-Chief and rabble rouser. He roused a lot of rabble a few days ago when he almost had Congress persons killed and taken hostage. Who thought it was a good idea to have a rally on the day the votes for the next President were to be certified? Well, Donald Trump of course. He knew what he was doing. It's just that his doofus supporters were inept at coup planning or the outcome might have been entirely different. Trump, Rudy Giuliani ("trial by combat"? he was wrong and, according to his own words, has been made a fool of and should go to jail) and Don Jr should be criminally implicated for inspiring to riot. Trump should be criminally implicated also for not calling out the National Guard till it might have been too late. It seems that only he had the authority to do so, and he was allowing sufficient time for his acolytes to do their dirty work.

Joe Biden definitely has his work cut out for him. He has to deal with a global pandemic which may be mutating. He has to deal with 40 years of neoliberal economic policies which have made the rich richer and the poor homeless. And he has to deal with a cult of domestic terrorists. To those who think that China, Russia and Iran are the problems, I've got news for you: the American people, a huge contingent of them, are the problem. Gun violence is the problem. Trillions of dollars wasted on a sitting military, on the grounds that we have enemies who justify this, is the problem. The policies of George W Bush who caused millions of deaths in the Middle East with the result of ongoing chaos is the problem. It's enough to make your head spin. While the US is in chaos as a society, the rest of the world is moving forward. While Joe Biden must play catch up, the rest of the world is moving ahead. While much of the US citizenry is composed of cultish dingbats, the rest of the world are very clear eyed by comparison. While the US culture and militarization of mindset is descending into a cesspool of self indulgence, people in the rest of the world are using their brains and feelings of compassion for their fellow inhabitants of earth to move ahead. While religious bigots use Jesus as an excuse to do dastardly deeds in the same way that the Ku Klux Klan has always done, the rest of the world is coming from a more enlightened attitude toward ethics and morality, religion or no religion.

The result is that the US has become the equivalent of a Third World country with an outsized and bloated military. Pride goeth before a fall, and the US, if it cannot get its act together, will go the way of the Roman Empire when it descended into chaos. The best the US can hope for coming out of the putrefaction of the Trump era is to be a good partner with the rest of the world as we solve enormous problems including climate change and poverty. No more yelling "We're Number One" when clearly a significant number of us are spoiled brats and worse. Let's turn the military culture into a peace culture. Let's take megaphones away from demagogues the way Twitter has denied Trump his Twitter account. Let's police social media.

Social media has not ennobled the American people; instead it has allowed a large number of Americans to be turned into a cult the way radio allowed Hitler in the 1930s to encultify, to coin a word, the German people. Cults demand that people pay obeisance to a leader. Kim Jong Un is sitting there thinking that the US is just as big a cult as North Korea. The remedy for this is that people have to be educated to think critically and not to follow some powerful figure with a huge megaphone whether it be Hitler, Mussolini or Donald Trump. Trump's megaphone has been taken away the way a parent takes away a child's favorite toy if he or she misbehaves. Trump's following have a militarized mindset. I would lay dollars to doughnuts that most of them have served in the military the way Ashli Babbit, the rioter who was shot, did. Perhaps if young Americans were required to do two years of national service or service in the Peace Corps instead of being incentivized to become Marines, sailors and airmen, attitudes would change. Instead of their minds being molded to taking commands from superior officers, they might develop an alternative mindset in which serving the poor and unfortunate of the world would be their highest priority.

The US has become a degenerate society, composed of unthinking followers of a strongman who had promised them that they're number one, Americans are number one and we're the greatest society and nation on earth. This is misguided thinking doomed to failure. This is the fall of the Roman Empire, the people of which had become a bunch of degenerate spoiled brats. There are good people here of course. The new administration represents a great many of them. There are many changes that need to be made in US society that they will try to change. It will be a sisyphean effort. Much of what has been seen as essential to American culture will have to be discarded and we will have to join the rest of the world's nations humbly in a cooperative effort to combat global warming and create a culture of love, peace and compassion.

Off the Top of My Head

We Have Met the Enemy, Sir, And It Is Us

by John Lawrence, January 8, 2021

Why are we spending a trillion dollars a year on a defense establishment when the biggest threat to the republic is domestic terrorists? The failed coup attempt by inept Trump supporters could have ended a lot worse. Congress persons could be dead. Vice President Pence could be dead. Hundreds of Trump conspiracy theorists could be dead. The Capitol could have gone up in flames. And they will probably give Trump a slap on the wrist. He needs to go to prison. In other countries failed coup attempts end quite differently. The best outcome so far is the suspension of Trump's Twitter and Facebook accounts. It needs to be made permanent. Social media is responsible for spreading Trump's lies and conspiracy theories. They have profited from spreading lies.  Everything connected with Qanon should be taken down and accounts canceled. These white people (were there any blacks or Latinx in  the insurrection) need to be reeducated. I wonder if the Chinese have any room in their reeducation camps for the Uyghurs?

During the Jim Crow era in the South, African Americans by design occupied the lowest rung of the social ladder. The next rung up were people other southerners referred to as "poor white trash." The poor white trash were the most avid racists and white supremacists because their only point of pride was that they were better than African Americans. They did the dirty work for the Ku Klux Klan. Basically, Trump supporters and especially those that broke into the Capitol building are poor white trash. I have called the Republican party the WPP - White People's Party - and it's evident that that is what it really is. It remains to be seen whether they will remain loyal to Trump, but he has certainly exploited their grievances and pandered to their racism, white supremacy and demands that they be given supremacy over blacks, Latinx and immigrants. They are one rung up the ladder from minorities and immigrants, and they have demonstrated that they will go to great lengths to stay there just like the poor white trash of a foregone era.

Social media needs to be reigned in. The internet at this point has done more harm than good when you consider the hacking of government secrets and the harm social media has done in spreading conspiracy theories, falsehoods and lies. In the early days of the internet I taught a course at Palomar college. In our discussion I remember there were several layers of protocol that the internet was supposed to provide. One of them was security. Security then was mostly ignored by commercial software developers because it subtracted from their profits and didn't add to the commercial appeal - the bells and whistles - of the product. They need to go back and redesign the internet from scratch making security the number one concern. As far as social media is concerned, it needs to be tightly regulated by Congress with Federal authority to take down websites and cancel social media accounts. We now have seen a demonstration of what can happen when we let these wahoos run rampant. People exploit other people for profit, and even though that has been the American way, it needs to be stopped. Cults need to be taken down from social media. Free speech needs to have limits. So far this has been ignored, and it has been at our peril. It's a miracle that only one policeman was killed in the insurrection. What if the entire Congress had been taken down. There was practically no police presence and certainly not in the numbers required to withstand the mob that was incited to riot by Trump.

Hopefully, America has been chastened. Hopefully, this near coup has been a wake up call. Some of the people most likely to benefit from Joe Biden's initiatives are Trump supporters whether they know it or not. Of course they will have to occupy the same rungs of the ladder as minorities and immigrants, and this is what this latter day poor white trash of the WPP will hardly consent to do. Federal law makes it a crime to engage “in any rebellion or insurrection against the authority of the United States or the laws thereof.” Someone who violates this statute faces a fine and up to 10 years in prison. Perhaps while these domestic terrorists are serving their 10 year jail sentences, they can be reeducated. At the very least their social media accounts should be taken down, and Trump should never be allowed to Twitter again.

Off the Top of My Head

They Should Have Seen It Coming. What Happened Yesterday Was a Failed Coup Attempt.

by John Lawrence, January 7, 2021

Miraculously, very few people were hurt. The inadequate police force was totally overwhelmed. Why wasn't the National Guard there in the first place? Why did it take hours for additional police to show up? The rioters could have taken over and held the Capitol if they had had weapons. They could have taken Congress persons hostage. These guys are Second Amendment advocates. Each of them could have had a gun under their winter coats. A good question is why didn't they? I'm assuming Trump's intention was a coup, but it failed because of ineptness on the part of the leaders. It might have been a dry run for January 20. Why are our leaders so naive? Why is the decision to activate the National Guard up to the President who had to be "convinced" to call up the Guard. Really? He was the one inciting the riot in the first place. Why would he call in troops to disperse it? The only way he would want any troops there is if they were loyal to him and were there to protect and enable the rioters. Remember the military presence at the Black Lives Matter movement when Trump wanted to cross the road and hold up a Bible in front of a church. Where were the helicopters yesterday? Why doesn't the Mayor of Washington DC have the authority to call in the National Guard?

January 20, the day President elect Biden is inaugurated, should see a sufficient police and military presence to insure that everything goes according to plan without the threat of disruption by any person or group. The perimeter for the event should be extensive and well guarded. No fooling around. It is a travesty that people were able to get inside and rampage in the Capitol building putting the lives of Senators, Congress persons, staff people, media and the vice President at risk. These rioters had been egged on by President Trump, Rudy Giuliani who called for "trial by combat" and Don Junior. "It should be a message to all the Republicans who have not been willing to actually fight, the people who did nothing to stop the steal," he. said at a "Stop the Steal" rally on the National Mall. "This gathering should send a message to them: This isn't their Republican Party anymore. This is Donald Trump's Republican Party."

I half expected Trump to come on TV, proclaim martial law, suspend the Constitution and declare the election invalid, as troops, loyal to him, held Nancy Pelosi hostage on her knees and blindfolded. This is how coups are done, but, fortunately, the ineptness of the planners contributed to their not being able to go all the way. Also the fact that Trump didn't have any military units loyal to him, although he has put people loyal to him in important positions in the Pentagon, doomed Trump's coup attempt. In the final analysis I guess some people in important positions took their oaths to protect and defend the Constitution more seriously than their loyalty to Trump.

Now it's up to the FBI to track down all those people who invaded the Capitol and give them lengthy jail sentences. They have tons of visual records from cameras in the Capitol, and they have hotel records although a lot of them stayed at Trump's hotel. They probably have already destroyed those records. A lot of them flew there so they have those records. It's a credit to the Congress persons that they reconvened and got their business done even though they had to stay there most of the night. The election of President Biden has finally been certified. What an excruciating ordeal! By the way, Biden should not keep saying in regard to the rioters, "That's not who we are." The question is who do you mean by "we", Mr. President elect? Obviously, it is who some of us are. There are now two classes in America who are at war with each other. It has nothing to do with capitalists and proletarians. It has to do with those who have the decency of Biden and his followers and those who are basically latter day Ku Klux Klanners and white supremicists, who also by the way used the slogan "America First".

Now we have to be concerned about January 20. As Yogi Berra said, "It's not over till it's over."

Off the Top of My Head

Good-Bye Mitch McConnell: Democrats Win Control of Senate. Now They Need to Get Rid of Filibuster to Get Anything Done.

by John Lawrence, January 6, 2021

Nothing turned off GOP voters more than seeing their hero call for a $2000. payment to individuals while Mitch McConnell stood there on the Senate floor and said repeatedly, "Object. Object." Jon Offoss told his supporters that, if he were to be elected and Democrats controlled Congress, Biden had promised to implement the $2000 payments. That would be incentive enough for many Republican voters, especially the non-rich, to vote for a Democrat. Thank God, Democrats will control the Senate and the Roadblocker-in-Chief, will not get the chance to block all progressive Democratic legislation coming forward from the House in the next 4 years. Now there is one more potential roadblock that the Senate has the ability to do away with: the filibuster rule. Meanwhile, on the day Joe Biden is certified by the Congress, Trump, while completely neglecting the fact that yesterday the most people ever died from COVID, is holding another shit show and super spreader event in Washington so his supporters can get off on their collective anger that their hero wasn't reelected in a free and fair election. By the way I noticed in the excellent CNN film about Jimmy Carter (Rock and Roll President) that the Ku Klux Klan in white robes protested openly at one of his campaign events and one of them was carrying a sign, "America First." So that's where Trump got the idea for that slogan.

Even when Democrats gain control of the Senate, opposition party senators can filibuster the majority’s agenda. That means that any one Republican senator can filibuster any progressive piece of legislation that Joe Biden and House Democrats put forward including the Green New Deal, or more appropriately - the Biden New Deal, a public option for Obamacare which would allow anyone to choose Medicare, the elimination of part or all of student loan debt, $2000 COVID relief payments to most Americans and more, much more. The filibuster is not part of the Constitution; it is simply a rule of the Senate which can be changed by a majority vote. Eliminating the filibuster has been characterized as the so-called "nuclear option." Wikipedia notes:

"According to the Supreme Court's ruling in United States v. Ballin (1892), Senate rules can be changed by a simple majority vote. Nevertheless, under current Senate rules, a rule change could itself be filibustered, requiring two-thirds of senators who are present and voting to end debate. (This differs from the usual requirement for three-fifths of sworn senators.)

"Despite the two-thirds requirement described above being written into the Senate rules, any Senator may attempt to nullify a Senate rule, starting by making a point of order that the rule is unconstitutional or just that the meaning of the rule should not be followed. The presiding officer is generally expected to rule in favor of the rules of the Senate, but under rule XX, "every appeal therefrom shall be decided at once, and without debate" and therefore by a simple majority as there is no need for a vote on cloture.

"This happened in 2013, when Harry Reid of the Democratic Party raised a point of order that "the vote on cloture under rule XXII for all nominations other than for the Supreme Court of the United States is by majority vote". The presiding officer overruled the point of order, and Reid appealed the ruling. Mitch McConnell of the Republican Party raised a parliamentary inquiry on how many votes were required to appeal the chair's ruling in that instance. The presiding officer replied, "A majority of those Senators voting, a quorum being present, is required." Reid's appeal was sustained by a 52–48 vote, and the presiding officer then ruled that the Senate had established a precedent that cloture on nominations other than those for the Supreme Court requires only a simple majority. On April 6, 2017, that precedent was further changed by McConnell and the Republican majority, in a 52–48 vote, to include Supreme Court nominations."

Long story short. Democrats can eliminate the filibuster if they really want to. And they really need to do that because the Republican game plan will be to block all progressive legislation by means of the filibuster. Even without Mitch McConnell as chief roadblocker, Republicans will stymie Joe Biden and block all his initiatives. The result is that Biden's initiatives will go nowhere. It would be a total waste of Democratic power now that they have it. Republicans have shown no hesitancy to use their power to the full extent without any pretense of cooperating or compromising with Democrats. Now that Democrats have the power, they should use it starting with getting rid of the filibuster rule. Nobody knows more - from personal experience actually - than President Obama about how the filibuster rule can impede social progress. Republicans used it to effectively neuter Obama during his 8 year Presidency. Washington Post reported:

"Former President Barack Obama called on Thursday for eliminating the filibuster, joining a growing chorus of Democrats who portray the Senate’s signature procedural weapon as an obstacle to social progress that must be abolished if the party captures the Senate and White House.

"The appeal by Mr. Obama to do away with a tactic that Senate Republicans used to thwart him and the Democratic agenda for much of his eight years in office came during his eulogy in Atlanta for Representative John Lewis, the civil rights icon. The former president seized the moment to cast the filibuster as a vestige of a grim period in the United States when Southern lawmakers used it to impede voting rights and other advances for African-Americans."

“Once we pass the John Lewis Voting Rights Act, we should keep marching,” Mr. Obama said, referring to legislation Democrats are pushing on Capitol Hill in the face of opposition from Republicans. “And if all this takes eliminating the filibuster — another Jim Crow relic — in order to secure the God-given rights of every American, then that’s what we should do.”

So the writing is on the wall. Do we want this democracy to represent the interests of the majority of its people or only the upper 10%? Do we want to save the planet from global warming? If so the Republican call for "moderation" or "compromise" or "not being too radical" will not work. There is a limited time frame for us to act or the planet will soon - in our lifetimes and the lifetimes of our children - become uninhabitable for most people. We have failed to act on this in a timely manner. Now we must play catch up, and there is no time to waste. We have about 10 years to get global warming under control. Don't listen to people that say the Green New Deal is too radical. It's too radical only if we want to let the planet become virtually uninhabitable.