By Bill Barclay
CPEG, and Ventura DSA
Last year was the tenth since the end of the Great Financial Crisis (GFC) and the third of trump’s presidency.
Trump came into office promising increased rate of growth – 4% maybe even 5 or 6% – an end to trade deficits and more jobs, including a revival of manufacturing.
So, where so we stand?
On the question of growth there is no doubt: although the numbers for the 4th quarter GDP growth are not in yet, it is clear that 2019 will be the 13th consecutive year of real GDP growth below 3%, probably around 2.3%. This number is in contrast to the 3% annual real GDP growth that occurred between during early 1987-2007 neoliberal decades, and even further below the 3.7% average for the first three plus decades (1948-1980) following World War II. The U.S. economy is stuck in low gear. And, the usual policy response of the neoliberal era – cut corporate tax rates in the hopes that more investment will occur – is not working. The “Tax Cuts and Jobs Act” (TCJA), Trump’s major tax cut enacted in 2017, has not moved us off the launching pad.
The Stock Market
Or at least not most of us. After a down year in 2018, the stock market raced to quite a few records in 2019, rising 30%. A major driver of this gain was the use of the increased cash in the hands of corporations to purchase their own stocks. While 2018 will probably remain the record year for such stock buybacks, 2019 will be a close second. (Among the chief beneficiaries of stock buybacks are the company executives who are offered stock options as part of their benefits.)
But the interesting, although often neglected, fact about stock buybacks is how they have been financed. More than half of all buybacks are paid for by the purchasing company taking on more debt. It is sort of like mortgaging your house so you throw a big party. The result was a ramping up of non-financial corporate debt in 2019 that now exceeds 75% of GDP, above the previous record peak in the midst of the GFC. And, half or more of this debt is rated BBB, the lowest grade above junk bond status. The risks for your pension fund – yes, it is probably buying this stuff to get higher yields – is that, if a downgrade to junk status occurs (as happened to Ford in late 2019), your fund will have to sell – pension funds can’t own junk bonds.
The use of corporate cash to buy back stocks was accompanied by a failure of the TCJA to achieve its stated goal of increasing the rate of investment, by providing “rocket fuel for the economy.” Business investment has declined throughout 2019 and now is at a level similar to that of the 2000-01 recession, although well above the trough during the recession that followed the GFC. Of course, Trump blamed others for the failure of the U.S. economy to achieve a 4% (or even 3%) growth rate – in particular the Federal Reserve – in his January 2020 Davos rant.
During his campaign, Trump repeatedly attacked existing trade agreements, labeling NAFTA as “perhaps the worst deal ever made.” He also vowed to end the “cheating” by China in trade practices, although he blamed previous U.S. leaders for letting China do so.
At the end of 2019, Trump got a new NAFTA, “The U.S./Mexico/Canada Agreement (USMCA) through Congress. The USMCA does have some improvements over the old NAFTA but is very weak on environmental issues – climate change is never mentioned – and will likely have limited impact on the economic geography of automotive jobs.
What about the big trade picture? In December 2019 there was much made of the quarterly decline in the U.S. trade deficit. But missing from the self-congratulatory posturing was the fact the 2018 trade deficit was a record, eclipsing even those just prior to the GFC. The year 2019 will likely see a smaller trade deficit – but still much larger than the early 2000s.
Read more: https://www.cpegonline.org/post/year-three-of-the-trump-economy-the-us-economy-in-2019
By Benjamin Sachs
January 23rd, 2020
After eighteen months of highly collaborative work involving over seventy academics, organizers, lawyers, and students from around the world, we released this morning the report and recommendations of the Clean Slate for Worker Power project. You can learn all about the project at cleanslateworkerpower.org. Our full Report is available here, and the Executive Summary here. The Introduction, which outlines the theory and ambition of the project, is below:
A Clean Slate for Worker Power:
Building a Just Economy and Democracy
Since the founding of the country, concentration of power in the hands of a small minority has been recognized as a threat—perhaps the primary threat—to the viability of American democracy. This threat of concentrated power motivated the drafters of the U.S. Constitution to advocate for a system of checks and balances and a division of authority between state and federal governments. Concern over concentrated power explains the founders’ desire to ensure that a “multiplicity of interests” would be represented in the decisions of the national government. This aspiration finds expression in core principles of our democratic system: in the idea that every person should have one vote, no more and no fewer; in the idea that we are to have a republican form of government, not an oligarchy or an aristocracy; in the idea that we are all equal before the law.
But, since the founding of the country, the struggle to uphold these constitutional principles against the threat of concentrated wealth has been a continual one. This struggle was central to the story of the New Deal. Thus, President Franklin Delano Roosevelt critiqued wealthy business and financial elites by naming them “economic royalists,” thereby invoking the American revolutionary struggle against political royalism. As FDR put it in 1936: “For too many of us the political equality we once had won was meaningless in the face of economic inequality.” 1 This democratic struggle against concentrated economic power has also been core to the highest aspirations of the labor movement. Dolores Huerta, leader of the United Farm Workers’ historic organizing effort, put it this way: “Organized labor is a necessary part of democracy, [because o]rganized labor is the only way to have fair distribution of wealth.”
The struggle to preserve democracy in the face of extreme wealth concentration is a defining feature of our current historical moment because we live in a time of radical economic inequality. The point can be illustrated with any number of statistics, and it is worth reviewing a few of them:
read more. https://onlabor.org/a-clean-slate-for-worker-power-building-a-just-economy-and-democracy/
(Ed.: recommended. History will remember both Sanders and Warren for taking on American capitalism. Their differences won’t loom that large.)
By Harold Meyerson
By Joe Allen
January 9, 2020
(Ed.: We haven’t had an antiwar movement in the U.S. for a long time. So, when Iranian General Qassem Suleimani was assassinated on orders from President Donald Trump on January 3rd, it immediately raised the prospect of a real shooting war between the U.S. and Iran. It also caught many of us flat-footed and scrambling to respond.)
Also see: Article on unions in In These Times.
#NoWarWithIran: What You Can Do NowJANUARY 7, 2020People across the globe are reeling from the U.S. military’s escalation towards war. Just weeks after anti-government protests in Iran about rising fuel prices, these attacks on Iraqi soil bring us dangerously close to never-ending U.S. led war with catastrophic consequences for millions of Iranians, Iraqis, and people across the Middle East.
Join our national organizing call this Thursday, 1/9 at 8pm ET/7pm CT/6pm CT/5pm PT.
War would also immediately put at risk our own domestic fights for Medicare for All, a Green New Deal, and other programs. It would bring thousands more working-class people from the U.S. into the war zone. And it would lead to increased racial and religious profiling in our communities and suppression of dissent. Democratic socialists understand that working class people in the U.S. have nothing to gain from war in the Middle East and we must do everything in our power to stop further U.S. military intervention in the region.
Already, DSA chapters all over the country are organizing demonstrations demanding an end to the escalation, but it will take sustained pressure from a mass movement to stop U.S. imperialism.
Join us for an emergency national strategy call THIS THURSDAY NIGHT, January 9th, 8pm ET/7pm CT/6pm MT/5pm PT on how we can help reignite a mass anti-war movement to stop a war with Iran.
On the call, we’ll be joined by:
Demand they support:
You can read our DSA National Political Committee statement for more information. And if your chapter is having a #NoWarWithIran action, or you’d like rally posters for friends and neighbors, you can order union-printed posters through our swag store. Overnight shipping is available.
We will update this page as the situation unfolds.