In this issue:

U.S. Unemployment Soars by 913,000 Workers During Past Three Months

U.S. Approves Direct Aid To Palestinian National Authority

Gen. Abizaid Grilled on Lack of Iraq WMDs

House Reviews U.S. Asia/Pacific Deployment

'Dead on the Fourth of July'

DLC Kansas Governor Brings in Expert from Rightwing Piggy-Bank To Plan Cuts

From Volume 2, Issue Number 27 of Electronic Intelligence Weekly, Published July 8, 2003

United States News Digest

U.S. Unemployment Soars by 913,000 Workers During Past Three Months

In June, official U.S. unemployment jumped to 9.358 million from 8.998 million in May, an increase of 360,000 unemployed, the U.S. Department of Labor's Bureau of Labor Statistics (BLS) reported July 3. In tandem, the official U.S. unemployment rate increased by 0.3% to 6.1% in June, the highest level since April 1994. EIR has demonstrated that real unemployment is twice what the BLS says it is.

Most professional economists, who had expected the June unemployment rate to be 6.1% or 6.2%, were shocked, and scrambled to explain why, despite all their predictions that the economic recovery is just around the corner--or is already happening--that unemployment keeps rising. One novel explanation came from Bill Cheney, chief economist for John Hancock Financial Services. Cheney told the July 4 Washington Post, "Many more people are looking for work because their confidence is returning," and they are now coming back into the labor force, after having been out so long. Cheney then got to the core of his sure-fire argument, "regardless of the reasons, there aren't enough jobs."

These figures confirm Lyndon LaRouche's assessment that the U.S. physical economy is in a downward spiral. Since June 2000, when the wave of unemployment started, 3.784 million workers have officially joined the ranks of the unemployed, and since January 2001, when George W. Bush took office, 3.402 million people have become unemployed. EIR will soon show that, in reality, over the past three years, 5 million workers have become unemployed.

For black workers, official unemployment leapt from 10.8% in May, to 11.8% in June. In reality, the real unemployment rate for blacks is at minimum 16%, and as much as 22%, with rates at 30% in some cities and towns.

In June, more than half of the 9.358 million unemployed had been looking for work for more than 12 weeks, the highest level since 1983.

Unemployment continues to strike at the manufacturing sector. During June, a further 56,000 manufacturing workers' jobs were eliminated, of which 48,000 were manufacturing production workers jobs. This is the 35th consecutive month in which manufacturing jobs have been axed. Since July 2000, there have been 2.623 million manufacturing jobs eliminated, of which 2.178 million were production manufacturing workers. This is the elimination of 15.1% of the U.S. manufacturing workforce, and 17.5% of its manufacturing production workforce.

EIR's preliminary investigation shows that the last time the U.S. had 35 straight months of manufacturing production worker loss was during the 1930s Depression.

U.S. Approves Direct Aid To Palestinian National Authority

The Bush Administration is reportedly extremely impressed with Palestinian Prime Minister Abu Mazen/Mahmoud Abbas, especially his success in organizing the three-month ceasefire among militant groups, including Hamas. This is significant, since the Israeli spin has been that the Bush Administration was not interested in the ceasefire. Abu Mazen's success has led to a formal invitation by Condoleezza Rice to Washington, to meet President Bush. Now it has led to an agreement by the U.S. to resume direct aid to the Palestinian National Authority, which had been suspended when the U.S. started a policy of ignoring Palestinian President Yasser Arafat.

The U.S. Agency for International Development will now transfer $30 million for rebuilding infrastructure in the West Bank and Gaza Strip.

With the funds earmarked for rapidly furthering the "Road Map" peace process, the Bush Administration is considering giving up to $300 million, initially, in aid to PNA security and military services. Palestinian security forces and infrastructure have been largely destroyed by the Sharon offensive of the past two years.

Gen. Abizaid Grilled on Lack of Iraq WMDs

Lt. General John Abizaid, nominated by President Bush to replace Gen. Tommy Franks as head of U.S. Central Command, admitted during his June 25 confirmation hearing in front of the Senate Arms Services Committee, that he did not understand why no chemical weapons have been found in Iraq. "It is perplexing to me," Abizaid said, "that we have not found weapons of mass destruction, when the evidence was so pervasive that it would exist." This, however, did not keep him from repeating the refrain that such weapons will be found eventually.

Under questioning from Sen. Jack Reed (D-R.I.), he also admitted that "I can't offer a reasonable explanation with regard to" Iraq's lack of use of such weapons. Reed noted that, because the evidence so far found is at such odds with the pre-war reporting, "we have to reevaluate whether or not intelligence was effectively gauging the intention, the capability or the will of that regime to use weapons of mass destruction, which is a critical question, I suspect, in the calculation to employ a military option."

Committee chairman John Warner (R-Va.), trying to salvage the situation, tried to suggest that maybe the speed of the campaign and the fact that it did not follow the pattern of the 1991 Gulf War, might have disrupted the movement of chemical artillery shells from depots to Iraqi units in the field. Abizaid replied that "I believe that if we had interrupted the movement of chemical weapons from the depots to the guns, that we would have found them in the depots. But, we've looked in the depots and they're not there."

House Reviews U.S. Asia/Pacific Deployment

A June 26 hearing of the House Asia and the Pacific Subcommittee took up the subject of announced, and unannounced, changes in U.S. force posture in South Korea and elsewhere in that region. Subcommittee chairman Jim Leach (R-Ia.) told the witnesses--Assistant Secretary of Defense for International Security Affairs Peter Rodman; U.S. Pacific Commander Adm. Thomas Fargo; and Christopher LeFleur, State Department special envoy for Northeast Asia security consultations--that "it strikes me that from a Congressional perspective, we should delegate to you in the Defense Department all of the niceties of how you think American forces should be structured; but when it comes to commitment that is political and involving both the purse as well as potential loss of life of the United States, we have to be careful about commitment, which is a public responsibility broader than simply the Department of Defense."

Rodman explained that, with respect to the recently announced force structure changes in South Korea, "What we're talking about is adapting our physical capability, and that's something that involves consultation with the Congress necessarily," rather than making any change in political commitment. LeFleur later explained that the reasons for repositioning U.S. troops south of Seoul were logistical, and to give them more maneuvering space away from populated areas.

'Dead on the Fourth of July'

Defense Secretary Donald Rumsfeld has angrily denied that Iraq is turning into a quagmire, but the toll of dead and wounded Americans is rising daily.

On July 5, a biting commentary by Patrick Cockburn reporting from Baghdad, in the London Independent is titled "Dead on the Fourth of July." After noting the increasing boldness of the guerrilla attacks on U.S. troops, Cockburn writes, "With Americans being killed in small numbers, Iraqis in larger numbers and Saddam Hussein's vow of defiance [in the form of an alleged tape-recorded speech calling for resistance to the U.S., which appeared this week--see MIDDLE EAST DIGEST], it is difficult to remember in Baghdad that in this war, combat is officially over. Somehow, despite all the triumphalism after the short war, the U.S. and Britain have failed to turn their military victory into a political victory." Cockburn wastes little time in identifying the reason for that situation. "Only 2 million out of 24 million ever supported" Saddam Hussein, a teacher in Basra told him, but they do blame America and Britain because, contrary to their high expectations, their lives have become materially worse since the fall of Baghdad.

DLC Kansas Governor Brings in Expert from Rightwing Piggy-Bank To Plan Cuts

Governor Kathleen Sibelius, a Democrat and darling of the Democratic Leadership Council (see LATEST FROM LAROUCHE for remarks on DLC as a Trojan Horse), has appointed an economist from Koch Industries to preside over the review of how to respond to the economic depression and budget crisis by slashing state services and raising taxes. Koch Industries, the largest privately held American oil company, is a major funder of conservative Revolution institutions and rightist Republican politics.

Koch economist Art Hall, now on loan to the state government, is expected to "question everything" in Kansas services and other spending.

This is not so shocking, even though the Koch funds aided Sibelius' Republican opponent. In fact, without public fanfare, Koch Industries has funded the DLC In October 2000, the DLC held a big fundraising event which Koch helped plan. Koch executive vice president Richard Fink and one other Koch officer attended and contributed heavily to the DLC. And Fink went on the board of the Progressive Policy Institute, the think tank of the DLC.

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