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Donald Trump wants to fundamentally change U.S. foreign policy. The President-elect wants to abandon the destabilizing wars and regime change operations that have characterized US policy in the past and work collaboratively with countries like Russia that have a mutual interest in fighting terrorism and establishing regional security. Here’s an excerpt from the speech Trump delivered in Cincinnati on December 1, that presents Trump’s views on the topic:

“We will pursue a new foreign policy that finally learns from the mistakes of the past…We will stop looking to topple regimes and overthrow governments…. Our goal is stability not chaos, because we want to rebuild our country [the United States]… We will partner with any nation that is willing to join us in the effort to defeat ISIS and radical Islamic terrorism …In our dealings with other countries, we will seek shared interests wherever possible and pursue a new era of peace, understanding, and good will.”

Trump’s approach to foreign policy may seem commendable given the disastrous results in Afghanistan, Libya, Syria and Iraq, but it is also a dramatic departure from the last 70 years of activity during which time the United States has either overthrown or attempted to overthrow 57 foreign governments. (According to author William Blum) This is why the political class and their wealthy constituents are so worried about Trump, it’s because they don’t want the new president mucking-around in a process he doesn’t understand, a process that has reshaped the world in a way that clearly benefits US mega-corporations while reinforcing Washington’s iron grip on global power. The bottom line is that “violence works” and any deviation from the present policy represents a direct threat to the people whose continued power and prosperity depend on that violence.

This is why none of the major media published Trump’s comments. The corporate bosses who own the media have nothing to gain by promoting the views of a populist executive who wants to minimize the carnage by working cooperatively with foreign leaders the media has already designated as ‘enemies of the state’, like Vladimir Putin. How does that advance the media’s agenda?

It doesn’t, which is why they’d rather the public remain in the dark about what Trump actually said.

But the Washington power-elite know what Trump said, and they have acted accordingly. They have put together a plan that is designed to undermine Trump’s credibility, back him into a corner and remove him from office. That’s the plan, regime change in the USA.

This is why CIA Director John Brennan took the unprecedented step of appearing on FOX News Sunday. Brennan and the other heads of the Intelligence Community have taken a leading role in the desperate character assassination campaign that is intended to obliterate public confidence in Trump in order to foil his attempts at resetting relations with Russia. The CIA’s involvement in the coups in Ukraine and Honduras, as well as the agency’s funding, arming and training of Sunni militants in Libya and Syria, attest to the fact that Brennan does not see peace and reconciliation as compatible with US foreign policy objectives. Like his elitist paymasters, Brennan is committed to perpetual war, regime change, and mass annihilation. Trump offers some relief from this 70 year-long nightmare policy. Check out this quote from Vice President-elect, Mike Pence on FOX News Sunday:

“I think the president elect has made it very clear that we have a terrible relationship with Russia right now. And that’s not all our own doing, but really is a failure of American diplomacy in successive administrations. And what the president elect has determined to do is to explore the possibility of better relations. We have a common enemy in ISIS, and the ability to work with Russia to confront, hunt down and destroy ISIS at its source represents an enormously important priority of this incoming administration. But what the American people like about Donald Trump is that he’s someone who can sit down, roll his sleeves up and make a deal. And what you’re hearing in his reflections whether it be with Russia, or China or other countries in the world, is that we’re going to reengage. We’re going to put America first, we’re going to reengage in a way that advances America’s interests in the world and that advances peace.”

Vice President-elect Mike Pence, FOX News Sunday

“Better relations” with Russia?

Not on your life. US elites and their think tank lackeys would never allow it, not in a million years. Even now, after six years of death and destruction in Syria, elites at the Council on Foreign Relations are still resolved to topple Syrian President Bashar al-Assad. (Re: “Aleppo’s Sobering Lessons,” Project Syndicate, by Richard Haas, President of the Council on Foreign Relations) The same is true at the Brookings Institute where chief strategist Michael O’ Hanlon leads the charge for splitting up the battered country so Washington can control vital pipeline corridors, establish military bases in the east, and eliminate a potential threat to Israeli expansion. Here’s a clip from a recent piece by O’ Hanlon that appeared in the Wall Street Journal. The author admits that the US goal is to splinter to country into multiple parts transforming it into a failed state:

“To achieve peace, Syria will need self-governance within a number of autonomous zones. One option is a confederal system by which the whole country is divided into such zones. A less desirable but minimally acceptable alternative could be several autonomous zones within an otherwise still-centralized state—similar to how Iraqi Kurdistan has functioned for a quarter-century….

Many Syrians will not like the idea of a confederal nation, or even of a central government controlling half the country with the other half divided into three or four autonomous zones. … But the broad vision should be developed soon.” (Wall Street Journal)

“Autonomous zones” in a “confederal system” is a sobriquet for a broken, Balkanized failed state run by tribal elders, disparate warlords and bloodthirsty jihadists. O’ Hanlon’s vision for Syria is a savage dysfunctional dystopia run by homicidal fanatics who rule with an iron fist. Is it any wonder why the Syrian people have fought tooth and nail to fend off the terrorist onslaught?

The United States is entirely responsible for the bloody decimation of Syria. It is absurd to think that either the Saudis, the Qataris or the Turks would have launched a war on a strategically-critical nation like Syria without a green light from Washington. The conflict is just the latest hotspot in Washington’s 15 year-long war of terror. The ultimate goal is to remove all secular Arab leaders who may pose a threat to US imperial ambitions, open up the region to US-dominated extractive industries, and foment enough extremism to legitimize a permanent military presence.

Russia’s intervention into the Syrian conflict in September 2015, has cast doubt on Washington’s ability to prevail in the six year-long war. The election of Donald Trump has further complicated matters by affecting a seismic shift in policy that could end the fighting and lead to improved relations between the US and Russia. Naturally, that is not in the interests of the vicious neocons or their liberal interventionist counterparts who see the proxy war in Syria as a pivotal part of their plan to clip Russia’s wings, discredit Putin in the eyes of the international community, and lay the groundwork for regime change in Moscow. Washington’s ultimate plan for Russia hews closely to that of Zbigniew Brzezinski who– in an titled “A Geostrategy for Eurasia”– had this to say:

“Given (Russia’s) size and diversity, a decentralized political system and free-market economics would be most likely to unleash the creative potential of the Russian people and Russia’s vast natural resources. A loosely confederated Russia — composed of a European Russia, a Siberian Republic, and a Far Eastern Republic — would also find it easier to cultivate closer economic relations with its neighbors. Each of the confederated entitles would be able to tap its local creative potential, stifled for centuries by Moscow’s heavy bureaucratic hand. In turn, a decentralized Russia would be less susceptible to imperial mobilization.” (Zbigniew Brzezinski, A Geostrategy for Eurasia, Foreign Affairs, 76:5, September/October 1997)

Nice, eh? In other words, Washington’s plan for Russia is no different than its plan for Syria. Both countries will be chopped up into smaller bite-size chunks eliminating the possibility of a strong nationalist government rising up and resisting Washington’s relentless exploitation and repression. It’s divide and conquer writ large.

“A loosely confederated Russia” also fits perfectly with Washington’s top priority to spread military bases across Asia, control crucial energy supplies, open up financial markets, impose Washington’s neoliberal economic policies, and maintain a stranglehold on China’s explosive growth. It’s the Great Game all over again, and Washington is “In it to win it.”

Here’s an excerpt from a speech Hillary Clinton gave in 2011 titled “America’s Pacific Century”. The speech underscores the importance that elites attach to the “rebalancing” plan contained in the term “pivot to Asia”. The strategy relies on the opening up of new markets to US corporations and Wall Street, controlling critical resources, and “forging a broad-based military presence” across the continent. Washington intends to be the main player in the world’s most prosperous region. Here’s Clinton:

“The future of politics will be decided in Asia, not Afghanistan or Iraq, and the United States will be right at the center of the action…. One of the most important tasks of American statecraft over the next decade will therefore be to lock in a substantially increased investment — diplomatic, economic, strategic, and otherwise — in the Asia-Pacific region…

Harnessing Asia’s growth and dynamism is central to American economic and strategic interests and a key priority for President Obama. Open markets in Asia provide the United States with unprecedented opportunities for investment, trade, and access to cutting-edge technology…..American firms (need) to tap into the vast and growing consumer base of Asia…The region already generates more than half of global output and nearly half of global trade. As we strive to meet President Obama’s goal of doubling exports by 2015, we are looking for opportunities to do even more business in Asia.”

(“America’s Pacific Century”, Secretary of State Hillary Clinton”, Foreign Policy Magazine, 2011)

Onward, to Asia, the next great US battlefield! The killing never ends.

As we noted earlier, the pivot to Asia is Washington’s top priority. Clinton merely confirms what geopolitical strategist Zbigniew Brzezinski laid out in his 1997 magnum opus The Grand Chessboard: American Primacy and Its Geostrategic Imperatives. Here’s a short excerpt from the book:

“For America, the chief geopolitical prize is Eurasia… (p.30)….. Eurasia is the globe’s largest continent and is geopolitically axial. A power that dominates Eurasia would control two of the world’s three most advanced and economically productive regions. ….About 75 per cent of the world’s people live in Eurasia, and most of the world’s physical wealth is there as well, both in its enterprises and underneath its soil. Eurasia accounts for 60 per cent of the world’s GNP and about three-fourths of the world’s known energy resources.” (p.31)

For Washington to achieve its foreign policy objectives, it must eliminate or defeat all emerging threats to its dominance. In practical terms, that means the Russo-Sino plan to transform Europe and Asia into a giant free trade zone that extends from Lisbon to Vladivostok– must be sabotaged by any means possible. The State Department’s coup in Kiev as well as aggressive efforts to restrict the flow of Russian gas to the EU via Nord Stream and South Stream, have temporarily succeeded in undermining Moscow’s plan for accelerated economic integration. Had Hillary won the election, the US would have stepped up its provocations, its sanctions, its military buildup on Russia’s borders, its gas war, its attacks on Russia’s markets and currency, and its proxy wars in Syria and Ukraine. But now that Trump has been thrown into the mix, anything is possible. Even a fundamental change in the policy.

The question is whether the deep state powerbrokers –who have already launched a number of attacks on Trump in the media — will throw in the towel and allow Trump to develop his own independent foreign policy or take steps to have him removed from office.

Early indications suggest that a coup is already underway.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

(Reprinted from Counterpunch by permission of author or representative)
 

Powerful elites are using the credibility of the US Intelligence agencies to demonize Russia and prepare the country for war. This is the real meaning of the “Russia hacking” story which, as yet, has not produced any hard evidence of Russian complicity.

Last week’s 25-page report, that was released by the Director of National Intelligence James Clapper, illustrates to what extent intelligence is being “fixed around the policy”. Just as the CIA generated false information related to Weapons of Mass Destruction to soften public resistance to war with Iraq, so too, the spurious allegations in the DNI’s politically-motivated report are designed to depict Russia as a growing threat to US national security. The timing of the report has less to do with the election of Donald Trump as President than it does with critical developments in Syria where the Russian military has defeated US-proxies in Syria’s industrial hub, Aleppo, rolling back Washington’s 15-year War of Terror and derailing the imperialist plan to control vital resources and pipeline corridors across the Middle East and Central Asia. Russia has become the main obstacle to Washington achieving its strategic vision of pivoting to Asia and maintaining its dominant role into the next century. The Intelligence Community has been coerced into compromising its credibility to incite fear of Russia and to advance the geopolitical ambitions of deep state powerbrokers.

The “Russia hacking” flap shows how far the Intel agencies have veered from their original mandate, which is to impartially gather and analyze information that may be vital to US national security. As we have seen in the last two weeks, the leaders of these organizations feel free to offer opinions on issues that clearly conflict with those of the new President-elect. Trump has stated repeatedly that he wants to reduce tensions and reset relations with Russia, but that policy is being sabotaged by members of the intelligence community, particularly CIA Director John Brennan who appeared just last week on PBS Newshour with Judy Woodruff. Here’s an excerpt from the interview:

“We see that there are still a lot of actions that Russia is undertaking that undermine the principles of democracy in so many countries. What has happened in our recent election is not new. The Russians have engaged in trying to manipulate elections in Europe for a number of years…

the Russians tried to interfere in our electoral process recently, and were actively involved in that. And that is something that we can’t countenance.” (“Interview with CIA Director John Brennan”, PBS Newshour)

Brennan, of course, provided no evidence for his claims nor did he mention the hundreds of CIA interventions around the world. But Brennan’s accusations are less important than the fact that his appearance on a nationwide broadcast identifies him as a political advocate for policies that conflict with those of the new president. Do we really want unelected intelligence officials — whose job it is to provide the president with sensitive information related to national security– to assume a partisan role in shaping policy? And why would Brennan –whose is supposed to “serve at the pleasure of the president”– accept an invitation to offer his views on Russia when he knew they would be damaging to the new administration?

Powerful people behind the scenes are obviously pushing the heads of these intelligence agencies to stick to their ‘anti-Moscow’ narrative to force Trump to abandon his plan for peaceful relations with Moscow. Brennan isn’t calling the shots and neither are Clapper or Comey. They’re all merely agents serving the interests of establishment plutocrats whose geopolitical agenda doesn’t jibe with that of the incoming administration. If that wasn’t the case, then why would the Intelligence Community stake its reputation on such thin gruel as this Russian hacking gibberish? It doesn’t make any sense. The people who launched this campaign are either supremely arrogant or extremely desperate. Which is it? Here’s an excerpt from an article by veteran journalist Robert Parry sums it up like this in an article at Consortium News:

“The DNI report amounted to a compendium of reasons to suspect that Russia was the source of the information – built largely on the argument that Russia had a motive for doing so because of its disdain for Democratic nominee Clinton and the potential for friendlier relations with Republican nominee Trump.

But the case, as presented, is one-sided and lacks any actual proof. Further, the continued use of the word “assesses” – as in the U.S. intelligence community “assesses” that Russia is guilty – suggests that the underlying classified information also may be less than conclusive because, in intelligence-world-speak, “assesses” often means “guesses.” (“US Report Still Lacks Proof on Russia ‘Hack’”, Robert Parry, Consortium News)

Bottom line: Brennan and his fellow spooks have nothing. The report is little more than a catalogue of unfounded assumptions, baseless speculation and uncorroborated conjecture. In colloquial parlance, it’s bullshit, 100 percent, unalloyed Russophobic horse-manure. In fact, the authors admit as much in the transcript itself when they say:

“Judgments are not intended to imply that we have proof that shows something to be a fact. Assessments are based on collected information, which is often incomplete or fragmentary, as well as logic, argumentation, and precedents.”

What kind of kooky admission is that? So the entire report could be BS but we’re supposed to believe that Putin flipped the election? Is that it???

What’s really going on here? Why have the Intelligence agencies savaged their credibility just to convince people that Russia is up to no good?

The Russia hacking story has more to do with recent developments in Syria than it does with delegitimizing Donald Trump. Aleppo was a real wake up call for the US foreign policy establishment which is beginning to realize that their plans for the next century have been gravely undermined by Russia’s military involvement in Syria. Aleppo represents the first time that an armed coalition of allied states (Russia, Iran, Syria, Hezbollah) have actively engaged US jihadist-proxies and soundly beat them to a pulp. The stunning triumph in Aleppo has spurred hope among the vassal states that Washington’s bloody military juggernaut can be repelled, rolled back and defeated. And if Washington’s CIA-armed, trained and funded jihadists can be repelled, then the elitist plan to project US power into Central Asia to dominate the world’s most populous and prosperous region, will probably fail. In other words, the outcome in Aleppo has cast doubts on Uncle Sam’s ability to successfully execute its pivot to Asia.

That’s why the Intel agencies have been employed to shape public perceptions on Russia. Their job is to prepare the American people for an escalation of hostilities between the two nuclear-armed superpowers. US powerbrokers are determined to intensify the conflict and reverse facts on the ground. (Recent articles by elites at the Council on Foreign Relations and the Brookings Institute reveal that they are as committed to partitioning Syria as ever.) Washington wants to reassert its exceptional role as the uncontested steward of global security and the lone ‘unipolar’ world power.

That’s what this whole “hacking” fiasco is about. The big shots who run the country are trying to strong-arm ‘the Donald’ into carrying their water so the depredations can continue and Central Asia can be transformed into a gigantic Washington-dominated corporate free trade zone where the Big Money calls the shots and Capital reigns supreme. That’s their dreamstate, Capitalist Valhalla.

They just need Trump to get-with-the-program so the bloodletting can continue apace.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

(Reprinted from Counterpunch by permission of author or representative)
 

Donald Trump has a plan for dealing with the stock market bubble. Make it bigger.

Before the election candidate Trump blasted Federal Reserve chairman Janet Yellen for keeping interest rates too low for too long to keep the economy humming along while Obama was still in office. The president elect accused Yellen of being politically motivated suggesting that the Fed’s policies had put the country at risk of another stock market Crash like 2008.

“If rates go up, you’re going to see something that’s not pretty,” Trump told Fox News in an interview in September. “It’s all a big bubble.”

Yellen of course denied Trump’s claims saying, “We do not discuss politics at our meetings, and we do not take politics into account in our decisions.”

As we shall see later in this article, Yellen was lying about the political role the Fed plays in setting policy, in fact, last week’s FOMC statement clearly establishes the Fed as basically a political institution that implements an agenda that serves a very small group of powerful constituents, the 1 percent. If serving the interests of one group over all of the others is not politics, than what is it?

The problem we have with Trump is not his critique of the market or the Fed. The problem is his remedy which can be sussed out by reviewing his economic plan. Trump wants to slash personal and corporate taxes in order to put more money into the economy to increase business investment, boost hiring, and rev up growth. Regrettably, his tax plan achieves none of these.

First of all, slashing taxes for the wealthy does not boost growth. We know that. It doesn’t work. Period. Check out this blurb from an article on CNBC:

“A study from the Congressional Research Service — the non-partisan research office for Congress — shows that “there is little evidence over the past 65 years that tax cuts for the highest earners are associated with savings, investment or productivity growth.”

In fact, the study found that higher tax rates for the wealthy are statistically associated with higher levels of growth…

The CRS study looked at tax rates and economic growth since 1945. The top tax rate in 1945 was above 90 percent, and fell to 70 percent in the 1960s and to a low of 28 percent in 1986.
The top current rate is 35 percent. The tax rate for capital gains was 25 percent in the 1940s and 1950s, then went up to 35 percent in the 1970s, before coming down to 15 percent today — the lowest rate in more than 65 years.

Lowering these rates for the wealthy, the study found, isn’t aligned with significant improvement in any of the areas it examined…

There is one part of the economy, however, that is changed by tax cuts for the rich: inequality….

The share of total income going to the top 0.1 percent hovered around 4 percent during the 1950s, 1960s and 1970s, then rose to 12 percent by the mid-2000s. During this period, the average tax rate paid by the 0.1 percent fell from more than 40 percent to below 25 percent.” (Study: Tax Cuts for the Rich Don’t Spur Growth, CNBC)

Trump’s tax plan will increase inequality by making the rich richer. He wants to reduce the top tax rate from 39.6% to 33% which means that people “making $3.7 million or more in a year, would receive $1 million in annual tax savings.” (USA Today) The plan is bad for the economy, bad for the deficits and bad for working people who will see more aggressive attacks on Social Security to make up for the losses in revenue.

Second, the huge tax break Trump intends to award to the tax dodging corporations that stash their money overseas will not be used to fire up growth or invest in future business ventures, but to issue more dividends to shareholders or increase stock buybacks that pump up stock prices. There’s a great article at the Intercept website that sums it up perfectly. Here’s a short excerpt:

“The official line from U.S.-based multinational corporations is that if they get a huge tax break, they’ll bring home the trillions of dollars in profits they’ve stashed overseas and use it to hire tons of Americans.

But now that Donald Trump’s election means it might really happen, corporate executives are telling Wall Street analysts what they’ll actually use that money for: enriching their shareholders and buying other companies.

The Intercept’s examination of dozens of earnings calls and investor conference talks since Trump won the presidential election finds that many executives are telling analysts at large banks that they are eager to take the money to increase dividends and stock buybacks as well as snap up competitors. They demonstrate considerably less if any enthusiasm for going on a domestic hiring spree…

“The wealthy are going to create tremendous jobs. They’re going to expand their companies,” Trump asserted during the first presidential debate. “They’re going to bring $2.5 trillion back from overseas, … to be put to use on the inner cities and lots of other things, and it would be beautiful.” During the third debate he promised that “We’re going to start hiring people, we’re going to bring the $2.5 trillion that’s offshore back into the country. We are going to start the engine rolling again.” (Corporations Prepare to Gorge on Tax Cuts Trump Claims Will Create Jobs, Jon Schwartz, The Intercept)

Trump knows his so called “tax holiday” scam is a bunch of baloney. Why would companies expand their operations, hire more workers, and generate more product when consumer demand is still in the crapper seven years after the Great Recession?

They’re not going to do that. They’re going to do exactly what their shareholders expect them to do, pursue those areas of investment that promise the best possible return. In this case that means stock buybacks, the financial engineering swindle that’s going to add another $2 trillion to equities valuations and send Trump’s “bubble” to the moon.

The people who believe that Trump is going to defend the “little guy” against the special interests, corporate lobbyists and elitist oligarchy who run this country are going to be pretty disappointed. Behind his widely-ballyhooed public relations campaign aimed at convincing his backers that he’s determined to keep the jobs in the US, Trump is working all the levers to ensure the big money keeps flowing in the same direction it has been for the last 30 years. Upwards.

As for Yellen, last week’s FOMC statement made it crystal clear that if Trump makes any attempt to veer from the predatory, neoliberal course she’s charted, he will be quickly slapped down with higher interest rates. Check out her comments from the post-statement press conference:

“We’re operating under a cloud of uncertainty at the moment … Some participants noted that if the labor market appeared to be tightening significantly more than expected, it might become necessary to adjust the Committee’s communications about the expected path of the federal funds rate, consistent with the possibility that a less gradual pace of increases would become appropriate.”

In other words, if wages finally manage to break-free from their seven years of flatlining stagnation due to an unforeseen surge in growth, the Fed will immediately extinguish that improvement by raising rates and reducing the level of economic activity. Yellen’s statement simply confirms the Fed’s anti-worker bias.

Which is why we say the Fed is basically a political institution.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

(Reprinted from Counterpunch by permission of author or representative)
 

Why is the Fed creating incentives for US corporations to destroy themselves? Why is the Fed pushing insurance companies and retirement funds into bankruptcy? Why is the Fed raising interest rates when inflation is still well below its 2 percent target?

Things are not always what they seem. In theory, the Fed’s low interest rates are supposed to have a positive impact on the economy by spurring a credit expansion. But it hasn’t worked out that way. Bank lending has remained stubbornly subdued throughout the post-crisis period. But what hasn’t remained subdued is corporate borrowing (via the bond market) which has exceeded all previous records increasing the probability of massive corporate defaults sometime in the next two years. Here’s a good summary of what’s going on from an article in Fortune titled “Corporate America is Drowning in Debt”:

“A good portion of Corporate America may have a serious debt problem. According to a report released Friday from S&P Global Ratings, the bottom 99% of corporations, when it comes to the amount of cash they have, are increasingly showing worrying levels of debt.

Studying S&P’s universe of more than 2,000 nonfinancial corporations, S&P’s researchers found that corporate issuers of debt had on hand a record $1.84 trillion in cash. But that statistic doesn’t tell us very much about the health of individual companies, because it appears cash is more concentrated at the top than ever. The top 1% of corporate cash holders…have slightly more than half of the total cash pile of Corporate America….

If you remove the top 25 cash holders, you’ll find that for most of Corporate America, cash on hand is declining even as these companies rack up more and more debt at historic rates. The bottom 99% of corporate borrowers have just $900 billion in cash on hand to back up $6 trillion in debt. “This resulted in a cash-to-debt ratio of 12%—the lowest recorded over the past decade, including the years preceding the Great Recession,” the report reads.” …

One obvious reason for Corporate America’s debt binge is low interest rates. With investors willing to lend companies money for so little in return, it makes sense that firms would turn to debt to finance things like share repurchases rather than, for instance, bringing cash earned from overseas, which would then be taxed at a high rate.

….”Given the record levels of speculative-grade debt issuance in recent years,” the report reads, “we believe corporate default rates could increase over the next few years.” (“Corporate America Is Drowning in Debt“, Fortune)

Repeat: The vast majority of US corporations are worse off now than they were in “the years preceding the Great Recession.” And the reason they’re worse off now is because of low interest rates. The Fed’s low rates create lethal incentives for CEO’s to pile on the debt which puts their companies at greater risk of default. Corporations are borrowing tons of money from investors in the bond market, which they are distributing to their shareholders rather than using to improve productivity or increase employment. They are also recycling two-thirds of earnings into stock buybacks which is going to dramatically impact their future competitiveness. Here’s a blurb from an article in USA Today that sums it all up:

“Capital spending fell 6.2% at an annual rate in the first quarter following a 2.1% drop late last year, its worst such stretch since 2009 and a big reason the economy nearly stalled in that period, Commerce Department data shows.

Business outlays were sluggish throughout 2015, rising 2.8% compared to an average 4.5% clip during the seven-year-old recovery. …Business spending typically makes up 12.5% of economic activity but has an outsized impact on the economy and stock market. Purchases of equipment and software, and the construction and renovation of buildings, create thousands of jobs for manufacturers. And such investment makes up nearly 30% of the sales of Standard & Poor’s 500 companies, says David Bianco, Deutsche Bank’s chief U.S. equity strategist….

Instead, public companies are plowing their large cash reserves into stock buybacks and dividends despite low borrowing costs.” (“Business investment is in a slump and its hurting the economy”, USA Today)

Stock buybacks– which were illegal before the Reagan administration — are a deceptive form of financial circlejerk that distort prices, create bubbles and lead to crisis. The reason the Fed ignores these issues because it sees profitmaking as a higher priority than ensuring the safety of the system. Go figure?

Since Donald Trump has been elected, the buyback frenzy has gained momentum mainly because he’s promised a one-time “repatriation holiday” for tax dodging US corporations who will be allowed to bring upwards of $1 trillion back to the US at a meager 10% corporate tax rate. Market analysts do not expect the money to go into production, hiring or infrastructure development, but into more buybacks that will send stocks higher into the stratosphere. Here’s the story from the WSJ:

“Corporate stock repurchases are on the upswing once again, wrong-footing skeptics who predicted 2016 would mark the beginning of the end of a postcrisis spending spree. Through Dec. 16, companies this month have stepped up their buybacks by nearly two-thirds over the same period last year, according to Goldman Sachs Group Inc….

The outlook for buybacks, like so much else in financial markets, has been upended by the Nov. 8 election of Donald Trump as president. After repurchases hit a record in 2015, they had slowed this year. Many analysts predict they will decline next year, reflecting soft corporate-earnings growth and stretched stock valuations. But the election surprise has raised the prospect that tax cuts will put large sums in corporate coffers, which in turn will be deployed largely in repurchases. That money potentially could include the profits that U.S. companies stand to bring back from overseas under a widely expected repatriation-tax holiday.

Goldman Sachs forecast that S&P 500 companies will repatriate $200 billion of their $1 trillion in cash held overseas in 2017 and that $150 billion of those funds will be spent on share repurchases. That could provide further support for major U.S. stock indexes that have hit fresh highs this month.”

(“Surging Buybacks Say Stock Boom Isn’t Over“, Wall Street Journal)

So according to G-Sax, 75% of all the dough returning from overseas is going go into buybacks that will pump up the equities bubble (that Trump criticized before he was elected) into the biggest colossus of all time. Is that the change that Trump backers were hoping for?

Here’s more from the same article:

“Repurchases have been a major contributor to the nearly eight-year stock rally. From the start of 2009 to the end of September 2016, companies in the S&P 500 spent more than $3.24 trillion repurchasing shares, according to S&P Dow Jones Indices.

Both companies and investors often applaud share repurchases because the practice drives up earnings per share and often boosts stock prices.” (WSJ)

Ultimately, the buck stops with the Fed, that’s where the real blame lies. The Fed created the incentives for this destructive behavior and they are the primary regulator of the entire financial system. They could stop this nonsense with just one appearance before Congress, but they choose not to. They’d rather keep the real economy in a permanent coma and blow up the financial system than lift a finger to stop Wall Street’s reckless and relentless looting spree.

We know that the low rates have been disastrous for pension funds, insurance companies and Mom and Pop’s retirement savings which have shriveled to nothing since the recession ended in 2009. We also know that–during that same period– “97% of all GDP-income gains went to the wealthiest 1% households” which has widened inequality to levels not seen since the Gilded Age. The question is: Why would the Fed change its policy now that all the money is flowing exactly where the Fed wants it to flow, upwards?

Is the Fed really worried about inflation, is that it?

Not at all. All the talk about inflation is pure bunkum and the Fed knows it. According to the Wall Street Journal:

“The central bank’s preferred gauge of inflation, the personal-consumption expenditures price index, was up 1.4% in November from a year earlier, data showed Thursday. Another measure, the consumer-price index, was up 1.7% from a year earlier in November….

Fed Chairwoman Janet Yellen said this month that there are signs wage inflation is picking up. Yet the nonfarm jobs report this month showed average hourly earnings for private-sector workers declined 0.1% in November….

One other factor that may contain the risk of inflation is the U.S. dollar, which rose to a 14-year high against a basket of its main rivals earlier this week. A higher dollar reduces the cost of imported goods that may keep a lid on inflation, potentially delaying the Fed’s goal to push up inflation to its 2% target.” (“The Markets Say Inflation Is Coming. The Data Show It Isn’t True“, Wall Street Journal)

Get the picture? Even using the Fed’s own methodology (“preferred gauge”) inflation is still below the 2% target. It’s just not a problem nor will it be as long as the Fed keeps the economy in this Central Bank-induced Depression. Because during a depression, the demand for credit stays weak, and when the demand for credit stays weak, the price of money remains low. It’s just supply and demand.

So the question we should be asking ourselves is this: Is the economy still in the crapper or has activity really started to pick up like Fed Chairman Janet Yellen keeps saying? Here’s how the Wall Street Journal answers that question:

“Stock prices may have soared since the November election, but the U.S. economy is ending 2016 on an anemic note. Measures of economic vitality including income growth, consumer spending and inflation weakened last month following a short-lived spurt.

Household spending rose just 0.2% in November from the month before, a slowdown in growth from the previous two months, while incomes flatlined, the Commerce Department said Thursday. Inflation readings, which had perked up, didn’t budge last month, and demand for factory-made goods remained soft. For now, that leaves the U.S. economy in the middling trajectory that has marked the seven-year expansion.

“Underlying support for the consumer sector remains fragile at best,” said Lindsey Piegza, economist at Stifel Nicolaus & Co. “The reality the consumer is facing at this point is still modest wage gains and a continued loss of momentum in income growth.”

Forecasting firm Macroeconomic Advisers estimates the economy is growing at a 1.7% rate in the final three months of 2016. Federal Reserve policy makers expect the economy to grow 1.9% this year and 2.1% next year, a forecast the central bank has barely changed since the election of Donald Trump.

About two-thirds of total U.S. output goes toward domestic consumer spending. Solid household outlays during the summer helped propel economic growth to a 3.5% annual pace in the third quarter, the best quarterly increase in two years, according to revised data released Thursday. But income growth has softened: Wage and salary income rose 3.5% in November from a year earlier, the slowest year-over-year gain since December 2013.

Without stronger support from consumers and more investment by businesses, third-quarter growth momentum could wane.” (“U.S. Economy Approaches Year’s End on Lackluster Note“, Wall Street Journal)

Yellen points to employment, consumer spending and “firming” inflation as signs that the recovery is strengthening, but as the article points out, it’s all baloney. There’s no recovery. Sure, there’s been a slight uptick in optimism because of Trump’s promise to spend a lot of money to fire up GDP, but most of those promises will never materialize, which means that growth will remain in the 2% doldrums for the foreseeable future.

But if the Fed is not raising rates to curb rising inflation or to prevent the economy from overheating, then what the heck is it doing?

Ahh, that’s where it gets interesting.

The Fed is raising rates because there is now widespread agreement that keeping rates low for a long period of time does serious damage to the financial infrastructure. That’s one reason, but it doesn’t fully explain what’s really going on. On a more practical level, the Fed is raising rates because of the banks. That’s right, it’s another handout to the big Wall Street behemoths. This is from the Wall Street Journal:

“Big U.S. banks have rallied in recent months amid rising interest rates but, if the Fed carries out its plans, there is room for them to keep rallying….

For American banks, a pie-in-the-sky scenario has just moved closer to reality. While struggling with ultralow interest rates, major banks have also been publishing regular updates on how well they would do if interest rates suddenly surged upward….Bank of America also says a 1-percentage-point rise in short-term rates would add $3.29 billion….a back-of-the-envelope calculation suggests an incremental $2.9 billion of extra pretax income in 2017, or 11.5% of the bank’s expected 2016 pretax profit…

With shares up 45% since the end of September, Bank of America is no longer cheap. But it isn’t expensive either… Especially if the Fed moves forward with more rate increases, there is room to go higher.” (“Banks’ Interest-Rate Dreams Coming True“, Wall Street Journal)

So higher rates and a steeper yield-curve mean heftier profits and higher stock prices, which is why the financials have been the hottest sector for the last six weeks.

Bottom line: The Fed’s rate hike has nothing to do with employment, growth, productivity, the state of the economy or inflation. It’s all about the banks.

And that’s why the plan is doomed from the get-go, because raising rates during a Depression doesn’t help to end the slump. It just makes matters worse.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

(Reprinted from Counterpunch by permission of author or representative)
 

Trump’s economic plan has sent stocks ripping higher for six weeks straight. But what’s going to happen to stock prices when Congress gives Trump’s plan a big thumbs down? Has anyone thought about that yet?

And what about the Fed? Does anyone seriously think that Fed chairman Janet Yellen is going to sit on her hands while Trump launches a $1 trillion fiscal stimulus package that triggers a sudden burst of growth followed by a sharp uptick in inflation?

No, Yellen’s not going to sit on her hands. She’s going to raise rates to prevent the economy from overheating which is going to throw cold water on Trump’s pro-growth government-spending plan.

So why has the Dow Jones Industrial Average (DJIA) climbed more than 1,600 points and gained nearly 10% (“the biggest post-election rally on record”) when Trump’s plan is either going to be derailed by the Fed’s higher interest rates or blocked by the obstructionist Congress? It doesn’t make any sense, does it? And if the plan doesn’t survive in its current form, then stocks are going to retrace all the gains they’ve made in the last month and a half. That’s roughly 1,700 points erased in the blink of an eye.

Bottom line: Trump’s Santa Rally could turn into a stock market bloodbath unless he’s able to deliver on his promises, which doesn’t look very likely. Check this out from Bloomberg:

“President-elect Donald Trump’s race to enact the biggest tax cuts since the 1980s went under a caution flag Monday as Senate Majority Leader Mitch McConnell warned he considers current levels of U.S. debt “dangerous” and said he wants any tax overhaul to avoid adding to the deficit.

“I think this level of national debt is dangerous and unacceptable,” McConnell said, adding he hopes Congress doesn’t lose sight of that when it acts next year. “My preference on tax reform is that it be revenue neutral,” he said…

The Committee for a Responsible Federal Budget, a nonpartisan think tank, has projected that Trump’s plans would increase the debt by $5.3 trillion over a decade, with deficits already over $600 billion a year and rising on autopilot…

What I hope we will clearly avoid, and I’m confident we will, is a trillion-dollar stimulus,” he said. “Take you back to 2009. We borrowed $1 trillion and nobody could find that it did much of anything. So we need to do this carefully and correctly and the issue of how to pay for it needs to be dealt with responsibly.”… (McConnell, Warning of ‘Dangerous’ Debt, Wants Tax Cut Offsets, Bloomberg)

It doesn’t sound like McConnell is a big fan of Trump’s economic plan, does it? So why has the Dow risen to within 26 points of the 20,000-mark if that’s the case?? Do investors think that Trump can simply issue an executive order and force Congress to do what he wants?

Good luck with that. The deficit-crazed Republicans are just as committed to austerity as ever, mainly because slashing government spending coupled with low interest rates is a tried-and-true method of transferring obscene amounts of money to the 1 percenters. Why would they tinker with a mechanism that works perfectly already?

They won’t, at least not to the extent that it’ll have any meaningful impact on the living standards of millions of working people across America. Congress is going to prevent that at all cost. And so will the Fed. Just listen to what Yellen had to say to a journalist from the Washington Post last week following the FOMC meeting. She was asked point-blank whether she thought the economy needed more fiscal stimulus or not. Her answer:

“Well … I called for fiscal stimulus when the unemployment rate was substantially higher than it is now. So with a 4.6 percent unemployment, and a solid labor market, there may be some additional slack in labor markets, but I would judge that the degree of slack has diminished, So I would say at this point that fiscal policy is not obviously needed to help us get back to full employment … But nevertheless, let me be careful that I am not trying to provide advice to the new administration or to Congress as to what is the appropriate stance of policy.”

Nice, eh? Yellen threatens Trump with three more rate hikes in 2017, torpedoes his $1 trillion infrastructure plan with a wave of the hand, and then has the audacity to deny that she’s dictating policy.

Of course she’s dictating policy. What else would you call it?

Yellen is saying as clearly as possible, that if Trump launches his fiscal spending plan, the Fed’s going to slap him down by raising rates. If that’s not a threat, then what is??

(BTW, the NY Times Neil Irwin commented on this very issue just days ago when he said, “any stimulative fiscal policy from the Trump administration could well face an equal and opposite tightening of monetary policy by a Fed that raises interest rates.” In other words, the Fed holds all the cards.)

But in Yellen’s defense, we should add that Trump’s infrastructure scheme wasn’t going to work anyway. The whole thing is another shabby giveaway to private-equity investors. It’s NOT a serious effort to rebuild America’s crumbling infrastructure or provide good-paying jobs to qualified construction workers.

According to economist Alan S. Blinder, “Trump’s plan would provide “an 82% tax credit to attract private-equity investors into the infrastructure business.” … (So) ” A $3 billion public-private “partnership”… could be financed like this: $2.5 billion in municipal bonds, $410 million in tax credits from the federal government, and $90 million in private equity. This means $90 million in private money winds up controlling a $3 billion asset. Mr. Trump likes leverage, but isn’t 33-to-1 a little ridiculous?”

Great. In other words, the public takes all the risk, while privately-owned businesses nab all the profits. When have we heard that before?

And there’s more too:

“Infrastructure projects selected in the traditional way, by governments, are chosen based on public benefits, the community’s ability to pay—and sometimes crass political favoritism…

Under the Trump plan, project selection would be left to profit-seeking investors, using the same criteria they use to decide which hotels to build, for example.”… (Trump’s Infrastructure Mistake, Alan S Blinder, Wall Street Journal)

See? This isn’t about rebuilding America or putting people back to work or even getting more money circulating in the economy. This is just another ripoff by a flim-flam man who wants to use his power as president to enrich his crony buddies. Trump might be a hero to millions of working people who think he’s got their interests at heart, but the facts just don’t match the rhetoric. His infrastructure plan is just another elitist swindle aimed at enriching the few at the expense of the many.

According to Blinder there are much better alternatives to this private equity hocus pocus, like “Build American Bonds (BABs), a special breed of municipal bonds … which can use them for routine maintenance and other projects that lack a revenue stream … for the great bulk of infrastructure needs, BABs would be a far superior solution. If the Trump administration is serious about making our public infrastructure great again, it should worry less about finding ways to make the rich richer.” (WSJ)

Then again, if Trump’s real objective is to boost employment and increase growth, there are much easier ways to go about it, like suspending the payroll tax on everyone making under $75,000 per year or adding a few hundred dollars per month to Social Security payouts or expanding the food stamps program to include more applicants. None of these ideas will help to rebuild America’s dilapidated bridges or pothole-strewn roads, but they do put more money into circulation pronto which increases demand, activity, hiring, capital investment and growth. More growth means upward pressure on stagnant wages, rising standards of living, strengthening of the middle class, and the beginnings of a virtuous circle. Trump’s infrastructure plan will achieve none of these. It won’t even push stock prices higher. It’s a dead-loss for everyone except the PE mandarins.

But there parts of Trump’s economic plan that could push stocks much higher, in fact, they could take today’s moderately-inflated stock market bubble and turn it into the most gargantuan asset-price balloon of all time. We’re talking about Trump’s tax cuts. The president elect wants to reduce the corporate tax rate from 35 percent to 15 percent and, at the same time, initiate a “repatriation holiday”, which will allow tax-dodging US corporations to bring “more than a trillion dollars in corporate cash parked overseas” back to the US paying a measly 10 percent tax on the total. Trump thinks the surge of capital reentering the US will boost employment, productivity and growth, but the experts disagree. They know it’s another giveaway to Wall Street. Get a load of this from Bloomberg:

“Deutsche Bank: “If a repatriation holiday is introduced at a ~5 percent rate, as opposed to the generally proposed 5-14 percent rates, 10 percent even by Trump, then we think ~$500 billion will be repatriated in 2017. These funds will go to a combination of dividends, buybacks, onshore debt reduction, Mergers and Acquisitions and capex…”

JPMorgan Chase and Co.: “Cash repatriation alone could boost shareholder payouts by ~$350 billion … we estimate that buybacks from repatriation alone could add ~$1.30 to S and P 500 earnings per share, assuming that 60 percent of potential payouts come in the form of buybacks.”…

JPMorgan Chase and Co.: “We estimate that Trump’s corporate tax plan, which incorporates a 15 percent statutory federal tax rate, would add roughly $15 to S and P 500 earnings.”
(Wall Street’s 2017 Forecasts Are Doomed If Trump Doesn’t Follow Through On Campaign Promises, Bloomberg)

Get the picture? None of this money is going to dribble down to the working stiffs who cast their ballots for Trump in the presidential election. Heck, no. Every dime is going into stock buybacks and bigger dividends for fatcat CEOs and their voracious shareholders so they can rake in bigger profits while the country continues its downward spiral into insolvency and depression. That’s what this tax fiasco is all about, rewarding the millionaires and billionaires in Trump’s coterie of dodgy friends.

So, yeah, stocks could rise even higher on back of more than a trillion dollars of new capital flowing into the markets, but that money is not going to do jack for anyone who punches a clock for a living. And that should matter to the people who voted for Trump thinking that he had their interests at heart, because he doesn’t have their interests at heart. It’s a joke. Trump’s economic plan focuses entirely on the welfare of the mega rich plutocrats like himself. Everyone else gets mere table scraps.

And that’s why Trump’s supporters should be so disappointed, because they stood by him through the most vicious campaign in history and helped to shoehorn his sorry posterior into office. And now he has sold them down the river.

Thanks a lot, Don.

(Reprinted from Counterpunch by permission of author or representative)
 

The neocon-driven propaganda campaign to prevent president-elect Donald Trump from taking office took an unexpected turn on Thursday when CBS posted an article claiming that Russian President Vladimir Putin personally authorized the alleged hacking of the DNC. According to the report:

“American intelligence officials say they are convinced that Russian hacking of our presidential election was approved by President Vladimir Putin. Sources confirm to CBS News they believe Putin was aware of attacks that began in July of last year.

An official investigation is still going on. But this is the first time the hacking that plagued the Democratic National Committee until Election Day has been linked to Putin, reports CBS News correspondent Jeff Pegues.

The hacks were so widespread and sustained over such a long period of time that U.S. Intelligence sources say it could not have been carried out without the knowledge of senior levels of the Kremlin. CBS News has learned that investigators believe the initial cyberattack involved thousands of malicious emails aimed at the U.S. government, military and political organizations.” (“Vladimir Putin likely gave go-ahead for U.S. cyberattack, intelligence officials say“, CBS News)

As is true with earlier reports on the same topic, CBS fails to provide the names of any of its “U.S. intelligence sources”, any corroborating evidence to support its allegations, or any proof that its speculative stitching together of isolated facts produce an accurate account of what actually took place. No where in the entire hysterical narrative, do the authors mention the fact that neither the DNC nor the Podesta emails were “hacked” by a hostile foreign power, but “leaked” from within the DNC itself or by agents operating at the NSA.

The most probable explanation for the alleged cyber intrusion is that the emails were given to WikiLeaks by a disgruntled employee operating in the Hillary campaign who was so sickened by the lies and corruption that he decided to blow the whistle. Is that so hard to believe?

Needless to say, this logical storyline doesn’t jibe with the CIA-MSM-Podesta version of events which requires a charge of foreign espionage to overturn the election and implement its treasonous plan for regime change in Washington.

According to the Daily Mail, Craig Murray, who is the former UK ambassador to Uzbekistan and associate of Julian Assange,

“flew to Washington, D.C. for emails….He claims he had a clandestine hand-off … near American University with one of the email sources. Murray said the leakers’ motivation was ‘disgust at the corruption of the Clinton Foundation and the ’tilting of the primary election playing field against Bernie Sanders’…

Murray says: ‘The source had legal access to the information. The documents came from inside leaks, not hacks’. ‘Regardless of whether the Russians hacked into the DNC, the documents Wikileaks published did not come from that,’ Murray insists.” ….

Murray said he was speaking out due to claims from intelligence officials that Wikileaks was given the documents by Russian hackers as part of an effort to help Donald Trump win the U.S. presidential election.

‘I don’t understand why the CIA would say the information came from Russian hackers when they must know that isn’t true,’ he said. ‘Regardless of whether the Russians hacked into the DNC, the documents Wikileaks published did not come from that.” (EXCLUSIVE: Ex-British ambassador who is now a WikiLeaks operative claims Russia did NOT provide Clinton emails“, Daily Mail)

As of Thursday, none of the major media have covered or investigated Murray’s claims which should be expected since it essentially proves that the MSM fairytale-version of events is pure bunkum. By the way, there’s an excellent article at Consortium News by 6 Intelligence agency veterans titled “US Intel Vets Dispute Russia Hacking Claims” that challenges the absurd ‘Russia hacking claim’ and attributes the cyber incident to leaking. Here’s a short blurb from the piece that helps to clarify a few important points:

“All signs point to leaking, not hacking. If hacking were involved, the National Security Agency would know it – and know both sender and recipient.

In short, since leaking requires physically removing data – on a thumb drive, for example …

NSA is able to identify both the sender and recipient when hacking is involved….The bottom line is that the NSA would know where and how any “hacked” emails from the DNC, HRC or any other servers were routed through the network…

The various ways in which usually anonymous spokespeople for U.S. intelligence agencies are equivocating – saying things like “our best guess” or “our opinion” or “our estimate” etc. – shows that the emails alleged to have been “hacked” cannot be traced across the network. Given NSA’s extensive trace capability, we conclude that DNC and HRC servers alleged to have been hacked were, in fact, not hacked.

The evidence that should be there is absent; otherwise, it would surely be brought forward, since this could be done without any danger to sources and methods. Thus, we conclude that the emails were leaked by an insider – as was the case with Edward Snowden and Chelsea Manning. Such an insider could be anyone in a government department or agency with access to NSA databases, or perhaps someone within the DNC.” (“US Intel Vets Dispute Russia Hacking Claims“, Consortium News)

Bottom line: Leaked not hacked. Thus, the MSM “Putin did it” version = Bullshit.

Here’s more on Murray’s eyewitness account of his contact with the whistleblower. This is from an exchange that took place on Tuesday in an interview between Murray and author David Swanson.

David Swanson– When you say you’ve met the leaker; was that of the DNC emails or the Podesta emails?

Craig Murray– I cannot give too much detail on that…but I have met one of the people involved. …The person is American and not connected to Russia at all….(Julien Assange has confirmed that the leaker was not Russian)

David Swanson– Your claim is not that the Russians would never hack into a computer, right? Your claim is that you know who did this and it isn’t Russia?

Craig Murray– Right, I was involved in handling top secret material myself for over 20 years, and all the spy services spy on each other all the time. So the Russians could have done this, but they didn’t. I happen to know that they didn’t. In both the Podesta and the DNC emails came from sources that are not Russian, but were American inside sources. And that could be inside the organization itself or it could be American agencies that are monitoring people’s communications….Inside the DNC or inside the NSA. (“Talk Nation Radio: Craig Murray: Russia Didn’t Do It“)

So, the ‘hacking story’ has nothing to do with hacking and nothing to do with Russia. It’s just another attempt by establishment elites to distort the facts in order to subvert the democratic process and overturn the election results. Isn’t that what this is really all about, regime change in the USA?

You bet it is.

This charade has Hillary’s bloody fingerprints all over it.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

(Reprinted from Counterpunch by permission of author or representative)
 
An Interview with Jeffrey St. Clair

“One might well ask which foreign government had a larger roll in assisting Trump’s victory over Clinton and more to gain: Russia or Israel. Sheldon Adelson spent a reported $25 million in support of Trump and Netanyahu was publicly campaigning for Trump from Tel Aviv.”
— Jeffrey St. Clair, CounterPunch Editor

Mike Whitney: CounterPunch was listed as one of the 200 websites that, according to the Washington Post, “wittingly or unwittingly published or echoed Russian propaganda”. The shadowy organization that leveled these claims is called PropOrNot, a group of researchers has made every effort to remain anonymous. Rather than wasting our time asking whether or not you are Russian agent (which is too ridiculous to consider) what do you think is driving this group to label and attack the websites on its list?

Jeffrey St. Clair: One can only speculate, since we don’t at this point know who they are and no one would know of their existence at all had it not been for the Washington Post. Even to call them “researchers” may be to inflate their resumés. Mark Ames has tracked down some tweets associated with the PropOrNot accounts that suggest ties to Ukrainian nationalists. But again that’s just speculation until they emerge from the shadows and reveal their identities, a prospect that I don’t think is forthcoming any time soon. In fact, we may need to sue them to finally answer these questions.

Mike Whitney: How does Russia factor into all of this? Is Washington creating a pretext for an escalation in Syria or Ukraine?

Jeffrey St. Clair: Which Washington? Washington seems divided. Trump’s election has caused a lot of internal divisions within the establishment to erupt to the surface. Rarely do these kinds of clashes from within what some call the Deep State get fought in public. Of course, there are many bi-partisan reasons to inflate the Russian threat that have nothing much to do with Syria or Ukraine, such as defending big defense contracts, for useless weaponry such as the F-35 and a new generation of nuclear weapons.

Mike Whitney: The Washington Post appears to be incensed by the idea that US elections may have been “hacked” by a foreign government. Do you remember any time in the last 30 or 40 years when the Post was as upset about Washington’s regime change operations which involved the violent toppling of 40 or 50 sovereign governments or the disruptive color-coded revolutions funded by US NGO’s? How would you explain the Post’s selective indignation?

Jeffrey St. Clair: Of course not. The Post and the NYT have supported through their own special brand of propaganda many of those interventions and cover operations. And I don’t think the Post has ever showed the slightest inclination to pursue investigations of instances where countries other than Russia have attempted to sway elections in the US, such as the Saudis and the Israelis. One might well ask which foreign government had a larger roll in assisting Trump’s victory over Clinton and more to gain: Russia or Israel. Sheldon Adelson spent a reported $25 million in support of Trump and Netanyahu was publicly campaigning for Trump from Tel Aviv. The Israeli’s have proven track record of swaying US elections. Go ask Cynthia McKinney. The Russians don’t. Not yet, anyway.

Mike Whitney: After months of closely following the Trump campaign in the lead up to the election, I noticed something quite extraordinary, that is, the MSM had lost its power to influence public attitudes. This was particularly noticeable when the numerous sex allegations were leveled at Trump, but his base of support hardly budged. This suggests to me that the MSM is rapidly losing its ability to control the masses by shaping public perceptions. Do you think PropOrNot could be an attempt by “interested groups” (USG?) to reestablish its monopoly on information by attacking the websites and alternate sources of news that pose the greatest threat to its continued control?

Jeffrey St. Clair: Trump didn’t just touch, he frontally embraced almost every third rail in American politics and not only survived but thrived on it, like some super-villain in a Dark Horse comic. It’s quite remarkable really. The MSM media has been dying for years and Trump’s campaign emphasized just how feeble and politically impotent the Times and the Post, as well as the network and cable news outlets have become, at least for an outlier candidate like Trump. By the way, Bernie Sanders also built his campaign in the face of first media indifference and then hostility. But Bernie wasn’t felled by the media, but through the anti-Democratic structure of the Democratic Primaries and the internal sabotage of the DNC. (See my book Bernie and the Sandernistas for more.) The GOP primary system, by contrast, proved much more open and democratic than the Democrats’s rigged system.

I don’t know enough about PropOrNot to speculate about the site’s origins. It seems pretty amateurish to me. But the government has had a role in setting similar “perception management” operations in the past. Recall the Lincoln Group’s contract with the Bush administration to write and pay for propaganda stories during the Iraq war? One wonders whether something similar might be at work here. There’s a history, as they say. But we don’t know enough yet. The real mystery is why the Washington Post ran with such a flimsy, unsourced story in the first place. How much contact did the Post have with actual individuals at PropOrNot and was there coordination between the Post, PropOrNot and members of congress looking to set up a new HUAC-like inquisition on the alleged Russian peril.

Mike Whitney: Is the First Amendment in danger?

Jeffrey St. Clair: The first Amendment is always under attack. What’s new now is that it is being assaulted by the mainstream media.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

(Reprinted from Counterpunch by permission of author or representative)
 

The Democratic Party is doing incalculable damage to itself by shapeshifting into the party of baseless conspiracy theories, groundless accusations, and sour grapes. Hillary Clinton was already the most distrusted presidential candidate in party history. Now she’s become the de facto flag-bearer for the nutso-clique of aspiring propagandists at the CIA, the New York Times and Bezo’s Military Digest. How is that going to improve the party’s prospects for the long term?

It won’t, because the vast majority of Americans do not want to align themselves with a party of buck-passing juveniles that have no vision for the future but want to devote all their energy to kooky witch-hunts that further prove they are unfit for high office.

The reason Hillary Clinton lost the election is because she is a polarizing, untrustworthy warmonger. Period. Putin had nothing to do with it.

And the same rule applies to the major media that has attached itself leech-like to this pathetic fairytale. Here’s a clip from the Times headline story connecting FSB-agent Trump with the evil Kremlin:

“American intelligence agencies have told the White House they have “high confidence” that the Russian government was behind the theft of emails and documents from the Democratic National Committee. …

The attack on the congressional committee’s system appears to have come from an entity known as “Fancy Bear,” which is connected to the G.R.U., the Russian military intelligence service, according to an official involved in the forensic investigation…

Clinton campaign officials have suggested that President Vladimir V. Putin of Russia could be trying to tilt the election to Mr. Trump, who has expressed admiration for the Russian leader.” (Computer Systems Used by Clinton Campaign Are Said to Be Hacked, Apparently by Russians, New York Times)

If there was a Pulitzer Prize for fearmongering innuendo or spurious accusations, the Times would win it hands-down. As it happens, readers have to delve much deeper into the article to find this shocking disclaimer:

“But the campaign officials acknowledge that they have no evidence. The Trump campaign has dismissed the accusations about Russia as a deliberate distraction…..”

“No evidence”???

They got nothing. NOTHING!

All they have is a few anonymous agents who refuse to identify themselves speculating on alleged hacking incidents that (they surmise) were the work of Vladimir P. Strangelove in his remote Soviet Cyber-war bunker. That’s not even enough material for a decent spy thriller.

But, of course, all this bunkum about “Fancy Bear” and “Russian military intelligence” and the “high confidence” of (unnamed) US intelligence agents is enough to scare the hell out of many readers and leave them with the impression that the Kremlin is up to its old Cold War tricks again. The Times editors are wise enough to know that it’s quite easy to tap into 40-years of anti-Soviet brainwashing and convince the gullible sheeple that Washington and Moscow are still mortal enemies. It would have been helpful if the Times had given the story a bit of context, that is, pointed out that the US has relentlessly expanded NATO eastward establishing military bases in all of the former Soviet satellite states, toppled the Moscow-friendly regime in Ukraine, and built nuclear weapons sites in east Europe just a few hundred miles from Moscow.

The Times writers might have also noted that this latest propaganda campaign against Russia could very well be the result of Moscow’s triumph over US-backed militants in Syria that are facing a decisive defeat due in large part to Russian involvement. In other words, the Times and the other US propaganda organs are functioning as they always do, whipping up public sentiment against the “evildoers” so Washington can drag the country into another imperial war of expansion. The whole “hacking” mantra fits perfectly with the Pentagon’s hybrid war strategy which manipulates information in order to shape public perceptions and gain support for another round of genocidal violence in some far-flung location. (Raqqa, perhaps?)

Do you think that bloodthirsty Hillary would be on-board with such a plan?

Of course she would. Hillary never met a war she didn’t like.

But let’s cut to the chase: Putin didn’t lose the election for Hillary. Obama did. People wanted change, and they didn’t get it, so they moved on to Door Number 2: Donald Trump. Take a look at these three short clips from a recent survey from PEW Research and you’ll get a feel for what really happened in the election:

“The Republican Party made deep inroads into America’s middle-class communities in 2016. Although many middle-class areas voted for Barack Obama in 2008, they overwhelmingly favored Donald Trump in 2016, a shift that was a key to his victory…..In 2016, Trump successfully defended all 27 middle-class areas won by Republicans in 2008. In a dramatic shift, however, Hillary Clinton lost in 18 of the 30 middle-class areas won by Democrats in 2008…

Overall, Democrats experienced widespread erosion in support from 2008 to 2016. Their share of the vote fell in 196 of the 221 metropolitan areas examined. The loss in support was sufficiently large to move 37 areas from the Democratic column to the Republican column…

Not coincidentally, Democrats also were more likely to have lost ground in manufacturing-dependent areas. Of the 56 communities with a relatively large share of manufacturing jobs, Trump picked up victories in 15 metro areas that had supported Obama in 2008 and held onto another 29, leaving only 12 communities in the Democrats’ column.” (GOP gained ground in middle-class communities in 2016, Pew Research)

Get it? The Dems lost ground everywhere because Obama didn’t deliver the goods. That’s reason number one. Second, Hillary didn’t address the issues that ordinary working people really care about. And what they care about is the economy. Money, security, jobs. Is that hard to understand?

People are afraid because things are getting worse not better. Their standards of living are slipping, they’re worried about their retirement, their jobs, their health care, and the pile of debt their kids have accumulated to go to college. They’ve lost confidence in the media, the congress, the courts and the president who promised change but never lifted a finger for working people his entire time in office.

That’s why Hillary lost, just look at the research.

The Democrats have no vision for the future, and without vision, the party will disintegrate which is precisely what’s happening. The Democratic Party is disintegrating before our very eyes. This latest “Russian hacking” diversion is just speeding along the process.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

(Reprinted from Counterpunch by permission of author or representative)
 
Washington’s Proxy-Army Faces Decisive Defeat in Aleppo

Syrian Army helicopters dropped leaflets on parts of eastern Aleppo on Sunday warning anti-government fighters to surrender while they still had the chance. Hundreds of jihadists have already laid down their weapons and surrendered while a hardline corps of deadenders continue to fend off the rapidly advancing army.

The situation is looking increasingly hopeless for the ragtag group of insurgents that have lost more than half the territory they held in just the last week. Every attempt they’ve made to break through Syrian Army lines has been repelled leaving them to defend a few shrinking districts where they will either surrender or die.

On Sunday, Russian Foreign Minister Sergey Lavrov delivered an ultimatum to the remaining militants that clarified the position of the Syrian government and its allies. he said:

“Those groups which refuse to leave eastern Aleppo will be treated as terrorists. By refusing to walk out from eastern Aleppo they will in fact go ahead with armed struggle. We will treat them accordingly, as terrorists and extremists, and support the Syrian army in its operation against such armed gangs.”

US Secretary of State John Kerry has made every effort to stop the fighting to protect US-backed jihadists that are trying to topple Syrian President Bashar al Assad. Unfortunately, a proposal that was accepted by both Kerry and Lavrov concerning the withdrawal of fighters in Aleppo, was rejected by higher-ups in the Obama Administration ending the prospects for a negotiated settlement. Lavrov expressed his frustration in comments to the media where he said:

“They have withdrawn their document and have a new one. Our initial impression is that this new document backtracks, and is an attempt to buy time for the militants, allow them to catch their breath and resupply. The same thing happened with our agreement of September 9. It’s difficult to understand who makes decisions there, but apparently there are plenty of those who want to undermine the authority and practical steps by John Kerry.”

According to Reuters, “the Syrian Foreign Ministry said it would now accept no truce in Aleppo, should any outside parties try to negotiate one.” Meanwhile, “Russia and China vetoed a U.N. Security Council resolution on Monday calling for a week-long ceasefire.” Simply put, this is the end of the line for the US-backed terrorists that have laid to waste much of the battered country and killed more than 400,000 people. And while Aleppo may not be the decisive turning point in the ongoing conflict, it does put all of the main population centers and industrial hubs back under regime control.

More important, the recapturing of Aleppo is a major setback for Washington and its jihadist-breeding allies. (US, Saudi Arabia, Turkey and Qatar) US plans for redrawing the map of the Middle East to meet its economic and geopolitical objectives has been defeated by a courageous and determined coalition (Syria, Iran, Russia and Hezbollah) that has methodically routed or exterminated the foreign-backed opposition and reestablished both state security and the sovereign authority of the elected government to control its own affairs.

On Tuesday morning, AMN News reported that the Syrian Army had captured 85 percent of East Aleppo. Dozens of insurgents have been killed in sporadic fighting while hundreds more have surrendered. It appears that the battle of Aleppo is about to end and the Syrian Army is on the “verge of total victory.”

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

(Reprinted from Counterpunch by permission of author or representative)
 
• Category: Foreign Policy • Tags: Counterpunch Archives, Russia, Syria 

Will Donald Trump be good for the US economy?

The American people seem to think so. According to a recent survey taken by Gallup “Americans have relatively high expectations (of) the president-elect… Substantial majorities (upward of 60%) believe the Trump administration will improve the economy and create jobs. A slim majority (52%) say he’ll improve the healthcare system.”

Even more impressive, the University of Michigan Consumer Sentiment Index spiked to a 93.8 -high in November, signaling a significant improvement in overall consumer attitudes about the economy.

Analysts attribute this change in outlook to the recent presidential election which showed a marked-uptick in optimism “across all income and age subgroups across the country.”

“The initial reaction of consumers to Trump’s victory was to express greater optimism about their personal finances as well as improved prospects for the national economy,” said Richard Curtin, the survey’s chief economist.

So, people are not just giving Trump the benefit of the doubt, they genuinely think their economic situation is going to get better under the new president.

The results are particularly significant when we realize that the economy not only topped the list of important issues going into the November elections, but that also (according to a survey conducted by Edison Research) “Three in five voters said the country was seriously on the wrong track and about the same number said the economy was either not good or poor. Two-thirds said their personal financial situation was either worse or the same as it was four years ago. About one in three voters said they expected life to be worse for the next generation.”

In other words, the election was a referendum on Obama’s handling of the economy, in which 60 percent of those surveyed, think was a failure. These results also suggest that, had Obama made any attempt to address wage stagnation, shrinking incomes, student debt, or widespread economic insecurity, Hillary Clinton would probably be president today. As it happens, the victory went to the anti-establishment outsider who promised a fundamental change in direction, Donald Trump.

This is particularly worth thinking about now that protests have broken out in cities across the country and liberals are accusing Trump supporters of voting for a racist. No, the majority of Trump supporters did not vote for a racist (surveys also show that a majority of these people support a way for undocumented immigrants to attain US citizenship) nor do the approve of the white nationalist movement. They voted for someone who they thought would change the economic policies that have been destructive to their interests. Trump won the election because he addressed the issues that matter to ordinary working people and refrained from such foolishness as running around with his hair on fire blaming the Russians for everything under the sky. Hillary Clinton got exactly what she deserved.

Now the question is: Can Trump deliver?

The question is not only important for the American people, but also for the Trump administration that figures its prospects for success depend largely on an economic revival. Steve Bannon, who is Trump’s chief strategist and advisor, knows that he won’t be able to build a strong, divers coalition to support his political revolution without boosting growth and improving conditions for working people. That’s why fixing the economy is Job 1.

Here’s a quote from Bannon:

“The globalists gutted the American working class and created a middle class in Asia. The issue now is about Americans looking to not get f—ed over. If we deliver…”we’ll get 60 percent of the white vote, and 40 percent of the black and Hispanic vote and we’ll govern for 50 years. That’s what the Democrats missed. They were talking to these people with companies with a $9 billion market cap employing nine people. It’s not reality. They lost sight of what the world is about.”…

“It’s everything related to jobs. The conservatives are going to go crazy. I’m the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Ship yards, iron works, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution — conservatives, plus populists, in an economic nationalist movement.” (Ringside with Steve Bannon, Hollywood Reporter)

I don’t pretend to know anything more about Steve Bannon than I’ve read in the newspapers and on the Internet. What I do know, however, is that if he is sincere in his desire to defeat the corrupt political establishment and build a coalition that “will govern for 50 years”, he’s going to have to find a way to climb down on his hardline immigration policies in order to implement his economic strategy. That said, I expect Trump will settle on some way to minimize the damage he has done to himself and call on congress to get more involved in the hot-button immigration issue. In other words, he’s going to have to punt if he wants to govern.

Bannon is the main architect of Trump’s economic plan, a plan that has already earned broad public support, but a plan that won’t succeed unless it is drastically changed. Here’s why:

Trump’s economic plan can be broken into three parts: Tax cuts, deregulation and fiscal stimulus.

As far as tax cuts, there are three main subsets:

1–The corporate tax rate, which Trump wants to drop from 35 percent to 15 percent.

2–A tax cut on the so-called “repatriation of funds”– which lowers the rate on roughly $2 trillion of cash that’s currently stashed overseas by uber-rich US businesses that have been evading US corporate taxes for years. Trump wants to give these tax dodgers a one-time “holiday” with a 10% penalty for companies that agree to bring their cash back to the US. Trump believes that the one-time tax break will increase business investment and employment in the US. Critics say the scheme will not work unless the economy strengthens and demand grows.

3–Trump also wants to reduce the top tax rate from 39.6% to 33%, while making modest reductions to the other brackets. Under the Trump plan, “a taxpayer who makes between $48,000 to $83,000 a year would save about $1,000 (while) people in the top 0.01%, making $3.7 million or more in a year, would receive $1 million in annual tax savings.” (USA Today)

Here’s a brief summary from economist Dean Baker:

“According to the analysis of the Tax Policy Center at the Brookings Institution and the Urban Institute, (Trump’s) tax plan will reduce revenue by more than $9 trillion (close to 4 percent of GDP) over the course of the next decade. This tax cut plan would effectively add close to $800 billion to the annual deficit when it first takes effect, with the amount increasing over time……

“According to the Tax Policy Center, more than half of Trump’s tax cuts will go to the richest one percent of the population. The richest 0.1 percent will get tax cuts that average almost $1.5 million annually. The Trump tax cut is consistent with the fundamental principle of the Republican Party, and unfortunately many Democrats, of putting as much money as possible in the pockets of the rich.” (Republican deficit hawks abandon their religion, Smirking Chimp)

As you can see, most of the benefits from the proposed tax cuts go to the extremely rich. How does that fit with Trump’s campaign promise:

“I am proposing an across-the-board income-tax reduction, especially for middle-income Americans…The tax relief will be concentrated on the working and middle-class taxpayer. They will receive the biggest benefit – it won’t even be close.”

The tax cuts look like a serious betrayal of Trump’s supporters. They also look like a misguided , short-term strategy that will derail Bannon’s plan for broad coalition based on a strong economic growth and rising wages. This latest iteration of “trickle down” economics will not help him achieve that goal.

Unfortunately, the other parts of Trump’s economic plan are equally dismal. For example, Trump is determined to repeal many of the key provisions of the 2010 Dodd-Frank law, the toothless bill that Congress passed in order to prevent another financial meltdown. At present, Texas congressman, Jeb Hensarling — an outspoken critic of Dodd-Frank appears to be the frontrunner in the competition for US Treasury Secretary. Hensarling, who just last week said “Dodd-Frank was a grave mistake”, is pushing his own Wall Street-friendly Financial CHOICE act, which would replace the bill with a “pro-growth, pro-consumer” alternative” that would protect the banks from ‘growth-strangling regulation.” (Housingwire)

Is that what we really need, more laws to protect the banks?? Check out this clip from Fortune Magazine:

“Hensarling wants to put the market in charge. His view is that encouraging banks to hold lots of capital (as Dodd-Frank does) goes far enough by itself to shore up the system, making banks far safer than the law’s dense web of stress tests, complex limits on trading, and banning of mortgages and credit cards deemed “abusive” by regulators. Now that Republicans control Congress and the White House, it’s highly possible that the Hensarling manifesto, or a large part of it, will become law…

“I will not rest until Dodd-Frank is ripped out by its roots and tossed on the trash bin of history,” (Hensarling) declared in a recent speech. The centerpiece of the CHOICE act is a provision that would exempt banks from the more restrictive Dodd-Frank regulations…” (This Congressman Could Turn the Dodd-Frank Financial Reforms Upside Down, Fortune)

The idea that a Congressman can devote all his energy to lifting the ban on “abusive mortgages” — just eight years after abusive, predatory, toxic mortgages blew up the global financial system costing roughly $50 trillion and years of agonizing retrenchment– seems almost treasonous, doesn’t it? And yet, at the very least, Hensarling is likely to become one of Trump’s chief advisors on financial regulations. Go figure?

What, in God’s name, is Trump trying to achieve? On the one hand, he blames the Fed for inflating another gigantic asset bubble and, on the other, he tries to remove the regulatory obstacles to bubble-making. What sense does that make?

Here’s a little more background on Trump’s crusade against regulation. This is from the Wall Street Journal:

“Donald Trump has tapped a longtime critic of heavy regulation to flesh out his new administration’s plans for remaking the financial rule book, including the potential dismantling of much of the Dodd-Frank financial overhaul.

Paul Atkins served as a Republican member of the Securities and Exchange Commission from 2002 to 2008, where he spoke out against big fines for companies, arguing they punish shareholders. Now Mr. Atkins, 58 years old, is the member of the president-elect’s transition team charged with recommending policies on financial regulation, according to current and former regulators briefed on the matter.

Mr. Trump has detailed little about his views on financial regulation beyond his vow to dismantle the 2010 Dodd-Frank law.” (Donald Trump’s Point Man on Financial Regulation: A Former Regulator Who Favors a Light Touch, Wall Street Journal)

Trump also wants to dismantle the Consumer Financial Protection Bureau (CFPB) which recently imposed a $100 million fine on Wells Fargo for using bank employees to create more than 2 million unauthorized accounts to meet sales quotas. The action was applauded by consumer groups across the board which is why Trump will make every effort to defang the watchdog agency. The president-elect appears to be gearing up to eliminate any rule that impairs Wall Street’s ability to rake in bigger profits, whether it puts the American people at risk or not.

So how does this square with Steve Bannon’s comments about coalition building and desire for a stronger economy?

I can’t figure it out, after all, Bannon sounds like a true believer, a no-nonsense, red-blooded, blue collar working guy who hates the Wall Street, the Republican establishment and the mainstream media. What’s not to like about that?

But how does Bannon’s hardscrabble upbringing, his commitment to tea party uprising, and his take-no-prisoners combativeness, jibe with these flagrant tax giveaways, this anti-worker deregulation, and a fiscal policy that only benefits the uber wealthy? I don’t get it??

In an extremely persuasive interview with Buzzfeed News, Bannon disparages the new strain of “Ayn Rand” capitalism that objectifies people and turns them into commodities. He expands on this idea by giving a brief synopsis of the financial crisis that many will find galvanizing. Here’s a clip:

“The 2008 crisis, … which, by the way, I don’t think we’ve come through — is really driven I believe by the greed, much of it driven by the greed of the investment banks. …
And one of the reasons is that we’ve never really gone and dug down and sorted through the problems of 2008. Particularly the fact — think about it — not one criminal charge has ever been brought to any bank executive associated with 2008 crisis. And in fact, it gets worse. No bonuses and none of their equity was taken. So part of the prime drivers of the wealth that they took in the 15 years leading up to the crisis was not hit at all, and I think that’s one of the fuels of this populist revolt that we’re seeing as the tea party…

The bailouts were absolutely outrageous, and here’s why: It bailed out a group of shareholders and executives who were specifically accountable. …

In fact, one of the committees in Congress said to the Justice Department 35 executives, I believe, that they should have criminal indictments against — not one of those has ever been followed up on. … (and) Middle-class taxpayers, people that are working-class people, right, people making incomes under $50,000 and $60,000, it was the burden of those taxpayers, right, that bailed out the elites. …

It’s all the institutions of the accounting firms, the law firms, the investment banks, the consulting firms, the elite of the elite, the educated elite, they understood what they were getting into, forcibly took all the benefits from it and then look to the government, went hat in hand to the government to be bailed out. And they’ve never been held accountable today. Trust me — they are going to be held accountable.” (This Is How Steve Bannon Sees The Entire World, Buzzfeed News)

Repeat: “They are going to be held accountable.”

Bravo! He wants to lock them up. He wants the bankers to be held accountable and locked up! Who doesn’t want that? Every working slob in America wants that. This is why Bannon has attracted such a loyal following; it’s because his analysis of the financial crisis and its aftermath are “dead on”. The American people know they were ripped off, know that Wall Street is infested with crooks and parasites, and know that the country is governed by a corrupt and unaccountable oligarchy of racketeers.

Bannon has tapped into powerful feelings of frustration and rage, and he’s built a thriving movement on top of them. But where’s the beef? His economic policy just doesn’t deliver the goods. Bannon is talking the talk, but he’s not walking the walk.

The tax cuts don’t deliver for working people and neither does deregulation. So what about the third part of Trump’s economic plan, the fiscal stimulus component?

Bannon says he’s the driving force behind the $1 trillion infrastructure development program. Unfortunately, the program is little more than a scam. Let me explain:

Typically, when people think about fiscal stimulus, they imagine expensive Keynesian “shovel ready” infrastructure projects with lots of well-paid government workers building bridges, roads, rapid transit systems and even schools. That’s not what this is. According to economist Jared Bernstein:

“Instead of just allocating the needed resources as in the traditional approach, they propose to “offer some $137 billion in tax breaks to private investors who want to finance toll roads, toll bridges, or other projects that generate their own revenue streams.”

Since the plan depends on private investors, it can only fund projects that spin off user fees and are profitable. Rural roads, water systems, and public schools don’t fall into that category. Neither does public transit, which fails on the profitable criterion (it depends on public subsidies.” (Trump’s misguided flirtation with Keynesianism, Politico)

This isn’t going to work. It’s completely self defeating. This is just more of the same, more handouts to big business. The whole point of fiscal stimulus is to get money in the hands of the people who will spend it fast, rev up the economy, boost growth, generate more demand and get the economy out of its eight-year-long funk. The rebuilding of infrastructure is secondary, in fact, it doesn’t even matter. What matters is getting money circulating in the perennially-moribund economy. Caspice?

Here’s more on the Trump infrastructure boondoggle from an article in the Washington Post:

“Trump’s plan is not really an infrastructure plan. It’s a tax-cut plan for utility-industry and construction-sector investors, and a massive corporate welfare plan for contractors. The Trump plan doesn’t directly fund new roads, bridges, water systems or airports, as did Hillary Clinton’s 2016 infrastructure proposal. Instead, Trump’s plan provides tax breaks to private-sector investors who back profitable construction projects. … There’s no requirement that the tax breaks be used for … expanded construction efforts; they could all go just to fatten the pockets of investors in previously planned projects…

Second, as a result of the above, Trump’s plan isn’t really a jobs plan, either. Because the plan subsidizes investors, not projects; because it funds tax breaks, not bridges; because there’s no requirement that the projects be otherwise unfunded, there is simply no guarantee that the plan will produce any net new hiring. …

Buried inside the plan will be provisions to weaken prevailing wage protections on construction projects, undermining unions and ultimately eroding workers’ earnings. Environmental rules are almost certain to be gutted in the name of accelerating projects.” (Trump’s big infrastructure plan? It’s a trap. Washington Post)

These so called “public-private partnerships” are just another way for big business to suck money out of the government. They don’t help the economy, not really, and they don’t help workers either. If Bannon is serious about building his coalition on the back of a robust economy, there’s an easier way to do it. First get rid of the corporate ideologues and supply side radicals whose theories never work. Then hire a team of reputable economists who have first-hand experience implementing thorny stimulus programs of this magnitude. (Joseph Stiglitz, James Galbraith, Dean Baker, Michael Hudson, Jack Rasmus)

Then start with the low-hanging fruit, that is, put money into already-running programs that will produce immediate results. For example, in James Galbraith’s epic article “No Return to Normal” the economist recommends increasing Social Security payments. Think about that. It’s a complete no-brainer. The people who live on Social Security spend every dime they get every month, which means that — if their payments go up by, let’s say, $200 or more per month– then all that dough goes straight into the economy which is what fiscal stimulus is all about. Also, increase food stamp funding, lower the Medicare age of eligibility, and rehire a portion of the 500,000 federal workers who lost their jobs in the Crash of ’08. These policies will put money into the economy immediately, boosting growth, increasing wages, and strengthening the prospects for whatever political party happens to be in office.

The point is, fiscal stimulus doesn’t have to be a boondoggle and it doesn’t require “shovel ready” jobs. All that’s needed is a competent team of economic advisors who know what the hell they’re doing and the political will to get the job done. Trump’s economic plan doesn’t do that, all it does is slightly improve GDP while trillions of dollars are transferred to the bank accounts of behemoth corporations and Wall Street cronies.

If Bannon is serious about fixing the economy and rebuilding the Republican party, my advice to him would be: Give Galbraith a call.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

(Reprinted from Counterpunch by permission of author or representative)
 
• Category: Economics • Tags: Counterpunch Archives, Donald Trump, Taxes