America’s second civil war? It’s already begun
If Trump is elected, he’ll make it worse
MAY 13
Friends,
Despite the popularity of the recent movie “Civil War,” we’re not on the verge of a second one. But we are separating into so-called “red” and “blue.” And if Trump is reelected president, he’ll hasten the separation.
Since the Supreme Court’s decision to reverse Roe v. Wade left the issue of abortion to the states, one out of three women of childbearing age now lives in a state that makes it nearly impossible to get an abortion.
And while red states are making it harder than ever to get abortions, they’re making it easier than ever to buy guns.
Red states are also banning diversity, equity, and inclusion (DEI) initiatives in education. Florida’s Board of Education recently prohibited public colleges from using state and federal funds for DEI. Texas Governor Greg Abbott has signed a law to require that all state-funded colleges and universities close their DEI offices.
Red states are suppressing votes. In Florida and Texas, teams of “election police” have been created to crack down on the rare crime of voter fraud, another fallout from Trump’s big lie.
They’re banning the teaching of America’s history of racism. They’re requiring transgender students to use bathrooms and join sports teams that reflect their sex at birth.
They’re making it harder to protest. More difficult to qualify for unemployment benefits and other forms of public assistance. Harder than ever to form labor unions.
They’re even passing “bounty” laws — enforced not by governments but by rewards to private citizens for filing lawsuits — on issues ranging from classroom speech to abortion to vaccination.
Blue states are moving in the opposite direction. Several, including Colorado and Vermont, are codifying a right to abortion. Some are helping cover abortion expenses for out-of-staters.
When Idaho proposed a ban on abortion that empowers relatives to sue anyone who helps terminate a pregnancy after six weeks, nearby Oregonapproved $15 million to help cover the abortion expenses of patients from other states.
Maryland and Washington have expanded access and legal protections to out-of-state abortion patients. California has expanded access to abortion and protected abortion providers from out-of-state legal action.
After the governor of Texas ordered state agencies to investigate parents for child abuse if they provide certain medical treatments to their transgender children, California enacted a law making the state a refuge for transgender youths and their families.
Blue states are also coordinating more of their policies. During the pandemic, blue states joined together on policies that red states rejected — such as purchasing agreements for personal protective equipment, strategies for reopening businesses as Covid subsided, even on travel from other states with high levels of Covid.
But as blue and red states separate, what will happen to the poor in red states, disproportionately people of color?
“States’ rights” has always been a cover for racial discrimination and segregation. The poor — both white and people of color — are already especially burdened by anti-abortion legislation because they can’t afford travel to a blue state to get an abortion.
They’re also hurt by the failure of red states to expand Medicaid eligibility under the Affordable Care Act, by red state de facto segregation in public schools, and by red state measures to suppress votes.
One answer is for Democratic administrations and congresses in Washington to prioritize the needs of the red state poor and make extra efforts to protect the civil and political rights of people of color in red states. Yet the failure of the Senate to muster enough votes to pass the Freedom to Vote Act, let alone revive the Voting Rights Act, suggests how difficult this will be.
Blue states could spend additional resources on the needs of red state residents, such as Oregon is now doing for people from outside Oregon who seek abortions. And prohibit state funds from being spent in any state that bans abortions or discriminates on the basis of race, ethnicity, or gender.
California already bars anyone on a state payroll (including yours truly, who teaches at Berkeley) from getting reimbursed for travel to states that discriminate against LGBTQ+ people.
Where will all this end?
If Trump is elected this November, the separation will become even sharper. When he was president last time, Trump acted as if he was president only of the people who vote for him — overwhelmingly from red states — and not as the president of all of America.
Recall that during his presidency, he supported legislation that hurt voters in blue states — such as his tax law that stopped deductions of state and local taxes from federal income taxes.
More than 4 in 10 voters believe that a second civil war is likely within the next five years, according to a Rasmussen Reports poll conducted April 21-23.
Red zip codes are getting redder and blue zip codes, bluer. Of the nation’s total 3,143 counties, the number of super landslide counties — where a presidential candidate won at least 80 percent of the vote — jumped from 6 percent in 2004 to 22 percent in 2020.
Surveys show Americans find it increasingly important to live around people who share their political values. Animosity toward those in the opposing party is higher than at any time in living memory. Forty-two percent of registered voters believe Americans in the other party are “downright evil.”
Almost 40 percent would be upset at the prospect of their child marrying someone from the opposite party. Even before the 2020 election, when asked if violence would be justified if the other party won the election, 18.3 percentof Democrats and 13.8 percent of Republicans responded in the affirmative.
We are becoming two Americas — one largely urban, racially and ethnically diverse, and young. The other, largely rural or exurban, white and older.
But rather than civil war, I see a gradual, continuous separation — analogous to unhappily married people who don’t want to go through the trauma of a formal divorce.
America will still be America. But it is fast becoming two versions of America. The open question is the same as faced by couples who separate: Will the two remain civil toward each other?
THE ORIGIN OF DEBT
-By Robert Reich
Friends,
The dire warnings of fiscal hawks are once again darkening the skies of official Washington, demanding that the $31 trillion federal debt be reduced and government spending curtailed (thereby giving cover to Republican efforts to hold America hostage by refusing to raise the debt ceiling).
It’s always the same when Republicans take over a chamber of Congress or the presidency. Horrors! The debt is out of control! Federal spending must be cut!
Not only is the story false, but it leaves out the bigger and more important story behind today’s federal debt: the switch by America’s wealthy over the last half century from paying taxes to the government to lending the government money.
This back story needs to be told if Americans are to understand what’s really happened and what needs to be done about it. Republicans won’t tell it, so Democrats (starting with Joe Biden) must.
A half century ago, American’s wealthy financed the federal government mainly through their tax payments. Tax rates on the wealthy were high: Under Republican President Dwight Eisenhower, they were over 90 percent. Even after all tax deductions, the wealthy typically paid half of their incomes in taxes.
Since then — courtesy of Ronald Reagan, George W. Bush, and Donald Trump — the effective tax rate on wealthy Americans has plummeted. Even as they’ve accumulated unprecedented wealth, today’s rich are now paying a lower tax rate than middle-class Americans. (The 400 richest American families paid a tax rate of just 3.4 percent between 2014 and 2018, while the rest of us paid an average tax rate of 13.3 percent.)
One of the biggest reasons the federal debt has exploded is that tax cuts on wealthier Americans have reduced government revenue.
Meanwhile, America’s wealthy are financing America’s exploding debt by lending the federal government money, for which the government pays them interest.
As the federal debt continues to mount, those interest payments are ballooning — hitting a record $475 billion in the last fiscal next year (which ran through September). The Congressional Budget Office predicts that interest payments on the federal debt will reach 3.3 percent of the GDP by 2032 and 7.2 percent by 2052.
The biggest recipients of these interest payments are not foreigners but wealthy Americans who park their savings in treasury bonds held by mutual funds, hedge funds, pension funds, banks, insurance companies, personal trusts, and estates.
Hence the half-century switch: The wealthy used to pay higher taxes to the government. Now the government pays the wealthy interest on their loans to finance a swelling debt that’s been caused largely by lower taxes on the wealthy.
This means that a growing portion of your taxes are going to the wealthy in the form of interest payments, rather than paying for government services everyone needs.
So, the real problem isn’t America’s growing federal budget deficit. It’s the decline in tax revenue from America’s wealthy combined with growing interest payments to them.
Both are worsening America’s already horrific inequalities of income and wealth.
What should be done? Reduce the debt by raising taxes on the wealthy.
ROBERT REICH
The stock market is down but don’t cry for America’s mega-billionaires. A record share of the nation’s wealth remains in their hands. They’re also paying a lower tax rate than the average American.
So how do they justify their wealth and their low tax rates? By using three myths. All are utter rubbish.
1. The first is trickle-down economics. They (and their apologists) claim that their wealth trickles down to everyone else as they invest it and create jobs.
Really? For over forty years, as wealth at the top has soared, almost nothing has trickled down. Adjusted for inflation, the median wage today is barely higher than it was four decades ago. Trump provided a giant tax cut to the wealthiest Americans, promising it would generate $4,000 increased income for everyone else. Did you receive it?
In reality, the super-wealthy don’t create jobs or raise wages. Jobs are created when average working people earn enough money to buy all the goods and services they produce, forcing companies to hire more people and pay them higher wages.
2. The second myth is the “free market.” The ultra-rich claim they’re being rewarded by the impersonal market for creating and doing what people are willing to pay them for. The wages of other Americans have stagnated, they say, because most Americans are worth less in the market now that new technologies and globalization have made their jobs redundant.
Baloney. Even if they’re being rewarded, there’s no reason why the “free market’ would reward vast multiples of what the rich were rewarded decades ago. The market can induce great feats of invention and entrepreneurialism with lures of hundreds of thousands or even millions of dollars — not billions. And as to the rest of us succumbing to labor-replacing globalization and labor-saving technologies, no other advanced nation has nearly the degree of inequality found in the United States, yet all these nations have been exposed to the same forces of globalization and technological change.
In reality, the ultra-wealthy have rigged the so-called “free market” in America for their own benefit.
Billionaires’ campaign contributions have soared from a relatively modest $31 million in the 2010 elections to $1.2 billion in the most recent presidential cycle — a nearly 40-fold increase. What have they got for their money? Tax cuts, freedom to bash unions and monopolize markets, and government bailouts. Their pockets have been further lined by privatization and deregulation.
3. The third myth is that they’re superior human beings — rugged individuals who “did it on their own” and therefore deserve their billions.
Bupkis. Six of the 10 wealthiest Americans alive today are heirs to fortunes passed on to them by wealthy ancestors.
Others had the advantages that come with wealthy parents. Jeff Bezos’ garage-based start was funded by a quarter-million dollar investment from his parents. Bill Gates’s mother used her business connections to help land a software deal with IBM that made Microsoft.
Elon Musk came from a family that reportedly owned shares of an emerald mine in Southern Africa. (By the way, when I mentioned this in a recent video, Elon went nuts — tweeting that “You [sic] both an idiot and a liar.” Hmmm. Did I touch a nerve, Elon?)
@RBReich You both an idiot and a liar
September 21st 2022
4,969 Retweets55,395 Likes
Don’t fall for these three myths. Trickle-down economics is a cruel joke. The so-called “free market” has been distorted by huge campaign contributions from the ultra-rich. Don’t lionize the ultra-rich as superior “self-made” human beings who deserve their billions. They were lucky and had connections.
In reality, there’s no justification for today’s extraordinary concentration of wealth at the very top. It’s distorting our politics, rigging our markets, and granting unprecedented power to a handful of people.
The last time America faced anything comparable was at the start of the 20th century. In 1910, former President Theodore Roosevelt warned that “a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power” could destroy American democracy.
Roosevelt’s answer was to tax wealth. The estate tax was enacted in 1916, and the capital gains tax in 1922. Since that time, both have eroded. As the rich have accumulated greater wealth, they have also amassed more political power — and have used that political power to reduce their taxes.
Years later, Franklin D. Roosevelt saw the 1929 crash not only as a financial crisis but as an occasion to renegotiate the relationship between capitalism and democracy. Accepting renomination in 1936, he spoke of the need to redeem American democracy from the despotism of concentrated economic power.
“Through new uses of corporations, banks and securities,” he said, an “industrial dictatorship” now “reached out for control over Government itself. … [T]he political equality we once had won was meaningless in the face of economic inequality. A small group had concentrated into their own hands an almost complete control over other people's property, other people's money, other people's labor—other people's lives… Against economic tyranny such as this, the American citizen could appeal only to the organized power of Government. The collapse of 1929 showed up the despotism for what it was. The election of 1932 was the people's mandate to end it.”
FDR gave workers the power to organize into labor unions, the 40-hour workweek (with time-and-a-half for overtime), Social Security, unemployment insurance, and workers’ compensation for injuries. He raised taxes on the top.
But since then, these reforms have also eroded.
The two Roosevelts understood something about the American economy and the ultra-rich that has now reemerged, even more extreme and more dangerous. We must understand it, too — and act.
Who will bear the pain?
The war on inflation is about to get ugly
Here is writing from Robert Reich a very insightful political analyst. To see more of his commentary click below
Robert ReichSep 13
Get ready. The war on inflation is about to get ugly.
Today’s consumer price index report shows annual inflation still roaring at 8.3%. Even without food and energy included, core inflation rose back above six percent year-on-year, according to the U.S. Bureau of Labor Statistics.
This means the Fed will almost certainly raise interest rates by another three-quarter of a point when it meets next week. And then probably keep raising rates.
How much economic "pain" -- as Fed Chair Jerome Powell recently called it -- will be needed to control the worst breakout of U.S. inflation since the 1980s?
Researchers at the International Monetary fund are now saying that the unemployment rate may need to reach as high as 7.5% -- double its current level -- to end the country's outbreak of high inflation. This would entail job losses of about 6 million people.
Who will bear this pain? Not corporate executives. Not Wall Street. Not big investors. Not the upper-middle class.
The draftees into the war on inflation will be — already are — lower-wage workers. As the economy cools due to interest rate hikes, they will be first to be fired as the economy plunges and the last to be hired.
The Fed is obsessing about a “wage-price” spiral — wage gains pushing up prices — when it should be worried about a profit-price spiral.
Wages are going nowhere.
But profits have been soaring.
In the second quarter this year U.S. companies raked in profits that were the highest on record or close to levels not seen in over half a century. As a share of GDP, U.S. corporate profits in the second quarter rose to 12.25%, their highest levels since 1950.
So there you have it: Profits up. Wages down. So what’s pushing up prices? Profits.
Wages are lagging behind inflation. Most workers’ paychecks are shrinking, in terms of purchasing power.
Yet the Fed isn’t paying attention. Minutes of the Fed’s July 26-27 policy meeting reveal seven mentions of ‘wage’ or ‘wages’, 17 of ‘labor market’, eight of ‘job’ or ‘jobs’, and not one of ‘profit’.
Transcripts of Fed chief Jerome Powell’s press conference on July 27 show nine references to ‘wage’ or ‘wages’, 38 mentions of ‘labor market’, 15 mentions of ‘job’ or ‘jobs’, but not a single mention of ‘profit’, ‘corporate’, ‘company’, or ‘companies’.
Hello?
Instead of raising interest rates and slowing the economy toward (if not into) a recession, Congress and the Biden administration should be taking aim at corporate profits.
The Biden administration did pass a 1% tax on stock buybacks in the recently enacted Inflation Reduction Act, and a minimum corporate tax.
But these measures don’t go nearly far enough.
A windfall profits tax, price controls, higher taxes on corporations and the wealthy, and bolder antitrust enforcement are necessary.
Otherwise, the onus for controlling inflation falls entirely on the Fed.
The Fed will be using the blunt instrument of job-sapping and recession-seeding higher interest rates because interest-rate hikes are the only tools in the Fed’s tool kit.
Yet they put most of the burden of fighting inflation on average working people and the poor.
Mark my words. The war on inflation is about to get ugly – especially if the people who are drafted into it are mainly average working people and the working poor rather than top corporate executives and major investors.