Iran Could Still Strike Back at the U.S.

The Islamic Republic is too weak to wage a conventional war on the U.S. — but that doesn’t mean it poses no threat.

How might Iran respond to the death of Qasem Soleimani? Ever since the Trump administration’s January 3 killing of Soleimani, the Islamic Republic’s top military commander, that question has been on the mind of policymakers in Washington and the American public at large.

Iran’s January 8 rocket attack on U.S. military bases in Iraq clearly constituted part of its response, but Iranian leaders quickly made clear that more retaliation is forthcoming. Supreme Leader Ali Khamenei himself has said that, while the rocket attack was a “slap” at the United States, it was “not enough,” and the Islamic Republic will continue its opposition to the United States with the ultimate goal of driving America out of the Middle East altogether.

Doing so, however, is likely to prove difficult for Iran. As a recent analysis by CNBC notes, sanctions leveled by the Trump administration over the past two years have inflicted extensive damage on the Iranian economy. The country’s GDP shrunk by nearly 10 percent last year, and its exports of crude oil declined from a peak of 2.5 million barrels per day to less than 500,000 daily.

Domestic conditions, meanwhile, are deteriorating. Inflation is on the rise within the Islamic Republic and is now pegged at over 30 percent. So, too, is joblessness; nearly a fifth of the country’s workforce is currently estimated to be unemployed. Meanwhile, governmental expenditures have surged as Iran’s ayatollahs struggle to keep a lid on an increasingly impoverished, and discontented, population.

All of this, according to CNBC’s analysis, profoundly limits Iran’s ability “to fund a war” against the United States. But that doesn’t mean the threat from Iran is nonexistent. Iran still has the ability to “ramp up its aggression against the U.S.” through the use of its network of proxy forces in the region.

That network is extensive — and lethal. It comprises not only Iran’s traditional terrorist proxies, such as Lebanon’s Hezbollah militia and the Palestinian Hamas movement, but also assorted Shiite militias in Iraq (the so-called “Hashd al-Shaabi”) and even Yemen’s Houthi rebels. Recently, it has also made use of theShi’a Liberation Army” (SLA), a group of as many as 200,000 Shiite fighters — drawn from Afghanistan, Yemen, Pakistan, and elsewhere — that has been trained and equipped by Iran’s Islamic Revolutionary Guard Corps and deployed to foreign theaters such as Syria.

Notably, these forces appear to have been thrown into chaos, at least temporarily, by the killing of Soleimani. Reports from the region suggest that Iraqi militias are “in a state of disarray” after the death of the Iranian general, and aren’t currently ready to strike U.S. or allied targets. Over time, however, we can expect Tehran to regain control and direction of its troops and weaponize them anew against the United States and regional U.S. allies such as Israel, Saudi Arabia, and Bahrain. That is doubtless the top priority of Soleimani’s successor as head of the Quds Force, Esmail Ghaani, who has already commenced outreach to Iranian proxies in an effort to reinforce Tehran’s support for “resistance” activities.

Tehran likewise has another potent tool by which to target the United States: cyber warfare. Over the past decade, the Iranian regime has made enormous investments in its cyber-war capabilities and carried out a series of demonstration attacks on targets such as Saudi Arabia’s state oil company and various U.S. financial institutions to showcase its newfound technological prowess. In the wake of President Trump’s pullout from President Obama’s 2015 nuclear deal, Iran reshaped its cyber-activism against the United States, focusing less on offensive attacks and more on gathering information about potential policy from the notoriously opaque new administration in Washington.

But Tehran’s potential to do significant harm to the U.S. in cyberspace remains. Indeed, the U.S. Department of Homeland Security has warned publicly that Iran could carry out a cyberattack against critical U.S. infrastructure in the near future, with potentially significant “disruptive effects.” And so far, neither the Pentagon nor the State Department has articulated much by way of a strategy to deter Iran from carrying out such attacks, or to mitigate the damage they could do. (In the aftermath of Soleimani’s killing, that lack of strategy has become a matter of growing concern on Capitol Hill.)

Perhaps the most compelling reason to expect an asymmetric Iranian response to Soleimani’s killing, however, is that asymmetric warfare plays to Iran’s inherent strengths. Ever since the regime’s grinding eight-year war with neighboring Iraq in the 1980s — a conflict that Iran lost handily — its leaders have exhibited a strong penchant for military asymmetry over direct confrontation. This preference has only been reinforced by persistent Western sanctions, which have eroded the country’s conventional military capabilities and made the acquisition of spare parts and matériel considerably more difficult.

Soleimani was the regime’s principal architect of asymmetric war, and had devoted nearly a quarter-century to building up the Islamic Republic’s asymmetric potency. That is precisely why his targeted killing by the Trump administration represents such a significant blow to the integrity of Iran’s proxy network — and to the prudence of its time-tested asymmetric strategy. Going forward, Tehran may well have to rethink its approach, and could conclude that the potential costs of continuing its campaign of aggression against U.S. forces in the region are now simply too high. If it doesn’t, however, the very capabilities that Soleimani spent his career cultivating will remain the most potent weapons the Islamic Republic has to wield against the United States.

The Debt-Peonage Society

Today the Senate is expected to vote to limit debate on a bill that toughens the existing bankruptcy law, probably ensuring the bill’s passage. A solid bloc of Republican senators, assisted by some Democrats, has already voted down a series of amendments that would either have closed loopholes for the rich or provided protection for some poor and middle-class families.

The bankruptcy bill was written by and for credit card companies, and the industry’s political muscle is the reason it seems unstoppable. But the bill also fits into the broader context of what Jacob Hacker, a political scientist at Yale, calls “risk privatization“: a steady erosion of the protection the government provides against personal misfortune, even as ordinary families face ever-growing economic insecurity.

The bill would make it much harder for families in distress to write off their debts and make a fresh start. Instead, many debtors would find themselves on an endless treadmill of payments.

The credit card companies say this is needed because people have been abusing the bankruptcy law, borrowing irresponsibly and walking away from debts. The facts say otherwise.

A vast majority of personal bankruptcies in the United States are the result of severe misfortune. One recent study found that more than half of bankruptcies are the result of medical emergencies. The rest are overwhelmingly the result either of job loss or of divorce.

To the extent that there is significant abuse of the system, it’s concentrated among the wealthy — including corporate executives found guilty of misleading investors — who can exploit loopholes in the law to protect their wealth, no matter how ill-gotten.

One increasingly popular loophole is the creation of an “asset protection trust,” which is worth doing only for the wealthy. Senator Charles Schumer introduced an amendment that would have limited the exemption on such trusts, but apparently it’s O.K. to game the system if you’re rich: 54 Republicans and 2 Democrats voted against the Schumer amendment.

Other amendments were aimed at protecting families and individuals who have clearly been forced into bankruptcy by events, or who would face extreme hardship in repaying debts. Ted Kennedy introduced an exemption for cases of medical bankruptcy. Russ Feingold introduced an amendment protecting the homes of the elderly. Dick Durbin asked for protection for armed services members and veterans. All were rejected.

None of this should come as a surprise: it’s all part of the pattern.

As Mr. Hacker and others have documented, over the past three decades the lives of ordinary Americans have become steadily less secure, and their chances of plunging from the middle class into acute poverty ever larger. Job stability has declined; spells of unemployment, when they happen, last longer; fewer workers receive health insurance from their employers; fewer workers have guaranteed pensions.

Some of these changes are the result of a changing economy. But the underlying economic trends have been reinforced by an ideologically driven effort to strip away the protections the government used to provide. For example, long-term unemployment has become much more common, but unemployment benefits expire sooner. Health insurance coverage is declining, but new initiatives like health savings accounts (introduced in the 2003 Medicare bill), rather than discouraging that trend, further undermine the incentives of employers to provide coverage.

Above all, of course, at a time when ever-fewer workers can count on pensions from their employers, the current administration wants to phase out Social Security.

The bankruptcy bill fits right into this picture. When everything else goes wrong, Americans can still get a measure of relief by filing for bankruptcy — and rising insecurity means that they are forced to do this more often than in the past. But Congress is now poised to make the bankruptcy law harsher, too.

Warren Buffett recently made headlines by saying America is more likely to turn into a “sharecroppers’ society” than an “ownership society.” But I think the right term is a “debt peonage” society — after the system, prevalent in the post-Civil War South, in which debtors were forced to work for their creditors. The bankruptcy bill won’t get us back to those bad old days all by itself, but it’s a significant step in that direction.

And any senator who votes for the bill should be ashamed.

How Corporations Destroyed American Democracy – Chris Hedges.

How Corporations Destroyed American Democracy – Chris Hedges.
Filmed at Socialism 2010 in Chicago by Paul Hubbard

The Best Economic News No One Wants to Talk About

Something’s happening to wages that neither Democrats nor Republicans care to acknowledge.

Stop me if this sounds familiar: For most American workers, real wages have barely budged in decades. Inequality has skyrocketed. The richest workers are making all the money. Earnings for low-income workers have been pathetic this entire century.

These claims help drive the interpretation of breaking economic news. For example, the Labor Department yesterday reported that the unemployment rate fell to a 50-year low, while wage growth stalled. “The wage numbers here are INSANE,” the MSNBC host Chris Hayes tweeted. “The tightest labor market in decades and decades and ordinary working people are barely seeing gains.”

So, let’s play a game of wish-casting.

  • Imagine a world where wage growth was truly stagnant only for workers in high-wage industries, such as medicine and consulting.
  • Imagine a labor market where earnings growth for low-wage workers, such as those who work in retail and restaurants, had doubled in the past five years.
  • Imagine an economy where wages for the poorest Americans were rising twice as fast as hourly earnings for high-wage earners.

It turns out that all three of those things are happening right now.

According to analysis by Nick Bunker, an economist with the jobs site Indeed, wage growth is currently strongest for workers in low-wage industries, such as clothing stores, supermarkets, amusement parks, and casinos. And earnings are growing most slowly in higher-wage industries, such as medical labs, law firms, and broadcasting and telecom companies.

Bunker’s analysis is not an outlier. A Goldman Sachs look at data from the Bureau of Labor Statistics found growth for the bottom half of earners at its highest rate of the cycle. And even among that bottom half, the biggest gains are going to workers earning the least. A New York Times analysis of data from the Federal Reserve Bank of Atlanta found that wage growth among the lowest 25 percent of earners had exceeded the growth in every other quartile.

In fact, according to Bunker’s research, wages for low-income workers may be growing at their highest rate in 20 years.

What’s happening here? Donald Trump hasn’t sprinkled MAGA pixie dust over the U.S. economy. In fact, his trade war has clearly diminished employment growth in industries, that are sensitive to foreign markets, such as manufacturing. Rather, a tight labor market and state-by-state minimum wage hikes have combined to push up wage growth for the poorest workers. The sluggishness of overall wage growth is concealing the fact that the labor market has done wonderful things for wages at the low end.

One reason you haven’t heard this economic narrative may be that it’s inconvenient for members of both political parties to talk about, especially at a time when economic analysis has, like everything else, become a proxy for political orientation. For Democrats, the idea that low-income workers could be benefiting from a 2019 economy feels dangerously close to giving the president credit for something. This isn’t just poor motivated reasoning; it also attributes way too much power to the American president, who exerts very little control over the domestic economy. Meanwhile, corporate-friendly outlets, such as The Wall Street Journal’s editorial pages, have reported on this phenomenon. But they’ve used it as an opportunity to take a shot at “the slow-growth Obama years” rather than a way to argue for the extraordinary benefits of tight labor markets for the poor, much less for the virtues of minimum-wage laws.

Democrats don’t want to talk about low-income wage growth, because it feels too close to saying, “Good things can happen while Trump is president”; and Republicans don’t want to talk about the reason behind it, because it’s dangerously close to saying, “Our singular fixation with corporate-tax rates is foolish and Keynes was right.”

But good things can happen while Trump is president, and Keynes was right. “Tighter labor markets sure are good for workers who work in low-wage industries,” Bunker told me. “This recovery has not been spectacular. But if we let the labor market get stronger for a long time, you will see these results.”