TTIP—American Economic Imperialism

Paul Craig Roberts

Greenpeace has done that part of the world whose representatives are so corrupt or so stupid as to sign on to the Trans-Pacific and Trans-Atlantic “partnerships” a great service. Greenpeace secured and leaked the secret TTIP documents that Washington and global corporations are pushing on Europe. The official documents prove that my description of these “partnerships” when they first appeared in the news is totally correct.

These so-called “free trade agreements” are not trade agreements. The purpose of the “partnerships,” which were drafted by global corporations, is to make corporations immune to the laws of soverign countries in which they do business. Any country’s sovereign law whether social, environmental, food safety, labor protections—any law or regulation—that impacts a corporation’s profits is labeled a “restraint on trade.” The “partnerships” permit corporations to file a suit that overturns the law or regulation and also awards the corporation damages paid by the taxpayers of the country that tried to protect its environment or the safety of its food and workers.

The law suit is not heard in the courts of the country or in any court. It is heard in a corporate tribunal in which corporations serve as judge, jury, and prosecutor.

In other words, the “partnerships” give global corporations the power to overturn democratic outcomes. Allegedly, Europe consists of democracies. Democracies pass laws protecting the environment and the safety of food and labor, but these laws democratically enacted reduce profits. Anything less than a sweatshop, with starvation wages, no environmental protection, no safety legislation for food or worker, can be overturned at will by global corporations under the terms of the “partnerships.”

Only a traitor, a well paid one, could sign such a pact.

In my opinion, corporate taxation can also be overturned as it obviously reduces profits.

The Trans-Atlantic and Trans-Pacific “partnerships” have been conducted in secrecy. The reason is obvious. Had people known how they were being sold out, there would have been a firestorm of protest. The corporate shills and their propagandists in the financial media could deny my revelations, because I had no official documents to release.

The “partnership” agreements are treaties. Under the US Constitution, treaties are the prerogative of Congress, not the prerogative of an executive brance appointed Trade Representative who represents not the people but the corporations seeking the advantage. To avoid the US Constitution, the agreements are defined as non-treaties. You see how the groundwork for corruption is established.

The way it works is that the appointed US Trade Representative “negotiates” with appointed trade representatives of other countries. Any resistance to the deal is overcome with bribes and intimidation. All of the negotiation is conducted in secrecy. When the trade representatives sign on to the deal, it is presented to the legislatures of the countries. The legislators are told that they must approve the pact and not endanger all the hard work that has gone on for so long and that is in everybody’s interest as attested to by all of the bribed and coerced trade representatives.

These “trade pacts” originate in the US, because American global corporations and the American mega-banks are the largest players in the world economy, and the agreements that the corporations walk through the process give the American companies economic hegemony over the countries that sign the agreements. The Trans-Atlantic and Trans-Pacific “partnerships” are tools of US financial imperialism.

Today (May 3, 2016) I debated on Press TV Sean O’Grady, the financial editor of the UK newspaper the Independent. It is extraordinary that O’Grady took a line totally opposite to that of his newspaper. I suggested to him that perhaps he should read his own newspaper.

Today an article in the Independent reported that the leaked “documents show that US corporations will be granted unprecedented powers over any new public health or safety regulations to be introduced in future. If any European government does dare to bring in laws to raise social or environmental standards, TTIP will grant US investors the right to sue for loss of profits in their own corporate court system that is unavailable to domestic firms, governments or anyone else. For all those who said that we were scaremongering and that the EU would never allow this to happen, we were right and you were wrong.”

As I understand it, the situation is worse than the article describes. TTIP applies to laws already on the books, such as France’s laws against GMO seeds and food products.

The Independent article continues:

“Today’s shock leak of the text of the Transatlantic Trade and Investment Partnership (TTIP) marks the beginning of the end for the hated EU-US trade deal, and a key moment in the Brexit debate. The unelected negotiators have kept the talks going until now by means of a fanatical level of secrecy, with threats of criminal prosecution for anyone divulging the treaty’s contents.

“Now, for the first time, the people of Europe can see for themselves what the European Commission has been doing under cover of darkness – and it is not pretty. The leaked TTIP documents, published by Greenpeace this morning, run to 248 pages and cover 13 of the 17 chapters where the final agreement has begun to take shape. The texts include highly controversial subjects such as EU food safety standards, already known to be at risk from TTIP, as well as details of specific threats such as the US plan to end Europe’s ban on genetically modified foods.

“The leaked texts also reveal how the European Commission is preparing to open up the European economy to unfair competition from giant US corporations, despite acknowledging the disastrous consequences this will bring to European producers, who have to meet far higher standards than pertain in the USA.

“According to official statistics, at least one million jobs will be lost as a direct result of TTIP – and twice that many if the full deal is allowed to go through. Yet we can now see that EU negotiators are preparing to trade away whole sectors of our economies in TTIP, with no care for the human consequences.

“The European Commission slapped a 30-year ban on public access to the TTIP negotiating texts at the beginning of the talks in 2013, in the full knowledge that they would not be able to survive the outcry if people were given sight of the deal. In response, campaigners called for a ‘Dracula strategy’ against the agreement: expose the vampire to sunlight and it will die. Today the door has been flung open and the first rays of sunlight shone on TTIP. The EU negotiators will never be able to crawl back into the shadows again.

“For those of us in the thick of the EU referendum debate, the contempt shown by the TTIP negotiators to the people of Europe is the most potent reminder of the democratic deficit at the heart of the EU institutions.”

You can read the Independent article here: http://www.independent.co.uk/voices/ttip-leaks-shocking-what-are-they-eu-us-deal-a7010121.html

The revelations are disconcerting for the British and European peoples. For example, the Independent reports that TTIP could cause the privitazation of the National Health Service and the UK Parliament would be powerless to stop it.http://www.independent.co.uk/news/business/news/ttip-could-cause-an-nhs-sell-off-and-parliament-would-be-powerless-to-stop-it-says-leading-union-a7006471.html
See also: http://www.independent.co.uk/voices/comment/what-is-ttip-and-six-reasons-why-the-answer-should-scare-you-9779688.html

In our debate Sean O’Grady performed as a shill, a propagandist for the corporate interests behind TTIP. He said that it was a free trade agreement that benefitted everyone just as NAFTA and other such agreements have proved to be the case. Tell that to all the displaced American workers.

He said that it was unfortunate that the secrecy had possibly hurt the agreement’s prospects and that it would have been better if the pact’s provisions had been known as they were negotiated. That way, he said, the agreement would not be threatened by the shock effect of the leaked documents.

O’Grady also claimed that no one has thus far agreed to the pact despite the fact that the representatives have agreed to the pact. Perhaps what he means is that legislatures have not
given their approval.

The headline on the Independent article thinks the leak will prevent approval: “After the leaks showing what it stands for, this could really be the end for TTIP.” If so, O’Grady regards it as a great loss. For the global corporations, of course, not for the peoples it would exploit.

The Greenpeace revelations should deep-six the pact, but I am uncertain. French president Hollande says, provisionally, that France will not sign the pact as it is. In other words, give us some fuzzy language to make it look like we got it fixed.

The EU’s chief negotiator, Ignacio Garcia Bercero, a likely recipient of a large bribe, rushed to the defense of TTIP by declaring Greenpeace to be “flatly wrong.” Bercero’s statement makes no sense. Greenpeace released the official documents. No one denies that the leaked documents are legitimate. So apparently Bercero’s position is that the official documents are wrong. He sounds like a guy working hard for his money.

Bercero, went on to say, according to the BBC, that “it is not correct to say the US is pushing for lowering of the level of protection in the EU.” This is an amazing lie ! Those who are trying to put a good face on the leak themselves admit that this is precisely what the US is trying to do. They claim that the Europeans haven’t yet given in.

It is disingeneous for Bercero or O’Grady or anyone to pretend that TTIP has not been from the very beginning about establishing global corporate hegemony over the governments of democratic countries. I pointed this out when the corporations first made their move. There is no doubt whatsoever that the Trans-Atlantic and Trans-Pacific “partnerships” are about giving global capitalism immunity from the laws of sovereign countries.

EU Trade Commissioner Cecilla Malmstroem is, according to the BBC, “steering the TTIP talks.” Malmstroem, another likely recipient of a large bribe, says: “I am simply not in the business of lowering standards.” http://www.bbc.com/news/world-europe-36185746

Her statement is misleading. She is not in the business of lowering standards. She is in the business of making it possible for global capitalism to overthrow all standards, high and low.

From my encounter today with Sean O’Grady, a person whos integrity I no longer respect, I expect the corporate bought-and-paid-for Western financial press and governments to close ranks and discredit the leaked documents as some kind of Greenpeace “conspiracy theory.” Even in my presence, a former Assistant Secretary of the US Treasury and Wall Street Journal editor, O’Grady had no compunction about misrepresenting to my face the agreement as a good one harmed only by secrecy. If it hadn’t been secret, said O’Grady, it would have been OK.

All of the blather about free trade and tariff reduction is mere cover for the only purpose of TTIP, which is to establish American economic imperialism over the peoples whose governments sold them out for money.

Gripped By Climate Disruption, World On Brink Of Global Water Crisis

Deirdre Fulton

Global water shortages, exacerbated by human-caused climate change, are likely to spur conflict and migration across the Middle East, central Asia, and Africa—all while negatively impacting regional economies, according to a new World Bank report published Tuesday.

Rising demand combined with increasingly "erratic and uncertain" supply could reduce water availability in cities by as much as two thirds by 2050, compared to 2015 levels, the report warns. Meanwhile, "food price spikes caused by droughts can inflame latent conflicts and drive migration," a World Bank press statement reads.

The report further cautions: "Unless action is taken soon, water will become scarce in regions where it is currently abundant—such as Central Africa and East Asia—and scarcity will greatly worsen in regions where water is already in short supply—such as the Middle East and the Sahel in Africa. These regions could see their growth rates decline by as much as 6% of GDP by 2050 due to water-related impacts on agriculture, health, and incomes."

However, the World Bank adds, "the negative impacts of climate change on water could be neutralized with better policy decisions, with some regions standing to improve their growth rates by up to 6% with better water resource management."

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Scientists have warned that global warming is setting the stage for more frequent, and more devastating, droughts. Indeed, extreme drought is currently causing hardship in several of the regions named in the World Bank report.

Just this week, Zimbabwe put its wild animals up for sale, "saying it needed buyers to step in and save the beasts from a devastating drought," Reuters reported. On Tuesday, Burkina Faso's government began rationing water in its drought-hit capital, which is home to some two million people. Much of India is currently suffering from a scorching heat wave and severe drought conditions that have decimated crops, killed livestock and humans, and left at least 330 million Indians without enough water for their daily needs.

The World Bank's warning comes on the heels of a study published this week in the journal Climatic Change, which suggests that the Middle East and North Africa could become "uninhabitable" by the end of this century due to climate change and increasing hot weather extremes.

Echoing the World Bank, the Max Planck Institute researchers behind that study wrote: "We anticipate that climate change and increasing hot weather extremes in the [Middle East and North Africal], a region subject to economic recession, political turbulence and upheaval, may exacerbate humanitarian hardship and contribute to migration."

Maoist-backed, fascistic candidate leads Philippine presidential race

Dante Pastrana

With the 2016 Philippine presidential election due to take place on May 9, the emergence of a far-right candidate as the frontrunner is a stark warning to the working class. Rodrigo Duterte, who has pledged to summarily execute hundreds of thousands of alleged criminals in his first six months in power, is leading in the latest opinion surveys.

A poll conducted by Pulse Asia from April 16 to 20 showed Duterte, the mayor of Davao City, the fourth largest city in the country, with 35 percent support. Erstwhile frontrunner, Senator Grace Poe, was in second, with 23 percent. Administration candidate and Liberal Party standard-bearer Manual Roxas II, was third with 17 percent, followed by United Nationalist Alliance candidate Vice President Jejomar Binay with 16 percent.

In a similar survey conducted by the Social Weather Station, Duterte had 33 percent support, with Poe also coming in second at 24 percent.

Duterte is a right-wing populist. Between stints as either a congressional representative or Davao City vice mayor, Duterte held the Davao City mayoralty for 22 years. Throughout, without compunction, he openly espoused summary execution of alleged petty criminals and gave free rein to death squads. According to Fr. Amado Picardal, a human rights advocate, the death squads accounted for 1,424 victims. Most were accused of petty crimes and were both poor and young. The youngest was a 12-year-old boy.

Duterte has postured as an “outsider” of the political establishment, a simple “probinsyano” (from the provinces) sparring against the elites in the capital. More truthfully, Duterte is the product of the establishment and a symptom of its political degeneration and shift to the right.

Duterte was a state prosecutor during the dictatorship of Ferdinand Marcos. He was installed into the Davao City government by President Corazon Aquino. The subsequent explosion of extrajudicial murders in the city was aided and abetted by the successive administrations of President Fidel Ramos and President Gloria Macapagal Arroyo.

Arroyo sought to appoint him as her department secretary of local government, effectively signalling that she would countenance the expansion of Duterte’s vicious law and order campaign nationwide. The signal was taken up and implemented by other cities in Mindanao and the Visayas region.

While Duterte and Davao City police were briefly investigated under President Benigno Aquino, it was all for show following damning reports from the United Nations Human Rights Rapporteur and the international Human Rights Watch.

The political responsibility for the rise of extreme right-wing figures such as Duterte rests with the various Maoist parties in the Philippines. They have assisted successive administrations in suppressing any independent mobilisation of the working class.

Moreover, Maoists and ex-Maoists have been directly involved in cultivating and promoting Duterte for years. Former Maoists staff his campaign machinery, with an ex-guerrilla currently serving as his chief of staff. The assassins of the Davao death squads include former Maoist New People Army (NPA) members and, to this day, continue to use the NPA’s signature method. A member of the Maoist front organization Makabayan is currently a city councillor allied to Duterte.

Significantly, the bloodbath in Davao City has drawn no condemnation from Maoist-aligned human rights organizations. In fact, Jose Ma. Sison, the exiled head of the Communist Party of the Philippines, expressed his willingness to join a coalition government with Duterte. He dismissed concerns over Duterte’s plan for a mass killing of alleged criminals as simply “mouthing off,” despite the bloody record in Davao City.

Duterte has pledged to dump a hundred thousand corpses of alleged criminals in Manila Bay—more than enough, he declared, to make the fishes fat. Meanwhile, to big business, the stock and financial markets, he promised “business as usual.”

Duterte’s threats are above all directed at the suppression of the working class and rural poor. He has promised to deal with any political opposition by closing down government institutions, including the courts and Congress. He has pledged the return of the death penalty and promised to pardon all police and state security personnel implicated in summary executions.

In February, Duterte promised to set up trade union-free economic zones and threatened the union organizers of the Maoist-aligned labor federation, Kilusang Mayo Una, if they conducted any activity in the proposed zones.

The emergence of Duterte is part of the rapid rightward march of the whole political establishment amid a deteriorating economy, sharpening social tensions and the integration of the Philippines into the US war drive against China.

More than a decade of annual economic growth averaging over 5 percent for more than decade from 2001 to 2015 has been forged on the back of the working class and the poor. The legal minimum monthly wage is well below the government’s own poverty line. More than 50 percent of the population remains poor, with social inequality measured as the worst in South East Asia.

Duterte’s bloody record has prompted some limited expressions of unease, but not condemnations, in the US media. The concern is certainly not that Duterte will trample on democratic rights and unleash a wave of extra-judicial killings, but rather that he will not be a reliable ally as the US ratchets up pressure on China over the South China Sea.

Duterte, along with all the other presidential candidates, has pledged to implement the Enhanced Defence Cooperation Agreement (EDCA), which allows the US military to use the Philippines as a forward operating base against China. The candidates have vied with each other in whipping up reactionary nationalist sentiments, vowing to defend Philippine territorial claims.

At the same time, there are concerns in ruling circles that the rising tensions will cut across business and economic ties with China, which is by far the country’s largest trading partner. Throughout the campaign, the presidential candidates have sought to balance, oscillating between bellicose statements against Beijing and a ludicrous insistence that involvement in the US war drive will not affect Philippine economic relations with China.

Duterte is probably the most erratic. One day he declares that he will cut a bilateral deal with China to settle the territorial disputes in the South China Sea in return for economic concessions. Days later, he postures as a Philippine martyr ready to die to defend the country’s maritime claims if China refuses to abide by the outcome of a Philippine case currently before a UN tribunal in The Hague.

The Philippine ruling elite is presiding over a capitalist society wracked by brutal exploitation and inequality even as the US war drive threatens to impose more onerous demands on the working class and the poor, turning their children into cannon fodder for the confrontation against China.

None of the establishment candidates will hesitate to use police-state measures to impose their dictates on the working class. Duterte is only the most brazen of the representatives of the bourgeoisie.

Canada preparing to join US ballistic missile defense

Roger Jordan

Canada’s Liberal government is considering joining the US-led ballistic missile defense (BMD) system, reversing a decision taken 11 years ago by Paul Martin’s minority Liberal government.

The reopening of the debate over Canadian participation in BMD was announced in the 30-page “consultation” document Defence Minister Harjit Sajjan issued last month to kick-off the Liberals’ much-touted defence policy review.

Noting that Canada has not discussed its attitude towards the US missile defence program in over a decade, the “consultation” document presents the issue in a manner aimed at promoting Canada’s participation. It states, “Given the increase in the number of countries with access to ballistic missile technology and their potential to reach North America, this threat is expected to endure and grow more sophisticated in the coming decades.”

Its name notwithstanding, the US missile-defense system is anything but defensive. It is aimed at realizing US imperialism’s longstanding goal of developing the technological means to wage a “winnable” nuclear war—a strategic question that has been receiving growing attention in ruling circles in Washington in recent months.

Over the past decade, the US has spent some $100 billion on weapons to counter ballistic-missiles and it has partnered with NATO allies in Europe to station BMD equipment on that continent, as well as with Japan, South Korea and Australia in the Asia-Pacific.

Canada’s renewed readiness to sign up to this reckless initiative reflects its close integration with US imperialism–the most destabilizing force in world politics. Canada is a major ally in the Obama administration’s three major military-strategic offensives: in the Middle East, in Eastern Europe and the Baltic against Russia, and in the Asia-Pacific targeting China.

As Prime Minister Justin Trudeau has repeatedly stated, a key priority of his government is to deepen Canada-US cooperation. Toward that end, his government has announced a tripling of Canadian Special Forces’ troops in Iraq and is considering deploying Canada’s military in at least half-a-dozen other countries, including Libya, Mali, and Haiti.

As with the Chretien Liberal government’s decision not to participate in the Bush administration’s 2003 invasion of Iraq, the rejection of missile defense two years later had nothing to do with opposition to US military aggression. The Martin Liberal government combined its rejection of BMD with a budget that pledged to boost military spending by $13 billion over the next five years so as to demonstrate its commitment to an expanded and better-armed military.

If Liberal Prime Minister Paul Martin felt unable to approve Canadian participation in the US BMD program, it was because of the deep unpopularity of the Bush administration and the weak position of his Liberal Party, which was dependent on opposition support in parliament. Just a year later, Martin’s minority Liberal government was defeated in the 2006 federal election and replaced by Stephen Harper and his Conservatives.

Nonetheless, the 2005 decision did create frictions. Bush waited over a week before returning a call placed by Martin to the White House to explain Ottawa’s refusal to join BMD, and the corporate media was overwhelmingly critical of the Liberals’ position. What support there was in the Canadian elite for Martin’s decision was bound up with right-wing Canadian nationalism, including the claim that the BMD program would violate the country’s sovereignty.

In an April 25 comment, the Toronto Star’s Tim Harper notes that senior Canadian military officials have been lobbying to reverse the BMD decision virtually ever since the Martin government’s 2005 announcement.

A key factor in the Liberals’ determination to push forward with BMD is its intention to intensify cooperation with the US under the guise of “continental defence.” The defence policy review document also contains proposals to expand or “modernize” NORAD, the Canada-US joint aerospace command set up in 1958.

Another significant consideration in the reopening of the missile defence debate is the increased focus in policymaking circles on the Arctic. The US and Canada have seized on Russian military operations on its domestic territory in the Arctic to present Moscow as an aggressive player in the region that must be confronted. A number of reports and comments, including a study by the Conference of Defence Associations and the defence policy review consultation paper itself, point to concerns over the supposed dearth of Canadian military equipment and personnel in the region.

Canada’s full integration into the missile defence system would give it additional leverage in its moves to extend its territorial claims in the area around the North Pole, where it is directly being challenged by counter-claims from Russia. Fellow NATO-member Denmark has also submitted its own claim to a large swathe of the Arctic Ocean, based on its control of Greenland, including waters and ocean-floor coveted by Canada.

While the Harper government was considering joining BMD prior to last year’s election, the ruling elite concluded that the increased militarization of Canadian foreign policy and its further integration into US war plans against Russia and China could best be prepared with a Liberal government seeking to sell this reactionary agenda to the public behind a wave of “progressive” rhetoric. Sections of the ruling elite are concerned that this will become much more difficult should Republican frontrunner Donald Trump enter the White House after the US election this November.

The Liberals were discussing plans to deepen ties with US imperialism long before coming to power. Last June, Trudeau delivered an important speech calling for “real change” in Canada-US relations. One of his central demands was greater continental policy coordination between Washington and Ottawa to better project their common interests on a range of issues. This topic has been raised again in the current debate. Proponents of Canada’s participation in BMD argue that the current situation in which Canadian Armed Forces’ personnel are active in NORAD, which is responsible for providing radar data to the BMD system, but have no say in how the missile defense system is positioned and used, is untenable and poses a grave danger to Canadian geopolitical interests.

Barely two weeks after the Liberals’ sweeping victory in the October 19 election, the Centre on International Policy Studies think-tank issued a report urging the new government to reverse the missile defense decision as part of its declared goal of “reengaging” Canada on the global stage. One of the report’s authors, Bob McRae, Canada’s former ambassador to NATO, provocatively proclaimed at a public forum held at the University of Ottawa as the study was released, “Splendid isolation is not an option for Canada.”

At the same time, Sajjan received briefing material from the military, as part of his transition into office, which underlines the top brass’s support for BMD. “The strategic importance of ballistic missile defense,” said one briefing paper, “has increased in recent years.”

The Trudeau government offered a further signal of its intent to join BMD with its appointment of Bill Graham to the panel of four experts that is overseeing the defence policy review. A former Liberal defence minister, Graham is a strong advocate of missile defense. He told a Senate committee in May 2014 that participation in BMD was essential to protecting Canada’s privileged military-security relationship with Washington. “It seems to me,” said Graham, “we’re outside of an extraordinarily complex and amazingly new form of a weapons system which will affect our security but which we are foreign to decisions around its development. I think that’s a dangerous place to be.”

The Liberals and Conservatives on the Senate committee joined together to unanimously recommend Canada join BMD.

A Liberal decision to join BMD would be welcomed by the opposition Conservatives. Asked about the issue last month, former defence minister and likely Conservative leadership candidate Jason Kenny declared. “This is, I think, an obligation for us.”

The New Democratic Party, which opposed joining in 2005 and described BMD as “weaponizing space,” has criticized the Liberals for reopening the debate. Defence critic Randall Garrison said he had “a bad feeling” about the proposal, and told the Ottawa Citizen he feared it would trigger an arms race. Such hand-wringing is worth little coming from a party that has supported one imperialist military intervention after another beginning with Canada’s involvement in the NATO-led bombardment of Yugoslavia in 1999 and is on record as favouring increased military spending.

Puerto Rico declares moratorium on $367 million debt payment

Rafael Azul

On Monday May 2, what had been announced since last June finally took place; the government of Puerto Rico defaulted on part of a $422 million debt payment that was due on May 1. This is the largest default in Puerto Rican history. It is anticipated that this will be the first of many non-payments this year.

Governor Alejandro García Padilla had declared on May 1 in a televised address to the island nation: “As we confront having no liquidity to satisfy both the demands of our creditors and the services to our people, I am forced to choose. I have chosen that your basic needs are above everything else.”

Such words ring hollow, given that, since 2014, the governor has carried out policies that have eliminated jobs, closed schools and cut health care.

The García Padilla administration announced a “moratorium” on $367 million owed to Wall Street hedge funds by the Puerto Rican Development Bank. The government paid the balance of the $422 million, an interest payment of $22 million and $33 million owed locally.

The Puerto Rican legislature recently approved legislation providing a legal basis for the moratorium. The passage of this law, however, does not prevent credit agencies from declaring Puerto Rico in default and lowering bond ratings to junk status. Both Moody’s and Standard and Poors have ignored the Puerto Rican measure.

It has been reported that vulture funds and speculators are buying up Puerto Rican bonds at steep discounts from face value (anywhere from 10 to 70 cents on the dollar). The Puerto Rican state has some $72 billion in bond debt and will face another $2 billion in debt service this summer.

The moratorium takes place in the context of the inability of the US Congress to decide on a so-called rescue package for the island, known as PROMESA, which is centered on the imposition of a fiscal control board, a Wall Street dictatorship over the island with the power to impose austerity measures on Puerto Rican public employees, retirees, young workers and students.

The PROMESA bill, authored by Congressman Sean Duffy (Republican, Wisconsin), is stalled in Congress due to differences within the Republican Party majority. In its present form, it provides for a five-member financial control board, to be appointed by US President Barack Obama.

Puerto Rican authorities insist that they are not asking for a bailout or for bankruptcy protection, but for an extension of debt payments. “We neither desire a financial rescue, nor has it been offered [by the US Congress],” declared the governor on Sunday. “We only need the legal tools that will make it possible for us to confront this crisis and make for a more viable Puerto Rico.”

“We can’t wait longer. We need this restructuring mechanism now,” added Garcia Padilla.

While the US Congress has not yet reached agreement on PROMESA (in part because of fear that a rescue of Puerto Rico may encourage US states to ask for similar “bailouts”), a financial control board with veto authority over spending, like the one imposed most recently on Detroit, seems to be on the horizon. In its present form, elected Puerto Rican officials would have absolutely no power to decide anything having to do with government spending, taxes, pensions, or even the imposition of a sub-minimum wage for workers under 25, on the pretext of creating jobs.

Bondholders and hedge funds have pressured against PROMESA, insisting that Puerto Rico pay its debts on the basis of draconian austerity measures. At the same time, privately, debt specialists and bond insurers are admitting that some sort of rescue, involving the downgrading of debt and extension of payments, is inevitable.

As the economy sinks, Puerto Rico faces an exodus of emigration to the US mainland. Compounding the social crisis has been the closure of hundreds of schools, and the outbreak of the Zika virus. At last count there were some 683 confirmed cases of Zika infections in Puerto Rico, including 49 pregnant women. Four have died from the disease and another four have developed paralysis.

A year ago, as the debt crisis was progressing, the Puerto Rican government cut appropriations for public health by $250 million, resulting in the closure of hospitals and health care centers. Thousands of public employees needed for mosquito eradication efforts have been sacked. The government’s response has been to offer early parole to imprisoned drug offenders in return for helping fight the Zika epidemic.

Also last year, the US Congress imposed cuts in Medicare and Medicaid for Puerto Rican households. Since 2014, thousands of doctors and health professionals have migrated to the United States, together with 144,000 others—an enormous “brain-drain” not seen since the mass emigrations of the 1950s.

About 50 percent of Puerto Ricans live in poverty, about three times the US rate. Median household income is less than $19,000—half of the household income in the poorest state in the US, Mississippi.

Australian government budget sets stage for volatile federal election

James Cogan

The Coalition government headed by Prime Minister Malcolm Turnbull brought down its 2016–2017 financial year budget last night, laying out the campaign slogans and agenda it will take to the federal election due to be called in the next week. Polling day is almost certain to be set for Saturday, July 2.

In his speech to the federal parliament, Treasurer Scott Morrison claimed that the first Turnbull budget was an “economic plan for jobs and growth.” The government’s estimates of revenue, however, are based on fanciful predictions of growth as the global economic downturn deepens.

Morrison declared the country was making a “transition” from an “unprecedented mining investment boom”—largely based on high-priced, large volume resource exports to China—to a “new economy” driven by an “ideas’ boom.” The Treasury department predicted that economic growth in Australia would increase from 2.5 percent over the coming 12 months, to 3 percent during each of the following financial years to 2020–2021.

The absurdity of such figures was demonstrated even before Morrison rose to his feet to deliver the speech. Just hours earlier, in a virtual vote of no confidence in government policies, the Reserve Bank of Australia cut its base interest rate to a historic low of 1.75 percent. This action was taken in response to data revealing that Australia has joined numerous other countries by slumping into deflation, with a fall of 0.2 percent in the consumer price index in the first three months of the year. Further interest cuts are expected, with the RBA warning that global growth estimates had been downgraded again and highlighting the continuing slowdown in China, Australia’s largest export market and trading partner.

Even as Treasury provided Morrison with predictions of sustained growth for the next five years, it was compelled to note falls of more than 25 percent in mining investment in 2015–16 and 2016–17. Since the peak of the mining boom in 2010–2011, the price for major Australian mining exports, such as iron ore and coal, have fallen as much as two-thirds, plunging the balance of trade into large deficits. The budget paper observed: “Low inflation, low wage growth and low productivity growth being experienced in many advanced economies could become embedded in lower growth potential over time.”

The vice president of global credit rating agency Moody’s, Marie Diron, poured cold water on the government’s budget forecasts. She declared: “We estimate that the adjustment to an environment of lower commodity prices is still underway and will continue to weigh on corporate profitability and wage growth. As a result, improvements in the government’s revenues may be somewhat more muted than currently budgeted.”

The reality of Australian capitalism is that further global shocks could send it over the economic precipice, triggering a collapse in the speculative real estate bubble that has been largely responsible for what growth has taken place. The country’s major banks are highly exposed to an increase in corporate bankruptcies and household debt defaults, caused by falling property prices and rising unemployment.

The fiction that Australia will return to growth regardless of the state of the global economy enabled Morrison to announce a return to budget surpluses from massive budget deficits sometime in the early 2020s—without announcing austerity measures on the scale imposed in the US and Europe. The budget is, nevertheless, predicated upon ongoing and draconian cutbacks to the living standards and social rights of the working class, in order to finance three key measures: the ramping up of military spending, spelled out in the January Defence White Paper, the reduction of the corporate tax rate and small tax reductions for the highest income earners.

The military budget rises by 3.1 percent to $32.3 billion. This is the first increment in increases that will see $195 billion spent over the next decade on the acquisition of new warships, aircraft and submarines, as part of the US-led war preparations against China. Australia’s military deployments in Afghanistan, Syria and Iraq have been funded for the next 12 months to the tune of $686 million.

The corporate tax cuts begin for small-to-medium businesses with turnovers of less than $10 million. Their tax rate will fall from July 1 to 27.5 percent, from the current 28.5 percent. Over the following decade, the rate for all companies, large and small, will be reduced to 25 percent. At the same time, the income threshold at which individuals begin paying 37 percent tax on their income will rise from $80,000 to $87,000—an amount earned by less than 25 percent of tax payers. The main beneficiaries will be the top 3–4 percent, who pay 45 cents in the dollar on income earned over $180,000. They will also gain from the elimination of a temporary 2 percent tax increase that was introduced in 2014.

The hand-outs to business and the wealthy will lower revenue by $9.25 billion over four years. The expansion of military expenditure will cost billions more. It will be paid through the ongoing war against the working class, conducted by successive Labor and Coalition governments since the 1980s, leaving millions in financial stress or outright poverty.

Among the most brutal measures are:

* 30,000 unemployed young people aged under 25 will be pushed each year into a “voluntary” cheap labour scheme that enables private businesses to employ them as government-subsidised “interns.”

* Subsidies to aged care providers for complex health services will be cut by $1.2 billion over four years. Incentives for pathology and radiology providers to “bulk-bill,” rather than charge clients up-front for services, will be axed, saving more than $600 million.

* 90,000 disability support pensioners will be subjected to eligibility requirements, forcing at least 30,000 onto the unemployment benefit, which pays $130 less per week. All new aged pension and welfare applicants will receive 1.7 percent less than the current already below-poverty-line payments, by denying them the so-called compensation handed out in 2011 for the former Labor government’s now defunct tax on carbon emissions. The savings will be directed into financing the National Disability Insurance Scheme (NDIS), which was launched by Labor in 2012 with the primary aim of privatising disability services and driving disabled people into the workforce.

* Government departments will have to find “efficiency” savings of $1.9 billion, leading to thousands of public sector job losses, on top of more than 10,000 redundancies since 2013. Entire areas of the public sector are being prepared for privatisation as part of the NDIS and the contracting out of Medicare payment services.

* Tens of billions of dollars in funding, cut in 2014 from grants to state governments to finance public health and education, have not been reinstated. In response, the Australian Medical Association declared that the health system faced a “funding black hole.” The federal government has handed to the states the task of imposing deeper cutbacks to already vastly underfunded and increasingly dysfunctional public health and education services. While plans to de-regulate university fees have been shelved for the time being, funding to universities will be cut by 20 percent over the coming years.

* If re-elected, the Turnbull government will resubmit legislation that was blocked in the Senate in 2014 and 2015 and which, if passed, will inflict over $13 billion in welfare cuts. These will affect the poorest sections of society. The measures include changes to family tax benefit eligibility, reductions in pharmaceutical benefits, a one-month waiting period for young people to access income support, and raising from 24 to 25 the age at which individuals can qualify for the higher Newstart unemployment benefit, rather than the Youth Allowance. The Coalition will also attempt to push through an increase in the aged pension eligibility age from 67 to 70, for all citizens born after 1965.

In an attempt to deflect populist accusations by the opposition Labor Party and the Greens, to the effect that its budget favoured the rich and the major corporations, the Turnbull government introduced changes to various concessions that have enabled the wealthiest individuals to avoid tax by directing income into their superannuation (private retirement) funds. It also announced a crackdown on multi-national tax evasion, modelled on the “Google tax” introduced by the Cameron government in the UK.

As the details and implications of the budget measures filter out, however, a groundswell of condemnation is already developing over the raft of attacks on the working class and poor.

The upshot is that the first-term Coalition government, which was already facing likely defeat, will enter an election campaign reviled by millions of ordinary people while, at the same time, facing criticism from the most rapacious layers of the financial and corporate elites for failing to impose savage austerity cuts. The editorial of the Australian Financial Review today declared, “this is not the budget that Australia could have had or should have had,” and lambasted Turnbull and Morrison for taking major spending cuts “off the table until after the election.”

The stage has been set for an election campaign marked by tremendous tension and volatility, above all due to the ongoing crisis and breakdown of the two party-dominated parliamentary system, which has provided Australian capitalism with relative stability for well over a century.

Poverty grows, health declines among UK children

Margot Miller

“Fairness for Children,” a report by UNICEF, reveals the income disparities that exist in the 41 richest countries and the devastating impact of inequality.

Its “report card 13” reports on how far the bottom 10 percent of children have fallen below their peers in the middle of the distribution, and ranks the 41 countries in its remit accordingly.

The report makes a comparative measure of “bottom-end inequality,” in income, educational achievement and health and happiness, to see how far children in the bottom percentile have been allowed to slip behind their peers since the financial crash of 2008. Bottom-end income inequality increased between 2008 and 2013 in half of the richest countries, worsening the health, educational outcomes and life chances of children.

Children in the UK fare particularly badly. In terms of inequality in education, UK children rank 25th out of 37 countries. This is measured by how children score in the international Programme for International Student Assessment (PISA) tests in reading, maths and science at age 15. Only 12 other countries in the study do worse by their poorest children in terms of educational achievement. The UK ranks after Poland, Romania and Slovenia. Eleven percent of UK children perform below PISA proficiency level 2.

The research underlines the abject failure of the relentless exam and target-led reforms implemented by successive UK governments.

This inequality gap in educational achievement is highlighted by UK government statistics from the Evaluation Office Agency. In areas in the north of England, such as Stockport, Trafford and Warrington, just 1 in 20 schools deemed outstanding by the government watchdog Ofsted serve lower-income areas. Nor can poorer families afford to move to the catchment areas where the more “desirable” (based on exam results) schools are.

In any case, as report card 13 reveals, educational achievement, even if measured by the narrow prism of tests, correlates with income inequality and deprivation. Finland, which has one of the lowest gaps in income inequality, also has one of the lowest proportions of 15-year-olds falling below the Pisa level 2 proficiency level.

In terms of overall health between the bottom 10 percent and the average, the UK ranks most unequal in terms of the consumption of fresh fruit and vegetables and has one of the largest gaps in the amount of physical activity children take. The latter is no doubt a consequence of the selling off by governments of school playing fields to developers, combined with the squeezing out of sports from the school curriculum in favour of the “three Rs” (reading, writing and arithmetic).

UNICEF deputy executive director for the UK Lily Caprani observed that “more of our children are at risk of becoming overweight and obese.” Though all key stage 1 children (up to seven years old) are now entitled to a free school lunch, meals are provided by private companies whose priorities are not healthy eating but profit making.

Nor does this growing epidemic of obesity in children conflict with more and more children turning up at school hungry or being underweight. Malnutrition may present itself in the form of obesity, as the poor can only afford cheaper processed foods, laden with fats and sugar and depleted of essential vitamins.

A report undertaken on behalf of the All Party Parliamentary Group on Hunger revealed that one in five children in some UK primary schools start their first and final years underweight, a “shock increase” of 15 percent “in an age of rampart child obesity.”

Data collected for the House of Commons Library for 2011 pointed to half a million under-fives who were anaemic, the highest level in 20 years. The number of pregnant mothers with anaemia is on the rise, while an increasing number of people admitted to hospital in an emergency are found to be suffering from malnutrition.

In terms of income inequality between children living in the poorest households and the average, the UK does not rank as low as some other countries, coming seventh out of 41. A government spokesman boasted that “there are now three hundred thousand fewer children in poverty” in the UK.

Closer inspection reveals a less rosy picture. Child poverty is measured as the percentage of children in households with incomes below 50 percent of the national median income. However, median income has fallen because of the decline in wages of those in the middle. This means that though the gap between the lowest and median income is smaller, this does not indicate that the poor are any less poor in real terms.

Without what the report calls “social transfers” (welfare benefits and progressive taxes) the UK would rank among the bottom of the countries in the study. And it is these that are under ferocious attack by the Conservative government. Cuts to working and non-working benefits since 2013 and the introduction of Universal Credit are projected to increase child poverty by 50 percent by 2020, according to the Institute for Fiscal Studies.

Alison Garnham, chief executive of the Child Poverty Action Group, reiterates the point that removing the UK social security system benefits will expose children to the worse ravages of poverty “by the end of the parliament.”

In relation to the introduction of Universal Credit, which combines six benefits into one, Labour’s shadow welfare and pensions secretary, Owen Smith, said this will leave “a working single mother £3,000 a year worse off,” and “over two million working families will lose an average of £1,600 per year, driving up child poverty.”

Notwithstanding these comments, Labour is as committed to austerity as the Tories. Shadow Chancellor John McDonnell has pledged that Labour would operate under a “fiscal credibility rule” and “commit to always eliminating the deficit on current spending in five years.”

The government is attempting to remove tax credits from the working poor. Iain Duncan Smith, the former secretary of state for work and pensions, who was also the architect of the hated “Bedroom Tax,” announced that the Tories would move to repeal the 2010 Child Poverty Act. Cuts to tax credits were incompatible with the targets outlined in the act to eradicate child poverty by 2020.

Duncan Smith spearheaded an attempt by the government to redefine the poverty level, to factor in family breakdown, debt and drug addiction, for example, and shift away from the present definition of families existing at 60 percent of the median income. The purpose is to stigmatise the poor and shift the blame for poverty away from the capitalist class and its governmental representatives.

These attacks follow unprecedented cuts, carried out by successive Labour and Conservative governments since 2008, with local authorities enforcing a reduction of spending on children and young people by £2 billion, or 71 percent.

The UNICEF report card ends with appeals to governments to alleviate child poverty by creating more employment opportunities, through progressive taxation and effective service provision. But the eradication of child poverty, along with the other scourges of austerity and war, will only end when the working class puts an end to capitalism.

May Day 2016 and the future of socialism

Joseph Kishore

On Sunday, May 1, the International Committee of the Fourth International’s third annual International May Day Online Rally attracted broad participation from workers and youth throughout the world. It was the only international event that presented to the working class a genuinely Marxist and socialist perspective in response to the spreading wave of imperialist violence that threatens the very future of humanity.

The rally was an expression of a significant growth in the political influence of the ICFI. The meeting was accessed by nearly 2,500 people, an increase of more than 40 percent over 2015. The number of countries where there were listeners increased from about 80 to 98. The size of the audience was also reflected in the large number of comments, nearly 750, submitted by listeners.

The response confirms other signs indicative of the growing political influence of the World Socialist Web Site. In February and March, according to Compete.com, the total number of individual users who accessed the site was close to a quarter million, significantly higher than the previous year.

Underlying this growth are significant objective factors. First, the past year was characterized by an enormous intensification of geopolitical conflict and a growing concern among workers and youth internationally over the danger of war. The “war on terror,” which is approaching its 15th anniversary, is developing into a global battle between major powers, centered on the increasingly provocative efforts by the US to economically and militarily encircle Russia and China. The possibility of nuclear war is once again being openly discussed by government officials and geopolitical strategists.

Second, the lasting impact of the 2008 economic crisis and the subsequent restructuring of class relations is finding expression in a growth of social militancy that is acquiring a political dimension. In the United States, the center of world imperialism, the past year has been dominated politically by an election campaign that has seen a collapse in the authority of the old political parties and their traditional representatives. As David North, chairman of the WSWS International Editorial Board, noted in his opening report to the rally:

There are many signs of a growing anti-capitalist political radicalization of the working class and youth throughout the world. Perhaps the most significant is the fact that millions of American workers, in the recent series of primary elections, cast their vote for a candidate who had identified himself as a socialist. Of course, the “socialism” of Bernie Sanders is little more than warmed over liberalism. But Sanders attracted support not because of his political opportunism, but because he was perceived by workers to be advancing, to use his own words, a “political revolution” against social inequality.

Class struggle is emerging as a dominant factor in the political situation in every country. Over the past year, hundreds of thousands of workers and youth in France participated in protests against right-wing labor reforms and an anti-democratic “state of emergency” imposed by the Socialist Party government. Autoworkers in China and India have launched strikes against attacks on wages and working conditions. Throughout Europe, there is deep opposition to relentless austerity dictated by the banks.

Another element in the growth of the influence of the International Committee is the increasingly clear differentiation between genuine Marxism and the politics of organizations that claim to be “left,” but in fact represent the interests of more privileged sections of the middle class. In Greece, Syriza rose to power in January of last year and rapidly repudiated all of its election promises. By the end of 2015, the “Coalition of the Radical Left” was implementing EU-backed austerity while serving as a front-line police force in the brutal attack on refugees throughout the continent. Based on the analysis of the WSWS, a section of workers and youth are beginning to draw conclusions from this experience.

There is still a vast gulf between the level of political consciousness and the dangers that confront the working class. The rally had an audience in the thousands, not yet in the hundreds of thousands or the millions. However, bigger numbers will come. The growing readership of the WSWS and the response to the May Day rally anticipate a much broader turn of workers throughout the world to genuine socialist politics.

Here, the question of political leadership is decisive. A socialist revolution develops out of the interaction between the objective movement of the working class and the intervention of the revolutionary party.

The most remarkable feature of the May Day rally was the unified and politically coherent perspective advanced by all of the speakers. Leaders of the ICFI from the US, UK, Germany, Sri Lanka and Australia delivered speeches (to be published on the WSWS over the next week) on some of the most important political issues confronting the international working class, including the consequences of a quarter century of virtually ceaseless war; the impact of the Obama administration’s “pivot to Asia” on India, Australia and the entire Pacific region; the growth of German militarism, the crisis in Europe and the imperialist campaign against Russia; the Brexit campaign in the UK; the refugee crisis in Europe, the Middle East and North Africa; the consequences of US-China tensions for Latin America, and the political crisis in the United States.

The fight to unify the working class of all countries and build a political leadership for the emerging struggles against war, social inequality and the assault on democratic rights was a dominant theme in all the speeches. As Wije Dias, general secretary of the Socialist Equality Party in Sri Lanka, argued in his remarks, “The crucial question is to arm the incipient rebellion of workers around the world with a program and perspective that articulates their objective interests as a global class and protagonist of a new social order, free of want and war.”

The ICFI proceeds with an immense degree of revolutionary optimism. The capitalist crisis produces not only war, it produces as well the conditions for socialist revolution. As David North put it in analyzing the political situation in the United States, “The basic narrative of American political exceptionalism—that the working class will never turn to socialism in the United States—has been refuted in practice. A new chapter in the history of the American class struggle is beginning. Socialism, suppressed for so long in the United States, is entering a period of explosive growth.”

This has the most far-reaching international implications. The growing support for socialism will develop not as a national, but as a global process.

One historical period is coming to an end and a new period is beginning. The quarter century of political confusion and disorientation created by Stalinism and the dissolution of the Soviet Union, along with the right-wing shift of “left” politics, is giving way to a period of political radicalization and struggle.

The May Day rally was a significant event in the history of the ICFI and the fight to build an international movement of the working class and youth against imperialist war and the capitalist system. We record in the May Day rally this important milestone, while also recognizing the immense challenges ahead.

Is the US Economy Heading for Recession?

Jack Rasmus

This past week the U.S. government announced the country’s economy rose in the January-March 2016 at a mere 0.5 percent annual growth rate. Since the U.S., unlike other countries, estimates its GDP based on annual rates, that means for the first quarter 2016 the U.S. economy grew by barely 0.1 percent over the previous quarter in late 2015.

Growth this slow indicates the US economy may have “slipped into ‘stall speed’, that is, growth so weak that the economy loses enough momentum and slides into recession”, according to economists at JPMorgan Chase.

Has the U.S. economy therefore come to a halt the past three months? If so, what are the consequences for a global economy already progressively slowing?  What will an apparently stagnating US economy mean for Japan, already experiencing its fifth recession since 2008? For Europe, stuck in a long term chronic stagnation? And for emerging market economies, struggling with collapsing commodity prices and currencies, rising unemployment, and long term capital flight trends? Once heralded as the only bright spot in the global economy, the US economy now appears to have joined the slowing global trend.

Some Interesting Trends

Last quarter’s 0.5 percent U.S. GDP may indicate the nation’s economy is even weaker than it appears. The economy of the United States’ recent 0.5 percent growth rate is the latest in a steady declining U.S. GDP growth trend over the past year. In the previous fourth quarter 2015, the US economy grew 1.4 percent, which was down from the preceding quarter’s growth of 2 percent and before that 3.9 percent.  So the U.S. economy appears to be slowing rapidly over the past year.

Over an even longer period of more than eight years, since the previous peak growth in late 2007, the U.S. economy has grown by a cumulative total of only 10.1 percent.  That’s a paltry annual growth of only 1.2 percent a year on average for the past 8+ years.

But even those figures are overestimated. In 2013, the U.S. redefined the way it estimated GDP, adding categories like R&D expenses and other intangibles that artificially boosted U.S. GDP estimates simply by redefining it.  That “economic growth by redefinition” raised GDP by around 0.3 percent annually, and in dollar terms by roughly US$500 billion annually.  So the real U.S. GDP may be actually growing by less than 1 percent on average per year since 2007; and during the most recent quarter, January-March 2016, the economy may not have grown at all, but may have stagnated, collapse, and come to a halt.

Behind the Wizard’s Curtain

The media and press like to define recessions as two consecutive quarters of negative GDP growth. Actually, U.S. economists tasked with declaring when a recession has begun or has ended don’t rely totally on GDP estimates, which are notoriously inaccurate and have become increasingly so, given U.S. and other governments’ penchant for changing how they define GDP.

Redefining GDP to boost the appearance of growth is not just a problem in the US in recent years.  For example, there are few independent research sources that think China is growing at its officially announced 6.8 percent GDP rate. To note but a couple, both Capital Economics and Lombard Street research estimate that China’s GDP is growing at only around 4-4.5 percent based on close examination of other indicators like electricity usage, power generation, local transport volumes, and so forth.   In recent years India officially nearly doubled its GDP overnight by redefining it. So did Nigeria.  India bank researchers, whom this writer has talked to, say they have a rule of thumb: take the official government GDP rate and half it and that’s probably close to India’s actual GDP. In Europe, a number of economies, including Britain, which have been desperate to raise their GDP in recent years, now include drug smuggling and prostitution services in their estimates of GDP. How they come up with such estimates and the pricing of such services is, of course, interesting.

Not satisfied with the media-press definition of a recession as two consecutive quarters of negative GDP, US economists at the National Bureau of Economic Research, who are tasked with declaring the beginning and end of a recession, look at various economic indicators — like industrial production, retail sales, exports-import trends, and other sources. A recession may occur in just one quarter; or may require more than two.

Looking at these other indicators for this past January-March 2016 period, the US economy appears even more likely headed for a recession and sooner rather than later.

US industrial production (manufacturing, mining and utilities) declined at an annual rate of -2.2 percent this past quarter, after having declined -3.3 percent the preceding quarter. Industrial production has fallen six of the last seven months. US industrial capacity is now at its lowest point since 2010.

Business investment is another trouble spot. Investment in business structures fell by -10.7 percent and investment in new equipment by -8.6 percent, the latter the biggest drop since the 2007-09 recession.  Business inventories rose barely, by the smallest amount in two years, continuing a slowing trend of the past nine months.

And what about consumption, which constitutes about two thirds of the total US economy? US consumer spending has been growing at an average monthly rate of only 0.1 percent. Retail sales, the largest element of consumer spending, has fallen every month on average during the quarter.  After having sustained retail sales in previous years, auto sales, a large component of retail sales, declined for the second consecutive quarter during the January-March period.  The outlook for U.S. consumer spending recovery is also not too bright.  A recent Gallup poll reported that 60 percent of those interviewed indicated the U.S. economy was “getting worse.”  Reflecting the poor demand for consumer goods, U.S. consumer prices now hover on the brink of deflation, falling at an average monthly rate of -0.1 percent for the quarter.

Exports are declining, residential housing construction recently plummeted. In other words, not many of the economic indicators that comprise GDP show a promising picture. GDP should probably be even lower than the recently reported 0.5 percent annual and 0.1 percent quarter to quarter growth rates.  The U.S. economy has obviously “stalled.” But it’s not the first time. In fact, it’s the fifth time it has since the official end of the last recession in June 2009.

What’s a Relapse?

The performance of the US economy this past January-March, a trend that appears is continuing into April, represents what this writer has called an ‘economic relapse’. A relapse is a collapse of economic growth for a single quarter, to near zero or even negative growth.

The U.S. economy has experienced now five such single quarter relapses since the 2007-09 recession was officially declared over.  The economy collapsed to 0.1 percent in early 2011, to 0.2 percent in late 2012, declined again by -2.2 percent in 2014 and collapsed to 0.2 percent in 2015.

Relapses are the consequence of “epic” recessions such as occurred in 2007-09, which are typically characterized by short, shallow recoveries that slip repeatedly into periodic bouts of renewed stagnation.  They are the result of near total reliance on central bank monetary policies that are designed to boost stock, bond and other financial markets — and thus the incomes of rich investors — but which fail to generate a sustained real economic recovery.  Fiscal policies designed to stimulate consumption and good paying jobs are rejected. That almost perfectly describes U.S. economic policy the past eight years.

Politicians Wearing Rose-Colored Glasses

Despite the facts, U.S. government politicians and Federal Reserve bank officials continue to run around declaring that the U.S. economy is performing well. They like to cite the 200,000 jobs allegedly created in recent months. But a closer examination shows the jobs being created are part time, temp, contract, low paid, no benefit service jobs. Jobs that generate no overall wage increase for the economy and no real income gains for working people.

Young workers 30 years old or less are especially hard hit by this “‘well performing US economy.” A recent study by the Center for American Progress, for example, showed that 30 year old workers earn today the same pay, adjusted for inflation, that 30 year olds earned back in 1984.

Despite all that, President Obama continues to tour the country complaining that he doesn’t get enough credit for bringing the US back from the worst recession since the 1930s depression.  He should tell that to the millions of millennial young workers, with low paid crappy service jobs, with no medical insurance, having to live at home with relatives because they can’t afford to rent an apartment, loaded with debt and with no prospects for meaningful change on the horizon.  No wonder they’re rallying around Bernie Sanders, who continues to capture 85 percent of their votes in the presidential primaries.  Obama (and Hillary) will have a hard time convincing them “all is well” — and an even harder time getting them to vote Democrat in the coming election in November.