Surging cost of living in US drives class tensions to the breaking point
The latest inflation data published Tuesday shows that the working class confronts months of immense hardships as wages lose their value in the face of rising living costs. The ruling class’s attempt to make the working class pay for the crisis of capitalism is driving workers into struggle across the world, including in the United States, where teachers, nurses, and possibly railroad workers are launching powerful strikes.
Price increases in virtually all consumer items led to a 12-month inflation rate of 8.3 percent, the US Bureau of Labor Statistics reported Tuesday. Rents, groceries, and medical care costs drove the rise in the Consumer Price Index (CPI) in August. Household furnishings, new vehicles, motor vehicle insurance, and education also saw increases.
For the working class, life is becoming intolerably more expensive by the day.
Rental housing costs rose another 0.7 percent in August, bringing the 12-month increase to 6.2 percent, the highest since 1986. Utilities were up 2.1 percent in August and are up a staggering 19.8 percent over the past year. The cost of food was up 0.8 percent last month and has risen by 11.4 percent over the last year, the sharpest rise since 1979.
President Biden did not refer to the new figures during a White House event to celebrate the passage of the phony “Inflation Reduction Act” Tuesday afternoon, only saying glibly, “We have more to do.” The president touted the three-month fall in gasoline prices, without mentioning that gas is still up 26 percent over the last year.
Biden, the Democrats and Republicans have provided at least $50 billion to arm Ukraine this year, but they have done nothing to alleviate the impact of rising costs on working class and middle-class families.
In a separate report Tuesday, the Bureau of Labor Statistics said real average hourly earnings fell another 0.2 percent from July to August. Over the last year, real average hourly pay of an American worker fell by 2.8 percent.
“Everything is going up except our paychecks,” James, a Detroit Chrysler (Stellantis) worker, told the World Socialist Web Site. “I’m working two jobs and at least 80 hours a week to make it. It’s crazy. I don’t have any time to sleep.”
The rise in living expenses—which has added $341 to a typical family’s monthly costs—is escalating class conflict in the United States and internationally. This week alone, 15,000 nurses in Minnesota participated in one of the largest private sector health care strikes in US history; 6,000 Seattle teachers walked out of classrooms; and more than 100,000 railroad workers are set to strike at 12:01 EST on Friday morning.
The American ruling class, and the Biden administration in particular, is relying on the trade union apparatus to enforce contracts with wage increases that are far below the rate of inflation. Indeed, workers in trade unions have seen nominal wage increases that are significantly lower than for workers who are not in unions.
In an effort to enforce labor “peace” at home, while it wages war abroad, the Biden administration is working on further integrating the trade union apparatus—and its thousands of officials making six-figure salaries—into a tri-partite corporatist relationship directed against the working class.
The teachers’ unions are doing whatever they can suppress the fight of educators against horrific conditions and the spread of the pandemic as schools open. The health care unions are isolating the powerful struggle of Minnesota nurses, while limiting their strike to only three days. The AFL-CIO apparatus is desperately trying to keep a lid on anger that is boiling to the surface.
Nowhere is this clearer than in the rail industry, where workers have not had a raise in years and have no sick days. Many are forced to remain on call 24/7, leading no time for their families or rest.
While the Biden administration and the millionaires in the US Congress are threatening to use strikebreaking legislation against workers, the unions are engaged in a divide-and conquer strategy aimed at forcing through a sellout agreement. They promoted the fiction that a “Presidential Emergency Board” would propose a contract favorable to workers—the very same proposal that Congress is preparing to try to ram through over overwhelming opposition.
The ruling class is engaged in a policy of class war. Federal Reserve Chairman Jerome Powell, with full backing of the Biden administration, has made it clear that he is willing to throw the economy into a recession with sharp increases in rate hikes, which are designed to “exert pain” and use mass unemployment to beat back workers’ demands for raises that keep up with the rate of inflation.
Inflation, however, is not caused by workers’ demands for raises to keep up with rising costs but the infusion of trillions of dollars by the US government and central banks to bail out Wall Street and prop up the stock market bubble. The economic crisis has been exacerbated by the limitless resources handed over to the Pentagon to wage war against Russia and China.
Urgent action by the working class is needed to defend living standards. The Socialist Equality Party calls for workers to form independent organizations of working-class struggle, rank-and-file committees, in every workplace and neighborhood.
A network of rank-and-file committees, as part of the International Workers Alliance of Rank-and-File Committees, should prepare strikes, mass demonstrations and other class actions to win the following emergency demands:
- Raise base hourly pay by 40 percent to offset declining real income over the last five years. Two-thirds of American workers are living paycheck to paycheck.
- Immediately index all wages to the current inflation level and introduce an automatic monthly Cost-of-Living Adjustment (COLA) escalator to keep pace with rising expenses.
- Increase all employer-paid medical and pension benefits in line with inflation.
- Sharply raise government-funded Medicaid, Medicare and Social Security benefits to protect retired workers and spouses.
- Immediate relief for unpaid credit card, student loan, car and housing debt.
- Stop price-gouging by the energy monopolies and roll prices back to the November 2020 level of $2.00 a gallon. The profits must be reclaimed to meet social needs, and the energy industry must be nationalized under public ownership and democratic control.
Rank-and-file committees have already been initiated in critical industries, including among rail workers, health care workers, educators and autoworkers. The campaign of Will Lehman for president of the United Auto Workers is spearheading the fight for a rank-and-file rebellion against the union apparatus and the establishment of democratic control on the shop floor. It is winning a powerful response from autoworkers and other workers throughout the country.
A counter-offensive in the working class, freed from the constraints of the union apparatus, is the only way to break the dictatorship of the corporate and financial oligarchy and its two parties, the Democrats and Republicans. Only in this way can any of the great problems confronting workers be resolved.
The development of the class struggle must be connected to the building of a socialist and revolutionary leadership in the working class, in the United States and throughout the world. Capitalism offers nothing but poverty, exploitation, war and dictatorship. If there is to be a future for workers, it is through the fight to expropriate the ruling elites, establish genuine democratic control over economic life, and reorganize society on the basis of social need, not private profit. That is, it is through the fight for socialism.
Wall Street slumps as inflation data signify continued Fed interest rate hikes
Wall Street had its biggest fall in two years yesterday on the back of data which showed inflation is becoming broad-based, despite a fall in gas prices, meaning that the US Federal Reserve is certain to continue its interest rate hikes. It could even accelerate them as it seeks to suppress workers’ wage demands by contracting the economy.
The sell-off was triggered by an increase in the consumer price index for the month of 0.1 percent from July, contrary to market expectations that it would show a decline of the same amount, after recording no change in the previous month.
The most significant figure was core inflation – calculated after stripping out volatile items such as food and energy. It rose by 0.6 percent for the month, double the pace over the previous month, to reach an annual rate of 6.3 percent, compared to 5.9 percent in July.
In response to expectations that the Fed will maintain interest increases, and possibly accelerate them, market indexes plummeted.
All 30 stocks in the Dow fell as the index dropped nearly 1300 points. The S&P 500 slid 4.3 percent and the tech-heavy and interest-rate sensitive NASDAQ was down 5.2 percent. The three indexes had their biggest one-day fall since June 2020.
The falls were so sharp because there was an expectation, at least in some quarters, that the pace of inflation was starting to slow and the Fed would start to ease off. But that scenario has been blown apart.
At the start of trading the probability the Fed would lift rates by 100 basis points (one percentage point) at its policy-making meeting next week was zero. By the end of the day, it was 30 percent, with a 75-basis point rise regarded as certain.
In its report on the market slide, the Financial Times said: “The frenzied selling … hit nearly every corner of the market. At one point during the trading day, nearly 2000 stocks on the New York Stock Exchange fell in value in tandem, a phenomenon normally seen at times of market stress.”
It said investors were piling into options contracts to try to hedge against a further slide.
The drop in stock prices was matched by sharp falls in the price of government bonds, sending up the yield, or interest rate. Yields and prices move in opposite directions.
The yield on the two-year Treasury bond, the most sensitive to Fed interest-rate policy, rose to 3.75 percent, its highest level since 2007, while the yield on the 10-year Treasury reached 3.4 percent, near its highest level for the year.
The most significant feature of the bond market however, is inversion, where, contrary to “normal” conditions, the yield on short-term is now consistently higher than that on the 10-year bonds. This is regarded as a reliable indicator of recession.
In their comments issued before the latest inflation data, Fed officials made clear they intended to continue with rate rises, no matter what the recessionary effects for the economy.
Speaking to a conference in Austria last Friday, Fed governor Christopher Waller said he supported “another significant increase in the policy rate” at the next meeting because it was necessary to “get the policy rate to a setting that is clearly restricting demand.”
Waller did not spell it out, but the meaning of his remarks was clear. Fed rate rises must induce an economic contraction to suppress the demand for labour and put a clamp on workers’ wage claims to compensate for the biggest price increases in four decades.
As Fed chair Jerome Powell and other Fed officials have admitted, rate hikes will do nothing to bring down prices resulting from resulting from rising energy prices, increased food costs and constrictions in supply chains.
In an interview last week, Cleveland Fed president Loretta Mester struck a similar tone. She said elevated inflation was leading her to conclude that the Fed would have to move faster in lifting its rate than she had previously anticipated.
Some indication of the effect of the price hikes so far and the driving force behind wage demands was provided by analysis from Ryan Sweet senior director of economic research at Moody’s Analytics, reported in the Wall Street Journal.
He said the average household was spending $460 more each month to buy the same bundle of goods and services as it did last year—the equivalent of a wage cut of more than $100 per week—which was a “big burden particularly on lower income households.”
But the policy of the Fed is to increase this burden by contracting the demand for labour through a recession as inflation continues to surge.
In comments to the Financial Times, TS Lombard chief economist Steven Blitz said the inflation data, combined with wage rises and a tight labour market, was “not going to produce the soft-landing fairy tale.” There were better chances of “rolling a hard eight” (two fours in a dice game) than achieving that.
CNN has published some revealing comments made by billionaire investor David Rubenstein, the chairman of the private equity firm The Carlyle Group, on the thinking of Powell, whom he hired 25 years ago. Powell wanted a higher unemployment rate but could not say so publicly, he said.
“He can’t come out and say, ‘I hope the unemployment rate goes up to 6 percent.’ That doesn’t sound politically very attractive to say that.”
Rubenstein said an unemployment rate of 6 percent would result in a sizeable wave of layoffs.
“There will be a lot of job losses. The Fed isn’t going to publicly say, ‘We want job losses,’” he said.
Instead, it covers its real agenda with the claim that it is “fighting inflation”—a lying fiction that is faithfully repeated by a compliant mass media as finance capital pursues its class war against the working class.
Biden's build back better means high inflation, stock market tanking, higher interest rates
Mid-morning yesterday , President Joe Biden huffed and puffed on the White House South Lawn, celebrating (!) the Inflation Reduction Act (sic!):
"Overall, prices have been essentially flat in our country these last two months," Biden said. "That is welcome news for American families, with more work still to do."
However, a few hours earlier, at 8:30 A.M. EDT, the Bureau of Labor Statistics released its
Consumer Price Index Summary for August 2022, revealing a totally different reality, which definitely was not "welcome news for American families."
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in August on a seasonally adjusted basis after being unchanged in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.3 percent before seasonal adjustment.
Uh, Joe, an 8.3% price increase, no matter what Democrats say, is not "essentially flat" and certainly not "welcome news for American families."
Increases in the shelter, food, and medical care indexes were the largest of many contributors to the broad-based monthly all items increase. These increases were mostly offset by a 10.6-percent decline in the gasoline index. The food index continued to rise, increasing 0.8 percent over the month as the food at home index rose 0.7 percent. The energy index fell 5.0 percent over the month as the gasoline index declined, but the electricity and natural gas indexes increased.
So prices for basic essentials necessary for sustaining life, such as "shelter, food, and medical care," continued their monthly upward hike, which Biden defines as "essentially flat." And gasoline prices declined because of emergency panicked releases from the Strategic Petroleum Reserves and temporary gas tax reductions by some panicked Democratic governors.
The index for all items less food and energy rose 0.6 percent in August, a larger increase than in July. The indexes for shelter, medical care, household furnishings and operations, new vehicles, motor vehicle insurance, and education were among those that increased over the month. There were some indexes that declined in August, including those for airline fares, communication, and used cars and trucks.
Although this is nice news, for most people, airline fares and such are not essentials — not part of their daily spending.
The all items index increased 8.3 percent for the 12 months ending August, a smaller figure than the 8.5-percent increase for the period ending July. The all items less food and energy index rose 6.3 percent over the last 12 months. The energy index increased 23.8 percent for the 12 months ending August, a smaller increase than the 32.9-percent increase for the period ending July.
O-o-h! So this is what our president means by "essentially flat" — monthly price increases are slightly smaller than the previous month! Oh.
Meanwhile, the report continues:
The food index increased 11.4 percent over the last year, the largest 12-month increase since the period ending May 1979.
Hmmm, by May 1979, Jimmy Carter (D) had been president for nearly two and a half years.
In reaction to this "essentially flat" (sic) inflation report:
Dow tumbles 1,200 points for worst day since June 2020 after hot inflation report
Let's go Brandon! Right out of the White House! And be sure to take Kamala Harris (D) with you!
Image: Gage Skidmore via Flickr, CC BY-SA 2.0.
Biden's illegal migrant surge costs taxpayers $20.4 billion a year --study
As if inflation brought on by government overspending weren't high enough already, a new study shows that Joe Biden's illegal migrant surge is costing taxpayers $20.4 billion a year, or $9,232 for each illegal migrant.
According to Fox News:
FIRST ON FOX: The number of illegal immigrants who entered the U.S. since President Biden took office will cost the U.S. taxpayer over $20 billion each year, according to a new analysis by a hawkish immigration group.
The study by the Federation for American Immigration Reform (FAIR), which advocates for lower levels of immigration overall, calculates that the illegal immigrants who have entered the U.S. since Jan. 2021 will add an extra $20.4 billion burden a year, in addition to the $140 billion existing illegal immigrants already cost.
The analysis is based on an estimated 1.3 million released into the U.S. by immigration officials, as well as approximately one million "gotaways" -- or illegal immigrants who have slipped past overwhelmed agents. FAIR calculates that each illegal immigrants costs $9,232 a year to support.
Some two million migrants have come on in at Biden's incentivization of illegal entry, flooding cities such as El Paso, which has now been described by locals as looking like "a third world country," according to the New York Post. Biden's catch and release policies of unvetted migrants into the country has created a disaster for U.S. national security, imported third world crime, and created a huge burden for U.S. taxpayers, who are already burdened by Biden's multiple government spending packages, all of which create inflation.
The $20.4 billion figure, times four years of Joe Biden's presidency, would bring the migrant total cost to $81.6 billion for the taxpayers which is well more than the $62.5 billion that Joe Biden has shipped to Ukraine to help that country protect its borders.
The $20.4 billion is not only fat on the fire of inflation here, it's more than the entire GDP of Haiti, about two thirds of the GDP of Honduras, and well above the GDP of Nicaragua, three countries that are prominent in their export of illegal immigrants. When you add the $140 billion cost of the existing illegal aliens into the kitty, it's above the GDPs of almost every third world migrant-exporting country.
How much of that cash could have been sent to those places as foreign aid instead of the premium payments being shelled out for illegal migrants over here, given that the Biden administration claims to be all concerned about "root causes"? People go where the money is, and well, when your annual income is $1,300 a year in your home country, and $9,232 in the states, plus whatever you can earn under the table, or over, what does a smart would-be migrant do?
All this, so that Joe Biden can pad the voter counts and congressional seat representation on behalf of Democrats, damn the cost and too bad about inflation.
FAIR, which conducted the study, noted that the money spent on the uninvited foreign nationals could be better spent on far more citizen-critical costs at home. According to Fox News:
FAIR, which calls for stricter border controls as part of a range of broader immigration reforms, laid out the money the estimated $20.4 billion could be spent on instead -- including providing every homeless veteran in the U.S. $50K a year for the next 10 years.
The money, the analysis says, could also hire 330,000 teachers, fund and expand the National School Lunch Program, provide Supplemental Nutrition Assistance Program benefits to more than 7 million extra families or provide every family earning less than $50K a year a $410 grocery voucher.
It could also construct the entire wall at the southern border -- a project that began under the Trump administration.
"Even in an age in which trillion dollar spending packages and are considered modest, the additional $20.4 billion the Biden Border Crisis has heaped onto the backs of American taxpayers is still staggering," Dan Stein, president of FAIR, said in a statement. "$20.4 billion could address some very important needs of the American public, instead of covering the costs of the surge of illegal migration triggered by this administration’s policies."
Which shows how dishonest and irresponsible the Bidenites are in their zeal to bring in illegal migrants and release them into the interior of the country. Some 29% of them are failing to show up to their immigration court hearings, even with Biden stacking the odds in favor of their approval to stay. That's a recipe for chaos -- and more costs, from the border, entirely imported by Joe Biden, who should be held responsible for this off-the-books spending that was never directly authorized by Congress or the American people.
Image: Screen shot from KTSM 9 video, via YouTube
