Biden Blurring Almost Everything – Thomas Ferguson


The Biden campaign is trying to appeal to supporters of a Green New Deal and the finance sector at the same time. He’s promising an FDR style New Deal at a time when Wall St. is more powerful than ever. Thomas Ferguson joins Paul Jay on podcast.


Paul Jay
Hi, I’m Paul Jay, and welcome to the podcast.
On Thursday, Joe Biden accepted the Democratic Party’s nomination for president and talked about the
need for a New Deal, drawing on the spirit of Roosevelt. This is the same Biden that for years was
considered a fiscal conservative. And in The New York Times on Friday, an article, titled, “We Have
Crossed the Line Debt Hawks Warned Us About for Decades’, there’s a quote from Olivier Blanchard, a
senior fellow at the Peterson Institute for International Economics and a former chief economist of the
International Monetary Fund. Here’s the quote,” At this stage, I think, nobody is very worried about
debt. It’s clear that we can probably go where we are going, which is debt ratios above 100 percent in
many countries. And that’s not the end of the world,” Blanchard said.
Now, for those that don’t follow these things, the Peterson Institute has been the mecca of debt hawks,
warning of the dangers of government debt and demanding draconian austerity policies for years. So
why the change of tune? And how long will this embrace of Keynesian stimulus last? Now joining us is
our friend Thomas Ferguson, a professor emeritus at the University of Massachusetts in Boston. Thanks
for joining us, Tom.

Tom Ferguson
Hi there. Well, I’m glad to be here even in the middle of a covered epidemic.

Paul Jay
Well, let’s start with Biden. He’s promising this FDR-ish economic style presidency, or at least he kind of
hints at that. Is that really what he’s proposing? And if he is, can he deliver?

Tom Ferguson
The short, blunt answer is that the Biden campaign is quite deliberately blurring almost everything it
says because it’s having to ride two horses, at once. And we might as well walk through the Blanchard
and others, quotations and comments and sort of set this discussion up a bit. And the question is about,
as you said, fiscal policy, it’s also about monetary policy. And so, look, let’s go back to the political
context first, I think, which was there was a powerful movement on the left-wing of the Democratic
Party. It didn’t do as well as it hoped, but it did rather well. And there I would count, not only Sanders,
but Warren I think most of the time, clearly belonged to that. But the point to grasp here is that they
had lost before the pandemic hit, just before it. And that disastrous sequence, first in South Carolina and
then the whole South and Western primaries, in which Biden buried Sanders and in which the South
Carolina Democrats and others, Black Democrats were quite clearly enlisted in Congress to beat back
the Sanders challenge.
Since the establishment of the Democratic Party had the whole ball game one before the pandemic, and
then the next thing to sort of grasp is, OK, how did the pandemic change this? And there I think the

answer is straightforward. The main point, especially of the Sanders campaign, about the importance of
Medicare for all, not linked to a job, became overwhelmingly important. So did the general problem of
wage rises that he is focused on the war, and you could see echoes of that in the Warren campaign.
Luckily, most of the main issues of, especially, the Sanders campaign, look pretty good in the pandemic.
And now you’re getting a lot of desperate people, particularly as the US fell over the fiscal cliff at the
end of July. That is the fiscal cliff here being the drop in spending that is now happening because of the
failure to put through another stimulus package.
And so you have, if you like, greatly increased need, a very urgent situation for enormous numbers of
people. But it gets worse than that. And I’m going to come straightforwardly to the Roosevelt analogy in
a second. Because while a pandemic is going on, the initial impact of that thing was shocking to
everybody, and I do not think anybody anywhere really grasped what was happening, and even I think
it’s fair to say American elites and not just American ones were really panicked.
Nobody knew how lethal this thing was. You could see that the health care systems were way
overburdened, especially at the start that nobody really in the United States had the protective gear
they’re required and indeed a rather clumsy effort to conceal that by telling people, for example, that
masks didn’t matter, coming out of the mouths of doctors who should have known better and were
shortly to change their tune. That was pretty much universal. Together with campaigns to beat down
physicians and nurses who tried to say they were unprepared for, that effort, by the way, continues as
the pandemic is not over. OK, so we’re looking at a royal mess now. After a while, though, after the big
steep drop in the stock market, the Federal Reserve got heavily active, supported by legislative changes,
which are very important, in particular the part of the stimulus package that backed up the Fed so it
could absorb losses, which it’s not normally allowed to do, and that’s an effect of the Treasury, Federal
Reserve combo.
OK, so what’s happened then is quite amazing. You see the rapid cartelization and monopolization of big
sectors of the economy in which large firms get lots of money or make lots of money, but not all large
firms or some sectors, airlines, obviously, one, tourism, there are others retail, a lot of sort of real mall-
type retailers have gone down the tubes. There are losses here, but fundamentally, the sectors of the
economy that are effectively going to lead the way into the new economy, whether you like it or not,
whether it’s wonderful or not, what we might call a financial information age economy, the leaders in
those are doing extremely well.
And indeed, the move online, everywhere, they can do it, which is mostly a white collar-We’ve talked
about this interview very early on worker safety, I’m not going to repeat that. But, this was really
monopolization, if you like, speaking loosely, what’s really going on is oligopoly. It has greatly increased.
Now, look, Roosevelt and the New Deal actually, he did it in two stages, and he was pushed along by
massive social pressure. But in the first phase of the New Deal, the main recovery initiatives besides
going off gold and telling the Fed this is actually in Fed minutes. I’ve written about this. I studied the
New Deal a lot and I’ve been in a lot of archives, actually famous last words, I know what I’m talking
about. An awful lot of people writing about it, don’t. In the Federal Reserve minutes for that period, you
can actually see a distinction between technical and political adjustments for the money supply, for
example. Anyway, the first New Deal, the main package was the National Recovery Administration,
which was nothing other than an effort to catalyze the economy. It was business-led, if you don’t like it,
or even if you do, you call it corporatism, now, what’s effectively happening–And that failed.

Then the second New Deal in 1935, and after made Roosevelt, if you like, immortal and that’s the New,
when people say they like the New Deal, that’s usually the one they think they know and love. That’s the
Wagner Act, the National Labor Relations Act, the Social Security Act, not just the establishment of
Social Security, mostly for Whites admittedly, but also unemployment compensation and a series of
wage and hour bills, one of those had been earlier. Anyway, and then a move toward free trade, which
for now we can just let go, we want to focus here on the transition from the first to the second New
Deal took place, it was basically an economic, first New Deal was an economic failure. Cartelization
didn’t work and Roosevelt had a turn left as large chunks of the workforce organized.
OK, now contrast the situation you are in right now. Basically, the labor movement is at, well, not an all-
time low, but a very historic low, I mean, there has been some new organization, but not much. And
those sort of big impact of organized labor that was happening in 35′ and 36′, not really earlier, although
there was a wave of strikes on the right. There’s nothing like that happening right now. And instead, you
have, effectively, a bailout for the super-rich, I mean particularly the leading sector firms and finance
and information technology. Now they’re mostly not taking those bailout loans themselves, but the
existence of the Fed there to let people know they can sell the bonds has enabled the private debt
markets to reopen.
As far as I can tell, they’ve really only reopened in the United States on a large scale. So you’re looking in
effect at the corporate stage of the New Deal. That first New Deal has already been accomplished,
before the elections. This is going to be a fact that everybody is going to have to deal with. Now, catch
the irony there. Even in the midst of the, it was in the house. A couple of weeks ago, they had the
antitrust hearings and Warren made antitrust a centerpiece of her campaign. And there’s an awful lot of
writing about antitrust. What’s actually happening is corrode trust, a massive consolidation, and the
largest firms are doing better than ever, to be blunt and short about it. So this is really pretty weird.
There’s another point about comparisons between the New Deal then and the economy now.
The new deal happened in the middle of a deep business cycle, downturn, and plunge. I mean,
depression is not just a business cycle downturn, but there was, if you like, a kind of not automatic, we
know it wasn’t automatic, but people sort of thought it was automatic, that is to say, they couldn’t
control it, the decline in the economy. This is not what you’ve got here now at all. You’re not dealing
with a sort of cyclical business cycle downturn or even some vast extension of it. I mean, what happened
was an outside intervention, COVID blew down the whole economy.
It created both, as lots of people have noticed, both a demand shock in the sense that people lost their
jobs they couldn’t buy and a supply shock they couldn’t work either. And you can watch, although
people rarely talk about it’s not in the press much now. A fairly sharp rise in food prices, not prices
overall, the food price story, particularly for food consumed at home, it’s up a lot actually.
Now, let’s compare this and the New Deal. When Roosevelt took office, one great advantage he had,
I’m not telling him it was wonderful for everything, but it was an advantage. People trying to reform, for
example, the financial system, which did see a major reform of the first New Deal as the Glass-Steagall
Act and then the second New they did the restructuring of the Federal Reserve. But at that point, big
finance was flat on its back in the couple of months before Roosevelt came into office. Back then, it was
in March, not in January. Now you’ve got people worried right now. How do you go from November to
January? Well, they were worried then because they had to go from November to March. Anyway, that
last month and a half or so, basically all the banks of the United States collapsed and closed, they were

shut. And when Roosevelt took office, the financial system was at a standstill. Now they rapidly brought
it back to life, but it was shut.
Now, in that situation, not only the prestige, but the actual political power of finance was a good deal
less than it would have been if it were sitting there making profits. Right now, though. While bank stocks
are down a bit, not only the largest chunks of the economy, but an awful lot of individual shareholders
and financial groups suspect private equity and hedge funds, they’re making money hand over fist.
These people are actually–a considerable number, are actually ahead of where they were when the
pandemic started.
So, what I’m trying to tell you is the Biden administration is not coming into power like Roosevelt
administration did with, finance and indeed big chunks of other business flat on its back. A large chunk
of small business is dead and isn’t going to revive, but an awful lot of big businesses are making money
hand over fist. And the financial sector–basically, you got the stock market at a record. I think it was you
who remarked to me the other day, well, don’t you feel great because Apple is worth, what is it, two
trillion now? Well, you know, if you’re out of work, maybe you don’t feel so great.
So we’re looking here, in other words, where the power of ordinary people has been sinking fast. The
major political movement had failed before the pandemic. And I think it’s fair to say that while there are
lots and lots of wildcat strikes, enormous numbers because people are getting desperate, you clearly
have a hunger problem. Thus far, you haven’t seen anything like the organized type of demonstrations
and things that were going on in the earlier deal, they’re not happening now. What has happened is
interesting, and we want to talk about this. Which is the succession of smaller elections, notably that
election in New York where Representative Engle lost a seat. A number of candidates allied with Sanders
and AOC and others have won elections. There is a real electoral movement inside the Democratic Party
against the establishment. And I think it’s fair to say that the pandemic has somewhat increased its
There is also a powerful outside the party movement, Black Lives Matter there, and the Democratic
establishment has sort of tried to absorb that basically. And I myself think that what will matter is the
ability after Biden, if he wins, I don’t think this is a foregone conclusion, but if he wins, then it’s going to
turn into the strength of the electoral left inside the Democratic Party. Now, let’s talk about what does
that make for a policy problem for Biden?

And if you look carefully at how they ran the convention and particularly the discussions of fiscal and
monetary policy, you can see the fault line running down there in exactly the way I’m talking. Now,
before I sort of talk about this, I think I take everybody seriously, the Sanders speech was very direct on
this or reasons for supporting Biden. I mean, yeah, democracy itself probably is threatened, and so let’s
first things first from their standpoint, I think.
I think they need it when they say they’re strongly campaigning for Biden. But the morning after, if he
gets elected, this is going to get very complicated. In the last few days if you look closely, I think it was
former Senator Ted Kaufman, who’s, I think, running the transition for Biden has always been close to
him, made some remarks about how they know the exact opposite of what Blanchard was saying. They

know that they will have to sort of rein in their fiscal ambitions. And that created a storm of controversy.
AOC and others tweeted and they did some backpedaling. But then, also, you will see what effectively
the Biden campaign did. It’s not stupid, and they’re not completely unresponsive idiots either. I mean,
they made some efforts to reach out to the left, Democrats, if you like. But what they actually did, when
you look hard, is they did, what I like to call the “Noah’s Ark strategy”, they were just basically putting
everything in two by two. They had a whole set of committees that were joint with Sanders people, then
they very plainly got another set of groups working that are not for Sanders people or are others. And I
think I understand the mainline Democratic advisers that are around Biden, and this is going to be an
attempt to run a center-left administration right along the lines of the Obama administration and, you
know, at one point they even had a fundraising group which was basically constituted by all Treasury
people. And I don’t expect to see all those folks back. The famous Cheshire cat of Larry Summers.

Paul Jay
I think when you look at this quote from Blanchard and I listen to Bloomberg Radio a lot, and the
majority of the people speaking on behalf of the finance sector are saying what Blanchard says, which is
not only do they not fear the current debt levels, they’re OK with higher debt levels.
I heard one woman who’s the head of a pretty big hedge fund who says, let it rip, just keep doing
whatever it takes, there’s really no limit to how far you can go. So to see Biden come up with a big
stimulus package. It sounds like he’s going to have a good significant portion of the financial sector
behind him. So I can’t see how he wouldn’t do that. In fact, some of the people I’m hearing on
Bloomberg are frustrated with the Republicans for not pushing through a bigger new package here.

But this isn’t FDR just because you have a big stimulus package. FDR, first of all, was more or less in favor
of public ownership. He certainly wanted to defend private ownership as a system. But within that, he
did want to promote a certain amount of public ownership and said in certain critical sectors, I think he
was talking about electricity, that if the electrical companies are going to hold people up with bad
service and high rates, then it should be a public utility. And you could certainly apply that principle now
to other sectors. Well, Biden’s not talking about that.
And FDR’s employment program was direct employment hired through government programs. I don’t
hear a word about that. One can assume, I think based on what we know of Biden and the Obama-Biden
administration, that whatever they do is going to be done through the private sector.
So it’s a little disingenuous, I think, of Biden to be talking about a New Deal as if he’s on the same page
as AOC and others that are talking about this Green New Deal. What do you think of that?

Tom Ferguson
I do, but I want to come back to the Blanchard and other questions first. OK, now, I have a credential
here that just about nobody else has pulled back in 2008 when everybody was walking around saying

Obama was going to bring you a New Deal or something. I wrote a paper where I’d analyzed his early
funding and I said, this is all wrong. This is bringing the financial sector back to power. Lots of people
have had to concede that was right. I did it back in April or May, was sufficiently toxic. I remember that
one website I think I’d actually written it for, took it down 2012 because they just didn’t want any
reference to it. So bless their hearts that they could capitalize off of it, they put it back up. Now look, I’m
not done with the financial analysis and I do that with a couple of colleagues, Paul Jorgensen and Jie
Chen, but I’ve seen enough to know that they’re going to be a lot of financial people. But what you want
to pay attention to here is what people are actually saying and the evolution of the economic theories in
the last couple of years. What they’re usually saying is now we need to spend, which is exactly what
Blanchard said in that quote that you read. I agree that everybody thinks that, watch what happens after
the election.
Plus, people realize that they have a serious problem. I mean, if Blanchard got the lesson of the failure of
the European Union to recover because premature austerity focused on. But behind the scenes, if you
look, I am close enough to this discussion that I am not wrong. There is an immense amount of
discussion underway about how fast can you cut back and what will you do over time. In Germany and
elsewhere, this takes the form of a very low key discussion of the debt brake, which is their hope for–
because they have a couple of political parties to build on or to liberalism on austerity. In the US, that
same discussion is underway now. The question is going to be, how bad is the situation? The war
analogy is not too misleading, meaning people spend what they have to to try to win a war, but then
they will usually some kind of fiscal consolidation will cut back. That didn’t destroy the US economy after
World War Two because they had all that pent up savings. People were not allowed to spend all the
money they’ve made and they had sitting there, bonds and things and they’d pull them out and spend
You’re not going to see that from the bulk of the population, now. They’re losing their jobs, looking
mostly at falling wages and generally wretched conditions. What’s actually happening in this economy is
a vast intensification of the tendencies toward a dual economy. There isn’t going to be any enormous
release of private savings, for example, to propel the economy forward after the pandemic thing, where
there was in World War Two. So I want to insist that the fiscal consolidation question is going to come
up front.
Now, part of the way you can see this, look at what just happened in the last 24 hours in the discussion
over whether possibly a Biden administration might keep Fed Chairman Powell in his job with people
close to Biden saying, well, he might actually do it. You can read that around in today’s papers. And this
question is not going away. And there is no structural way it can go away. They simply cannot say we’re
going to do fiscal consolidation before the election.
After the election, there will be a question of how much do you need to spend to make sure the place
doesn’t fall apart. But then, the question of cutting back. I mean, Jared Bernstein, who’s a perfectly
reasonable being, a liberal Democrat, who was friendly to labor, and was saying no, we know we have to
take a look at spending. That’s gotten some push-back too. This is going to be an open sore. And so, I
think people are living in lalaland.
And if they think that this business will continue, which is, of course, a question of both fiscal and
monetary policy, watch the way the Fed is able to work. These people have learned they can affect
financial markets just with announcements. And the fact that they’re standing around, as my friend Ed

Cain is always saying, knowing they’re behind too big to fail banks. It all makes banks happy, and drives
their stock.

Paul Jay
It’s not just too big to fail banks these days. It’s too big to fail stock market. They just won’t let the stock
market fail. And if you knew that and got in early enough, you made an absolute killing.

Tom Ferguson
No, no, I agree. Though, if you notice just the other day, when they released the minutes of the Federal
Open Market Committee, you could see a slight discussion of whether they really needed to intervene
all on the yield curve. Read that as just keep doing their quantitative easing. And the suggestion was,
“well we probably don’t need to do it now.” They’re clearly thinking already that they might have
overshot their hand just a touch, and would like to cut back.
Now, that’s created enough anxiety that in the world financial community, as they contemplate
potential spending. And nobody knows how this is going to come out, just how bad the situation is going
to get. The war analogy again is very illuminating. Now, can you actually win this thing? I mean, it looks
to me like, in COVID, the average white-collar one-percenter is sort of thinking, “well, you know what?
This hasn’t been such a terrible pandemic for us.” But that could change.

Paul Jay
I think it’s important that we all remind ourselves that even if Biden wins the election in November, he
doesn’t take power until January. Biden could actually be taking power at a time where the financial
sector and the real lords of the world may be deciding, OK, enough of this stimulus, just at a time, Biden
is promising to come in with a two trillion-dollar climate package.

Tom Ferguson
Yeah, and I’m saying they’re already thinking about it. You just can’t read it in The New York Times
except between the lines. I mean, they do print just enough that a smart person could put this together.
But it’s not the same as the Real News Paul, to just use an analogy, plucked from memory. But anyway,
let’s continue now. Let’s actually pick up on the Green New Deal business, as well as the technology
story, and the sort of way that this is going to drive all kinds of problems in the United States.
I mean, here we are in the middle of a pandemic, and you’ve got wildfires raging in California and
elsewhere. And the governor, I think, just declared some kind of a disaster for some of those areas. And
you can see green problems, including drought, all over the place. Now, you actually mentioned to me,
there wasn’t much talk of a Green New Deal.

Now, this is worth a little excavation. I remember when Obama came in, and then went back to
whatever that town was, I think it was in Kansas, where Theodore Roosevelt had given some speech.
And he started talking about Fair Deal and things, he didn’t want to embrace a New Deal discussion. And
the Democrats have just run from that label ever since. The Green New Deal, Pelosi buried it with the
House Democrats. It wasn’t like they were full of senators rushing, it’s just that they weren’t in the
majority, and couldn’t get much of anything out of there.
And Pelosi just endorsed Joe Kennedy over Ed Markey, who makes much more sense on green issues
than most other US senators who were Democrats. The party establishment doesn’t want to do a Green
New Deal. That’s just obvious. They don’t even like the rhetoric. It’s also obvious, one, that you need
some kind of a fairly drastic Green New Deal, but two, it could create a lot of jobs. Particularly if you
start redoing construction, to sort of get into bizarre English, to “greenify” home insulation and things
like that, you create a lot of jobs. Not to mention restructuring the utilities, long-range power
transmission, the electrical grid, and so forth. That’s a substantial chunk of investment. But there’s more
too. Like, look, we know that the use of the Internet has shifted from something that might be nice for
you, to a life essential, particularly as these schools just can’t operate without it.
We’ve seen people try to open universities; they tried to open the University of North Carolina, but they
had to close after a few days. Notre Dame just did it. There will be a lot of other people discovering that.
And the public-school situation is a nightmare, where you get the most amazing proposals, and no real
national testing system or anything to deal with that. Now, what that is throwing is the individuals are
thrown back on their ability to get to a good Internet connection.
Now enormous numbers of people in the United States, I’d guess more than half actually, don’t have
really fast Internet. One of my problems back with the old line that the Russians were depressing the
black vote in Michigan through the Internet was that more than half of Detroit didn’t have any kind of
Internet access except maybe on a cell phone. I take for granted that people working on cell phones
don’t sit around reading, watching Russian TV, or something.

And that hasn’t changed. You obviously now need to push. Not only do you have to keep the Post Office
going into the remotest aspects of the United States, and the rural areas, you need to push good
Internet access out there. Now, the companies won’t do it. They’re oligopolies. They don’t want to make
the investment for a relatively low earning per square mile out there. You got farmhouses, not dense
urban clusters. And then there’s going to be this whole range of applications and so forth that
everybody’s going to need or want pretty soon. This is going to supplant more regular business models,
a lot more small businesses are going to die, I’m sorry to say. And people can wring their hands, and
they can deliver speeches about how they set up that Main Street program, which never got off the
ground. I looked at Rosengren from the Boston Fed and others talking about this, and he was clearly a
given Mission Impossible
That one had the look of a program that was set up never to succeed when the Congress passed it, but it
has succeeded. Anyway, there is a huge amount you could do in a Green New Deal. For one, Internet
access, and as you say, that’s certainly going to require some more public muscle. I mean, nothing is

going to make the major Internet companies do the type of scale of investment that the population now
needs and needs real fast.
I should say, I take it for granted that while this is a bad pandemic, and we can hope that they eventually
get a vaccine, it’s probably not going to be the last. You don’t know where, in whatever cave, or
wherever it is, something else will come out, or somebody will try something.

Paul Jay
There’s a lot of talk amongst the same Bloomberg radio type pundits and otherwise that the sectors of
finance are going to spend a lot of money trying to keep the Senate Republican, because what they
really want in the final analysis is more or less a gridlock.
What are the chances that finance can tip the balance of the scales on the Senate?

Tom Ferguson
OK, well, to me, this is like a fastball thrown down the middle, because my colleagues and I, Paul
Jorgensen and Jie Chen, we have that paper on the linear model of congressional spending. Bluntly, it
means that the more you spend, the more votes you get in the two-party split. And one case we looked
at in detail was the 2016 Senate campaign, where, with like two or three weeks to go, you could see that
it looked hopeless.
I mean, you could pick up a contract on the Republicans winning the Senate. I forget it was incredibly
low. Eight or nine bucks would buy you a hundred dollars or so. And they spent a fortune, a lot of money
came in from private equity, and casinos, and elsewhere. And they saved the Senate. Now, that tells me
that my colleagues in political science who have kept insisting for years that money matters just a little
or not at all, which bunches of them, including a lot of economists, still continue to say. They’re wrong.
If you actually look at who in the business community backed Trump, what I mean, my colleagues and I
have that paper on 2016, where we looked exactly at this. And you can see basically, the bulk of the
business community of big business mostly liked Hillary Clinton. The big exceptions are casinos, private
equity, and later during the campaign itself, some banks, they love deregulation. They started pitching
in. There were a few folks from silicon, there weren’t many. And then a huge chunk of the business
community really liked what Trump did. I know one major woman business figure in the Northeast who
delivered a tirade in a group I was in about how Trump’s remarks on women and all the other stuff on
race were horrible. Then, somebody asked, well, are you going to vote him? Well, yes, was the answer,
those policies are so wonderful. The COVID debacle, where the nicest thing you could say about the
White House, is that it’s been heavily political, and often almost deranged in the way they shift lines
back and forth each week on nearly everything, and the unwillingness to do even the simplest sort of
coordination, it’s cost him heavily. So we’re coming back to where we were in 2016. That is to say,
where the bulk of big business I think is going to hold their nose and vote for Biden, and we’ll back them
up. So I don’t think you’re going to see the Democrats lacking for cash. Can the Republicans raise a lot of
money from a few sectors? Well, they did that in 2016 in the final stages. That’s one of the many
reasons that I’m not prepared to say that anything is in the bag.

Though, if you ask me, if I was pushed to it, I’d say the most likely outcome is that the Democrats
probably win everything. Just barely in the Senate, but even in the White House. But boy, is that not a
certain outcome.

Paul Jay
But just getting the Democrats in control of the Senate doesn’t necessarily guarantee everything either,
because so much of the Democratic senators are so fiscally and otherwise right of center themselves.

Tom Ferguson
That’s exactly right. I mean, now this is where you go back to the real New Deal, if I may, for a second,
and sort of see what happened there, which is that effectively, nobody in the Democratic Party was
feeling very radical, though a lot of financial houses wanted major changes in financial legislation. I’ve
written a lot about that. That’s the origins of the Glass-Steagall Act. Averell Harriman was actually at that
point even in the administration, and he and lots of other people in investment banking wanted the
separation of investment from commercial banking.
So we get to late 1934, and the National Recovery Act is not succeeding. Basically, the economy is
stalled out, didn’t plunge, but they were doing a very, very slow introduction of more public spending,
and they didn’t really believe it themselves, and in the end they never really did it. So for a couple of
years, from 35 to 36, they, famously, they cut back and brought on a recession.
But now here’s the point. What actually forced the second New Deal? The answer is, partly it was the
right-wing opposition dug in in the Supreme Court, and throughout like the NRA. But also you began to
see really large waves of strikes. Now, very famously, the American Federation of Labor had been sitting
on its tail for most of the depression. They weren’t doing very much. They’d even get asked to help
organize, and they didn’t do it. And finally, what you found is that in some parts of the labor movement,
a few unions that were organizing, or trying to, broke off from the AFL.
And famously, John L. Lewis walked out of the convention having socked the head of the AFL, I think, in
the jaw, and they began to organize. The labor movement hasn’t done much recently. I think they have
not exploited this, particularly on the areas of worker safety. I mean, there are some unions and some
movements in it that have tried to do a lot. But my sense is you could do a lot more.
You’re going to need to get a serious effort to organize more people, and that’s going to have to feed
into the electoral left, because that ability to throw people out of their seats is what’s going to move the
more conservative Democrats. It’s really vital. That is finally going to settle the whole business, this
movement of the Justice Democrats that the national Democratic committees just hate.

Paul Jay
This is the campaign to elect progressive Democrats and defeat the conservative right-wing Democrats
in primaries.

Tom Ferguson
Yeah, and the striking thing is, is that the Democratic National Committee and its allies in Congress were
all yelling at Justice Democrats for trying to defeat the right-wing Democrats. This didn’t block Nancy
Pelosi from coming in to endorse Joe Kennedy against Ed Markey. And it’s like these guys basically make
the rules the way they want them. And I mean, the other side of this is you’ve got people like Richard
Neal, who doesn’t get much publicity, who’s been among those, along with Pelosi and others, just sitting
on Medicare for a while.
They just block it. You know, if there’s one piece of legislation that common sense says, breaking the
connection between employment and medical coverage has been shown to be very, very important, and
capping the possibility of economic life-threatening charges, you should be able to go into any hospital
in the United States, and not have to find out if your anesthesiologist is on your plan or not at the last
second. I mean, they could have fixed this in Obamacare.
They didn’t. And the Democrats have just sat on their hands on this since then. A whole bunch of us said
then, and now, this is unconscionable. My sense is that this is a really powerful idea, and it really is an
idea whose time has come.

Paul Jay
Sum this up, so, let’s assume for the sake of argument, your cautious prediction is right. The Dems
narrowly get control of the Senate, obviously keep control of the House, and Biden as president. But it’s
not till January. And he’s going to be facing, as you said, a far stronger banking financial sector than FDR
faced. Certainly, they fought FDR, but they were, as you say, a lot weaker then than they are now.
In fact, nothing’s ever been as powerful as the American finance sector is now.
He’s got to deal with the progressive sector of the Democratic Party. On the other hand, he’s unlikely to
have to face them again. He’s not likely to run for a second term.
So he doesn’t have to worry about his own electoral fortunes very much, which I suppose could play
both ways in the sense that he could actually try to do something, which is uncharacteristic of him.
Which is, not be pragmatic about his own political career, and actually do what’s needed, but so far, it’s
just rhetoric. So for people who are organizing, who are trying to develop a mass movement in the
United States, it seems like a lot of the onus is going to be on them, because the pressures on Biden to
be another Obama administration are going to be very strong.

Tom Ferguson
That’s right, these are almost the same people that brought you the Obama administration, which led
directly to the 2010 wipeout that so greatly intensified the sort of right-wing free-market control policy,
and eventually led to Trump.

What can I say? I guess my usual signoff line is, if you want a happy ending, see a Disney Movie. But
look, this is a problem. On the other hand, Bernie Sanders was right the other night when he said, just
look at how far they have come from where they were. I mean, look, I’m living in the middle of a
congressional district where you’ve got eight or ten folks running around, and not one of them, but
three or four of them are walking around saying, well, Medicare for all is really pretty obvious.
And yeah, it really is obvious, you know? If you’re not on somebody’s payroll, you know it’s obvious. And
it’s not as though the problems are going away. I mean, I think we were close to a very full employment,
not full, we hadn’t reached there, in the final months before the pandemic. I mean, the economy had
more people at work than most everybody thought were possible. And they had all of this stuff about
the old so-called Phillips Curve relationships and stuff like that we’re all seeing, even central bankers are
noticing, that just didn’t hold any water.
If you actually could stabilize the economy, which it’s not now, this question will come back, and the
question of what are you going to do with the great masses of the population, and particularly, with
black and Hispanic families very heavily hit hard by the coronavirus? You know, I mean, where are we
going to be? I have a feeling that if you were to rerun the Democratic primary now, Joe Biden probably
wouldn’t sweep the South, but I could be wrong about that.
I’m sorry to say, we’re all going to find out.

Paul Jay
So thanks for joining us, Tom.

Tom Ferguson
Thanks, Paul. Glad to talk again sometime.

Paul Jay
And thank you for joining us on podcast.


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  • I suggest Mr Ferguson reread Mike Moore’s Stupid White Men on Bill Clinton being the best or worst republican POTUS America never voted for, before trying to alibi the duplicitous , absolutely corrupt , and perhaps senile Joe Biden as Americas white knight.

  • Voting is of little importance and has been since our defeat in Vietnam , when CIA and the the various deep state entities controlled by unelected elites decided that guys like Carter , Nixon , and Kennedy were unreliable and began openly fixing the results. These days the SCOTUS, and Electoral College are the primary tools , supplemented by electronic ballot rigging , voter suppression , and gerrymandering of districts . Whether Trump or Biden sit on the now mainly ceremonial POTUS throne is truly immaterial to the global elites that now rule most of the planet.

  • The characterization of today’s (since 2009) QEs as “Keynesian” stimulus is incorrect. If JM Keynes were alive today, he would be vociferously denouncing the Fed and the Treasury as irresponsible. Keynes, in his 1936 treatise, “The General Theory of Employment, Interest, and Money”, urge federal borrowing when there is growth stagnation and high unemployment. Its object was the stimulation of aggregate demand by putting people back to work. Keynes saw this as the singular responsibility of the federal government, because private investment in times of GDP stagnation is discouraged by the wide perception of unacceptable risk. Only the federal government can provide the needed employment stimulus . This is very different from increasing the reserves of the major banks so that they and their privileged borrowing corporations can help themselves in the stock market rather than invest and increase employment. That is not Keynesian stimulus.

    I can think of no person who was and is still detested as much as FDR by his own capitalist class as was JM Keynes. If Keynes had been in charge at the Bretton Woods conference in place of Harry Dexter White, an agreement could have been made that might have avoided the domination of the postwar economy by the US and the ultimate breakdown of the gold standard (1971). If Keynes had been heard after WWI, the Versailles Treaty would not have set the stage for WWII. He was a profoundly far sighted political economist and one of the key intellectuals of the 20th century, as recognized and celebrated by Bertrand Russell in his “History of Western Philosophy”.