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      US adds 263,000 jobs in November as unemployment rate stays at 3.7%

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      US adds 263,000 jobs in November as unemployment rate stays at 3.7%Jobs market remains strong even as Fed imposes biggest series of rate rises in decades in effort to tame inflation The US added 263,000 jobs in November, the labor department announced on Friday, another strong month of jobs growth. The unemployment rate remained at 3.7%, close to a 50-year low.Employers hired 284,000 new positions in October and 269,000 in September and the latest figures show hiring has remained resilient despite rising interest rates and the announcement of a series of layoffs at technology and real estate companies.The jobs market has remained strong even as the Federal Reserve has imposed the biggest series of rate rises in decades in its fight to tame inflation. This week, the Fed chair, Jerome Powell, indicated that the continuing strength of the jobs market – and rising wages – were likely to trigger more rate rises in the coming months.The US had been expected to add 200,000 jobs in November. The latest jobs numbers – the last before the Fed meets to decide its next move later this month – will strengthen the central bank’s resolve to keep raising rates.“This phenomenal labor market is showing little sign of slowdown,” said Becky Frankiewicz, president and chief commercial officer of ManpowerGroup. “Despite recurring headlines of deep cutbacks – primarily in tech – other sectors have scaled up; and while we’ve been bracing for a downturn, the broader labor market has barely flinched.”Economists expect rate hikes will eventually dampen hiring, potentially leading to a recession and job losses next year. But so far, the jobs market has shaken off the Fed’s interventions.The government figures follow a downbeat report from ADP, the US’s largest payroll supplier. On Wednesday, ADP said the private sector had added just 127,000 positions for the month, well below the 190,000 forecast by economists and a steep reduction from the 239,000 jobs ADP recorded in October.ADP’s chief economist, Nela Richardson, said it was still too early to say but it seemed the rate rises were filtering through to hiring decisions.“Turning points can be hard to capture in the labor market, but our data suggest that Federal Reserve tightening is having an impact on job creation and pay gains,” said Richardson. “In addition, companies are no longer in hyper-replacement mode. Fewer people are quitting and the post-pandemic recovery is stabilizing.”TopicsUS unemployment and employment dataUS economyFederal ReserveUS politicsnewsReuse this content More

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      Senate moves quickly to avert US rail strike by passing key bill

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      Senate moves quickly to avert US rail strike by passing key billBill goes to Biden’s desk for his signature after legislation that binds rail firms and workers to settlement plan passes 80-15 The Senate moved quickly on Thursday to avert a rail strike that the Biden administration and business leaders warned would have had devastating consequences for the nation’s economy.The Senate passed a bill to bind rail companies and workers to a proposed settlement that was reached between the rail companies and union leaders in September. That settlement had been rejected by some of the 12 unions involved, creating the possibility of a strike beginning 9 December.The Senate vote was 80-15. It came one day after the House voted to impose the agreement. The measure now goes to Joe Biden’s desk for his signature.“I’m very glad that the two sides got together to avoid a shutdown, which would have been devastating for the American people, to the American economy and so many workers across the country,” the Democratic majority leader, Chuck Schumer, told reporters.Schumer spoke as the labor secretary, Marty Walsh, and transport secretary, Pete Buttigieg, emphasized to Democratic senators that rail companies would begin shutting down operations well before a potential strike would begin. The administration wanted the bill on Biden’s desk by the weekend.Shortly before Thursday’s votes, Biden – who had urged Congress to intervene earlier this week – defended the contract that four of the unions had rejected, noting the wage increases it contains.“I negotiated a contract no one else could negotiate,” Biden said at a news briefing with Emmanuel Macron, the French president. “What was negotiated was so much better than anything they ever had.”Critics say the contract that did not receive backing from enough union members lacked sufficient levels of paid leave for rail workers. Biden said he wanted paid leave for “everybody” so that it wouldn’t have to be negotiated in employment contracts, but Republican lawmakers have blocked measures to require time off work for medical and family reasons.The US president said that Congress should now impose the contract to avoid a strike that Biden said could cause 750,000 job losses and a recession.Senators also voted on Thursday on a measure, passed in the House on Wednesday along party lines, that would provide seven days of paid sick leave to railroad workers.It fell eight votes short of a 60-vote threshold needed for passage in the Senate.The rail companies and unions have been engaged in high-stakes negotiations. The Biden administration helped broker deals in September but four of the unions rejected them. Eight others approved five-year deals and are getting back pay for their workers for 24% raises retroactive to 2020.The unions maintain that railroads can easily afford to add paid sick time when they are recording record profits. Several of the big railroads involved in these contract talks reported more than $1bn profit in the third quarter.TopicsUS SenateUS CongressRail industryRail transportUS economyUS politicsJoe BidennewsReuse this content More

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      We need serious public policy, not more printed money – the US economy is in tatters

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      AnalysisWe need serious public policy, not more printed money – the US economy is in tattersDoug HenwoodDecades of bailouts have convinced some that the Fed will always come to the rescue – but this only papers over the fundamental flaws of the US economy With the Federal Reserve leading the world’s central banks in a tightening cycle of interest rate rises, the likes of which we haven’t seen since 2006, commentators across the political spectrum are noting the fondness of the Fed chair, Jerome “Jay” Powell, for his legendary predecessor, Paul Volcker. On the left, the comparison is fearful; on the center and on the right, it’s one of admiration. But circumstances don’t really support the comparison.Fed announces sixth consecutive hike in US interest rates to fight inflationRead moreOn taking office in October 1979, Volcker declared “the standard of living of the average American has to decline” as a consequence of the war against the chronic inflation of the 1970s. He quickly set to work making that happen by driving interest rates up towards 20% and creating the deepest US recession since the 1930s.That squeeze did put an end to high inflation but at a tremendous social cost. Six million people lost their jobs over the next three years, taking the unemployment rate from 6% to almost 11% in late 1982. The cost wasn’t merely short-term. About half of those job losses were categorized as permanent, as opposed to being temporary layoffs, many of them in the manufacturing heartland. The term “rust belt” entered common usage.Volcker was appointed by Jimmy Carter, who seemed to have no idea of what he was getting himself into. His friend and adviser, the Georgia banker Bert Lance, prophetically warned him that he was dooming his prospects in the 1980s election. But Carter listened to the consensus of Wall Street and the political class – Volcker was the man to tame inflation, which was running around 13% at the end of 1979. The US had seen inflation rates that high before, but never outside of major wars or their immediate aftermath. Inflation, which was under 2% in 1965, had been rising relentlessly for 15 years, barely pausing even in the nasty recession of the mid-1970s. Contrary to a belief popular on the left, that inflation was not kind to workers. Wages badly lagged prices, and real average hourly earnings fell 14% between 1973 and 1980.There are some similarities between the present and 40 years ago. Then, as now, food and energy prices were important factors in sparking inflation, but in both cases, even if you strip out those two volatile components, a severe inflation remains. And in both cases, polls have shown inflation to be deeply unpopular.But there are also major differences, notably in the strength of labor. At the end of the 1970s, almost a quarter of all workers were unionized; now only about a tenth are. Then, an average of 22,000 workdays were lost to strikes every year; last year it was just 1,500 – a decline of 93%. The early 1980s recession hammered the bargaining power of the working class. Unions were busted, and we went from a time when Take This Job and Shove It could be a hit song (as it was in 1977) to one where workers were grateful to have any job at all, no matter how tenuous and low-paying. As the recession ended in late 1982, the stock market took off and the employer class began a 40-year celebration of its triumph.That’s not the world Powell finds himself in. Inflation has been a problem for close to 15 months rather than 15 years, and although there are some tentative signs of life in the labor movement – notably at one Amazon site and a few hundred Starbucks outlets (out of 9,000) – the share of the labor force represented by unions fell last year, and strike activity so far in 2022 is about a third lower than in 2021. Unlike the inflation of the 1970s, this is not the wage-push kind (to use the jargon). It’s been driven first by supply chain blockages, thanks to Covid, and extended by embargoes against Russian energy exports, and most workers are just looking on helplessly as their paychecks fail to keep up with price increases.There’s another difference as well: we’re coming off a decade of extremely indulgent monetary policy. Coming out of the Great Recession, the Fed kept short-term interest rates near zero between 2011 and 2021, with the brief exception when they pushed them up to just over 2% in 2017 and 2018 (still quite low by historical standards). On top of that, the central bank pumped over $3tn (£2.7tn) into the financial markets between 2008 and 2015, and almost $5tn between early 2020 and early 2022. The earlier pumping was meant to prevent a financial implosion after the sub-prime crisis, and the latter to counter the threats of the early pandemic months. But the result of both has been to stimulate crazy inflation in asset prices – stocks, crypto, unicorns, housing – a remarkable waste of capital and one that can be very risky to deflate. Decades of bailouts have convinced financial market players that the Fed will always come in to rescue them and reversing that mentality could require a Volckerish austerity for Wall Street – one that’s politically hard to imagine.The Fed’s interest rate hikes are going to hit the most vulnerable | Dean BakerRead moreWhat Powell is up to now bears almost no resemblance to Volcker’s clampdown. The federal funds rate, the interest rate at which banks lend each other money overnight – that is the Fed’s most direct policy target – changed from just above 0% to just under 4% after raising the target rate another 0.75 points this week. That’s almost 15 points below the Volcker peak. In real terms – deducting the rate of inflation – Volcker’s peak was almost 10%, a lot higher. Right now, the real fed funds rate is around -4% (yes, that’s a negative sign). Powell may admire Volcker, but next to him, he’s a piker.The debate over monetary policy overlooks a more important issue. That decade of cheap money papered over a lot of fundamental problems with the US economy: low levels of public and private investment, massive polarization between rich and poor and unstable employment for much of the labor force. These should be addressed with serious public policy, not by printing money. It would be nice if we talked about that, but given the degraded state of American political discourse, I’m not hopeful.
      Doug Henwood is an economic journalist based in Brooklyn. His radio show, Behind the News, airs on KPFA radio in Berkeley, and is available on all the standard podcast outlets
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      Democrats on the defensive as economy becomes primary concern over abortion

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      Democrats on the defensive as economy becomes primary concern over abortionPolls indicate tide shifting toward Republicans with high inflation rates and gas prices working in their favor With less than two weeks to go until election day, Democrats’ hopes of defying political history and keeping their narrow majorities in the House and Senate appear to be fading, as many of the party’s candidates go on the defensive in the final days of campaigning.Over the summer, many election forecasters wondered if Democrats could avoid the widespread losses typically seen by the president’s party in the midterms. With voters expressing outrage over the supreme court’s decision to end federal protections for abortion access and gas prices falling, Democrats had been hopeful that their endangered incumbents could win reelection.DeSantis’s old law firm received millions in Florida state funds, investigation findsRead moreIn August, Democrats took the lead on the generic congressional ballot, according to FiveThirtyEight. They held onto that lead for two and a half months – until last week.The national political environment now seems to have moved in Republicans’ favor, and Democrats are running out time to turn the tide. Gas prices started to rise again this month, although they have since started to moderate. With inflation at near record levels, the share of voters who name the economy as their top priority has increased since the summer.A New York Times/Siena College poll taken this month found that 44% of likely voters say economic concerns are the most important problem facing the country, compared to 36% who said the same in July. Just 5% of likely voters identified abortion as the most important issue right now. Voters’ renewed focus on inflation and gas prices could hurt Democrats’ chances in some key congressional races, given that Republicans consistently score better on surveys asking which party is better equipped to manage the economy.The shifting winds have prompted some Democrats to question whether they made a tactical error by focusing heavily on abortion rights in their campaign messaging. Just last week, Joe Biden promised to send a bill codifying Roe v Wade to Congress if Democrats fortify their majorities in the midterms.“I want to remind us all how we felt that day when 50 years of constitutional precedent was overturned,” Biden said last Tuesday. “If you care about the right to choose, then you got to vote.”With surveys indicating abortion rights are not top of mind for most voters, some progressive lawmakers are urging their colleagues to instead emphasize economic proposals like raising the minimum wage and creating a federal paid family leave program as they campaign for reelection.“In my view, while the abortion issue must remain on the front burner, it would be political malpractice for Democrats to ignore the state of the economy and allow Republican lies and distortions to go unanswered,” progressive senator Bernie Sanders wrote in a Guardian op-ed earlier this month.Sanders added: “Now is the time for Democrats to take the fight to the reactionary Republican party and expose their anti-worker views on the most important issues facing ordinary Americans. That is both the right thing to do from a policy perspective and good politics.”Democrats worry that the strategy pivot may be coming too late for some candidates, as alarm bells go off in battleground states across the country.In Florida, a state that Donald Trump won by just three points in 2020, Republican governor Ron DeSantis appears likely to defeat his Democratic challenger, Charlie Crist, by double digits. DeSantis, a Trump-like figure who is widely expected to run for president in 2024, has already raised at least $177m this election cycle, setting a record for a gubernatorial campaign. DeSantis’ fundraising haul and Democrats’ bleak polling numbers have led many of the party’s national organizations and donors to abandon Florida candidates, effectively declaring a preemptive defeat.In the battle for the House, Republicans are poised to recapture the majority, as districts that Biden easily won less than two years ago now appear to be up for grabs. According to Politico, a recent internal poll conducted by the campaign of Julia Brownley, whose California district went for Biden by 20 points in 2020, showed the Democratic incumbent leading her Republican opponent by just 1 point.Sean Patrick Maloney, the chair of the Democratic Congressional Campaign Committee who is overseeing the party’s efforts to maintain control of the House, now faces the risk of being ousted himself. Earlier this week, the Cook Political Report changed the rating of Maloney’s race from “lean Democrat” to “toss-up”. If Maloney cannot hold his seat, the defeat would mark the first time since 1992 that a sitting House campaign committee chair lost reelection. Republicans are gleeful at the prospect of toppling the DCCC chair, dumping several million dollars into Maloney’s district.Maloney has remained optimistic about his chances, telling CBS News, “I’m going to win this election, and when I do, they’re going to wish they had that $9 million back.”But if the national environment is as dire as it appears for Democrats, a Republican wave could soon sweep Maloney and many of his colleagues out of office.TopicsUS midterm elections 2022DemocratsRepublicansHouse of RepresentativesUS CongressJoe BidenAbortionnewsReuse this content More

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      US economy bounces back to growth despite surging inflation

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      US economy bounces back to growth despite surging inflationCommerce department estimates show 2.6% annual growth rate for third quarter, snapping two straight quarters of contraction The US economy grew at a 2.6% annual rate from July through September, snapping two straight quarters of economic contraction and overcoming punishingly high inflation and interest rates.Thursday’s estimate from the commerce department showed that the nation’s gross domestic product – the broadest gauge of economic output – grew in the third quarter after having shrunk in the first half of 2022. Stronger exports and steady consumer spending, backed by a healthy job market, helped restore growth to the world’s biggest economy.Still, the outlook for the economy has darkened. The Federal Reserve has aggressively raised interest rates five times this year to fight chronic inflation and is set to do so again next week and in December.Fed chair Jerome Powell has warned that the Fed’s hikes will bring “pain” in the form of higher unemployment and possibly a recession.The government’s latest GDP report comes as Americans, worried about inflation and the risk of recession, have begun to vote in midterm elections that will determine whether Joe Biden’s Democratic party retains control of Congress. Inflation has become a signature issue for Republican attacks on the Democrats’ stewardship of the economy.With inflation still near a 40-year high, steady price spikes have been pressuring households across the country. At the same time, rising interest rates have derailed the housing market and are likely to inflict broader damage over time. The outlook for the world economy, too, grows bleaker the longer that Russia’s war against Ukraine drags on.Last quarter’s US economic growth reversed annual declines of 1.6% from January through March and 0.6% from April through June. Consecutive quarters of declining economic output are one informal definition of a recession. But most economists have said they believe the economy skirted a recession, noting the still-resilient job market and steady spending by consumers. Most of them have expressed concern, though, that a recession is likely next year as the Fed steadily tightens credit.Preston Caldwell, head of US economics for the financial services firm Morningstar, noted that the economy’s contraction in the first half of the year was caused largely by factors that don’t reflect its underlying health and so “very likely did not constitute a genuine economic slowdown.” He pointed, for example, to a drop in business inventories, a cyclical event that tends to reverse itself over time.Higher borrowing costs have weakened the home market, in particular. The average rate on a 30-year fixed-rate mortgage, just 3.09% a year ago, is approaching 7%. Sales of existing homes have fallen for eight straight months. Construction of new homes is down nearly 8% from a year ago.Still, the economy retains pockets of strength. One is the vitally important job market. Employers have added an average of 420,000 jobs a month this year, putting 2022 on track to be the second-best year for job creation (behind 2021) in labor department records going back to 1940. The unemployment rate was 3.5% last month, matching a half-century low.Hiring has been decelerating, though. In September, the economy added 263,000 jobs – solid but the lowest total since April 2021.International events are causing further concerns. Russia’s invasion of Ukraine has disrupted trade and raised prices of energy and food, creating a crisis for poor countries. The International Monetary Fund, citing the war, this month downgraded its outlook for the world economy in 2023.TopicsUS economyEconomicsBiden administrationUS politicsnewsReuse this content More

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      Democrats need to address economic fears now – or risk losing their majorities | Robert Reich

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      Democrats need to address economic fears now – or risk losing their majorities Robert ReichUntil Democrats tell it like it is, their electoral majorities will continue to be fragile A milder version of Liz Truss’s economically induced vanishing act may be occurring on this side of the Atlantic.Despite the Federal Reserve’s most aggressive campaign in generations to slow the economy and bring price increases under control, prices continue to climb.This could have severe political consequences for Democrats in the midterm elections in a little over two weeks. The economy is the most important issue on voters’ minds.Prices rose at a brutally rapid pace in September, with a key inflation index increasing at the fastest rate in 40 years. For this reason, investors expect the Fed to announce another rate increase at the end of its next meeting on 2 November, just six days before election day.Republicans are focusing on inflation because voters see it as their biggest immediate problem, and it’s easy to pin blame on the Democrats because they’re in charge.But the Biden administration and the Democrats aren’t responsible.Inflation is worldwide. It’s being propelled by continuing global supply shocks – including Putin’s war in Ukraine and China’s Covid lockdowns – which are contributing to shortages of energy, food and hi-tech components.The shortages are coming just at a time when consumer demand is soaring in the wake of what is hopefully the end of the worst of Covid.Inflation in the United States is also being caused by corporations raising their prices faster than their costs to fatten their profit margins.The evidence of this is now all around us. Corporate profit margins are at record highs.“The companies who set prices are really reluctant to stop increasing them,” says Jeanna Smialek, who writes about the Fed for the New York Times. “What we saw was that corporations were actually pocketing quite a bit more profit off this …. They’re still putting up prices very rapidly, even in instances where their own costs are starting to fall.”Corporate profits continue to climb even as consumers are taking it on the chin. It’s a giant redistribution from consumers to corporations.This would seem to be a natural issue for Democrats to be sounding off about.The Fed’s rate hikes aren’t working because they’re based on the anachronistic idea that slowing consumer demand automatically causes prices to fall or to climb more slowly.But with global shortages of supplies, and monopolistic corporations raising prices to preserve or enlarge their profits, the Fed would have to raise interest rates far higher before having the desired effect. The Fed would very likely bring the economy to a crawl, by which time the human cost will be overwhelming.Better to wait out the global supply shocks and deal with corporate power with a temporary windfall profits tax and more vigorous antitrust enforcement.Why aren’t Biden and the Democrats hammering away with this message?Nine months ago, the White House’s National Economic Council was putting out research papers on the relationship between corporate power and inflation, but then abruptly stopped.The reason was conventional economists claimed the theory didn’t hold water. They argued that monopolistic corporations would have exercised their pricing power all along, not just during this burst of inflation.That conventional view is being proven wrong. Corporations have been more willing to exercise monopoly power over the past year because inflation has given them cover to do so. While telling retailers and consumers they have no choice but to raise prices because their own costs are rising, they’ve been raising prices higher than their rising costs in order to expand their profit margins.Another reason the White House stopped blaming inflation on big corporations is that the corporate funders of Democrats have made it clear they don’t want the White House or Democratic candidates to blame this inflation on them.That’s a pity, because until Democrats tell it like it is – and talk accurately and clearly about such abuses of corporate power – their electoral majorities will continue to be fragile. And they’ll never get the political mandate they need to take on corporate power as directly and forcefully as it must be taken on.And in two weeks, they may lose control over Congress.
      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
      TopicsInflationOpinionUS politicsDemocratsUS midterm elections 2022US economycommentReuse this content More

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      Republicans are trying to win by spreading three false talking points. Here’s the truth | Robert Reich

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      Republicans are trying to win by spreading three false talking points. Here’s the truthRobert ReichRepublicans want midterm voters to believe lies about crime, inflation and taxes. This is what they’re claiming – followed by the facts Republicans are telling three lies they hope will swing the midterms. They involve crime, inflation, and taxes. Here’s what Republicans are claiming, followed by the facts.1. They claim that crime is rising because Democrats have been “soft” on crimeThis is pure rubbish. Rising crime rates are due to the proliferation of guns, which Republicans refuse to control.Here are the facts:While violent crime rose 28% from 2019 to 2020, gun homicides rose 35%. States that have weakened gun laws have seen gun crime surge. Clearly, a major driver of the national increase in violence is the easy availability of guns.The violence can’t be explained by any of the Republican talking points about “soft-on-crime” Democrats.Lack of police funding? Baloney. Democratic-run major cities spend 38% more on policing per person than Republican-run cities, and 80% of the largest cities increased police funding from 2019 to 2022.Criminal justice reforms? Wrong. Data shows that wherever bail reforms have been implemented, re-arrest rates remain stable. Data from major cities shows no connection between the policies of progressive prosecutors and changes in crime rates.Research has repeatedly shown that crime is rising faster in Republican, Trump-supporting states. The thinktank Third Way found that in 2020, per capita murder rates were 40% higher in states won by Trump than in those won by Joe Biden.Let’s be clear: it’s been Republican policies that have made it easier for people to get and carry guns. Republicans are lying about the real cause of rising crime to protect their patrons – gun manufacturers.2. They claim that inflation is due to Biden’s spending, and wage increasesBaloney. The major cause of the current inflation is the global post-pandemic shortage of all sorts of things, coupled with Putin’s war in Ukraine and China’s lockdowns.The major domestic cause of the current inflation is big corporations that have been taking advantage of inflation by raising their prices higher than their increasing costs.Here are the facts:Inflation can’t be explained by any of the Republican talking points.Biden’s spending? Rubbish again. That can’t be causing our current inflation because inflation has broken out everywhere around the world, often at much higher rates than in the US.Democrats shouldn’t focus only on abortion in the midterms. That’s a mistake | Bernie SandersRead moreBesides, heavy spending by the US government began in 2020, before the Biden administration, in order to protect Americans and the economy from the ravages of Covid-19 – and it was necessary.American workers getting wage increases? Wages can’t be pushing inflation because wages have been increasing at a slower pace than prices – leaving most workers worse off.The biggest domestic culprits are big corporations using inflation as an excuse to raise prices above their own cost increases, resulting in near-record profits.US corporate profits are at the highest margins since 1950 – while consumers are paying through the nose.Let’s be clear: the biggest domestic cause of inflation is corporate power. Republicans are lying about this to protect their big corporate patrons.3. They say Democrats voted to hire an army of IRS agents who will audit and harass the middle classNonsense. The IRS won’t be going after the middle class. It will be going after ultra-wealthy tax cheats.Here are the facts:The Inflation Reduction Act, passed in July, provides funding to begin to get IRS staffing back to what it was before 2010, after which Republicans diminished staff by roughly 30%, despite increases since then in the number of Americans filing tax returns.The extra staff are needed to boost efforts against high-end tax evasion – which is more difficult to root out, because the ultra-wealthy hire squads of accountants and tax attorneys to hide their taxable incomes.The treasury department and the IRS have made it clear that audit rates for households earning $400,000 or under will remain the same.Let’s be clear: the IRS needs extra resources to go after rich tax cheats. Republicans are lying about what the IRS will do with the new funding to protect their ultra-wealthy patrons.None of these three lies is as brazen and damaging as Trump’s big lie. But they’re all being used by Republican candidates in these last weeks before the midterms.Know the truth and share it.
      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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      For the love of cars: will steep gas prices stall Democrats’ midterm hopes?

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      For the love of cars: will steep gas prices stall Democrats’ midterm hopes? Economy in focus: America has a love affair with cars – but soaring prices are causing a rift. In the midwest, Adam Gabbatt asks voters what they thinkThe Henry Ford museum, in Dearborn, Michigan, is a tribute to America’s obsession with the motor vehicle.The sprawling complex, set across 12 acres, is home to early examples of the Ford Model T, the mass-produced, affordable vehicle that set the US on the path of a car-dominant culture, as well as other era-defining vehicles right up to today.US midterms 2022: the key racesRead moreWalking past these cars, it is possible to trace the history of the car in the US. With the occasional exception, that history has been: let’s make more cars, and let’s make them gigantic. The tiny Model T – early versions were about 11ft long – was replaced by cars like the Chevrolet Bel Air in the 1950s, and the Cadillac Coupe deVille of the 1960s, leading to the gigantic trucks and SUVs that are bestsellers in the US today.With gas prices recently soaring, however, many Americans are now suffering as a result of that thirst for size. It’s a problem for people across the country, and with key midterm elections looming next month, the historic spike in the cost of fuel will be one of the issues that determines how the US votes.Republicans have hammered Joe Biden and the Democratic party over the increase, despite the cost being tied to issues, including Russia’s invasion of Ukraine, that are largely outside the government’s control. Prices have slowly declined in recent months, but news that Opec+, the global oil production cartel, will reduce daily production by 2m barrels, has rocked the Biden administration, weeks before the vote.That has provided Republicans with another opening to attack Democrats over gas prices, inflation and general cost of living. But outside the Henry Ford museum, the more than $120m the party has spent on ads related to inflation mostly didn’t seem to have had an impact – so far.“I truly believe that some of the higher prices that we’re paying right now is the price of freedom. I mean, you know, you don’t want to give in to all the dictators all over the world and you want to live in a free world, you have to make some compromises,” said Louis Sommer.“I’m willing to pay $6 a gallon or $10 a gallon if that’s what it takes to live in a free world.”Sommer, 39, drives a Ford Edge, which averages 22mpg, and also has an old Ford pickup truck, which guzzles about 14mpg. With prices hovering at just over $4 a gallon in this part of Michigan, those cars cost a lot of money to run.Despite not classifying himself as a Democrat – “If I would vote right now, I would probably vote Libertarian,” Sommer said – he supports Biden’s efforts on foreign policy, and had not been swayed by the Republican rhetoric. As for driving, Sommer, who works in the auto industry, said he had considered buying an electric car, but believes they are too expensive.“An electric car, as a second car, would make a lot of sense,” he said.“But right now, the electric cars are $50,000-$60,000. For a second car, it should be more like, you know, $20,000-$30,000. And you know, the infrastructure is not there in the neighborhood that I’m living in.”Gas prices in the US peaked, according to the Energy Information Administration, in June 2022, at an average of about $5 a gallon, compared with $2.42 in January 2021. Costs surged first as people returned to the roads post-Covid, and then again after Russia invaded Ukraine in February. By this September, prices had dropped to an average nationwide of $3.77, but the Opec+ news has not been kind: in the past two weeks prices have risen again to almost $4 a gallon.In a country where, outside a handful of cities, there is hardly a thriving public transit system, the cost of gas has always been a key issue, and a uniquely visible one: with prices displayed in neon letters at every gas station, to go for a drive is to witness multiple adverts for inflation.The increases are also more noticeable than the parallel spikes the country is experiencing with groceries as most people pay for gas on its own, rather than bundling it with other items.In Ohio, south of Michigan, the higher prices are being keenly felt, particularly in smaller, rural towns where grocery stores and doctor’s offices are frequently a long drive away.Ohio’s economy boomed through coal, oil and iron ore mining before the state switched to manufacturing cars, rubber and steel in the mid-1900s. By the 1980s those trades had moved abroad, and like much of the midwest, Ohio has suffered from a lack of well-paying jobs.In the town of Bucryus, which is ​​home to the annual Bucyrus bratwurst festival, and calls itself the bratwurst capital of America, gas was selling at $3.95 a gallon in early October, and local people are being forced to adapt.“I’ve been doing less traveling and just generally doing less stuff,” said Ned Ohl, who works at the Crazy Fox Saloon. “Everything just takes a little more money than I would have normally spent.”Ohl, 33, is a history buff, and had planned a trip this summer to the Waverly Hills sanatorium, a Tudor gothic former tuberculosis hospital in Louisville, Kentucky. He postponed the trip indefinitely as he couldn’t afford the gas.As for who is to blame, Ohl said: “I try not to get into the politics of it.”Kim King, who was in the bar celebrating the finalization of her divorce, said she had also been affected.“Nobody’s traveling,” King said. “I drive my daughter to volleyball and softball, but I don’t do anything outside of that. I’m not about to take a road trip anywhere.”Bucryus was among the towns to benefit from the rise of the motor vehicle. For decades Route 30, which runs across the US from New York City to San Francisco, ran right through the center of Bucyrus, and the town had a boom period during the prohibition era, when bootleggers used underground tunnels to hide and transport their wares. A speakeasy bar underneath the Crazy Fox Saloon, allegedly frequented by Al Capone, still exists today, but only as a little-visited tourist attraction.There was no sign of mob activity in the Crazy Fox, where bar patron Mike, who declined to give his last name, was more than happy to link gas prices to politics.“It went up right after that dumb-ass president stopped the pipeline,” Mike said. He was referring to Biden, and the planned Keystone XL pipeline, which would have carried oil from Canada to Texas. Biden revoked the permit for the pipeline on his first day in office. Politifact and other factcheckers have found no connection between the cancellation of the pipeline and the increase in gas prices.Nevertheless, Mike, who manages a hotel next to the Crazy Fox Saloon, was set in his opinion: “I think we could have put a puppet in and done a better job,”Mike said his car use had been affected.“​​I don’t go anywhere other than to the grocery store,” he said.“I go to Marion [a town 20 miles south of Bucyrus] once every other week to pick up my son; other than that it costs too damn much to run a vehicle right now.”Mike said his son stays with him every other weekend. They used to take trips out to Lake Erie, but: “You can’t do that any more.”Americans tend to drive larger cars than people in other countries do. So far in 2022 the three top-selling vehicles in the US are all pickup trucks – the Ford F-Series takes top spot – and the majority of the rest are SUVs. The bestselling car in the UK is the Vauxhall Corsa, a compact car that is four feet shorter than the smallest of Ford’s F-Series vehicles. The bestselling cars in France, Italy and Germany are all tiny compared with American vehicles.Bigger cars need bigger engines, and more fuel. The Corsa, according to its stats, will average 45.6mpg in the city. The most economical of the Ford F-Series vehicles will burn through 25mpg.It wasn’t always the case. The Henry Ford museum documents a move in the US toward smaller cars in the 1970s, triggered in part by spikes in gas prices, while the New York Times reported in 1973 that the rush “toward smaller, less extravagant cars” had left Ford, Chrysler and GM scrambling to switch up assembly lines.The museum also offers a glimpse into a time when the government was more willing to clamp down on car use.In 1974 Richard Nixon signed into law a 55mph speed limit on all national highways, after Opec caused a gas price spike when it stopped shipping oil to the US. The new speed limit was designed to conserve gas. Thirty years earlier, during the second world war, the US had introduced another effort to encourage people to carpool to save fuel for the war effort, with one public awareness poster in the Henry Ford museum telling Americans: “When you ride ALONE you ride with Hitler!”Driving south-east into Ohio – and not with Hitler – the flat, open landscape gave way to thick woods and rolling hills, marking the beginnings of the Appalachian mountains. This part of the state is not doing well financially. The small rural towns that dot Morgan county are pockmarked by closed storefronts and buildings with flaking paint. After decades of decline, as industry left, frequently the only businesses still active are car-related: repair shops, gas stations and the occasional car dealership.That the auto industry is the only thriving trade speaks to the reliance people here have on their cars. There’s no public transport, and frequently people have to drive miles to stores like Family Dollar, Dollar General or Kroger for groceries or essentials.In Stockport, a town of about 500 people on the Muskingum River, CJ’s Family Restaurant is one of the most popular eateries. Carolyn Schramm, 78, has owned the restaurant, which offers diner-style breakfasts and coffee, and more substantial dinner options such as an $8.25 sirloin steak and $6.80 spaghetti with meat sauce, for 35 years.The price of food has gone up this year, and with the rise in gas prices so has the price of traveling to buy supplies.“I need to put prices up,” Schramm said. “But I haven’t done it yet.”It’s difficult in a restaurant where Schramm said “customers become your family”. Some people come to CJ’s two or three times a day to eat, and in a town where the median household income is $34,338 – that figure for the US as a whole is $67,521 – many people are not flush with cash.“There’s one couple I know they say they have to be careful how much they come.”Schramm was wearing a T-shirt that said “Proud grandma of a 2020 senior”, in recognition of her granddaughter, who graduated from Morgan high school two years ago. She said gas prices had “made a big difference” for her children and grandchildren, who all live an hour’s drive away.“So far they haven’t had to come less; fortunately my kids have pretty good jobs, but you never know from one day to the next,” she said.Despite the spike, it won’t affect how, or whether, Schramm votes in November. She doesn’t blame the government for the increase, but said: “I don’t get in much on politics because frankly I think they’re all crooks.”The road from Stockport to the Pennsylvania border is quite wiggly, the rapid ascending and descending placing stress on both vehicle and stomach. Washington, a town of 13,000 people that lies 10 miles across the border, had the cheapest gas prices yet, with Sam’s Club offering it at $3.71 a gallon.On one of Washington’s main streets Tyler Weller, 21, had just finished work. He works as a traffic controller at a construction site, and is able to walk to work, but he knows a lot of people who have struggled more to cope with gas prices.“We don’t have a lot of public transport in this town, it’s kinda small. So some of my friends have been borrowing money just to drive to work,” he said. “The grocery store, you can push it off or whatever, but you have to get to work.”Weller said he is thankful he gets paid weekly – he earns $15 an hour – as he hasn’t had to worry as much about filling up his car. But he has still had to make sacrifices.“Usually I just like driving around, like a decompression ride,” he said. “I’ve had to drop those.”Others, like Weller, drive to relax, and it could be that there are impacts on people’s mental health as they are unable to turn to traditional forms of release. Weller said while he had noticed prices had gone down, they weren’t low enough for him to run his car the way he used to. And at the Luxury Box restaurant in Washington, a woman who gave her name as Kath said people celebrating cheaper gas have a short memory.“I think people are naive when they see the prices drop – they get excited, and that’s not exactly where they should be – even though it’s a little better on our wallets,” Kath said.“They notice the prices are better, they think they’re saving money, but in actuality we’re not, compared to where we were when it used to be $2.50-something.”Kath believed Biden and the Democrats could have done more to prevent the increase in prices, although she didn’t have specifics.“I think there’s a lot behind the scenes that we don’t know,” she said.As for how she was faring financially, Kath echoed a sense of hopelessness that others had exhibited across Michigan, Ohio and Pennsylvania.“It’s just not the gas prices. At this point it’s the whole economy. Our food prices are outrageous. There are increases on everything – other than how much you get paid,” Kath said.“I make very decent money for myself, but I feel like I’m now making minimum wage, and I haven’t felt like that in years.”TopicsUS midterm elections 2022GasInflationAutomotive industryJoe BidenUS economyUS politicsfeaturesReuse this content More