Mikhail Gorbachev: 1931-2022

Mikhail Gorbachev, the last leader of the Soviet Union who presided over its dissolution and abandonment of Marxist-Leninist communism, died Tuesday at 91. Russian news agencies reported that his death followed “a serious and long” illness.

One of the most consequential leaders of the 20th century, Gorbachev was born in 1931, the only Soviet leader born after the USSR was already established. Moving his way up through the Communist Party ranks, he joined the Politburo in 1979. Following the brief terms of Yuri Andropov and Konstantin Chernenko, he became General Secretary in 1985.

By the time he came to power, the Soviet Union had a stagnant economy, a dysfunctional government, and a military quagmire in Afghanistan. In an attempt to salvage the Soviet Union, he initiated structural reforms, perestroika, and a new openness and transparency to the outside world unprecedented in Soviet history, glasnost.

The reforms were not enough to salvage the failing Soviet system, however, and even helped lead to the dissolution of the state. Western countries at this time were prospering economically, and defense initiatives in the US, such as President Ronald Reagan’s Strategic Defense Initiative (SDI, or 'Star Wars'), further weakened Soviet morale as they were unable to compete effectively.

Anti-communist movements gained strength in communist eastern European countries, leading to the revolutions of 1989. By the start of the next decade, the constituent countries of the USSR began to break away from the country, and with few exceptions, Gorbachev did not use force to put down the revolts. Surviving a coup attempt by communist hardliners but unable to save the USSR, Gorbachev resigned December 25, 1991, ending the Soviet Union.

His legacy since the end of his rule has largely been largely positive in the West, praising his openness to the outside world and allowing the Soviet Union to dissolve relatively peacefully. In Russia, his legacy has been more negative, with the main criticism being that he allowed the Soviet Union to collapse. Russia, while still a powerful country, no longer plays the pivotal role it did as the USSR and faces numerous economic and geopolitical challenges as a post-Soviet country.

 

Democratic Fortunes Improve After Recent Victories

 Facing the prospect of significant losses in the November midterm elections, Democrats’ fortunes may have improved if recent election results are any indication. Along with an increase in President Joe Biden’s approval ratings, Democrats have expressed more confidence that they will keep the Senate majority and possibly keep their House majority.

The most notable recent indication the Republicans may not have a lock on Congressional control after the midterms are the results of the special US House election in New York. Democrat Pat Ryan defeated Republican Marc Molinaro, 51.1% to 48.7%, in the 19th congressional district, slightly overperforming Biden’s performance in 2020. In the New York’s 23rd, Republican Joe Sempolinski won 6.5 percentage points, underperforming Trump’s 11-point victory in 2020.

In Kansas, voters rejected by a double-digit margin to allow the state legislature to restrict or ban abortion in the state.

Biden’s approval ratings have also improved in recent weeks, though they still remain negative.

 

Manchin and Schumer Announce Reconciliation Deal

Sen. Joe Manchin (D-WV) and Senate Majority Leader Chuck Schumer (D-NY) announced Wednesday that they had reached an agreement to revive a slimmed down version of the ‘Build Back Better Act’ that Manchin had rejected in December 2021. Perhaps most surprisingly, the revived deal includes climate change expenditures and tax increases that Manchin had claimed he had ruled out earlier this month following months of negotiations between him and Schumer. Any revised deal had been expected only to include an extension of Obamacare health care plan subsidies and a drug pricing negotiation package aimed at reducing the cost of prescription drugs.

The deal now includes a minimum tax rate on corporations of 15% of their book profit, preventing them from using depreciation expenses to reduce their tax rate below 15%. It also eliminates the carried interest loophole.

Perhaps the most controversial part of the bill is the $80 billion given to the IRS over the next 10 years, the bulk of which will be used for increased audits in an attempt to raise revenue for the federal government. Proponents of the plan, such as Sen. Ron Wyden (D-OR), claim the increased audits will catch high income tax cheats and will pay for themself. Opponents, including most Republicans, claims the IRS will target ordinary taxpayers to raise the revenue, especially the self-employed. The bill’s language does not currently limit the IRS’s increased enforcement budget to only audits on high income/high net worth individuals or corporations.

This plan will need the support of all 50 Democratic senators to pass the Senate. Moderate Democrat Kyrsten Sinema of Arizona has not yet announced her position.

 

Kentucky Floods Kill at Least 26

Heavy rains in Kentucky this past week caused massive flooding that has claimed the lives of at least 26 people, according to Kentucky Governor Andy Beshear (D). As many as 37 remain unaccounted for as rescuers attempt to access affected areas, efforts that have been hampered by damage to roads and bridges.

A dozen shelters were opened for flood victims, with least 388 residents taking refuge there Sunday.

The flooding has swept homes off their foundations and sweeping debris for hundreds of yards.

More rain is expected for many of the affected areas in Kentucky, further threatening residents already struggling to recover.

Map showing rainfall totals in Kentucky from 7/25

through 7/29. The heaviest rainfall totals, in red, were 

in eastern Kentucky.

US Enters Recession after Two Consecutive Quarters of Negative GDP Growth

The US economy officially entered recession in the second quarter of 2022, after official estimates showed the GDP, a measure of total economic output, declining at 0.9% rate in Q2. It follows a decline of 1.6% in the first quarter of the year.

The Biden administration downplayed the decline and refused to say that the US was in recession, touting the low unemployment rate (3.6%) and strong consumer spending. While two consecutive quarters of economic decline is the typical definition of a recession, the National Bureau of Economic Research also makes their own call whether the US economy is in recession.