The GOP Tax Cuts Are Already Hurting Social Security

Teresa Ghilarducci  -Photo:

The GOP has been intent on destroying Social Security since 1934 when its creation was first proposed by the Roosevelt administration. This, however, remained always a rather remote possibility … until now. With Trump and Congress transferring even more wealth to the rich and large corporations in the form of tax cuts that will land the country $10 trillion deeper in debt, the party of pseudo-fiscal hawks is campaigning hard for legislation that will lead to sharp cuts in Social Security and other entitlements.

In this context, the 2018 midterm elections could be the most consequential midterm election in years, according to Teresa Ghilarducci, an internationally known economist on labor and retirement. In this exclusive interview, Ghilarducci — a professor at The New School for Social Research, as well as the author of numerous books including Rescuing Retirement: A Plan to Guarantee Retirement Security for All Americans and When I’m Sixty-Four: The Plot Against Pensions and the Plan to Save Them — shares her analysis of the GOP attack on Social Security.

C.J. Polychroniou: Senate Republicans (and possibly a few Democrats) have their eyes set on slashing Social Security and other entitlements in order to balance the budget, although it is their own policies that have led to greater indebtedness. How serious is the possibility that they can succeed in undermining security retirement for millions of Americans?

Teresa Ghilarducci: During the 2012 presidential campaign, Republican politicians — including then-Texas Gov. Rick Perry and Sen. Ted Cruz — called Social Security a Ponzi scheme, which reveals a misunderstanding of Social Security finances and Mr. Ponzi’s 1920 investment fraud swindle — when Mr. Ponzi definitely spent more than he took in.

Further, in September of last year, newly appointed White House Economic Adviser Larry Kudlow commented that, “We have to be tougher on spending.” Strengthening that view, Senate Majority Leader Mitch McConnell — in what seemed to be a defense of the bad news surfacing in mid-October 2018 that the 2017 tax cuts will substantially deepen the federal deficit — claimed that the deficit ought to be blamed on the Democrats for their unwillingness to cut Medicare, Medicaid and Social Security.

The blame for the increase in the projected deficit falls on the tax cuts of 2017 that were a result of the Republican control of the federal government — almost all Republicans voted for the tax cuts and almost all Democrats did not. The cuts added $1 trillion to the federal deficit and the nonpartisan Joint Committee on Taxation did not support Republican arguments that the $1.5 trillion tax cut would pay for itself with economic growth. Senator McConnell’s announcement today makes clear political elites will use Social Security, Medicare and Medicaid as bargaining chips in budget negotiations and call for cuts in government spending.

I feel this accretion of Republican statements means that after the midterms, the higher federal deficits caused by the tax cuts of 2017 will fuel the chronic attack to cut the programs. Read more

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The Brexit Nightmare: An Interview With Malcolm Sawyer

It’s been more than two years since citizens in U.K. voted 48 to 52 for a split from European Union. Yet, the conservative government of Theresa May is still trying to come up with a workable Brexit plan, one that some may describe as allowing the U.K. to have the cake and eat it at the same time. Moreover, public opinion in U.K. remains sharply divided over Brexit, and this includes members of the Labour party itself, with some trade union leaders and Labour representatives even warming up to the idea of a second referendum.

Will Theresa May’s government be able to deliver an agreement before the U.K’s  exit date, which is set for March 2019? Will Labour vote down May’s Brexit deal? And what will the British economy look like in the post-Brexit era? The renowned British economist Malcolm Sawyer, Emeritus Professor of Economics at Leeds University, sheds light on the Brexit conundrum  in an  exclusive interview below with C. J. Polychroniou.

C. J. Polychroniou: Professor Sawyer, let’s begin by asking you the most basic question, which is: what’s really holding up Brexit talks?

Malcolm Sawyer:  There are the sheer complexities of unravelling the involvement of the UK in the European Union built up over 45 years, and the need for agreement over issues ranging from EU citizens rights in UK (and vice versa) after Brexit, the financial obligations of the UK on withdrawal, security co-operation, the nature of future trade relations etc.

There are the divisions within the government and the Conservative Party over the issues of the EU and leave or remain. There are basic differences between those who view Brexit in terms of ‘taking back control’ with little regard for economic costs involved and those who were Remainers seeking close trade ties and other co-operation with the EU after exit. It is then very difficult if not impossible to satisfy both and to arrive at any compromise.

Theresa May’s Brexit plans have been facing a lot of opposition from rebels in her own party all along, but now it seems that even the Northern Irish party that is propping up her government is making it difficult for the Prime Minister. Is it possible that U.K. could leave the bloc without any Brexit deal at all?

The process of UK leaving the EU involves two stages – the terms of the Withdrawal Agreement, sometimes seen as akin to a divorce settlement, which has to be settled within 24 months of the start of negotiations under Article 50 of the Treaty of Lisbon which means end of March 2019. The second stage will involve finalizing the future relationships between UK and the EU27 across a wide range of issues though the focus has been on the trade relations (e.g. a free trade area agreement, form of customs union), though it is intended that the broad outlines will be included in the withdrawal agreement. The intention has been for a 21 month transition or implementation period with further negotiations to establish the post-Brexit relationships.

A no-deal situation had been used to refer to no specific trade deal between UK and EU27, with trade between UK and EU27 operating under WTO arrangements with the tariffs charged by UK (EU27) on EU27 (UK) goods the same as charged by UK (EU27) on goods from countries with whom there was no specific trade agreements.

More recently no-deal has come to mean no withdrawal agreement between the EU and the UK, and hence the UK leaving at the end of March 2019 without any agreements over the nature of future relationships. Customs posts and checks would have to be quickly put into operation involving collection of new sets of tariffs and disruption to the just-in-time supply chains across countries, combining to lead to shortages in some key areas (agricultural products, pharmaceuticals often mentioned) and disruption of production.

It is clearly possible that UK to ‘crash out’ of the EU at the end of March 2019. A failure of the UK government to agree the withdrawal agreement with the EU, or a prospective agreement which is then rejected by the UK Parliament, would put the UK firmly on that path, and the chances of one of those coming to past looks to be significant. Read more

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Will Trump’s Policies Wreak Havoc On The US And Global Economies?

Gerald Epstein is Professor of Economics and a founding Co-Director of the Political Economy Research Institute (PERI) at the University of Massachusetts, Amherst

With the midterm elections rapidly approaching, many Americans will start thinking more and more about the economy before they decide how to cast their votes. In this context, Trump’s claim that the US economy under his administration is the “greatest in history” needs to be thoroughly and critically examined in order to separate facts from myths. How much of the ongoing “recovery” is being felt by average American workers? And what about Trump’s escalating trade war with China, which is already beginning to impact American consumers and various US manufacturers, while making European firms nervous? In this exclusive interview, Gerald Epstein, professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts at Amherst, clears the air on several myths and misconceptions about the developments that Trump has tried to frame as an “economic miracle.”

C.J. Polychroniou: Trump likes to boast about an economic revival of historic proportions under his administration, which includes a strong labor market, a robust stock market, and a 4 percent GDP rate. What are the facts and myths about Trump’s alleged economic miracle? Give us the full story.

Gerald Epstein:Trump is a gross exaggerator who loves to construct stories. When it comes to his claims about an economic miracle under way during his administration, I think my friend and colleague John Miller in the economics department at Wheaton College put it best in a September 30 presentation at the University of Massachusetts Amherst: “Compared to the standard of U.S. economic performance since 1948, we have been living through an economic expansion that has been historically long, historically slow, and that has done historically little to improve the lot of most people.”

It is safe to say, as Miller and many other economists show, slashing corporate taxes has not generated an investment boom or a stock market boom. Data show that during the second quarter of 2018, housing investment continued to go down, and spending on new equipment, the largest component of investment, grew only half as quickly as it had at the end of 2017, prior to the tax cut. As the data discussed by Josh Bivens of the Economic Policy Institute show, business investment in structures such as office buildings and factories did increase far more quickly than before the tax cut, but most of that went into oil and gas drilling which resulted from higher world energy prices.

What’s the explanation for S&P 500 and Dow setting all-time records under Trump, and what impact do stock market trends have on the life and well-being of average Americans?

It is true that the stock market has increased since Trump was elected, but it has been on an upswing since the recession bottomed out in 2009. In fact, stock prices (the S&P 500 adjusted for inflation) increased just 2.1 percent from Jan. 1 to Sept. 1, 2018 — far slower than earlier in the expansion, and the near double-digit increase during the 1990s expansion.

Only in the third week of September did the S&P 500 Stock Index and the Dow Jones Index finally top their January 2018 highs.

Still, it is clear that since Trump was elected, financial investors have been quite happy and optimistic. The Republican agenda of tax cuts and deregulation have significantly increased corporate profits and the expectations of further corporate profits, and these drive up stock prices.

But most stocks are owned by the very wealthy. According to Edward Wolff, the richest 10 percent of the population own close to 90 percent of all stocks. So when the stock market goes up in value, it is the already very rich that mostly benefit. Read more

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Human Rights, State Sovereignty, And International Law

We live in an era where virtually every government on the planet claims to pay allegiance to human rights and respect for international law. Yet, violations of human rights and plain human decency continue to occur with disturbing frequency in many parts of the world, including many allegedly “democratic” countries such as the United States, Russia, and Israel. Indeed, Donald Trump’s immigration policy, Putin’s systematic repression of dissidents, and Israel’s abominable treatment of Palestinians seem to make a mockery of the principle of human rights. Is this because “faulty” forms of government or because of some Inherent tension between state sovereignty and human rights? And what about the international regime of human rights? How effective is it in protecting human rights? Richard Falk, a world renowned scholar of International Relations and International Law sheds light into these questions in the exclusive interview below with C. J. Polychroniou.

Richard Falk is Alfred G. Milbank Emeritus Professor of International Law, Politics, and International Affairs at Princeton University and the author of some 40 books and hundreds of academic articles and essays. Among his most recent books are A New Geopolitics (to be published in December 2018); Palestines’s Horizon: Toward a Just Peace (2017); Humanitarian Intervention and Legitimacy Wars: Seeking Justice in the 21st Century (2015); Chaos and Counterrevolution: After the Arab Spring (2014); and Path to Zero: Dialogues on Nuclear Dangers (2012).

C. J. Polychroniou: Richard, you taught International Law and International Affairs at Princeton University for nearly half a century. How has international law changed from the time you started out as a young scholar to the present?

Richard Falk:  You pose an interesting question that I have not previously thought about, yet just asking it makes me realize that this was a serious oversight on my part. When I started thinking on my own about the role and relevance of international law during my early teaching experience in the mid-1950s, I was naively optimistic about the future, and without being very self-aware, I now understand that I assumed that moral trajectory that made the future work out to be an improvement on the past and present, that there was moral progress in collective behavior, including at the level of relations among sovereign states. I thought of the expanding role of international law as a major instrument for advancing progress toward a peaceful and equitable world, and endeavored in my writing to encourage the U.S. Government to align its foreign policy with international law, arguing, I suppose in a liberal vein, that such alignment would promote a better future for all while at the same time being beneficial of the United States, especially given the overriding interest in avoiding World War III.

My views gradually evolved in more critical and nuanced directions. As my interests turned toward the dynamics of decolonization, I came to appreciate that international law had legitimized European colonialism, and the exploitative arrangements that were imposed on the countries of the global south. I realized that the idealistic identification of international law with peace and justice was misleading, and at best only half of the story. International law was generated by the powerful to serve their interests, and was respected only so long as vital interests of these dominant states were not threatened.

The Vietnam War further influenced me to adopt a more cautious view of international law, and even more so, of the United Nations. I opposed the war from the outset from the perspective of international law, citing the most basic prohibitions on intervention in the internal affairs of sovereign states and the core prohibition of the UIN Charter against all recourses to aggressive force. I did find it useful to put the debate on Vietnam policy in a legal format as the country was then under the sway of liberal leadership, although tinged with Cold War geopolitics and ideology. The defenders of Vietnam policy, motivated by Cold War considerations, relied on legal apologetics as well as claims that it was important for world order to contain the expansion of Communist influence, and that the adversary in Vietnam was China rather than North Vietnam. The legal debate to which I devoted energy for ten years convinced me that international law on war/peace issues was subordinated to geopolitics including by the Western democracies, and that even so, legal counter-arguments were always available to governments eager to disguise their reliance on geopolitical priorities. International law remains useful and even necessary for the routine transnational activities of people and governments, stabilizing trade and investment relations, but often in ways that favor the rich, and issues pertaining to questions of safety, communications, and tourism exhibit a consistent adherence to an international law framework. Read more

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Trump’s Economy Is On A Path To A Bust

Whose interests are being promoted by macroeconomic policies in the United States? Is Donald Trump good for the economy? Is he responsible for the current economic indicators, which seem to be healthy? Are his tariff policies good for workers here and abroad? And how does his approach to economics differ from Obamas?

Howard Sherman is Emeritus Professor of Economics at the University of California at Riverside, a founding member of the Union for Radical Political Economics and author of Inequality, Boom, and Bust: From Billionaire Capitalism to Equality and Full Employment and Principles of Macroeconomics: Activist vs Austerity Policies (co-authored with Michael Meeropol, and now in its second edition). In an exclusive interview for Truthout, Sherman provides answers to these questions and exposes the myths associated with the “success story” of Trumps economy. In fact, Sherman contends that the US economy is on the verge of an economic recession and possibly a Great Depression.

C. J. Polychroniou: Howard, what are the goals and aims of macroeconomic policy in the US, and what interests are they designed to protect and promote?

Howard Sherman: There are two different views in the US over macroeconomic policy. One is the conservative view, which says that capitalism is the best possible economic system, so it needs no reforms, or just a few minor ones. Capitalism functions smoothly and there is a recession only when there is an incorrect government policy. Furthermore, there is never too much inequality because inequality merely reflects the productivity of an individual, so no reform is needed to change inequality.

The second view is the progressive economics view, held by a minority. In general, progressives believe that inequality represents extremely high profits made by corporations that exploit the labor of workers at low wages. Inequality increases with every capitalist expansion, meaning that there is an increase in the ratio of all profits to all wages. Moreover, this increase in inequality means that the demand for goods and services by workers, based on their wages and salary, is limited. As such, the rising supply of goods to the market far outdistances the demand for these goods by the entire working population. The result is an economic recession or a depression that produces heavy unemployment in every downturn business cycle.

The conservative view that capitalism is near perfect helps to prevent reforms of the system, so it makes the wealthy owners very happy. On the other hand, the progressive policy that is necessary to raise wages and salary reflects the views of the great majority of the working population. Read more

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The Resurgence Of Political Authoritarianism: An Interview With Noam Chomsky

Noam Chomsky

Following the end of World War II, liberal democracy began to flourish in most countries in the Western world, and its institutions and values were aspired to by movements and individuals under authoritarian and oppressive regimes. However, with the rise of neoliberalism, both the institutions and the values of modern democracy came rapidly and continuously under attack in an effort to extend the profit-maximizing logic and practices of capitalism throughout all aspects of economic and social life.

Sketched out in broad outlines, this story explains the resurgence of authoritarian political trends in today’s Western societies, including the rise of far-right movements whose followers feel threatened by the processes unleashed by neoliberal economic policies. In the former communist countries and in the non-Western world, meanwhile, authoritarianism is also on the rise, partly as a residue of authoritarian legacies, and partly as a reaction to perceived threats posed to national culture and social order by global capitalism.

Is it possible to counter this rise in extreme populism? In this exclusive Truthout interview, the world-renowned linguist and public intellectual Noam Chomsky — the author of more than 100 books and thousands of academic articles and popular essays — offers his unique insights on this and more, bringing into the analysis issues and questions that are rarely addressed in the current debates taking place today about the resurgence of political authoritarianism.

C.J. Polychroniou: In 1992, Francis Fukuyama published an intellectually embarrassing book titled The End of History and the Last Man, in which he prophesied the “end of history” after the collapse of the communist bloc, arguing that liberal democracy would become the world’s “final form of human government.” However, what has happened in this decade in particular is that the institutions and values of liberal democracy have come under attack by scores of authoritarian leaders all over the world, and extreme nationalism, xenophobia and “soft fascist” tendencies have begun reshaping the political landscape in Europe and the United States. How do you explain the resurgence of political authoritarianism in the early part of the 21st century?

Noam Chomsky: The “political landscape” is indeed ominous. While today’s political and social circumstances are much less dire, still they do call to mind Antonio Gramsci’s warning from Mussolini’s prison cells about the severe crisis of his day, which “consists precisely in the fact that the old is dying and the new cannot be born [and] in this interregnum a great variety of morbid symptoms appear.”

One morbid symptom is the resurgence of political authoritarianism, a highly important matter that is properly receiving a great deal of attention in public debate. But “a great deal of public attention” should always be a warning sign: Does the shaping of the issues reflect power interests, which are diverting attention from what may be more significant factors behind the general concerns? In the present case, I think that is so, and before turning to the very significant question of the resurgence of political authoritarianism, I’d like to bring up related matters that do not seem to me to receive the attention they merit, and in fact are almost totally excluded from the extensive public attention.

It’s entirely true that “the institutions and values of liberal democracy are under attack” to an unusual extent, but not only by authoritarian leaders, and not for the first time. I presume all would agree that primary among the values of liberal democracy is that governments should be responsive to voters. If that is not the case, “liberal democracy” is a farce. Read more

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