UK’s two-child limit welfare policy driving children into poverty

Simon Whelan

A study by the Child Poverty Action Group (CPAG) reveals how the UK’s two-child policy for welfare benefits is negatively affecting 1.5 million children, with more than a million of those affected growing up in poverty.

Official government statistics revealed last summer that one in 12 of all UK children now live in families hit by the two-child limit. It is forecast to affect roughly 3 million children in the future. 

Footprints in the Community food bank in northern England receives donations [Photo: Twitter/Footprints UK]

The 1.5 million figure includes all children in a family subject to the limit rather than only each subsequent child who is ineligible for support as a result of the policy. Additional children in the family without additional income mean less money all round.

Speaking on the report April 5, CPAG chief executive Alison Garnham said, “Six years to the day since this nastiest of policies came into effect, our survey is showing its devastating effects. The two-child limit makes it impossible for parents to provide their children with essentials—and the cost-of-living crisis is adding extra pain.”

The two-child limit restricts child universal credit and tax credits allowances to the first two children in a family, unless the children were born before April 2017 when the policy was introduced. CPAG found that families were being deprived of up to £3,235 a year.

Exemptions apply only for those who had children in a multiple birth or children conceived due to rape or coercion. Even the exemptions themselves are reactionary as women must disclose that they were raped in order to be eligible—under what has become known as the “rape clause”.

The cruel and vindictive two-child limit was introduced by Theresa May’s Conservative government as a stick to beat the poor. It was justified with the implication that the working class are frivolous welfare cheats who only have children to avoid employment and claim supposedly “generous” welfare benefits.

A government spokesperson responded to the CPAG report by doubling down on the Dickensian policy: “The two-child policy means families on benefits are asked to make the same financial decisions as families supporting themselves solely through work, including considering our comprehensive childcare offer for working parents and child benefit for all children.”

In fact, 58 percent of families affected by the limit are in work. As for childcare, the private sector is bleeding parents dry—a part-time nursery place (25 hours a week) costs an average of nearly £8,000 a year.

The CPAG study found zero evidence to suggest the two-child policy had affected fertility rates but plenty of proof that it was pushing very large numbers of children into or deeper into poverty.

Last year a study by academics at universities in York and Oxford found the continuation of the two-child limit during the cost-of-living crisis was “creating an almost impossible context for affected families, with a risk of long-lasting harm for millions of children”.

As part of their study, the CPAG took submissions from more than 3,000 parents who have taken part in an ongoing survey about the two-child limit. The researchers found that in the last year many more families had struggled to pay for basics like energy bills and food. Individual testimonies relate parents missing meals, a daily reliance upon discounted foods, children unable to join school clubs and outings and mothers financially forced to return to work when their babies are only months old.

Respondents told the CPAG:

“I now find myself struggling to put food on the table. I couldn’t even bear to think what will happen when I run out of oil heating which I know will happen soon...  I’m really, really struggling.”

“I work full time, my wife cares for our children and my elderly mother. We are doing everything right and yet we can’t afford the basics.”

“We can’t afford much. Literally living hand to mouth, everything has gone up. Have one meal a day as a parent so kids don’t go without.”

“It would have been nice to be able to afford clothes and other basics. We are going to really struggle when our third child starts eating food.”

Similar statements are collected under the subheadings: Children are losing out, Families going into debt, and Mental health suffers.

The study by the CPAG showed that of working families affected by the two-child limit 87 percent said the policy made it harder for them to pay for food during 2022-23, up from 78 percent a year before. The percentage for non-working households is 90 percent. For all affected families, the proportion struggling to pay energy bills rose from 73 percent to 82 percent.

The CPAG notes that while the government has provided small payments to assist with living costs for low-income households, these are made at a flat-rate and make no allowance for the number of children in a household.

Alison Garnham, CPAG chief executive, stated, “The number of children in poverty rose by 350,000 last year – and the two-child limit played a big part in that rise. There is no place for this policy in a country that believes all children deserve a good start. Ministers must remove it before it does more damage to children and to family life.”

Recent analysis by the Scottish government suggests that, in terms of reducing child poverty, the two-child limit would be the most cost-effective UK welfare reform to reverse.

The CPAG calculates that abolishing it would cost a mere £1.2 billion and would lift 250,000 children out of poverty, with a further 850,000 lifted from deep poverty. By way of comparison, the Tory government has already spent well in excess of £5 billion pursuing NATO’s war in Ukraine against Russia and pledged billions more.

Fox Corp. to pay $787.5 million for pushing Trump election lies

Patrick Martin

Fox Corp., the corporate owner of Fox News, agreed Tuesday to pay Dominion Voting Systems $787.5 million to settle a lawsuit triggered by the broadcast on a massive scale of slanders claiming that the company’s voting machines had switched votes from Donald Trump to Joe Biden in the 2020 election.

The settlement was the largest ever in a US lawsuit for defamation and comes to nearly 10 times the market value of Dominion, one of the main manufacturers of voting machines for US elections. The $787.5 million is nearly equal to the total assets under management of the comparatively small hedge fund that owns Dominion.

The lies about Dominion were one of the central pillars of the “stolen election” propaganda campaign launched by Trump and his political entourage after his defeat in the 2020 election. Trump lawyers Rudy Giuliani and Sidney Powell were repeatedly given platforms by Fox hosts like Sean Hannity, Tucker Carlson and Laura Ingraham to spout their false claims against Dominion.

This campaign culminated in the organized assault on the US Capitol on January 6, 2021, when a mob summoned to Washington by Trump marched from the White House and stormed the building, blocking for many hours the congressional vote to certify the Electoral College result showing Biden’s victory over Trump by a margin of 306 to 232.

Fox’s role in encouraging and inciting the first-ever attempt to overturn the result of a US election by force was not an issue in the lawsuit, but it shapes the response of both the corporate media and the political establishment. It no doubt contributed to the decision by Rupert Murdoch and his inner circle to settle rather than continue to fight a lawsuit they had bitterly contested right up to the day when opening arguments were to be presented to a Delaware jury.

Rupert Murdoch, left, Donald Trump, right. [AP Photo/Mary Altaffer, Evan Vucci]

By settling, whatever the cost, Murdoch and his Fox News underlings avoided being put on the witness stand and compelled to give testimony that might go even further in exposing the inner workings of the principal media organ of the fascist right in America. They had already given sworn depositions to Dominion, but testifying in open court with massive media attention could have led to even more damaging revelations.

Murdoch and other top aides, as well as Carlson, Hannity, Ingraham and other fascistic “hosts,” had already admitted that there was no evidence to support Trump’s claims of a stolen election, and that they did not believe these claims during the period, from November 2020 through January 2021, when Fox programs were providing a platform for the non-stop propagation of these claims.

The initial attempt by Murdoch to suggest an arms-length relationship with Fox News programming decisions—despite the fact that his son Lachlan is the Fox Corp. CEO—was blown up by the release of emails and other messages in which Murdoch complained about the lack of evidence underlying the “stolen election” lies, but then gave permission for them to continue.

In sum, the settlement with Dominion amounts to an admission by the single largest US media empire that it systematically broadcast false statements about the 2020 elections, week after week, knowing that they were false. The obvious conclusion is that similar deliberate and massive lies are being broadcast today by the corporate media, not just about the 2020 elections, and not just by Fox News.

The settlement does not end the legal proceedings against Fox and other Trump allies relating to the election lies. Dominion is also suing Newsmax and One America Network, right-wing media rivals of Fox whose ratings increases were a concern to Fox executives in the aftermath of the 2020 election. It is also suing several of the most aggressive proponents of the slander campaign over “vote-switching,” including Mike Lindell, CEO of MyPillow, and Trump lawyers Rudy Giuliani and Sidney Powell.

A second voting machines company, Smartmatic, is also suing Fox over the same lies on the same broadcasts, seeking damages of $2.7 billion. Its suit was filed later and in New York courts, where it is moving to trial far more slowly. Smartmatic can use all the sworn depositions and court findings in the Dominion case as part of its suit.

The Fox News Network announcement of the settlement was brief, but packed with more lies and half-truths: “We are pleased to have reached a settlement of our dispute with Dominion Voting Systems. We acknowledge the Court’s rulings finding certain claims about Dominion to be false. This settlement reflects FOX’s continued commitment to the highest journalistic standards. We are hopeful that our decision to resolve this dispute with Dominion amicably, instead of the acrimony of a divisive trial, allows the country to move forward from these issues” [italics added].

The italicized sentence is the critical one. Fox does not even admit publicly that the claims that Dominion voting machines rigged the election were false, only that the court ruled that to be so (which could be challenged later). It does not say who made those “certain claims,” which were initiated by the Trump campaign but then voiced by Fox hosts and on Fox “news” broadcasts.

The stage for the settlement was set by the ruling issued by Superior Court Judge Eric M. Davis on March 22, which granted summary judgment to Dominion on the question of defamation—meaning that Fox could not argue that there was any truth to the claims of vote-switching—and on the question of publication—that Fox News Network, not only its show hosts, were responsible for the false statements, and that Fox Corp. and Rupert Murdoch, not just Fox News Network, shared this responsibility.

The company thus faced the prospect of going to trial in front of a jury in Delaware, Biden’s home state, deprived of its arsenal of legalistic smears and diversions, with a judge who had repeatedly indicated his determination to compel in-person testimony by Murdoch and other top company officials and on-camera personalities.

In the end, the payout was less than one-fourth of the $4.1 billion in cash-on-hand for the giant media corporation, whose annual revenues approached $19 billion last year. Fox’s stock was down only slightly Wednesday, with Wall Street apparently agreeing that settling was cheaper than the continuing damage from the publicity over the case. One analyst cited in the media wrote, “it isn’t clear there has been much, if any, impact of these lawsuits on Fox News’s viewership and business,” and concluded, “The network remains a key growth driver for the overall company.”

European Central Bank chief warns of global fragmentation

Nick Beams

The president of the European Central Bank, Christine Lagarde, has joined a growing chorus of voices warning that the fragmentation of the world economy could have significant effects on the international financial system and economic growth as well as promoting inflation.

Christine Lagarde, president of the ECB, speaking at the European Parliament earlier this year. [AP Photo/Jean-François Badias]

The deepening rifts have been set in motion by the US-led NATO war against Russia in Ukraine and the stepped-up confrontation of the US against China.

In a speech at a Council on Foreign Relations event in New York on Monday, Lagarde said the tectonic plates of geopolitics were “shifting faster.”

“We are witnessing a fragmentation of the global economy into competing blocs, with each bloc trying to pull as much of the rest of the world closer to its respective strategic interests and shared values. And this fragmentation may well coalesce around two blocs led respectively by the two largest economies in the world.”

This could have “profound effects” in the policy environment for central banks and we “may see more instability as global supply elasticity wanes and… we could see more multipolarity as geopolitical tensions continue to mount.”

The period of relative stability following the end of the Cold War was now giving way to one of lasting instability resulting in “lower growth, higher costs and more uncertain trade partnerships” which could lead to the risk of repeated supply shocks.

The most visible shocks so far had been the European energy crisis, but other critical supplies could be affected as well. She noted that the US was completely dependent on imports for at least 14 critical minerals and Europe depended on China for 98 percent of its supply of rare earth elements, which are vital for key areas of the economy.

“If global value chains fragment along geopolitical lines, the increase in the global level of consumer prices could range between around 5 percent in the short run and roughly 1 percent in the long run,” she said.

In the period of US dominance after 1945, Pax Americana, the dollar became ensconced as the global reserve and transactions currency, with the euro, in the more recent period, rising to second place, but new trade patterns had ramifications for the international payments system.

“In recent decades,” she said, “China has already increased 130-fold its bilateral trade in goods with emerging markets and developing economies, with the country becoming the world’s top exporter.”

There was a significant correlation between a country’s trade with China and its willingness to hold its currency, the renminbi, as a reserve.

This could lead to certain countries seeking to lessen their dependence on the Western payments system for reasons of political preference, financial dependence, or the use of sanctions. According to the International Monetary Fund, the number of countries under sanctions, virtually all of them stemming from actions by the US, doubled from 2012 to 2022.

Such developments, she said, did not point to any imminent loss of dominance for the dollar and the euro “but they do suggest that international currency status should no longer be taken for granted.

In preparing her remarks, Lagarde would undoubtedly have taken note of the speech by Brazilian President Lula during a visit to China a few days before.

In what was described as an “impassioned speech” at a meeting organised by the New Development Bank in Shanghai, he called on developing countries to move away from the dollar in their international trade relations.

The New Development Bank is known as the bank of the BRICS grouping which, in addition to Brazil and China, comprises Russia, India and South Africa.

To loud applause from the audience of Chinese and Brazilian officials, he said: “Every night I ask myself why all countries have to base their trade on the dollar? Why can’t we do trade based on our own currencies? Who was it that decided that the dollar was the currency after the disappearance of the gold standard?”

Brazil’s trade with China has expanded rapidly over the past decade, now totaling more than $150 billion, and there are moves to base this trade in their own currencies, with the first of such agreements being made in recent weeks.

Warming to his subject, Lula continued: “Why can’t a bank like that of the BRICS have a currency to finance trade relations between Brazil and China, between Brazil and other countries? It’s difficult because we are unaccustomed [to the idea]. Everyone depends on just one currency.”

The issue is not just one of thinking, however, because as the Financial Times pointed out commodity markets are based on the dollar and mineral companies, such as the iron ore giant Vale, keep most of their transactions dollar denominated.

However, notwithstanding these existing relations, there is clearly a push to weaken, if not break, the enormous power which is provided to the US because of dollar dominance.

The weakening US position was the subject of comments by former Democrat US treasury secretary Lawrence Summers on Bloomberg Television who said it was “troubling” that it was losing influence.

“There’s a growing acceptance of fragmentation, and—maybe even more troubling—I think there’s a growing sense that ours may not be the best fragment to be associated with.”

Summers was speaking from the sidelines of the IMF-World Bank meetings in Washington last week where fragmentation was one of the major issues under discussion.

“Somebody from a developing country said to me, ‘what we get from China is an airport. What we get from the United States is a lecture,’” he said.

Summers said the recently brokered deal by China for a rapprochement between Saudi Arabia and Iran was a “huge challenge for the United States.”

Always the firmest defender of US imperialism both on the political and financial fronts, he continued: “We are on the right side of history—with our commitment to democracy, with our resistance to aggression in Russia. But it’s looking a bit lonely on the right side of history, as those who seem much less on the right side of history are increasingly banding together in a whole range of structures.”

In an allusion to the role of the dollar and the threats to its global dominance, he said: “If the Bretton Woods system is not delivering strongly enough around the world, there are going to be serious challenges and proposed alternatives.”

Trade and finance are not the only issues. The use by the US of dollar supremacy to enforce its geopolitical objectives is giving rise to opposition, especially following the decision to freeze the dollar holdings of the Russian central bank at the start of the Ukraine war.

As Financial Times foreign affairs columnist Gideon Rachman noted in a comment on Tuesday: “The US dollar, which has gained international credibility as a ‘safe haven’ currency, now looks less safe to those who fear they might one day be on the wrong side of a geopolitical dispute with Washington.”

The mounting opposition to dollar hegemony will undoubtedly be the subject of discussion in Washington. While there is little prospect of its immediate replacement as the global currency, US imperialism has no intention of allowing its power to be whittled away.

It should be recalled that in 1971 the weakening position of the US in global markets led to the decision by President Nixon to unilaterally end the Bretton Woods agreement of 1944 by removing the gold backing from the US currency. The so-called partners and allies of the US found out about the decision, like everyone else, when Nixon announced it in a Sunday night television broadcast.

The dollar maintained its global role after the Nixon decision because the US still retained considerable economic power. But in the more than half a century since then, that power has been significantly eroded, and the US financial system has become the source of major crises for the world economy and its financial system.

Mass layoffs start at Disney as US Federal Reserve’s moves to increase unemployment take effect

Tom Hall

The Walt Disney Company announced it would be laying off 7,000 workers as part of a “strategic transformation,” announced by CEO Bob Iger on Wednesday, February 8 2023. [AP Photo/Richard Drew]

Seven thousand previously announced layoffs will begin at the Walt Disney Company next week, the latest in a jobs bloodbath instigated by the US Federal Reserve’s policies to keep workers’ wages well below the rate of inflation. The layoffs affect roughly 15 percent of the total workforce in Disney’s film and TV divisions.

Across the US, job cuts were up 15 percent month-to-month and a whopping 319 percent year-on-year in March, according to outplacement firm Challenger, Gray & Christmas. Employers announced 270,416 cuts in the first three months of 2023, the highest quarterly total since 2020, when much of the country was shut down due to limited pandemic lockdowns.

So far this year, layoffs have been particularly concentrated in tech and other white-collar industries. Meta, the company which owns Facebook, began its second round of layoffs Wednesday, with a third round planned for next month. Meta has announced it would cut 21,000 jobs out of a total workforce of 86,000. On Monday, London-based accounting firm EY announced it would cut 5 percent of its global workforce, including 3,000 based in the US. Cuts have also been announced recently at Redfin, Apple and Best Buy.

But significant layoffs are also beginning to impact industrial workers, especially in the auto industry. Stellantis, formed in 2021 out of a merger between Fiat-Chrysler and French automaker Peugeot, shut down its assembly plant in Belvidere, Illinois, in late February and announced 400 job cuts at its huge Sterling Heights Assembly Plant north of Detroit. It has also recently announced hundreds more layoffs at its Warren Truck and Toledo Jeep plants. These cuts take place in advance of the mid-September expiration of the contracts covering 160,000 Stellantis, General Motors and Ford workers in the US and Canada, when automakers will seek massive job cuts as they continue to switch to less labor-intensive electric vehicles.

The layoffs are the outcome of deliberate monetary policy by the Fed and the Biden administration. Following a more modified version of the so-called Volcker Shock of the late 1970s, when record rate hikes led to the worst recession in half a century and the elimination of millions of manufacturing jobs, Fed Chief Jerome Powell has hiked interest rates from near-zero to 4.65 percent in the space of a year.

While this is being done under the banner of “fighting inflation,” the only price increases which the Fed and Wall Street are really concerned about are wage increases, which have hovered around 5 percent—still well under inflation—over the last two years due to a pandemic-induced tightened labor-market. A recent study by the European Central Bank found that profits, not wage increases, were the primary driver of inflation. Profits margins are at their highest levels in 70 years, according to the New York Times.

At the same time, central banks and regulators are moving to guarantee the bumper profits of the financial industry. JPMorgan Chase, the largest bank in the US, announced a 52 percent increase in profits for its first quarter. This is driven primarily by higher interest rates, and the bank is expected to make $81 billion in 2023 off of net interest rate income alone. Bank of America’s profits increased to $8.2 billion for the first quarter, but the bank has still announced 4,000 job cuts. Billions of dollars, meanwhile, are being made available at the drop of the hat for military spending, especially for Washington’s proxy war against Russia in Ukraine.

The defense of profits against challenges from the working class, and not fighting inflation, is the main goal of monetary policy. The Fed’s target for wage growth is 3.5 percent, well below inflation, which would require the destruction of 1.5–2 million more jobs.

The only sector of the workforce where wage growth currently meets that benchmark is unionized workers, where wage growth is actually lower than non-union workers. The trade union bureaucracy has worked closely with management and the Biden administration to ram through a series of sellout deals and prevent strikes.

In March, real wages declined in the US by 0.7 percent, the 24th straight month in which wages after inflation declined. Last month, the official inflation rate declined from 6.5 to 5 percent. However, price increases for many key goods remain elevated, including electricity (10.2 percent), food (8.5 percent) and transportation (13.9 percent).

But for the ruling class, storm clouds are gathering on the horizon in the form of the class struggle. The massive strikes and protests which have rocked other major capitalist centers, including France and Britain, are making their way west towards the United States. Yesterday, an indefinite strike of 100,000 federal employees began in Canada.

In the United States, the contract for 340,000 UPS workers expires on July 31, and workers at the logistics giant are demanding substantial wage and benefit increases and an end to second-tier delivery drivers, under conditions where UPS’ revenue topped $100 billion for the first time next year. Autoworkers are also pressing for strike action as their contract expiration looms.

While the rise in interest rates has produced a boom in profits for many of the largest banks, it has also introduced serious instability into the financial system, which has been built up over 40 years on the basis of virtually free money. The collapse earlier this year of Silicon Valley Bank and Credit Suisse, and the role which federal treasury bonds played in the collapse of SVB, portends a severe financial crisis. Therefore, the Fed’s room for further rate increases may be limited.

This means that the ruling elite will have to resort to increasingly direct methods to beat back the working class. What flows from this is the increasingly close and intimate collaboration between the government and the trade union bureaucracy. In spite of militant-sounding rhetoric from Teamsters General President Sean O’Brien at UPS, where talks have officially begun this week, O’Brien is a regular visitor to the White House, having made his latest visit just the previous week. Similar moves are already being made in the auto industry with new United Auto Workers President Shawn Fain.

Russian pro-NATO oppositionist Vladimir Kara-Murza sentenced to 25 years in prison

Clara Weiss

On Monday, a Russian court sentenced the leading pro-NATO oppositionist Vladimir Kara-Murza to 25 years in prison for his public criticism of the Russian invasion of Ukraine.

The 41-year-old Kara-Murza has longstanding ties to the American ruling class and was a principal figure behind the campaign to impose the Magnitsky Act by the US Congress, as a result of which key figures aligned with the Putin regime were sanctioned. Since February 27, 2022, he has been a member of the “Russian Anti-war Committee.” The committee includes pro-NATO figures like Mikhail Khodorkovsky, one of the leading oligarchs of the 1990s, Garry Kasparov, a long-time leader of the pro-US opposition in Russia, as well as the businessman Boris Zimin, who has also funded the activities of the US-backed Putin critic Alexei Navalny, who has also been imprisoned.

Far from being “anti-war,” the committee speaks for a section of the Russian oligarchy and state apparatus that advocates a reorientation of Russian foreign policy toward close collaboration with NATO, and supports the US regime-change operation in Russia.

The sentencing of Kara-Murza was based on public appearances he made in the US and other countries in 2021–2022. On March 15, 2022, Kara-Murza spoke before lawmakers in Arizona, denouncing the invasion of Ukraine which, in Russia, can only be referred to as a “special military operation.” The appearance was the basis for his being charged with “public dissemination of false information about the use of the armed forces,” or the defamation of the armed forces, which carries a maximum 15-year prison sentence. He was arrested shortly thereafter. In the summer of 2022, another charge was added, based on Kara-Murza’s activities for the “Open Russia” foundation that had been founded by ex-oligarch Mikhail Khodorkovsky. Then, in October, the charge of “state treason” which carries a maximum sentence of 20 years in prison was added, based on public appearances at NATO assemblies and the US Congress.

Much of the trial proceeded behind closed doors and Kara-Murza’s lawyers repeatedly asked that the judge Sergei Podoprigorov be replaced, since he had personally been placed on the US Magnitsky sanctions list that had been worked out with the assistance of Kara-Murza. When the sentence was announced, diplomats from 24 countries, including all NATO members states, and the US ambassador to Russia were present.

The ruling was the first time that a now extended interpretation of the charge of state treason was applied in a criminal court in Russia. Kara-Murza’s sentencing was also markedly more severe than that for any other opposition figure, including the much more prominent Alexei Navalny.

Workers must draw two conclusions from the sentencing of Kara-Murza:

First, it is an indication that, over one year into the NATO-Russia conflict in Ukraine, the infighting within the Russian oligarchy and state apparatus is becoming increasingly bitter. While Kara-Murza was less known to the public—in both Russia and the West—he is one of the best connected Russian opposition figures, both in the Russian elites and internationally. Kara-Murza comes from a well-known family of political journalists. His father, Vladimir Kara-Murza Sr., was a prominent backer of the “shock therapy” under Boris Yeltsin with which the restoration of capitalism was completed in Russia after the Stalinist destruction of the Soviet Union in 1991, and later also became a member of the pro-US “liberal” opposition to the Putin regime.

Kara-Murza Jr. himself was good friends with the late Republican senator and war hawk John McCain, and was also an invited columnist for the Washington Post, an outlet owned by Amazon’s Jeff Bezos and closely aligned with the US secret services and state apparatus. By so publicly and severely going after Kara-Murza, the Kremlin no doubt seeks to send a “warning message” to other dissenting oligarchs and current or former state officials who either openly advocate or cautiously eye the replacement of Putin to establish a regime that is directly aligned with the imperialist powers.

While Putin is the dominant figure in the Kremlin regime, the regime itself is far from homogenous and stable. For the past year, even while finding itself in a war with NATO in Ukraine, the Kremlin has constantly vacillated between threats of escalation, including the deployment of nuclear weapons, and appeals to the imperialist powers to find a compromise. The invasion itself had been based on the disastrous miscalculation that the war could strengthen Russia’s position at the bargaining table with the imperialist powers. Even today, the fundamental orientation of the regime is toward finding a negotiated settlement with imperialism, without relinquishing too many of the Russian oligarchs’ own claims to the direct exploitation of the natural resources and the working class of the country.

However, the relentless push by the imperialist powers to escalate and broaden the war is fueling immense conflicts within the Russian ruling class. Kara-Murza’s sentencing was no doubt a component of the bitter factional infighting and an expression of the growing instability of the Putin regime.

Secondly, workers must see the sentencing of Kara-Murza as a warning that the Kremlin is escalating domestic repression. While this trial was part of the factional infighting within the ruling oligarchy, the charges that were used to imprison Kara-Murza—including the defamation of or spreading of disinformation about the armed forces—could be used just as well to go after any left-wing critic of the Putin regime’s war.

There are indications that a broader wave of repression is already ongoing. In the wake of the explosion at a St. Petersburg café early this month, which killed one of the most prominent pro-Kremlin war bloggers, Russia’s domestic secret service FSB has announced that the Ukrainian regime was actively recruiting “terrorists” among Russian youth.

Last week, the FSB claimed to have preempted 118 crimes “of a terrorist character” by teenagers and young people, who were supposedly acting on behalf of Ukrainian intelligence. The press service of the FSB declared that it was fighting against “an aggressive ideological and recruitment campaign” by Ukrainian and Western secret services that was “targeting our citizens, above all the young generation, with the aim of involving them in terrorist and extremist activities.” Criminal charges against “crimes of a terrorist character” can be invoked solely on the basis of social media posts.

There is no question that the Ukrainian state, with the full assistance from NATO and especially the US, is funding and arming an insurgency in Russian-claimed territories in Ukraine as well as increasingly within the Russian Federation. However, the Kremlin is using this development primarily as a pretext to escalate domestic repression under conditions where among young people, in particular, left-wing opposition not only to the war but the entire capitalist system is growing rapidly.

Having emerged out of the nationalist reaction against the socialist October Revolution and the decades-long political oppression of the working class by the Stalinist bureaucracy, which culminated in the 1991 destruction of the Soviet Union and the restoration of capitalism, the Putin regime is highly sensitive to the growing anti-war sentiments in the working class and the resurgence of the class struggle internationally.

Interest rate hikes threaten recession and job losses but boost profits of major banks

Nick Beams

The interest rate hikes by the US Federal Reserve have led to financial turbulence, hit consumer spending, threatened to induce a recession and thrown millions out of work, increased costs for home buyers and, because of their international flow-on effects, increased the debt burden on poorer and low-income countries around the world.

But the major US banks, which dominate the American financial system, are raking in the money.

JPMorgan Chase, the largest bank in the US, last week announced a 52 percent increase in its first-quarter profits and record revenues.

Other major banks, Citigroup and Wells Fargo, also announced profit increases, benefiting from the Fed’s interest rate hikes, which enabled them to lift their rates on loans.

As the Wall Street Journal reported:

Together the three banks reported more than $22 billion in profits, up by more than a third compared with a year ago. Combined revenue was more than $80 billion, up 19 percent from a year ago. All three banks beat Wall Street expectations for per-share earnings and revenue.

JPMorgan’s net interest rate income—the difference between what it makes on loans and what it must pay depositors—rose by 49 percent to a record $20.71 billion. At Wells Fargo, it rose by 45 percent and at Citigroup by 23 percent.

In 2023, JPMorgan expects to take in $81 billion in net interest rate income, an increase of $7 billion on its forecast just three months ago.

Jamie Dimon at the JPMorgan Healthcare Investment Conference. [Photo by Steve Jurvetson / CC BY 2.0]

Bank of America has also joined the profit bonanza. Yesterday, it announced a profit of $8.2 billion for the first quarter, an increase of 15 percent. It benefited from the rise in interest rates as well as an increase in trading because of the turmoil in financial markets set off by the collapse of Silicon Valley Bank.

But even though its profit results beat market expectations, which had been for a decline, BofA wants more, announcing that it will cut as many as 4,000 positions from its payroll, representing around 2 percent of its workforce, which it said would be mainly achieved through attrition.

The major banks have also done well because of the move by depositors away from smaller and medium-sized banks in the wake of the collapse of SVB.

JPMorgan announced it had gained $50 billion in new deposits following the March turmoil, while Citigroup picked up an additional $30 billion.

The increase in profits for the major banks further underscores the class-war agenda at the centre of the interest rate hikes by the Fed.

This has been advanced in the name of fighting inflation. But the focus is on just one price, wages. It is aimed at suppressing the wages upsurge by the working class in response to ongoing inflation.

Over the past two years, since inflation took off, sparked by the supply chain crisis that resulted from the refusal of governments around the world to take action to eliminate COVID, real wages have fallen.

But profit margins have increased, and, according to a report in the New York Times, are now at their highest levels in almost 70 years. Research by the Economic Policy Institute has found that profit markups accounted for around one-third of price increases in the fourth quarter of last year. In 2021 it was even higher, one half, compared to the normal level of 13 percent.

However, this rampant profit gouging, led by major corporations, does not even rate so much as a mention in all the pronouncements by Fed Chair Jerome Powell and other officials on the so-called fight against inflation.

Rather, official statements, remarks at press conferences and in congressional hearings are replete with references to a “tight” or “very tight” labour market, the excess of job vacancies over those seeking work, and the need to bring the supply of labour back into “balance” with the demand.

What this means in practice is lifting interest rates to slow the economy, induce a recession and increase unemployment. Of course, the Fed cannot publicly state that this is its goal, because this would expose its claim that it acts in the interests of the “American people” and reveal its essential class role as an instrument of the corporate and financial oligarchy.

Even though he has acknowledged that wages are not “the principal story for why prices are going up”—a statement he made at a press conference last November—Powell has a laser-like focus on the labour market.

“Demand for workers far exceeds the supply of available workers, and nominal wages [well below the inflation rate] have been growing at a pace well above what would be consistent with 2 percent inflation over time,” he said in a speech late last year.

The chief means of increasing supply, under conditions where the available workforce has contracted because of COVID illness and deaths and the ongoing effects of Long COVID, is by driving up unemployment.

And this forms the basis of the Fed’s economic projections, which predict a rise of one percentage point in the unemployment rate over the course of this year, or a loss of as many as 2 million jobs. But as a number of commentators have pointed out, a percentage point rise in the jobless level does not stop there, but has a flow-on effect leading to further job losses.

According to a New York Times report, staff economists at the Cleveland Fed put out a paper in January in which they said approaching inflation of 2 percent by late 2025 would require a “deep recession,” with a doubling of the jobless rate.

On numerous occasions, Powell has expressed his admiration for former Fed Chair Paul Volcker, who hiked interest rates in the 1980s. This drove up unemployment to levels not seen since the Great Depression, as part of a class war launched under Reagan, beginning with the mass sacking of air traffic controllers in 1981.

The surge in bank profits and the deepening attacks on the working class, enforced through the trade union bureaucracies, which work day in day out to suppress the growing wages movement, are two sides of the same coin.

But as the real nature of the capitalist economy becomes ever more clearly exposed, so-called “left” and liberal forces move in to throw dust in the eyes of the working class.

A typical example was a New York Times article citing comments by Skanda Amarnath, a former staff member at the New York Federal Reserve and now executive director of Employ America, a group that advocates maximising employment.

He said those who see curtailing the growth of employment and wages as a “failure of imagination” in the fight against inflation were “so spot on.”

Scottish National Party in meltdown

Steve James

The April 5 arrest of Peter Murrell, the Scottish National Party’s former CEO and husband to former leader Nicola Sturgeon, accompanied by police raids on Murrell and Sturgeon’s house and SNP offices to cart away boxes of material, points to a party in meltdown.

Murrell was released without charge later that day. He was arrested as part of Operation Branchform, the police investigation launched after complaints from supporters of Scottish independence over the fate of £666,953 raised between 2017 and 2020 and handed to the SNP for the purpose of mounting a second referendum.

Scottish First Minister Nicola Sturgeon poses for the media with husband Peter Murrell, outside polling station in Glasgow, Scotland, on December 12, 2019. The husband of former Scottish National Party leader Nicola Sturgeon was been arrested in a party finance probe on April 5, 2023. [AP Photo/Scott Heppell, File]

Murrell’s arrest comes just weeks after Sturgeon unexpectedly resigned as party leader. Her departure was attributed to opposition within the SNP to her strategy for making next Westminster election a de facto second independence referendum, and to misgivings over a Gender Recognition Reform Act passed by the Scottish parliament but stalled by the UK government.

It now appears likely that the timing of Sturgeon’s decision had something to do with Murrell’s imminent arrest. Murrell resigned as SNP CEO after he was exposed during the campaign to replace Sturgeon for having misled the party over falling membership figures. The party has lost around 30,000 members in two years.

Revelations have emerged of the SNP leadership’s efforts to obscure its dire financial state. The Sunday Mail reported April 9 that as early as August 2021 Sturgeon sought to avoid questions from the party’s national executive over the crowdfunded cash for a second independence campaign. A source told the tabloid, “She told the meeting that there was nothing wrong with the accounts and that people should stop talking about it because it was undermining the party.”

The meeting came three months after the SNPs treasurer Douglas Chapman resigned claiming he was unable to properly scrutinise party accounts and two months after Murrell loaned the party £107,000.

Media attention was given to the seizure by police of a “high end” Niesmann+Bischoff camper van, worth around £110,000, from outside the home of Murrell’s mother. The vehicle, delivered in 2021 and never used, was later said to have been intended for use as a “battle bus” during the 2021 Scottish elections.

The BBC reported that the company tasked with auditing the SNP’s accounts had also resigned. According to the UK Electoral Commission, political parties with income and expenditure exceeding £250,000 are required to have their annual accounts independently audited and reported. Accountants Johnston Carmichael’s resignation was reported in the Herald to be coincidental with the party failing to inform the Electoral Commission of Murrell’s £107,000 loan.

The SNP faces further loss of revenue if no auditor can be found willing to sign off on its £4 million accounts by May 31. It could also have external auditors imposed by the Electoral Commission. The SNP’s Westminster Group of MPs receives £1.15 million in subsidies from parliament to pay staff wages, research and travel.

Some SNP MSPs threatened to withhold their £250 a month subscription dues if Murrell was assisted with his legal fees. The Sunday Post reported that an expert in “allegations of financial crime” had been hired. On April 11, new party leader Humza Yousaf was reported in the Scotsman stating that Murrell, CEO for 25 years, had been cast adrift.

Following an NEC meeting last weekend, Yousaf denied the party was close to bankruptcy but confirmed the need for “financial oversight.” On April 16, the Sunday Mail reported police attention being directed to Sturgeon for her refusal to appoint a fundraising manager to oversee incoming donations. The same day, it circulated a video of a March 2021 NEC meeting at which Sturgeon warned against public discussion of financial problems after Edinburgh’s former Lord Provost Frank Ross, Allison Graham, and Cynthia Guthrie resigned from the SNPs finance and audit committee. Speculation is growing that she may even resign as an MSP.

SNP president, acting CEO and former minister Mike Russell complained, “In my 50-year association with the party this is the biggest and most challenging crisis we’ve ever faced, certainly while we’ve been in government.”

Among the pseudo-left tendencies that have orbited the SNP for years, there is overt panic as all of them try to rescue the perspective of Scottish separatism from the unravelling of the SNP.

Writing before Murrell’s arrest, Scottish Socialist Party co-leader Colin Fox complained, “Many SNP members I talk to privately fear their party is about to embark on the same path Labour in Scotland has followed since devolution, electing a series of short-lived leaders who fail to halt the decline.”

Fox called for an independence convention to bring all the separatist parties together to mobilise “majority support via both parliamentary and extra-parliamentary means.”

Phil Stott of the Socialist Party Scotland presented the SNP’s debacle as arising from a UK state attack on the supposedly “left” perspective of independence. “The SNP is certainly not a left party, let alone a workers’ party. However, its support for the break-up of the UK has put it on collision course with the overwhelming majority of the ruling capitalist class who have welcomed the current SNP debacle.

“Despite our trenchant and consistent opposition to the SNP leadership’s anti-working class policies and bureaucratic methods, we oppose the capitalist state intervening in this way.”

No doubt there is immense schadenfreude in Tory, Labour and UK state circles over the SNP’s travails. But if the SNP has indeed been undone by a police operation, it is one set in motion by Scottish nationalists!

The SNP crisis takes the form of a faction fight between rival, well-connected wings of the Scottish bourgeoisie and upper middle class, none with any qualms about using the state apparatus against their opponents. It is only three years since former SNP leader and First Minister Alex Salmond was acquitted of #MeToo-inspired sex charges instigated by Sturgeon’s close advisers, aided by powerful figures in the Scottish civil service and legal apparatus.

Today, writing in the Scotsman, former Justice Minister Kenny MacAskill, deputy leader of Salmond’s Alba Party and still a Westminster MP, crowed of Sturgeon’s fate, “Many knew and only the timing was unknown. Irrespective of what happens with Peter Murrell, her reputation will not survive and rightly so.”

The attempt by the pseudo-left groups to portray the SNP’s crisis as a product of its insufficient commitment to national separatism is a grotesque political distortion. The SNP’s funding crisis is rooted in a membership decline flowing from the fact that in national and local government, it has imposed brutal cuts on every area of social spending, while also supporting NATO’s war with Russia.

The eruption of a wave of class struggle in Scotland and throughout the UK has fundamentally undermined the attempt by the SNP and its apologists to advance separatism as a left alternative to the austerity and war agenda of the Tories and Labour in Westminster. The SNP has been exposed as just another pro-business party and the prospect of an “independent” Scotland as a reformist paradise for workers revealed as a chimera.

Contrary to the nationalist and pseudo-left claims, in the 21st century there is no basis for a tiny Scottish state to offer anything other than social misery, intense exploitation, and authoritarianism, achieved by means of the division and weakening of the working class.

Electoral deadlock continues in Bulgaria

Andrei Tudora

A general election was held on April 2 in Bulgaria, the fifth since the fall of the Borisov Government in 2021. Only about 41 percent of Bulgarians showed up to vote.

Despite the harsh rhetoric and mudslinging between the representatives of the main bourgeois parties, in the last two years the Bulgarian oligarchy has in fact presented a solid front against the working class: from the catastrophic COVID reopening and health care collapse, to joining the war drive against Russia.

Boyko Borisov’s GERB (Citizens for European Development of Bulgaria) consolidated the number one slot from the previous elections, winning 26 percent of the votes, while the PP-DB coalition (We Continue the Change-Democratic Bulgaria) led by Kiril Petkov and Asen Vasilev gained 24 percent and will lose 9 seats.

Petkov was prime minister during the crucial early months of 2022 and began steering the country towards an aggressive confrontation with Russia, until his government collapsed in June, and a caretaker government was appointed by President Rumen Radev. The PP has been praised in the international media for its ruthlessly pro-market stance and its staunch support of Bulgaria’s “Western allies.” It managed to take advantage of a protracted electoral crisis to emerge at the end of 2021 as the main “anti-corruption” party.

The PP has largely cosmetic differences with Borisov, whom large sections of the ruling class now regard as too compromised and a liability in the government. Petkov had hoped that a first place finish in this round of elections would have offered enough leverage to force a minority government, with GERB support in Parliament. Now Borisov is pressing the PP to join a Grand Coalition. The GERB relies on a network of mayors and regional political operatives that it inherited from the old SDS (Union of Democratic Forces); a right-wing party founded after the restoration of capitalism in 1989.

Former Bulgarian Prime Minister Boyko Borisov, whose party led the March 2 poll. [AP Photo/Valentina Petrova]

Petkov and Vasilev have so far refused the scheme, fearing that, as they lack the GERB’s electoral network, their party would disappear electorally, similar to other “anti-corruption” parties that sprang up in recent years.

The two parties have been in a de facto coalition throughout 2022, working together to ensure parliamentary consensus for the imperialist war against Russia, as well as continued provocations towards neighboring North Macedonia.

The international press that has covered the election, such as the Financial Times, Politico, and the Süddeutsche Zeitung, have expressed great anxiety to see a Grand Coalition officially take form in Bulgaria, to counter what is usually termed “pro-Russian forces,” in fact popular opposition to war.

Anti-war sentiment is widespread in Bulgaria. A poll by the EU Commission in December showed only 24 percent fully approve of the sanctions against Russia, while another by the ESTAT polling agency, quoted in Bulgarian News Agency, showed that a total of 23.1 percent of respondents expressed support for Ukraine. Bulgaria has been a member of NATO since 2004, but only 29.8 percent said they would support joining the military alliance, if a referendum were held on membership now.

One political figure that the press describes as “pro-Russian” is President Rumen Radev, accused of at times not showing enough enthusiasm towards the war in Ukraine. Despite some of his public utterances, made to maintain face, Radev’s office has in fact been a central node of pro-NATO Bulgaria’s machinations in recent years.

Radev, working both with Petkov and his own appointed caretaker government, has accelerated Bulgaria’s status as one of the main suppliers of Soviet-type ammunition to the Ukrainian regime. Bulgaria and its EU imperialist allies have been pressuring the former Yugoslav republic of North Macedonia to make concessions to historical Bulgarian expansionism. Bulgarian caretaker Foreign Minister Nikolay Milkov provocatively requested in April that the country be given a “consultative role” in North Macedonia’s proposed constitutional changes.

It is open secret that Bulgaria has put its substantial weapons industry at the service of the NATO war machine. According to a report in January by the German daily Die Welt, Bulgaria has supplied ample quantities of munition and fuel for Ukraine’s Soviet-era equipment, despite widespread popular opposition.

The third largest party, and the de facto main opposition force in the country is Revival, a fascist party, that gained 14 percent of the vote and has increased its MPs by 10 since the last elections. Revival is presented in the Western media as a “pro-Russian” party, in an attempt to amalgamate the fascists with genuine opposition to war.

Revival’s rise is part of an international phenomenon, the increasing turn of the bourgeoisie to dictatorial forms of rule and the promotion of fascist forces. The organization was propped up as part of the ruling class’s attempt to intimidate and pollute public discourse regarding its handling of the COVID pandemic.

The party organized an attack on the Bulgarian Parliament on January 12, last year, a copycat of the January 6, 2021, fascist coup attempt in the US. Its leader Kostadin Kostadinov has expressed his admiration for Donald Trump.

The noxious anti-science reaction to COVID became the official discourse of the Bulgarian oligarchy, spearheaded by the post-Stalinist BSP (Bulgarian Socialist Party). Even minimal protective measures such as vaccines were discouraged, leaving the country with only 30 percent of the population vaccinated as of the summer of 2022.

That right wing and openly fascistic forces hold sway over Bulgarian society is primarily the responsibility of Stalinism and the bourgeois parties that emerged out of it after the restoration of capitalism: the BSP and the whole coterie of middle-class organizations that surround it, such as the Bulgarian Left, formed by ex-BSP bureaucrats in 2009.

With the pandemic and the outbreak of war, these layers are completely submerged in the swamp of fascist conspiracies, with all the nationalist filth, moral degradation and backwardness that have always been integral to Stalinism.

At a BSP Congress in February, the party announced a referendum against “gender ideology” in schools, in order “to safeguard Christian and family values for the sake of our children,” and party boss Korneliya Ninova ranted about the “global-liberal” establishment. The Congress, in true Stalinist fashion, also purged some of Ninova’s potential rivals.

Several of the purged MPs united with factions and parties that usually tailed the BSP and ran in the elections as Levitsata! (The Left!). Expressing virtually no difference to the right wing, pro-NATO BSP, they gathered 2 percent of the vote. The BSP itself took almost 9 percent and is now the fourth largest party in parliament.

The Bulgarian Communist Party and the Party of the Bulgarian Communists, participated in the coalition “Neutral Bulgaria,” which includes the far-right Attack party, an outlet notorious for organizing fascist thugs throughout the 2000s.

As the entire bourgeois establishment is shifting further to the right, the working class is increasingly entering into struggle, where it meets the opposition of the trade unions, and their Stalinist and pseudo-left hangers-on.

Health care workers have struggled against an underfinanced and rotting system since 2019, in open rebellion against the official trade union federation. At the start of the pandemic, nurses have been protesting and exposing the disastrous situation in the hospitals and the lack of PPE. Both the Borisov and successive governments made false promises of pay rises, as the situation in the country deteriorated and the workload in the hospitals became unbearable.

At the end of last year, nurses protested in several Bulgarian towns, and on March 28 ambulance drivers protested in Sofia. In November, large demonstrations took place in the capital against poverty wages and galloping inflation.