Sunday, March 16, 2025

Week-end Wrap – Political Economy – March 16, 2025

Week-end Wrap – Political Economy – March 16, 2025

By Tony Wikrent


Jaime Raskin Asks Us To Help Make A FOIA Tsunami

Beryl Stone, March 11, 2025 [DailyKos]

From Raskin:

Today I filed a formal demand for access to my personal data obtained by the Department of Government Efficiency (DOGE) and Elon Musk. I encourage all U.S. citizens to join me in doing the same.

Elon Musk should have been more careful in what he wished for, Carol. DOGE recently dodged lawsuits about its seizure of citizens’ personal data by telling courts that it is a legitimate government agency entitled to extract this information. What Elon Musk apparently did not realize is that this statement triggers DOGE’s obligation to comply with citizen demands to see and—if need be—correct their personal information under the Privacy Act. It also allows every citizen to find out what other agencies or outside parties have been made privy to our information.

Last night, the U.S. District Court for the District of Columbia issued an injunction commanding DOGE to comply with citizen requests under the Freedom of Information Act. FOIA encompasses the Federal Privacy Act of 1974, which entitles any citizen to access personal information held in any U.S. government records system.

By visiting the link on my website HERE, you can fill out the Privacy Act request form and mail it in directly to DOGE. This newly recognized federal agency, which has been systematically accessing government computer data systems, now has an obligation to respond to specific information demands from any of the 340 million U.S. citizens who exercise their legal right to defend their privacy and establish the security of their personal information.

Trump not violating any law

'He who saves his Country does not violate any Law'


Trump Orders US Military to Plan Invasion of Panama to Seize Canal: Report

Brett Wilkins, March 13, 2025 [CommonDreams]

U.S. officials familiar with the planning said options for "reclaiming" the vital waterway include close cooperation with Panama's military and, absent that, possible war.


Legal Fight Underway as Trump Invokes Alien Enemies Act of 1798 for Deportations

Jessica Corbett, March 15, 2025 [CommonDreams]


DHS Official Explicitly Equates Protest to Terrorism in 'Stunning' Interview

Julia Conley, March 13, 2025 [CommonDreams]


Trump visits Justice Department for speech that breaks all norms

Perry Stein, Jeremy Roebuck, Derek Hawkins, March 14, 2025 [Washington Post, via msn.com]

DHS has begun performing polygraph tests on employees to find leakers NBC News, via Naked Capitalism 03-10-2025]



Trump Is Fighting His Court Losses With a Surprising Legal Tactic

Matt Ford, March 15, 2025 [The New Republic]

...Shortly after Trump issued an executive order in January that purported to end birthright citizenship, federal courts in three different states blocked it from taking effect. All three courts generally held that the order was plainly illegal under both the Fourteenth Amendment and a century and a half of Supreme Court precedent.

On Thursday evening, the Justice Department asked the Supreme Court to intervene in an unusual way. The administration did not quite ask the justices to overturn the lower court injunctions altogether. Instead it asked them to end the practice of so-called “universal injunctions” against the federal government and rule that the lower court’s injunctions have no effect beyond the litigants themselves….


DHS Detains Lead Negotiator of Columbia Gaza Solidarity Encampment, Claiming “Activities Aligned to Hamas” 

[Drop Site, via Naked Capitalism 03-10-2025]


Columbia Bent Over Backward to Appease Right-Wing, Pro-Israel Attacks — And Trump Still Cut Federal Funding 

[The Intercept, via Naked Capitalism 03-10-2025]


Tightening the Screws: Columbia as Early Focus of Conservative Revenge on Universities

Yves Smith, 03/15/2025 [Naked Capitalism]


‘Project Esther’: The Right-Wing Group Behind Project 2025 Has a Plan to Crack Down on America’s Pro-Palestine Movement 

[Zeteo, via Naked Capitalism 03-10-2025] From October, still germane.


The Abduction of Mahmoud Khalil 

[Unpopular Front, via Naked Capitalism 03-13-2025]


The disappearance of Mahmoud Khalil is a trial run

Jonathan M. Katz, March 10, 2025 [The Racket]

They think they've found a wedge, and they're going to use it….

What the Trump administration is counting on is that millions of Americans will lose those deeply rooted instincts when they see that the detained man in question has an Arabic name, that he is of Palestinian descent, and that the protests he participated in were against the government and his university’s support for Israel’s mass slaughter in Gaza.

They are counting on that because their goal—overtly stated today by the president—is that the detention of Mahmoud Khalil will be “the first arrest of many to come.” Those, including some purported liberals, who are cheering right now would do well to pay attention to the president’s specific warning: that they are targeting students who engaged in “engaged in pro-terrorist, anti-Semitic, anti-American activity,” a threat that will loom large as other kinds of protests bubble up among an increasingly restive public….



PROFESSOR AT CENTER OF COLUMBIA UNIVERSITY DEPORTATION SCANDAL IS FORMER ISRAELI SPY 

[MintPress News, via Naked Capitalism 03-13-2025]


After Banning the Associated Press, Trump Is Now Targeting Specific Journalists That He Wants to See Fired

Pam Martens and Russ Martens, March 10, 2025 [Wall Street on Parade]


USAID employees told to burn or shred classified documents 

[NBC, via Naked Capitalism 03-12-2025]

[TW: If Trump intended to “drain the swamp” by dismantling the Deep State — not just seek retribution on his opponents — he would be keen to find and preserve the documents implicating the Deep State.]


Yesterday in Court

Joyce Vance, March 14, 2025 

Judge Beryl Howell held a hearing Wednesday afternoon in Washington, D.C., in the case filed by the Perkins Coie law firm against President Trump over the executive order he signed that is little more than an attack on the firm because Trump doesn’t like some of the clients they’ve represented in the past. That is not what executive orders are for, and Judge Howell pressed pause on this one, granting a temporary restraining order (TRO) that stops its enforcement for now. But the issues under consideration here are bigger than just one law firm….

Finally, Judge Howell found that issuing a TRO was in the public interest. Trump is using the presidency to pursue “what appears to be a wholly personal vendetta” against the firm. Without a TRO, she reasoned, lawyers across the country would live in fear of representing clients whom the president might not like, and that “threatens the very foundation of our legal system.” She explained that courts in other cases have held that our justice system is based on the fundamental basis that it works best when all parties have representation, and the “chilling effect of this EO threatens to undermine our entire legal system and the ability of people to have access to counsel.”….

This executive order is dark, authoritarian stuff. If presidents can, for no reason or for bad reasons, decide that individuals or businesses are operating contrary to the national interest and strip them of their ability to make a living and of other rights, then we are no longer a democracy. So even though this is “just” a TRO, it’s a big win for Perkins Coie, but also for the legal profession, the rule of law, and democracy. Presidents shouldn’t be able to use the power of the presidency to retaliate against people they don’t like and prevent lawyers from representing their clients. Wednesday, a federal judge said so and told Trump no.


Army Corps knew Trump's water release order in California's San Joaquin Valley was a waste

James Ward, [Palm Springs Desert Sun, via USAToday]

The Washington Post reported Friday that the Army Corps of Engineers knew President Trump's order in late Janurary to release San Joaquin Valley reservoir water wouldn’t reach Southern California as he promised.

The President had said the water release would help prevent more Southern California wildfires, but local water experts say that was "virtually impossible."

Around 2.2 billion gallons of reservoir water from Terminus Dam at Lake Kaweah and Schafer Dam at Lake Success in Tulare County were sent into the San Joaquin Valley. That water is stored mainly to irrigate crops during the spring and summer growing seasons….

“A decision to take summer water from local farmers and dump it out of these reservoirs shows a complete lack of understanding of how the system works and sets a very dangerous precedent,” said Dan Vink, a longtime Tulare County water manager, in February.

Congressman Jim Costa (D-Fresno), representing parts of Tulare County, and Sen. Alex Padilla (D-California) both wrote critical letters about the reservoir water release.

"An unscheduled release of water at this time of year, when there is little demand for irrigation water and a snowpack that is below average, poses grave threats to a reliable water supply this year," Costa wrote. "This could increase the cost of water for farmers for this crop year exponentially due to dry conditions anticipated."….



Heather Cox Richardson, March 13, 2025

...That’s not how Trump portrayed the sudden release of water. After talking to reporters about the upcoming congressional budget fight, he suddenly pivoted to Los Angeles, and from there to water. "I broke into Los Angeles, can you believe it, I had to break in,” he said. “I invaded Los Angeles and we opened up the water, and the water is now flowing down. They have so much water they don't know what to do. They were sending it out to the Pacific for environmental reasons. Ok, can you believe it? And in the meantime they lost 25,000 houses. They lost, and nobody’s ever seen anything like it. But, uh, we have the water—uh, love to show you a picture, you’ve seen the picture—the water’s flowing through the half-pipes, you know, we have the big half-pipes that go down. Used to, twenty-five years ago they used to have plenty of water but they turned it off for, again, for environmental reasons. Well, I turned it on for environmental reasons and also fire reasons but, ah, and I’ve been asking them to do that during my first term, I said do it, I didn’t think anything like could happen like this, but they didn’t have enough water. Now the farmers are going to have water for their land and the water’s in there, but I actually had to break in. We broke in to do it because, ah, we had people who were afraid to give water. In particular they were trying to protect a certain little fish. And I said, how do you protect a fish if you don’t have water? They didn’t have any water so they’re protecting a fish. And that didn’t work out too well by the way….”


Men DOGEbags at Work

Musk Shares Claim That Stalin and Hitler Didn’t Murder Millions: ‘Public Sector Employees Did’ 

[Haaretz, via Naked Capitalism 03-14-2025]

[TW: Foor over two decades I’ve tried to explain that bipartisanship with the other party is impossible because today’s (anti)Republicans are indoctrinated with and fervently believe neo-confederate economic policies—that government is and always has been bad. I have argued that there is no appeasing today’s (anti)Republican Party. They refer to us as “demonrats” and worse.

[But the leadership of the Democratic Party is quite cozy rubbing shoulders with Republicans. They go to events and dinners with Republicans, and chum it up. I was angry but not surprised when Obama yukked it up with Trump at President Jimmy Carter's funeral two months ago. Or when his wife Michelle embraced George Bush in September 2016.

[I’ve had arguments with Democratic precinct captains, county commissioners, county Dem Party chair people, city council people, and a couple people on the state party board and DNC. I once spoke with the chair of the Democratic Party in a nearby County to urge her to run for Congress so that she could face off against Republican fossil Howard Coble, who had been in Congress for 30 years. Her answer was that she simply couldn’t because her family were friends with the Cobles “going back a long way.” I am not making this up.

In 1992 — 33 years ago — Bill Greider wrote Who Will Tell the People: The Betrayal of American Democracy. In the “Introduction: Mutual Contempt,” Greider wrote,

...a peculiar dimension has developed in modern politics. Politicians are held in contempt by the public. That is well known and not exactly new in American history. What is less well understood (and rarely talked about for the obvious reasons) is the deep contempt politicians have for the general public….

A Washington lobbyist, a former congressional aide with close relations to influential Senate Democrats, described the perspective with more candor than is allowed to politicians. "This city is full of people who don't like themselves, don't like their jobs and don't like their constituents — and I mean actively don't like their constituents," the lobbyist told me not long ago. "I'm convinced one of the reasons they are in session so long is that members of Congress have gotten used to being here and they don't like going home where they have to talk to a bunch of Rotarians and play up to local leaders who are just dumb as stumps. They prefer to be here, to be around people they know and like and who understand them — lawyers, lobbyists, the press and so forth." (p. 17)

[I’ve personally cornered a couple members of Congress — I grabbed their hands tightly and refused to let go while I told them that there can never be any honest bipartisanship, and that there would never be an economic recovery of widely shared prosperity until Wall Street was destroyed. I did that to Tom Perez when he was DNC chair. They all squirmed and blanched or turned purple and tried to get away asap. The leadership of the Democratic Party is simply not interested in hearing the truth. Let alone fighting for it.

[The leadership of the Democratic Party must be replaced en masse. I used to be against term limits, but I would now support then if term limits would help us discard octogenarian oligarch lackeys like Nancy Pelosi, Chuck Schumer and Dick Durbin. ]


Love of a Nation — Our leadership classes’ lack of love for their own people is dissolving our societies

N.S. Lyons, March 13, 2025 [The Upheaval]

...Yet, at least among our ruling classes, this natural reciprocal love between citizen and nation, which sustains our countries and our societies, seems to have long since frayed. This is no great shock, given that in our age the very idea of nationhood is itself decried, or outright denied, the nation-state stripped of the nation, the world reduced to a network of special economic zones. A man cannot love a special economic zone. Nor can its administrators possess any special feeling for its temporary inhabitants.

This grim status quo is no accident, however. It is the result of a deliberate, 80 year conspiracy against love, conducted out of fear. As I’ve argued before, after WWII, with the trauma of war and totalitarianism haunting the world, the American and European leadership class resolved that these evils should never again threaten society. And they concluded that the emotional power of nationalism had been the central cause of the 20th century’s catastrophes, leading them to make anti-nationalism the cornerstone of the liberal establishment consensus that came to dominate culture and politics after the war.

The philosopher Karl Popper, in his sweepingly influential 1945 book The Open Society and Its Enemies, denounced the idea of national community writ large, labeling it disastrous “anti-humanitarian propaganda” and smearing anyone who cherished his particular homeland and history as a “racialist.” Theodor Adorno, who set the direction of American psychology and education policy for decades, classified natural loyalties to family and nation as the hallmarks of the “authoritarian personality” that drove the common man inexorably toward fascism.

But the aversions of the post-war elite ran deeper than a philosophical anti-nationalism. As R.R. Reno writes, the visceral imperative became to fully banish all the “strong gods” that fueled conflict, meaning all those “objects of men’s love and devotion, the sources of the passions and loyalties that unite societies.” Strong bonds and strong loves of any kind – of family, nation, truth, God – came to be seen as dangerous, as sources of dogma, oppression, hatred, and violence. The peaceful and prosperous “open society” the post-war establishment set out to instantiate would, as Reno puts it, “require the reign of weak loves and weak truths,” with all dangerous sentiment subordinate to the rule of cool rationality and tepid impartiality….


DIGITIZING THE FISC (pdf)

Rohan Grey, via Naked Capitalism 03-13-2025]

On the constitutional implications of Trump’s BFS-DOGE takeover.


“The President Wanted It and I Did It”: Recording Reveals Head of Social Security’s Thoughts on DOGE and Trump 

[ProPublica, via Naked Capitalism 03-13-2025]


These Are the 10 DOGE Operatives Inside the Social Security Administration

Makena Kelly and David Gilbert, March 13, 2025 [Wired, via CommonDreams]


Trump’s Third Rail… The sneak attack on Social Security

Robert Kuttner March 11, 2025 [The American Prospect]

...In the past two weeks, there were four separate sneak attacks. First, plans were announced to cut the Social Security workforce by 12 percent, or 7,000 employees. The Social Security staff is already at its lowest level in decades relative to population….

On March 7, the Social Security Administration also announced that people who inadvertantly get too large a check through no fault of their own will lose 100 percent of their benefits. And the Trump administration briefly tried a bizarre foray in Maine, where parents were told they could no longer register a newborn for a Social Security number at the hospital and instead had to visit one of the state’s eight Social Security offices, according to an email sent to Maine officials. This was reversed after a day.

In addition, detailed testimony released on March 7 in a federal employee union lawsuit, given by former associate Social Security commissioner Tiffany Flick, lays out the extent to which Elon Musk and his pawns have gone in their effort to gain access to confidential Social Security data. This information could be used to violate personal privacy, undermine confidence in Social Security, make selective benefit cuts, or even disrupt payouts, all in the name of looking for largely nonexistent fraud. According to The Washington Post, even Trump’s handpicked acting Social Security commissioner, Leland Dudek, warned senior staff that Musk’s DOGE troops are running roughshod at the agency.... 


A Federal Judge Roasts the DOJ’s “Sham” Excuses for Trump’s Mass Firings 

[Slate, via Naked Capitalism 03-14-2025]


Inside Elon Musk’s ‘Digital Coup’ 

[Wired, via Naked Capitalism 03-15-2025]


“The President Wanted It and I Did It”: Recording Reveals Head of Social Security’s Thoughts on DOGE and Trump

Eli Hager, March 12, 2025 [ProPublica]

In a recording obtained by ProPublica, acting Social Security Commissioner Leland Dudek portrayed his agency as facing peril, while also encouraging patience with “the DOGE kids.”


Strategic Political Economy

Monopoly Round-Up: The Mar-a-Lago Accord, and Trump Seeks a Google Break-Up 

Matt Stoller [BIG, via Naked Capitalism 03-10-2025]

...a deep dive into two items. The first is the incessant rumors on Wall Street about what is known as the “Mar-a-Lago Accord,” a potential Trump initiative to restructure the role of the dollar. The second are some actions the Trump antitrust enforcers took this week to lay out their approach to competition policy, including seeking a break-up of Google and trying to block a private equity roll-up.

What’s surprising about both of them is that they reveal something I didn’t expect about this second term of Trump, which is that this time he doesn’t seem to care about the stock market. I’m not a fan of Trump, but that attitude, if it’s real, is refreshing.

Let’s start with the “Mar-a-Lago Accord,” which is the rumor of a deal to solve Trump’s dissatisfaction with the role of the American dollar in the global economy. The basic dilemma comes out of the negotiations after World War Two, during which the U.S. decided to allow most global trade to be conducted in dollars so as to break up the European imperial system. The idea was that instead of having a British or French empire in which trade happened within their systems, trade would be free among all nations. The U.S. served as the security guarantor through its Navy, and as the financial guarantor through the dollar.

When the U.S. was big relative to the rest of the world, and when the U.S. controlled exchange rates through aggressive public power, the fact that the dollar had to serve as the domestic currency and a global currency didn’t matter so much. But starting in the late 1950s, economist Robert Triffin noted what became known as the “Triffin dilemma,” which is that if a country has to supply the global reserve currency, it will become effectively an exporter of money, and that export will be so lucrative it will destroy the rest of the reserve currency nation’s economy….

In 1971, economist Nicholas Kaldor warned the U.S. that its status as a reserve currency provider and its lack of public controls over the global system would have a devastating impact. These policies would, he said, transform “a nation of creative producers into a community of rentiers increasingly living on others, seeking gratification in ever more useless consumption, with all the debilitating effects of the bread and circuses of Imperial Rome." And so it has. It’s not that Americans lost out to foreigners, it’s that U.S. corporate leaders sold out America, with the help of foreigners.

Both Treasury Secretary Scott Bessent and Trump’s Council of Economics Advisor Chair Stephen Miran understand and want to address this problem. Miran wrote a widely cited report on America’s Triffin problem…. 

On Friday the DOJ had to submit an updated proposal, and this version was the first chance we had to see what the Trump people thought. It was their moment to either roll back what Biden sought, or keep it intact. And largely, the Trump DOJ maintained the aggressive remedy proposal against Google put forward by the Biden administration. As Lee Hepner put it, what was just “filed in US v Google Search shows Trump DOJ digging its heels on Chrome divestiture, removal of all search defaults, and data disgorgement.”….

Meanwhile, the Trump Federal Trade Commission under Chair Andrew Ferguson issued its first merger challenge this week, proposing to block a private equity acquisition of medical device coating maker Surmodics by private equity firm GTCR, which owns a competitor Biocoat. These two entities, if combined, would control more than half the market for “hydrophilic coatings,” which are special coatings that work really well inside the body when maneuvering medical devices. They are used for things like operating within a “blood vessel in the brain, for example—without damaging sensitive tissue or vital structures.”

Wall Street dealmakers are extremely angry at this merger challenge, because they were expecting a more lax regulatory environment….


Neoliberalism and a Healthy Population Are Incompatible

Richard Murphy [Funding the Future, via Naked Capitalism 03-13-2025]


A User’s Guide to Restructuring the Global Trading System (pdf)

Stephen Miran, November 2024 [Hudson Bay Capital]


Johns Hopkins Plans Staff Layoffs After $800 Million Grant Cuts

Liz Essley Whyte and Nidhi Subbaraman, March 11, 2025 [Wall Street Journal, via Naked Capitalism Coffee Break 03-14-2025]

Local and international health research efforts are already winding down as the university braces for even more potential cuts

Part the Third: Who Funds the Research that Provides the Foundation of Our Healthcare?  From 2023, but still germane: Comparison of Research Spending on New Drug Approvals by the National Institutes of Health vs the Pharmaceutical Industry, 2010-2019:


Funding from the NIH was contributed to 354 of 356 drugs (99.4%) approved from 2010 to 2019 totaling $187 billion, with a mean (SD) $1344.6 ($1433.1) million per target for basic research on drug targets and $51.8 ($96.8) million per drug for applied research on products.


This was covered previously in Patents and Intellectual Property in Biomedical Science: A History in Two Tales.


Tipping Point: The Politics of Water Insecurity in the Middle East 

[Center for Strategic & International Studies, via Naked Capitalism 03-11-2025]

The Middle East is no stranger to water scarcity and violence. For centuries, conflict has exacerbated water insecurity and vice versa. But the region is now at a tipping point. Groundwater aquifers are running dry or becoming contaminated, populations are exploding, and borders are more hardened than ever, making resettlement—a time-tested survival strategy—impossible.


Why Republican Tax Cuts Always Cause A Financial Crash (updated March 2025)

Tony Wikrent, March 14, 2025 [real-economics.blogspot.com]

[TW: I updated this to include Trump’s 2017 tax cuts, which led to a collapse of the repo overnight funding market in September 2019. The Fed moved quickly to limit the damage, and was successful in avoiding any public or Congressional scrutiny as it poured in over $6 trillion in loans over a number of months.]


Global power shift

Trump White House has asked U.S. military to develop options for the Panama Canal, officials say 

[NBC News, via Naked Capitalism 03-14-2025]


Oligarchy

Tax Cuts Are Theft: An Amplification

Sara Robinson, August 10, 2010 [ourfuture.org]

Dave points to the practical effects of a piece of conservative theology that deserves a bit of deeper drilling. It's this: Conservatives believe that only private individuals should hold wealth. They do not believe in commonly-held public wealth of any kind. And that's why they feel perfectly free to raid the vast legacy that our ancestors have accumulated and stewarded for us over the past 230 years….

...What they've stolen from us and arbitraged away isn't just our own money; it's the vast accumulation of civilizational wealth that was bought with the blood, sweat, tears, endless sacrifice, earnest planning, and bold dreaming of a dozen generations of American ancestors, and then bequeathed to us to ensure our own futures. Each of those generations received it in trust from the one that came before, added its own unique contributions to it, and then passed it on as an endowment to the next. As time compounded the gift, the legacy got richer; and our sense of who was entitled to share in the bounty got broader....

It's only when you think about our common wealth the way the world's richest families do -- as a bequest from a long line of distinguished ancestors, as a vast common resource base that provides us with extraordinary material comfort today, and as a sacred trust that we must manage and multiply on behalf of generations yet to come -- that you can really begin to understand the sheer magnitude of everything they took from us.

The thieves didn't just steal our houses, our retirement funds, our careers, or our tax money. It went far beyond that. They also stole the family jewels -- the vast infrastructure that's been built up for centuries by generations of foresighted Americans, now collapsing into uselessness. They defunded the great universities, crowded our kids into classrooms like factory farmed chickens, and are shutting down the magnificent state and national parks. And they're also stealing our future, committing us to endless debt, sucking the marrow out of our international standing, foreclosing our opportunties, making it impossible to solve looming problems, and forcing us to hand off to our children a far more meager legacy than the one we received….

Here's the irony: the people who did this to us did it precisely because they also understand wealth in these generational terms…. So, if they understand this, where's the disconnect? Why couldn't they respect the public's need to manage our common wealth the same way they manage their own private wealth?

The disconnect is this: In the conservative worldview, it's right and legitimate for private families and corporations to accrue generational wealth, and build great dynasties. But it's absolutely wrong for the democratic masses to accumulate wealth that way; or to collaborate, via the government, to ensure that all of their children will have a birthright sufficient to open the doors to their dreams.

Maggie Thatcher told us outright: "There is no such thing as society. There are only individuals and families, and their interests." And if there's no such thing as society, then society has no right to accumulate wealth -- via taxes, investment, or any other means. Viewed this way, a conservative might even think it's a virtuous thing to defund and defraud the public out of any capital it does manage to acquire….


The Dark MAGA Gov-Corp Technate — Part 2 

Iain Davis, March 13, 2025 [Unlimited Hangout]

In continuing to unpack the ideologies of the oligarchs who are part of the new Trump administration, Iain Davis examines how their ideas are being translated into policy. He considers the consequent infrastructure rollout that is preparing the US and the world for an imminent Gov-corp Technate within a multipolar world.


Mark Carney: Technocrat Superstar and Eco-Warrior Takes the Helm of Canada

Matthew Ehret, March 10, 2025

Mark Carney can best be described as one of the most important insiders and mascots for the oligarchy, serving as the UN Special Envoy for Climate Action and Finance, former investment banker for Goldman Sachs, World Economic Forum Trustee (alongside fellow Oxford trainee Chrystia Freeland), former governor of the Bank of Canada and then the Bank of England and the Chair of the Financial Stability Board from 2011-2018, where he oversaw the growth of the very derivatives time bomb which was designed to take down the trans Atlantic financial system in a future controlled detonation.

In 2024, Carney was even made President of the queen of all think tanks: The Royal Institute for International Affairs (aka: Chatham House,) whose American branch was set up in 1921 as ‘The Council on Foreign Relations’.


The carnage of mainstream neoliberal economics

Hatching a Conspiracy: A BIG Investigation into Egg Prices

Matt Stoller [BIG, via Naked Capitalism 03-10-2025]


Fowl Play: How Chicken Genetics Barons Created the Egg Crisis 

Matt Stoller [BIG, via Naked Capitalism 03-13-2025]


Trumpillnomics

Walmart clashes with China after asking suppliers to absorb tariffs 

[Axios, via Naked Capitalism 03-14-2025]


China questions Walmart over response to Trump tariff costs

[Nikkei Asia, via Naked Capitalism 03-14-2025]

Chinese government agencies, including the Ministry of Commerce, summoned Walmart representatives this week after the U.S. retailer urged suppliers in China to offset President Donald Trump's tariffs with substantial price cuts, according to Beijing's state media.

A post on Wednesday by Yuyuan Tantian, a social media account linked to state broadcaster CCTV, said the retailer was called in the previous day. It said that Walmart's alleged demands on Chinese suppliers risk "disrupting the supply chain and harming the interests of businesses in both China and the U.S., as well as American consumers," and thus may "breach commercial contracts and undermine the stability of market transactions."….

"If Walmart continues down this path," the Yuyuan Tantian post warned, "it may face consequences beyond a government summons."….

"Walmart doesn't want to be the company that Trump calls out for raising prices because of tariffs, so they are trying to force suppliers to eat it to some degree," said Cameron Johnson, senior partner at Tidalwave Solutions, a Shanghai-based supply chain consultancy….

"Once the additional tariffs hit 35%, that's the threshold when companies and industries start to say we have to move out of China completely," Johnson said. "The problem is where else are you going to make those products? We are out of options. Moving supply chains takes years, if not longer."

[TW: Trump has probably destroyed WalMart’s business model.]


CAN THE TRUMP ADMINISTRATION ARBITRARILY TAKE MONEY FROM ANYONE’S BANK ACCOUNT? FEDERAL GOVERNMENT’S MUGGING OF NEW YORK CITY FOR FEMA FUNDS SUGGESTS YES 

Nathan Tankus, [Notes on the Crises]


USDA ends program that helped schools serve food from local farmers 

[AP, via Naked Capitalism 03-14-2025]


Administration cancels meteorologist disaster training 

[The Hill, via Naked Capitalism 03-14-2025]


They’re not capitalists — they’re predatory criminals

[X-Twitter, via Naked Capitalism 03-14-2025]

Meant to make it clear with the present-tense "is," but my point was that I think an unknown number of serving members of Congress may be getting paid off in crypto, just like the President is.

Jacob Silverman
@SilvermanJacob
The next Bob Menendez is being paid in crypto, not gold bars and watches.

There should be an investigation (Congressional, IG, whatever) into who's buying $TRUMP, $MELANIA, and $WLFI, and who's investing in his companies, but somehow the people who are supposed to enforce the law seem to have disappeared.



[The Lever, March 10, 2025]

Money laundering and tax evasion for all who can afford it. Amid a huge rise in tax evasion and money laundering scams, Republicans are deregulating cryptocurrency, killing off corporate transparency rules, and downsizing the agency that audits tax returns.

The Senate just voted to exempt crypto from the regular rules. At Big Crypto’s urging, the upper chamber just voted to kill a rule that would have subjected the cryptocurrency industry to the same tax disclosure rules as normal brokers. The 70-27 bipartisan vote shows the power of crypto campaign cash. And reminder: Sen. Chuck Schumer (D-N.Y.) promised the industry favors while stumping for former Vice President Kamala Harris at a fundraiser last fall.

Farewell to the Corporate Transparency Act. Trump’s Treasury Department just declared that it will refuse to enforce the anti-money-laundering law requiring shell corporations to tell law enforcement who their actual owners are. Trump’s own Justice Department defended the 2021 Corporate Transparency Act, which was upheld by a Trump-appointed federal judge and the U.S. Supreme Court. But now Trump is celebrating as his administration halts enforcement of the law.

Defunding the tax police. As the Internal Revenue Service potentially loses half its staff, employees are warning that the agency’s audits of the wealthy could soon end. For every dollar the IRS spends, it generates between $5 and $12 in revenue — and when the agency audits filers making $10 million or more, it returns $13,000 every hour. Meanwhile, the Securities and Exchange Commission is dismantling itself as you read this.


Health care crisis

What to know about the new disease outbreaks in central Africa 

[AP, via Naked Capitalism 03-10-2025]


America Is Sleeping on a Powerful Defense Against Airborne Disease

Roxanne Khamsi, March 11, 2025 [The Atlantic]

Treating clean indoor air as a public good would have protected Americans against more than COVID-19….

For decades, experts have pushed the idea that the government should pay more attention to the quality of indoor air. In his new book, Air-Borne: The Hidden History of the Life We Breathe, the journalist Carl Zimmer shows the long arc of this argument. He notes that Richard Riley, a giant in the field of aerobiology who helped show that tuberculosis can be airborne, believed that individuals shouldn’t have to ensure that the air they breathe is clean. Just as the government regulates the safety of the water that flows into indoor pipes, it should oversee the safety of air in indoor public spaces.

More than half a century before the coronavirus pandemic, Riley positioned this idea as an alternative to requirements for widespread masking, which, he said, call for “a kind of benevolent despotism,” Zimmer reports. If cleaner air was the one of the best ways to reduce the societal burden of disease, then the two best ways to achieve it were to push people to wear masks in any public space or to install better ventilation. The latter approach—purifying the air—would mean that “the individual would be relieved of direct responsibility,” Riley reasoned in a 1961 book he co-authored: “This is preventive medicine at its best, but it can only be bought at the price of civic responsibility and vigilance.”….


Information age dystopia / surveillance state

Meta stops ex-director from promoting critical memoir 

[BBC, via Naked Capitalism 03-14-2025]


Dodge Chargers Now Have Pop-Up Ads at Every Stoplight… Just What Nobody Asked For 

[FuelArc News, via Naked Capitalism 03-12-2025]


Amazon Uses Arsenal of AI Weapons Against Workers

Daniel Boguslaw, March 13, 2025 [The American Prospect]

A study of a union election at an Amazon warehouse in Bessemer, Alabama, shows that the company weaponizes its algorithmic surveillance tools to prevent organizing.


Climate and environmental crises

‘Global weirding’: climate whiplash hitting world’s biggest cities, study reveals 

[The Guardian, via Naked Capitalism 03-14-2025]

Climate whiplash is already hitting major cities around the world, bringing deadly swings between extreme wet and dry weather as the climate crisis intensifies, a report has revealed.

Dozens more cities, including Lucknow, Madrid and Riyadh have suffered a climate “flip” in the last 20 years, switching from dry to wet extremes, or vice versa. The report analysed the 100 most populous cities, plus 12 selected ones, and found that 95% of them showed a distinct trend towards wetter or drier weather.


EPA launches attack on ‘holy grail’ of climate science — and dozens of enviro rules 

[Politico, via Naked Capitalism 03-14-2025]


New Report Finds Urgent Need to Expand Energy Supply to Meet Rapidly Growing Future Demand

[American Clean Power Association, March 10, 2025]

Electricity demand in the United States is projected to surge by an unprecedented amount over the coming decade, according to data released today by S&P Global Commodity Insights….

The full US National Power Demand Study will describe a critical gap between the current energy supply and future needs. It predicts U.S. electricity demand will surge by 35-50% between 2024 and 2040. This is primarily due to AI data centers and new manufacturing activity in the short-term whereas electric vehicles (EV), space-heating electrification, and broad economic growth underlie the long-term dynamics. This demand is growing faster than the supply of new energy solutions that could power it — data centers and manufacturing facilities, for example, take about three years to build versus development and construction times of typically five or more years for new power generation to come online, creating an urgent need for faster policy action on permitting and grid interconnection and an all-of-the-above energy strategy within the sector....

 

Creating new economic potential - science and technology

CPKC hydrogen locomotive enters mainline service

Kevin Smith, ​​​​​​​March 12, 2025 [Rail Journal]

NORTH American Class 1 CPKC has introduced its first high-powered hydrogen locomotive into regular mainline service. The locomotive is hauling bulk freight trains carrying coal mined by Elk Valley Resources as CPKC tests performance in “challenging real-world operating conditions.”

The retrofitted AC4400CW locomotive is based in Golden, British Columbia. CPKC has confirmed on social media that it was successfully refuelled for  the first time at a fixed refuelling station, the first installed outside of Alberta, on March 6.

The locomotive is coupled to a prototype hydrogen tender eveloped by HGmotive that can be connected to any compatible hydrogen-powered locomotive. The design is based on a tender for compressed natural gas (CNG) developed by HGmotive in 2019.



Phoenix to build multibillion dollar purification plant to make wastewater drinkable by 2030

Phoenix wants to recycle wastewater into drinking water by the end of 2030 and share it with the Valley.

The plan is to build an advanced water purification facility and treat, then reuse millions of gallons of wastewater that would have otherwise been discharged into the Salt River.

The investment would provide Arizona cities a significant new drinking water supply, which is vital as they work to lessen their dependence on the shrinking Colorado River and diversify their water sources.

The multibillion-dollar technology, called direct potable reuse, or "tap to toilet," by critics, cleans water that goes down a home's drains and sends it back for reuse. It will be added to the 91st Avenue Wastewater Treatment Plant southwest of downtown and purify 60 million gallons per day — enough water for about 200,000 households per year….


Trump’s transactional regime

Blackrock Becomes a Power Player in Global Shipping — With Help from Trump 

[WSJ, via Naked Capitalism 03-13-2025]


Analysis Details How Trump's Circle Could Be Profiting From White House Crypto Policies

Eloise Goldsmith, March 14, 2025 [CommonDreams]


Resistance

Seeing Things For What They Are — And not for what they used to be

Hamilton Nolan, Mar 15, 2025 [How Things Work]

...Things have changed in America. There are deep undercurrents that have been exerting pressure from below—the relentless evolution of global capitalism, the growth of inequality, new forms of technology jumbling the world of information—and then there are things that have changed rapidly, closer to the surface. It was possible to use a certain frame of reference that worked pretty well in the American political system for the past 40 years or so. But now that frame is out of date. It is worse than useless. It is misleading. It is detrimental, because the answers it spits out, the explanations it gives, the strategies it recommends for specific situations, are all based upon old data and old wisdom that no longer works. The frame of reference that guides many of the people who, unfortunately, dominate the Democratic Party in Washington is like a flood map that was drawn up before climate change. They keep using these same old formulas that worked back then, ignoring the rising water as it creeps up to their necks.

Reagan and Bush and Clinton and Bush Jr. and Obama all to varying extents did awful things and all to varying extents are responsible for the progression of the state of our politics to this point, but they also all believed themselves to be constrained by a set of guidelines, norms, and political realities that no longer exist. Even their most immoral policies were shaped to maneuver through public opinion and economic demands and historic traditions and laws that have now, effectively, disappeared. The playbook that political veterans used to operate in that old world is a set of directions to a house party that is already over. If you show up there you will only find an empty house. The action is elsewhere now. Chuck Schumer continues to pull up in front of that empty house each morning, blinking vacantly, knocking on the door with a bottle of wine in his hand, wondering what is taking so long.

Here are a few notable ways in which many (not all) of our political and media and business and intellectual leaders have failed to update their priors for current times: The federal government is now controlled by a political party that is nakedly, not bashfully, racist, and hopes to eradicate the past century’s worth of racial progress; economic policy is being dictated, stupidly, by a small group of zealots who do not understand economics; the primary concern of the president now is vengeance, and he is going to use the tools at his disposal to enact vengeance upon his endless list of enemies in a way that could surpass McCarthyism; “civil liberties” mean nothing to those who control the federal government now, and will likely provide little protection from that vengeance in the real world; the law, and the power of the courts to enforce laws that constrict the behavior of the federal government, is very much in question, and it is distinctly possible that within the next year or two the law is exposed as toothless in the face of the president’s will, and therefore the law should not be relied on as the primary guard rail of our democracy now; voter suppression is about to reach extremes not seen in generations, and outright election theft based on shoddy racist claims of voter fraud is extremely likely in upcoming elections at all levels; the US government is going to lose its status as a reliable source of information—economic statistics, scientific data, and more—as official information is manipulated for partisan gain in unprecedented ways, a development that will be devastating for almost all fields of knowledge, and for the economy; the federal government is being run by people who want to eradicate the government’s functions, except to the extent that those functions can be used to crack down on foreign and domestic enemies; many people are going to be jailed and deported and potentially killed unjustly in the very near future, by the president and his loyalists; institutions that imagine themselves to be proud, ethical, important parts of the fabric of America are going to cower in fear and abdicate their responsibilities in ways that their own leaders would scoff at right now. We are not living in “The West Wing.” We are living in “Goodfellas.” It does not have a happy ending….


Trump Ignoring Court Orders Is New Grounds for Impeachment, Says Pro-Democracy Group

Jessica Corbett, March 15, 2025 [CommonDreams]


Resisting This Fresh Hell

Nan Levinson, March 13, 2025 [LA Progressive]

...Such responses will undoubtedly involve a variety of approaches. These are likely to range from the immediate to the long haul; from small, local acts to ease individual lives — accompanying immigrants through the legal process when their residency is imperiled, for example — to more traditional activities like lobbying, petitioning, and supporting civil liberties organizations, or even movement-building and large-scale actions aimed at challenging the power of Trump and changing our very political situation.

We’ve already seen individual acts of principle, along with small communal acts of subversion. When someone in the Air Force took the Diversity, Equity, and Inclusion purge literally and cut a video about World War II’s Black Tuskegee Airmen from a training course, a senator decried it as “malicious compliance.” In Silicon Valley, there was a “quiet rebellion” when Meta workers brought in certain sanitary products to replace those removed from men’s bathrooms by order of their boss, Mark Zuckerberg. A DOGE hiring site was besieged by mock applications from well-qualified Hitlers, Mussolinis, Francos, and a Cruella De Vil. Then there was that World War II anti-fascism Simple Sabotage Field Manual, downloaded at least 230,000 times since 404Media made it accessible online. Ways to gum up the works suggested there include, “Cry and sob hysterically at every occasion, especially when confronted by government clerks,” and my fave, “Act stupid.” 

….Which leads me to Gene Sharp, an unsung but influential theorist of nonviolent resistance, whose pragmatic ideas about peaceful protest were picked up by popular liberation movements around the world in this century. He argued that the power of governments depends on the cooperation and obedience of those they govern, which means the governed can undermine the power of the governors by withdrawing their consent. “When people refuse their cooperation, withhold help, and persist in their disobedience and defiance,” he wrote, “they are denying their opponent the basic human assistance and cooperation that any government or hierarchical system requires.” While his suggestions for challenging power included individual resistance, he advocated a nonviolent insurgency big enough and sustained enough to make a country ungovernable and so force the governors to truly pay attention to the governed.

How big? Political scientist Erica Chenoweth has suggested that about 3.5% of a country’s population participating actively in nonviolent protest can bring about significant political change. If that’s accurate, an effective resistance would need about 12 million Americans taking to the streets. And yes, that’s a lot, but keep in mind that the women’s protest march early in Trump’s first term gathered more than five million Americans on a single day, many of whom were part of a political protest for the first time….


Bill Clinton, The Genesis Of The Corporately-Owned New Dems And The Decline Of The Democratic Party — The Democratic Party Won't Fix Itself— It Has To Be Forced On Them

Howie Klein, March 11, 2025 [downwithtyranny.com]


Conservative / Libertarian / (anti)Republican Drive to Civil War

Right-Wing Donors and Foundations Spent $1 Billion to Keep People From Voting Last Year

Aaron Dorfman, March 12, 2025 [The American Prospect]

In the 2024 election, more people didn’t vote than voted for any one candidate: 36.33 percent of eligible voters nationwide stayed home (or had their vote thrown out); 31.78 percent voted for Trump; 30.84 percent voted for Harris; and 1.06 percent voted for a third-party candidate.

There are, of course, many reasons why so many eligible voters didn’t vote. Right-wing funding of election deniers and anti–voting rights organizations are definitely part of the answer. Millions of people wanted to vote but were prevented from doing so. Others did vote, but their vote was wrongly rejected and was never counted.

That didn’t happen by accident; it was planned for and funded. In just three years—2020, 2021, and 2022—more than $1 billion flowed from more than 3,500 foundations and high-net-worth donors to about 150 nonprofits that advocate purging people from the voting rolls, restricting vote-by-mail or early voting, removing drop boxes, and other ways of making it harder for people to vote.

Using internet research and Form 990 keyword analysis, researchers at the National Committee for Responsive Philanthropy assembled a list of organizations that:

  • promoted fabricated or overblown threats to election integrity such as noncitizen voting, voter fraud, and corrupt voter registration drives;
  • were mentioned in Project 2025’s implementation plan;
  • were linked to state preemption policies, which prevent duly passed municipal and county laws from being enforced; or
  • were linked to policies criminalizing protest at the state or local level.

Based on this list of nonprofit names, we used Python and compilations of IRS Form 990 data published by Giving Tuesday to match filings by these anti-democracy organizations to filings by their institutional funders…. 

Yesterday, Don Moynihan noted that Trump and Musk, veering from ideological targeting to cronyism, are building a new spoils system. He wrote that a fundamental democratic norm is that laws are implemented as written and applied equally to all. Yet under Trump— and encouraged by Musk— we see a blatant erosion of this principle. He withheld emergency aid from blue-leaning areas, and now his administration has institutionalized this approach, turning budget implementation into a spoils system. Republican lawmakers are able to protect their districts from cuts, while Democratic areas bear the brunt. DOGE (and other departments) openly favor GOP requests, making government services contingent on political loyalty.

Trump and his allies have also embraced impoundment— illegally withholding appropriations to reshape spending in alignment with their own priorities. This unconstitutional power grab effectively nullifies congressional authority. Republicans in Congress, despite knowing that Trump is stripping them of their power, go along with it because they benefit politically. “While they publicly decry government spending,” wrote Moynihan, “they privately ensure their own districts are spared from cuts. DOGE is accepting requests from Republican officials to reverse cuts in their jurisdictions. It is a form of spoils system in reverse: your pet projects will be spared from elimination.


Arlington Cemetery website drops links for Black, Hispanic, and women veterans

Matt White, March 13, 2025 [taskandpurpose.com, via DailyKos]

The website for Arlington National Cemetery "unpublished" links to lists of notable graves, walking tours and educational material pertaining to Black, Hispanic and women veterans, as well as some Medal of Honor recipients….

Cemetery officials confirmed to Task & Purpose that the pages were “unpublished” to meet recent orders by President Donald Trump and Secretary of Defense Pete Hegseth targeting race and gender-related language and policies in the military.


The (anti)Federalist Society assault on the Constitution

Trump Justice Department sends letter to Mayor Brandon Johnson about alleged antisemitism on campuses

Alice Yin, [Chicago Tribune, via YahooNews]


The Justice Department issued a notice Thursday to Mayor Brandon Johnson over alleged antisemitism on Chicago campuses, the latest escalation of President Donald Trump’s crackdown on liberal cities and educational institutions.

A Justice Department-led task force requested Johnson and the mayors of New York City, Los Angeles and Boston discuss with federal officials their responses to antisemitism at their cities’ schools and colleges over the past two years, according to a news release. The statement says the mayors “may have failed to protect Jewish students from unlawful discrimination, in potential violation of federal law.”….


Friday, March 14, 2025

Why Republican Tax Cuts Always Cause A Financial Crash (updated March 2025)

 [This is an updated and rewritten version of the original article I posted in January 2017.]


The centerpiece of Trump’s economic plan — after cleaving the federal government into dysfunctional pieces — is to once again try the Republican experiment of cutting taxes. Now, I know it is hard to argue against cutting taxes, but Democrats have really dropped the ball by not pointing out the amazing historical fact that every single time the Republicans have cut taxes, a financial crash and economic depression followed within a few years.

In 2017, Trump wanted a trillion dollar increase in spending on infrastructure. This time, Trump and Musk are terminating billions in dollars of government spending, and are going after Medicaid and Social Security as well — contrary to Trump’s campaign lies to “not touch” those programs. Trump’s and Musk’s cutting are going to accelerate the microeconomic factors which cumulatively cause Republican tax cuts to create macroeconomic disasters.

There have been three grand multi-year national experiments with Republican / conservative tax cutting over the past century. All three experiments resulted in the average American becoming poorer, the real (industrial) economy in tatters, and spectacular financial crashes. [There is also the fourth experiment of the 2017 Trump tax cuts which, as I will discuss below, also resulted in the beginnings of a financial crash in autumn 2019. The first visible signs of this 2019 financial crisis began in September of that year, but was rapidly swallowed in the economic collapse caused by the COVID pandemic three months later, in December.]

Tax Cut Experiment Number 1
In 1921, President Warren G. Harding proposed ending the wartime excess profits tax which had been imposed during World War I. When Harding died during a speaking tour in California in August 1923, Calvin Coolidge became President, so it was Coolidge who actually signed into law the Revenue Act of 1924, which lowered personal income tax rates on the highest incomes from 73 percent to 46 percent.

Two years later, the Revenue Act of 1926 law further reduced inheritance and personal income taxes; eliminated many excise imposts (luxury or nuisance taxes). The tax rate on the highest incomes was reduced to 25 percent.

The result was a speculative frenzy in the stock markets, especially the application of structured leverage in what were called at the time "investment trusts." In September 1929, this edifice of false prosperity began to wobble, and finally crashed spectacularly in October 1929.

Coolidge did not seek re-nomination in 1928. Faced with a wildly gyrating stock market, a worsening collapse in farm incomes, steeply declining industrial activity, and the disastrous surge in unemployment, the new Republican President, Herbert Hoover, responded with more tax cuts. Personal income tax on incomes under $4,000 was cut by two thirds; personal income tax on income over $4,000 was cut in half. The tax rate on corporations was cut by a full percentage point.

How did the economy respond to these tax cuts? It sunk further and faster into the First Great Depression.

Tax Cut Experiment Number 2
In 1981, Ronald Reagan reduced the top marginal income tax rate, which affects the very wealthy, from 70% to 50%. In 1986, Reagan convinced Congress to reduce the top tax rate yet again, to 28%. Contrary to the Reagan / Republican / conservative argument that the tax cuts would pay for themselves by boosting economic activity, the budget deficit and federal debt exploded. Federal government debt grew from 33.3% of GDP in 1980 to 51.9% at the end of 1988.

Reagan's tax cuts failed to revive American industry, which was also being hammered by the Reagan / Republican / conservative blind faith in free trade. A number of American industries actually disappeared: by the end of Reagan’s presidency, the American textile, apparel, and footwear making industries had been reduced to less than one tenth the size and sales they had just two decades earlier. During Reagan’s tenure, the also it U.S. lost its trade surplus in consumer electronics, industrial electronics, and electric power generating equipment.

The most important industry of all, the machine tool industry—which is needed to make all other production equipment—slipped into a death spiral from which it has never really recovered. At the beginning of the 1980s, the ten largest machine tool makers in the world were all American. By 1997, only one of the top ten was, and it was ranked seventh by sales. In 2009, China became the world’s largest producer of machine tools.

Today, the United States no longer produces large electric transformers, all the large American machine tool builders of the 1940s-1980s have ceased to exist, Intel and AMD have lost the technological lead in chip making,.

In industry after industry, under Reagan, the U.S. lost its world lead: steel, auto, printing equipment, construction equipment, farm equipment, power generating equipment. Only the aerospace industry, the key component of the American empire’s military-industrial complex, managed to maintain its world lead. But today, Boeing can no longer build safe passenger jets. And China has deployed a 6th generation combat aircraft, years ahead of the U.S. 

Meanwhile, the average American family began working more hours to maintain its standard of living. The phenomena of latch-key kids took hold as mothers sought jobs to help keep their family afloat. Wikipedia notes that the number of Americans below the poverty level increased from 29.272 million in 1980 to 31.745 million in 1988, increasingly slightly as a percentage of total population, from 12.95% in 1980 to 13.0% in 1988. The number of people in poverty under the age of 18 increased from 11.543 million in 1980 (18.3% of all child population) to 12.455 (19.5%) in 1988.

Oh, and the banking and financial sector? On October 17, 1987, the worst stock market crash since the First Great Depression shook Wall Street, with the Dow Jones Industrial Average crumbling 22.6% in one frantic day of panicked trading.

Tax Cut Experiment Number 3
Republicans and conservatives of course contend that the two Bush tax cuts of 2001 and 2003 created the economic boom of 2002-2006. But they prefer we not remember the financial crash of 2007-2008. As discussed below, the financial crash is actually the inevitable result of cutting taxes the way Republicans do.

But first I want to expose the “economic boom of 2002-2006” for what it was: a frenzy of borrowing based on the rise in home value that was largely speculative, which led inevitably to the financial crash of 1008-2009. The amount Americans borrowed against their homes more than doubled from $627 billion in 2001 to $1.428 trillion in 2005. From 2001 to 2005, the cumulative amount of home equity extraction totaled just under $5 trillion. This was more than double the total $2.3 trillion growth of GDP in this same 2001-2005 period.

Economist Paul Krugman wrote in December 2008: "The prosperity of a few years ago, such as it was — profits were terrific, wages not so much — depended on a huge bubble in housing, which replaced an earlier huge bubble in stocks."

Meanwhile, U.S. industries continued to weaken and falter. Even the semiconductor and computer industries—the crown jewels of the American industrial economy in the late 1980s—collapsed under Bush, fleeing offshore. As the late Andy Grove, one of the founders and former chairman of semiconductor pioneer Intel wrote in July 2010 (How to Make an American Job Before It's Too Late):

Today, manufacturing employment in the U.S. computer industry is about 166,000 -- lower than it was before the first personal computer, the MITS Altair 2800, was assembled in 1975. Meanwhile, a very effective computer-manufacturing industry has emerged in Asia, employing about 1.5 million workers -- factory employees, engineers and managers.

The largest of these companies is Hon Hai Precision Industry Co., also known as Foxconn. The company has grown at an astounding rate, first in Taiwan and later in China. Its revenue last year was $62 billion, larger than Apple Inc., Microsoft Corp., Dell Inc. or Intel. Foxconn employs more than 800,000 people, more than the combined worldwide head count of Apple, Dell, Microsoft, Hewlett-Packard Co., Intel and Sony Corp.

Most important to note, wages and earnings for all but the richest Americans continued to stagnate. For the bottom quintile of wage earners, the inflation adjusted amount they took home actually declined. 

And, in late 2006, the sub-prime mortgage crisis began to unravel the very fabric of the world financial system, leading to the crashes of April and September 2008.

The failure of our national debate on tax cuts
Most discouraging about this entire national debate on taxes, has been the complete failure of Democratic Party leaders to point to these clear facts, and ask the obvious question:

Why do Republican tax cuts lead, counter-intuitively, to industrial decline, stagnant wages, and finally financial collapse?

The fact is that high marginal tax rates strongly correlate with economic growth.  In December 2010 at the AngryBear blog, Mike Kimel examined the effects of cutting the top marginal tax rate:

The positive relationship between the top [higher] marginal tax rate and the growth in real GDP is very nearly bullet-proof. For instance, it extends all the way back to 1929, the first year for which the government computed GDP data. Additionally, higher marginal tax rates are not only correlated with faster increases in real GDP from one year to the next, but also with increases in real GDP over the subsequent two, three, or four years. This is as true going back to 1929 as it is for the period since Reagan became president. In fact, since the Reagan Revolution took hold, similar relationships have existed between the top marginal rate and several other important variables, like real median income, real private investment, consumer sentiment, the value of the dollar relative to other major currencies, and the S&P 500. Lower tax rates in any given year are associated with slower growth rates for each of these variables, whether those growth rates are measured over periods of one, two, three or four years.

If you ignore banking, finance, and real estate and look under the hood of the industrial economy you can see why there is this counter-intuitive relationship between tax rates and economic growth. With high taxes, the only way to retain the bulk of the wealth created by a business is by reinvesting it in the business -- in plants, equipment, staff, research and development, new products and all the rest. 

But if tax rates are low, then there is more incentive to pull the wealth out, by declaring it as profits — profits that are taxed at what turns out to be too low a rate. In other words, low taxes create an incentive for profit taking, not for business expansion and capital investment.

This in turn creates an incentive for short-term horizons in business planning. If you’re going to be taking all the profits out of a company, and take home a few million a year, why bother to reinvest anything in the business? You’re going to be rich, and never have to work again, even if the business goes bust. Or gets packed on a boat and shipped to China. Or goes "virtual" and lets all the hard work, like, you know, actually making something, be done by the lowest bidder. Employees? Don’t need them.

But employees are also customers. If enough businesses "take profits," after some length of time, the former employees also become former customers. Meaning, they stop buying. As economists phrase it, the economy's aggregate demand generation is crippledFrom examining the effects of the three Republican tax cut experiments this past century, it appears the length of time for this to happen is five to seven years. [The 2017 Trump tax cuts are examined below].

If tax rates are high enough to discourage profit taking, the best way for investors and owners to keep the profits created by a business, is to invest those profits back into the business: buying new plant and equipment that will be used for many years, and hiring and training new employees.  This in turn pushes managers and owners toward longer-term planning, beginning to counteract the infamous quarter-to-quarter short term fixation of Wall Street. And you do not get the absurd situation of companies posting record breaking profits, but not buying new equipment, nor hiring new employees.

Low tax rates encourage taking wealth out of industrial companies; the wealth taken out must then be "put to work." That means more money chasing "investment" opportunities (instead of real investment in capital goods and employees), leading to price increases in financial capital or real estate or some other “asset.” In other words, an asset bubble. The rise in prices of an asset bubble has nothing to do with the creation of real wealth. It all looks like prosperity—until the asset bubble bursts.

The virtuous economic cycle that was destroyed by Reagan
The central economic assumption of Reagan’s economics is the same as that of neoliberalism: the people in the private sector who have become rich by profitably “investing” do a much better job allocating society’s financial resources than the federal government. Reagan flatly asserted that "government is the problem." Bill Clinton signaled his acceptance of this assumption by declaring that the “era of big government is over.” Bush Jr. of course imitated Reagan by cutting taxes. And Barack Obama declared “I am a pro-growth, free-market guy. I love the market."

Reagan, the Republican Party, and American conservatives in general have developed a simple-minded faith in tax cuts, especially in reducing taxes on the highest incomes. The rich, according to their assumption, can supposedly increase society’s wealth much better than the government can do by planning. Given this assumption in their economic thinking, it should be no surprise that their major goal is to get as much of society’s financial resources into the hands of the rich.

The reality, as shown by the three Republican experiments in the past century, is much different. Tax cuts only work to build bubbles that enrich mostly the financial sector. Tax cuts do nothing to help the real, industrial economy. Judged from the perspective of long-term national interests, the rich have proven that they are not very good at investing: they prefer credit default swaps over investing in sustainable energy start-ups.

The major political-economic challenge of the past three decades has been to create a new economy that is not dependent on burning fossil fuels so as to halt climate change. Measured against this challenge, the Reagan / Republican / conservative / neoliberal theory that the rich are best at allocating our society's financial resources has been a disastrous failure. Scientists working on climate change have concluded that we have passed the tipping point, so it is more accurate to write “catastrophic failure” than “disastrous failure.” We have wasted forty years testing the Reagan / Republican / conservative / neoliberal theory. We are about to waste another four years under Trump.

Another reason tax cuts do not create economic growth has to do with the distribution of income in the economy. The Republican / conservative religious belief that "tax cuts create jobs" has become so shallow and so insipid, that they don’t even understand the actual process of job creation contained in their own lousy theory. Tax cuts do NOT create jobs. It is the response of business to growth of aggregate demand in the economy that creates jobs.

In March 2013, Dave Johnson explained this crucial flaw in the economic assumptions behind the deal Obama made with Republicans and conservatives that made over 80 percent of the Bush tax cuts permanent:

Tax Cuts Are Theft
The American Social Contract is supposed to work like this: A beneficial cycle:

GRAPH

We invest in infrastructure and public structures that create the conditions for enterprise to form and prosper.  We prepare the ground for business to thrive. When enterprise prospers we share the bounty, with good wages and benefits for the people who work in the businesses and taxes that provide for the general welfare and for reinvestment in the infrastructure and public structures that keep the system going.

We fought hard to develop this system and it worked for us.  We, the People fought and built our government to empower and protect us providing social services for the general welfare.  We, through our government built up infrastructure and public structures like courts, laws, schools, roads, bridges.  That investment creates the conditions that enable commerce to prosper – the bounty of democracy. In return we ask those who benefit most from the enterprise we enabled to share the return on our investment with all of us – through good wages, benefits and taxes. But the "Reagan Revolution" broke the contract. Since Reagan the system is working like this:

But the “Reagan Revolution” broke the contract. Since Reagan the system is working like this:

GRAPH

Since the Reagan Revolution with its tax cuts for the rich, its anti-government policies, and its deregulation of the big corporations our democracy is increasingly defunded (and that was the plan), infrastructure is crumbling, our schools are falling behind, factories and supply chains are being dismantled, those still at work are working longer hours for fewer benefits and falling wages, our pensions are gone, wealth and income are increasing concentrating at the very top, our country is declining.

This is the Reagan Revolution home to roost: the social contract is broken. Instead of providing good wages and benefits and paying taxes to provide for the general welfare and reinvestment in infrastructure and public structures, the bounty of our democracy is being diverted to a wealthy few.

The great failure of the Democratic Party is that it has done what its rich donors wanted: defended this status quo, But this allowed Trump to become the vehicle through which an enraged population expresses its discontent and demands change. 


What about Tax Cut Experiment Number 4: Trump’s 2017 Cuts?

Contrary to Trump’s boasting, the U.S. economy from 2016 to 2019 basically bumped along, with the exception of unemployment, which declined from 4.9 percent in February 2016 to 3.6 percent in December 2019. But the process of financial weakening discussed above did indeed take place.

Fittingly, the first signs of trouble originated with a bank had made massive loans to Trump and his family — Deutsche Bank of Germany. On May 19, 2019, The New York Times reported that a team of five whistleblowers at Deutsche Bank had been prevented from filing suspicious activity reports with the U.S. Financial Crimes Enforcement Network FinCEN) regarding bank accounts held by Trump and his son-in-law Jared Kushner. In June 2016, the IMF had released a report identifying Deutsche Bank as holding the largest portfolio of dangerously unstable financial derivative connections to Wall Street TBTF banks.

It is not known exactly how the suspicious Trump accounts impacted the financial position of Deutsche Bank. A month after the New York Times report, Deutsche Bank announced it was firing 18,000 employees — and creating a separately chartered “bad bank” into which it shoveled $83 billion in financial derivatives and other toxic assets. (See The Repo Loan Crisis, Dead Bankers, and Deutsche Bank: Timeline of Events, by Pam Martens and Russ Martens, September 30, 2019, Wall Street on Parade.)

Again, it is not known exactly how the problems at Deutsche Bank impacted its counterparties on Wall Street. What is known is that in August 2019, the U.S. Treasury yield curve inverted, meaning short-term interest rates moved higher than long-term rates. Historically, an inverted yield curve is an economic warning: when it costs more to borrow short term than long term a recession soon occurs. 

On September 17, the overnight inter-bank lending rate on repurchase agreements (repos) increased five-fold, from 2 percent range to 10 percent. This was an even more serious warning that there were very dangerous and immediate problems in the TBTF banks, hedge funds and money market funds.

The Federal Reserve did not wait for these problems to spread from Wall Street to the rest of the economy, and began pouring tens of billions of dollars of loans every day into the system. By October 24, 2019, the amount the Fed assistance to Wall Street had reached $690 billion each week

Remember the explanation that low tax rates cause companies and “investors” to take money out of companies, instead of reinvesting in equipment and employees? 

According to the filings that JPMorgan Chase makes annually with the Securities and Exchange Commission (SEC), since 2013 JPMorgan Chase has spent $77 billion buying back its own stock. That includes the whopping $17.01 billion it has spent in just the first nine months of this year buying back its stock…. Had JPMorgan Chase not spent $77 billion propping up its share price with stock buybacks, it would have $77 billion more in cash to loan to businesses and consumers – the actual job of its commercial bank. Add in the tens of billions of dollars that other mega banks on Wall Street have used to buy back their own stock and it’s clear why there is a liquidity crisis on Wall Street that is forcing the Federal Reserve to hurl hundreds of billions of dollars a week at the problem.

Pam Martens and Russ Martens, October 28, 2019, Wall Street on Parade

All the other TBTF banks were apparently doing the same thing. In July 2017, then Vice Chair of the Federal Deposit Insurance Corporation (FDIC), Thomas Hoenig, sent a letter to the U.S. Senate Banking Committee, stating:

“[If] the 10 largest U.S. Bank Holding Companies [BHCs] were to retain a greater share of their earnings earmarked for dividends and share buybacks in 2017 they would be able to increase loans by more than $1 trillion, which is greater than 5 percent of annual U.S. GDP.

“Four of the 10 BHCs will distribute more than 100 percent of their current year’s earnings, which alone could support approximately $537 billion in new loans to Main Street.

“If share buybacks of $83 billion, representing 72 percent of total payouts for these 10 BHCs in 2017, were instead retained, they could, under current capital rules, increase small business loans by three quarters of a trillion dollars or mortgage loans by almost one and a half trillion dollars.”

It turns out that the TBTF banks were not only backing away from lending to the rest of the economy, (then to themselves beginning in September 2019), they were also failing to meet the reserve requirements for the amount of readily liquid assets they kept on hand. 

By the middle of November 2019, the Fed’s emergency support for the repo market had reached $3 trillion, and at least two TBTF banks, Morgan Stanley and Goldman Sachs had begun working out the kinks to borrow even more through the Fed’s discount window. This is a mechanism by which the banks can borrow money short term directly from the Fed to meet “temporary shortages of liquidity.” Short term means longer than overnight (as in the repo market) but probably for a month or two. 

On December 12, 2019, the New York Fed announced that it would give an additional $2.93 trillion in short-term loans over the next month to the TBTF banks that were the Fed’s primary dealers on Wall Street. As Pam Martens and Russ Martens explained on Wall Street on Parade at the time, Trump and the Stock Market Are the Winners in the Fed’s Repo Loan Binge

December 2019 was also the time that the COVID pandemic began, forcing much of the economy to shut down. To which Congress responded by passing a series of relief packages, including the massive $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act (March 27, 2020). 

So, yes, the Trump 2017 tax cuts led to a financial unravelling at the end of 2019, but it was nipped in the bud by over $8 trillion in emergency lending by the Fed to TBTF banks, hedge funds and money market funds, and over $3 trillion in emergency COVID relief spending by Congress. 


Tax cuts cause deficits
In a March 2023 report, the Center for American Progress showed that Tax Cuts Are Primarily Responsible for the Increasing Debt Ratio

...the true cause of rising debt: Tax cuts initially enacted during Republican trifectas in the past 25 years slashed taxes disproportionately for the wealthy and profitable corporations, severely reducing federal revenues. In fact, relative to earlier projections, spending is down, not up. But revenues are down significantly more. If not for the Bush tax cuts and their extensions—as well as the Trump tax cuts—revenues would be on track to keep pace with spending indefinitely, and the debt ratio (debt as a percentage of the economy) would be declining. Instead, these tax cuts have added $10 trillion to the debt since their enactment and are responsible for 57 percent of the increase in the debt ratio since 2001, and more than 90 percent of the increase in the debt ratio if the one-time costs of bills responding to COVID-19 and the Great Recession are excluded.


Despite these facts, precious few commentators and pundits ever tell Republicans: if you really want to end government deficits, then stop your tax cuts. It’s not a spending problem, it’s a revenue problem, caused by handing tax cuts to the rich. Imagine if the deficit issue were framed this way every time a Republican appeared on a Sunday morning news show, or every time a Democratic representative or Senator stood to address the issue. 


Tax cuts create oligarchy 
The most dangerous problem with tax cuts is that they have created a new plutocratic oligarchy able to buy enough political influence that they basically monopolize political power. This is pretty much obvious at this point. 

But what Musk and his DOGEbags are doing now goes beyond even that. They are intentionally destroying the ability of government to function for the common good. Why? The stock answer is that Republicans and conservatives want to cripple government so that they can then turn around and say, “See, government doesn’t work.”

In August 2010, Sara Robinson, who used to post some brilliant material at Orcinus in the early years of the blogosphere, expanded on Dave Johnson’s explantion of how Reagan’s tax cuts had destroyed the virtuous circle of the national economy. 


Tax Cuts Are Theft: An Amplification
by Sara Robinson | Aug 10, 2010

Dave points to the practical effects of a piece of conservative theology that deserves a bit of deeper drilling. It's this: Conservatives believe that only private individuals should hold wealth. They do not believe in commonly-held public wealth of any kind. And that's why they feel perfectly free to raid the vast legacy that our ancestors have accumulated and stewarded for us over the past 230 years….

...What they've stolen from us and arbitraged away isn't just our own money; it's the vast accumulation of civilizational wealth that was bought with the blood, sweat, tears, endless sacrifice, earnest planning, and bold dreaming of a dozen generations of American ancestors, and then bequeathed to us to ensure our own futures. Each of those generations received it in trust from the one that came before, added its own unique contributions to it, and then passed it on as an endowment to the next. As time compounded the gift, the legacy got richer; and our sense of who was entitled to share in the bounty got broader....

It's only when you think about our common wealth the way the world's richest families do -- as a bequest from a long line of distinguished ancestors, as a vast common resource base that provides us with extraordinary material comfort today, and as a sacred trust that we must manage and multiply on behalf of generations yet to come -- that you can really begin to understand the sheer magnitude of everything they took from us.

The thieves didn't just steal our houses, our retirement funds, our careers, or our tax money. It went far beyond that. They also stole the family jewels -- the vast infrastructure that's been built up for centuries by generations of foresighted Americans, now collapsing into uselessness. They defunded the great universities, crowded our kids into classrooms like factory farmed chickens, and are shutting down the magnificent state and national parks. And they're also stealing our future, committing us to endless debt, sucking the marrow out of our international standing, foreclosing our opportunties, making it impossible to solve looming problems, and forcing us to hand off to our children a far more meager legacy than the one we received….

Here's the irony: the people who did this to us did it precisely because they also understand wealth in these generational terms…. So, if they understand this, where's the disconnect? Why couldn't they respect the public's need to manage our common wealth the same way they manage their own private wealth?

The disconnect is this: In the conservative worldview, it's right and legitimate for private families and corporations to accrue generational wealth, and build great dynasties. But it's absolutely wrong for the democratic masses to accumulate wealth that way; or to collaborate, via the government, to ensure that all of their children will have a birthright sufficient to open the doors to their dreams.

Maggie Thatcher told us outright: "There is no such thing as society. There are only individuals and families, and their interests." And if there's no such thing as society, then society has no right to accumulate wealth -- via taxes, investment, or any other means. Viewed this way, a conservative might even think it's a virtuous thing to defund and defraud the public out of any capital it does manage to acquire….


Democrats have to oppose Trump from the left
On tariffs and economics generally, if Trump actually manages to force companies to return production to USA, the Democratic Party is dead meat if it continues to respond as it has. It is very troubling that the news media analysts and Democratic Party leaders appear incapable of doing anything other than regurgitate some “free trade” drivel from the Koch-funded, market fundamentalist American Enterprise Institute and Cato Institute. If Democrats are going to oppose Trump by allying with market fundamentalists to defend the “free trade” tenets of conservative / neoliberal economics, then they will be useless in opposition and voters will treat them accordingly. The only way Democrats can successfully oppose Trump is from the left: by pushing single payer health care; a tax on Wall Street speculation; and a massive $100 trillion world-wide program New Green Deal to stop climate change by building new energy, transportation, and industrial systems that do not use fossil fuels.

Besides a tax on Wall Street, Democrats should counter Republican proposals to “reform” the social safety net by introducing and pushing for expansions of existing programs. A few weeks ago, Senator Bernie Sanders of Vermont, Senator Elizabeth Warren, Democrat from Massachusetts, and Democratic Representatives Jan Schakowsky of Illinois and Val Hoyle of Oregon introduced a bill to increase Social Security payments by $2,400 per year, and to ensure the system is fully fund for the next 75 years by removing the tax exemption on all income above $250,000. Then there is the issue of the national minimum wage, which has been stuck at $7.25 an hour since 2009 — while the wealth of billionaires like Musk and Bezos has increased over ten-fold.

Instead of sucking up to their rich donors, Democrats need to begin fighting the economic inequities that Americans are rightly enraged about.