News Shorts for Jan. 29-Feb. 4, 2018
Uproar Grows Over Lack of Federal Disaster Relief
Feb. 4, 2018—Political pressure is mounting on Congress over the fact that the $81 billion disaster relief bill passed by the House in December continues to languish, with little visible prospect of passage by the Senate. The Puerto Rican situation, where approximately a third of the Island’s 3.4 million population remains without electricity, spurred considerable activity this week, when a report surfaced that the FEMA intended to stop emergency food and water deliveries on Jan. 31. The Agency rushed to say it had no such intention.
Even without the cutoff, Puerto Rico remains in dire straits, with un-cleared debris, a crippled economy, and spotty power. Governor Roselló is currently in the United States, rallying with New York Governor Cuomo to get the full aid package he says the Island needs. ($94 billion) Also mobilizing are lawmakers from Florida, such as Congressman Darren Soto, who are also concerned to get the resources to care for the estimated 280,000 Puerto Ricans who have come to Florida since Hurricane Maria. Florida Governor Scott will travel to Puerto Rico on Feb. 5.
At the same time, the governors from Texas, California, and Florida joined with Gov. Roselló in a Jan. 24 letter to the Congressional leadership, demanding action on the delayed disaster relief. “Over the past several months, we have received numerous assurances that adequate disaster funding was imminent,” the governors wrote in a joint letter. “Its continued delay only exacerbates ongoing uncertainty in devastated areas. Simply put, the communities devastated by these storms cannot be completely put back together until the federal government makes good on its promise to our citizens. If ever there was a time and role for the federal government to urgently help its citizens rebuild communities damaged by epochal disasters, now is the time to step up and fill that role.”
On Feb. 2 twelve Texas Congressmen, from both parties, added their voices to the mobilization in a letter to the Senate, blasting that body for not taking up the disaster relief measure. “We write asking for prompt consideration,” the letter reads. “We have constituents who after almost six months, remain in transitional housing and homes that lack weatherization as Texas remains in the grip of an unusually cold winter. It is past time for Congress to act.”
Mayors Discuss Infrastructure at Center for American Progress Forum
Feb. 4, 2018—The mayors of Los Angeles, Austin, and Pittsburgh took the stage at the Center for American Progress Jan. 25, to discuss their perspectives on meeting the infrastructure needs of the nation. All three, who were in Washington, D.C. for the National Conference of Mayors, expressed the hope that the Administration’s infrastructure plan, which relies heavily on local funding, could still be shaped into an effective program for the nation.
Los Angeles Mayor Eric Garcetti, who heads the mayors’ infrastructure committee, emphasized the initiatives which have been taken by the cities in the face of Federal government inaction, and particularly the willingness of citizens to accept higher taxes to fund infrastructural improvements. He said that $230 billion in tax increases had been passed on election day 2016, including in his city. He also alluded to the larger problem in the economy when he stated that the United States has no manufacturing facilities to build port facilities or rail cars—areas of crying need for the economy.
Mayor Bill Peduto of Pittsburgh put more emphasis on the need for Federal aid, including the role of the Army Corps of Engineers, which was responsible for building the vital system of locks and dams on the rivers at whose intersection Pittsburgh lies. These water systems desperately need upgrading and repair after decades of neglect.
Austin Mayor Steve Adler also stressed the fact that the population is willing to pay more for infrastructure. He took aim at the question of funding for the nation’s highways, which the current Administration’s plan looks to actually reduce, by limiting the Federal government’s percentage to 20% of the costs, as opposed to the 50 to 80% it now pays on average.
Trump Touts Infrastructure, but Projects Budget Cuts
Feb. 4, 2018—Amid widespread anticipation that President Trump’s State of the Union address would outline a large infrastructure plan, the President limited himself to less than 200 words on the subject. They went as follows:
As we rebuild our industries, it is also time to rebuild our crumbling infrastructure.
America is a nation of builders. We built the Empire State Building in just 1 year — is it not a disgrace that it can now take 10 years just to get a permit approved for a simple road?
I am asking both parties to come together to give us the safe, fast, reliable, and modern infrastructure our economy needs and our people deserve.
Tonight, I am calling on the Congress to produce a bill that generates at least $1.5 trillion for the new infrastructure investment we need.
Every Federal dollar should be leveraged by partnering with State and local governments and, where appropriate, tapping into private sector investment — to permanently fix the infrastructure deficit.
Any bill must also streamline the permitting and approval process — getting it down to no more than two years, and perhaps even one.
Together, we can reclaim our building heritage. We will build gleaming new roads, bridges, highways, railways, and waterways across our land. And we will do it with American heart, American hands, and American grit.
Thin gruel, as they used to say. The President put forward no great projects, and no clear plan for funding, other than the statement that “every Federal dollar should be leveraged by partnership with State and local governments.” This reflects the intent to shift the financial onus to the states—a recipe for guaranteed failure.
At the same time, leaks about the upcoming Administration budget plan for 2019 indicate that Trump intends to cut various of the Federal programs already in effect—including funding for the Washington, D.C. Metro system. Federal support for the New York-New Jersey Gateway transit project has already been withdrawn. The 2018 budget plan—which has never been enacted, due to reliance on short-term continuing resolutions—already called for major cuts in Federal support for transportation, including grants for transit systems. It also proposed tolls for interstates and privatization where possible.
“The Fed Will Ignite the Next Financial Crisis”
Feb. 4, 2018—That was the title of a Jan. 29 article in Seeking Alpha by analyst Lance Roberts. His warning began:
There seems to be a very large consensus the markets have entered into a “permanently high plateau,” or an era in which price corrections in asset prices have been effectively eliminated through fiscal and monetary policy.
Partnering with this fairy tale-like mindset is an overwhelming sense of complacency. Throughout the entire monetary ecosystem, there is a rising consensus that “debt doesn’t matter” as long as interest rates remain low. Of course, the ultra-low interest rate policy administered by the Federal Reserve is responsible for the “yield chase” which has fostered a massive surge in debt in the U.S. since the “financial crisis.” (emph. in original)
Roberts points to the high degree of leverage in the current borrowing spree. As a result, he notes that it now takes $3.83 of debt in order to create $1 of economic growth.
Roberts’ analysis of an impending crisis relies on the fact that the U.S. government is attempting to reverse its easy-money, quantitative easing program by gradually pulling back QE over the course of this year. This will lead to raising of interest rates, and a likely stock market crash, according to Roberts, of as much as 49-50%.
Of course, continued QE presages its own dangers, as debt would continue to rise.
It could be that the mini-collapse of stocks Feb. 1 and 2 is a harbinger of things to come very soon. Is anyone contemplating Glass-Steagall?
Disastrous Cutbacks in U.S, Nuclear Power Industry Continue
Feb. 4, 2018—As even some prominent environmentalists now admit, nuclear fission power is a crucial, reliable, environmentally-clean source of electric power. Its necessary successor—nuclear fusion power—would be even more productive, providing the basis for a major jump in productivity in the economy. For this reason, American System Now considers reporting on this area to be a high priority.
Nuclear power still produces approximately 20% of the U.S.’s electricity. However, due to the 2005 repeal of FDR’s Public Utility Holding Company Act and the lavish public subsidies to inefficient solar and wind power, the utilities running nuclear plants are in economic trouble all across the United States. While two states—Illinois and New York—have moved to provide financial support to keep plants open, six reactors have shut down since 2013, and twelve more are slated for the same fate. The primary reason in most cases is economic.
In early January an attempt by Energy Secretary Perry to get the Federal Energy Regulatory Commission to change the rules to allow support for economically troubled nuclear facilities failed. January saw the decision by California to shut its last nuclear plant, Diablo Canyon, on the basis that it was “uneconomical.” Then on Feb. 2, Exelon announced that it will be shutting its Oyster Creek plant in New Jersey early, also for financial reasons.
The counterproductive nature of these shutdowns, and a pathway to a sane policy, will be the subject of future articles.