A tweet from President Trump on March 31, calling for a BIG & BOLD infrastructure plan, received far less media attention than his usual twitter posts. Coming just days after Congress passed a $2.2 trillion Corona Virus "relief" package, and the announcement by the Federal Reserve of a $4-plus trillion dollar bailout fund, it indicates that the President is aware that these measures are not only inadequate to address the economic needs exposed by the health emergency, but counter-productive, as the Fed's bailout policies are designed to protect speculators and the casino economy. This plan will NOT "stimulate" a recovery of the real economy—as Trump is no doubt aware—nor will it put an end to the reckless policies responsible for the crash of a second out-of-control speculative bubble in the last 12 years.
He tweeted that, with interest rates at virtually zero percent, this is the time for "our decades long awaited infrastructure Bill. It should be very BIG & BOLD, $2 trillion—focused solely on jobs and rebuilding the once great infrastructure of our Country! Phase 4!" His designation of this as Phase 4 is a reference to House Speaker Nancy Pelosi's advocacy of a follow-up to the relief bill, which she referred to as "Phase 4", dedicated to infrastructure investment. However, Pelosi and the Democrats initial intent was to use the present financial crisis to jump-start funding for the "Green New Deal," a delusional idea which Trump derided in his comments describing his intention. Once Trump announced his support for a big infrastructure plan, Pelosi backed away from her proposal, saying there are "other priorities."
During his election campaign in 2016, and in the early days of his presidency, Trump called upon the Democrats to join him in addressing the worsening situation with U.S. infrastructure. He referred to numerous reports by construction and engineering associations which found that an expenditure of between $2 trillion and $10 trillion would be necessary to repair the existing, decaying platform of infrastructure. For example, the American Society of Civil Engineers gave a near failing grade—a D+—for the overall quality of U.S. infrastructure in its 2018 "report card", calling for at least $4.5 trillion to be spent by 2025. Trump insisted it is urgent to go beyond repairs, that to "Make America Great Again" would require an enormous effort, to modernize everything to "first-class levels", including building high-speed rail, "beautiful and efficient airports", upgrading roads and ports, and broadband connectivity. He emphasized that this would create hundreds of thousands of good jobs.
Unfortunately, his goal ran into the same ideological constraints that created the crisis, i.e., the dominance in both U.S. political parties of neoliberal dogma, backed by funding from lobbyists for Wall Street banks and financial entities. They insist that any expenditure must "pay for itself", and comply with the austerity demands of a "balanced budget." For the Democrats, this means a fraudulent belief in "pay as you go," meaning that revenue must be generated by the new infrastructure to offset the costs. Republicans have a similar approach, with a more forceful demand that no tax revenue be "diverted" to projects, and that new taxes to pay for programs are unacceptable. Both parties agree that some form of "Public-Private Partnerships" must be formed to defray the costs. This is a non-starter, as private investors have been conditioned to seek the highest, quickest returns, and therefore continue to recklessly pour funds into the most risky speculative instruments in now-collapsing casino economy.
THE FRAUD OF THE 2008 BAILOUT
When the initial $700 billion rescue package was introduced in 2008, following the collapse of the mortgage-backed securities bubble, it triggered a major explosion in the U.S. The fund, named TARP—the Troubled Asset Relief Plan—was correctly identified as a bailout of the speculators, who created a bubble in mortgage-backed securities, which was backed by an unsustainable bubble in housing prices. When that bubble popped, and Lehman Brothers was pushed into bankruptcy, it became clear that there were many other institutions in the same situation, and the decision was made to bailout the whole bankrupt financial system. At the same time, nothing was done to protect homeowners, who were trapped in unaffordable mortgages, and more than seven million families lost their homes.
The decision to bail out the speculators provoked an angry reaction, among both so-called conservatives, and leftists who marched under the banner of Occupy Wall Street. The mobilization terrified members of Congress, and the initial bailout bill was defeated in the House of Representatives. There was wide-spread support for restoring Glass Steagall banking separation, which was a major feature in economic scientist Lyndon LaRouche's proposed Home Owner and Bank Protection Act. However, after major arm-twisting by President George W. Bush's team, with full support from presidential candidates McCain and Obama, the TARP bill was reintroduced, and passed the second time.
No effort made to reverse the criminal process by which the physical economy had been sacrificed, in the name of profit, to a global casino economy. In all, estimates are that the total bailout ran to over $23 trillion, and new bubbles emerged, backed over the last decade by Quantitative Easing, zero or negative interest rates, etc. These new bubbles are now collapsing.
Having learned nothing from the fraud of that bailout, the leading bankers today decided to follow the same script. This time, with only one negative vote, the House passed a $2.2 trillion relief bill, which provides some funds for public health, and aid for those millions losing their jobs and businesses. However, nearly a quarter of funds in that bill will go to bailouts, along with more than $4 trillion in funds from the Federal Reserve, which will be handed to the speculators.
INFRASTRUCTURE INVESTMENT AS AMERICAN AS APPLE PIE
Adherence to neoliberal dogma has prevented any significant infrastructure investment in the U.S. in decades. It exhibits an unbelievable ignorance of American history, as government expenditure in great infrastructure projects was what built the nation, beginning with Alexander Hamilton's commitment to connect the new nation with roads, bridges, canals and ports, to be funded by a credit system through a National Bank; made the U.S. a continental nation with Lincoln's railroad program; pulled the nation out of the Great Depression, with Franklin Roosevelt's public works programs, and Manhattan nuclear project; and continued with President Eisenhower's national highway program, and the NASA program of John F. Kennedy, which provided a science driver which boosted productivity in all economic activity throughout the 1960s.
Trump's attempt to get an infrastructure bill introduced was sabotaged by Paul Ryan, who was the Republican House Speaker for the first two years of his presidency. Ryan, a "deficit hawk", joined with Tea Party Republicans in opposing any funding of infrastructure. When Trump reached out to the Democrats, Congressional leaders Schumer and Pelosi engaged with him, but rejected every specific proposal he made. After Democrats captured the House in the 2018 mid-term election, Pelosi joined with radicals such as Alexandria Ocasio-Cortez in demanding that any expenditures must go toward a "Green New Deal," a proposal which would lead to the further deindustrialization of the country, by drastically lowering the nation's energy-flux density of power production, in furtherance of their anti-science quackery of reducing the "carbon footprint", allegedly to reverse "man-made climate change."
This approach of today's Democrats is an explicit rejection of the leadership provided by previous Democratic Presidents, notably Franklin Roosevelt and Kennedy, both of whom emphasized development of new, more energy-intense systems—specifically nuclear energy—as essential for the future.
PROGRAM FOR JOB CREATION
Trump's insistence that infrastructure spending is key for creation of new, productive jobs, is more important than ever, given the devastating surge of unemployment due to the Corona Virus lockdown. The week ending March 21 saw 3.3 million Americans file for unemployment, while that figure soared to more than 6.65 million jobs lost in the week which ended March 28—a loss of almost 10 million jobs in two weeks. There are estimates that if the Corona Virus lockdown continues, the rate could reach 30%, higher than at the peak of the Great Depression.
Trump asked Wyoming Republican Senator John Barrasso to work with him to pass his proposed Phase 4 plan. According to "The Hill", Trump tasked Barrasso with putting together a $2 trillion package, with an emphasis on upgrading roads, bridges, ports and tunnels, as a first step. Trump said he is open to discussing this with Pelosi, with whom he has a difficult relationship, but whose support he will need to get a bill passed. Both Republican and Democratic leaders in the Senate, Mitch McConnell and Schumer, expressed reluctance to proceed, for the above-mentioned ideological reasons, and for partisanship on Schumer's part, as his actions demonstrate that he believes the collapse of the economy will help elect a Democrat in the November 2020 election!
The likely stalemate ahead makes obvious that it will be up to the American people to mobilize for a change in thinking to insure such an approach is taken, as both parties are controlled at the top by Wall Street speculators. As the Schiller Institute's Helga Zepp LaRouche has stated, there is no way out of the present breakdown crisis without an explicit rejection of neoliberalism. For a "BIG & BOLD" infrastructure plan to become a reality, Americans must rediscover the principles of the American System, in its most recent comprehensive expression, in the Four Economic Laws of Lyndon LaRouche.
The assertion of these principles worked in the past to pull the nation out of crises, under President Washington's support for his Treasury Secretary Hamilton, and under Presidents Lincoln, Franklin Roosevelt and John Kennedy. Nothing less will work today, to extricate the U.S., and the world, from the collapse of the present, global, neoliberal system.