If The Fed Can Bail Out Wall Street, It Can Rescue Public Education

Prof.dr. Gerald Epstein

Public education in the U.S. has been under severe attack for many years now, thanks to the dominance of neoliberal thinking and policies across the societal spectrum. However, the coronavirus pandemic has sparked a new crisis in the nation’s public education system as a result of having created huge holes in school budgets, especially in high-poverty areas. Yet, there are ways to prevent the collapse of the public education system in the U.S., if there is a will to do so. And the rescue can come directly through the power of the Federal Reserve, according to leading progressive economist Gerald Epstein, professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts at Amherst. In this exclusive interview for Truthout, Epstein discusses how the COVID-19 crisis has exacerbated funding deficits for public education and how the Federal Reserve can step in to save schools.

C.J. Polychroniou: Is the crisis facing public education systems today simply a question of the fall-off in tax revenues on account of the pandemic?

Gerald Epstein: The shortfall is not due only to the fall-off in revenues, though that is a significant part of it. It is also because of the large extra costs that schools and universities will face to operate safely in the COVID world: the extra spacing, cleaning, masks, technology needs, and so on. No one knows exactly how much these extra costs will amount to, but various organizations have estimated them to be somewhere between $116 billion and $245 billion.

These immediate problems are made immeasurably worse in many school districts and for many colleges because of longstanding funding shortfalls facing public education, K-12 and higher education. Many school systems — and especially those in poor communities, communities of color and rural communities — have been faced with serious cut-backs for more than a decade, punctuated, only occasionally and inadequately, with compensating increases.

Indeed, since the 2007-08 Great Recession, states have been devoting even less money to public education. Is this because of the peculiarities of the current model of education, which essentially leaves matters of funding education largely to the states, or because of the domination of neoliberalism at the federal and state levels?

It is true that public education funding in the U.S. comes primarily from the states and local governments. For example, according to the Center on Budget and Policy Priorities, in 2016, 47 percent of K-12 funding came from the states, 45 percent from local governments, and only 8 percent from the federal government.

This dependence on states and local governments does contribute to inequalities in school funding among states. But, to get to your question about neoliberalism, the neoliberal turn of state governments, led primarily by Republicans, has had a devastating effect on school funding, especially for poorer communities and communities of color. As Gordon Lafer shows in his brilliant book The One Percent Solution, state and local networks funded by the Koch brothers and others were able to elect state and local officials committed to a litany of neoliberal attacks on unions, public and social goods, and the state, all in the interests of corporations. The result in many states was a cut in taxes and education funding, and a push to privatize education through charter schools and similar tricks. There was also an attack on teachers’ unions and public-school teachers’ pay.

These anti-public school measures were greatly exacerbated by the fallout from the Great Financial Crisis of 2007-2009 (GFC), which itself was largely due to neoliberal policies of financial deregulation (which exacerbated long-growing deeper problems in the economy that we have no time to discuss here).

Most states cut school funding severely when the GFC hit; and despite the long (but slow) economic expansion that occurred after the GFC and ended with the pandemic, state funding per student remains below pre-crisis levels. This is especially true of states that cut deeply during the crisis. At the local level, the collapse of the housing market led to a decline in property values in many communities. Since the primary source of local funds for public schools are property taxes, this led to lower local revenues for education. The federal government did increase funding for the states temporarily, but it was not enough and it did not last.
Just prior to the pandemic, some states had finally recovered much of the lost ground in educational expenditures, but many teacher salaries, which had been deeply cut over the neoliberal period, remained below their previous levels and were falling behind wage growth in other professions. In response, there have been a number of teachers’ strikes across the country, where teachers have demanded not only an increase in their pay, but also an increase in funding for their schools. Many of these have been successful.

Similar forces played out with respect to funding of public higher education. State funding of public higher education declined significantly over the last 20 years or more, and students and their families were more and more saddled with the bills. The huge rise in student debt, more than $1.6 trillion worth, is wreaking havoc on a generation of students that has now been confronted with two near-depression level meltdowns in the course of little more than a decade.
The important point is that all these problems were there prior to the onset of the pandemic. Now they have been greatly exacerbated.

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Chomsky: We Must Not Let Masters Of Capital Define The Post-COVID World

Noam Chomsky

The global outbreak of COVID-19 has many thinking that a new economic and political order is inevitably under way. But is that so? In the U.S., the moneyed class, which has thrived under Donald Trump, won’t go down without pulling all stops to make sure that popular pressures for radical reforms will be blocked, says world-renowned public intellectual Noam Chomsky. Chomsky also reminds us that overt racism has intensified under Trump, and that police violence is a symptom of the underlying white supremacy that plagues U.S. society. Meanwhile, Trump’s anti-environmental policies and his trashing of arms control treaties are bringing the world ever closer to an environmental and nuclear holocaust.

C.J. Polychroniou: It’s been argued by many, from various quarters, that COVID-19 has been a game changer. Do you concur with this view, or are we talking of a temporary situation, with a return to the “business as usual” approach being the most likely scenario once this health crisis is over?

Noam Chomsky: There is no way to predict. Those who have primary responsibility for the multiple crises that imperil us today are hard at work, relentlessly, to ensure that the system they created, and from which they have greatly benefited, will endure — and in an even harsher form, with more intense surveillance and other means of coercion and control. Popular forces are mobilizing to counter these malign developments. They seek to dismantle the destructive policies that have led us to this uniquely perilous moment of human history, and to move toward a world system that gives priority to human rights and needs, not the prerogatives of concentrated capital.

We should take a few moments to clarify to ourselves the stakes in the bitter class war that is taking shape as the post-pandemic world is being forged. The stakes are immense. All are rooted in the suicidal logic of unregulated capitalism, and at a deeper level in its very nature, all becoming more apparent during the neoliberal plague of the past 40 years. The crises have been exacerbated by malignancies that have surfaced as these destructive tendencies took their course. The most ominous are appearing in the most powerful state in human history — not a good omen for a world in crisis.

The stakes were spelled out in the setting of the Doomsday Clock last January. Each year of Trump’s presidency, the minute hand has been moved closer to midnight. Two years ago, it reached the closest it has been since the Clock was first set after the atomic bombings. This past January, the analysts abandoned minutes altogether and moved to seconds: 100 seconds to midnight. They reiterated the prime concerns: nuclear war, environmental destruction and deterioration of democracy, the last of these because the only hope of dealing with the two existential crises is vibrant democracy in which an informed population is directly engaged in determining the fate of the world.

Since January, Trump has escalated each of these threats to survival. He has continued his project of dismantling the arms control regime that has provided some protection against nuclear disaster. So far this year, he has terminated the Open Skies Treaty, proposed by Eisenhower, and imposed frivolous conditions to block the re-negotiation of New Start, the last pillar of the system. He is now considering ending the moratorium on nuclear tests, “an invitation for other nuclear-armed countries to follow suit,” said Daryl Kimball, executive director of the Arms Control Association.

The military industry can scarcely control its euphoria over the flood of gifts from the public to develop new weapons to destroy us all, encouraging adversaries to do likewise so that down the road, new grants will flow to try to counter the new threats to survival. A hopeless task, as virtually every specialist knows, but that is not pertinent; what matters is that public largesse should flow into the right pockets.

Trump also has continued his dedicated campaign to destroy the environment that sustains human life. His FY 2020 budget proposal, issued while the pandemic was raging, called for further defunding of the Centers for Disease Control and Prevention and other health-related components for government, compensated by increased support for the fossil fuel industries that are destroying the prospects for survival. And, as usual, more funding for the military and for the [border] wall that is a central part of his electoral strategy. The corporate leaders Trump has installed to supervise environmental destruction are quietly eliminating regulations that somewhat constrain the damage and that protect the population from poisoning water supplies and the air they breathe. The latter reveals sharply the malevolence of the Trump phenomenon. In the midst of an unprecedented respiratory pandemic, Trump’s minions are seeking to increase air pollution, which makes COVID-19 more deadly, endangering tens of thousands of Americans. But it doesn’t much matter. Most have no choice but to live near the polluting plants — [those] who are poor and Black, and who vote the “wrong” way.

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It’s Time To Nationalize The Fossil Fuel Industry

Robert Pollin

The COVID-19 pandemic’s impact on the economy provides a golden opportunity for creating a fairer, more just and sustainable world as it shatters long-held assumptions about the economic and political order. Its impact on the energy industry in particular can boost support for tackling the existential threat of global warming by raising the prospect of nationalizing and eventually dismantling fossil fuel producing companies, a position argued passionately by one of the world’s leading progressive economists, Robert Pollin, distinguished professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts at Amherst.

C.J. Polychroniou: It has been argued by many that the coronavirus pandemic is a game changer for numerous industries, and could change the way we work and the way we use energy. We could also see the possible return of the social state and thus the end of austerity. First of all, are there any comparisons to be made between the current health and economic crises and what took place during the Great Depression?

Robert Pollin: There is one big similarity between the economic collapse today and the 1930s Great Depression. That is the severity of the downturns in both cases. The official U.S. unemployment rate coming from the Labor Department as of May 2020 was 13.3 percent. But a more accurate measure of the collapsing job market is the number of workers who have applied for unemployment insurance since the lockdown began in mid-March. That figure is 44 million people, equal to about 27 percent of everyone in the current U.S. labor market, employed or unemployed. By contrast, during the Great Recession of 2007-09, official unemployment peaked, and for one month only, at 10.0 percent.

However, between 1930 and 1939, U.S. unemployment averaged about 18 percent, peaking at nearly 25 percent in 1933. The obvious difference between the 1930s and now is that the 1930s figure is an average over 10 brutal years. Our current severe job market is not going to last for 10 years. It could only last for a few more months, before the official unemployment rate gets to something like the more “benign” levels of Great Recession years, i.e. “only” 8-9 percent. Still, since the March lockdown, the severity of the unemployment crisis has been comparable to the 1930s.

This brings up the single most critical point of contrast between the 1930s and today. That is, we could have easily seen a decade-long economic depression now, except for the fact that the federal government today has intervened to an unprecedented extent to counteract the depression, while in the 1930s, the government did not intervene at the necessary scale until World War II.

The list of ways in which orthodox economists and government policymakers today are clueless is very long indeed. But they have at least figured out that, to stave off a 1930s-level depression, you pump massive amounts of money into the economy. For now, this has thus far included the so-called CARES Act, which passed Congress and Trump signed in March. This was a $2 trillion injection, equal to about 10 percent of the overall U.S. economy (Gross Domestic Product, or GDP), and still more important, Federal Reserve bailout funds for big corporations and Wall Street, to the tune of something like $5 trillion — 25 percent of GDP — and counting. Without the CARES Act and Federal Reserve bailouts, we could easily be looking right now at a replay of the 1930s. Things are bad enough as it is, of course. Plus, it is clear that the federal government funds are largely being stuffed into the pockets of corporations instead of where they are needed. Spending on public health — in the midst of a pandemic no less — as well as public education, and direct support for workers and the poor are getting short shrift, as usual.

The oil and gas industry has been particularly hard hit during the coronavirus pandemic. In that context, some, including yourself, have argued quite passionately that the time is ripe for nationalizing the fossil fuel industry. What would be the advantages of doing so? And how could we finance the transition to a sustainable energy future?

The underlying issue here is that, according to the thoroughly mainstream and highly cautious projection of the Intergovernmental Panel on Climate Change (IPCC) we, the residents of planet Earth, have 30 years total to achieve net zero carbon dioxide (CO2) emissions to have a reasonable chance of avoiding the most severe impacts of climate change — in terms of heat extremes, heavy precipitation, droughts, floods, sea-level rise and biodiversity, and the corresponding impacts on health, livelihoods, food security, water supply and human security. There is no avoiding what this means — which is that the global fossil fuel industry simply must be put out of business within the next 30 years. This is for the simple reason that burning fossil fuels to produce energy is what spews CO2 into the atmosphere, and is therefore the primary cause of climate change. The need to put an end to the fossil fuel industry remains an imperative, regardless of whether the industry is facing financial difficulties, as they are at present, or swimming in profits. Everyone on the planet simply has to stop burning oil, coal and natural gas to produce energy. We can, of course, take it as a given that the fossil fuel companies will fight fiercely, using every single tool at their disposal, to keep themselves alive, so that they can continue to reap big profits from destroying the Earth.

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Noam Chomsky: Amid Protests And Pandemic, Trump’s Priority Is Protecting Profits

Noam Chomsky

Many years ago, social scientist Bertram Gross saw “friendly fascism” — an insidious authoritarianism that denies democratic rights for corporate ends without the overt appearance of dictatorship — as a possible political future of the United States.

Today, that future has arrived. Donald Trump has not only consolidated the integration between Big Business and government, but now, with the country in the grip of some of the biggest protests in more than half a century, he is actually trying to turn the U.S. into a police state, to “‘dominate’ by violence and terrify any potential opposition,” as Noam Chomsky astutely points out in a new and exclusive interview for Truthout.

C.J. Polychroniou: Noam, for the past 40 or so years, we have been witnessing in the U.S. the demolition of the welfare state and the supremacy of the ideology of market fundamentalism to the point that the country is unable to deal with a major health crisis, let alone resolve long-standing issues like large-scale poverty, immense economic inequalities, racism and police brutality. Yet, Donald Trump did not hesitate in the midst of the George Floyd protests to declare that, “America is the greatest country in the world,” while he is seeking at one and the same time to start a new civil war in this country through tactics of extreme polarization. Can you comment on the above observations?

Noam Chomsky: I don’t think Trump wants a civil war. Rather, as he says, he wants to “dominate” by violence and terrify any potential opposition. That is his standard reflex. Just look at his outburst when one Republican Senator, Lisa Murkowski, broke strict Party discipline and raised some mild doubts about the magnificence of His Royal Majesty. Or his firing of the scientist in charge of vaccine development when he raised a question about one of Trump’s quack medicines. Or his purge of the inspector generals who might investigate the fetid swamp he’s constructed in Washington.
It’s routine. He’s a radically new phenomenon in American political history.

Another Trump reflex is his call for “the most vicious dogs, and most ominous weapons, I have ever seen” when peaceful protesters appear near his abode. The phrase “vicious dogs” evokes the country’s horror when images of vicious dogs attacking Black demonstrators appeared on the front pages during the civil rights movement. Trump’s use of the phrase was either by intent, to stir up racist violence, or reflexive, arising from his innermost sentiments. I leave it to others to judge which is worse, and what either tells us about the malignancy at the center of global power.
With that qualification, there is no inconsistency. Both the claim that America is the greatest country in the world, in his special sense, and his call for domination, follow from his guiding doctrine: ME!

A direct corollary to the doctrine is that he must satisfy the demands of extreme wealth and corporate power, which tolerate his antics only insofar as he serves their interests abjectly, as he does with admirable consistency in his legislative programs and executive decisions, such as the recent Environmental Protection Agency decision to increase air pollution “in the midst of an unprecedented respiratory pandemic,” risking tens of thousands of deaths, disproportionately Black, the business press reports, but increasing wealth for those who matter.

The success of his tactics was revealed clearly at the January extravaganza at the Davos ski resort, where the masters of the universe, as they are called, meet annually to cavort and congratulate one another. This year’s meeting departed from the norm. There was visible concern about “reputational risk” — recognition that the peasants are coming with their pitchforks. Therefore, there were solemn declarations that, We realize we’ve made mistakes, but we are changing, you can put your faith in us, we will become “soulful corporations,” to borrow the phrase used in accolades to corporate America in the ‘50s.

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Chomsky: COVID-19 Has Exposed The US Under Trump As A “Failed State”

Noam Chomsky

The label “failed state” has started to fit the U.S. like a glove as the COVID-19 national health crisis continues to reveal the structural flaws and weaknesses of the United States, argues worldrenowned public intellectual Noam Chomsky in this exclusive interview for Truthout. Meanwhile, the Trump administration continues to exact a high price in human lives due to its caricaturish but highly dangerousresponse to the crisis. In the interview that follows, Chomsky also analyzes what’s behind Trump’s encouragement of the “anti-lockdown” protests, discusses the right-wing determination to destroy the U.S.Postal Service, and lays out his views on the electorallesser of two evils” principle.

C.J. Polychroniou: Noam, it is widely accepted by now that the U.S. coronavirus response not only was delayed, but remains mired in contradictions as Trump battles with scientists over policy. Moreover, the country as a whole was shown to be completely unprepared for a major health crisis. Are we talking here not simply of an incompetent administration but also of a failed state?

Noam Chomsky: Fifteen years ago, I wrote a book called Failed States, a common locution in the day, referring to states that are incapable of meeting the needs of citizens, in the most important case because of deep policy choices, and are a danger not only to their own citizens but the world. The prime example was the United States. Extensive evidence was reviewed. That’s not of course the intended use of the phrase in the doctrinal system, just as “rogue state” means some enemy, not ourselves, the prime example.

I still stand by that judgment, which was not mine alone. A few years later, a Gallup/WIN international poll found that the U.S. is regarded as the greatest threat to world peace, no one else even close. And the severe threats of government policy to the domestic population, already quite apparent when the book appeared, became much clearer a year later when the housing bubble burst and the financial crisis ensued — along with Obama’s response: bail out the perpetrators, who became richer and more powerful than before, and forget about the congressional legislation that called for some help to the many who had lost their homes in corporate scams facilitated by the Clinton-Rubin-Summers deregulation extravaganza, extending the neoliberal assault on the population that took off under Reagan.

That’s a large part of the background for what finally brought us the Trump malignancy — which may, quite literally, doom human society on Earth. We’ve discussed elsewhere why this is no exaggeration. I hope that the basic facts and their dread import are well understood, and won’t review them here.

Trump has indeed hit America with a hammer blow — and much of the world as well, a matter we should not overlook. Just keeping to the current COVID-19 crisis, it is remarkable to see how little attention has been given to his sadistic assault against poor and suffering people around the world in pursuit of his goal of enhancing his electoral prospects.

There has been some attention to his extending his vicious attacks against refugees fleeing from misery and oppression, appealing to a deluded voter base that has been led to believe that refugees are the source of their suffering under the programs to which Trump is passionately committed.

But there is hardly a word about his attack against poor people in Africa, where unknown numbers will die thanks to his defunding of the World Health Organization (WHO), which has been protecting them from a wide range of diseases, now this new plague. Or about Palestinians in the occupied territories, victims of Israel’s racist contempt for their health and other basic needs, amplified by Trump’s defunding of their meager health, educational and support systems generally because — as he explained — they weren’t treating him with enough respect while he’s smashing them in the face.

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Noam Chomsky & Robert Pollin: To Heal From COVID-19, We Must Imagine A Different World

Prof.dr. Robert Pollin

The coronavirus disease (COVID-19) caught the world unprepared, and the economic, social and political consequences of the pandemic are expected to be dramatic, in spite of recent pledges by leaders of the Group of 20 (G20) major economies to inject $5 trillion into the global economy in order to spur economic recovery.
But what lessons can we learn from this pandemic? Will the coronavirus crisis lead to a new way of organizing society — one that conceives of a social and political order where profits are not above people?
In this exclusive interview with Truthout, public intellectual Noam Chomsky and economist Robert Pollin tackle these questions.

Noam Chomsky

C. J. Polychroniou: Noam, what are some of the deeper lessons we can draw from the global health crisis caused by coronavirus?

Noam Chomsky: Pandemics have been predicted by scientists for a long time, particularly since the 2003 SARS pandemic, which was caused by a coronavirus similar to COVID-19. They also predict that there will be further and probably worse pandemics. If we hope to prevent the next ones, we should therefore ask how this happened, and change what went wrong. The lessons arise at many levels, from the roots of the catastrophe to issues specific to particular countries. I’ll focus on the U.S., though that’s misleading since it is at the bottom of the barrel in competence of response to the crisis.

The basic factors are clear enough. The damage was rooted in a colossal market failure, exacerbated by the capitalism of the neoliberal era. There are particularities in the U.S., ranging from its disastrous health system and weak social justice ranking — near the bottom of the OECD — to the wrecking ball that has taken over the federal government.

The virus responsible for SARS was quickly identified. Vaccines were developed, but were not carried through the testing phase. Drug companies showed little interest: They respond to market signals, and there’s little profit in devoting resources to staving off some anticipated catastrophe. The general failure is illustrated dramatically by the most severe immediate problem: lack of ventilators, a lethal failure, forcing doctors and nurses to make the agonizing decision of who to kill.

The Obama administration had recognized the potential problem. It ordered high-quality low-cost ventilators from a small company that was then bought by a large corporation, Covidien, which shelved the project, apparently because the products might compete with its own high-cost ventilators. It then informed the government that it wanted to cancel the contract because it was not profitable enough.

So far, normal capitalist logic. But at that point the neoliberal pathology delivered another hammer blow. The government could have stepped in, but that’s barred by the reigning doctrine pronounced by Ronald Reagan: Government is the problem, not the solution. So nothing could be done.

We should pause for a moment to consider the meaning of the formula. In practice, it means that government is not the solution when the welfare of the population is at stake, but it very definitely is the solution for the problems of private wealth and corporate power. The record is ample under Reagan and since, and there should be no need to review it. The mantra “Government bad” is similar to the vaunted “free market” — easily skewed to accommodate exorbitant claims of capital.

Neoliberal doctrines entered for the private sector too. The business model requires “efficiency,” meaning maximal profit, consequences be damned. For the privatized health system, it means no spare capacity: just enough to get by in normal circumstances, and even then, bare bones, with severe cost to patients but a good balance sheet (and rich rewards for management). When something unexpected happens, tough luck.

These standard business principles have plenty of effects throughout the economy. The most severe of these concern the climate crisis, which overshadows the current virus crisis in its import. Fossil fuel corporations are in business to maximize profits, not to allow human society to survive, a matter of indifference. They are constantly seeking new oil fields to exploit. They do not waste resources on sustainable energy and dismantle profitable sustainable energy projects because they can make more money by accelerating mass destruction.

The White House, in the hands of an extraordinary collection of gangsters, pours fuel on the fire by its dedication to maximizing fossil fuel use and dismantling regulations that hinder the race to the abyss in which they proudly take the lead.

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