Bob Hennelly

Biden is inheriting a failed state

In the waning days of the Trump presidency, there's a steady drumbeat coming from the corporate news media and its pundits: the suggestion that, come Jan. 21, everything will suddenly and magically return to "normal."

Never mind the mounting COVID death toll, which on several days this month has spiked above 3,000 a day.

The projection of normalcy is essential to preserving the existing economic order, to organize our self-image as the noblest of nations built on the wisdom of great white men, the landed gentry, who — with the exception of their reliance on slavery — were divinely inspired when they wrote the Constitution.

After four years with Donald Trump at the helm, one would have to be a comatose ancestor worshipper not to see how Trump exploited the shaky 18th-century architecture of patriotism for his own family's enrichment.

A man who failed to win the majority of the popular vote in 2016 had carte blanche to turn state against state in a COVID civil war that produced a body count that may end up rivaling that of the Rwandan civil war of the 1990s, when actual weapons were used to kill 800,000.

The Trumpian internecine conflict tore the nation asunder at the granular level. Millions of once close-knit extended families have become alienated from each other over arguments as to the efficacy of wearing a mask or socially distancing.

And the legitimate public health remedy of social distancing and limiting in-person communication only encouraged the stratification of our society that was already well underway, thanks to late-stage vulture capitalism and its acceleration of wealth concentration.

Trump, by pitting red against blue, robbed the entire county of its most essential defense: cohesion. But Trump was not happy with that alone. He dug deeper, like the sadist he is, fanning the flames of racism and xenophobia that existed in volcanic fissures just below the surface of our nation. He hoped to ride that lava flow of ash and burning cinder to realize his ambition.

But to finger Trump alone for our miserable situation fails to not fully grasp the awful truth that's been decades in the making. That true narrative reads more like science fiction than like the accurate, if bleak, recounting of our post-9/11 history it is.

As the world's wealthiest nation, we invested vast sums in the deadliest and most ecologically destructive weapons known to man. We cut public health spending and closed hospitals in rural and urban areas where the poor lived.

Life expectancy declined in the U.S. three years in a row, just as it did around the time of the 1918 Spanish flu epidemic. Two decades into the 21st century, millions of American households either had no health care insurance or were underinsured. Thus, well before the onset of the pandemic, we had a significant population of Americans beset with chronic disease and with inadequate medical care. Even though we also have the most expensive health care system in the world.

In pre-COVID America, the vast wealth inequality we were seeing rivaled what we had experienced during the Great Depression. Now, in the jaws of this killer virus, the daily experience gap between those who are privileged enough to work from home, and those forced by economics to go out in the world to earn their daily bread, harkens back to the era of feudalism: the nobility safe in the castle, while the "essential" serfs must face bandits, wolves and weather outside the walls.

"There are the college-educated knowledge-based workers, who can continue to work insulated in their homes, who are served by the essential workers in transit and retail sectors who have to be out in the world to serve them," observed Dr. Harriet Fraad, a New York psychotherapist who focuses on the intersection of family life and the economy. "This means during this pandemic that it's the poor and working class, made up primarily of women and people of color, who are more likely to die."

In his victory speech, President-elect Joe Biden pledged "to be a president who seeks not to divide but unify" and who will seek to "heal and restore the American soul."

That presumes America had a soul before the pandemic.

A fully honest examination of the struggles of tens of millions of American households before COVID, and how they have fared during the pandemic, suggests we have yet to find it.

Our worst pre-existing condition: Big Pharma

Before COVID, the headlines you might read about the pharmaceutical industry tended towards corporate malfeasance — violations of the Foreign Practices Corruption Act, insider trading, abusive mass marketing of opioids or predatory pricing, that sort of thing. Few think of such a notoriously manipulative industry as heralding medical breakthroughs.

But with a quarter of a million American deaths and another 12 million COVID cases, we are being told by the corporate news media these same companies are going to save life on the planet as we once knew it pre-pandemic.

Several months of worsening news about the pandemic, including decimating personal tragedies and loss on a scale not seen since the beginning of the last century, has reduced us to a childlike state looking for our parents that may already be dead.

Lost in transit

The mainstream news media agrees that Donald Trump's attempts to derail the peaceful transition of power is reckless. Yet they have failed to critically examine his decision to have our nation defer to the profit-driven pharma sector the efforts to beat COVID. Indeed, the research to create a vaccine is almost entirely publicly-funded, though the effort has entrusted to the private sector with little oversight.

As Michael Hiltzik recently wrote in his Los Angeles Times op-ed entitled "The Colossal Problem of Publicly Funded Vaccines in Private Hands," the Trump junta's blank check is going to an industry that has long "profited from billions of dollars in government scientific research without returning anything to taxpayers."

The U.S. Treasury's largesse towards the multinational pharma profiteers includes not merely billions of dollars in taxpayer funded-research for them to profit off of, but also guaranteed orders for the millions of doses of vaccine from the government.

Hiltzik quotes Peter Maybarduk, director of the Access to Medicines Program at the non-profit Public Citizen, who suggests the US has "considerably slowed the global timetable" in the COVID fight "by bestowing billions in grants to companies "and asking them to develop manufacturing arrangements that are in their interest rather than pooling resources saying we're going to teach the world how to make these vaccines and using all the available manufacturing capacity."

There's a tragic irony that we are relying so heavily on an industry that's a pillar of our for-profit health care system — one that rations care and feeds off of scarcity and disease — to deliver us from a pandemic.

The multinational pharmaceutical industry is the foundation of the American health care system that rations medical care based on the ability to pay. It has been its own kind of killer virus, and the industry permitted the proliferation of chronic diseases in the ranks of the poor and working classes — in turn serving as a form of race- and class-based social control, one that is increasingly revealing itself with each day's new COVID body count.

As Reverend William Barber pointed out during the Democratic primary campaign of 2020, there was, long before COVID, a raging pandemic that fed off of poverty playing out daily. This pandemic lived below the corporate news media radar, and prematurely claimed the lives of 250,000 Americans every year.

Big pharma, and our winner-take-all economic system, is implicated in those deaths. Back in 2018, a report by the Harvard T.H. Chan School of Public Health, the Harvard Global Health Institute, and the London School of Economics found that the US paid twice as much as other high-income countries for health care only to get poorer population health outcomes.

"The main drivers of higher health care spending in the U.S. are generally high prices — for salaries of physicians and nurses, pharmaceuticals, medical devices, and administration," the report's researchers say.

Making a killing

It's been the pharma companies, along with big tech firms like Amazon and Google, that have perfected the legal three-card-monte of profit-shifting to offshore jurisdiction hundreds of billions of dollars annually that starves public health care systems globally.

For decades, economists and public interest tax experts have flagged this accelerating "race to the bottom," where multinationals and the holders of vast personal fortunes reduce or eliminate entirely their tax bill by pitting the nations of the world against each other.

This continued beggaring of local, state and national governments by the wealthiest, including pharma companies, comes as our public health sector crumbles under the weight of the resource scarcity that resulted from generations of this hoarding and hiding of profits often generated by taxpayer-funded research.

A nurse's pay a second

Last week, thanks to the research generated by the international Tax Justice Network (TJN), we were able to quantify the scale of the impact of how pharmaceutical (and other) corporations have rigged tax codes to their advantage across the world.

TJN reports that even as the world's "pandemic-fatigued countries… struggle to cope with second and third waves of coronavirus," they have been losing "over $427 billion in tax each year to international corporate tax abuse and private tax evasion, costing countries altogether the equivalent of nearly 34 million nurses' annual salaries every year – or one nurse's annual salary every second."

"Pharma companies like Pfizer, along with software and internet companies, have been the major players in global tax dodging and designing the new mechanisms since the later 1990s that move lots of profits to low tax jurisdictions in the form of untaxed royalties that they pay themselves to offshore companies that they own," explains James Henry, a New York based economist and lawyer who is a senior advisor to TJN.

There are surely tens of thousands of committed scientists and technicians working at "warp speed" to develop a safe and effective vaccine out of a sense of moral duty. But we would be foolish to forget that big pharma itself is fueled by a maniacal pursuit of profits. And as an industry, it has shown the same kind of contempt for the law as the current occupant of the White House.

Above and beyond the law

Like Trump, Big Pharma are ruthless and unrepentant. Yet, because of the scale of the money involved in their crimes, our legal system actually shields them from personal criminal prosecution — as it did with the Wall Street banks in the Great Heist of 2008.

As it turns out, the most important duty for our Department of Justice, no matter which party controls the White House, appears to be to twist the law to preserve capital and keep great fortunes intact, while feigning to prosecute the corporate shell in the public interest.

This is critical, because today's federal prosecutors and regulators are all-too-often the farm team for tomorrow's over-compensated captains of industry.

Take Purdue Pharma, whose predatory marketing of the highly addictive opioid Oxycontin helped set off double-digit percentage spikes in drug overdose deaths that have killed more than 400,000 Americans since 1999.

In 2007, Purdue Pharma entered into a Department of Justice deal that required they plead guilty to a felony and pay a $600 million dollar fine for misleading and defrauding the public, including physicians, about their signature drug OxyContin.

Yet, some members of the bulletproof Sackler family, some of whom were heirs of the Purdue fortune, were allowed to transfer $10 billion out of their accounts between 2008 and 2018, according to an audit that was released while Purdue sought bankruptcy protection in September.

Last month, serial offender Purdue Pharma agreed to plead guilty to three federal crimes including producing highly addictive drugs "without legitimate medical purpose" in a deal with the Trump/Barr Department of Justice that was denounced as a "failure" by Massachusetts Attorney General Maura Healey.

"DOJ failed," tweeted Healey. "Justice in this case requires exposing the perpetrators accountable, not rushing a settlement to beat an election. I am not done with Purdue and the Sacklers, and I will never sell out the families who have been calling for justice for so long."

Walking wounded

Even before COVID, 140 million Americans struggled week to week trying to make ends meet, which they often did by cutting health care corners.

For three years before COVID hit, America's life expectancy was on the decline. How many members of Congress sounded the alarm? The last time such a demographic event happened was in the years leading up to the First World War and the Spanish Flu epidemic, when 675,000 Americans, and 50 million people worldwide, died.

Currently, with more than 250,000 deaths here in the U.S. and 1.2 million globally, there seems to be something truly exceptional about America's bout with the COVID scourge.

In the post-election interregnum, the prognosis is bleak. The U.S Treasury is sending out billions to Big Pharma, while rushing to close off access to Federal Reserve borrowing for small businesses and local governments. Unemployment benefits for 12 million Americans sidelined by COVID are set to run out the day after Christmas.

Just as individuals may have preexisting conditions that make them more susceptible to COVID-19, so does our economic system, which lets tens of millions of families teeter on the edge so as to provide the cheap labor on which billionaires' fortunes rely.

There can be no honest critique of how we got here without noting "the gross failure of the U.S. private, profit-driven, capitalist medical-industrial complex (four industries: doctors, drug and device makers, and medical insurance firms)" who "decided not to prepare for a serious virus problem," writes economist Richard Wolff in his latest book "The Sickness is the System."

Our only enduring remedy is radical change.

A Wall Street tax that could lift many out of poverty already exists. It's just not being collected

Imagine if there were a tiny tax that Wall Street traders were required to pay on every stock trade. Enacting such a thing might sound like a long and difficult political fight against a moneyed caste. Yet astonishingly, it turns out that it already exists in the state of New York — it's just not being collected. To the contrary: Wall Street is being refunded the tax money.

That's particularly ironic right now, when many economists and pundits have astutely noted that Wall Street bankers and investors are making out quite well while the rest of us aren't. The fortunes of billionaires in the United States have increased precipitously in the past eight months, while wages have stagnated for the vast majority and poverty has risen.

The City of New York, the largest and densest in the state, has a particular concentration of poverty that could be alleviated if this peculiar tax rebate were merely reversed. Given that federal relief from the Trump administration has been scant, ending the tax rebate seems like shrewd politics. And progressives are starting to bring attention to it.

The Stock Transfer Tax and its discontents

Since 1981, the State of New York has been rebating back to Wall Street billions of dollars from the state's Stock Transfer Tax, first enacted by Albany Republicans in 1905 who needed to close a budget gap in an era when trust-busting was in the air.

Assemblyman Phil Steck has been leading the charge to stop sending the revenue back to Wall Street from the minuscule transaction tax. Such an act could net the state up to $19 billion a year.

While $19 billion is well shy of the $50 billion in pandemic aid that New York State, New York City, and the Metropolitan Transportation Authority require, progressives say it's a down payment on a long overdue realignment.

"The tax is in sum and substance one quarter of one percent, it's nothing . . . and according to data from Tax and Finance it was $1.6 billion in June alone," Mr. Steck said during a phone interview. "The present circumstances demand it . . .Teachers are being laid off . . .grant-based programs have been withheld. Upstate some of our education funding is all grant-based."

Steck continued: "In the last ten years, we have given up $138 billion. It is the classic race to the bottom. The whole public sector has been starved. It all starts with Reagan and the anti-tax thing and the idea that government is bloated yet huge private corporations have as much bureaucracy as government."

So, just what are the lost opportunity costs of forking over that much tax revenue back to the very same sector of the economy that's been gorging itself for decades even as so many were struggling?

"Most of our great water and sewer infrastructure was built with federal aid," explained Steck. "But as we kept spending more and more on the military that aid stopped and at that point the states had a choice; either the states raised taxes or let it go to hell. What did they do? They let it go to hell, and that's why are infrastructure ratings are so poor in terms of the quality of roads and bridges."

The case for ending the rebating of the stock transaction tax back to Wall Street got much stronger with the October 22 report for New York State Comptroller Tom DiNapoli, which noted that the "securities industry saw its pretax profits reach $27.6 billion in the first six months of 2020, an 82 percent increase over the same period last year."

James Henry is a New York based economist and lawyer who is a senior advisor with the international Tax Justice Network. Henry says that if the rebate ends, the stock transfer tax would greatly help abate the poverty caused by the pandemic.

"New York has a chance to set an example for the world and that is a very painless tax that is highly concentrated a very, very wealthy people and institutions that can be used for many ongoing needs," Henry told Salon. "Now, we have an emergency that is affecting everybody and we are acutely aware of the fiscal crisis — and that I think is going to make it finally possible to get lots of different jurisdictions to work together and to implement such a thing — but even then it is not a done deal because Wall Street is fiercely opposed to setting this precedent."

Henry said such taxes on financial transactions are very common around the world. "Two weeks ago, Spain implemented a stock transfer tax. The EU [European Union] is about to adopt a tax between 0.1 and 0.2 percent. They are debating this on all European exchanges. Even Kenya has adopted a financial transaction tax…and they are raising more money than they expected."

If not now, when?

"At no other time in recent history would there be less of a basis for opposition to a stock transfer tax when the mass of the population, so called Main Street, is in such deep economic difficulty with very little prospect of getting out of it soon and a major likelihood it is about to get worse," says Richard D. Wolff, a professor emeritus of Economics at the University of Massachusetts Amherst.

Wolff said he first encountered the concept of the stock transfer tax when he was a student getting his doctorate in economics and took a class from James Tobin who championed the concept and went on to win the Nobel Memorial Prize in Economics.

"In Europe it is stilled called the Tobin Tax," said Wolff. "He [James Tobin] was a Kennedy liberal, no radical, not by a long shot. A smidge to the left of Biden."

Today, opponents of ending the rebate raise the specter that Wall Street firms will leave New York.

Back in March of 1905, before the tax was enacted, the New York Times raised the same concern, warning the levy would send the captains of high finance fleeing for Philadelphia and Chicago leaving New York to the fate of "Medieval cities, which fell out of the course of modern commerce."

By July 1905, with the Stock Transfer Tax on the books, the Times was singing a much different tune. Then, they observed that it had "no traceable" impact on Wall Street and was actually working. "It is sad to recall the prophecies thus falsified," opined the Times.

The London Stock Exchange has had such a stock transfer tax since 1694, despite perennial complaints from the investor class.

Stock transfer boosters say the revenue realized from it is only one of many benefits.

"It does discourage day traders," Steck told the Corporate Crime Reporter. "And day trading is not considered beneficial for economic reasons. It's more like gambling. In Hong Kong, for example, they have a financial transaction tax. And as a result, they have less of that type of frequent trading behavior than we have here in this country."

As Henry sees it, resuming the collection of the Stock Transfer Tax in New York is just one item on a tax reform agenda which needs to include addressing nationally the huge Trump-McConnell 2017 tax cut which "basically failed to tax the $2.6 trillion U.S. multinationals had accumulated offshore for 20 years."

Henry continued. "U.S. multinationals have been basically parking their intellectual property, their software, their patents in offshore havens and not paying any taxes on the royalties that they pay themselves tax free.

We're seeing an 'unprecedented loss of small businesses' — and economists fear a major crash looms

As all eyes were fixated on the story of Trump's COVID-19 infection, a number of big economic news stories passed by the public eye. That is unfortunate particularly because those stories, when viewed together, paint a devastating picture of the near-future of the American economy.

First, the Department of Labor's Bureau of Labor Statistics released a jobs report that documented just how economically destructive Trump's COVID denial strategy has been. On Oct. 2, the Bureau of Labor Statistics reported that the country's recovery momentum had slowed last month, with the nation's employers adding only 661,000 jobs — much lower than the 800,000 that Wall Street analysts had expected.

The BLS data also indicated the loss of over 200,000 government jobs, primarily in state and local education — jobs which, in pre-pandemic times, would be ramping up as primary and secondary schools begin their semesters. The September jobs profile also ironically included 34,000 temporary U.S. Census workers, who are about to be terminated as the Census wraps up.

The report tried to spin September's jobs news in a positive light, noting "notable job gains….in leisure and hospitality, in retail trade, in health care and social assistance, and in professional and business services."

There are still tens of millions of unemployed and underemployed Americans on the sidelines as the country appears to be losing the battle with COVID-19. New infections are trending up, meaning further economic fallout is inevitable. The New York Time's daily tracking graph reports there are now 25 states where "new cases are higher and staying high." That's up from 18 states last week.

For James Parrott, an economist with the New School's Center for New York City Affairs, the top line job numbers obscured more troubling indicators. "We saw the Labor Force Participation rate drop to 61.4 percent," Mr. Parrott said in a phone interview. "Over the past year the non-institutional working age population increased by a million, but four million left the work force."

Unlike the unemployment statistics, which are subject to all sorts of complicated political massaging, the labor force participation rate is simple to calculate: you are either working, looking for work, or not in the labor market.

The labor force participation rate was 63.2 percent in January 2019. During Trump's COVID-19 economic collapse it nosedived to 60.2 percent in April, then headed back up to a still-anemic 61.7 percent in August, before dropping again last month to 61.4 percent.

Meanwhile, right-wing stinginess over unemployment assistance will have a further economic ripple effect. Trump and Republican Senate Majority Leader Mitch McConnell refused to extent the supplemental $600 a week pandemic unemployment payments past July 31. Economists say the effects of that decision won't be fully felt until Christmas.

"We also see that personal income data showed a decline in household income in August because of the loss of the $600 pandemic supplemental unemployment, which will result in a decline in consumer spending that should hit leading up into the holidays," Parrott noted.

The New School economist expressed concerns the national statistics were failing to capture the "unprecedented loss of small businesses" that "we don't see in a normal recession."

A divergent economic situation is now accelerating U.S. wealth concentration on a scale not seen since the eve of the last Great Depression. As CNN reported, America's billionaires have seen their cumulative fortunes rise by $845 billion since the pandemic began.

Joseph Wilson, a labor historian and union consultant, observed that "the American pandemic recovery model is speeding down the wrong track: the Treasury Department's vault is wide open to the tune of trillions for the largest corporations, bond holders and hedge funds, while the $600 dollar per week Federal Pandemic Unemployment Compensation funds have vanished."

Wilson continues: "This will inevitably result in an even more bifurcated economy, with a full recovery for those on top, and pain, suffering, unemployment and increased poverty for the working class. Public service and front-line workers will get shafted, and the top one percent will get yachts and caviar. That's why the European recovery model, in which workers wages are maintained by governmental subsidies, will lead to a more comprehensive, sustainable and socially equitable recovery. The political economies of Europe and the United States stand in sharp contrast."

As Trump was holed up in the hospital over the weekend, negotiations continued between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin over Pelosi's last and final attempt to get some barebones economic relief to cities, counties and state governments.

But Richard Wolff, professor emeritus of economics at the University of Massachusetts–Amherst,

predicts these measures will come up short because their architects failed to appreciate just how much damage has already been done.

"The 'stimulus' plans being discussed between Pelosi and Mnuchin strikes me more installments of the 'too little too late' sort," Wolff wrote in an email. "We are living through a staggering depression unmatched for the speed and depth and extent of economic collapse, microeconomic as well as macroeconomic. Investments are being abandoned or postponed because of demand constraints, and that will slow productivity growth and, in turn, competitiveness of US corporations."

Wolff continues: "Vast sectors of the economy are not being paid and will soon enter into litigations taking years to resolve. Educations are being downgraded, to say the least, with long-run consequences that are negative on multiple levels. And all of these dimensions of the current depression argue for not only massive fiscal stimuli far larger than anything Pelosi and Mnuchin debate, but also structural transformations neither major party dares to imagine let alone discuss."

In short, neither Trump nor the Democrats seem prepared to acknowledge let alone address the depth of our economic morass.

"Chief among these are the problem of a private capitalist sector that rests on financial life-support provided by the Federal Reserve as well as the US Treasury, and the problem of a private sector governed by profit-driven employers making all enterprise decisions," reasoned Wolff.

Odds have improved that the convergence of the Trump's hospitalization, the looming election and the rising infection rate will produce a bipartisan deal to stave off economic disaster. Oct. 1 also marked the end of the federal program that paid the nation's airline industry to maintain their payrolls while passenger traffic dropped by 95 percent.

The airlines are now in the process of laying off tens of thousands, with the justification that air travel is still just 30 percent of what it was were before the pandemic hit.

John Samuelsen, president of the International Transportation Workers Union, which represents tens of thousands of airline and mass transit workers said Washington had "no choice" but to quickly pass Pelosi's slimmed-down HEROES Act.

"It is a simple equation," Mr. Samuelsen said. "The Republicans have successfully dragged their feet, hemmed and hawed and refused to bail out the American workers, small businesses, the economy, public transit systems, industries—essentially everything. They have left the American people at the mercy of the pandemic."

Samuelsen continued: "If this doesn't happen in the next several days there will be directly tens of thousands of layoffs, and that will ultimately get to hundreds of thousands of jobs when you factor in the impact on the workers in the businesses dependent on all the airports around the country. And the way the airline industry will do this is by cutting seating capacity, just like what we will see with mass transit when they will cut service" if there is not any aid from Washington.

"The nation is crying out for it and the economy is crying out for it. We have seen the disconnect between Wall Street and Main Street, but if they fail to extend the CARES Act it won't be long before this decline crashes into every aspect of daily life," Samuelsen said.

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