Thursday, April 30, 2020


GOP Senators to Trump: Reject ‘Blank Check’ Bailouts to State Governments

New York Gov. Andrew Cuomo addresses a regional summit of governors on public health issues around cannabis and vaping, Thursday Oct. 17, 2019, in New York. (AP Photo/Bebeto Matthews)
AP Photo/Bebeto Matthews

Several Republican senators wrote to President Donald Trump on Thursday, urging him to reject a “blank check” bailout to indebted states that would not help states’ response to the coronavirus outbreak.
Sens. Rick Scott (R-FL), Ted Cruz (R-TX), Ron Johnson (R-WI), Mike Lee (R-UT), and Mike Enzi (R-WY) urged Trump to reject any bailouts for state and local governments in a future bailout bill.
House Speaker Nancy Pelosi (D-CA) said on Thursday that a future spending package would need $1 trillion to bail out state and local governments.
Senate Majority Leader Mitch McConnell (R-KY) has continually rejected the idea of bailing out indebted states.
“We’re not interested in borrowing money from future generations to send down to states to help them with bad decisions they made in the past unrelated to the coronavirus epidemic,” he said.
The GOP senators contended that states would use the bailout to help out with expenses unrelated to the coronavirus response.
“Unfortunately, we are hearing reports that some states and localities are advocating that a potential future Coronavirus response measure be used as a piggybank for unrelated expenses that have nothing to do with responding to the Coronavirus,” they wrote.
The senators continued:
We believe additional money sent to the states for “lost revenue” or without appropriate safeguards will be used to bail out unfunded pensions, reward decades of state mismanagement, and incentivize states to become more reliant on federal taxpayers. Again, we are supportive of funding to respond to the Coronavirus and protect our frontline workers, but we cannot allow states and localities to get a blank check from American taxpayers to fund areas of their budget that have nothing to do with the Coronavirus.
States like New York are calling for billions in unrestricted aid — not just money for Coronavirus recovery, but for pre-existing state programs and debts. New York’s rainy day fund is one of the lowest in the nation, and the state owes over $450 billion in unfunded pension and post-employment benefits. Other states are in even worse shape. Illinois has already requested a $40 billion bailout, most of which would go to pension and budget shortfalls caused by decades of fiscal mismanagement.
“And let’s not forget, this year’s federal budget deficit will be the largest in the history of our nation, in excess of the cumulative deficits for the first 200 years of our country’s existence,” the senators added. “We will end the year with in excess of $25 trillion in federal debt.”
“Americans expect that their tax dollars will be used for Coronavirus response, not to backfill decades of bad fiscal policy. As we continue to work to help families across the nation, we respectfully ask that you to oppose bailouts for states,” the Republican conservatives wrote to Trump.
“America has faced many crises throughout our history – crises that demanded difficult decisions. Coronavirus is no different. Government at every level must work together to spend taxpayer dollars wisely to end the Coronavirus crisis,” the senators wrote.
Sean Moran is a congressional reporter for Breitbart News. Follow him on Twitter @SeanMoran3.

Stock markets surge as Fed pledges to continue corporate handouts

The US economy contracted at its fastest pace in the first quarter of this year since the end of 2008 and the onset of the Great Recession brought about by the global financial crisis.
Gross domestic product fell at an annual rate of 4.8 percent for the first three months of the year with indications of much worse to come in the second quarter.
But in another expression of the divorce between Wall Street and the real economy, financial markets celebrated the news—the Dow went up 532 points—because it provided the US Federal Reserve Board with the rationale for funnelling still more money into the markets on top of the trillions of dollars it has already handed out.
Following a two-day meeting of its policy-setting open market committee yesterday, the Fed made clear that its ultra-low interest-rate regime and its program of financial asset purchases, propping up all financial markets—stocks, bonds, municipal debt and corporate bonds—would continue virtually indefinitely.
Chairman of the Federal Reserve Jerome Powell (AP Photo/Susan Walsh)
“The Federal Reserve is committed to using its full range of tools to support the US economy in this challenging time,” it said.
The use of the term “economy” is a misnomer. The Fed, together with the Trump administration, is solely concerned with the profits of the major corporations and the hedge fund traders and financial speculators on Wall Street who are raking in money hand over fist in the crisis.
As the reported yesterday, the figure of 26.5 million US workers who have applied for unemployment assistance over the past five weeks is a considerable underestimate. For every 10 people who applied there were another three or four who tried to apply but could not get through and an additional two people who did not try to apply because the process is so onerous.
The situation facing millions of workers, 
forced to try to survive on the pittance 
provided by jobless benefits, or unable to 
even receive it, stands in sharp contrast to the
amount of between $4.2 and $6 trillion made 
available to the corporations and banks 
under “emergency assistance” packages.
Wall Street was particularly heartened by the Fed’s open market committee statement and additional remarks made by its chair, Jerome Powell, at a news conference.
“The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” the official statement said.
The reference to risks over the “medium term” was a signal to the markets that the Fed would continue its unprecedented interventions as far as the eye can see. And the message was received and understood as the market surged.
It was buttressed by Powell. He said that the Fed would move “forcefully, proactively and aggressively” to support the economy and indicated that the administration should provide still further support for corporations.
Powell said that Fed policy was in the “right place” for now, that ultra-low rates would remain for a “good while” and the Fed was not “in any hurry” to withdraw support.
More “direct fiscal support” might be needed in order to “limit long-lasting damage” and it was time to use “the great fiscal power of the United States.” In other words, open the financial spigots to bolster the corporations and Wall Street.
And the representatives of finance capital are expecting it. James McCann, senior economist at Aberdeen Standard Investments, noted that the Fed was “promising to do more if necessary.” While it had made a “brief pause” at its latest meeting to establish the impact of what had already been done, “they cannot afford to rest on their laurels.”
The March quarter figures, while significant, only reflect the start of the effects of the lockdown and social distancing measures, which began to impact in the last three weeks of the month. But they express the speed of the decline.
Personal consumption, which accounts for about 70 percent of the US economy, fell at a rate of 7.6 percent, the biggest drop since the second quarter of 1980 in the midst of a major recession. Spending on services was down by 10.2 percent, the largest fall since quarterly figures began to be collected in 1947.
Spending on software, research and development, capital equipment and building fell at an annual rate of 8.6 percent, deepening the decline in investment that had been evident well before the COVID-19 pandemic struck.
All forecasts are for a massive drop in the second quarter. The Labor Department is expected to announce that even the official unemployment rate, which is invariably understated, will reach double digits for the first time in more than a decade.
James Sweeney, chief economist at Credit Suisse, told the Wall Street Journal that there was a “lot more to come” and the US economy was “headed for the largest contraction in GDP since the Great Depression.”
The data and forecasting company IHS Markit expects US GDP to contract at an annual rate of 37 percent from April to June. Following the issuing of the latest GDP numbers, Morgan Stanley economists said they expected the second-quarter contraction would be an annual rate of 38 percent, equivalent to the worst quarterly contraction of the 1930s.
According to a report in the Wall Street Journal, major manufacturers have warned that “some closed plants never reopen.”
“The impact of COVID-19 on our business has been significantly more severe and chaotic than any cyclical downturn we had envisioned,” the CEO of Caterpillar, Jim Umpleby, said. Other executives have said that the economy was already heading for a downturn before the virus struck and cut demand still further.
The situation in the US is being replicated worldwide. This week, analysts at the McKinsey consultancy firm said that up to 59 million jobs in the UK and the European Union were at risk because of lockdowns resulting from the pandemic—a quarter of all private-sector employment. It warned that EU unemployment could double and was unlikely to return to pre-crisis levels before 2024.
The International Labour Organisation has warned that global unemployment for the most impoverished workers in the so-called informal sector will be much worse than it had previously predicted, and they faced “massive damage” to their livelihoods.
Two weeks ago, the ILO said the fall in working hours in the informal sector would be equivalent to the loss of 195 million jobs. This week it increased that estimate to 305 million jobs.
The situation in the US—the centre of the world economy—is expressive of the basic class forces and interests at work in the capitalist economy as a whole.
Hundreds of millions of American workers face horrific conditions not seen in generations, while the institutions of the state—the Fed and the administration—pull out all stops to save the big corporations and financial parasites and speculators on Wall Street, providing unlimited amounts of money that, one way or another, will be extracted from the labour of the working class.
At the same time, the insanity of the “free market” system is revealed in the sight of long queues at food banks while agricultural producers destroy their products because they cannot find a market for them.
This is the inexorable logic of capitalism, the political economy of profit. The working class must fight for its own independent political economy based on conscious planning in a socialist economy to meet human need.

Consumer Confidence Collapsed in April But Hope Grew Stronger

Handsome man with tools, holding an American Flag, standing against a background of green trees and the rays of the setting sun. View from the back, close-up. Concept of work and employment
iStock / Getty Images

Consumer confidence in the United States suffered a record plunge in April as the coronavirus wreaked havoc on the economy and threw millions of Americans out of work.
The Conference Board’s consumer confidence index fell to 86.9 from a downwardly revised 118.8 in March. That is the steepest decline since 1973, when confidence plunged during the oil crisis. It was worse than economists expected.
Not surprisingly, Americans have a very grim view of what is happening in the economy right now. But they unexpectedly turned sunnier about what they expected six months from now.
The Conference Board’s gauge of Americans’ feelings about the current state of the economy plummeted to 76.4 from 166.7. That is the largest decline recorded for this measure.
Americans became much more negative about the labor market. Those who said jobs are “hard to get” rose to 33.6 percent from 13.8 percent. Those who said jobs are “plentiful” dropped to 20 percent from 43 percent.
The gauge of future expectations — what consumers think will happen six months from now— actually improved to 93.8 from 86.8 in March. A huge jump in expectations for the job market indicates that Americans think the economy will be in much better shape when it reopens after the shutdown orders are lifted. The share expecting more jobs six months from now rose from 16.9 percent to 41.0 percent, while those anticipating fewer jobs in the months ahead moved up from 17.6 percent to 20.8 percent.
Americans know the current situation is grim but are confident of better times in the not too distant future.

After the 2008 crisis, the Bush and Obama 

administrations orchestrated the bailout of 

Wall Street, buying up all the bad debts, 

particularly in mortgage-backed securities, 

that had been used as vehicles for an orgy of 

speculation. As a result, social inequality 

increased to record levels. Corporate cash 

hoards rose to $2 trillion. Some $4 trillion 

was funneled into stock buybacks.

Far from being forced to pay for the economic consequences

of the pandemic, the banks and corporations have simply 

been bailed out again, this time on a far larger scale. Once 

again, the crisis is being utilized as an opportunity to 

restructure class relations in the interests of the rich.

The Great Wall Street Heist of 2020

28 April 2020
The economic fallout from the COVID-19 pandemic continues to have devastating consequences for the vast majority of the population in the United States. The new month begins on Friday, which means that rents and mortgages will come due for tens of millions of workers who have no income to pay for them.
More than 20 million people have filed for unemployment benefits over the past five weeks. In March, less than 30 percent of those who filed received any benefits. Millions more are ineligible for any assistance.
Millions of people have yet to receive anything, including the $1,200 federal cash stimulus, and are desperately attempting to stave off destitution. Food banks are overwhelmed by demand and are running out of staple goods. According to the Economic Policy Institute, more than nine million people who lost their jobs have also lost their health insurance through April 11, with millions more in the weeks that have followed.
There are, however, two realities, two 
Americas. While the economic destitution of 
workers is being used in an effort to drive 
them back to work over widespread 
opposition, the corporate and financial 
oligarchy has seen its fortunes increase.
Gigantic corporations, many of which have massive cash hoards, are laying off employees while continuing to pay executives. Entertainment giant Disney recently came under public scrutiny over the fact that it has furloughed more than 100,000 workers while maintaining its executive compensation program. But this is the general rule.
US billionaires, since mid-March, have 
increased their wealth by $282 billion. The 
collective fortune of these 614 individuals, 
which totals $3.2 trillion, has been buoyed by 
the continued rise of share values on Wall 
Street, which increased sharply again on 
A headline in the German newsweekly Der Spiegel yesterday captured the economic situation: “The death toll in the US is rising—so are the markets.” Noting that while businesses remain shut down and joblessness exceeds by far anything seen in American history, Der Spiegel writes: “So if the fundamental economic data actually offer so little incentive to buy, what is behind the rally? The solution to the riddle has three letters: Fed.”
The Fed—that is, the US Federal Reserve—has made clear that it will do everything in its power to support Wall Street. As a consequence, the markets keep going up. “If you wanted to bet on price losses,” Der Spiegel remarks, “you would have to bet against an institution whose funds are practically infinite.”
Beginning in March, as the Trump administration and the media were downplaying the danger posed by the coronavirus pandemic, the Federal Reserve began funneling money into the markets—first by reducing interest rates to zero, then by initiating a raft of programs to buy up assets from banks and corporations, providing them with cash to purchase stocks.
The activity of the Federal Reserve was endorsed unanimously by the US Congress in late March, when it passed the “CARES Act,” which allocated $454 billion to finance up to $4 trillion in asset purchases. Every single senator voted for the CARES Act, including the erstwhile “democratic socialist” from Vermont, Bernie Sanders.
The Fed is spending something on the order of $80 billion every day. The central bank’s balance sheet is expected to increase to as much as $11 trillion, from less than $4 trillion last year and less than $1 trillion before 2008. This would bring the overall value of assets held by the Fed to nearly half the entire annual economic output of the United States.
One should call things by their right names. Terms such as “asset purchases” and “quantitative easing” tend to obscure what is happening. This is plunder, thievery, robbery on an unprecedented scale. Since stock ownership is overwhelmingly concentrated among the rich, it is the rich who are benefiting.
The Great Wall Street Heist of 2020 has been aided and abetted at every stage by the Democratic and Republican parties. The various institutions of the state, including the mainstream media, have exposed themselves as nothing more than the paid hirelings of Wall Street, to put the matter delicately. Others might have more expressive terms.
After the 2008 crisis, the Bush and Obama administrations orchestrated the bailout of Wall Street, buying up all the bad debts, particularly in mortgage-backed securities, that had been used as vehicles for an orgy of speculation. As a result, social inequality increased to record levels. Corporate cash hoards rose to $2 trillion. Some $4 trillion was funneled into stock buybacks.
Far from being forced to pay for the economic consequences of the pandemic, the banks and corporations have simply been bailed out again, this time on a far larger scale. Once again, the crisis is being utilized as an opportunity to restructure class relations in the interests of the rich.
Everything turned over to Wall Street will be paid, in one form or another, by the working class--through austerity, the further destruction of social programs and intensified exploitation. Hence the relentless campaign to return everyone back to work, risking a new wave of the pandemic and the deaths of countless thousands of people.
Such measures, we are told, are necessary to “save the 

economy.” But “the economy,” like the “American people,” is an 

abstraction. “The economy” that has been “saved” is the economy

of the rich, capitalism. Every measure taken has 

been based on protecting the interests of 

the oligarchy at the expense of society. 

Every policy has been guided by class interests.
A socialist response, that is, one based on the interests of the working class, is of an entirely different character. Trillions must be allocated, not to bail out Wall Street, but to implement an emergency program to build up health care infrastructure and provide protective equipment to all essential workers.
The loans and other mechanisms through which the income of workers is earmarked for payments to the banks must be immediately forgiven. Student debt ($1.5 trillion), car loans ($1.3 trillion) and credit card debt ($1.08 trillion) could all be wiped out with the money that has been turned over to Wall Street, with trillions still left over.
All workers must continue to receive their full income for the duration of the pandemic. The highest quality health care must be available to all, free of charge and on a completely equal basis.
There must, moreover, be real assistance to small businesses. The so-called Paycheck Protection Program passed by Congress, ostensibly to aid small businesses, has turned out to be another massive swindle for large corporations, including restaurant chains, hotel conglomerates and hedge funds.
Such actions and other emergency measures to secure the interests of the working class, in the United States and internationally, could not and cannot be secured within the framework of the existing state institutions.
The entire response to the pandemic—from the initial downplaying of the threat to the failure to organize any significant response, the massive handout to Wall Street and the present campaign to force workers back to work even as the pandemic rages—is proof of the Marxist theory of the state. The state is not a neutral body. The financial oligarchy rules. It is their state. The politicians are their politicians. The media is their media.
The logistics, food production, health care, energy, manufacturing and other basic industries must be restructured to meet social needs, under the democratic control of the working class. The massive bailouts of Wall Street must be reversed, with the social resources redirected to securing the financial well-being and health of the working class.
Such policies cannot be realized within the existing political system. They raise the necessity for the revolutionary mobilization of the working class to take political power in its own hands through the establishment of a workers’ government—that is, a government of the workers, by the workers and for the workers—that will implement the socialist policies required to save mankind from disaster.


Neither McConnell nor the Democrats have any problem giving free money—in unlimited amounts—to Wall Street.

On Wednesday, Forbes published a commentary titled “Kiss Your State Pension Goodbye.” It noted: “This is hardly the first time letting states file for bankruptcy to escape trillions of dollars in promised retirement benefits has been proposed.”


Senate Majority Leader McConnell calls for states to declare bankruptcy and gut pensions

25 April 2020
Senate Majority Leader Mitch McConnell on Wednesday called for state governments facing mounting deficits linked to the coronavirus crisis to file for bankruptcy instead of receiving financial aid from the federal government.
Specifically targeting public sector workers’ pensions, the Kentucky Republican told right-wing radio host Hugh Hewitt: “I think this whole business of additional assistance for state and local governments needs to be thoroughly evaluated. There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations.”
States currently have no legal right to declare bankruptcy, but McConnell suggested a law to permit it, saying, “I would certainly be in favor of allowing states to use the bankruptcy route.” He added, “We have governors regardless of party who would love to have free money.”
McConnell’s office on Wednesday released a statement titled “Stopping [Democratic-led] Blue State Bailouts.”
Declaring bankruptcy would allow state governments to override laws and even state constitutional provisions that guarantee the pension benefits of retired public workers. On Wednesday, Forbes published a commentary titled “Kiss Your State Pension Goodbye.” It noted: “This is hardly the first time letting states file for bankruptcy to escape trillions of dollars in promised retirement benefits has been proposed.”
The author cited a 2011 column by former Florida Governor Jeb Bush and former House Speaker Newt Gingrich in the Los Angeles Times calling for change in federal bankruptcy laws to allow states to “reorganize their finances.”
Neither McConnell nor the Democrats have any problem giving free money—in unlimited amounts—to Wall Street. The Senate majority leader’s statement came one day after the Senate voted by unanimous consent for a new $484 billion bill that will funnel money disproportionately to large businesses, in the guise of aiding small businesses and their employees. The bipartisan bill was approved by the House of Representatives on Thursday, with only one dissenting Democratic vote, and signed into law Friday by President Donald Trump.
The new legislation includes an additional $310 billion for the so-called “Paycheck Protection Program” (PPP) enacted last month as part of the $2.2 trillion CARES Act corporate bailout. The Democrats dropped their demands that the new legislation include money to aid state and local governments and additional funding for food stamps. They claimed that aid to the states and localities facing collapsing tax revenues would be forthcoming in a new bailout bill to be negotiated with the White House and congressional Republicans.
Trump reiterated at his Thursday White House briefing that he was open to discussing aid to the states as part of the next bailout bill, but he added that “a lot of people” were sympathetic to McConnell’s position, and he singled out for attack “blue” states, naming Illinois. The White House is seeking to use the fiscal crisis of state and local governments and the possibility of federal aid as leverage to force them to reopen their economies more rapidly.
The Democrats voted to top up the PPP, which exhausted its $349 billion funding in less than two weeks, even though multiple reports had emerged that the vast majority of family-owned businesses had been shut out of the loan program while scores of large publicly traded companies had received millions of dollars in forgivable loans, and the Wall Street banks assigned to handle the Small Business Administration financing had made $10 billion in fees.
In saying it would be preferable to allow states and cities to go bankrupt rather than provide them with a small fraction of the trillions doled out by the Treasury and the Federal Reserve to corporations and banks, McConnell was expressing the outlook of the corporate-financial oligarchy that runs America. Working through both of its political parties, it has responded to the deadly pandemic by opposing any diversion of resources from its private wealth to save lives and contain the virus, and instead orchestrated the unlimited transfer of taxpayer money to prop up the stock market and make itself even richer.
Now it is moving to use the crisis to lay waste to what remains of social services and benefits on which hundreds of millions of working class people depend. This too is, in all essentials, a bipartisan policy.
The Democratic-aligned Washington Post, owned by Amazon’s billionaire CEO Jeff Bezos, published an editorial Friday that chastised McConnell and called for aid to states and cities. At the same time, it lined up behind McConnell’s attack on pensions, denouncing the call by the Illinois Senate president, a Democrat, for $10 billion in federal aid to stave off the collapse of the state’s pension system. It declared that the federal government should not aid pension systems whose problems are “self-inflicted.”
The National Governors Association has requested $500 billion in federal aid, a fraction of the trillions injected into the financial markets, to avert a collapse of basic social services, from education and health care to sanitation and firefighting, and the destruction of hundreds of thousands of public-sector jobs, as well as the wages and pensions of state and municipal workers.
State and local officials of both parties fear a social explosion as the ruling class demands that workers return to work without any protection from infection, unemployment reaches Depression-era levels, millions of laid off workers are blocked from applying for benefits as a result of antiquated and overwhelmed state benefit systems, and outrage grows over the callous indifference of the political establishment to massive human suffering and death.
McConnell’s statement has intensified tensions between the states and the federal government. Trump has rejected calls by governors for federal money and coordination to ramp up coronavirus testing. Last month he suggested that New York state be quarantined, provoking Democratic Governor Andrew Cuomo to call it a “civil war measure.” Earlier this month Trump declared that he had “absolute authority” to force the states to reopen their economies on his timeline.
Democratic governors, in particular, have denounced McConnell’s proposal. On Thursday, Cuomo called the bankruptcy suggestion “one of the saddest, really dumb comments of all time.” On Friday he denounced it as “un-American.”
Some Republicans have joined in. New York Congressman Peter King called McConnell’s remarks “shameful and indefensible,” and dubbed him the “Marie Antoinette of the Senate.”
However, none of them have pointed to the contrast between the senator’s attitude to providing money to maintain social services and pensions and his avid support for bailing out Wall Street. That is because the Democratic Party, no less than the Republicans, supports the multi-trillion-dollar bailout of the oligarchy.
Even as Democratic governors and mayors criticize Trump and the Republicans for withholding federal aid, they are preparing massive budget cuts. Not one has even proposed raising taxes on corporations and the wealthy to avoid the destruction of vital services and the impoverishment of working class families.
Moody’s Analytics has warned that states may face combined deficits of $158 billion to $203 billion through the 2021 fiscal year. More than 2,100 cities across the country expect budget deficits this year.
New Jersey’s Democratic governor, Phil Murphy, has frozen more than $1 billion in spending and cut property tax rebates for homeowners. Responding to McConnell’s bankruptcy proposal, Murphy said Wednesday that without federal support his state would not go bankrupt. Instead, he declared, “We will just cut, cut, cut and cut.”
Virginia Governor Ralph Northam, a Democrat, is seeking to freeze $2.3 billion in new spending, scuttling a program for free tuition at community colleges and canceling an increase in the state minimum wage.
Washington state Governor Jay Inslee, also a Democrat, this month vetoed budget items projected to cost $445 million over three years, including a plan to hire 370 school guidance counselors.
New York’s Democratic mayor, Bill de Blasio, announced last week that he would slash over $2 billion in city services over the next year. He plans to close public pools, reduce sanitation pickups, suspend the summer youth employment program and impose a hiring freeze.
Michigan may have a deficit as high as $7 billion over the next 18 months. Detroit’s Democratic mayor, Mike Duggan, has threatened to throw the city back into bankruptcy and bring in an emergency financial manager to impose new cuts in social services, pensions and jobs.
Whatever their policy differences, the two parties are united in ruling out any challenge to the capitalist profit system and the entrenched wealth of a parasitic ruling elite. They all agree that the full burden of the pandemic crisis must be borne by working people.

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