GAZED

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  • Are Economic Indicators Signaling a Recession?

    Investment banks are sounding the alarm on a looming recession while consumers worry about soaring inflation diminishing their purchasing power, a plummeting stock and bond market, slow GDP growth, rising interest rates, and an equity market decline. But what do actual economic indicators of recessions currently say about the likelihood of sliding into a recession? Is market volatility and inflation expected to subside? 

    Recessions are marked by downturn in economic activity, and officially declared after two consecutive quarters of negative GDP growth rates by a committee at the NBER. There are mounting worries that rising borrowing costs for consumers and businesses, could cause a sudden recession. Investors fear the slowdown in economic activity could lead this way, but what do the GDP growth rate, employment rate, inflation forecasts, interest rate changes, and yield curve actually signify?

    While the market and inflation are doing unnerving, it is unlikely that the U.S. economy will enter a recession for various reasons. The New York Federal Reserve currently forecasts a 3.7% chance of a recession within 12 months. The bad news is true — GDP growth slowed in the first quarter of 2022, rising only by 0.1% quarter-on-quarter, a downturn from the 1.2% increase in the fourth quarter of 2021. Inflation slowed last month to 8.3%, with prices at a four-decade high, and gas at an average of $4.40 per gallon. Additionally, the S&P 500 has fallen nearly 20% this year, and the Bloomberg Barclays Aggregate Bond Index has dropped 11% since its January 2021 peak. But are these indicators of a looming recession or temporary effects of the Fed’s monetary policy to reign in inflation, which helps consumers in the long-term?  

    Monetary Policy to Blame for GDP Slowdown and Stock & Bond Market Downturn

    Both the GDP growth slowdown and stock market plunge are simply a result of the Federal Reserve’s interest rate hikes implemented to combat the very inflation eating away consumers’ purchasing power. The Fed raised interest rates to 0.25%-0.50%, and said the federal funds rate could reach 2.5% of higher by the end of 2022. Because of this, GDP growth predictions for 2022 have been lower. 

    The Fed raises interests to lower inflation by slowing down spending to slow demand down in balance with supply which has been limited by supply chain shortages through the pandemic.  People buy fewer homes and cars and companies reduce hiring and pay increases. Ten-year Treasury yields surged from 1.5% at the end of 2021 to over 3.0%, thereby forcing the Fed to raise rates faster and reduce bond holdings, subsequently lowering overall bond demand causing it to drop 11%. These hikes not only affect GDP growth but also the stock market. Rate hikes make investors move their money into bonds and out of stocks, causing them to fall. Rising bond yields create a greater discount on future profits. 

    Gas Price Inflation

    Gasoline prices are mainly Putin’s fault. Russian invasion of Ukraine has pushed oil prices higher worldwide. Core inflation (food and energy) is actually only 6%. President Biden has released gasoline from strategic petroleum reserves. By looking at futures prices, the market predicts that oil prices will come down.

    Recession Indicators: 

    There is a 3.7% chance of a recession as forecasted by the New York Federal Reserve. 

    Early Signs: 

    -2 year/10-year yield curve inversion – inverted temporarily in April for first time since 2019. Inversion occurs when shorter-dated (two-year) US Treasury bond yields trade above longer dated (10-year) yields). Lead time is about 17 months on average.

    -Defensive sectors outperform – health, utilities, consumer staples outperformed s&p 500

    -Commodity prices spike – spiked globally over 30%

    -S&P earnings year over year decrease

    -New housing construction declines

    -Banks unwilling to make loans

    Later signs:

    -3-month/10-year yield curve inversion

    -High yield spreads widen

    -Unemployment rises

    Good Indicators

    While there are some recessionary signs, many other indicators say the opposite.The consumer (70% of the economy) and labor market remain strong with 50-year-low unemployment of 3.2% and increased wage growth across all sectors, with incomes rising 0.4% in April. (However, nominal raises haven’t kept up with inflation.) Consumer spending is also robust — Americans boosted spending by 0.9% in April. Even after factoring in inflation, it rose at a strong pace. Moreover, consumers have about $2.3 trillion of excess savings accumulated during the pandemic they could continue spending over the coming years.

    Moreover, the latest Treasury curve inversion was caused by fixed income markets awaiting Fed interest rate hikes. There has also been no inversion for the three-month vs. two-year yielded curve. New housing constructions continue to grow, and banks have not limited their lending. Corporate profit margins (which peak a year before a recession) have also remained stable. Historically, the stock markets decline over 33% from peak ahead of a recession, but Nasdaq has not declined over 20%.

    While yields on 10-year and 2-year Treasuries are getting closer, there’s still a large gap between 10-year and 3-month Treasuries. Both parts of the curve ended to flatten and invert before we are at risk of a recession.

    A former senior adviser at the U.S. Department of the Treasury believes that while the likelihood of a recession is low, it’s more likely the U.S economy falls into a “garden variety recession,” not a 2008-level financial crisis. This is what happens when the Federal Reserve increases interest rates to lower inflation caused by rapid economic growth. The more severe kind is a “balance-sheet recession” marked by mass unemployment, and consumers using their income paying down a sudden “debt bubble” instead of growing economic activity. Moreover, the 2008 recession was caused by bad housing crisis debt and since then the Dodd-Frank Act and consumer protections have been instituted.

    While leading indicators can send mixed signals while exciting a global pandemic, necessary interest rate hikes intended to curve inflation are the culprit for the GDP growth and stock market decline. 

  • How Too Much Loss Aversion Leads to Utility Losses

    How Too Much Loss Aversion Leads to Utility Losses

    Humans aren’t perfectly rational agents that make choices that maximize utility, when faced with risky choices that could lead to big gains, people are risk-averse, preferring to settle for choices that result in lower utility but higher certainty. While loss-aversion is beneficial in many situations, heuristics and personal biases cause us to miscalculate the probability of events and fear taking a risk towards a great opportunity. When we fear failure more than we want to achieve, we miss out on the good we might win if we just dared try. The only guaranteed way to fail is to not try and give up instead of strategize as every self-made person who’s succeeded at something has.

    Behavioral economics reveals a lot about the science of decision making, under conditions of scarcity. Prospect theory and loss aversion describe how humans, behave when faced with risky choices and differing levels of utility (gain). Prospect theory describes how individuals make a choice between probable, risky choices. Loss aversion is a phenomenon that is a part of prospect theory (developed by Kahneman and Tversky) that describes how people make decisions based on potential gain or losses relative to their specific situation. Loss aversion is the tendency to prefer avoiding losses to acquiring equivalent gains. When faced with risky choices leading to gains, people are risk-averse and prefer more certain choices with lower expected utility. But when faced with risky choices leading to losses, individuals are risk-seeking, preferring solutions that lead to a lower expected utility in order to avoid losses. 

    Tversky and Kahneman proposed that losses cause a greater emotional impact on an individual than does an equivalent amount of gain, so they will choose the option that is most certain. For example, when faced with two options — Option 1 – $3,000 with a probability of 39%, $2,800 with a probability of 60%, and $0 with a probability of 1%, or Option 2 – a guaranteed $2,000 — humans will choose Option 2. Prospect theory and loss aversion mean that people don’t base choices based on utility overall, but probability. Individuals tend to be loss-averse as they weigh losses about twice as heavy as gains per many studies.

    Prospect theory is applied anywhere from marketing to finance to national security. In finance, investors place more weight on perceived gains versus perceived losses. In international relations, theorists use it to analyze how politicians are likely to take bigger risks to avoid losses. This ties back to a “rational choice model” used in international relations, where the rational choice stems from utilitarianism — the strategic pursuit of the choice with the highest expected utility weighted by probability. The solution to this model being increased amounts and quality of information. More facts, not heuristics or biases, lead to better choices. This is why we shouldn’t act on fear, but facts.

    People hate utility losses twice as much as they enjoy gains. They are more willing to take risks to avoid losses. Much like in game shows, participants in behavioral economic studies end their participation in money games when the risk of their loss is close to their effort, even when they face bigger gains by continuing.   Loss aversion as a cognitive bias, is leveraged by marketing campaigns to influence consumer decisions such as through the use of free trials where buyers won’t want to give up the product or service. This is the basis of insurance — where individuals’ need for security and need to avoid big losses causes them to buy in.

    A person’s risk aversion level is dependent on experiences, heuristic judgments, and biases, not often on rationality. A mixture of neurology, socioeconomic factors, and culture influence how we make decisions — with powerful and wealthier people being less loss averse. Due to their safety net and network, they assign less weight to losses than other people. The key part of prospect theory that leads humans to miss out on gains they might win due to fear, is the idea that people attribute excessive weight to events with low probabilities and insufficient weight to events with high probability. Without having enough information, acting on personal experiences and biases, individuals might choose choices they wrongly see as more probable that have a lower expected utility. This is fear and heuristics in action.

    Loss aversion is the tendency to prefer avoiding losses to acquiring equivalent gains. But an overwhelming fear of financial losses can cause bad decisions — such as when investors hold stock for too long or too little amount of time. The fear of potential losses paralyzes us from trying as we overestimate risks — in the end this prevents us from taking even well-calculated risks, with great potential for returns. 

    What we can take away from prospect theory studies, is that humans vastly miscalculate the probability of the outcomes of certain choices and tend to focus more on the negatives — failure, financial losses, etc., instead of what can be gained in a well-calculated, strategic move. Often times, we fear making a choice towards our goals and dreams even if you have nothing to lose. Trying and not succeeding isn’t failure. Failure is never trying at all, or giving up instead of learning from it and strategizing.

  • What’s Driving Inflation

    What’s Driving Inflation

    Soaring inflation rapidly climbed 7% in the United States through December, the fastest since 1982. The rising price index isn’t a unique phenomenon, it’s been seen globally. However, it’s been more pronounced in the U.S. than in any other country. Policy makers argue over the causes among partisan lines, but what has really been the driving force behind this massive inflation eating away at consumers stagnant salaries during a pandemic? Is it the general economic rebound, government spending bills, or supply shortages driving up the price level?

    Inflation is a general increase in the price level and decrease in the purchasing power of money. It’s measured through the Consumer Price Index, as a change in prices for basic goods and services like food, clothing, and transportation. It can be caused by both demand-side factors like rising consumer demand and supply-side factors like supply chain shortages that we are seeing. 

    Economists believe 40-year high inflation has been caused by a combination of the economic rebound, government spending, and supply shortages while the Federal Reserve has kept interest rates at rock bottom. Government spending in the form of stimulus bills to help the millions of Americans who lost their jobs and faced imminent economic crisis, stimulated the economy. While many nations passed stimulus bills to boost demand, the United States’ $5 trillion in spending in 2020 and 2021 far outpaces any other country’s economic response. It boosted economic growth through consumer spending. This demand-side boost pushed the demand curve right and raised prices.

    The White House holds that supply chain disruptions and shortages are responsible for the rapid increase in inflation. ““The inflation has everything to do with the supply chain,” President Biden said in a news conference. “While there are differences country by country, this is a global phenomenon and driven by these global issues,” Jen Psaki, the White House press secretary, said. It is true that supply shortages have caused inflation to be seen worldwide, in countries sfrom India to Brazil, and Europe (5 percent.) Prices also rose at a record-breaking rate in the U.K. and Canada.

    The global supply chain did indeed collapse as the pandemic spread, factories shuttered, ports were backlogged, and trucking labor shortages rose. Yet amid these global supply shortages, the U.S. has experienced more rapid inflation than almost any other developed economy. 

    This all happening while the current Fed Funds Rate stands at 0.25%. To push both demand and supply curves to an equilibrium price level, the Federal Reserve could work to retract demand, while the government attempts to fix supply chain issues. The Fed is preparing to raise interest rates in March to make borrowing more expensive and slow spending down to ameliorate inflation. This should be effective, as many households have increased their housing and auto debt, during such low rates, thereby driving up inflation.

    These actions can help rein in inflation as the U.S. economic output (real GDP) is expected to climb 4% in 2022.  The inflationary buble isn’t expected to be permanent, but to remain near 7% for a few months then at more moderate levels through the rest of 2022.

  • The Great Labor Awakening

    The Great Labor Awakening

    A great reckoning has come for the American business model of labor exploitation — will corporations choose growing labor shortages and boycotts, or employee rights and fair pay? Although the top 10 percent in the U.S. own 70 percent of the U.S. wealth, the working class holds tremendous untapped power capable of transforming the corporatist modum operatus. We’re in the midst of a great labor awakening across the country — from the labor strikes, mass resignations, and boycotts. Time is up for corporatism and the trickle-down fairy tale stockholm syndrome America believed in all while wages haven’t kept up with the 57% rise in inflation & 176% rise in productivity over the past 50 years, while 29 million go without health insurance, and while 38 million go hungry in the wealthiest country on earth.

    From John Deere to nurses to Kellogg plant workers — waves of strikes across the country are highlighting economic inequality amid a time of anti-union legislation and a widening wealth gap. Labor “shortages” are leveraging the working class’ voice in the conversation on harsh working conditions and stagnant pay. Over 100,000 unionized employees — from Hollywood production crew members, to John Deere factory workers and Kaiser Permanente nurses — overwhelmingly voted to authorize strikes. 

    This all comes during a time of worsening income inequality. Through 2020, Americans experienced mass hunger, unemployment, sickness, and an eviction crisis at a level not seen since the Great Depression through no fault of their own and with little relief. The other America —the billionaire class’ — has seen their wealth surpass a $1.9 trillion gain since mid-March, 2020 when most federal and state economic restrictions responding to the virus were in place. While over 70 million Americans filed for unemployment (40% of the labor force), evictions rose, and food banks ran out of food, 660 billionaires saw their wealth rise 40% to $4.1 trillion 10 months into the pandemic and Wall Street minted 56 new billionaires. This amount is two-thirds higher than the $2.4 trillion in total wealth held by the bottom half of the population of 165 million. The pandemic has exacerbated the nation’s economic inequality.

    Wealth is quite literally being heinously stolen from workers. While 45 out of 50 of the biggest U.S. companies turned a profit since March, the majority of firms cut staff and gave most of the profits to shareholders. John Deere’s CEO for one, has seen his salary rise 160% during the pandemic, while the workers producing the wealth struggle for fair pay. The company made $2.75 billion in profit in 2020, paid out $1.3 billion in dividend payments and they bought back $750 million in stock on top of the obscene CEO pay increases. 

    Union members are simply demanding fair pay. John Deere offered an initial raise of 5-6% with a total increase in wages of 11% over 6 years, but inflation over the last year alone was 5%. (It is normally 2.5-3%.) After those 6 years they’d be earning less than they are now while the company keeps pumping up executive’s salaries and distributing worker-produced profits to shareholders.

    Workers — unwilling to work starvation wage jobs subsidized by taxpayers through social programs — are en mass exodus. The U..S. had 10.4 million unfilled job openings in August, down from a record high of 11 million in July. Our front-line workers, so essential to our economy as the rest of America discovered, can’t afford their own survival. 

    The collective bargaining power of unions and progressives is what brought us the weekend, the 8-hour work-day, anti-trust laws — it outlawed child labor. Sadly, waning union power in recent decades has prevented further change towards justice and fairness.  In 2020, there were just 11 major work strikes, while from 1950 to 1980, the U.S. saw an average of about 300 per year per the Bureau of Labor Statistics. As of 2020, only 11.% of the workforce was unionized, compared to 20% in 1983. 

    Despite the anti-union and labor rights efforts of the previous administration, which gave $2 trillion to wealthy Americans, Americans’ union approval is at a 60-year high. Over two-thirds of those surveyed and 77% of Americans 18-34 were in favor per a September Gallup poll. Democrats have been negotiating for an infrastructure package that would provide thousands of jobs to union workers. The conditions of the jobs, however, need an overhaul.

    America must improve its plummeting living standards by doing more than clapping for our front-line workers who uphold our economy and line shareholders and executives pockets with their sweat and toil. As AFL-CIO President Liz Shuler said, “This is the capitalist system that has driven us to the brink,” she added. “Inequality is just getting worse and worse. … We think unions are the solution.”

  • Is Biden Responsible for the 7-Year High Gas Prices?

    Is Biden Responsible for the 7-Year High Gas Prices?

    Since the U.S. economic reopening began, gas prices rapidly hit a 7-year national average high of $3.24 a gallon. Consumers are feeling pain at the pump and wondering if this is the fruit of President Joe Biden’s energy policies. This oil and gas sticker shock threatens to strengthen the country’s biggest inflation scare in over 12 years, but are these simply supply and demand market forces at play and what tools does the U.S. president have to alleviate this? Do solutions that have been outlined clash with U.S. climate diplomacy initiatives?

    Crude Oil Prices and Market Forces

    Voters historically blame high gas prices on whoever is the current president, but short-term retail gas prices are not affected by long-term presidential energy policies, rather by crude oil prices that move by the very forces of supply and demand. As with other commodities, when supply exceeds demand, prices fall, and the inverse is true. 

    These two forces are affected by production costs, and supply and demand shocks like — natural disaster, geopolitical instability like war, and any unexpected event that constrains output or disrupts the supply chain. A positive supply shock increases output which makes prices fall, and the inverse is true as well.

    In addition to supply and demand shocks, decisions about supply output are made by producers like the Organization of Petroleum Exporting Countries (OPEC), independent petro-states like Russia, and private oil-producing firms like ExxonMobil. OPEC controls almost 80% of the world’s supply of oil reserves. This consortium sets production levels to meet global demand which in turn influences the price of oil and gas. 

    The U.S. president does not control OPEC and can not set prices. Supply shortages and rising post-economic reopening gas demand caused the rise in gas prices.

    Effects of Biden’s Energy Policies 

    The average retail gas price is now $1.02/gallon higher than a year ago, and higher than any time since 2014. Over a third of U.S. energy consumption in 2020 was supplied by natural gas. Oil and gas prices began to rise in May 2020 — tripling between then and the last week of December 2020. This is just the natural increase in demand for gas as the economy began opening back up from the pandemic shutdowns.  

    The entire world experienced this bounceback in oil and gas prices, and even other natural resources like lumber, metals, cotton, and sugar skyrocketed. Gas prices rose 280% in Europe this year and led to a 100%-plus surge in the U.S. due to factors like low storage levels, carbon prices, and reduced Russian supplies.

     Presidents historically can only take very few actions — release oil from the Strategic Petroleum Reserve, increase gas taxes, or engage in Middle East conflict. Biden has done none of this, yet people point to his long-term energy policies that do not affect current supply, as proof of his culpability in the crisis. 

    Detractors often point to Biden’s cancelation of the treaty-violating Keystone XL pipeline, and suspension of new oil and gas permits for federal land and water. However, these actions drive up gasoline prices in years time, not mere months. These measures could only restrict oil supplies years in the future. Companies even have years of permits stockpiled in preparation for moves like this. 

    The oil market only directly reacts to moves by OPEC that quickly impact present supply and gas prices are directly correlated to the price per barrel of WTI crude oil.

    What Biden Can Do

    What can Biden really do to bring gas prices down? The U.S. planned to get OPEC and its allies to unleash spigots which hasn’t succeeded yet. OPEC+ announced it would only gradually add supply to the market instead of following the White House’s calls to ramp up production. This sent crude prices above $79 a barrel for the first time since November 2014.

    Tapping the Emergency Oil Stockpile

    Energy Secretary Granholm said Biden is considering releasing barrels from the Strategic Petroleum Reserve (the nation’s emergency stockpile of crude). Oil prices tumbled below $75 a barrel following these comments about the SPR which the administration used last month after Hurricane Ida. After clarifying there was no immediate plan for this, crude rose back near $79. However, tapping into the SPR could be too inconsequential of a move. Goldman Sachs believes releasing up to 60 million barrels of oil from the SPR would only be of “modest help,” cutting their year-end forecast for $90 Brent crude by just $3.

    Oil Exports

    Granholm expanded, adding that they have not ruled out banning oil exports, but the Energy Department walked back on it saying there’s no plan for that. A ban would likely only make Brent prices rise due to weaker supply. 

    Therefore, the White House must persuade OPEC+ to return production that was diminished during the pandemic

    Pushing OPEC to produce more fossil fuels while huddling with leaders in Glasgow at COP26 summit just signals the start of a tricky energy transition towards sustainability.

    Overall though, higher gas prices raise the risk of stagflation – high inflation, low growth. Goldman Sachs predicts higher oil demand, with a $5 per barrel upside risk to its fourth-quarter 2021 Brent price forecast of $80 a barrel. Brent is trading at about $74 currently .

  • Starvation Wages Caused The Labor Shortage, Not Unemployment Insurance

    Starvation Wages Caused The Labor Shortage, Not Unemployment Insurance

    “No one wants to work anymore,” reads one sign taped to a McDonald’s drive-thru. Many fast-food and service industry companies are reporting that they’re facing a labor shortage created by unemployment insurance. This myth has been refuted by workers and analysts’ data. The real problem is the stagnant, starvation minimum wage which if it kept pace with the over 657% rise in inflation & 176% rise in productivity over the past 50 years, would be $24.  The free market capitalist solution is for employers to raise their wages and offer safe working conditions to attract workers. 

    Labor Effects of Unemployment Insurance

    A letter from the National Owners Association, a group of McDonald’s franchisees, stated, “When people can make more staying at home than going to work, they will stay at home.”

    While April’s job numbers were dire compared to March — 266,000 jobs added versus 916,000 in March — a $300 a week benefit is not the cause of this so-called “labor shortage.” Unemployment benefits to help people survive a pandemic that has killed 587,000 people and unemployed 114 million in 2020, are not generous enough to cause people to resign to unemployment. Workers report wanting a fair wage to work in hazardous conditions. 

    Furthermore, various studies found that even the $600 unemployment insurance from 2020 had little to no labor supply effects (employment or job search.) One study found that, “employers did not experience greater difficulty finding applicants for their vacancies after the CARES Act, despite the large increase in unemployment benefits.”

    Studies show that unemployed workers who receive benefits search for jobs more, get better offers, and get roles more suitable for their educational background.

    Laying blame on the labor force, who has experienced eviction, mass hunger and unemployment levels not seen since the Great Depression, while billionaire class’ wealth surpassed a $1.9 trillion gain, is both callous and unwarranted.

    Unemployment benefits are not depressing work, starvation wages are.

    A Starvation Wage

    If the minimum wage kept pace with the over 657% rise in inflation and 176% rise in productivity over the past 50 years, it would be $24. It peaked in 1968 at $11.18 when a manufacturing job bought you a house for $26,600. The $15 minimum wage was needed years ago.

    Workers making $7.25 an hour earn 18% less than those in 2009 did. Raising the minimum wage modestly to $15 per hour would give more than 32 million Americans a raise.

    Moreover, exploitative corporations use taxpayer money to subsidize starvation wages that leave employees relying on public assistance programs to barely survive, while executives reap billions in profit. Approximately 70% of adult wage earners receiving Medicaid and SNAP benefits worked full-time hours on a weekly basis. It’s morally despicable that someone working full-time can’t afford to exist. There is no excuse for multi-million and billion-dollar corporations (like Walmart who gained $64 billion during the pandemic) not paying their workers enough to eat and survive. Corporations’ labor costs are so low they’re being subsidized by taxpayers.

    If businesses refuse to pay their workers $15 an hour to survive, they shouldn’t exist. The free market capitalist solution is for them to meet the market need and provide livable compensation in exchange for producing all the labor keeping their businesses running. 

    The problem in the United States is not unemployed workers in a pandemic receiving $300 extra to survive, it’s that employers are robbing those producing wealth of their dignity and ability to support themselves. We should all be fighting to raise wages for the most vulnerable among us. As 1 Timothy says, “a worker is worth their wages,” or as Leviticus 19:13 says, “You shall not defraud your neighbor; you shall not steal; and you shall not keep for yourself the wages of a laborer until morning.” Or as Deuteronomy 24:14 says,  “You shall not withhold the wages of poor and needy laborers, whether other Israelites or aliens who reside in your land in one of your towns.”

  • How Taxpayers Subsidize Corporations’ Starvation Wages

    How Taxpayers Subsidize Corporations’ Starvation Wages

    A recent study proved that large corporations use taxpayer money to subsidize starvation wages which leave employees relying on public assistance programs to just survive, while executives reap billions in profit. The Government Accountability Office undertook the study at the request of Sen. Bernie Sanders to answer questions about the relationship between employers and the federal benefits programs. They found that 5.7 million Medicaid enrollees and 4.7 million SNAP recipients who worked full-time earned wages so low that they qualified for these programs.The time for a reckoning on corporations’ labor exploitation has come and we must ask ourselves why a minimum wage that hasn’t kept up with the 657% increase in inflation and 176% increase in productivity is acceptable. If a company can’t pay the labor force creating their wealth well enough to feed themselves, their nefarious business plan is inherently flawed. 

    Exploitation should not be subsidized.  Yet, according to the study titled “Millions of Full-time Workers Rely on Federal Health Care and Food Assistance Programs,”  this is exactly what American tax dollars are funding. Among the largest culprits, were Walmart McDonalds who have the most workers on food stamps and Medicaid. Walmart was in the top four employers of SNAP and Medicaid beneficiaries in each state, while McDonald’s was in the top five in the nine states reported. Within the nine states that responded about SNAP benefits, Wlmart employed 14,500 workers receiving the benefit and McDonalds 8,780. Out of the six states that responded about Medicaid enrollees, Walmart came out first place, with 10,350 employees. McDonald’s followed it with 4,600 Medicaid enrollees in those states.

    This November 2020 study came just as 660 billionaires gained $1.9 trillion while hunger rose 28%, 73 million lost work, 12 million lost health insurance, & over 25 million fell ill with Covid-19.

    Moreover, today’s $7.25 minimum wage is 29% lower than it was 50 years ago despite the fact that productivity has doubled since the late 1960s. The minimum wage would be $24.00 today if it kept up with the over 657% rise in inflation & 176% rise in productivity over the past 50 years. Hard-working Americans driving the economy through their labor are being robbed.

    Approximately 70% of adult wage earners receiving Medicaid and SNAP benefits worked full-time hours on a weekly basis. It’s morally despicable that someone working full-time can’t afford to exist. There is no excuse for multi-million and billion-dollar corporations (like Walmart who gained $64 billion during the pandemic) not paying their workers enough to eat and survive. Corporations’ labor costs are so low they’re being subsidized by taxpayers. Huge corporations are making billions in profit by relying on corporate welfare from the government by paying their workers poverty wages. It’s time for large corporations to finally pay their workers a living wage. Corporate welfare must end. 

  • Soaring Wealth Inequality and Pandemic Profiteers: A Call for Tax Reform

    Soaring Wealth Inequality and Pandemic Profiteers: A Call for Tax Reform

    Mass hunger, unemployment, sickness, and an eviction crisis are things Americans are experiencing at a level not seen since the Great Depression through no fault of their own and with no relief. The other America, the billionaire class’ wealth has seen their wealth surpass a $1.9 trillion gain since mid-March, 2020 when most federal and state economic restrictions responding to the virus were in place. While over 70 million Americans filed for unemployment (40% of the labor force), evictions rose, and food banks ran out of food, 660 billionaires saw their wealth rise 40% to $4.1 trillion 10 months into the pandemic and Wall Street minted 56 new billionaires. This amount is two-thirds higher than the $2.4 trillion in total wealth held by the bottom half of the population of 165 million. The pandemic has exacerbated the nation’s economic inequality.

    Recession by The Numbers: U.S. Job Losses

    Regular Americans have not fared as well as billionaires during the pandemic: The pandemic hit the airlines ($34B in losses), restaurants ($240B in losses), hotels, and mall-based retailers the hardest while industries like tech boomed. The unemployment rate stood at 6.7% beginning January. Over 25 million have fallen ill with the virus and more than 420,000 have died from it. [Johns Hopkins Coronavirus Resource Center]. Over 73 million lost work between Mar. 21 and Dec. 26, 2020. [S. Department of Labor]. 16 million were collecting unemployment on Jan. 2, 2021. [S. Department of Labor]. Nearly 100,000 businesses have permanently closed. [Yelp/CNBC]. 12 million workers have likely lost employer-sponsored health insurance during the pandemic as of August 26, 2020. [Economic Policy Institute]. 14 million adults—1 in 5 renters—reported in December being behind in their rent. [CBPP]. 

    Employment for t those making less than $27,000 a year remains over 20% below January 2020 levels. Last month, 29 million adults lacked sufficient foodt, according to the U.S. Census Bureau’s Household Pulse Survey, up 28% since before the pandemic. From Nov. 25-Dec. 7, between 8 -12 million children lacked food [Center on Budget & Policy Priorities (CBPP)]. Over a third of U.S. adults who have fallen behind on rent or mortgage payments are likely to face eviction or foreclosure over the next two months, per the December Census Bureau survey.

    This economic inequality also exists among racial, ethnic, and gender gaps. Low-wage workers, people of color and women have suffered disproportionately in the combined medical and economic crises of 2020. Latinos are more likely to become infected with Covid-19 and Blacks to die from the disease than are white people. While the Labor Department showed that all of the job losses in December were positions previously held by women

    Billionaire Wealth and Pandemic Profiteers

    Polar opposite to this, the one-percent’s wealth soared to the tune of $1.9 trillion and the US gained 56 new billionaires between mid-March and Dec. 22 per a December report from the Institute for Policy Studies. America’s 659 billionaires now hold roughly $4 trillion in wealth — roughly double what the 165 million poorest Americans are collectively worth. The 10 richest billionaires have a combined net worth of more than $1 trillion.

     Some of the biggest winners during this pandemic have been companies like Amazon, who’s profit increased by about 70% to $14.1 billion while they exploit their workers. Jeff Bozeos, Elon Musk,and Bill Gates were each worth more than $100 billion on Jan. 18.  Elon Musk’s wealth grew by over $154 billion, from $24.6 billion on March 18 to $179.2 billion on Jan. 18. Jeff Bezos’s wealth grew from $113 billion on March 18 to $182 billion, an increase of 61%. Mark Zuckerberg’s wealth grew from $54.7 billion on March 18 to $92 billion, an increase of over two-thirds

    It’s difficult to fathom such massive wealth gains concentrated at the top while workers are suffering during a pandemic-induced world economic collapse marked by an increased surge in evictions, over 465,000 COVID deaths, 6.7% unemployment, and a 28% increase in hunger. But the top 20% of earners have not had to worry about these issues as they carry out their jobs from home, gain from the Fed’s 0% rates, refinancing mortgages at record low rates, and watch the value of their stocks, bonds, and investment accounts surge. Those whose wealth is captured by financial assets have benefited during an economic collapse.

    Tax Reform

    This $1.9 trillion wealth gain by 660 U.S. billionaires is large enough to pay for all the relief for working families in President Biden’s proposed $1.9 trillion pandemic rescue package which includes $1,400 in direct payments to individuals, $400-a-week supplements to unemployment benefits, and an expanded child tax credit. A stimulus check of more than $3,400 for every one of the roughly 331 million people in the United States.

    There is no reason why workers should be struggling while billionaire CEOs amass trillions of dollars in wealth built by workers. This is why tax reform is necessary. Biden’s promising tax plan wants to deliver on this by transforming parts of billionaire gains into public revenue to help the nation. But this still falls short of structural change to how wealth is taxed. 

    Moody’s Analytics, “The Biden Fiscal Rescue Package,” Jan. 15, 2021

    Forbes, “Forbes Publishes 34th Annual List Of Global Billionaires,” March 18, 2020.

    The best approach is an annual wealth tax on the top 0.1% of  households like the tax plan proposed by Senator Bernie Sanders among others. Taxing those worth over $32 million only will “raise an estimated $4.35 trillion over the next decade and cut the wealth of billionaires in half over 15 years, which would substantially break up the concentration of wealth and power of this small privileged class.”

    Another solution is the taxation of annual investment gains on tradable assets as advocated by Senate Finance Committee chair,  Ron Wyden. 

    Economic Inequality Is Institutional Robbery

    Over the last 30 years, the top 1 percent has seen a $21 trillion increase in its wealth, while the bottom half of American society has actually lost $900 billion in wealth.

    Moreover, today’s $7.25 minimum wage is 29% lower than it was 50 years ago despite the fact that productivity has doubled since the late 1960s. The minimum wage would be $24.00 today if it kept up with the over 657% rise in inflation & 176% rise in productivity over the past 50 years. Hard-working Americans driving the economy through their labor are being robbed.

  • How Senate Budget Committee Chairman Bernie Sanders Will Wield His Power

    Incoming Senate Budget Committee Chairman Sen. Bernie Sanders (I-Vt.) will exert great influence over domestic economic issues that will finally help the American working class like never before through a special budget mechanism. Vowing to move quickly to push through an economic stimulus package and fight economic inequality to “boldly address the needs of working families,” he will hold robust influence over taxes, health care, and climate change among other issues during the worst depression since the Great Depression. Sanders said the first order of business must be the Covid bill with $2,000 checks, and that Democrats have to be “bold in a way that we have not seen since FDR in the 1930s.” What kind of legislation can he help Congress move through with a narrow majority and with what budget mechanisms?

    “Let me just be very clear as the incoming chairman of the Senate Budget Committee: Remember what happened in 2010. Democrats got wiped out. They had the power, but they did not deliver for the American people. We must have an aggressive agenda.”

    Sen. Sanders became the incoming Senate Budget Committee Chairman after the Georgia election resulted in a Senate Democratic majority. While Biden said he considered Bernie Sanders for Labor Secretary, they both agreed he was needed more in the Senate. “I did give serious consideration to my friend Bernie Sanders for this position,” Biden said at an event announcing more economic appointments. He explained, “Bernie and I agreed – in fact, Bernie said we can’t put control of the Senate at risk with a special election in Vermont.” This was ultimately a good choice given Democrats’ slim 50-50 majority even facing inside roadblocks from more conservative Democrats like Sen. Joe Manchin III who opposes $1,400 direct payment relief.

    Nevertheless the Senate Budget Committee Chairman wields significant power that can make a great impact on the lives of Americans that have been ignored in the way of corporate interests. The Senate Committee on the Budget was established in 1974 by the Congressional Budget Act. Along with the House Budget Committee, it drafts Congress’ annual budget plan and monitors budget actions. 

    Former Democratic Senate majority leader, Harry Reid, picked Sanders to be the ranking member in 2014 and dismissed “radical” smears about him, saying, “Even though he is a person who is known as a real progressive socialist, he never was a problem for my caucus…He didn’t try to be a rebel.” A true assessment since the democratic socialist” label equates to a center-left democrat in most western democracies. 

    Now the most progressive Senator will have a powerful role in shaping Democrats’ spending agenda. Bernie Sanders seeks to move quickly to push through an economic stimulus package saying, “I believe that the crisis is of enormous severity and we’ve got to move as rapidly as we can.” The urgency working-class people, the unemployed, the starving, the ignored feel in America will finally be represented by Bernie Sanders.

    Bernie’s secret legislative weapon within a slim majority? A budget mechanism called reconciliation. Budget conciliation allows Congress to move certain legislation a majority instead of 60 votes. Sanders said, “We have to be very, very aggressive, and I intend as chairman of the committee to use reconciliation to do just that.” He went on to say that  his reconciliation legislation “will have strong support among Democrats.” 

    This powerful tool passed legislation like the Trump tax cuts, Bush tax cuts, and Obamacare. The process starts with the Senate and House Budget Committees’ budget resolution. This means that Senator Sanders will lead important legislation originating in the Senate Budget Committee. 

    Bernie Sanders will effectively get to decide how vast Biden’s spending plans can be and he said he plans to test the bounds of reconciliation to address “structural problems in American society.” He plans to focus on pushing forth the stimulus package first and not tying his long-term priorities like universal healthcare to it. Biden’s team said they will work with Bernie Sanders and other leaders to write legislation for Biden’s agenda despite their differences on issues like single-payer healthcare. Sanders will exert great leadership, pragmatism, and compassion — an example of everything a public servant should hold — as the Senate Budget Committee Chairman. A true mensch. 

    “The first order of business, by the way,” the Vermont senator continued, “is to pass an emergency Covid-19 bill which, among many other things, says to working-class Americans, ‘We know you’re in pain, and we’re gonna get you a $2,000 check… We are on your side.’”

    Senator Sanders supports $2,000 direct payments and money for states and cities to fund Covid vaccine distribution, contact tracing, and testing.

    He is also calling for an emergency universal health care program to be created so that people won’t have to go without medical treatment during a pandemic because they’re uninsured. This is a transformative idea that would  help millions of Americans who have to choose between treatment or bankruptcy, food or medicine ven resorting to rationing medicine or crowdfunding. This emergency program would most likely help advocate for the passage of Medicare for All down the line — a fiscally responsible choice that would save an estimated 68,000 lives a year while reducing health care spending by $450 billion and grant access to a basic necessity for 27.9 million uninsured Americans. 

    “In the past, Republicans used budget reconciliation to pass massive tax breaks for the rich and large corporations with a simple majority vote. As the incoming Chairman of the Budget Committee, I will fight to use the same process to boldly address the needs of working families.”

    Wielding a powerful gavel, Senate Budget Committee Chairman Bernie Sanders will help working-class Americans like the massive Trump and Bush tax breaks passed through budget reconciliation helped tax-evading corporations and the top 1%. He will ensure that $2,000 direct payments are the “first order of business” upon taking power and warned of electoral backlash like in the 2010 midterms. For his entire career, Senator Sanders’ heart  has always been with struggling Americans who have faced stagnant poverty wages, a lack of healthcare affordability, and have been blocked from economic advancement by skyrocketing educational costs all while the rich get richer through Congressional legislation. We always have spending for defense contractors, (imaginary) border walls, and Wall St. subsidies but none for health care, education, or jobs. Senate Budget Chairman Sanders will radically change that and move the needle of socioeconomic equality towards justice and advancement. Godspeed to Bernie Sanders in achieving his legislative goals as Budget Committee Chairman.

  • How Trump’s Rhetoric Incited a Violent Insurrection at the Capitol

    How Trump’s Rhetoric Incited a Violent Insurrection at the Capitol

    In 1861, 11 senators and 3 representatives were expelled from Congress for supporting the insurrection and refusing to recognize Lincoln’s electoral win. Today, congressmen and republican governors are calling for the impeachment and/or removal of treasonous President Trump under the 25th Amendment for inciting a domestic terrorist coup attempt to stop the Electoral College count that ended in 4 deaths yesterday, January 6th. Elected officials were forced to evacuate from the Capitol after armed MAGA insurrectionists branding nazi insignia, MAGA shirts, and explosives, hung nooses, and flew Confederate and nazi flags while trashing the Capitol and searching for the Electoral College votes. Trump continued inciting the mob reiterating his lie that, “we had an election stolen from us…this was a fraudulent election,” and told them “We love you, you’re very special,” before telling them to go home. Donald Trump Jr. filmed the President watching the violent coup gleefully. Only 14 were arrested yesterday as the National Guard and army present during peaceful Black Lives Matter protests were nowhere in sight during the break-in.

    Trump and his allies lost 62 lawsuits, 3 recounts and staged a failed coup at the US Capitol to overturn a fair and free election.

    Domestic terrorists were allowed to invade and destroy federal property freely while BLM protestors have been left disabled by rubber bullets, pulled by unmarked vans, and thrown on the concrete to bleed out. Our democracy and national security are on the verge of destruction if no consequences follow this terrorist coup d’etat attempted by the President of the United States. Donald Trump, the MAGA insurrectionists, and elected officials who inspired them must be tried for treason, sedition, and subversive activities under 18 USC Chapter 115.  Cori Bush has already introduced legislation to sanction, remove House members from office who supported 2020 election challenges. The 147 who voted to disenfranchise voters in a bid to overturn free and fair elections must also face legal consequences.

    Violent White Supremacist Insurrection at the Capitol

    Not even during the Civil War did the Confederate flag make it to the Capitol, yet these Trump-supporting terrorists were allowed to invade and threaten congresspeople and staffers’ lives. This attack was orchestrated by the corrupt criminal authoritarian Trump regime because Vice President Pence failed to stop the Electoral College count. 

    Insurrectionists stormed the Capitol and broke in after a cop opened the gates. These attacks resulted in four deaths — yet only 14 arrests were made yesterday. Nooses were hung outside the Capitol and confederate flags waved inside. They released gas into the Capitol and stole federal property. Federal law enforcement found explosive devices as well. A protester in the Capitol appeared to be carrying a handgun on his hip along with zipties. Outside, Congresswoman Mary Miller quoted Hitler, “Hitler was right on one thing,” praising his political organization skills to a pro-Trump crowd. The insurrectionists chanted “the media is the enemy of the people,” destroyed equipment, and chased out reporters. Two insurrectionists even mocked George Floyd’s death. 

    This extremist violence is a widespread ideology — 45% of Republicans approve of the storming of the Capitol building. And we’re meant to accept this extremism as “economic anxiety?”

    What Incited the Terrorist Attack on the Capitol

    Despite this failed coup, Congress confirmed the results of the Electoral College this morning. Joe Biden will be sworn in as President of the United States at noon on January 20. 

    Trump and his allies lost 62 lawsuits, 3 recounts and staged a failed coup at the US Capitol to avoid this result.

    Trump’s incitement of violence to overthrow the election results is well-documented. He organized the insurrection, even tweeting out on December 30th, “JANUARY 6TH, SEE YOU IN DC!” He has repeatedly called on his supporters to take action if he lost. He’s told the “Proud Boys” to “stand back and stand by,” called the violent Charlottesville nazis “very fine people,” has told his supporters to fight protestors, telling them, “I’ll pay your legal fees,” and told terrorists who committed sedition yesterday, “We love you, you’re very special,” while continuing to push false claims of election fraud that even his own attorney general has debunked.

    While the insurrection was ongoing, Trump sent out a message to the violent mob reiterating his lie that they “had an election stolen from [them]…this was a fraudulent election.” The Trump family even gleefully watched the violent mob. Meanwhile, in response to peaceful Black Lives Matter protests, Trump said, “When the looting starts the shooting starts.”

    This attempted coup is on Donald Trump and he must be held responsible for endangering the lives of congressmen and staffers in an attempt to overturn an election. 

    It’s not only Trump that should be held responsible but also lawyers like Rudy Giuliani who echoed his rigged election claims and declared, “let’s have trial by combat,” to a crowd.

    The seditious seven congressmen who voted to invalidate the election also propagated the election fraud myth which incited this heinous insurrection. Ted Cruz, Josh Hawley, Cindy Hyde-Smith, Cynthia Lummis, Roger Marshall, Rick Scott, and Tommy Tuberville all voted to overthrow American democracy. Ted Cruz even solicited donations through a text while the mob took over the Capitol, stating, “I’m leading the fight to reject electors.” Moreover, 147 Republicans voted to disenfranchise voters yesterday in a bid to overturn free and fair elections.

    The United States Constitution gives the US Senate the power to expel any member by a two-thirds vote and that power should be exercised lest this happens again. It was exercised in 

    In 1861, 11 senators and 3 representatives were expelled from Congress for supporting the insurrection and refusing to recognize Lincoln’s electoral win. Self-serving attempts at sedition are a threat to democracy.

    Law Enforcement Complicity

    But it wasn’t just elected officials who allowed this Capitol invasion to happen. Law enforcement was filmed opening the gates, waving white supremacists in all while refusing to call the National Guard for backup. The domestic terrorists who committed sedition took selfies with cops, walked around stealing federal property, and were calmly escorted out. The cognitive dissonance in the way law enforcement treats these domestic terrorists versus how it treats peaceful Black and brown protestors is despicable. The National Guard and army were present during Black Lives Matter protests where innocent, unarmed people lost their eyes, were taken in unmarked vans, and injured by military-grade riot gear.

    There were over 14,000 arrests at the George Floyd protests, yet only 14 made last night. We had a serious act of domestic terrorism and no law enforcement agency issued a statement. These right-wing terrorists threatened the safety of congresspeople and were free to go. While officers shoved an innocent 75-year-old man so hard he cracked his skull on the pavement in Buffalo, New York. Militarized police once even broke up a peaceful violin vigil for an innocent young man an officer killed.

    This was not a security breach. The Capitol terrorists planned the threats online for weeks and agencies and personnel did not race to secure the Capitol. We spend $740 billion a year on defense and we failed to protect our nation’s Capitol from armed domestic terrorists.

    Impeachment, Removal, and Prosecution?

    Bipartisan calls for impeachment are gathering momentum from elected officials. Rep. Ilhan Omar began drawing the Articles of Impeachment yesterday tweeting, “Donald J. Trump should be impeached by the House of Representatives & removed from office by the United States Senate.” Nancy Pelosi, Chuck Schumer, and other democrats have called for Trump to be removed by impeachment or the 25th Amendment to bar the demagogue from ever holding public office and endangering American lives ever again. All the Democrats on the House Judiciary Committee just wrote a letter to Vice President Pence, urging him to invoke the 25th Amendment to remove Trump. Maryland Gov. Larry Hogan also called for Trump to resign or be removed. Furthermore, Cori Bush introduced legislation to sanction, remove House members from office who supported 2020 election challenges.

    Officials feel that the nation is at grave risk as long as he remains in power with the capability to influence his cult following to commit more dangerous crimes through his lies. For this reason, Facebook and Instagram have blocked President Trump’s accounts “indefinitely and for at least the next two weeks until the peaceful transition of power is complete,” according to Zuckerberg.

    18 USC Chapter 115

    The impeachment resolutions have been written. Per these Articles, President Donald J. Trump must be impeached and removed based on two charges. The first — demanding that the Georgia secretary of state “find votes” and his abuse of power in inciting a coup at the Capitol, and the second — incitement of insurrection. Donald Trump must be impeached and removed and members of congress who attempted to overthrow a free and fair election can be charged with sedition.

    The main three laws broken by the Capitol MAGA insurrectionists are under 18 USC Chapter 115 – treason, sedition, and subversive activities — § 2383. rebellion or insurrection, § 2384. seditious conspiracy, and § 2385. advocating the overthrow of the government.

    More charges could fall under the following laws: 

    18 USC § 231 – Civil disorders

    18 USC § 241 – Conspiracy against rights

    18 USC § 371–373 – Conspiracy

    18 U.S. Code § 842 – Explosives 

    38 U.S. Code § 930 – firearms in federal facilities

    18 USC 1361 – damage to gov’t property

    18 USC 2101 – riots 

    18 USC 2112, 2114 – robbery/burglary of federal property 

    14) 18 USC 1505: 

    15) 40 U.S.C. 5104 prohibits bringing weapons into the Capitol or engaging in “violent entry and disorderly conduct

    This didn’t happen in a vacuum. Four years of Trump’s vitriolic hatred, lies, and demagoguery proliferated all over fake news media channels like Facebook got us here. A coup was orchestrated by domestic terrorists to overthrow an election and law enforcement waived them in, Trump watched and kept fueling the lies about the election that encouraged them. Not even during the Civil War did the treasonous confederate flag make it to the Capitol. It wasn’t a failure, it was a win for these right-wing extremists and a lack of repercussions erases the legal lines making room for even more attacks. Donald J. Trump and his enablers must be removed and charged for encouraging an insurrection, an attempted coup.

    As Voltaire once said, “Those who can make you believe absurdities, can make you commit atrocities.” We must not allow demagoguery to go unchecked. Facts must prevail. Democracy must survive.