At the same time, the ruling class has utilized
the pandemic to organize a transfer
of trillions of dollars to the financial markets
through the Federal Reserve. The total assets
on the balance sheet of the US central bank
rose this week to more than $6.7 trillion, up
from less than $4 trillion before the pandemic
hit. Every day, the Fed is spending $80 billion
to buy up assets from banks and
corporations to fuel the market rise.
Depression USA
9 May 2020
Yesterday, the US Labor Department released its April unemployment report, revealing a level of joblessness that is without historical precedent. On the same day, the stock market rose sharply, with the Dow Jones Industrial Average finishing up more than 450 points, or nearly two percent. Wall Street continues not only to feast on death, as the toll from the coronavirus continues to grow, but to profit from the mass social misery that the pandemic has produced.
The Labor Department report recorded a drop of employment of 20.5 million people. Not only is this the largest monthly collapse in history, it exceeds the previous record more than 10 times over. The official unemployment rate increased from under 4 percent to 14.7 percent, far above anything seen since the Great Depression of the 1930s.
As bad as these numbers are, they significantly underestimate the scale of the social dislocation. The April report is based on estimates calculated during the middle of last month, so they do not take into account the millions of people who have lost their jobs over the last three weeks. Some 33.5 million have filed for unemployment claims since the beginning of state and federal lockdowns seven weeks ago.
According to the report, moreover, 6.4 million additional workers have left the labor force entirely and are not counted as unemployed, bringing the labor force participation rate to its lowest level since 1973. Another 11 million workers reported that they were working part time because they could not find full-time work, an increase of 7 million people since before the pandemic.
When all factors are taken into account, something in the area of one third of the work force is out of work.
Mass joblessness is impacting nearly every sector of the working class. Employment in the leisure and hospitality sector was the most extreme, falling by nearly 50 percent, or 7.7 million people. There were 2.1 million job losses in business and professional services, 2.1 million in retail, 1.3 million in manufacturing and 1 million in construction.
Stunningly, amidst an expanding pandemic, there were 1.4 million job cuts in health care. And under conditions of an enormous social crisis, there were 650,000 job cuts in the social assistance sector.
The report notes, moreover, that mass unemployment has impacted workers of all races and genders. The unemployment rate among adult men soared to 13.0 percent, adult women to 15.5 percent, and teenagers to 31.9 percent. The rate was 14.2 percent for whites, 16.7 percent for blacks, 14.5 percent for Asians and 18.9 percent for Hispanics.
While a large number of the job cuts are categorized as “temporary,” a growing proportion are permanent, as corporations begin to implement mass layoffs. Indeed, there were two million permanent job losses in April. This, taken by itself, would be the largest increase in unemployment in post-World War II American history.
Tens of millions of workers live paycheck to paycheck and rely on credit cards and other forms of debt to make up for the difference between their income and their expenses. Household debt rose by 1.1 percent in the quarter ending March 31, to $14.3 trillion, a new record. This does not take into account the piling on of debt by tens of millions of people as the economic crisis intensified in April and into May.
With no savings and no government assistance, workers are turning in record numbers to food banks, which are running out of basic goods. A report by the Hamilton Project earlier this week found that 41 percent of families with children under the age of 12 are experiencing food insecurity—that is, they are unable to afford enough to eat.
The ruling class has no policy to deal with the social catastrophe. On Friday, the Trump administration declared that the jobs that have been destroyed “will be back and they’ll be back soon.” He added that “we’re in no rush” to pass a bill that would provide some assistance. The administration’s top economic advisor, Larry Kudlow, said that talks over further “stimulus” measures are “in a lull right now.”
As for the Democrats, while mouthing phrases about additional aid, they are haggling over minor measures that they know will never be passed by Congress. Both parties display a combination of indifference, bewilderment and reaction in the face of the greatest economic crisis since the Great Depression. Their proposals in response to this crisis make the US in the era of Herbert Hoover appear almost philanthropic.
Mass social immiseration is, in fact, a deliberate policy, supported by the entire political establishment. It is aimed at creating conditions in which: 1) the ruling class can force a return to work even as the pandemic continues to spread throughout the United States; and 2) workers will be compelled to accept sharp reductions in wages and benefits and an increase in exploitation to pay for the massive handout to the super-rich.
To pressure workers to endanger their lives by returning to work, the majority of the population is being systematically starved of resources. Six weeks after the passage of the CARES Act—the massive boondoggle to the corporations adopted unanimously by the Democrats and the Republicans—the majority of Americans have not received their $1,200 “stimulus” check.
States are going bankrupt and beginning to implement brutal austerity measures. A report from the Economic Policy Institute earlier this month found that 50 percent more people are unemployed than have even been able to file for unemployment benefits—the result of overburdened application systems and onerous restrictions. Millions who have filed for benefits have not received anything.
The approximately 11 million undocumented immigrants in the United States are excluded from receiving any benefits. Millions of workers in the “gig economy,” while supposedly able to qualify for federal assistance, face impossible barriers to obtaining it. In the state of Illinois, for example, these workers will be able to start applying only on May 11, and they will not have any possibility of getting assistance for several weeks thereafter.
At the same time, the ruling class has utilized
the pandemic to organize a transfer
of trillions of dollars to the financial markets
through the Federal Reserve. The total assets
on the balance sheet of the US central bank
rose this week to more than $6.7 trillion, up
from less than $4 trillion before the pandemic
hit. Every day, the Fed is spending $80 billion
to buy up assets from banks and
corporations to fuel the market rise.
The enrichment of the oligarchy through rising share values is premised on mass impoverishment and an intensification of the exploitation of the working class. The profits and wealth of the corporate-financial elite have been saved at the expense of society.
Two agendas stand opposed to each other. One is the defense of the financial oligarchy, which means both an expansion of the pandemic, with all the horrific consequences this will bring, and a further immiseration of the population. The other agenda is that of the working class, which wants to fight the pandemic, save lives and defend the interests of the vast majority of the population.
The fight against the pandemic is not just a medical question. It is a political struggle to mobilize the working class against the Trump administration, the entire political establishment and the capitalist system it defends.
The GOP Isn’t Cynical Enough to Save Us From a Depression
How Kudlow can they go? Photo: Shutterstock/Shutterstock
More than 30 million Americans have lost their jobs since mid-March. The U.S. unemployment rate is now officially 14.7 percent, the highest it’s been at any time since the Great Depression (and that official rate is almost certainly lower than the actual one). Small businesses all across the country are on the verge of collapse. Absent an expansion in the government’s grant program for such firms, a cascade of bankruptcies will eliminate them — severing functional matches between workers, employers, and commercial spaces in the process — and thus delaying the onset of economic recovery. Meanwhile, states and cities are being forced to deepen the downturn by laying off public workers as exploding public-health costs — and cratering sales and income tax revenues — lay waste to their budgets. Already, just weeks into the labor-market collapse, nearly 23 percent of U.S. households say they cannot afford enough food, according to a new survey from the Brookings Institution. During the Great Recession, that figure never exceeded 16 percent.
If the Republican Party wanted to maximize Donald Trump’s odds of winning election this November, it would be doing everything in its power to pass a fourth coronavirus stimulus package as quickly as possible. Historically, swing voters have consistently turned against incumbent presidents (and their parties down-ballot) when economic growth slows in an election year. And there’s reason to think that Trump may be more vulnerable to worsening economic conditions than most presidents: Throughout his time in office, voters have given Trump’s handling of the economy higher marks than the man himself. Although the president’s approval rating has yet to dip beneath its long-run average, it has declined along with the economy’s performance in recent weeks. Today, both public surveys and (reportedly) the Trump campaign’s own internal polling suggest that Joe Biden is on pace to make Donald Trump a one-term president.
But for Republicans, some things are more important than winning elections — and, apparently, denying government assistance to desperate workers and their underfed children is one of them.
Shortly after the Labor Department unveiled the worst jobs report in multiple generations Friday, Larry Kudlow told reporters that the White House will oppose the passage of any further stimulus legislation this month. Trump’s chief economic adviser argued that it was unclear whether further aid was necessary, as Congress had just made “another big infusion” of relief funds late last month and states were now beginning to reopen their economies.
Trump appeared to echo this message late Friday afternoon, saying of negotiations over the next stimulus package, “We’re in no rush, we’re in no rush.”
There do appear to be some divisions among Republicans, both in the White House and Senate. Although Trump downplayed the need for stimulus Friday, he had described a payroll tax cut and infrastructure package as economic necessities earlier in the week. Recent reports have suggested that the White House favors sending out an additional round of relief checks. On Capitol Hill, meanwhile, a few Republican lawmakers from hard-hit regions have called for substantial fiscal aid to states and more generous wage subsidies for companies.
But the dominant view in Mitch McConnell’s caucus seems to be one of callous complacency. Asked whether he would support another round of cash payments to working-class households, Louisiana Republican John Kennedy told The Hill, “Well, people in hell want ice water too. I mean, everybody has an idea and a bill, usually to spend more money. It’s like a Labor Day mattress sale around here.”
Wisconsin senator Ron Johnson and South Carolina’s Lindsey Graham have also expressed opposition to further cash aid. And McConnell’s top deputies, John Barrasso and John Cornyn, have echoed Kudlow’s line that it’s premature to discuss new relief measures.
It’s possible — perhaps even probable — that this is a negotiating posture. If McConnell can frame the conservative position as “let the economy burn,” then suddenly relief of any kind, no matter how limited or regressively targeted, becomes a concession to Democrats. Nevertheless, this would not be a politically optimal pose to strike. If Republicans want to maximize the U.S. economy’s performance in the second half of this year, they need to keep businesses solvent and consumers financially secure now. Recessions are self-reinforcing. As Roosevelt Institute economist J.W. Mason writes, “once economic units have run through their reserves of liquidity, and/or start changing their beliefs about future income, the fall in spending will continue under its own power, regardless of what started it.”
In the Trump era, many liberals have commented on the GOP’s opportunistic embrace of deficits and expansionary monetary policy. When the unemployment rate was nearly 10 percent — and a Democrat was in the White House — Republicans cried out for balanced budgets and interest rate hikes. Once Donald Trump took the reins of an economy closing in on full employment, the GOP paired a $1.5 trillion tax cut with large increases in federal spending and calls for the Federal Reserve to expand the money supply.
But there are limits to Republicans’ ideological opportunism. The party may prioritize delivering returns to their investors in the billionaire class and military-industrial complex over balancing the federal budget. But the conservative movement’s commitment to increasing the dependence of labor on capital, crushing public-sector unions, and discrediting state-level experiments with social democracy is real and deep. And a significant portion of the party’s lawmakers seem to genuinely believe that recessions are self-correcting phenomena that government intervention will only prolong.
For these reasons, Republicans appear hell-bent on allowing the $600 federal increase in unemployment benefits to expire in July and denying states and municipalities the level of aid necessary for averting steep reductions in public employment, education, and other basic services. From the perspective of a Randian libertarian, COVID-19 looks like a cure for municipal workers’ pensions and blue state pre-kindergarten programs. So why not let the virus accomplish what the “red state model” failed to? After all, more free handouts aren’t actually necessary for ensuring that Trump won’t be campaigning in a depressed economy this fall — coercing workers back to their (epidemiologically hazardous) jobs forthwith will make America grow again. Besides, the S&P 500 is up 30 percent since late March — so how bad can things be?
This reasoning is economically delusional. In practice, state governments did not shut down their economies, their residents did. As Raj Chetty and his team of economists demonstrate in a new paper, in states across the country, economic activity declined before lockdown orders took effect — and has not picked up much in those places where they’ve been lifted. International data lends credence to these findings: Sweden’s economy has suffered at least as badly as its neighbors’, even though it made the aberrant decision to allow its nonessential businesses to remain in operation.
Whether the GOP’s stance is politically insane is more ambiguous. If America were a functioning, majoritarian democracy, then the party’s position would surely be untenable. Democrats currently lead Republicans in the congressional generic ballot by eight points. Virtually every poll suggests Biden is on course to win the popular vote by a comfortable margin. But then, if America were a majoritarian democracy, Republicans would not be in power to begin with. The GOP can afford to prioritize its ideological mission over its electoral best interests because America’s electoral institutions structurally overrepresent its predominately white, nonurban coalition. By holding up further stimulus, Republicans are taking a massive political risk and significantly reducing Trump’s odds of reelection. But it remains conceivable that the president will be able to squeak by on the strength of his Electoral College advantage, even as his party actively deepens a historic recession so as to economically disempower the majority of Americans who must work for a living.
A more cynical GOP would prioritize Trump’s reelection over denying “ice water” to “people in hell.” Unfortunately for America, actual Republicans put plutocracy before party.
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