Michael Shear and Reid Epstein Feign Stupidity about Trump’s Decade-Long Pitch for Authoritarianism

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Here’s what the NYT digital front page looks like for me this morning.

It features Kamala Harris’ rather unremarkable interview with CNN (part one, part two, part three) as prominently as CNN itself (other political outlets are more focused on an upcoming Brian Kemp decision on how Georgia’s election will be run, Trump’s attempt to flip-flop on abortion, and yet another attempt from Trump to delay his sentence in his New York case).

Whatever.

After demanding it for a month, I get that some outlets need to claim this interview was more useful than it was.

But the remarkable thing about NYT’s focus on it is they’ve written two stories substantially about the same thing: The NYT’s own month-long campaign to drive Joe Biden from the race.

Yet in adopting that focus, Reid Epstein and Michael Shear ignored the logic that their own outlet adopted for such an unrelenting push to oust Biden, and in the process, covered up the threat Trump poses to democracy.

Of the seven things Epstein took away from the interview, the first was an overstatement of the degree to which Kamala was “hugging” Biden’s legacy versus the degree to which (for example, on fracking) she will make concessions if it achieves an overall policy goal.

Nevertheless, Epstein is right that Harris was better able to explain the success of Biden’s policies, one of two reasons I was pretty sure, from the start, swapping Harris for Biden would be an improvement, justifying the swap.

As it turns out, Ms. Harris is a better salesperson for Mr. Biden’s accomplishments and defender of his record than he ever was. Perhaps that’s little surprise, given the president’s diminished political skills and trouble speaking coherently in recent years.

Having thus maligned Biden, Epstein then claimed that Harris wants to turn the page on both Biden and Trump. He focused on Harris’ depiction of her opponent not by name, but time period — the last decade — and quipped (I’m sure Epstein thinks this is clever!) that Biden has been prominent over the last decade and a half (treating the two years between when Biden reacted strongly to Charlottesville and the time he actually announced as part of his candidacy).

… but wants to turn the page on him as well as Trump.

What Ms. Harris did do was offer herself up as a continuation of Mr. Biden’s leadership even as she distanced herself from him.

Asked by Ms. Bash if she had any regrets about defending Mr. Biden’s fitness for office and ability to serve a second term, Ms. Harris said she did not and praised the president.

Then, in the next breath, she deftly put both him and Mr. Trump in the rearview mirror.

“I am so proud to have served as vice president to Joe Biden,” she said. “I’m so proud to be running with Tim Walz for president of the United States and to bring America what I believe the American people deserve, which is a new way forward, and turn the page on the last decade of what I believe has been contrary to where the spirit of our country really lies.”

Mr. Biden, of course, has been either president, vice president or a leading candidate for president for most of the last 15 years.

Then Epstein returned to it in his commendation for the boring interview, suggesting that Bash didn’t demean Biden as much as Epstein — or rather, “Republican critics” — want.

Republican critics of Ms. Harris may have wished for a harsher grilling — or for more direct questions about how she felt about Mr. Biden’s aptitude and acuity — but Ms. Bash pressed the vice president when necessary.

Shear did something similar.

His entire post focused on how Kamala answered Dana Bash’s question (three minutes into the third part) of whether the Vice President regretted supporting Biden until he dropped out.

Vice President Kamala Harris said on Thursday that she did not regret defending President Biden against claims that he had declined mentally, saying that she believes he has the “intelligence, the commitment and the judgment and disposition” Americans expect from their president.

“No, not at all. Not at all,” the vice president said when asked if she regretted saying Mr. Biden was “extraordinarily strong” in the moments following the disastrous debate in June that led him to abandon his bid for re-election a month later.

Shear did not, as Epstein did, feign confusion about what Harris meant when she adopted that “last decade” moniker. He explained — perhaps for Epstein’s benefit? — that it was a reference to Trump.

Instead, he misrepresented what she was doing with Biden, temporally, claiming that “she talked about Mr. Biden mostly in the past tense[,] with a kind of nostalgia.”

But she talked about Mr. Biden mostly in the past tense — fondly, but with a kind of nostalgia that made it clear that he no longer represents the future of the country that she hopes to be leading in January.

[snip]

“History is going to show,” she said, “not only has Joe Biden led an administration that has achieved those extraordinary successes, but the character of the man is one that he has been in his life and career, including as a president, quite selfless and puts the American people first.”

Her reminiscing about Mr. Biden’s place in history — she said it was “one of the greatest honors of my career” to serve with him — came just after she said she was determined to “turn the page” on a decade of American politics that has not been good for the country.

“Of course, the last three and a half years has been part of your administration,” Ms. Bash reminded the vice president.

Ms. Harris said she was talking about “an era that started about a decade ago,” an apparent reference to the beginning of former President Donald J. Trump’s first campaign for the White House in 2015. She said the era represented a “warped” idea that “the strength of a leader is based on who you beat down.”

That was clearly directed at Mr. Trump, and she suggested that the warped era would continue if he returned to the White House next year. [my emphasis]

Now, in point of fact, both men misrepresented how the Vice President used that “decade” moniker. She actually used it twice. Once, the instance they focused on, in the last third of the interview, which I’ll get to.

But she also used it in response to Bash’s very first question, the dumb “what would you do on Day One” question that TV pundits love.

I think sadly, in the last decade, we have had in the former president someone who has really been pushing an agenda and an environment that is about diminishing the character and strength of who we are as Americans, really, and I think people are ready to turn the page on that. [My emphasis; after this, Bash snapped back, repeating the, “what would you do on Day One” question.]

That is, Harris defined what she meant by “the last decade” in what was probably her fifth sentence in the interview (possibly even fourth — the woman may use longer sentences than me!), after introducing a focus on the middle class and a return to hope. From her very first response, Harris tied the way Trump (whom she never named) has diminished America to some kind of effect it might have on the middle class.

And the questions that followed that one were focused on policy, which Harris always addressed, whether in the present tense or past, in her role as Vice President. “Well first of all, we had to recover, as an economy,” Harris explained why she (and Biden) had not implemented further steps she’d like to take to help the middle class. “That’s good work,” Kamala boasted, after listing a bunch of Biden’s economic accomplishments. “There’s more to do, but that’s good work.”

In fact, Kamala’s answer to the question NYT dedicated much of two columns on, whether she regretted defending President Biden after he bombed the debate, was in the present tense.

Harris: I have served with President Biden for almost four years now and I’ll tell you it’s one of the greatest honors of my career. Truly. He cares so deeply about the American people. He is so smart and loyal to the American people. And I have spent hours and hours with him, be it in the Oval Office or the Situation Room. He has the intelligence, the commitment, and the judgment, and disposition that I think the American people rightly deserve in their President. By contrast, the former President has none of that. And so, one, I am so proud to have served as Vice President to Joe Biden. And two, I am so proud to be running with Tim Walz for President of the United States, and to bring America what I believe the American people deserve, which is a new way forward and turn the page on the last decade of what I believe has been contrary to where the spirit of our country really lies. [my emphasis]

In a question implicitly about how successful she has been thus far, in the race, Kamala defined who Biden is, present tense, and then explicitly contrasted that to Trump. Biden has, present tense, the intelligence, commitment, judgment, and disposition to be President, and Trump has, present tense, none of that. That’s what she used to springboard from her tenure as Vice President into her candidacy with Walz, a way to turn the page on the last decade that has been contrary to the spirit of the country.

Bash, like Epstein, tried to make this a gotcha, which is when Kamala explained for the second time what she was talking about.

Bash: The last decade — of course, the last three and a half years has been part of your Administration.

Harris: I’m talking about an era that started about a decade ago where there is some suggestion — warped, I believe it to be — that, the measure of the strength of a leader is based on who you beat down, instead of where I believe most Americans are, which is to believe that the true measure of the strength of a leader is based on who you lift up. That’s what’s at stake as much as any other detail that we could discuss in this election. [my emphasis]

But then Harris returned to what she said in that very first question: When she says “last decade” as stand-in for the opponent she won’t name, she means that a different vision of leadership is as important as any of the policy questions.

Where things turn to a past tense in which Harris does not presume herself to have participated — the one that Shear quotes to support his claim that “she talked about Mr. Biden mostly in the past tense” — came in response to her telling of how Biden told her he was going to drop out, which led her to think about how history — people in the future — will regard Joe Biden and the decision he was making, placing this past tense as past to some future time when pundits finally get their heads out of their asses.

The VP told the story: she was interrupted while making extra bacon for one of her grand nieces by a call from Joe Biden. Biden told her his decision, and, “I asked him, are you sure. And he said, yes. And that’s how I learned about it.”

The past tense Shear quoted came in response to a follow-up.

Bash had asked, and pressed a second time, whether Biden offered to endorse Harris right away. Harris responded that Biden was very clear he was going to support her (Kamala didn’t actually answer about the endorsement, but then they may have had earlier conversations), but that that wasn’t her first priority.

My first thought was not about me, to be honest with you. My first thought was about him, to be honest.

She then launched on a reflection about what, “I think history is going to show” about Joe Biden’s presidency, describing it as transformative economically, bringing back American alliances. Then she addressed “the character of the man.”

This is a question that goes back to one of two reasons Biden offered in February why he remained in the race: because he was really good at being President. The other (as I reviewed the day after the debate) was that he believed, in February, he had the best shot at beating Trump.

On July 21 — on the day that Biden was still scrambling to make the prisoner exchange with Russia even as NYT pundits were falsely reporting he was totally isolated — Biden was still very good at being President. With the significant exception of Gaza, he may still be. By that point on July 21, though, it had become clear that Harris is better able to beat Trump. As suggested by Epstein’s begrudging admission that when Kamala lays out Biden’s economic accomplishments, they look pretty good, part of that is defending the things the Biden Administration did to recover from the mistakes Trump made.

But part of it is offering a contrast with Trump. Which, because Harris apparently chose not to name her opponent and not to let silly pundits demand a response to Trump’s latest attention-getting provocation, as Bash did with a question about Trump’s presumption to define Harris’ race, the Vice President is referring to as a last decade. She did it in response to the first question, and she did it a second time in response to the question NYT chose to write about twice.

This is actually a pretty subtle way to do this. Obviously, Harris has befuddled two men who imagine themselves experts.

In their confusion about it, though, Epstein and Shear make a similar mistake to the one their colleague Shane Goldmacher did when he described that Kamala was running as a change candidate. They did so, even though Goldmacher himself referred to what Kamala was running against as Trump’s “decade”-long “bulldozing approach” advocating for “urgent upheaval.”

[S]o much of Trump’s lasting influence is about his lasting attack on rule of law. The insistence that this is about incumbency obscures the real threat Trump poses to democracy, whether or not he’s president.

Take this crazy Goldmacher paragraph.

For nearly a decade, Mr. Trump’s bulldozing approach has been premised on the idea that the nation was staring into an abyss and only urgent upheaval could save the country. The question for Ms. Harris is whether she can frame Democrats keeping power in 2024 as a break from that dark and divisive era.

It is true that Trump has been claiming that “only urgent upheaval could save the country.” But that was a fascist trope. It wasn’t true and even if it were, none of the policies Trump pushed would do anything but enrich people like him. Journalism should do more than observe that he made those false claims; it should explain why they’re false.

In the very next sentence, though, Goldmacher asserts that the challenge for Kamala (again adopting the dumb poll-driven assumption that she’ll only win if she is the change candidate) is by offering, “a break from that dark and divisive era.” What “era”? By reference, Goldmacher must mean that the near-decade in which Trump has told fascist lies is the “dark and divisive era” (though Trump’s racist birtherism started long before that). But it’s not an era. It’s a fascist belief, a means of exercising power, a means of dehumanizing your political opponents, one that had huge influence, but one that with the exception of the political violence it fostered, only held sway over a minority of the country (albeit a large one).

All three of these men — Goldmacher with his treatment of Trump’s tropes about America as an era, Epstein with his confusion about Harris’ (second) reference to a decade, and Shear’s invention of past tense usage that doesn’t exist — struggle because they’re viewing this exclusively about policy, even though Harris described that “the true measure of the strength of a leader” is “what’s at stake as much as any other detail that we could discuss in this election.”

As I noted in the earlier post, when people flatten this out into policies and incumbency, they ignore the ongoing threat that Trump poses to democracy and Kamala’s vision of how to defeat it.

Kamala is running on democracy just as much as Biden did in 2020. It just looks different, because she has more successfully wrapped it in a bipartisan flag. Even there, there’s real continuity (don’t forget that one of Biden’s most important speeches about democracy in 2022, one that had a real impact on the election, was at Independence Hall).

Largely enabled by Trump’s ongoing effect — again, especially on Choice — Kamala has just found a way to make democracy matter more personally, more viscerally.

Kamala is not eschewing the incumbency she has Vice President. On the contrary, she is running on a continuation and expansion of Joe Biden’s successful policies (even if journalists are missing that). And she is running, just as Biden did, on defeating both Trump’s electoral bid but also the threat he poses to democracy itself.

This is precisely why the NYT said the stakes on Biden dropping out were so high as it kicked off a relentless campaign to force Biden out: because, first, Donald Trump was a menace, and second, Biden didn’t have what it takes to hold Trump accountable.

Donald Trump has proved himself to be a significant jeopardy to that democracy — an erratic and self-interested figure unworthy of the public trust. He systematically attempted to undermine the integrity of elections. His supporters have described, publicly, a 2025 agenda that would give him the power to carry out the most extreme of his promises and threats. If he is returned to office, he has vowed to be a different kind of president, unrestrained by the checks on power built into the American political system.

[snip]

He struggled to respond to Mr. Trump’s provocations. He struggled to hold Mr. Trump accountable for his lies, his failures and his chilling plans. More than once, he struggled to make it to the end of a sentence.

These self-imagined pros apparently haven’t thought through how this all works. Epstein, at least, is still looking for his pound of flesh, for further humiliation for Joe Biden. The others are ignoring the two tasks: win an election, and reinvigorate an American dream that — because doing so would prove that democracy can deliver for the middle class — proves the value of democracy.

Kamala Harris is, in no way, disavowing Joe Biden. Rather, even as she’s pitching their joint policy success, she’s renewing the effort to package an American exceptionalism that can defeat Trump’s American carnage.

In 2020, Joe Biden, a member of the Silent Generation, offered a defense of democracy as democracy, which was enough for people who remember fascism and actual communism. In an era when many have forgotten that history and lost faith in democracy, GenX Kamala Harris has to do something more: She has to sell democracy, which Trump has been discrediting for a decade, itself.

Three Things: So Much Stupid

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[NB: check the byline, thanks. /~Rayne]

There’s a lot of stupid going on right now. Here’s an open thread to talk about it. Let me start off with three examples.

~ 3 ~

Ding dong, the witch is dead — Ronna McDaniel has been terminated less than a week after she signed a contract with NBC.

Even her agency dropped her.

I like journalist Sam Adam’s take:

Story at HuffPo: https://www.huffpost.com/entry/nbc-fires-ronna-mcdaniel-election-lies_n_6602d903e4b06a4403a3e80a

NBCUniversal News Group Chairman Cesar Conde accepted the blame for McDaniel’s hiring though he noted it was a collective decision by “collective recommendation by some members of our leadership team” to hire the unindicted January 6 co-conspirator.

It’d be nice if folks who support democracy and a free press checked their investment portfolios for Comcast (Nasdaq:CMCSA) including their mutual fund holdings’ portfolios — and then sent letters to Investor Relations asking for accountability at Comcast and NBC for this stupid hiring decision which damaged NBC.

~ 2 ~

BlackRock CEO is fucking clueless about Millennials and Gen Z, spewing this crap:

You know what’s causing these two demographic groups so much economic anxiety? The two things which cost them the most: tuition debt and housing.

They can’t save for a house if they have tuition debt hanging over them. President Biden has steadily chipped away at this but it isn’t enough.

They can’t buy a house because there’s too little housing available which in turn drives up pricing. Sure, mortgages are pricey right now but if there’s not enough housing, mortgages aren’t the bigger problem.

Rental housing is also overpriced and getting worse; it’s been unaffordable for persons working a full-time minimum wage job for years thanks to continued corporate pressure to resist raising minimum wages at state and federal level for decades. This has begun to change but Millennials are digging their way out of a deep hole to amass savings.

One of the biggest contributors to rising rental housing costs is the commodification of housing as a tradeable asset in the form of real estate investment trusts (REITs). Investors treat REITs as if they should increase in value and payouts like other tradeable stocks.

Gee, guess what BlackRock’s funds include?

Fink also hasn’t gotten the memo that there is a growing wave of disability as a result of the COVID pandemic. People will need to retire earlier, not later, and his bullshit refusal to accept wealthier persons must pay more into Social Security is not going to help.

Side note: I can’t recommend using Fortune magazine at this time. The link to this story follows but be warned: Fortune changed its privacy policy and you will be forced to accept that policy in order to read the fucking privacy policy. Absolutely unacceptable dark pattern.

Source: https://fortune.com/2024/03/26/blackrock-ceo-larry-fink-boomers-fix-retirement-crisis-millennials-gen-z-economically-anxious/

~ 1 ~

Trump’s POS social media platform appears to have lifted older Mastodon source code and slapped on a new frontend, without having addressed vulnerabilities in the older source code or handled the open source licensing correctly.

source: https://mstdn.social/@stux/112163975507522652

This massive stupidity is what the new Trump Media & Technology group is based on — the stock for which began trading today.

I’m going to have to buy popcorn futures for this.

~ 0 ~

Once again, this is an open thread. Bring all the stray stupid here along with topics not covered by other posts.

Oligarchy Has Arrived. Congress Must Take Notice — and Act!

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This is a guest post from our friend Bob Lord, who you may recall from previous guest posts. This was originally published a few days ago at Inequality.org – bmaz

The United States is experiencing a level of wealth inequality not seen since the original Gilded Age. This yawning gap between rich and poor has unfolded right out in the open, in full public view and with the support of both political parties.

A malignant class of modern robber barons has amassed unthinkably large fortunes. These wealthy have catastrophically impacted our politics. They have weaponized their wealth to co-opt, corrupt, and choke off representative democracy. They have purchased members of Congress and justices of the Supreme Court. They have manipulated their newfound political power to amass ever-larger fortunes.

The result? We can sum that up with a word usually associated with nations like Russia: oligarchy. Unless Congress takes action, inequality — and the instability inequality invariably produces — will only intensify.

The Patriotic Millionaires have been sounding out the alarm, over recent years, on inequality and oligarchy. More than most, our members — all men and women of substantial means — understand just how much wealth can buy. Wealth can even turn tax systems toxic.

In well-functioning democracies, tax systems serve as a firewall against undue wealth accumulation. By that yardstick, our contemporary U.S. tax system has failed spectacularly. Those of us in Patriotic Millionaires have witnessed that failure first-hand. Our nation’s current tax practices allow and even encourage obscene fortunes to metastasize while saddling working people with all the costs of that metastasizing. Years of this approach to taxation have hollowed out our middle class and our democracy.

Congress can change all that. Enter the OLIGARCH — Oppose Limitless Inequality Growth and Reverse Community Harms — Act. The architects of this legislation, led by Representatives Barbara Lee (CA-12) and Summer Lee (PA-12), have crafted a visionary approach to combat the existential threat to democracy we all now face. The OLIGARCH Act offers a powerful mechanism that can break the vicious cycle of unchecked wealth accumulation we now find ourselves trapped inside. That mechanism: a wealth tax tied directly to our level of inequality.

Enacting the OLIGARCH Act would create a dynamic tax structure that quickly responds to changes in our distribution of national wealth. The OLIGARCH Act’s elegantly straightforward solution builds upon a set of tax rates that escalate as a wealthy taxpayer’s wealth escalates:

  • A 2 percent annual tax on wealth between 1,000 and 10,000 times the median household wealth.
  • A 4 percent tax on wealth between 10,000 and 100,000 times the median household wealth.
  • A 6 percent tax on wealth between 100,000 and 1,000,000 times the median household wealth.
  • An 8 percent tax on wealth exceeding 1,000,000 times the median household wealth.

As inequality swells, in other words, the wealth tax would intensify, in the process acting as both a deterrent to wealth concentration and an antidote to it. As inequality recedes, our economic playing field would become more level. All of us would find ourselves better situated to flourish.

The OLIGARCH Act legislation also recognizes our fundamental need to counter tax evasion among the wealthiest households. By mandating a minimum 30 percent audit rate on ultra-rich households and instituting penalties for significant valuation understatements, the OLIGARCH Act would fortify our nation’s capacity to shut down tax manipulation and evasion.

We’ve reached a tipping point in our nation today. Extreme wealth is begetting extreme power, in turn begetting even more extreme wealth. The resulting stranglehold our richest hold over our democratic institutions has led to a government that caters to billionaires while working citizens struggle to make their voices heard. This imbalance doesn’t just weaken the integrity of our democracy. This imbalance emboldens extremist ideologies that thrive whenever masses of people become politically disillusioned.

We face a stark choice. Will we allow a handful of individuals to wield their wealth like a weapon against our nation’s bedrock principles? Or will we rise to the occasion, defend our democracy, and reaffirm our commitment to a society that offers real opportunity and disperses power — instead of letting that power concentrate among a fabulously wealthy few?

Those of us working with Patriotic Millionaires see the OLIGARCH Act as more than just a piece of legislation. We see it as a statement of purpose, a declaration that the American people will not stand idly by and watch the principles we hold dear erode away. We see the OLIGARCH Act as a call to action that asks each and every one of us to join the chorus demanding change. By urging our congressional representatives to co-sponsor and pass this transformative legislation, we pave the way for a future where democratic capitalism thrives, inequality recedes, and the American way of life endures.

Safeguarding our democracy, today more than ever, requires us to address the catastrophic — and rapidly growing — inequality that’s empowering a new aristocratic ruling class. To do anything less than challenge that class would leave our democratic institutions to the whims of America’s oligarchs. The stakes run that high.

Bob Lord, a veteran tax attorney and Institute for Policy Studies associate fellow, is currently serving as a senior advisor on tax policy for Patriotic Millionaires.

[Photo: Emily Morter via Unsplash]

Let’s Give ‘Em Something To Talk About: Cooked, Hooked, Mooked

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[NB: check the byline, thanks. /~Rayne]

Did something happen today? LOL

We need a fresh post and thread to talk about it.

~ 3 ~

Cooked: Donald Trump’s wallet

A jury in Manhattan awarded E. Jean Carroll $5 million in damages after finding the former president Donald Trump liable for defamation and sexual abuse.

Under New York State’s New York’s Adult Survivors Act which went into effect last November, Carroll filed a lawsuit against Trump for defamation based on his public denials after she accused him of raping her in 1996.

While the jury did not find Trump liable for rape – the challenge likely hanging on penetration as Teri Kanefield explained in an online thread – they did find credible Carroll’s accusation of sexual abuse and found Trump had defamed her with his repeated denials.

As revolting as it often is, Trump’s testimony is worth a scan as yet another example of classic abuser’s behavior called DARVO: Trump repeatedly Denied the accusation, Attacked his accuser, Reversed the Victim and Offense by claiming Carroll and the other women who supported her with their own sexual abuse accusations against Trump were lying about him. He minimized what he said about grabbing women by the pussy in the Access Hollywood tape and lied about his infidelities.

After reading Trump’s testimony one can only wonder what he might say under oath about the presidential records and classified documents he stole from the White House.

~ 2 ~

Hooked: Rep. George Santos charged by DOJ

Criminal charges were filed today under seal in the Eastern District of New York against Rep. Santos. Specifics about the charges are as yet unknown.

While the current GOP-led House Ethics Committee has been dragging its feet investigating – Santos, alias Anthony Dee – the representative for New York’s 3rd congressional district has been under pressure by House Democrats to resign due to his manifold lies and apparent frauds.

During his brief time in office, Santos has been accused of breaking campaign finance laws, violating federal conflict of interest laws, stealing cash meant for an Iraq War veteran’s dying dog, masterminding a credit card fraud scheme and lying about where he went to school and worked.

In response, House Speaker Kevin McCarthy said, “I’ll look at the charges.”

Right. He’s only had nearly 6 months to look into Santos to prevent more embarrassment for the House GOP Caucus and NY-03’s constituents. You’d think Santos having at least one alias and settling criminal charges for fraud in another country would clue McCarthy.

As Marcy noted, Santos was useful to McCarthy:

His utility is done, isn’t it, Kevin? Or do you want to be personally embarrassed by what may emerge from DOJ’s prosecution of Santos?

UPDATE — 10-MAY-2023 10:15 A.M. ET —
The indictment has been released to the public. Here it is: https://www.justice.gov/d9/2023-05/santos.indictment.pdf

See also Marcy’s latest post on McCarthy’s ability to count votes.

~ 1 ~

Mooked: Kevin McCarthy and his out-of-control caucus are feckless mooks

Speaking of McCarthy, he’s allowing his caucus to threaten tanking the entire global economy by way of a potential default on U.S. debt.

Never mind the entire problem began when the GOP-led 115th Congress passed Trump’s Tax Cuts and Jobs Act of 2017. The GOP’s bill relied on trickle-down economics to pay for itself, yet trickle-down economics don’t work, hurting those at the bottom of the economy the most. It left the country ill prepared for an effective and timely pandemic response, yet now the GOP wants to double down on its stupidity.

(Do not forget the House Speaker at that time was Paul Ryan. Don’t let him whitewash his way out of the blame for his role in the impending economic crisis. Ditto Mitch McConnell, former Senate Majority Leader.)

The same corporations and their wealthy owners which benefited from the Trump tax cuts are now raking in money hand over fist through price-flation for profits. They’re expecting their GOP minions to deliver even more benefits by starving the public which has yet to recover from the worst of the pandemic.

The complicit corporate media enables them by trotting out its tired “Dems in Disarray” bullshit, blaming Biden for the impending economic crisis when the problem is of the GOP’s making, just as it was when that idiot Senator from Texas Ted Cruz held the government’s operations and the economy hostage in 2013.

This is yet another kind of coup attempt; this time the mooks are seated inside Congress wielding a blunt economic weapon. If McCarthy and his minions aren’t willing to repeal part of Trump’s misbegotten tax cuts and raise taxes on the wealthy who can well afford to pay more, they’re acting in bad faith and against the needs of the American public.

~ 0 ~

What else is there to talk about? Share in this open thread.

Three Things: Crying All the Way to the Bank

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[NB: check the byline, thanks. /~Rayne]

“I cried all the way to the bank.”

– attributed to performer Liberace

I’ve run the gamut from fuming to furious this past week. I didn’t have a dime in Silicon Valley Bank, but its failure royally pissed me off.

Did we not learn anything from the 2008 crash? Or the decade-long savings and loan crises?

For that matter, have we not learned to stop listening to millionaires and billionaires who will not go hungry when their investments fail though Mom and Pop and their tiny businesses will?

~ 3 ~

In March 2018, I wrote a letter to both of my senators asking them to vote No on S.2155 Economic Growth, Regulatory Relief, and Consumer Protection Act, explaining,

— While smaller community banks may complain about the cost of compliance with Dodd-Frank regulations, the costs may be entirely appropriate to a safe, secure banking system. We cannot expect safety and security at no cost;
— Too Big To Fail (TBTF) banks have been allowed to accrue economies of scale placing them at an advantage over smaller competitors. The balance should be in the amount of collateral TBTF banks are required to maintain to offset their much larger risk. It is not irrational to expect a trade off of cost savings in exchange for increased security;
— The bill backpedals on protections against racism in lending by preventing the Consumer Financial Protection Bureau from collecting data about lending demographics;
— And the Congressional Budget Office’s score is dismal:
•  The bill would increase federal deficits by $671 million over the 2018-2027 period
•  And “would increase the likelihood that a large financial firm with assets of between $100 billion and $250 billion would fail.”

And yet both of my senators voted for the bill. Sen. Gary Peters replied with a pathetic explanation that he was trying to help community banks.

Community. Banks.

Like Silicon fucking Valley’s bank, which grew to be Too Big To Fail.

Specifically, this is what he wrote:

   Community banks and credit unions have made great contributions to our economic growth, and in turn, we must make sure they can continue reinvesting in our economy. Our financial regulations must protect consumers and ensure that community banks, credit unions, and other financial institutions can continue to safely provide the mortgages, small business loans, and auto financing that make our economy work for Michigan families. Big banks and Wall Street caused the financial crisis – not Michigan’s credit unions and community banks. Our state’s credit unions and community banks kept Michigan families afloat during the financial crisis by providing loans when big banks would not. We should not have a “one size fits all” approach to financial regulation.

Our economy is healthier and more stable when our financial system is diversified and not concentrated in a handful of the biggest multinational banks. Local community banks and credit unions are having difficulty competing with large, multinational banks headquartered out of state and overseas. This has resulted in increased consolidation and growth of the largest financial institutions while too many community banks and credit unions are being forced to close their doors. I am committed to ensuring that these local institutions can continue to provide affordable, competitive, high-quality financial services to Michigan’s hardworking families and businesses.

Yeah? Well the lack of diversity still happened and now the small banks and credit unions which were supposed to be protected are going to feel the pressure from yet another TBTF bank failure which slipped through the crack created by rolling back regulations.

I hate feeling like Cassandra. The only comfort I have is that I’m not alone.

Max Kennerly shared what Sen. Elizabeth Warren was surely thinking when she wrote about SVB this past week:

That. We fucking told you so. When are legislators going to listen?

And by legislators, I mean any of these Democrats who are still in office who voted for S.2155:

Democratic Senators (13 of these 18 are still in office):

Last Name

State

 Comments

Jones

Alabama

Bennet

Colorado

Carper

Delaware

Coons

Delaware

Nelson

Florida

Donnelly

Indiana

Peters

Michigan

Stabenow

Michigan

McCaskill

Missouri

Tester

Montana

Heitkamp

North Dakota

Hassan

New Hampshire

Shaheen

New Hampshire

Kaine

Virginia

Warner

Virginia

Manchin

West Virginia

King

Maine

(Independent, caucuses with Dems)

Heinrich

New Mexico

(Not Voting)

Democratic House Reps:

Bera

California

Bishop (GA)

Georgia

Blunt Rochester

Delaware

Carson (IN)

Indiana

Correa

California

Costa

California

Cuellar

Texas

Davis, Danny

Illinois

Delaney

Maryland

Foster

Illinois

Gonzalez (TX)

Texas

Gottheimer

New Jersey

Hastings

Florida

Himes

Connecticut

Kind

Wisconsin

Kuster (NH)

New Hampshire

Larsen (WA)

Washington

Lawson (FL)

Florida

Maloney, Sean

New York

Murphy (FL)

Florida

Nolan

Minnesota

O’Halleran

Arizona

Peters

California

Peterson

Minnesota

Rice (NY)

New York

Schneider

Illinois

Schrader

Oregon

Scott, David

Georgia

Sewell (AL)

Alabama

Sinema

Arizona

Suozzi

New York

Veasey

Texas

Vela

Texas

Speier

California

(Not Voting)

Walz

Minnesota

(Not Voting)

If any of these are your senators or representatives, feel free to call them at (202) 224-3121 and tell them they need to undo the damage S.2155 did in 2018, and re-assess Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA) insurance and funding.

~ 2 ~

In a nutshell, this is what was wrong at Silicon Valley Bank:

•  SVB had many high-value depositors whose accounts exceeded FDIC’s $250,000 threshold; 97% of funds deposited were uninsured;

•  The bank leaned on borrowers to deposit all their cash with SVB if they were to be approved for a loan, leaving depositors greatly exposed to SVB’s failure;

•  Using depositors’ cash, SVB bought excessively into long-term bonds while interest rates were low; when rates increased and more rapidly than anticipated, SVB tried to shift its distribution, but without adequately ensuring enough cash to cover withdrawals;

•  SVB’s Chief Risk Officer left and no replacement was named between April 2022-January 2023; the absence of a CRO had not been widely known. A new CRO was named in January 2023, but long after volatility in the tech sector had increased and thousands of tech employees had been laid off.

Ultimately, the bank was extremely vulnerable to the trash talk among techbros who hung with Peter Thiel who pulled his cash and advocated his peeps do the same. They read a newsletter which said SVB was technically insolvent, got their panties in a twist and set off a bank run rather than carefully doing more research as to where SVB had distributed its portfolio and working with the bank to manage rejiggering SVB’s portfolio distribution.

These same depositors could have been asking questions about the CRO’s replacement last summer without raising a ruckus and starting a run, but no. They could have been asking about adequate stress testing last year, in tandem with the Federal Reserve’s moves to increase interest rates between July and December 2022, but no. Apparently they only talked to SVB management when they needed loans.

The capper was that SVB lobbied for weakening of Dodd-Frank Act regulations with passage of S.2155. None of these big bucks depositors batted an eye at that; some were surely donating cash to right-wing politicians who were bashing the Biden administration about interest rates.

One thing legislators could address is the nature of some of the deposits and the limits of FDIC insurance. If some of the depositors are businesses with sizable cash deposits needed for operating funds like payroll, it may be worth considering establishment of a particular kind of FDIC insurance on these accounts above and beyond $250,000.

Imagine you’re a general manager and owner of a technology business. Average pay of technology workers in Silicon Valley is $134,000/year, or $11,166/month. If you have 100 employees, your need for cash to cover payroll will exceed $1 million.

Silicon Valley’s technology businesses can be small shops of one or two people to several thousand – they all still need to cover payroll each month.

Are we really going to worry about making whole people who should be smart enough to know they’ve exceeded FDIC insurance limit with their deposits, people who are rather well off by comparison with the rest of the U.S.? Nope, especially not entrepreneurs’ personal deposits since taking risk is what entrepreneurs do, it’s on them.

But protecting the lower wage workers and the economy at large? Yes, we should consider this. In the past week I’ve seen small businesses scrambling with fire sales of product to raise cash for operations after losing money at SVB. There’s at least one Broadway production which may have been canceled altogether because its producer was a depositor at SVB. In both of these cases it’s workers whose salaries are much less than $100,000/year who are going to bear the brunt of this kind of failure.

It shouldn’t be that difficult to regulate a particular kind of account dedicated solely to payroll which the FDIC would insure for the value of one month’s cash equal to the highest average monthly payroll in the previous 12 months.

This would blunt the drive for businesses and employees alike to pull cash out of a bank, heading off a potential run. Insured banks should likewise be obligated to ensure there was cash on hand matching the anticipated one-month payroll needs, in addition to cash required to meet stress tests the Dodd-Frank Act required.

Some legislators could make this happen in a heart beat if they were really concerned about the economy now and voters in 2024.

~ 1 ~

I’m sure there are folks who aren’t going to like this third of three things but we have an immigrant problem.

Nope, not the folks seeking asylum, desperately fleeing with their families to the U.S. leaving violence and economic hardship behind, who take jobs Americans don’t want and work doggedly to support their families here and abroad.

We have a problem with immigrants like Elon Musk who think they are their gods’ gift to mankind, who believe their money makes them invincible and unaccountable, who are able to thumb their noses at laws in ways the rest of us can’t, feeling immune because he was born with a South African emerald mine in his mouth. Musk has managed to completely trash a critical communications platform used by most news media and marginalized populations, subverting necessary exchange of information important to a functioning democracy – and he did it for little more than the lulz.

We’d long had a problem with immigrant Rupert Murdoch whose News Corp and Fox News have likewise undermined American democracy by promulgating increasing fascism, weaponizing the First Amendment to do so.

Now we have a problem with immigrant cryptofascist who believes they can buy whatever political outcomes they want while ignoring the will of the majority in a democracy. They also believe their wealth doesn’t require them to act prudently for the benefit of the rest of their community and society.

In particular, immigrant Peter Thiel who was key to starting a bank run on SVB, triggering its failure. He pulled all his money out, encouraged his friends to do so, setting off a run which tanked SVB, destroying wealth of persons and businesses in competition with Thiel and his friends.

Fuck everybody else affected by this behavior as far as he’s concerned, because he got his.

If a hostile foreign entity wanted to damage the U.S. economy deeply, they could do *exactly* what Thiel did. Asymmetric warfare would not look different.

As noted on Mastodon, the amount it will cost to make SVB’s depositors whole exceeds the amount the U.S. spends in a year on its food stamp program. There may not be a full federal bailout, with only the FDIC’s insurance covering each depositor to $250,000, but the amount of private as well as public money in play on a single bank should tell us something about our national priorities.

Those national priorities should now include discussion about the kinds of people we’re letting into this democracy, what they are doing to this democracy, and letting them stay in this democracy.

And if we’re going to agree we can’t eject them because they’re wealthy, selfish, and sabotaging the country with their utter disregard for the country which gave them citizenship, then we need to have a serious discussion about disarming them.

Tax them to the hilt so they can’t create a fascist autocracy, for starters – one that looks like Nazi Germany in the 1930s, or an apartheid society like South Africa where both Musk and Thiel once lived.

You may argue this isn’t fair, that American-born billionaires like Robert Mercer and Charles Koch are just as bad at sabotaging democracy.

Okay, great – what are we going to do about that? This country bred their toxicity, and then allowed a new immigrant generation of toxicity to rise because they all had beaucoup money. Meanwhile, hard-working impoverished asylum seekers have been treated like trash.

Let’s deal with this moral and ethical challenge instead of ignoring it.

~ 0 ~

This is an open thread. We’re overdue for a space to dump about topics unrelated to January 6.

It’s Your Economy, Stupid GOPr

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[NB: check the byline, thanks. /~Rayne]

I’ve had it. I’m fed up with the attacks on the Biden administration and Democrats in Congress about the economy when the problem is and has been the GOP.

The same GOP which has steadfastly encouraged Americans to avoid vaccines and boosters, reject wearing masks, ignore the need for social distancing and better ventilation to prevent the ongoing spread of COVID, ultimately weakening the country’s workforce and reducing the number of healthy workers.

The same GOP which has persistently supported Putin’s demoralization and destabilization of this country, even though they knew Trump was an asset — we haven’t forgotten Kevin McCarthy’s blurting it out back in 2016 and the rest of the GOP congressional caucus continuing their omertà — ultimately encouraging Putin to attack Ukraine setting economic sanctions in motion.

Now there are GOP candidates who are running not only on the worst of Trumpism, expressing naked racism, misogyny, other forms of xenophobia, but running on just plain stupidity about the economy.

I swear I could publish a post at least once a week cataloguing so much fresh stupid.

Today’s idiot is a GOP senate candidate, Blake Masters, who has already distinguished himself within the last week with a racist remark aimed at Black Americans.

Masters decided today he wanted it his way:

Sir, this is a McDonald’s.

Masters has no fucking clue why there aren’t enough fast food workers to take orders, as if COVID didn’t kill more than a million Americans causing a cascade of job losses due to long COVID, difficulty finding and keeping safe daycare for children and eldercare, scared off older employees who’d rather tough it out on their Social Security than risk getting sick, made transportation more challenging because the used car market is tight and parts and labor for repairs equally tight, public transport shared with maskless riders, so on.

And last but not least, fast food workers’ wages have not kept up with the increase in rent driven upward by speculation.

That’s why you’re looking at a goddamned self-operated kiosk, Masters.

Not to mention potential employees don’t want to take the risk on an employer which can’t be bothered to post wages or the number of available openings.

Applicants need to know before they even bother to apply because the average rent in Marana, AZ on a 1-bedroom apartment is $1542 a month. A worker needs in excess of $15/hour at 40 hours a week to make the rent — not including any other expenses like food or clothing or water or electricity or health insurance — and fast food jobs aren’t 40 hours a week because the companies want to avoid paying unemployment benefits.

The remaining fast food restaurant workers are moving into other industries because they can’t afford the irregular, too few hours combined with the lack of benefits, the crappy management, and the chronic mistreatment by customers on top of exposure on the regular to COVID.

But go ahead and expose your gross ignorance, Masters, punching down on the people who can least afford the time to rebut your whining.

The people who should rebut Masters’ whining are the Arizona corporations which do business in or rely on automation and robotics — businesses which will replace the crappy jobs fast food workers can’t afford, while improving the Arizona economy with better paid design and manufacturing jobs.

Like these companies, to name a few: Stanley Black & Decker, Nogales AZ; Caterpillar, Tuscon AZ; Lucid Motors and IPE Aerospace, Tempe AZ.

I hope Arizonans are smart enough not to fall for Blake Masters’ ignorant Trumpiness. If he hasn’t already figure out how stupid he is (being a potential victim of Dunning-Kruger), he may inflict some wretched stupidity on Arizona and the rest of the nation.

Seriously, can Arizonans trust him not to lick the kiosk display?

The Fed Prepares To Screw Working People Again

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The Federal Reserve Board has signaled its intention to hike interest rates, citing a fear of an overheated economy. Robert Reich has an opinion piece in The Guardian saying that raising interest rates will hurt working Americans. Reich explains; “They fear that a labor shortage is pushing up wages, which in turn are pushing up prices – and that this wage-price spiral could get out of control.” Reich explains why this is wrong.

The theory behind the Fed’s action is called the Philips Curve, which says roughly that as unemployment rises, inflation goes down, and vice versa, that as unemployment goes down, inflation increases. Here is a technical discussion of the history of the Philips Curve. This one is shorter and may be easier to read. They both say the same thing: there isn’t any obvious relation. The first piece describes some professional criticism of the Philips Curve which sadly has never had any impact on decision-making. The position of the economics profession apparently is that it must be right because they learned in in an advance economics course in College.

When you think about it, it’s utterly absurd: there are many sources of inflation, not the least of which is corporate pricing power. When most industries are highly concentrated in a few market participants they can set prices to maximize their profits. For example, Amazon dominates retailing. They just raised the price of their Prime service by $20 per household. There are about 150 million US subscribers. That’s about a $3 billion increase in revenues. Amazon blames wage increases and inflation for the increase. No, really. It comes on top of stupefying profits of $33.4 bn. So right there you get a huge increase in profits, vastly more than any wage increases or other inflationary costs.

Reich says that the impact of Fed interest rate hikes will fall on working Americans. As he puts it, “Higher interest rates will harm millions of workers who will be involuntarily drafted into the inflation fight by losing jobs or long-overdue pay raises.”

Let’s look at the numbers.


This chart shows the share of GDP going to labor*.

The gray bars are recessions. Almost all of the recessions since 1947 were triggered by interest rate increases. This chart says that when wages start to rise, the Fed raises rates, leading to recessions. Wage share falls. When it starts to rise again, the Fed triggers more rate increases. Before 1960, the labor share rose nearly to its previous highest levels. After 1960 the labor share peaks never reach their previous level.

The Great Crash led to a recession, one not caused by the Fed. In response, the Fed dropped interest rates to zero. But the labor share didn’t return to 2008 levels until 2020, and has fallen back since. Why does the Fed fear wages at this absurdly low share of GDP?

Now let’s look at corporate profits. This chart shows an estimate of corporate profits**.

The chart says that from 2012 to 2020, corporate profits were roughly steady at about $2.2 trillion. Then profits jumped straight up to the current level of $3.1 trillion in just two years. I’d guess the total rise is something like $1.4 trillion. That’s an astonishing increase. When did any media outlet point out that this is a major driver of inflation? Business reporters repeat the claims of corporate PR hacks that it’s all the fault of greedy American workers, or Covid, or supply chains***, and it’s just market forces at work. Talking heads will tell us that gigantic oligopolistic corporations will use those profits to build new factories and increase supplies. Or some other claptrap from Econ 101 textbooks.

Discussion

1. The Fed protects capital at the expense of labor. That’s what we mean when we say that inflation is such a big problem we have to hammer working people with unemployment to guard against inflation. It’s true that inflation affects working people, but why is there no way to solve that problem by penalizing capital? After all, inflation due to corporate actions, as in the case of the supply chain, market power, price-gouging and favorable government treatment is just as dangerous as any inflation driven by wages.

2. Reich points out that there isn’t any evidence of wage push inflation. Quite the contrary. Working people have been pounded by Covid and by aggressive union busting, and by price-gouging, and by surging health care costs and student debt. They haven’t caught up. He doesn’t say it, but the top quartile has done quite well, and the higher up in wealth and income people are, the better they’ve done.

3. Corporations have rigged the market structure so that working people are screwed. Government has done little to help. Can you imagine Congress stepping in to help working people? They can’t even raise the minimum wage. How long will people put up with this mistreatment?

=========
* Here’s the methodology. The number is a ratio, with all wages and salaries and proprietor’s labor compensation in the numerator, and what I take to be Gross Domestic Product as the denominator, all measured in constant dollars.

** Here’s the definition.

Profits from current production, referred to as corporate profits with inventory valuation adjustment (IVA) and capital consumption (CCAdj) adjustment in the National Income and Product Accounts (NIPAs), is a measure of the net income of corporations before deducting income taxes that is consistent with the value of goods and services measured in GDP. The IVA and CCAdj are adjustments that convert inventory withdrawals and depreciation of fixed assets reported on a tax-return, historical-cost basis to the current-cost economic measures used in the national income and product accounts. Profits for domestic industries reflect profits for all corporations located within the geographic borders of the United States. The rest-of-the-world (ROW) component of profits is measured as the difference between profits received from ROW and profits paid to ROW.

*** David Dayen, editor of The American Prospect, has produced a terrific series explaining the breakdown of the supply chain. Hint: it isn’t Biden’s fault.

Three Things: Pouring Cement Down the Wells

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[NB: Check the byline, thanks! /~Rayne]

The last 24 hours made me think of this quote:

Supply chains cannot tolerate even 24 hours of disruption. So if you lose your place in the supply chain because of wild behavior you could lose a lot. It would be like pouring cement down one of your oil wells. — Tom Friedman

I don’t care much for Friedman; he’s a shallow pond. But it’s worth pondering his perspective that supply chains shouldn’t be disrupted.

Tell COVID that, son. Tell Nature’s response to our society’s refusal to stop the supply chain over the last four decades. This mostly-closed system we call Earth has a way of telling us not too subtly when our hubris has gotten out of hand.

Though COVID has been and remains a scourge of human life, it may have been one of the best opportunities to stop the supply chain and literally pour cement down oil wells which in their own way have become a scourge.

Disruption to food and health care supplies has been problematic, but most of that could have been addressed on a proactive basis by government which was both competent and benign. But the bigger problems our society faces, the overarching global climate emergency in particular, may best have been served with pandemic sand in the gears of normalcy.

Finally — there’s no going back to the toxic avoidance of disruption. Change has come whether we like it or not.

~ 3 ~

“Hostile” stakeholders rattled the 12th largest corporation by revenue and the 6th largest oil and gas business this week.

ExxonMobil’s (XOM) board of directors now has at least two new directors promoted by an activist fund, Energy No. 1. The fund, launched by tech industry investor Chris James, had the support of BlackRock, California Public Employees’ Retirement System, California State Teachers’ Retirement System and New York State Common Retirement Fund in its demand to replace at least four of the board with candidates of their choosing. Apart from BlackRock, the three retirement funds are the largest in the U.S. and represent $850 billion in assets; XOM’s valued at $252 billion.

Since late last year, Energy No. 1 has accumulated a $50 million stake in XOM. The fund wants

Engine No. 1 wants ExxonMobil to pledge to reduce its emissions to net zero by 2050, warning that this was “not just a climate issue but a fundamental investor issue — no different than capital allocation or management compensation — given the immense risk to ExxonMobil’s current business model in a rapidly changing world.”

XOM hasn’t performed well over the last 15 years; its last stock price high was in mid-2014 ahead of Iran’s oil re-entering the global market.

XOM has accumulated far too much debt, servicing shareholder dividends, offering weak sauce like investment in carbon capture announced on Earth Day this year, yet still expecting to be part of the White House’s green energy policy.

The corporation doesn’t appear to be making adequate progress toward a low-to-no-oil future, one in which privately-owned vehicles are electric rather than combustion engine. With countries beginning to ban the sale of combustion engine vehicles as soon as 2027 and some cities banning their use as far back as 2013 (ex. Utrecht banned older diesel engines that year), XOM hasn’t made enough effort to move to a different mix of products to maintain or build revenue over the long run.

Nor has the oil and gas corporation responded to climate change as competitors BP and Royal Dutch Shell have by establishing a goal of zero emissions by 2050.

The final tally of shareholder votes and the subsequent board composition may not be known for several weeks. No matter the board’s final members, change isn’t over for XOM, especially when the family which created its progenitor is moving to encourage change. The Rockefellers, heirs to the Standard Oil fortune, provided considerable funds to the #ExxonKnew movement in order to force XOM to deal with its toxic business model.

Don’t be surprised if Rockefellers buy up stock in cement manufacturers.

~ 2 ~

A court told Royal Dutch Shell it must reduce emissions. The 6th largest corporation in the world based on revenue, Shell had been sued by the Dutch branch of the Friends of the Earth for violating human rights with its extractive business, undermining the Paris Agreement.

The suit followed a 2015 precedent in which an environmental activist organization Urgenda had successfully sued the Dutch government for failing to meet its own benchmarks on emissions reduction.

The court ordered Shell to cut the corporation’s net emissions by 45 percent compared to 2019 levels by a 2030 deadline. The emissions to be cut are those generated by Shell’s business processes and not by the use of the fossil fuel products it sells.

A personal experience shapes my opinion about Shell as well as my opinion of the entire fossil fuel industry. In the late 1980s I had been working for a Fortune 100 company which relied on fossil fuels (as many businesses still do today); the corporation had a curriculum of sorts to ensure its workforce was global caliber. The curriculum included a session with a consultancy which guided large corporations in future planning. This consultancy used Royal Dutch Shell’s scenario planning as tool, pointing to Shell’s scenarios which saw peak oil and an end to oil. Shell at that time had already begun future-proofing itself by investing in wind energy development and other alternative energy sources.

But inside a handful of years it was evident the fossil fuel industry didn’t see the same scenarios, and Shell’s management no longer looked presciently oracular. Instead the country watched Enron’s corruption around energy blowing apart any idea the fossil fuel industry was looking deep into the future instead of the next quarter’s profits.

That it takes a court order to force Shell back toward its 1990 direction says something about the fossil fuel industry as well as corporate governance over the the last three decades.

~ 1 ~

The Daily Beast’s headline: Biden Administration Backs Trump’s Massive Alaska Oil Drilling Project

The New York Times’ headline: Biden Administration Defends Huge Alaska Oil Drilling Project

What’s disturbing in these and other outlets’ coverage of ConocoPhillips’ Alaska project is the reference solely to Biden when Interior Secretary Deb Haaland and Energy Secretary Jennifer Granholm are surely key to the government’s support for drilling in Alaska. What could these two cabinet-level officials have in common? An inconvenient distaff angle to the prevailing media narrative?

NYT buries at the end of its piece the biggest single reason why the current administration may not yet yank the gangplank out from under ConocoPhillips’ Alaska project:

Other Alaska Native groups, however, said they welcomed the jobs as well as the state and local revenue expected to be generated by the project. In an April letter to Interior Secretary Deb Haaland, George Edwardson, president of the Inupiat Community of the Arctic Slope, called oil drilling “critical to the economic survival of the eight Inupiat villages that call this region home” and said the Willow project had the group’s “strong support.”

“Alaska’s oil and gas industry provides much-needed jobs for our people, tax revenue to support our schools and health clinics, and support for basic public services,” he wrote.

If the rest of their livelihood is collapsing under climate change, it’s understandable the local population will grab what jobs they can.

But there’s more to this than jobs for locals as the administration appears to reverse course on fossil fuel development. It’s not jobs but cash injections into local businesses which have suffered under the pandemic; it’s roads and other infrastructure paid for in large part by a corporation and not by local/state/federal tax dollars.

Meanwhile, Joe Biden has been plugging electric vehicles like Ford’s new electric F-150.

Is there a disconnect? Not in my opinion. Instead we are looking at asymmetric warfare, which may also explain why Biden appears to take a less aggressive stance on the Russian NordStream 2 pipeline running beneath the Baltic Sea.

In the case of ConocoPhillips, it’s blowing huge amounts of money to develop a field while vehicle manufacturers are racing toward an all-electric product lineup which may cause the price of oil to drop below cost of production. Unlike its competitors XOM and Shell, ConocoPhillips hasn’t yet had a reckoning with shareholders about its business model though overproduction of oil across the industry has already been a problem during the Trump administration.

Biden pointed out NordStream 2 is already mostly built and paid for — but some of the pipeline’s investors/co-developers are among those pressed by shareholders and environmental activists to reduce their carbon emissions. They’re out the sunk cost into the pipeline if the price of oil drops in response to falling demand.

Ditto for Russia’s oil businesses invested in NordStream 2.

These extractive companies — and petrostates — aren’t going to be able to recoup their investments anywhere near as fast as they’d initially projected. If electric vehicles arrive and are adopted by the public rapidly, they may lose much of their investment.

So go ahead, pump some cash into the economy. Build some roads and maybe some pipeline.

The locals will enjoy them for years to come after the oil business has collapsed and gone.

~ 0 ~

By the way, somebody remind the White House the Trump administration killed participation in tracking products of extractive industries. We still need to keep an eye on them. Specifically, in 2017 the U.S. withdrew from the EITI — Extractive Industries Transparency Initiative, the extractive industries anti-corruption effort — and now Congress needs to revisit the Securities and Exchange Commission’s Rule 13q-1, which implemented Section 1504 of the Dodd-Frank Wall Street Reform related to tracking large payments made by extractive industries.

Hold this last thought about the U.S. needing to track money related to oil and gas. I promise it’s going to come up in a future post.

Soft-Handed Academic Dudes and Minimum Wage Fast Food: What Could Go Wrong?

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I see tweets like this one in my timeline and I brace myself for the inevitable dogpile bashing workers:

Unemployed minimum wage workers have collected too much from state unemployment and federal aid, the old white dudes opine from their cushy home offices somewhere in McMansionburbia, nudge-nudge-winking about prescient forecasts of inflationary pressures.

Sod off, you slack-bottomed, soft-handed gits.

Unemployed minimum wage workers were most likely to be laid off early in the pandemic, and may already have been laid off not once but twice or perhaps even more, depending on location and on whether they were or are juggling one or more minimum wage jobs to make ends meet.

These are the same workers whose jobs OSHA has categorized as High Exposure Risk:

Those who have frequent indoor or poorly ventilated contact with the general public, including workers in retail stores, grocery stores or supermarkets, pharmacies, transit and transportation operations, law enforcement and emergency response operations, restaurants, and bars.

They’re in the same risk class as mortuary workers who prep the bodies of those who died of COVID.

This group of workers are among the risk class most likely to experience an outbreak of COVID; just look at the workplaces where Michigan had outbreaks as of April 9:

Not as bad as schools but how many of the K-12 and university students overlap in some way with fast food workers — either as consumers or employees?

Recall my chicken scratching from my last post about the unaffordability of the American Dream in which I calculate annual earnings for a full-time minimum wage worker:

Do the math:

Minimum federal wage $7.25  x  40 hour week  x  52 weeks  =  $15,080 a year.

That’s nowhere near enough to make a payment on the median home priced at $301,000. It’s not enough for a tiny dump of a house at one-third of median price.

The equation above already contains numerous generous assumptions: the employee makes 1) minimum federal wage, 2) at a full-time job, 3) for the entire year. For most minimum wage workers, at least one of these three points doesn’t apply. Most employers who hire minimum wage workers avoid paying unemployment taxes by employing workers less than full time, which means a minimum wage worker must work two jobs (or more) to make $15,080.

The average one-bedroom or studio apartment costs roughly $1000 a month right now. What’s left over for food, health care, transportation? Even if a worker can manage a roommate or two, what’s left over for basic needs?

Gods help them if they need childcare or eldercare on top of shelter, food, health care, and transportation.

And with most employers refusing to hire minimum wage workers for more than 27-32 hours a week in order to avoid paying either unemployment insurance tax or contribute to health care, these workers are likely not to have any benefits like sick or paid time off, or any savings to offset time needed for illness.

Why would any food service or retail employer think for a moment that minimum wage workers should be beating down the doors to come back to more of the same if their health and their lives had been and could be again at risk, for an absurdly low wage? Why can’t the usual pudgy white neoliberal male academic types grasp this?

The snotty, dismissive attitude by business toward minimum wage workers reflected in the tweet above — though labor appears to be an essential component to the business — also reveals both carelessness and cluelessness of these businesses. If a piece of equipment needed repair for the business to remain open, they’d fix it. But apparently remedying the problems their workers face is a step too far or opaque to the business operator.

Minimum wage workers also need the right to organize. Amazon may pay more than the federal minimum wage, but there are businesses across the U.S. which also operate like Amazon but without the notoriety forcing Amazon to pay better wages. Those businesses must be forced to rejigger their business models. Amazon is no model employer, either; overall conditions are bad when Amazon looks good by comparison.

But demanding businesses rework their operations to protect workers’ right to organize is too much to ask, one might say. Is it?

When businesses shut down sites to avoid unionization, they are rejiggering their business model, and they are doing it at a cost to the community as well as the workers. They are eating the cost of the closures to make an ugly point.

Kroger’s Seattle locations aren’t the only two sites the grocer is closing for this reason. At least three more closed in California to avoid paying higher wages to their workers who are disproportionately at risk of COVID — wages mandated by local government to ameliorate the risks these workers take.

Workers need Congress to pass the Protecting the Right to Organize Act of 2019 (PRO Act) for this reason, as do their communities. Many older and disabled Americans rely on their local grocers; losing one is incredibly disruptive and expensive, especially when it creates a food desert. No business is obligated to do business in any location, but a business willing to pull up and leave a neighborhood and damage customer relations solely because it can’t (read: won’t) figure out how to pay a living wage needs to do its own reorganization internally, restructuring its business model to operate ethically. A workforce which has the right to unionize may be the only way to force business to reset its thinking and operations.

In other words, if a business’s profits rely on paying wages which can’t support a worker, the business model isn’t legitimate. Unions may be the only means to make this clear to businesses.

Something needs to give soon, because this kind of scenario will continue — a clueless business thinking it must hire anybody at less than living wages, to work in conditions which may not be safe for either employees or customers.

The Youngsville mother of two was taken aback at the offer since she was only trying to go inside to get the food that was left out of her order after going through the drive-thru a first time. The lobby was closed, so she went back to the drive-thru window to get the order straightened out.

Then she learned why the lobby was closed.

“The manager told me, ‘I’m sorry. I can’t open the lobby because no one wants to work,’” Picou said. “And then she asked if I wanted a job. She said they’d hire anyone at this point.”

Imagine thinking a fully-staffed indoor fast food lobby is necessary in the middle of a pandemic, instead of creating a safer alternative.

Waiting for those slack-bottomed academic types to nod their heads vigorously in affirmation as they wipe the fast food mung off their faces.

You’ll notice that young mother in that article didn’t jump at the offer.

Goodbye, American Dream: The Unaffordability of American Life

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My oldest sent me a text this past weekend:

Also houses down here are going for 1.5x value. [Friend] put an offer in at 200k for house selling for 160k and it ended up selling for 240k. There’s no way it’ll appraise that high but EVERY house is selling like that.

Folks in big coastal metro areas will laugh at these prices, but until recently $160,000 bought a 900-1200 square foot home, three bedrooms and two bathrooms, a basement and a two-car garage in a suburban setting here in Michigan. At this price one wouldn’t find a brand new home but one between 10 to 50 years old, with a medium sized suburban lot. If one was really lucky, the house would be move-in ready, the yard would be fenced, and there might be a shed in the backyard for the lawn mower.

A young professional earning $80 to $100,000 a year could afford this and a family and still have a tiny bit left over to put in retirement savings.

But it’s a stretch at $200,000, and absolutely out of their range at $240,000. They may not even have the 20-25% down payment for this larger price, and the housing market has tightened so quickly they certainly haven’t been able to come up with an additional $20 to $40,000 to put down.

Wall Street Journal reported last week that as much as a third of single-family residential housing is now being snapped up by investors.

Big foreign investment firms that buy office buildings, hotels and shopping centers around the world have a new favorite real-estate play: single-family homes in American suburbs.

These institutions are partnering with U.S. housing companies to buy or build rental homes by the thousands. In suburban neighborhoods near cities such as Atlanta, Las Vegas and Phoenix, blocks of families are sending monthly rent checks to ventures backed by Canadian pension funds, European insurers, and Asian or Middle Eastern government-run funds.

The overseas investors are following in the footsteps of many big U.S. investment firms and pension funds, which started buying single-family homes on a large scale in the aftermath of the financial crisis.

This may well explain the huge jump in prices over the last 12-18 months.

The situation is so bad it’s become a joke on TikTok and Twitter:

Speculation is doing to residential property what it did to oil prices before June 2008 when Congress passed legislation requiring an increase from 10% to 30% margin on options. Oil prices then dropped greatly, but not enough fast enough to prevent economic Jenga – many mortgages failed because homeowners had to choose between a tank of gas to get to work or making their house payment.

~ ~ ~

Now imagine the frustration of a prospective house buyer like [Friend] above. They’re a two-career household with a small family, which means they have car payments, childcare expenses which likely exceed car payments, and student loans they’ll be paying down for at least another decade if they are trying to juggle all these expenses.

They’ve scrimped and saved, kept their lifestyle minimal – not hard to do if you’ve had to weigh going to the movies on a date night against the cost of a babysitter and movie tickets – and they’ve amassed enough cash to put down 20% on a house and been pre-approved for a mortgage between $120,000 and $160,000. The higher end would be a push for them but sometimes the right house is a little pricier.

And then the dream for which they’ve scrimped and saved is gone in a heartbeat. As soon as they see the house on market they bid but they couldn’t counteroffer enough money fast enough and it’s gone.

Even in a pandemic with so many people out of work, the right house is gone.

It’s probably been sold to a speculator who will put it up for rent at a price which is the same as [Friend]’s mortgage payment would have been, but at that price there’s no room to save any extra money.

And that’s what it’s like in the Midwest. What’s it like in more densely-populated coastal states?

How do young people who are competing for jobs on a national basis, earning pay which doesn’t adjust all that much for location, buy a home and attain the American Dream?

They’re giving up children to do this, we can see that by the flat to falling birth rates.

A major one. The National Bureau of Economic Research says that the largest component of child-rearing costs is housing. And the cost of housing in America has skyrocketed. The median U.S. home in 1953 cost $18,080, or about $177,000 in today’s inflation-adjusted dollars. Today, the median home price is $301,000. Young people who cannot afford homes or even a two-bedroom apartment are less inclined to marry and to have children. One 2014 study published in the Journal of Public Economics explicitly linked housing costs to fertility, suggesting that for every $10,000 jump in housing values, fertility among nonowners fell 2.4 percent. Economists also point to the fact that the fertility rate has fallen every year since 2007, and suggest that the Great Recession compelled many Millennials to put off child-rearing for years. “What we learned from the Great Recession is that every 1 percentage point increase in the unemployment rate reduces births by 1 percent,” said Wellesley College economics professor Phil Levine.

And in places like the greater San Francisco area they go homeless, living in their vehicles because they can’t afford rent *if* there’s rental housing available.

~ ~ ~

One solution to this mess is reducing student loan burdens. Getting tens of millions of young people out from underneath $50,000 and a decade or more of payments would free them to have children and/or buy a home.

I hesitate to say they may also save for retirement but it’s possible they’re not able to until they are out from under their student loans.

This problem may explain why so many young people have jumped at online trading apps like Robinhood, causing increased volatility in the stock market. They can get in with very little money, get out quickly, and do it all over again rapidly. It offers them a chance to increase their asset value though it does nothing for the overall stock market while compromising their personal data privacy.

But putting some portion of their meager savings in the stock market isn’t a solution — it’s far too risky, too easily gamed (hah, GameStop, get it?). It’s not a prudent approach to funding necessities.

Getting out from under student loan debt, though, would be a doable help with very little downside.

~ ~ ~

Removing at least part of student loan debt from younger consumers’ shoulders will act as an economic stimulus, too. Those who are able to end their loan payments will be able to spend more of their income on expenses they’ve deferred in addition to housing.

Employment should rise as demand increases, and a tighter employment market will help boost some if not all wages.

Which brings us to the section of the market which may not benefit directly from canceling student debt. Workers who make minimum wage or are employed in tipped hourly jobs can’t afford to buy the average home in the U.S.; they are struggling to pay rent let alone save a down payment. Many of them are students.

Do the math:

Minimum federal wage $7.25  x  40 hour week  x  52 weeks  =  $15,080 a year.

That’s nowhere near enough to make a payment on the median home priced at $301,000. It’s not enough for a tiny dump of a house at one-third of median price.

The equation above already contains numerous generous assumptions: the employee makes 1) minimum federal wage, 2) at a full-time job, 3) for the entire year. For most minimum wage workers, at least one of these three points doesn’t apply. Most employers who hire minimum wage workers avoid paying unemployment taxes by employing workers less than full time, which means a minimum wage worker must work two jobs (or more) to make $15,080.

Forget about it if the worker holds down a tipped hourly job; while in some cases tips can be quite good, the base wage in at least 16 states is $2.13 an hour. On a bad day it may cost a worker more to show up than they make if they pay for any form of transportation besides shoe leather or a bicycle.

The minimum wage must be raised if roughly 1.8 million Americans have any chance at saving a down payment on a house, let alone buying one. And if businesses aren’t already increasing wages now during pandemic market conditions, they’re not likely to do so unless they’re forced to by law.

~ ~ ~

Canceling a big chunk of student loan debt and raising the minimum wage will still not be enough to help tens of millions of Americans afford to buy their own home.

Once these folks have more disposable income and increase demand on the housing market, speculators will swamp the market even more so than they are right now.

(Domestic policy aside, it’s a marvelous way to ratchet up class conflict by locking out a couple generations of potential homebuyers if a hostile country’s sovereign fund was looking to both invest and destabilize the U.S. at the same time.)

Canada’s domestic housing policy encourages home owner occupancy of single family homes; speculative investment is far less than it is in the U.S. It hasn’t solved their housing market problems — Toronto housing is incredibly expensive — but it does reduce competition for homes.

There must be some form of legislation which reduces market demand by speculators so that the only participants in the single-family home market are single families.

There should be some limitation on speculation for multi-family housing so that rental properties remain affordable. Eliminating overseas buyers or funds is one possibility.

~ ~ ~

We’ll hear all kinds of caterwauling about how unfair it is that some students will have all their debt paid for them by canceling $50,000  while they had to pay for all their student’s education.

Bah. They can suck it up.

This month I finished shelling out a total of $200,000 for two kids to go to college. This doesn’t include what I’ve paid for their cell phone, health care insurance, and for the vehicles and auto insurance they’ve needed.

$200K covered tuition, books, fees and some of the housing and food for one kid on a half ride to a private school, and a kid at a Big 10 public university. Both kids worked throughout their four-year programs and paid for their own gasoline and rent off campus, along with some sundries.

Because of this investment in them I’ve got to come up with income for another seven-plus years to pay for my health care, but at least my kids have a fighting chance right now that most of their cohort don’t have. They don’t need to live at home with me to scrimp and save. They can move out out state and chase a better job.

But even with this investment in both of my kids it will take years for them to save enough to make a down payment on a home and have a 6-month cushion in the bank.

I don’t resent the fact they don’t have school loans which might be canceled. What I resent is that they don’t have the kind of world I had as a young adult, where if one worked hard they could make enough money to get ahead and expect a better life. (I do resent having to pay through the nose, five to ten times over what I paid for college, but that’s another matter.)

If housing prices jump 20-60% almost overnight, my kids don’t have that chance. They can’t expect their friends to uniformly have that chance, either, as [Friend]’s situation demonstrates.

If their entire cohort is stifled by student loan debt, wages stagnant for decades, and competition for housing from speculation, even steep parental investment isn’t enough to help them tread water.

And if all of their cohort of 20-somethings are stuck in the same boat, the entire economy is deeply skewed and screwed. Whatever assessment analysts are making of the stock market and the economy is manipulated by this iceberg of frozen, frustrated demand which cannot remain in stasis forever.

Something has to give.

We can start with canceling $50,000 student debt, increasing the minimum wage to $15 an hour, and eliminating overseas speculation from the housing market while limiting single-family homes to sales between occupants and their heirs.