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      Corporate greed, not wages, is behind inflation. It’s time for price controls | Robert Reich

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      Corporate greed, not wages, is behind inflation. It’s time for price controlsRobert ReichCorporations are using rising costs as an excuse to increase their prices even higher, resulting in record profits. We need limited price controls to break this cycle On Wednesday, policymakers at the Federal Reserve – America’s central bank – continued their battle against inflation with a third straight supersize interest-rate increase. And they warned that they’re not done. They’ll continue to raise borrowing costs until inflation is tamed.They assume that the underlying economic problem is a tight labor market, causing wages to rise – and prices to rise in response. And they believe interest rate increases are necessary to slow this wage-price inflation.This is dead wrong.Wage increases have not even kept up with inflation. Most workers’ paychecks are shrinking in terms of real purchasing power. Rather than causing inflation, wages are actually reducing inflationary pressures.The underlying economic problem is profit-price inflation. It’s caused by corporations raising their prices above their increasing costs.Corporations are using those increasing costs – of materials, components and labor – as excuses to increase their prices even higher, resulting in bigger profits. This is why corporate profits are close to levels not seen in over half a century.Corporations have the power to raise prices without losing customers because they face so little competition. Since the 1980s, two-thirds of all American industries have become more concentrated.Why are grocery prices through the roof? Because just four companies control 85% of meat and poultry processing. Just one corporation sets the price for most of the nation’s seed corn. And two giant firms dominate consumer staples.All are raising prices and increasing profits because they can.Big pharma, comprising five giants, is causing drug prices to soar.The airline industry has gone from 12 carriers in 1980 to just four today, all rapidly raising ticket prices.Wall Street has consolidated into five giant banks, raking in record profits on the spreads between the interest they pay on deposits and what they charge on loans.Broadband is dominated by three giant cable companies, all raising their prices.Automobile dealers are enjoying record profits as they raise the retail prices of automobiles.Gas prices have started to drop but big oil still has the power to raise prices at the pump far higher than the costs of crude.And so on.This is why Congress and the administration need to take direct action against profit-price inflation, rather than rely solely on the Fed to raise interest rates and put the burden of fighting inflation on average working people who are not responsible for it.Bold antitrust enforcement is essential. Even the credible threat of antitrust enforcement can deter corporations from raising prices higher than their costs.A windfall profits tax could also be helpful. This would be a temporary tax on price increases exceeding the producer price index’s costs of producing consumer goods.Price controls should be a backstop. The current inflation, emerging from the pandemic, is analogous to the inflation after the second world war when economists advocated temporary price controls to buy time to overcome supply bottlenecks and prevent corporate profiteering.Limited price controls should be considered now, for the same reasons.The inflation we are now experiencing is not due to wage gains from excessive worker power. It is due to profit gains from excessive corporate power.It’s profits, not wages, that need to be controlled.
      Robert Reich, a former US secretary of labor, is professor of public policy at the University of California, Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com
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      Fed raises interest rate by 0.75 percentage points as US seeks to rein in inflation

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      Fed raises interest rate by 0.75 percentage points as US seeks to rein in inflationThird outsized rate increase in a row as central bank struggles to fight runaway inflation, increasing the cost of everything The Federal Reserve announced another sharp hike in interest rates on Wednesday as the central bank struggles to rein in runaway inflation.The Fed raised its benchmark interest rate by 0.75 percentage points, the third such outsized rate increase in a row, bringing the Fed rate to 3%-3.25% and increasing the cost of everything from credit card debt and mortgages to company financing.The central bank signaled more raises to come, predicting rates would reach 4.4% by the end of the year and not start coming down until 2024. The Fed expects the rate rises to hit the job market – raising unemployment from 3.7% to 4.4% next year – housing prices and to lower economic growth.“We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t,” the Fed chair, Jerome Powell, said. “We have always understood that restoring price stability while achieving a relatively modest increase in unemployment and a soft landing would be very challenging. And we don’t know. No one knows whether this process will lead to a recession or if so, how significant that recession would be.”Central bankers around the world are raising rates sharply as they too attempt to tackle the cost of living crisis. This week the Bank of England is expected to announce its largest rate rise in 25 years. The European Central Bank raised interest rates across the eurozone by a record margin earlier this month.The Fed initially dismissed rising inflation, arguing it was a “transitory” phase triggered by the pandemic and supply chain issues. But as prices escalated the Fed announced a series of aggressive moves in the hopes of bringing prices back under control.Until recently Powell had said he hoped that the economy could achieve what he called a “soft landing” – a slowdown that would bring costs down but not lead to a spike in unemployment and a recession.Speaking at a congressional hearing on Wednesday, some of the US’s top bankers said it was too early to tell how rate rises would impact the economy. “I think there’s a chance, not a big change, a small chance, of a soft landing,” said Jamie Dimon, chief executive of JPMorgan Chase.“There’s a chance of a mild recession, a chance of a hard recession. And because of the war in Ukraine and the uncertainty in global energy and food supply, there’s a chance that it could be worse. I think policymakers should be prepared for the worst, so we take the right actions if and when that happens,” he said.Raising rates makes borrowing more expensive which should reduce spending and lower prices. But the policy is a blunt instrument and rate rises take time to filter through to the wider economy. So far the Fed’s rate rises have not had a significant impact.The US jobs market remains robust, with unemployment still close to a 50-year low, consumer spending rose last month and inflation remained stubbornly high in August, 8.3% higher than a year ago.There are, however, some signs of a slowdown. Existing home sales fell in August for the seventh consecutive month, according to the National Association of Realtors. Sales were 19.9% lower than in August 2021 and are now at their lowest level since they briefly stalled during the height of the pandemic in 2020. And large employers including BestBuy, Ford and Walmart have announced layoffs or hiring freezes.TopicsFederal ReserveUS economyBank of EnglandInflationEconomicsEuropean Central BankUS politicsnewsReuse this content More

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      Trump says he invoked fifth amendment in New York attorney general’s investigation: ‘I declined to answer’ – as it happened

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      In a lengthy statement, Donald Trump has announced he refused to answer questions during a deposition today as part of New York attorney general Letitia James’s investigation into his real estate dealings.The statement is full of attacks on James, but closes with the former president declaring he has lost faith in the justice system – at least under his Democratic rival, president Joe Biden:.css-knbk2a{height:1em;width:1.5em;margin-right:3px;vertical-align:baseline;fill:#C70000;}I once asked, “If you’re innocent, why are you taking the Fifth Amendment?” Now I know the answer to that question. When your family, your company, and all the people in your orbit have become the targets of an unfounded, politically motivated Witch Hunt supported by lawyers, prosecutors, and the Fake News Media, you have no choice. If there was any question in my mind, the raid of my home, Mar-a-Lago, on Monday by the FBI, just two days prior to this deposition, wiped out any uncertainty. I have absolutely no choice because the current Administration and many prosecutors in this Country have lost all moral and ethical bounds of decency.
      Accordingly, under the advice of my counsel and for all of the above reasons, I declined to answer the questions under the rights and privileges afforded to every citizen under the United States Constitution.Trump to face sworn deposition in New York lawsuit as legal troubles mountRead moreBe they at Mar-a-Lago or the New York attorney general’s office, former president Donald Trump’s legal issues were a major story today, as was an alleged Iranian plot to kill John Bolton, one of Tehran’s biggest enemies in Washington.Here’s a recap of the day’s events:
      Donald Trump invoked the fifth amendment against self incrimination when he sat for a deposition at the office of state attorney general Letitia James this morning, in her civil case relating to the former president’s real estate business.
      National security adviser Jake Sullivan warned Iran against any attacks targeting Americans following allegations that it plotted to kill Bolton, a former national security adviser in the Trump administration and noted Iran hawk.
      Data showing inflation flatlining in July prompted Joe Biden to say the figures were a sign that the world’s largest economy was healthy and poised to see prices moderate in the months to come.
      House speaker Nancy Pelosi said her visit to Taiwan was meant as a show of solidarity and not to fundamentally change Washington’s relationship with the island.
      Politico reports some new developments in the FBI’s visit to Mar-a-Lago, specifically efforts to get access to the search warrant, which hasn’t been released.Both rightwing group Judicial Watch and the Times Union newspaper serving the Albany, New York areas have filed motions to unseal the warrant:JUST IN: Judicial Watch motion to unseal the (possible) sealed search warrant for Mar-a-Lago has hit the docket.https://t.co/JORzlrE7rl pic.twitter.com/DT3XF5fNPs— Kyle Cheney (@kyledcheney) August 10, 2022
      BREAKING: Magistrate Judge Reinhart is asking for DOJ to respond to Judicial Watch’s unsealing request for (what I presume is) the Mar-a-Lago warrant by COB on Aug. 15. pic.twitter.com/Y4uJV3TGoz— Kyle Cheney (@kyledcheney) August 10, 2022
      The Albany Times-Union has also made a motion to unseal the search warrant, and Magistrate Reinhart has said DOJ can file a consolidated response to all unsealing motions: https://t.co/vdCBCdPwpG— Kyle Cheney (@kyledcheney) August 10, 2022
      And the Times-Union has made an identical motion to unseal a second sealed search-warrant case that was also docketed on Friday. It’s unclear which of the two is the Mar-a-Lago warrant.— Kyle Cheney (@kyledcheney) August 10, 2022
      Meanwhile, FBI director Christopher Wray isn’t saying much about the matter, according to ABC:Speaking for the first time since the FBI searched Former President Donald Trump’s Mar-a-Lago estate, FBI Director Christopher Wray told reporters in Omaha, NB he couldn’t get into the details. “Well, as I’m sure you can appreciate that’s not something I can talk about,” he said.— Luke Barr (@LukeLBarr) August 10, 2022
      Voters in four more states went to the polls last night to choose candidates in primary elections – and to also offer a glimpse into how Americans are thinking as the November midterms draw ever nearer.Multiple pollsters now see the Democrats’ prospects improving thanks to voters rallying around reproductive rights following the supreme court’s decision overturning Roe v. Wade, and Republicans opting for more extreme, Trump-friendly candidates to stand in the upcoming general election. Nate Cohn of The New York Times puts it this way:The GOP holds MN-1 in last night’s special election, but only by a modest 4 point margin (Trump+10 district; R+3 in last House race)The signs of a Democratic rebound post-Dobbs are starting to pile up https://t.co/9XJZGnxPqT— Nate Cohn (@Nate_Cohn) August 10, 2022
      There haven’t been many other special/non-primary election results since Dobbs, but MN-01 isn’t exactly alone. NE-01 was also a strong showing for Democrats. There’s also the KS abortion referendum, if you count it.We’ll get more data, including NY-19, over the next few weeks.— Nate Cohn (@Nate_Cohn) August 10, 2022
      Democrats have also trended upward on the generic congressional ballot, where they’ve reached parity with the GOPNo way to know if it lasts until November, but the focus on abortion/Jan 6 hasn’t ebbed–yet. At the same time, the news on inflation has improved for Ds— Nate Cohn (@Nate_Cohn) August 10, 2022
      Nate Silver of FiveThirtyEight sees things like this:Here’s something I think about. Let’s say Democrats somehow do hold the House this year. It’s not likely, but it’s also not impossible (~20% chance per 538 model). In 20 years, will people have a hard time explaining why it happened?I think no, they won’t. https://t.co/IiuAg9cVWO— Nate Silver (@NateSilver538) August 10, 2022
      The last time POTUS’s party gained seats in the House were 1998 and 2002. These are generally attributed to Lewinsky and 9/11, respectively.If Ds hold the House in 2022, people will attribute it to Roe being overturned and overall GOP radicalization including Jan. 6.— Nate Silver (@NateSilver538) August 10, 2022
      Is Dobbs + Jan. 6 a “special circumstance” equal in magnitude to 9/11? That’s a very apples-to-oranges comparison but I’d tend to say no; people forget how profoundly 9/11 changed public opinion. But is it comparable to Lewinsky? Certainly. It’s bigger, I’d think.— Nate Silver (@NateSilver538) August 10, 2022
      Dave Wasserman of The Cook Political Report with Amy Walter sums it up:This much is clear from Kansas and the #NE01/#MN01 House specials: there’s still time for things to snap back before November, but we’re no longer living in a political environment as pro-GOP as November 2021.— Dave Wasserman (@Redistrict) August 10, 2022
      To be sure, Democrats appear to be deep under water in the polls when it comes to control of the House, FiveThirtyEight says. Faring even worse is Joe Biden himself, whose approval rate has slid and slid and slid for months, with signs of stabilization coming only recently.The House of Representatives has taken the first steps to passing the Inflation Reduction Act, the Biden administration’s marquee spending proposal that is intended to lower health care costs and fight climate change.The Senate approved the legislation over the weekend with Democratic votes alone after pulling an all-nighter Saturday. While the House isn’t expected to vote on the bill till Friday, the chamber’s rules committee convened today to move it towards consideration by the full chamber.With Democrats thought to be on the cusp of losing control of the House in the November midterm elections, the bill could be one of the last major pieces of legislation passed in Biden’s first term. It was also intended to be much more ambitious, but provisions to lower housing costs and provide more aid and social services to poor Americans were stripped out in the lengthy negotiations that preceded its passage in the Senate.The Washington Post reports that Democrats are now making something of a long-shot pitch to voters: re-elect us in September and we will try again to pass those programs that didn’t make it into the Inflation Reduction Act. As Senate majority leader Chuck Schumer put it to the paper: “If we win, we’re going to have to do a reconciliation bill that will take care of a lot of the things that we couldn’t do”.Monkeypox cases are increasing across the United States, and as Wilfred Chan reports, the campaign against the disease is caught up in rightwing campaigns against LGBTQ+ rights:The conservative campaign against LGBTQ+ rights has found a new fixation for its hatred: monkeypox. On TV, rightwing commentators openly mock monkeypox victims – the vast majority of whom are men who have sex with men – and blame them for getting the disease. On social media, rightwing users trade memes about how the “cure” to monkeypox is straight marriage while casting doubt on monkeypox vaccines’ efficacy.This aggressive stigmatization of monkeypox – reminiscent of the homophobic response to HIV/Aids in the 1980s – poses a serious challenge to public health advocates and community leaders trying to have honest conversations about the disease with the gay and bisexual men who are most at risk during the current outbreak. Should public messaging highlight the fact that monkeypox is primarily affecting men who have sex with men? And should public health bodies urge gay men to change their sexual practices?The simultaneous threats of homophobia and monkeypox require making a difficult choice about which to tackle first, says the writer and veteran Aids activist Mark S King, a 61-year-old gay man.Rightwing media embraces Aids-era homophobia in monkeypox coverageRead moreFederal prosecutors in Michigan today began laying out their case against two men accused of plotting to kidnap Governor Gretchen Whitmer in 2020, saying that conversations about their plan went beyond just idle talk, Reuters reports.Adam Fox and Barry Croft Jr face kidnapping and weapons conspiracy charges for the second time after a federal judge in Grand Rapids, Michigan declared a mistrial last April.The men – alleged members of the Three Percenters, a self-styled militia group – are accused of plotting to abduct Whitmer from her vacation home and stage a “trial” for her for treason. Two other defendants were found not guilty in the men’s first trial.The mistrial was a setback for federal prosecutors in one of the highest-profile cases in years involving militias. The second trial will give them another opportunity.In his opening statement on Wednesday, a prosecutor said the men determined where the governor, performed reconnaissance on her summer cottage and gathered the equipment they needed, such as body armor and ammunition, to carry out their plan, according to a local TV station..css-knbk2a{height:1em;width:1.5em;margin-right:3px;vertical-align:baseline;fill:#C70000;}This wasn*t just talk. You will see these defendants and others took specific steps, planning and training,” Chris O’Connor, the assistant U.S. attorney for the Western District of Michigan, told the jury, local Fox affiliate WXMI reported.Attorneys for Fox and Croft revived their arguments from the first trial saying that there was no conspiracy.Christopher Gibbons, who represents Fox, described the accused as “big talkers” whose comments should not be taken seriously, according to NBC-affiliate WOOD-TV.If convicted on the conspiracy charges, the men face the possibility of life in prison.The two men on trial are among 13 men who were arrested in October 2020 and charged with state or federal crimes in the alleged kidnapping conspiracy. Seven of them are facing charges in state court.It’s been a sparky morning in US political news, mainly relating to the man Joe Biden refers to as “that guy”. The president has now jetted off on vacation but we’ll bring you all the developments as they happen.Here’s where things stand.
      Donald Trump invoked the fifth amendment against self incrimination (with an eye to a parallel criminal case in New York) during a deposition at the office of state attorney general Letitia James this morning, in her civil case relating to the former president’s real estate business.
      National security adviser Jake Sullivan warned Iran against any attacks targeting Americans following allegations that it plotted to kill John Bolton, a noted foe of Tehran who served in the Trump administration.
      The justice department announced charges against a Tehran-based member of Iran’s Revolutionary Guards for attempting to hire someone in the United States to kill John Bolton, a national security adviser under Donald Trump.
      Data showing inflation flatlining in July prompted Joe Biden to say the figures were a sign that the world’s largest economy was healthy and poised to see prices moderate in the months to come.
      Here is the president and family heading to South Carolina for a break..⁦@POTUS⁩ and fam off to South Carolina for vacation pic.twitter.com/LFEEU9a4BD— Seung Min Kim (@seungminkim) August 10, 2022
      There’s also this.Did you ever have to take the 5th? Nope? Me neither. pic.twitter.com/LJNOoEA060— Joyce Alene (@JoyceWhiteVance) August 10, 2022
      Following her visit to Taiwan that has sent tensions with China soaring, Democratic House speaker Nancy Pelosi said at a press conference that the trip’s goal was not to change Washington’s relationship with Taipei, but rather express solidarity.“We will not allow China to isolate Taiwan”, Pelosi said. “They have kept Taiwan from participating in the World Health Organization, other things were Taiwan can make a very valued contribution. And they may keep them from going there, but they’re not keeping us from going to Taiwan.”She noted Taiwan’s status as a democracy in contrast with authoritarian China, which considers the island a breakaway province and has vowed to reunify with it, even by force. Beijing warned Pelosi against going and responded to her trip by announcing military drills around Taiwan – steps the Democratic lawmaker said China did not take when a delegation of senators visited the island earlier this year.“So in any event, we’re very proud of our delegation”, she said.National security adviser Jake Sullivan has warned Iran against any attacks targeting Americans following allegations that it plotted to kill John Bolton, a noted foe of Tehran who served in the Trump administration.“We have said this before and we will say it again: the Biden Administration will not waiver in protecting and defending all Americans against threats of violence and terrorism. Should Iran attack any of our citizens, to include those who continue to serve the United States or those who formerly served, Iran will face severe consequences. We will continue to bring to bear the full resources of the U.S. Government to protect Americans,” Sullivan said in a statement.Bolton, who was Trump’s national security adviser from 2018 to 2019, presided over Washington’s decision to leave the Iran nuclear deal, and has advocated for bombing the country. The assassination plot alleged by the justice department earlier today appeared to be in retaliation for the 2020 assassination of Qassem Suleimani, the commander of the Islamic Revolutionary Guard Corps, who was killed on Trump’s orders.US charges Iranian man over alleged plot to kill ex-Trump aide John BoltonRead moreFormer national security adviser John Bolton has released a statement thanking the justice department for exposing the assassination plot against him.I wish to thank the Justice Dept for initiating the criminal proceeding unsealed today; the FBI for its diligence in discovering and tracking the Iranian regime’s criminal threat to American citizens; and the Secret Service for providing protection against Tehran’s efforts. pic.twitter.com/QDjkX6gUWM— John Bolton (@AmbJohnBolton) August 10, 2022
      He also takes a stab at the 2015 nuclear deal with Iran, which the United States pulled out of in 2018, during Bolton’s time in Donald Trump’s White House. The Biden administration along with its allies are in the midst of uncertain and lengthy negotiations with Tehran to revitalize the deal.EU team submit ‘final text’ at talks to salvage 2015 Iran nuclear dealRead moreDespite his apparently mounting legal troubles, Trump has continued to have success in getting his preferred candidates through primaries, as yesterday’s elections show:Minnesota congresswoman Ilhan Omar, a member of the select progressive group in the House of Representative dubbed the Squad, eked out a closer-than-expected Democratic primary victory on Tuesday night against a centrist challenger who questioned the incumbent’s support for the “defund the police” movement.The evening went far smoother for another progressive, Becca Balint, who won the Democratic House primary in Vermont – positioning her to become the first woman representing the state in Congress.But Tim Michels, backed by Donald Trump, was projected to win the Republican nomination for governor of Wisconsin, a day after the FBI searched the former US president’s home in Florida reportedly seeking classified documents.Progressive Ilhan Omar wins closer-than-expected House primary in MinnesotaRead moreMore details are emerging about the FBI’s search on Monday of Trump’s Mar-a-Lago residence, including that agents were looking for papers that the former president may have unlawfully taken from the White House. Hugo Lowell reports:Federal investigators searched Donald Trump’s Mar-a-Lago residence in Florida on Monday bearing a warrant that broadly sought presidential and classified records that the justice department believed the former president unlawfully retained, according to two sources familiar with the matter.The criminal nature of the search warrant executed by FBI agents, as described by the sources, suggested the investigation surrounding Trump is firmly a criminal probe that comes with potentially far-reaching political and legal ramifications for the former president.And the extraordinary search, the sources said, came after the justice department grew concerned – as a result of discussions with Trump’s lawyers in recent weeks – that presidential and classified materials were being unlawfully and improperly kept at the Mar-a-Lago resort.The unprecedented raid of a former president’s home by FBI agents was the culmination of an extended battle between Trump and his open contempt for the Presidential Records Act of 1978 requiring the preservation of official documents, and officials charged with enforcing that law.FBI searched Trump’s home seeking classified presidential records – sourcesRead moreNo matter how he does it, a judge in Georgia yesterday ordered Donald Trump’s former lawyer Rudy Giuliani to appear in person before an Atlanta special grand jury looking into attempts to tamper with the state’s election results in 2020.According to The New York Times, Giuliani has claimed his health doesn’t allow him to fly to the state – an argument a judge wasn’t buying.“John Madden drove all over the country in his big bus, from stadium to stadium. So one thing we need to explore is whether Mr. Giuliani could get here without jeopardizing his recovery and his health. On a train, on a bus or Uber, or whatever it would be,” Robert C.I. McBurney, a superior court judge in Fulton County, said.Giuliani has been tentatively ordered to appear on August 17.Giuliani ordered to go before grand jury in Trump election meddling caseRead more More

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      Workers are being punished for inflation. The real culprit is corporate greed | Robert Reich

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      Workers are being punished for inflation. The real culprit is corporate greedRobert ReichBig corporations are using inflation as cover to raise prices. Yet the US Federal Reserve is raising interest rates – further hurting Americans The US Federal Reserve is aiming its powerful firehose at the living room but it’s the forest that’s ablaze. As a result, people may drown even as their house catches fire.This about sums up the sorry state of inflation-fighting in America.On Wednesday, the Fed – America’s central bank – raised interest rates by three-quarters of a percentage point, and signaled more rate increases to come, perhaps as soon as September.This followed a quarter-point increase in March, another half a point in May, and three-quarters of a point in June.On Thursday, the commerce department announced that the US economy had shrunk for the second quarter in a row.While not technically a recession (economists in and out of the White House have spent much of the last several days deconstructing the word “recession”), there’s no question but that the US economy is slowing.This, to put it mildly, makes no sense.Inflation has broken out all over the world – the consequence of pent-up demand from more than two years of pandemic and of limited supplies of everything from computer chips to wheat, due to difficulties getting the world economy up and running.Add in Putin’s war in Ukraine driving up world energy and food prices, and China’s lockdowns against Covid, and you get a perfect conflagration.That’s not all. Big corporations are busily raising their prices because consumers have so little choice. Corporations are using inflation as cover.Prices at the gas pump have drifted down a bit in the last month but are still eye-popping. (Here in California, I’m paying over $6 a gallon.)At the same time, big oil has hit a gusher. Exxon just reported second-quarter profits of $17.9bn, more than three times what it earned a year ago. Chevron’s profit more than tripled to $11.6bn.The two giant American oil companies aren’t pouring their profits back into energy, green or otherwise. They’re buying back their shares of stock to reward investors and executives.Or consider giant corporations selling consumer staples, such as Proctor & Gamble (maker of everything from Gillette razors to Tide detergent).On Friday, P&G reported another quarter of rising profits despite the increasing costs of raw materials and transportation. How did it manage this feat? By raising its prices even more.Meanwhile, half of the recent rise in grocery prices is from beef, pork and poultry. Just four large conglomerates control these markets, and they’ve been coordinating their price increases to score large profits – here again, using “inflation” as an excuse.If markets were competitive, companies would keep their prices down to prevent competitors from grabbing away customers. But they’re raising prices even as they rake in record profits.The Fed’s firehose is hitting none of this.Meanwhile, we’re told not to worry because the labor market is doing just fine.Rubbish.There are two aspects to the labor market – jobs and wages. The number of jobs has been increasing nicely. Let’s hope this continues. But hourly wages have plummeted, when adjusted for inflation.If the Fed keeps raising interest rates – even if the national economy avoids an official “recession” – most workers will fall even further behind.The living standards of nearly everyone who borrows money are already dropping. Because of the Fed’s rate hikes, the average rate on credit card debt has reached 17.25% (up from 16.34% in March, before the Fed began raising interest rates). Rates on student loans, car loans and mortgages are also rising.The government should use a firehose better aimed at the conflagration, which won’t so badly burden the bottom 80%.For starters, impose a temporary windfall profits tax on big oil, on giant sellers of consumer staples and on big ag. This would reduce their incentive to engage in price gouging.Bolder antitrust enforcement – even the threat to block mergers and break up giant companies – could also reduce their ardor to raise prices.If Congress refuses to allow the government to use its bargaining power to reduce the prices of pharmaceuticals, big pharma is a good candidate for temporary price controls. (FDR controlled prices via executive order.)Finally, higher taxes on the wealthy – such as Democrats seem finally ready to enact – will help dampen total demand, thereby dousing some of the inflation fire.The Fed’s single tool for fire-fighting – interest-rate increases – is aimed in the wrong direction. It’s hitting working people rather than corporations responsible for most price increases (over and above the rising costs of global supplies).We need to fight rising prices, not working people.
      Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com
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      Republicans rush to label economic slowdown as ‘Joe Biden’s recession’

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      Republicans rush to label economic slowdown as ‘Joe Biden’s recession’Republicans are quick to call a recession as the administration points to brighter employment numbers Prices are rising in the US at the fastest rate in four decades. The Fed raised interest rates again. And new data showed the American economy shrank for a second consecutive quarter, intensifying fears of a recession and handing Republicans a potent line of attack just months before the midterm elections.For embattled Joe Biden, Thursday’s gross domestic product figures were the latest in a string of worrying economic developments clouding his presidency this week. The news came as Democrats celebrated a breakthrough on the president’s long-stalled economic agenda after Senator Joe Manchin announced his support for a version of the plan in a shock reversal for the West Virginia holdout.Joe Biden hails Senate deal as ‘most significant’ US climate legislation everRead moreWith control of Congress in the balance, Republicans seized on the turn of events to accuse Democrats of deepening economic disarray with their spending plans. Widespread pessimism about the state of the economy has shaped up to be Biden’s biggest political vulnerability, weighing down his approval ratings and threatening Democrats’ chances in November.Moments after the Bureau of Economic Analysis published the highly anticipated GDP report on Thursday morning, Republicans declared the economy well into the throes of “Joe Biden’s recession” and blamed Democrats’ policy initiatives for making life costlier for Americans.“Biden and Democrats are responsible for our shrinking economy, and they’re only trying to make it worse,” said Ronna McDaniel, chairwoman of the Republican National Committee.GDP, the broadest measure of economic activity, fell by an annual rate of 0.09%, following a 1.6% annual decline in the first three months of the year, according to the commerce department. The numbers recorded two consecutive quarters of declining economic output, a common – but not official – definition of recession.On Thursday, Biden dismissed fears that the US was in a recession, arguing that the economy was “on the right path”.“There’s going to be a lot of chatter today on Wall Street and among pundits about whether we are in a recession,” Biden said on Thursday afternoon. “But if you look at our job market, consumer spending, business investment, we see signs of economic progress in the second quarter as well.”In anticipation of the report, the White House has sought to convince Americans that two quarters of economic decline does not necessarily mean the US is in recession, particularly because unemployment remains low, job growth robust and household savings elevated.Biden stressed those sources of strength in the economy during an earlier appearance on Thursday, concluding: “That doesn’t sound like a recession to me.”The president also urged Congress to move quickly to pass his economic agenda that the White House argues will help ease the financial burden on American households by lowering the costs of healthcare and prescription drugs.Biden did pause to take a victory lap on Thursday, interrupting his meeting with the CEOs of five US businesses to announce that the House had enough votes to pass a sprawling bipartisan package designed to strengthen American manufacturing and increase the US’s competitiveness against China.The bill, which next goes to his desk for signatures, will “make cars cheaper, appliances cheaper, and computers cheaper”, Biden said in a statement. “It will lower the costs of every day goods.”But Republicans said the Democrats’ climate, healthcare and tax plan, formerly known as “Build Back Better” and recast as the “Inflation Reduction Act”, would only cause further financial hardship, especially after they passed a $1.9tn coronavirus relief package last year.“The definition of insanity? Doing the same thing over and over and expecting different results,” the Republican congressman Vern Gale Buchanan of Florida wrote on Twitter. “Yet here we are now entering a recession and Democrats are trying to spend hundreds of billions of dollars on Green New Deal priorities and raise taxes on America’s job creators.”Soaring inflation – now running at 40-year highs – led the Federal Reserve on Wednesday to increase interest rates in an effort to bring down prices, the second such increase in just over a month.Labelling the downturn a recession may be more politically charged than economically precise. Recessions are officially declared by the National Bureau of Economic Research, a private research group, and usually only after the decline is over.“Bottom Line,” Diane Swonk, chief economist for KPMG, said on Twitter, “We are not in a recession – yet. But the current environment is [not] healthy. The cure will be painful but is necessary to avoid an even worse outcome. Rock & hard spot. Scars likely. Hard.”The treasury secretary, Janet Yellen, said the US economy is in a state of transition, from a period of fast-paced growth to a period of more sustainable growth.Recession, she explained, is generally viewed as a “broad-based weakening of our economy” that includes “substantial job losses and mass layoffs, businesses shutting down, private sector activities slowing considerably”.“That is not what we are seeing right now,” she said.Yet even without an official determination of whether the US is in a recession, polling has found that most Americans believe it is: something likely to cause Democrats pain at the ballot box in November’s crucial elections.According to a recent CNN poll, 64% of Americans “feel” the economy is in recession, including 56% of Democrats and 63% of independents. The same survey found that four in 10 view the economy as “very poor”, an 11-point rise since the spring.Biden defended his administration’s actions, arguing that the economic stimulus plan was “the reason why we still had teachers in school, kids going to school, the reason why we had cops on the beat, the reason we had essential workers,” during the depths of the pandemic. But he admitted that the “vast majority of Americans have no idea what the recovery plan did”.Now, with their congressional majorities hanging in the balance, Democrats must persuade voters to trust their economic leadership as they rush to pass Biden’s economic agenda, which they vow will help, not hurt American pocketbooks.Manchin, who just weeks ago appeared to walk away from his party’s economic plans over concerns that it would worsen inflation, said his newfound support for the measure was based on assurances that it would not.Explaining his decision, Manchin told reporters: “This is truly going to be around inflation reduction.”TopicsBiden administrationInflationEconomicsUS politicsnewsReuse this content More

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      January 6 hearings: Barr ‘not sure at all’ transition would have happened had DoJ not resisted Trump – live

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      The January 6 committee has concluded its hearing for the day, with the next sessions expected later in July, when House lawmakers return to Washington from a recess.In his closing remarks, committee’s chair Bennie Thompson outlined what the committee had found thus far and what it expected to show in the future..css-knbk2a{height:1em;width:1.5em;margin-right:3px;vertical-align:baseline;fill:#C70000;} Up to this point, we’ve shown the inner workings of what was essentially a political coup and attempt to use the powers of the government, from the local level all the way up, to overturn the results of the election. Send fake electors, just say the election was corrupt. Along the way, we saw threats of violence, we saw what some people were willing to do. In a service of the nation, the constitution? No. In service of Donald Trump.
      When the Select Committee continues this series of hearings, we’re going to show how Donald Trump tapped into the threat of violence, how he summoned the mob to Washington, and how after corruption and political pressure failed to keep Donald Trump in office, violence became the last option.The testimony of the justice department officials who gave the bulk of the day’s evidence has concluded, but before they did, Jeffrey Rosen, the acting attorney general, told a tale familiar to those who have watched the committee’s hearings closely: he never heard from Trump on the day of the attack.“I spoke to a number of senior White House officials, but not the president,” Rosen said.What Trump was doing during the attack and who he was talking to are both expected to be focuses of later hearings of the committee.The committee has just unveiled evidence of more Republican congressmen requesting pardons from Trump in his final days in office. NEW on PARDONS: Republican congressman Mo Brooks sent an email on 11 January 2021 seeking pardons for “Every Congressman and Senator who voted to reject the electoral college vote submissions of Arizona and Pennsylvania.”— Hugo Lowell (@hugolowell) June 23, 2022
      Trump WH aide Cassidy Hutchinson testified that Brooks and Gaetz pushed for pardons for every Republican lawmaker who participated in Jan. 6 planning meeting — and Reps. Perry, Biggs, Gohmert asked for pardons. Jordan asked whether White House would pardon members.— Hugo Lowell (@hugolowell) June 23, 2022
      The testimony adds to the list of pardon requests that have emerged as the January 6 committee aired its evidence.Capitol attack pardon revelations could spell doom for Trump and alliesRead moreJeffrey Clark came very close to be the acting attorney general, a position in which he could have used his authority to disrupt the certification of Biden’s election win in several states, according to evidence the committee is airing.On January 3, three days before the attack on the Capitol, the White House had already begun referring to Clark as acting attorney general, according to Adam Kinzinger, the Illinois Republican leading the committee’s questioning today.The committee then turned to exploring a meeting between Trump and the leaders of the justice department that day in the Oval Office, in which Trump repeated specific claims of fraud that had been debunked and expressed his will to see Clark take over the department.Richard Donoghue said he warned of mass resignations to follow if Clark took over the department. “You’re gonna lose your entire department leadership. Every single (assistant attorney general) will walk out. Your entire department of leadership will walk out within hours. And I don’t know what happens after that. I don’t know what the United States attorneys are going to do,” Donoghue said. “My guess would be that many of them would have resigned.”Jeffrey Rosen, the acting attorney general in the final weeks of the Trump administration, is now recounting Trump’s attempt to replace him with Jeffrey Clark, who was playing a major roles in his efforts to have states that voted for Biden overturn their results.In a meeting on a Sunday, Rosen said Clark “told me that he would be replacing me,” and had made the atypical request to ask to meet him alone, “because he thought it would be appropriate in light of what was happening to at least offer me, that I couldn’t stay on his his deputy.”“I thought that was preposterous. I told him that was nonsensical,” Rosen said. “There’s no universe where I was going to do that, to stay on and support someone else doing things that were not consistent with what I thought should be done.”However, Clark also said he would turn down Trump’s offer to replace Rosen if the acting attorney general signed the letter disputing the validity of Georgia’s electors for Biden. Richard Donoghue recounted that Rosen made the decisions to begin informing other department officials about the quandary, and almost all the assistant attorney generals said they would resign if Trump replaced Rosen with Clark.As this hearing has unfolded, the justice department officials testifying have said they investigated many of the claims of fraud in the 2020 election brought forward by Trump and his allies. The decision to look into these claims in the weeks after polls closed may be more significant than it appears at first glance.In video testimony aired earlier in the hearing, William Barr, Trump’s attorney general during the election, said be believes that the department’s ability to debunk the false claims of fraud as Trump was making them were essential to allowing Joe Biden to assume office.“I felt the responsible thing to do was to be… in a position to have a view as to whether or not there was fraud,” Barr told investigators.“I sort of shudder to think what the situation would have been if the position of the department was, we’re not even looking at this until after Biden’s in office. I’m not sure we would have had a transition at all.”The committee has returned, and is now asking Jeffrey Rosen, the acting attorney general, about a request from Trump to seize voting machines.“We had seen nothing improper with regard to the voting machines,” Rosen said he replied, noting that investigators had looked into allegations the machines gave fraudulent results and found nothing wrong. “And so that was not something that was appropriate to do … I don’t think there was legal authority either.”Richard Donoghue, the former acting deputy attorney general, is recounting a meeting with Trump, in which he pushed him unsuccessfully to seize voting machines. By the end, “The president again was getting very agitated. And he said, ‘People tell me I should just get rid of both of you. I should just remove you and make a change in the leadership with Jeff Clark, and maybe something will finally get done,’” Donoghue said.Donoghue said he responded: “Mr President, you should have the leadership that you want. But understand the United States justice department functions on facts and evidence, and then those are not going to change. So you can have whatever leadership you want, but the department’s position is not going to change.”The committee is now in recess, but before they finished, Richard Donoghue described his reaction when he first learned of Jeffrey Clark’s proposed letter to the Georgia legislature asking them to convene to declare alternate electoral college voters.“I had to read both the email and the attached letter twice to make sure I really understood what he was proposing because it was so extreme to me I had a hard time getting my head around it initially,” Donoghue said. He responded in writing to Clark’s letter, saying that its allegations were “not based on facts,” and, in his view, “for the department to insert itself into the political process this way, I think, would have had grave consequences for the country. It may very well have spiraled us into a constitutional crisis. And I wanted to make sure that he understood the gravity of the situation because he didn’t seem to really appreciate it.”Clark himself made a brief appearance in video testimony the committee played before it took its break, responding to questions by asserting his fifth amendment rights and executive privilege.The committee will reconvene in a few minutes.One name that’s coming up a lot in this hearing is Scott Perry, the Pennsylvania Republican congressman who the committee said took part in Trump’s plan to pressure the justice department, and in particular install Jeff Clark at its helm.The committee just showed text messages between Perry and Trump’s chief of staff Mark Meadows, which showed the lawmaker encouraging Meadows to work on promoting Clark. Richard Donoghue also detailed a phone call from Perry where the congressman claimed fraud in the results in Pennsylvania from the 2020 election – which the justice department determined unfounded.The committee had sought documents and requested an interview with Perry last year, but the Republican refused to comply. Last month, Perry was among a group of congressmen subpoenaed by the committee.Capitol attack panel subpoenas five Republicans in unprecedented stepRead moreRichard Donoghue, the former acting deputy attorney general, is outlining his efforts to convince the president that the justice department could not interfere with a state’s election.“States run their elections. We are not quality control for the states,” he recalled explaining to Trump. “The bottom line was, if a state ran their election in such a way that it was defective, that is to the state or Congress to correct, it is not for the justice department to step in.”But Trump wanted something simpler, Donoghue said.“That’s not what I’m asking you to do,” Donoghue told the committee Trump said after he explained the department’s position. “Just say it was corrupt and leave the rest to me and the Republican congressmen,” the president said.Today’s hearing is focusing on the inner workings of the justice department, but as in previous sessions, the committee has tried to make sure the insurrection isn’t far from viewers’ minds.Case in point: lawmakers just aired video from the day of the attack showing marchers chanting “Do your job!” outside the justice department — evidence that Trump’s most ardent supporters were well aware of the president’s attempts to push government lawyers to interfere with Joe Biden’s victory.But as justice department officials tell it, they never believed in Trump’s fraud claims. Richard Donoghue, the former acting deputy attorney general, said Trump lawyer Pat Cipollone described the letter Clark wanted to send for Trump as a “murder-suicide pact. It’s going to damage everyone who touches it.”The committee’s top Republican Liz Cheney is offering more details about the actions of justice department official Jeffrey Clark, who had his house raided today by federal investigators.According to Cheney, Clark and another justice department lawyer drafted a letter addressed to the Georgia state legislature, which would have said the department had “identified significant concerns that may have impacted the outcome of the election in multiple states, including the state of Georgia”, and that the legislature should convene and consider approving a new slate of electors. Joe Biden had won Georgia, but Trump made baseless allegations of fraud in the polls, and the new electors would have presumably given him the state’s electoral votes.“In fact, Donald Trump knew this was a lie,” Cheney said. “The Department of Justice had already informed the president of the United States repeatedly that its investigations had found no fraud sufficient to overturn the results of the 2020 election.”Cheney said Clark had met with Trump privately and agreed to help him sway these states’ legislatures without telling his bosses at the justice department. But Cheney said Clark’s superiors – who are the witnesses testifying today – refused to sign it. That was when Trump began considering installing Clark at the helm at the justice department – which he never ended up doing. The House committee investigating the January 6 insurrection has started its fifth hearing, which will focus on Donald Trump’s efforts to get the justice department to go along with his plans to overturn Joe Biden’s 2020 election victory. Testifying in the chamber will be:
      Jeffrey Rosen, the acting attorney general for the final weeks of Trump’s term, including during the attack on the Capitol.
      Richard Donoghue, the former acting deputy attorney general, who appeared in a video aired at the conclusion of Tuesday’s hearing threatening to resign if Trump appointed Jeffrey Clark to head the justice department.
      Steven Engel, the former assistant attorney general for the office of legal counsel.
      We’re about 10 minutes away from the start of today’s January 6 hearing, which my colleague Lauren Gambino reports will offer new evidence of how Trump pressured the justice department to take part in his plot to overturn the 2020 election:The House committee investigating the January 6 insurrection plans to present new evidence on Thursday about Donald Trump’s brazen attempts to pressure the justice department to overturn the 2020 presidential election that he lost, aides said.After exhausting his legal options and being rebuffed by state and local elections officials, the president turned to the justice department to declare the election corrupt despite no evidence of mass voter fraud, the nine-member panel will seek to show in their fifth and final hearing of the month.Testifying from the Cannon Caucus Room on Capitol Hill are Jeffrey Rosen, the former acting attorney general; Richard Donoghue, the former acting deputy attorney general; and Steven Engel, the former assistant attorney general for the office of legal counsel.Capitol attack panel to show how Trump pressured DoJ to overturn electionRead more More

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      Federal Reserve announces biggest interest rate hike since 1994

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      Federal Reserve announces biggest interest rate hike since 1994Fed confirms 0.75 percentage-point increase as Americans across country hit hard by rising prices and shortages of key items With soaring inflation and the shadow of recession hanging over the United States, the Federal Reserve announced a 0.75 percentage-point increase in interest rates on Wednesday – the largest hike since 1994.Until this week the Fed had been expected to announce a smaller increase. At a press conference, the Fed chair, Jerome Powell, said the central bank decided that a larger hike was needed after recent economic news, including last week’s announcement that inflation had risen to a 40-year high.He made clear that a similarly outsized rate rise should be expected at its next meeting in July unless price rises softened. “We at the Fed understand the hardship inflation is causing,” he said. “Inflation can’t go down until it flattens out. That’s what we’re looking to see.”The hike will increase the Fed’s benchmark federal-funds rate to a range between 1.5% and 1.75% and officials said they expected rates to rise to at least 3% this year.Powell acknowledged that the Fed’s attempt to cool spending is likely to lead to job losses. The Fed expects unemployment to rise to 4.1% from the current rate of 3.6% as it attempts to bring inflation back down to its target rate of 2%.“We never seek to put people out of work,” Powell said. But, he added: “You really cannot have the kind of labor market we want without price stability.”The rate rise came after more bad news on inflation late last week sent US stock markets into a tailspin, presenting the Fed and the Biden administration with an escalating crisis amid fears that runaway inflation has now spread through the economy.Over a third of US population urged to stay indoors amid record-breaking heatRead moreThe Fed cut rates to near zero at the start of the coronavirus pandemic, as the US and global economies effectively shut down. It increased rates for the first time since 2018 in March this year, but the increase did nothing to tamp down rising prices.Powell initially described rising prices as “transitory”, but has changed his view and says the Fed intends to aggressively increase rates in order to bring prices back under control. There are already signs that consumers are cutting back in the face of rising inflation. Retail spending fell for the first time this year in May, the commerce department said on Wednesday. Home sales have fallen for three consecutive months and consumer confidence hit a record low between May and June.Last week the labor department announced consumer prices were 8.6% higher in May than they were a year ago. The increase was broad-based, with food and fuel prices rising alongside rent, airfares and car prices.Across the country, consumers are being confronted by rising prices and shortages. Nationally, gas now costs an average of $5 per gallon, close to $2 higher than a year ago. In California, a gallon of gas now costs more than $6, up from just over $4 a year ago.Supply chain disruptions and other issues have led to shortages of basic necessities including tampons and baby formula.On Wednesday, Joe Biden summoned top oil executives to the White House to discuss ways they can “work with my administration to bring forward concrete, near-term solutions that address the crisis”.Biden’s handling of the inflation issue has battered his poll numbers. With crucial midterm elections, and control of Congress, coming up in November, Biden’s approval rating is 33%, according to Quinnipiac University’s national poll, equal to the lowest rating for his administration.Many parts of the economy remain strong and the Fed is aiming for a “soft landing” – hoping it can tame inflation by raising rates without sharply increasing the unemployment rate – but Powell acknowledged some risks, including the war in Ukraine, were beyond the influence of the Fed.Nearly 70% of the academic economists polled by the Financial Times and the University of Chicago’s Booth School of Business now believe the US economy will tip into a recession next year.TopicsFederal ReserveUS interest ratesUS economyInflationUS politicsBiden administrationEconomicsnewsReuse this content More

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      Janet Yellen tells Congress US faces ‘unacceptable levels of inflation’

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      Janet Yellen tells Congress US faces ‘unacceptable levels of inflation’Treasury secretary admits she regrets describing inflation as ‘transitory’ and says it is ‘top economic problem at this point’ Janet Yellen told Congress that the US is facing “unacceptable levels of inflation” on Tuesday as the treasury secretary defended herself from criticism of her previous comments that rising prices were “transitory”.Although the hearing with the Senate finance committee was centered on Joe Biden’s budget for 2023, Yellen was forced to answer questions on inflation, including some on how she once said that inflation would be “transitory”, or temporary.In response to a question about how she had initially framed inflation, Yellen said: “When I said that inflation would be transitory, what I was not anticipating was a scenario in which we would end up contending with multiple variants of Covid that would be scrambling our economy and global supply chains.“I was not envisioning impacts on food and energy prices we’ve seen from Russia’s invasion of Ukraine.”Yellen said she and the Federal Reserve chair, Jerome Powell, “could have used a better term than transitory”.She said: “There’s no question that we have huge inflation pressures, that inflation is really our top economic problem at this point and that it’s critical that we address it. I do expect inflation to remain high, although I very much hope that it will be coming down now.”Last week, Yellen drew headlines for making similar comments to CNN, during an interview in which she had been “wrong then about the path inflation would take”.At the hearing on Tuesday, Yellen said: “We currently face macroeconomic challenges, including unacceptable levels of inflation, as well as the headwinds associated with the disruptions caused by the pandemic’s effect on supply chain and the effects of supply-side disturbances to oil and food market.”‘We’re still struggling’: low unemployment can’t hide impact of low wages and rising inflationRead moreThe Biden administration has been delicately walking the inflation tightrope over the last few months as they try to push an aggressive response while also emphasizing other indicators that prove the economy is still improving, particularly in the jobs market.Biden celebrated the figures shown in May’s jobs report, released last Friday, which showed that 390,000 new jobs were created that month.“Because of the enormous progress we’ve made on the economy, Americans can tackle inflation from a position of strength,” Biden said in remarks following the release of the jobs report.Republicans in Tuesday’s hearing repeatedly pointed to the passing of the $1.9bn American Rescue Plan, which was passed in March last year and delivered further coronavirus aid, as a key driver of inflation.In response, Yellen noted that Biden “inherited an economy with very high unemployment”.“We had to address the possibility that this could be the downturn that could match the Great Recession,” she said. “In the policy, there were various risks taken into account. Of course, inflation was one of them. But the overwhelming risk was that America would be marred by a deep and long recession.”Yellen pointed to the expansion of child tax credit, which gave extra assistance to families, in the stimulus package that “resulted in a dramatic reduction in childhood poverty and financial insecurity for American families and contributed little to nothing to inflation”.She also said the US is “not the only country that’s experiencing inflation – you can see that in virtually every developed country around the world”.TopicsInflationJanet YellenEconomicsUS politicsBiden administrationnewsReuse this content More