Supreme Court Decision Returns Power of the Purse to Congress
With a single court decision by the Supreme Court, Donald Trump and his constant threat of tariffs was ended. The decision was in a court that rarely rules in favor of the worker, where a number of judges were appointed by Trump, 3 in his first term when he assumed power without a majority. It was a 6 to 3 decision.
That is what makes this ruling so remarkable.
“The blockbuster Supreme Court ruling that invalidated President Donald Trump’s emergency tariffs ends one chapter of economic uncertainty….”
“Even as the nation’s high court determined Friday that the president had exceeded his authority by slapping tariffs on goods from just about every country in the world, Trump made clear at a White House news conference that he was determined to do so again, though this time within the bounds of the law.”
“The justices’ 6-3 ruling said the president did not have the authority under the 1977 International Emergency Economic Powers Act (IEEPA) to impose a vast array of import levies on goods from nearly all of the nation’s trading partners.”
Washington Post 2 22 2026
All the Supreme said was taxation was the responsibility of Congress; Congress holds the purse strings of government. As tariffs are a form of taxes; taxes on imports, Congress has to be where tariffs start and stop.
Immediately following the ruling Trump raised global taxes 15%. It is like cutting off your nose to sprite your face.
The next question is how to pay back the tariffs already taken in, 134 billion dollars, which will have to be paid back to the importers who paid tax in the first place. Given they are all American based brokers, or American companies, they don’t have far to go.
Trump has promised to use court to delay reimbursing the importers he tariffed, who are now all clamoring for their money back.
The tax man has been rebuked; his constant threats of tariffs now will take months to come in effect, instead of a social media post of a shout on an airplane to a reporter.
Congress is the responsible party when taxes rise. They never fall, even in periods of prosperity. Nevertheless they are still in control, and reminded us they had the power to use the court to clip Don’s wings. Without tax threats Don is a loud voice with no real clout behind him.
““The President asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope,” Roberts wrote. “In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorization to exercise it.””
“Trump cannot, Roberts wrote.”
“Roberts pointed out IEEPA made no mention of tariffs and that he could find little in the law to authorize such massive levies, writing bluntly: “Those words cannot bear such weight.”
“He also said Trump’s move ran afoul of the “major questions doctrine,” a rule the court has enunciated in recent years that holds that any presidential action that has major economic or political ramifications must have explicit authorization by Congress.”
“The stakes of the ruling are enormous: The tariffs affect trillions of dollars in trade, and the government collected nearly $134 billion in levies through Dec. 14 under the authority challenged in the case.”
Washington Post ibid.
Perhaps they have been saving the 134 billion dollars, in case something like this happened? Otherwise it means more taxes on top of what is paid the importer, considering the consumer paid the bulk of the taxes, the tariffs taxes on imports.
Expect export commodities value to fall, as the tariffs made their value higher than what they would have been without the tax. BYD vs Ford is not here yet, but is getting closer.
Without protectionism it is questionable how many nonmetric products will be competitive in the world market. With the declining value of the dollar nominally more will have to be paid by the consumer for the same product, inflation. Exports were balanced with heavy taxation on competitors’ products, to make American products more competitive.
The global tax of 15% he has now levied for 150 days seems less personal than the normal tariff for Dons crotchets. This one is not directed at a single competitor, rather the whole world market. It sort of admits non metric production will never be able to compete in the world market.
Some of the tariffs were on Cuba, the other country adjacent to Mar a Lago, Trump’s palace. He cut off their oil,will he return the tariff money now illegal?
How embarrassing. The taxman, who raised everyone’s taxes by heavily taxing imports, now has to contend with Congress. What happens if Don tries to use tariffs again? Will the Supreme Court change their mind? Will they have too? They made it crystal clear taxes are Congress’s responsibility, and Trump is president, not congress.
We will be in for an interesting spectacle when the 134 billion dollars have to be paid back. They could devalue the currency further, another 10% next year as this makes the debt normally worth less in real labor time. This surplus value has already been paid for by the consumer in the form of higher prices. Now another 134 billion on top of this?
It’s that or the capitalist is honest enough to lower the prices on his goods due to being repaid the tariff. This scenario looks unlikely.
In the end this exercise results in massive inflation, the price of everything has been going through the roof under Don. The leverage of tariffs as punishment has limits. Congress does own the purse strings of government, it has been that way since founding. All this did was test the boundaries of what can happen if the Republican bourgeoisie have control of both houses of Congress and the president. Clearly it was chaos.
Currency Devaluation. Tariffs. Disproportionate Representation of Large Landowners in the Senate. 2 12 2026
In an attempt to pay off the debt, at 100% GDP, the dollar is being devalued. It has fallen more than 10% since Trump took power, which makes the value of the debt smaller as it is in dollars, and if the dollar is worth less nominally the value of the debt falls.
It is simple; a hundred dollars this year is worth $90 instead of 100$ when Trump took power. Thus if you owed 100$, but the currency was devalued, you would only have to pay 90$ worth of debt in last year’s money.
We see the devaluation clearly when we look at gold prices on the market, up 70% in the past year.
Which points to a greater devaluation, and an attempt to stem losses by investing in a more stable form of currency. Silver too was up 130%, a remarkable example of the devaluation of the currency.
When the dollar is worth 10% less, the value of everything goes up 10% in price. This would be part of the real inflation rate, about 10% in Trump’s first year in office. A devalued currency also makes the value of wages go down, as more wages have to be paid for the same product as before the devaluation.
So wages have to rise, or workers undergo privations. Wages must rise, the tariffs also cause this. The tariffs make American exports able to be sold for more money, as competitors’ products are raised in value, allowing American export products to rise in value.
It’s like the Corn laws in the 19th century, it made it so British exports of food were able to be sold for higher prices. It made competition easier for British exports, by raising the cost of grain imported.
It was repealed in 1846, somewhat due to the Irish famine. It was viewed as a free trade measure.
The combination of tariffs and a devalued dollar mean the working class are being more heavily exploited, as wages real value fall 10%. Combined with the rise in price of imported goods, which are now being tariffed, wages must rise. But what if they don’t? It means more hours must be worked to achieve the same wage. The burden is clearly riding on the proletariat.
The bourgeoisie says that the tariffs costs will not be paid for by the consumer. They suggest the cost will be paid for by the producer of the commodity. In case they haven’t noticed, the price of everything is rising, while the currency keeps falling in value. Clearly tariffs have risen the prices of commodities, the costs are being passed on to consumers.
The bond market in the form of the national debt may be a safe haven for investors. As debt increases there may be surplus value to be gained by speculation on the state’s debt. The assumption is it is going to be paid off, which is probably likely, but first the country’s debt rating may fall, leading to a crisis. It is a risky venture.
Trump wants to lower the interest rate, making it easier for banks to raise capital. This will effectively subsidise even greater segments of the economy, like the farm subsidies.
“The legislation Trump has called the One Big Beautiful Bill locked in more than $65 billion over 10 years in agricultural support programs.”
The Washington Post 12 28 2025
Large scale land ownership would be in question without the massive state expenditures of big farms. It seems to just be part of American agriculture, and political representation of the large landowners is large. They know Trump has deep pockets, like the banks who benefit from low interest rates.
It is the big banks who benefit from the lower interest rates, it allows them to raise capital easier. Combine this with “too big to fail” legislation, you get a sure fire way to massively increase the power of the big banks. Given the smaller banks are not “too big too fail”, you see monopoly capitalism brewing. As the smaller banks fail, the big banks buy their assets for ridiculously low prices, consolidation of ownership on a massive scale.
The penny being phased out is an obvious effect of devaluation of currency. Stores were already not paying pennies as of 2026. The penny is on its way out, the 50$ bill on the way in.
The combination of devaluation of the currency and tariffs makes workers have to work more hours to be able to have the same standard of living they would have had without devaluation and tariffs. The large landowners benefit as they can export at higher prices due to the rise in the cost of food due to tariffs. But even with this, they still require massive money from the state to stay afloat.
The corn laws were lifted, as the city had enough of supporting the large scale landowners. A similar moment could be coming, the Senate will be where you will see it. It is two senators a state, the large landowners disproportionately weigh in on the city this way. Structural change of the senate could be coming, as the cities suffer under the large landowners, represented by two senators a state.
At the start of what is looking like what could be a crisis, the question is if the financial bubble will burst. The speculation on financial capital is reaching a fevered pitch, with investment in money capital feeding a market that is now further and further away from industrial capital, and is producing a mountain of financial services, hedge funds, money markets, etc.
The bourgeois are in bonds heavily too, speculating on the ability of the state to be able to pay off its debts, with the interest paid for by taxes.
The purpose of circulation capital, merchants capital, is to make the turnover of capital occur more smoothly. Credit and the large banks are also connected with this, they use the stored money to do banking operations that include loaning out money to capitalists to smooth the exchange of commodities.
But beyond this lies the world of joint stock companies, which are simply companies with several owners. The stock is a title to ownership of the company, and the companies control capital.
But is all this buying and selling of stocks really a movement of industrial capital?
To some degree yes. But it is invested in by money market funds, and other financial services that draw interest from industrial capital. They are a cost of production, and we should always remember the value of a commodity is the amount of labour contained in it, whether or not it is paid for. David Ricardo showed us this in his Principles of Political Economy and Taxation. Clearly circulating capital does not miraculously create value; the exchange of commodities does not create surplus value, what Ricardo called profit (surplus value). The surplus value is the unpaid section of the workday, based on the amount of labour required to produce a commodity. Profit is calculated on the whole capital expenditure, including the means of production and raw materials.
All this speculation and corresponding financial capital has formed a bubble, and in the end, if it breaks, industrial capital will be all that remains. And if you are a country that has leveraged other countries resources, with money from the home country, importing much more than exporting, financial capital becomes increasingly more important.
The question becomes how much financial capital has accumulated, and what happens when there is overproduction, and crisis occurs. At this point large amounts of capital are destroyed, we saw this as the markets were crashing of late. The money is just wiped off, the financial capital rendered useless paper.
Perhaps this is due to the fact the bank does not produce commodities, rather it makes the process of production turn over more quickly by means of credit, making turnover more smoothly than if the industrial capitalist had to be the one who had to sell his own commodity.
The banks also invest financial capital in industry, in the 20th century they were quickly becoming ever more powerful. The ability to gain seats in joint stock companies led to the monopoly conditions, led by JP Morgan, who controlled US Steel, most of the eastern railways, General Motors, etc. Financial capital was connected with this, he used credit to buy companies, which he obtained through the bank.
But the question remains how much is financial capital used to simply turnover commodities? The stock market is still called the ‘“Stock Exchange”, implying something tangible is being exchanged.
“What does a mercantile exchange do?
“The Merc trades several types of financial instruments: interest rates, equities, currencies, and commodities.
Google search mercantile exchange
“Equities, also known as stocks, represent an ownership stake in a company, giving investors a claim on the company’s assets and earnings. Investors purchase equities to gain potential returns through capital appreciation (an increase in share price) and dividends. The value of equities fluctuates based on market demand, company performance, and economic conditions, making them a popular but inherently risky investment.”
Google search equities
Equities seem to now equal stocks., as the jargon in capitalism changes sometimes; Milton Keynes would have been proud of this one. People buy stocks “to gain potential returns through capital appreciation (an increase in share price) and dividends.”
“Capital appreciation is the increase in an investment’s market value over time, leading to a higher price than its original purchase price. This growth occurs due to factors like increased demand, better asset performance, or favorable market conditions. Investors seek capital appreciation for passive growth, while the actual profit realized from selling an asset is known as a capital gain.”
Google search capital appreciation
So now we know profit results from selling an asset, which is an active relationship of the owner of stocks to his glorified hoard.
“Passive growth” refers to growth achieved without continuous, active effort, appearing in several contexts including investment strategies where wealth accumulates over time with minimal management)….
Google search passive growth
And naturally investors in stocks want to think or do as little as possible, and still be able to wring the surplus value out of the workers, whose labour represent the profit..
” increased demand, better asset performance, or favorable market conditions” as reasons for the exploitation of the proletariat is not clear. There are conditions which make it easier or harder for the bourgeois to reap the profits from his ownership of means of production, referred here to as assets. Sort of a more technical term for the accumulation of capital in stock, obtained upon selling, “capital gain”.
google’s explanations are always witty. I don’t know who writes them. It would not seem to be a task to just let a computer so to say wax philosophically about.
The bubble occurs when financial capital is divorced from reality, when circulating capital starts to cease to function,
But it is definitely better to be a producer of commodities than a financial capitalist speculating on the price of commodities when the crisis comes. I think that should be obvious, the bubble may break, and the speculation on financial capital becomes more risky. The next stage will be in production, when the companies who all rely on China for cheap raw materials and machinery have to pay double for them (Trump’s now on now off again tariffs in 2025). . The financial capital may cushion the blow, but when the merchant cannot pay the bill at the port, his creditors will be the first to react. The spectacle of yards in port, parked, waiting for a consumer, and conversely a working class suffering layoffs and loss of employment, the result of the speculative bubble breaking.
And there are the exports to China, now tariffed 138% by them to enter, now not tariffed, etc. . America produces commodities China uses, they may have a huge deficit in overall trade, but they still rely on products from America. Overproduction will likely occur here too, unless new markets are found for finished commodities. As far as commodities produced in both countries jointly, the tariff would be a real impediment to production.
The speculation on financial capital has created a bubble. Overproduction is looking likely, we will probably again see the state in its role to bail out the failing companies and agriculture. We see this taking effect in regard to the threat by Trump to lower the price of money to banks to near nothing. A large subsidy to capitalist industry. It is also a clever way to use the states money, the segment of surplus value separated off and called taxes, by alternately pulling the taxes out of the surplus value, then returning them to capitalists who are having trouble making a profit. The only question is, is it using the state money to make a profit? The bourgeois has a fetish about state assets capable of making a profit, they are sold off, often at bargain basement prices, to any capitalist who wants to take the risk of running them. I fit is the state making money here, it is quite clever. But it is also not capitalism.
Generally it is agriculture that is subsidized and bailed out; the milk wasted and dumped as it cannot be sold at $2.19 a gallon. The government paying farmers to dump the milk. At the same time the soup kitchens with long lines, often outdoors in winter.
This is a recurring feature of capitalism. It may be here again, crisis. If it is, it was sparked by Donald Trump’s protectionism. The taxes on imports could cause overproduction, social overproduction, at home and abroad. He backed off this time, but it could be enough to cause confidence investors had in dealing with Americans to be depleted; how can they be trusted? It is a crisis at least partially of their own making.
With both houses of Congress, and the president all being in the same political party, the Republicans, it would seem to be now that the bold moves would take place. Given the Republican bourgeoisie always preaches less government, and less taxes, just now has this unfolded?
Donald Trump and Elon Musk, the richest man in the world, just attempted to gut the state. They removed thousands of state workers and officials, in what was an attempt to pay off the national debt, which stands at 34.2 trillion dollars. It costs about a trillion dollars a year in interest. This money comes from taxes, through the more mysterious bond borrowing by the Central Bank. They buy money, to pay off expenses of the state, and the interest is paid for by taxes.
The Central Bank are indebting the state, and the bourgeois speculate on the ability of the state to be able to pay off its debts.
Musk’s effort seemed bold, and he promised to cut 2 trillion dollars from the state.
But then, things started to unfold that contradicted the Republican message we were so used to hearing about; how fat the state was, and how the assets of the state could be made private property. Musk started issuing to state offices and state industry ultimatums regarding their employment.
Musk really believed the Republican bourgeoisie, and attempted to gut the state. Things started to unravel though, and 2 trillion dollars became 1 trillion dollars. State workers really were losing their jobs, but it was becoming clear the state employees were there to help the bourgeois run industry that was needed but could not create a profit. The state industry could not be sold off to private businessmen, it turned out the state could not shrink in size much smaller than it already was, without causing civil unrest.
2 trillion went to 1 trillion, and at the end of Musk’s official work to make the state smaller, he saved about 150 billion dollars a year. This was about a half a percentage point of the expenditures of the state for 2024. This is about one sixth the size of the interest payments the bonds issued this year are paying.
Then Trump’s efforts at legislation, his budget “big Beautiful Bill” he was trying to pass, would indebt the state 2.4 trillion to 5 trillion dollars in 5 years.
So lowering taxes was fiction.
The massive tariffs also followed Republican leadership, taxes on imports. It’s simple; the importer buys a foreign product. When it arrives at the dock, the importer receives his receipt, with the tax on the purchase displayed on the bottom. In this case it is the tariff that is the tax, paid for by the importer. It is like Sales Tax, paid by the purchaser of the product, in this case the importer.
So much for lowering taxes. As far as the consumer goes, for instance WalMart has said prices there will be rising due to tariffs. Trump has said WalMart should make less profit, simply “eating the cost of the tariffs”. But stores like WalMart, where the proletariat shops, already were stretched to make a profit, having to compete with other stores like online giant Amazon. Amazon also has said prices are rising, due to tariffs.
The taxes from Trump on imports, whose Republicans preached about the “tax and spend” culture of Washington constantly to get elected, showed the latter was also fiction. At best they passed on the taxes to the next generation, by which time the next president will have to pay off the debt, or default.
Moody’s credit ratings are used to assess the creditworthiness of debt issuers, providing investors with insights into the likelihood of default and financial loss. The repayment of obligations is what is key here, and on May 16, 2025, Moody’s Ratings (Moody’s) downgraded the Government of United States of America’s long-term issuer and senior unsecured ratings to Aa1 from Aaa and changed the outlook to stable from negative.
This was the last credit ratings organization to downgrade the government’s credit rating, the others already concluded default by the bourgeoisie on its debts is a risk worthy of a downgrade.
Yet Trump kept suggesting the taxes he created on imports would help pay off the debts. But it was a drop in the bucket compared to the 32 trillion dollars owed by the government for its debts.
At this point Musk began sensing he had been made on ass of, and left the government. He would have a falling out with the president he paid 260 million dollars of his money to elect. It started getting ugly on social media, with Musk going so far as to suggest Trump should be impeached.
Trump then said Musk had a drug problem, which would explain why he was so easily taken when he heard the state was too fat, and its assets could be privatised.
I guess the only real question is why there are some who believe the economy has been helped by Trump and his Republicans. He threatened 150% taxes on Chinese imports. He backed off, but it remains about 50% on imports from China.
Trump is the taxman. And he is this with complete control of Congress, Senate and House. Perhaps the only question is is this not exactly what happens when the bourgeoisie has total control the state?
Foxconn, Wisconsin, and Delusions of Grandeur 10 23 2020
In 2017 Foxconn and Donald Trump announced they would be building an LCD screen factory in Wisconsin. Mount Pleasant was chosen to host the factory, south of Milwaukee, near Racine Wisconsin.
This was when the bourgeois Paul Ryan was speaker of the House of Representatives, the congressman from the district of what was promised by Foxconn to be a huge project. Scott Walker, another Republican bourgeois, was governor then. Donald Trump came to Wisconsin to officially open the project, digging the first shovel of soil in 2018 with the leader of Foxconn, Terry Gou.
It was done with fanfare, and reported by the press as a major accomplishment for Trump and his followers Paul Ryan and Scott Walker. But from the start there were strange things about the factory, a 4 billion dollar state subsidy approved by Scott Walker, that was to arrive as 250 million dollars a year to Foxconn. There was also the diversion of 7 million gallons a day of water from Lake Michigan, which was to be returned polluted.
Along the same lines there was little or no Environmental Impact Statement, the project was simply approved by the government to go forward.
Perhaps at this point it should have been clear something was wrong with this picture. There were no protests, but opposition to the factory due to ecological concerns was common among the people who inhabited the regions near the Great Lake that was going to be polluted to make the LCD Screens, with heavy metals. It was also going to create air pollution on a large scale.
But the project seemed to be going through, and by 2018 work was underway building the beginnings of the factory. There were huge buildings constructed on land that had to be removed from the residents, often against their will. A dome started to take shape, and the factory was being built. The state and local government began investing 400 million dollars into construction of roads and bridges for the factory in Mount Pleasant.
“Hopes were high among the employees who joined Foxconn’s Wisconsin project in the summer of 2018. In June, President Donald Trump had broken ground on an LCD factory he called “the eighth wonder of the world.” The scale of the promise was indeed enormous: a $10 billion investment from the Taiwanese electronics giant, a 20 million-square-foot manufacturing complex, and, most importantly, 13,000 jobs.
“Which is why new recruits arriving at the 1960s office building Foxconn had purchased in downtown Milwaukee were surprised to discover they had to provide their own office supplies. “One of the largest companies in the world, and you have to bring your own pencil,” an employee recalls wondering. Maybe Foxconn was just moving too fast to be bothered with such details, they thought, as they brought their laptops from home and scavenged pencils left behind by the building’s previous tenants. They listened to the cries of co-workers trapped in the elevators that often broke, noted the water that occasionally leaked from the ceiling, and wondered when the building would be transformed into the gleaming North American headquarters an executive had promised.
“The renovations never arrived. Neither did the factory, the tech campus, nor the thousands of jobs. Interviews with 19 employees and dozens of others involved with the project, as well as thousands of pages of public documents, reveal a project that has defaulted on almost every promise. The building Foxconn calls an LCD factory — about 1/20th the size of the original plan — is little more than an empty shell. In September, Foxconn received a permit to change its intended use from manufacturing to storage.
“Soon, the office began to fill with people who had nothing to do. Many just sat in their cubicles watching Netflix and playing games on their phones.
The Verge
The Eighth Wonder of the World
10 23 2020
Foxconn was attempting to gain state money to build by gaming the system to make it look like they had been hiring, as the subsidy was based on how many employees they had hired. The office for Foxconn was being packed full of bureaucrats, to make the required number of employees to be able to get the Treasury’s money to keep building.
It was the employees who began to see there was something wrong, that Foxconn was not what it seemed. Working for Foxconn was a rough job, with no real work to do in the office, in a broken down old building.
“Even the handful of jobs the company claims to have created are less than real: many of them held by people with nothing to do, hired so the company could reach the number required for it to get tax subsidy payments from Wisconsin. Foxconn failed at that objective, too: last week, Wisconsin rejected the company’s subsidy application and found it had employed only 281 people eligible under the contract at the end of 2019. Many have since been laid off.
“Foxconn did not return repeated requests for comment.
“It’s not unusual for either the Trump administration or Foxconn to make announcements that prove hollow. But for Foxconn, the show went on — for two years, the company, aided by the vocal support of the Wisconsin GOP, worked to maintain an illusion of progress in front of a business venture that never made economic sense.
The Verge ibid.
The jobs never came, and Foxconn would not get their subsidy. But the money for the roads and bridges would be spent, all to host what was supposed to employ 13,000 workers, at a 10 billion dollar investment.
The illusion Foxconn had of a partially completed factory that would soon be producing LCD Screens continued for several years, until now, where it is now obvious there will be no 10 billion dollar LCD factory in Mount Pleasant. But in the leadup to this realization, the Republican bourgeoisie tried to mislead the public about the progress made by Terry Gou and his Foxconn factory.
“That illusion has had real costs. State and local governments spent at least $400 million, largely on land and infrastructure Foxconn will likely never need. Residents were pushed from their homes under threat of eminent domain and dozens of houses bulldozed to clear property Foxconn doesn’t know what to do with. And a recurring cycle of new recruits joined the project, eager to help it succeed, only to become trapped in a mirage.
“Foxconn would spend the next two years jumping from idea to idea — fish farms, exporting ice cream, storing boats — in an increasingly surreal search for some way to generate money from a doomed project. Frequent leadership changes, a reluctance to spend money, and a domineering corporate culture would create an atmosphere employees described as toxic. Many of the employees The Verge spoke with have since left the company, and all of them requested anonymity out of fear of retaliation. It has been a baffling ordeal for the people who thought they were building the Silicon Valley of the Midwest — “Wisconn Valley,” Walker called it — all the more so because so many others still believe the vision.
The Verge ibid.
The broken promise of an LCD factory led to attempts to figure out how Foxconn could possibly make a profit doing something other than producing LCD Screens. By this time desperation was starting to set in, and it was clear the factory would never produce LCD’s, or any commodity for that matter.
“Foxconn’s Wisconsin saga began two days after Trump’s inauguration, when the company’s founder and CEO, Terry Gou, told reporters he was considering building a $7 billion factory in the US and employing as many as 50,000 people.
“A contract with WEDC (Wisconsin Economic Development Corporation, a state-run organization that administers the Foxconn deal and approves the tax subsidies if the hiring quotas are met) signed in November made it official: nearly $3 billion in “refundable” tax credits, most likely to be made in the form of direct payments to Foxconn. Combined with infrastructure the state promised to build, approximately $800 million in additional incentives mostly from the small town of Mount Pleasant, where the “Fab” was to be located, and other contributions, the package totaled more than $4 billion. In a best-case scenario, the Legislative Fiscal Bureau found the state wouldn’t break even until 2043. Depending on how many people Foxconn hired, each job would cost taxpayers somewhere between $200,000 and more than a million dollars. The average subsidy in the US is around $24,000 per job.
“Such announcements are far from unusual for Gou, and often, nothing comes of them. In Vietnam in 2007, in Brazil in 2011, in Pennsylvania in 2013, and in Indonesia in 2014, Foxconn announced enormous factories that either fell far short of promises or never appeared. Just this year, the industries minister of Maharashtra, India, which aggressively pursued one of Gou’s multibillion-dollar projects in 2015, finally confirmed the factory isn’t coming, saying the state had learned a lesson about believing businesses promising big investments.
Ibid.
Yet the illusion of Foxconn building in Wisconsin continued, and the subsidy for building was not negated until 2020, when a new governor, a member of the liberal progressive bourgeoisie Tony Evers, removed the subsidy.
“…the 1,040 people Foxconn intended to hire by the end of 2018, per its contract with the state, or even the 260 needed in order to receive subsidies, an audit found the company had managed to hire only 113. At the Mount Pleasant campus, it had erected a single structure, a 120,000-square-foot space that sat virtually empty. Its very name, “the multi-purpose building,” seemed noncommittal. As for the promised LCD factory, the “Fab,” Foxconn boasted in a letter that a contractor had moved 4 million cubic yards of dirt. As 2018 came to an end, the company froze budgets and canceled planned career fairs. The project entered a complete stall.
“Foxconn’s vacillations spilled into public view in January 2019, when Woo told Reuters, “In Wisconsin we’re not building a factory,” having finally discovered it was unprofitable to make LCDs in the US. The comment caused an uproar. State Republicans swiftly blamed Evers for driving Foxconn out; the administration expressed surprise at the change; Trump spoke with Gou, and Foxconn immediately announced that LCD production was back on. “Great news on Foxconn in Wisconsin after my conversation with Terry Gou!” Trump tweeted, claiming credit for bringing Foxconn to Wisconsin a second time.
Ibid.
In Works volume 4 I detailed when this occurred, Terry Gou’s admitting the factory could not be built in Wisconsin, as there was no way the company could compete in America. It looked like the end of Foxconn, until Donald Trump intervened to keep the illusion going, saying he was keeping the project going. At this point many of us were starting to question whether or not the factory would go forward.
“If the factory was meant to earn Trump’s goodwill, the January incident showed that the company couldn’t simply vanish as it had elsewhere. Foxconn was stuck in Wisconsin, and it needed to find a way to cut its losses. Employees at every level of the project were enlisted in a search for something — anything — Foxconn could do to generate revenue.
“In meetings at Racine’s City Hall, Foxconn representatives and city officials started developing a plan, elements of which Racine submitted to a competition called the Smart Cities Readiness Challenge in 2019: camera-festooned autonomous vehicles would patrol high-crime areas, the city said in its proposal, guided by 5G cells mounted on lamp posts. Self-driving vehicles — retrofitted golf carts at first, then shuttles as soon as 2020 — would ferry Racine’s workers to Foxconn’s campus. Foxconn, the city noted in the submission, was a “particularly important stakeholder” and would help provide financing and technology.
“But when city officials started asking basic questions about the sort of infrastructure they needed to build in order to accommodate Foxconn’s technology, Foxconn employees found they were unable to get clear answers from the company. “They were losing confidence, and then we parade in more new shiny ponies, and more people who couldn’t answer what should have been easy questions,” an employee said.
“Foxconn only ever got as far as buying the golf carts. They arrived from China disassembled, in orange, pink, and other festive colors. One employee described them as “the biggest pieces of shit,” like something “bought off Wish.com.” Unable to make them autonomous, Foxconn put them in storage in the multipurpose building. At one point, the company discussed outfitting them with lights and turning them into security vehicles, but the subsidiary in charge of security refused to pay FEWI (Flying Eagle Wisconsin, the Foxconn subsidiary run by Alan Yeung initially tasked with laying the foundation for the Wisconsin project) for the carts, according to one employee. As the divisions bickered, bored employees would come down from the Milwaukee headquarters to race the carts around the empty building, until the batteries finally died.
Ibid.
It looks like Racine was easily fooled by promises of high tech industrial development from capitalists; in the form of a company from Taiwan, that would make a massive amount of profit doing manufacturing in Mount Pleasant. The fraud is a product of the more reactionary bourgeois desperation to appear to be making progress by partnering with large capitalist companies, that society would miraculously prosper if the workers just accepted their leadership, and supported them.
Racine should have known they were being taken, that Scott Walker was not telling them the whole truth about who was going to invest in their city. But their trust of Republicans led them to believe the false promises delivered by a billionaire with the support of Donald Trump, Paul Ryan. and Scott Walker.
“Earlier partnerships announced with local companies like Rockwell Automation had been followed by total silence. (Employees say they quickly fizzled; Rockwell did not return a request for comment.) Of the $100 million gift Gou promised the University of Wisconsin-Madison, the school confirmed that only $700,000 ever arrived.
“The original plan had been grandiose: the sphere was to be the dot in the “i” of a complex of data centers spelling out “Fii” (Foxconn Industrial Internet) when viewed from the air. But according to three employees, Foxconn balked at the cost. An employee with knowledge of the project said that Foxconn finally moved forward with the sphere — and only the sphere — when the architect told the company it had to put a deposit down for the steel if construction was going to finish in time for a long-promised visit from Trump.
“But the building without the data centers was just a glass orb in a field — at best, “really, really, really expensive office space,” in the words of one employee. Adding to Fii’s troubles, FEWI (Flying Eagle Wisconsin, the Foxconn subsidiary run by Alan Yeung initially tasked with laying the foundation for the Wisconsin project.), also trying to cut its losses, had “tricked” Fii into buying more land than was needed for the sphere, according to a second employee. A Foxconn executive briefly entertained an elegant solution, according to two employees: starting a Foxconn tree farm, so the company could get free trees for the terrarium-like interior of the sphere that Gou wanted, and sell the excess trees for profit.
“It’s endless,” said an employee, noting with frantic exasperation that the sorts of tropical trees Foxconn wanted can’t even grow in Wisconsin’s climate. “When you’re desperate and you have no product to sell and the only asset you have is land, what can you do? You build on it or you grow crops on it.”
Ibid.
The sphere now sits empty in Mount Pleasant, Wisconsin, surrounded by farmland. There are roads to it though, thanks to the state that picked up the costs of building them to the factory. The buildings that were supposed to be factories are now considered useful for storage. Their official purpose is now this, storage.
“In many ways, the Foxconn debacle in Wisconsin is the physical manifestation of the alternate reality that has defined the Trump administration. Trump promised to bring back manufacturing, found a billionaire eager to play along, and now for three years the people of Wisconsin have been told to expect an LCD factory that plainly is not there. Into the gap between appearance and reality fell people’s jobs, homes, and livelihoods.
“The buildings Foxconn has erected are largely empty. The sphere has no clear purpose. The innovation centers are still vacant. The heart of the project, the million-square-foot “Fab,” is just a shell. In what an employee says was a final cost-cutting measure, only the portion that was to host the Trump visit was ever finished. Recent documents show the “Fab,” once intended for use as manufacturing, has been reclassified as a massive storage facility.
“WEDC, as part of its audit of the company’s 2019 subsidy application, had Foxconn survey its employees about what they were working on. Not a single respondent mentioned LCDs because no one is working on LCDs, and they never were.
“The project has fallen orders of magnitude short of its hiring and investment targets. WEDC found Foxconn had only 281 eligible employees at the end of 2019, 13 percent of what it had originally aimed for. (Many of the employees Foxconn tried to claim were paid too little or hired too late in the year to get a paycheck in 2019.) After this year’s layoffs, it is nowhere near meeting its 2020 target of 5,200 employees. Foxconn itself acknowledged, in its subsidy submission, that it has so far invested 2.8 percent of the $10 billion it promised. It has built less than 2 percent of the 20 million square feet of manufacturing space it originally planned.
“The company’s desperate quest to maintain appearances caused it to fail repeatedly and in ways more destructive than mere ordinary failure would have been: local businesses were strung along, civil servants spent years figuring out what the company is doing, residents were removed from land the company didn’t need, and again and again recruits were lured in by the vision of a grand manufacturing renaissance in Wisconsin.
“That vision got Gou regular access to the White House during a trade war and gave Trump a groundbreaking and almost a ribbon-cutting, too. But maintaining the mirage required a culture of secrecy. Employees were warned not to talk to the press (including, specifically, me). Many were afraid to speak — afraid of getting fired, or of retribution even after they’d left. Publicly, the company issued announcement after announcement — innovation centers, career fairs, smart cities, AI 8K+5G, the AI Institute — each one erasing the memory of the last missed deadline. (One employee quipped that one of the few things Foxconn succeeded in making in Wisconsin was press releases.) The illusion was defended by GOP officials at all levels of government, from Mount Pleasant to the State Assembly to the White House, who accused anyone pointing out that the project was off track of trying to scuttle it for partisan ends, as if the existence of the factory were open to debate and positive thinking might make it real.
“…in actual reality, the project has succeeded in manufacturing mostly this: an endless supply of wonderful things for the President to promise his supporters. This past weekend, in an interview with a local Wisconsin TV station, Trump insisted Foxconn had built “one of the most incredible plants I’ve ever seen” in Mount Pleasant and would keep its promises and more if he was reelected.
It was another Trump promise that was an illusion. The grandiose claims of 13,000 jobs, 10 billion dollars for a small town in Wisconsin, was designed to fool people to support him.
Clearly all that would have occurred if Scott Walker was still Governor, and Paul Ryan Congressman, was the fraud would have continued.
But in the end it had to fail, and reality to make itself felt. It was after hundreds of millions of dollars were spent by the state to build the roads, bridges, etc. to support the Foxconn factory, which will never make LCD Screens, or employ 13,00 people.
The factory is a monument to an illusion, and illusion of a bourgeois with worldly connections bringing investment into small town Wisconsin. Although the office referred to in the article was in Milwaukee, Racine and Mount Pleasant are more like suburbs, the latter mostly rural. It was to convince Trump’s rural following he could deliver investment, and this would result in prosperity.
It seems to have failed. It is a relief that the LCD Screens will never be produced here, as it would damage the ecology of Lake Michigan, which is why I was always against it. Hopefully if anything is produced there, it will have to have a real Environmental Impact Statement, not the farce we were handed last time. But in reality, it looks like nothing will ever be produced there. It is a dream of something that was an illusion, like Trump’s vision of America, that society would progress if everyone just believed capitalism was working.
Taxes on Imports. Attempts to Limit China’s Exports by Raising Taxes here on Commodities. 11 29 2024
The cockeyed idea that you can control production from another country of commodities in demand worldwide by raising taxes on the import of these commodities is running into difficulties. The idea that the American market can pressure China to produce less Electric Vehicles (EV’s) and Solar Panels, by taxing imports; tariffs, seems to be an argument that without Americans to consume China’s production, they will be unable to sell their EV’s and solar panels. What this view lacks is the recognition that the production of high quality finished goods, which will easily find a market elsewhere, are making the taxes only bite the consumers, primarily American workers, who consume cheap Chinese products at Dollar Stores, WalMart, etc.
The latest complaint is capitalist production cannot compete with China’s socialist system.
“China is too large to export its way to rapid growth and would benefit by reducing excess industrial capacity which is pressuring other economies, Yellen said in remarks to an audience of about 40 representatives of the American Chamber of Commerce in Guangzhou.”
“”Overcapacity isn’t a new problem, but it has intensified, and we’re seeing emerging risks in new sectors,” Yellen said in China’s southern export hub of Guangzhou, where she met with Vice Premier He Lifeng and Guangdong Province Governor Wang Weizhong.”
“Yellen and other Biden administration officials are growing increasingly concerned about China’s overproduction of electric vehicles, solar panels, semiconductors and other goods that are flooding into global markets in the face of a demand slump in China’s domestic market.”
“Chinese state media have pushed back against Yellen’s excess capacity message, saying it was an example of a double standard.”
“”While it is just basic economics that surplus products naturally seek out markets elsewhere once domestic demand is met, and Western nations have been doing that for centuries, when it comes to China, it becomes an ‘overcapacity problem’ threatening the world,” the China Daily said.”
Ibid. Reuters
They really look silly telling China to produce less because the market in America cannot compete, and they are starting to refuse to buy the commodities to hurt China. It’s like cutting off your nose to spite your face. They are going to deliberately cause inflation with taxes on imports, taxes that will be paid by the consumer, often of products like solar panels for rooftops that have been acknowledged by them as effective to stop climate change.
What logic is it to not buy a cheap solar panel, just because the seller has decided to sell it below its value, the amount of labour time required to produce it? Why should the buyer care?
Creating a surplus is the basic rule of all capitalist production. Suggesting China should not export so many products is a ridiculous request, given this is the overriding goal of capitalist production, to create surplus value. Do as I say, not as I do.
“Nov 29 (Reuters) – U.S. trade officials announced on Friday a new round of tariffs on solar panel imports from four Southeast Asian nations after American manufacturers complained that companies there are flooding the market with unfairly cheap goods.”
Article continues…
“According to a preliminary decision posted on the U.S. Commerce Department’s website on Friday, the agency calculated dumping duties of between 21.31% and 271.2%, depending on the company, on solar cells from Cambodia, Malaysia, Thailand and Vietnam.”
“Most solar panels installed in the United States are made overseas, and some 80% of imports come from the four nations targeted in the Commerce Department probe.”
“President-elect Donald Trump has called the Inflation Reduction Act too expensive, but also has said he plans to slap hefty tariffs on a range of sectors to protect American workers.”
Trump said his favorite word was “tariffs”, and now he is becoming president again. What he really means is his favorite word is actually “taxes”, because that’s what tariffs are, a tax on imports. He already is trying to figure out what to do with the money from the taxes on imports, with lofty goals of being able to use it for his state.
Apparently there is some contention about if the consumer will be paying these taxes. They will, unless they purchase American made products, the old non metric, fossil fuel dependent production.
Solar panels are becoming more out of reach to the worker daily. China produces 80% of the panels, it is unlikely they will take a loss to sell their panels for less to compensate for the tariffs. You will see inflation on panels, due to taxes levied by the bourgeoisie, who are not really committed to stopping climate change.
It would be nice if solar panels were produced here, but instead the focus seems to still be on pumping as much fossil fuels as possible out of the ground, in the least amount of time. China seems to be rapidly becoming superior to American production of a key component of any renewable energy plans, the solar panel.
China is already talking about putting their own tariffs on large gasoline powered engines, for cars and trucks. This could get interesting. How about a tax on non metric products? Imagine if they had to go metric to access foreign markets.
In all this taxing of imports it is the consumer who is going to pay. This form of taxation will also bite the bourgeoisie, as Sam Walton owns WalMart, for instance, and will have to raise prices on Chinese products popular there due to tariffs. And if those non metric gasoline large motor powered cars and trucks get tariffed, it could cause an economic crisis.
Most large scale production uses Chinese produced raw materials, for welding, for instance. This is s tax on their own production; without the cheap welding supplies the commodities rise in value. Will the bourgeois willingly make less profit to offset the taxes?
So what we seem to be seeing is what the new government is going to be doing is to keep the old decaying industry functioning, regardless of its ecological impact. The appointments Donald Trump has made are all involved with petroleum and fossil fuel production. Either that or they are inexperienced, and will take orders well.
What we can expect is, for instance, Milwaukee’s electrical generation will be remaining coal fired turbines, until Trump leaves office. For a number of years Wisconsin Electric, the monopoly that sells natural gas and electricity to Southeastern WIsconsin, has talked about switching the Oak Creek power plant to gas.
This now looks unlikely, regardless of the ecological effects of massive coal storage and burning. Simply put, the Republican bourgeoisie will not have deep enough pockets to change the turbines to gas.
It also looks like gasoline powered large engines for autos, boats, etc. will be here to stay. Trump has said he will tariff, or tax, Chinese electric vehicles (EV”S). The current government has already increased for this year 100% tariffs on electric vehicles, a 25% tariff on lithium-ion EV batteries and a 50% tariff on photovoltaic solar cells produced in China.
And this is not enough for Trump, he wants to increase taxes on imports, tariffs, even higher.
China has shown it can produce cheap quality EV’s that are competitive in the world market. They pollute the ecology far less than Detroit’s SUV and pickup trucks that use large gasoline powered engines. The tax on imports of Chinese EV’s are designed to make Detroit’s products more competitive in the domestic market.
Who wouldn’t want a cheap quality EV? Why would a machine that can reduce the ecological impact of climate change not be welcomed?
China now produces 80% of the photovoltaic cells for solar energy. At some point China decided to move forward industrially, went metric, and shifted to developing the latest technology. All our bourgeoisie can do is tax imports from China to keep Americans buying Detroit’s gasoline powered large engine vehicles, and consuming fossil fuels for power generation.
We expect it from Trump, but here is Biden doing it too. These forms of protectionism are only going to get worse, and you can really see how non metric industry is simply not competitive. China is still considered a third world country by the United Nations, and American can’t compete. The statements to expect are something to the effect of “China, India and Russia are polluting the ecology, why should we be held to a different standard?”
Which reduces us to the standards of a declining capitalist model, like Russia, without recycling; or India and China, that are in the developing world.
How far we have come. The days of glory are coming to an end; technological progress is changing society, and Detroit is still not metric. The speed limit signs, the gas pumps, the size of containers at the store, are all not yet metric.
And do you really expect Trump to do a metric conversion? He doesn’t even believe climate change is real. “Make America Great Again” includes inches, gallons, and feet.
Another 4 years without a metric conversion. And this is supposed to be someone who understands basic economics.
What this is going to do is fetter the productive forces even worse than they are currently. It will further isolate the workers and industry from the rest of the world. Who is going to buy a large non metric gasoline powered motor pickup truck outside the domestic market?
Then there is the social conditions; Elon Musk, who invested more than 250 million dollars into getting Trump elected, is now coming to power. His industry he owns is called Tesla, and produces luxury automobiles. It is not part of regular commodity production, it is what the surplus value is spent on. It does not produce a profit, rather it consumes profit. A worker cannot afford Musk’s cars, they are for the bourgeoisie. It is what the bourgeois spend their profits on, rather than an affordable car a worker would consume.
This and government contracts are how Musk has gained his wealth. Trump will steer more government contracts for space,. to Musk’s monopoly, complete with the knowledge of engineers who created the industry for NASA previously..
These are all part of what to expect around here for the next 4 years. Buying a Detroit gasoline powered truck, not being able to afford a solar panel for the house, using gas and electricity instead of renewable energy…. The speed limit staying 70 miles per hour on the highway; purchasing gallons of gasoline for the car, etc. Prepare yourself for it, it is coming.
Wages are the lowest that can be paid, remaining socially acceptable. The unpaid section of the workday, the surplus value, essentially what profit, is where taxes are divided off from. Escaping from this reality seems to be what is desired now, by cutting taxes for the wealthy.
If you cut taxes from profit and shift it directly on the workers back,. the taxes still have to be paid for. Workers work longer hours, what Marx referred to as increasing the absolute surplus value. But this too runs into resistance, as there are laws about how many hours workers are supposed to be able to work, 8 hours is the current one.
You have to work them overtime to make up for the loss of wages due to the tax
Longer hours, a wage cut… It makes one wonder where the support for this is coming from.
Privations by the proletariat would seem to be coming. You cannot simply raise the amount of profit. If you lower the amount of the taxes from profit the taxes have to come from somewhere.
And as the only thing that creates profit is labour,: lowering taxes on the wealthy is the same thing as increasing the profit kept by the capitalist at the workers expense.
Either the taxes are coming from the form of profit, or from making the worker privy to part of what was taken as surplus value directly by his employer by charging him yearly, like property taxes, or printing it on the paycheck as a deduction, it still comes from the worker. In either case, divided off of profit, or shifted on to the worker, the surplus value flows into the state.
The bourgeoisie claims the tax money as their own. Obviously for them it is part of their profit. State industry does not make a profit. It is privatized when it can make a profit, we saw this with recycling. Waste Management now runs the sorter. Money for the state can only come from taxes.
The wealthy can only cut taxes by increasing privations from its workers. Surplus value from the worker is needed to maintain the capitalist state. It is a bourgeois fantasy to massively defund the state. Perhaps some of the savings will come from the prisons, police, etc. whose social function becomes clear during unrest. Like that is going to happen. The whole purpose of the state from its inception is to keep the classes divided.
Perhaps it is more palatable to the bourgeoisie to consider taxing workers directly rather than making a profit and dividing it off to pay for the state. But in the end, it is all the labor of the workers that has to pay this, out of the surplus value they have created thorough exploitation of their labour.
Ecological Era 