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Robert Borosage

By Robert L. Borosage
Co-Director Campaign for America’s Future

Even as the health insurance companies draw down on health care reform, another showdown is just beginning in Washington. On Wednesday, the House Financial Services Committee will begin marking up the first legislation to try to curb Wall Street’s casino. And if you think the health insurance companies are packing heat, wait till you see the firepower the banks will unleash to frustrate reform.

The Committee will focus on two core reform measures. The first, the regulation of derivatives, goes to the heart of the current collapse. Derivatives are the exotic instruments that Warren Buffett warned were “weapons of financial mass destruction.” Derivatives have been traded with little regulation, over the counter, in private deals. This allowed companies like AIG essentially to open a casino on top of an insurance company, and take bets without the prudence required of a Las Vegas bookie. When AIG went belly up and threatened to bring down the entire financial house of cards, taxpayers ended up with a bill totaling over $180 billion and counting.

The reforms call for standardizing derivatives, trading them on a public exchange, with transparency, so prices can be compared and holdings regulated. Common sense, one would think. (for a good summary, see the estimable Harold Meyerson’s piece)

But the five largest American banks — in rough order of declining solvency: Goldman Sachs, Morgan Stanley, JP Morgan Chase, Bank of America and Citigroup — hold fully 95% of derivatives — with a notional value of over $290 trillion. In the first six months of the year, they made about $15 billion trading in these things. Not surprisingly, they have leveled their guns at the very notion of a public exchange. They enlisted companies that use derivatives to hedge against foreign exchange risks and the like, arguing that the reforms would raise costs all around. They have largely succeeded in the congressional cloakrooms.

So the bill that the House will consider on Wednesday creates a clearinghouse, not a publicly managed exchange. It also allows banks to decide that a deal is so unique that it needn’t be posted on the clearinghouse. The best experts in the field — like Michael Greenberger of the University of Maryland — warn that the legislation might end up WEAKENING current law. That is no small achievement, because, as we saw in the collapse of AIG, current law is toothless.

The second basic reform to be considered is a Consumer Protection Finance Agency to protect consumers from getting gouged or defrauded by lenders on the whole range of consumer loans — mortgages, car loans, payday lending, credit cards. The regulators who currently have some police power failed to use it before the crash — as exemplified by the systematic fraud practiced in peddling complex subprime mortgages to people who could not hope to pay them back. And after claiming to be born again cops on the beat, the same regulators have failed to do much since the crash — as exemplified by the record fees banks are exacting from depositors, or by hiking interest rates on credit card holders. The reasons for their failure are both ideological — the abiding conservative belief that markets are self-regulating and regulation is costly, and institutional — the regulators’ first duty is to insure the health of the banks. If the banks are getting healthy by gouging their customers, the regulators turn their heads.

So the CPFA is designed to create an independent cop on the beat to protect consumers and police the banks and credit card companies. Needless to say, the banks don’t like this idea. Already they’ve succeeded in delaying and diluting the administration’s proposal. The current draft strips out the mandate that banks offer customers “plain vanilla” alternatives — a clean 30 year, fixed rate mortgage, for example, when peddling exotic ARMS with balloon payments. Worse, it now suggests vesting enforcement power in a council of the very same regulators that have failed so miserably in the past and present.

But that’s not all. The banking lobby is nothing if not shameless. They hope to use the reforms to WEAKEN current law. They are pushing to make the federal standard the ceiling on reform, stripping the power of states to have higher standards. Basically, they are hoping to find a way to shut down the independent investigations of state attorneys general like New York’s Eliot Spitzer and Andrew Cuomo or Illinois’ Lisa Madigan. (for a good summary of this see Dave Johnson’s blog here)

How do the banks fend off needed reform? Follow the money. A recent report by Paul Blumenthal of the Sunlight Foundation shows that the 27 members of the House Financial Services Committee have received over one-fourth of their contributions from the FIRE (Finance, insurance and real estate sector). Ranking Republican Spencer Baucus from Alabama opposes the CFPA, arguing that we don’t need “more regulation,” we just need “smart regulation.” He received a staggering 71% of his contributions from the finance sector over the first six months of this year (and 45% of his total contributions over his career). Democrat Melissa Bean who leads the effort to gut state regulatory authority over the banks has received fully 42% of her contributions for the first six months from the banking sector. Not surprisingly, the champions of reform like Rep. Alan Grayson, Maxine Waters, Keith Ellison, Adam Putman, and Carolyn McCarthy all pull in the lowest percentage from the sector.

Historically, the banks, as Senator Dick Durbin decried in disgust, “own the place.” And they’ve succeeded thus far in frustrating reform, even while pocketing literally hundreds of billions in support from taxpayers.

Terrific documentation made available by researchers at the Service Employees International Union (SEIU) provides the details. Citigroup received about $341 billion from taxpayers in the bailout, and dispensed $4.9 million for lobbyists in the nine months after the bailout and $5.6 million in campaign contributions in 2008. (Talk about return on investment). Bank of America got $199 billion from the bailout and paid lobbyists $3.6 million in the nine months thereafter, while making campaign contributions of $7.2 million in 2008. Goldman Sachs pocketed a nifty $63.6 billion in bailout fund while setting aside $11.4 billion for bonuses and compensation for the first six months of 2009. (Lobbying fees $1.8 million; 2008 campaign contributions $7.1 million)

But this time it could be different. Backroom deals are no longer safe. Americans have been fleeced of trillions in the value of their homes and their savings because of Wall Street’s reckless excesses. Then as taxpayers, they were extorted to ante up literally trillions more to forestall economic collapse by bailing out the banking sector. Insult was added to that injury when the Federal Reserve refused to tell the Congress who got the money and on what terms.

Legislators would be well advised to understand the cozy old ways of doing business are no longer acceptable. Americans are livid and paying attention. Legislators who rely on Wall Street to finance their campaigns and then lead the effort to block or dilute reforms will discover that their constituents know what they have been up to. Organizations like my own Campaign for America’s Future, the Sunlight Foundation, Americans for Financial Reform, Huffington Post bloggers will make certain the word gets out. Legislators may discover that Wall Street’s money is a burden, not a blessing.

The House committee’s markup is the beginning of a long process that will make health care reform look like a summer’s picnic. Legislators will have to decide what side they are on. It is up to us to make certain that they understand we will hold them accountable for the choice they make.

Dean Baker

By Dean Baker
Co-Director, Center for Economic and Policy Research

The elites hate to acknowledge it, but when large numbers of ordinary people are moved to action, it changes the narrow political world where the elites call the shots. Inside accounts reveal the extent to which Johnson and Nixon’s conduct of the Vietnam War was constrained by the huge anti-war movement. It was the civil rights movement, not compelling arguments, that convinced members of Congress to end legal racial discrimination. More recently, the townhall meetings, dominated by people opposed to health care reform, have been a serious roadblock for those pushing reform.

Those disgusted by the bank bailouts, and the bankers who brought us this recession, will have a chance to make their views known when the American Bankers Association has its annual meeting in Chicago, October 25-27. A large coalition of labor, community, and consumer organizations are organizing a protest at this “Showdown in Chicago”

A big turnout at this event can make a real difference. Just to review the scorecard, most of the country is still suffering the fallout from the bankers’ irrational exuberance of the housing bubble era. The Congressional Budget Office (CBO) and other forecasters expect the suffering to endure for years to come.

The unemployment rate is about to cross 10 percent, with an additional 9 million workers only able to find part-time work. CBO projects that unemployment will not return to normal levels until 2014. Almost 200,000 people are losing their homes every month through foreclosure. Tens of millions of people who had expected a comfortable retirement just saw most of their wealth disappear with the collapse of the housing bubble. State and local governments are being forced to lay off school teachers and fire fighters under the pressure of enormous budget deficits.

But not everyone is suffering. Thanks to the bailout programs put in place last fall, most of the country’s major banks are back on their feet. In fact, in the most recent quarter, bank profits hit a new record high as a share of all corporate profits.

And the banks are sharing their wealth. Many of their top executives and high performers will be getting bonuses this year worth millions of dollars, in some cases the bonuses will be in the tens of millions.

In the meantime, in elite Washington circles people are busy making plans for a national sales tax so that the government can limit the fiscal damage caused by the bankers’ recession. A sales tax is of course very regressive since low and moderate-income people typically spend the vast majority of their income, while our banker friends will more likely to be able to save some of their income or spend it in other countries where they will not be paying this new sales tax.

To summarize: the bankers wrecked the economy with their greed, ran off with taxpayer dollars in a massive bailout, and now plan to raise taxes for the rest of us. If that picture doesn’t sound quite right, then go to Chicago.

This is a case where the divisions are not left-right, but of the elite against everyone else. When Congress was debating the TARP bank bailout last fall, members of Congress were hearing calls from people across the political spectrum who were outraged that their tax dollars were going to the banks that had wrecked the economy. A higher percentage of Republicans than Democrats ended up voting against this bankers’ piñata.

The policies that will rein in the banks: reform of the Federal Reserve Board to make it democratically accountable, a tax on financial speculation to pay for the bankers’ mess, and restrictions on the bank abuses of consumers that caused the carnage have support from people on both the left and right.

A bill that would require the Fed to disclose what it did with more than $2 trillion in loans to banks and other financial institutions was originally co-sponsored by Ron Paul and Alan Grayson, one of the most conservative and one of the most progressive members of Congress. Due to public pressure, it now has more than 270 co-sponsors.

This is exactly the sort of alliance that gets the elite worried. Reining in the power of the financial industry will be a long hard fought war, but it is one that must be fought. President and Nobel peace prize winner Barack Obama may not have been able to bring the Olympics to Chicago, but everyone who wants to retake our country from the banks can bring their backside there on October 25th.

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 Dean Baker is the author of the new book, “Plunder and Blunder: The Rise and Fall of the Bubble Economy.” 

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This piece was first published on Huffington Post.

I can’t tell what’s more outrageous and disgusting: The fact that lobbyists have been permitted to serve on the federal advisory boards that oversee policies affecting their clients, the fact that that has been occurring with almost no Establishment outcry for years, or the fact that lobbyists have the sheer audacity to publicly scream at the Obama administration for trying to end this form of institutionalized corruption.

That latter point is, of course, the good news announced on the White House’s website on September 23rd:

We wanted to take this opportunity to announce the next step in the President’s efforts to reduce the influence of special interests in Washington. The White House has informed executive agencies and departments that it is our aspiration that federally-registered lobbyists not be appointed to agency advisory boards and commissions. These appointees to boards and commissions, which are made by agencies and not the President, advise the federal government on a variety of policy areas.

The administration had previously been criticized – rightly, IMHO – for issuing a series of waivers on its much-touted lobbyist/ethics reforms. So this move is a welcome change in direction that suggests the White House is getting (at least a tiny a bit) more serious about rooting out some of the worst corruption in the government.

Then again, the reaction on K Street to even this minimal clean-government step shows just how institutionalized that corruption is. Though, as OMB Watch notes, there will still be many ways for corporate interests to get around this latest directive, those interests are nonetheless going crazy.

Over here and here you have corporate trade associations freaking out. Over there you have the American League of Lobbyists screaming bloody murder. And at U.S. Trade Representative Ron Kirk’s press conference last week, he was barraged with questions about how he could dare try to remove lobbyists from the major federal advisory boards that have shaped our destructive “free” trade policies.

Kirk answered the question judiciously, saying that while “There is a role for representatives and lobbyists in the development of the policymaking process, the president felt that that role in Washington had been enlarged to perhaps an unhealthy degree.”

That’s an understatement, if there ever was one. On trade policy alone, CongressDaily estimates that of the 700 representatives serving on government advisory panels, about one third are registered lobbyists.

To be sure, some might say that hey, it’s not a big deal for lobbyists to serve on advisory panels, because those panels are only “advisory.” But that label is deliberately deceptive.

These panels issue very influential reports and edicts with the stamp, seal and credibility of the federal government. These are documents that begin the long process of policy formation and that, for example, congresspeople hold up in floor debates as proof that they are doing the right thing. And so the reason why corporate lobbyists are going crazy about being barred from these advisory panels is because they know that those panels – despite their “advisory” billing – are extremely powerful in corrupting policy at its very origin. Remove the lobbyists from these positions, and you begin removing the spores that ultimately germinate into stuff like NAFTA, the Medicare prescription drug giveaway, corporate tax loopholes, etc.

To that end, I expect this story isn’t over by a long shot. The anger about this modest proposal is so intense on K Street, you may see the administration back off. I sure hope not – and I give the White House a lot of credit for moving forward knowing full well this would be the reaction.

But that gets back to the original point of this post: just how deeply rooted corruption really is in Washington. It has become such a part of Beltway culture that lobbyists now feel fully entitled to be able to corrupt public policy with the seal of the government – they expect it so much, in fact, that they spaz out whenever anyone tries to stop it.

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David Sirota is the bestselling author of the books “Hostile Takeover” (2006) and “The Uprising” (2008). Find his blog at OpenLeft.com or e-mail him at ds@davidsirota.com

Gilbert B. Kaplan

 By Gilbert B. Kaplan
Former Deputy Assistant and Acting Assistant Secretary of the U. S. Department of Commerce

If you were going to start a trade war against the United States, it is unlikely that your first salvo would be on chicken parts, or as the Chinese rather charmingly first announced, on dorkings. A dorking is a five toed chicken that flourishes in Surrey, England. The normal chicken has four toes. If you have not heard of dorkings before, you are not the only one.

But this is where the Chinese government focused their retaliation earlier this week, in response to President Obama’s decision to impose duties on Chinese tires. To step back, on September 11, President Obama took one of the best and strongest decisions that has been made on trade issues in this town for a long time, imposing duties ranging up to 35% on surging imports of tires from China. In so doing, he overturned eight years of precedent established by his predecessor who had declined to enforce a trade statute called Section 421. Section 421 is a trade statute China agreed to as a condition to becoming a member of the WTO; and it is designed to deal with low cost imports from China that surged into the U. S. after they joined.

It is a trade remedy that makes good sense. As a benefit to China when they joined the WTO, U.S. duties on goods coming in from China were lowered permanently across the board, generally to a zero rate. But China agreed, in turn, that up until 2013 we could impose short term duties to off-set import surges that might result from this change, when the surges harmed our industries and workers during the break-in phase. Since that time, industry after industry in the U. S. has faced these import surges, but it was not until now that the U. S. acted.

The reaction from the Wall Street Journal, George Will, David Rockefeller writing in the New York Times, and many other supporters of the status quo was to declare the beginning of war and the end of trade as we know it. And to bemoan the beginning of protectionism. And finally, to invoke the memory of the Smoot-Hawley tariff and usher in the beginning of the second great depression.

There will be no trade war. For the Chinese to declare a trade war on the United States in retaliation for the U. S. actions would be roughly like Wal-Mart declaring a trade war on the American consumer or Walt Disney declaring a trade war on America’s children. The United States is the best friend economically China has. It is basically China’s free lunch. We have thrown open our enormous market–still the largest in the world by far–to Chinese imports and run a sustained trade deficit with China of over $100 billion a year since they joined the WTO. Our deficit with China is now over $250 billion per year. We lowered out tariffs to zero and admitted China to the WTO because we believe in free trade, but this was not something the United States had to do. We could have blocked their entry. So the prospect of China wanting to strike back on something beyond dorkings that would really hurt our economy is nil. Though they have threatened action on auto parts as well, this has not yet materialized and even the value of our auto part imports into China is small.

Nor can President Obama’s action be called protectionist. China agreed in its Accession Protocol with the rest of the WTO members and the United States that such short term safeguard measures could be applied against them. Just as their enormous trade access to our market is a result of the WTO agreement, so is the short term adjustment action President Obama took. The duties will only remain in effect for three years. This is exactly the kind of case this remedy was designed for. Passenger tire imports from China did indeed surge during the period of review, 2004-2008, increasing by well over 200%, and causing over 9,000 U. S. job losses through this year, and the closing or idling of many U. S. production plants. And to say that the application of this 421 remedy has been overzealous by the United States borders on the absurd. Only six other cases have even been filed under the statute. Of these, the International Trade Commission, a bi-partisan independent agency, has found injury in four others, but in none of those has the President ever imposed a remedy. This is the first in eight years.

And as to the dire warnings of the onset of the next great depression, the economic evidence all goes in exactly the opposite direction. We have lost millions of manufacturing jobs since 2001 in this country. If we do not take action to brace up the manufacturing sector and allow more reasonable adjustments to globalization, it will be this failure that will prolong and deepen the recession we are already in. Yesterday’s job numbers, showing a continuing increase in the unemployment rate to 9.8%, the highest level since 1983, demonstrate that.

The fundamental point is that many people in this country, including those represented by the commentators mentioned above and those wailing about the horrors of the tire tariffs are making an enormous amount of money by moving jobs to China, building factories there financed by Chinese government largess in the form of subsidies, and avoiding the environmental, health care, and corporate tax costs they would have to pay here. So they stand up against even the most measured trade actions, meant to help the American worker and manufacturer.

No, there will be no trade war. It’s just too hard to imagine the war cry, “Let the Dorking Wars Begin!”

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 Mr. Kaplan is the Former Deputy Assistant and Acting Assistant Secretary of the U. S. Department of Commerce and he is currently a partner in the international trade firm of King & Spalding in Washington, D. C. He filed the first successful anti-subsidy case by any U. S. industry against China, which led to large anti-subsidy duties on imports of Chinese pipe into the United States in 2008. Mr. Kaplan can be contacted at gkaplan@kslaw.com.

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This piece was first published on The Huffington Post

Robert Borosage

By Robert L. Borosage
Co-Director Campaign for America’s Future

Glenn Beck has captured national attention with his caustic poison. The aging right-wing troubadours — Rush Limbaugh and Bill O’Reilly — still rouse the wingnuts and enforce discipline among Republican legislators. They’ve peddled the fantasies about ACORN and the all-powerful poverty lobby, and launched a search-and-destroy hunt for targets of opportunity in the Obama administration. Progressives have sensibly organized to question Beck’s advertisers, and even the president has called him out.

But it is worth remembering — Glenn Beck is not blocking the passage of a good health care bill. The old and new carny acts of the right aren’t undermining the energy legislation or frustrating financial reform. To focus on who and what is standing in the way — follow the money.

On health care, the lockstep opposition of Republicans in Congress is deplorable, but Republicans don’t have the votes to block progress. The president is forced to negotiate with Democrats who have 60 votes in the Senate and a large majority in the House and could pass a good bill tomorrow if they unified.

The angry tea bag activists shouting slogans in town meetings in August provided drama, but the true opposition is writing checks, not waiving signs. They are wearing pin stripes, not jeans and t-shirts. They represent wealthy insurance company CEOs, not angry workers or small business owners.

The Washington media likes to paint the divisions as ideological. Republicans and Blue Dog Democrats are said to be opposed to “big government,” cautious about spending, more concerned about deficits, reflecting more conservative districts and voters. Sure, there are ideological differences between the parties. And legislators do cater to the major interests in their districts. And no doubt, the Democratic Party is a big tent, with a broad range of political opinion.

But the president didn’t cut a deal with Big Pharma to sustain the ban that prohibits Medicare from negotiating lower prices on drugs because of ideology or a policy debate. He did it to neutralize one of the powerful lobbies standing in the way of reform. The deals with utilities and coal companies in the energy bill aren’t about ideology; they are about special interests and political clout. Republicans don’t mind government spending when pouring hundreds of millions into subsidizing insurance companies to compete with Medicare. Blue Dogs aren’t worried about costs when they oppose a public option that would help keep insurance companies honest.

The re-born McCarthy like conspiratorial fantasies of Glenn Beck should not go unanswered. His effort to discredit the administration by searching for appointees to target should be resisted and scorned.

But everyone should be clear. The president has called on the Congress to act on fundamental reforms that cannot be avoided. Our broken health care system is unaffordable and must be fixed. Moving to new energy is a national security, economic and environmental imperative, not a choice. Fundamental financial reform is necessary if we are to avoid a worse crisis in the near future.

Glenn Beck and Rush Limbaugh and the Republicans in Congress oppose these reforms. They want, as Limbaugh proclaimed, the president to fail. But they aren’t the major roadblocks to the change we need. What stands in the way is the organized power of the entrenched lobbies that have a direct stake in limiting change, and are willing to spend hundreds of millions to obstruct it. Their legions are less angry citizens, than sophisticated lobbyists, increasingly Democrats, many of them retired legislators. They deliver campaign contributions, not votes. They threaten negative campaign ads, not authentic citizen uprisings.

With literally billions at stake, progressives will never be able to match the money of the industries fighting off change. Our only chance is to make their money toxic — to expose the contributions, the lobbyists, the inside deals — and to make legislators understand the president was right when he said we can’t let the permanent lobbies define what is possible in the nation’s capital.

The struggle over health care reform is now reaching its climax. The backroom struggle over energy and financial reform is already fierce. It is time for Democrats to unite to get these done. It is time for the two or three Senate Republicans with any iota of independence to put country over party and be part of the solution. But most of all, it is time for us to follow the money, to track the contributions, expose the lobbyists, and challenge the legislators in both parties who hope to benefit by serving special interests rather than representing their constituents.

Check out opensecrets.org, where the Center for Responsive Politics tracks contributions. Take a look at their study with the Sunlight Foundation on the lobbyists undermining health care reform. Get angry, not cynical. Let your legislators hear from you — and join with your neighbors to demand that they represent you and not the interests that are writing campaign checks. The president has called on the Congress to deal with fundamental national challenges that can not be ignored (although his predecessors were happy to do so). We’ll not have a better chance to get vital reforms done. But to succeed, legislators in both parties will have to learn that voters aren’t going to put up with the cozy beltway business as usual.

Leo W. Gerard

 By Leo W. Gerard
International President

In the title tune to the 1934 musical “Anything Goes,” Cole Porter says “times have changed,” since the stock market crashed in 1929, but the super rich, like John D. Rockefeller Jr., “still can hoard enough money to let Max Gordon produce his shows.”

The lyrics also tease FDR because Eleanor advertised a mattress from a venerable company:  “Missus R., with all her trimmin’s, can broadcast a bed from Simmons, ‘cause Franklin knows, Anything Goes.”

That 133-year-old company, which employs members of my union, the United Steelworkers (USW), will file for bankruptcy soon. Then it will be auctioned to yet another private equity firm – the seventh such sale in little more than 20 years.

Repeatedly, new owners stuck their greedy hands under the mattress and pulled out money. Each time, that hurt the company and the workers. The firm is $1.3 billion in debt now – eight times what it was when the private equity companies started passing Simmons around like a cheap date. And a quarter of its workforce – 1,000 people – is laid off.

This is Anything Goes capitalism. It destroys companies. And it destroys workers’ lives. But it sure does work for the private equity firms. They made around $750 million in profits from the now-indebted and bankrupt Simmons.

It’s time to flip the mattress on that failed economic philosophy. Time to end the days of Anything Goes, just like FDR did. Time to regulate private equity before it ruins more American manufacturing.

Too often private equity firms buy manufacturers, borrow against their assets, pull out that money as “dividends,” and run off without regard to the future of the company or its workers. It’s smoking instant cash gratification in a crack pipe. Here is how Robert Hellyer, a former Simmons president who worked under several of the private equity buyers, explained it to the New York Times, “From my experience, none of the private equity firms were building a brand for the future. . .Plus, the mind-set was, since the money was practically free, why not leverage the company to the maximum?”

It’s morally wrong. It’s economically wrong. It’s gotta stop.

Bankrupting viable companies – the way the private equity firms did Simmons – for the profit of a few and the pain of the most should be banned.  The New York Times, writing about the Simmons case, noted:

“A disproportionate number of the companies that were acquired during that frenzy are now struggling with the enormous debts. More than half the roughly 220 companies that have defaulted on their debt in some form this year were either owned at one time or are still controlled by private equity firms, according to analysts at Standard & Poor’s.”

The current owners of Simmons, the ones who put the company even further into debt, Thomas H. Lee Partners of Boston, will leave the mattress firm mired in bankruptcy while walking away about $77 million richer. Clearly, Anything Goes for them. All profit; no consequences.

Not so for Simmons bond holders, who stand to lose more than $575 million in the bankruptcy; the workers, who confront losing their livelihoods, and the company itself as it struggles to survive under an extraordinary debt burden. 

Scott A. Schoen, Simmons co-president, whined to the New York Times that the mattress downturn was “unprecedented and unforeseeable.”

On the other hand, as the Times noted of the private equity takeovers, “Many of these deals, cut in good times, left little or no margin for error – let alone for the Great Recession.”  Maybe Mr. Schoen could have shown a better business plan.

Then, again, it wasn’t about business planning. It was all about raiding the company for its assets and shipping out, like a Viking invader.

Before the likes of Thomas H. Lee and partners showed up on the scene, Noble Rogers, 50, worked happily for Simmons, mostly at the Mapleton, Ga., plant. President of the USW local, he loved Simmons because the company cared for its workers, providing a pension, and when workers retired, giving them a bonus of $20 for each year and a mattress set.

“There were picnics, March of Dimes walks, Christmas parties, and we always had Halloween parties. It was really a family-oriented company,” Rogers told the New York Times.

Then in 2003 came Thomas H. Lee Partners of Boston, the latest private equity firm extracting more money from Simmons.

In the spring of 2008, Simmons laid off the entire night shift of Rogers’ plant. A few months later, on Sept. 18, Simmons officials announced they were closing the factory altogether. 

Rogers negotiated with Simmons for the traditional gift of $20 for each year worked and the mattress set for those eligible for retirement. Simmons rebuffed him. But then, that was to be expected. Simmons – under Thomas H. Lee – had stopped the parties and picnics.

The USW has worked with legitimate private equity firms that bought struggling manufacturers, set them on a path to profitability, and moved on to the next money-making acquisition.

That is completely different from buying a company to function as nothing more than a leach, engorging on its assets until huge debts are amassed, then carelessly disengaging to snare a hapless new victim.

Anything Goes capitalism is something that must go.

Kim Bobo

By Kim Bobo
Founder and Executive Director of Interfaith Worker Justice

It’s a good thing Moses, the Old Testament’s most powerful advocate for oppressed workers, didn’t have to be confirmed by the US Senate. He would have faced a lot of opposition.

This Wednesday, October 7, the Senate Health, Education, Labor, and Pension (HELP) Committee will finally vote on the Obama administration’s labor department nominations of M. Patricia Smith for Solicitor of Labor (the senior attorney for the Department) and Lorelei Boylan for Wage and Hour Administrator. They were both nominated in the spring, and Smith’s confirmation hearing was held in May, a full five months ago. As important as Secretary of Labor Hilda Solis is in setting the tone and direction for the Department of Labor (DOL), the real nuts-and-bolts work of reinvigorating the department’s enforcement efforts around wage theft will be accomplished by these two critical positions.

The nation is facing a wage theft crime wave. Six weeks ago, the findings of the largest survey of low-wage workers ever conducted were released. “Broken Laws, Unprotected Workers” revealed that 26 percent of the low-wage workers surveyed were not paid the minimum wag,e and 76 percent of those who worked overtime were not paid time and a half—blatant violations of the law.

What we’ve been doing as a nation to protect low-wage workers from workplace robbery is clearly not working. President Obama could not have chosen two finer public servants to reinvigorate and lead the nation’s agency charged with protecting low-wage workers against unscrupulous employers. As the Commissioner of the New York State Department of Labor, Patricia Smith oversaw the development of the nation’s most effective and creative enforcement mechanisms; programs that have recovered wages for workers, recovered taxes for the State of New York, reached millions more workers about the programs and resources offered by the Department of Labor, and debarred companies that steal wages from public contracts. And Lorelei Boylan worked with Smith at the New York Department of Labor as the director of strategic enforcement, leading investigations of unscrupulous employers.

Smith and Boylan are not only dedicated public servants, but have done exemplary work defending the rights of workers; like Moses, they want the abuse of low-wage workers to stop, and they have tried some new approaches to getting unscrupulous employers to change their behavior. Their creative—and effective—approaches to wage theft have raised the ire of right-wing business forces who call the groundbreaking community partnerships forged by the New York State DOL “vigilante justice.”

Like any visionaries, Smith and Boylan know that new approaches are required. If the critics don’t like community partnerships modeled on neighborhood crime watch programs and community policing, what would they have said about the frogs, gnats, boils, hail, and locusts that Moses and Aaron delivered? No question about it: Moses would not have been confirmed.

As for Smith and Boylan, we’ve waited since the spring for their confirmation. The Senate should confirm them immediately so they can get to work freeing the nation’s workers from wage theft.

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Kim Bobo is the author of Wage Theft in America: Why Millions of Working Americans Are Not Getting Paid—And What We Can Do About It, Organizing for Social Change,  and Lives Matter: A Handbook for Christian Organizing.

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This post appeared first on www.religiondispatches.org, and is republished with special permission

Robert Kuttner

Robert Kuttner
Co-Founder and Co-Editor of The American Prospect

If the unemployment numbers keep rising into 2010, the Republicans are primed to pick up dozens of seats in the House, crippling the Obama administration’s capacity to recoup in the second half of the president’s first term. Obama would lose his very tenuous working majority and would confront a situation very much like the one Bill Clinton faced after the Republican gains of 1994, when he worked even more closely with Republicans in order to save his own skin. If you liked triangulation Clinton-style, wait for Rahm Emanuel’s version of it.

The most recent employment numbers were bad enough on their face — 263,000 job losses in September, and a measured increase in payroll employment to 9.8 percent. But the real numbers are much worse. The nominal rate conceals the fact that the labor force is 615,000 workers smaller than it was a year ago, even though the working age population continues to grow. People who can’t find jobs and quit looking are no longer counted as part of the labor force. If normal labor force growth had continued, the unemployment rate would be close to 12 percent. See the analysis of the numbers by the good people at the >Economic Policy Institute and the estimable Dean Baker. The administration’s people know this reality, and they are aware of the political risks. So what are they doing? Precious little.

I had a conversation with a senior administration economic official last week and I asked him to suspend disbelief and consider a large increase in public spending to create more jobs. What would he spend the money on? We discussed the pro’s and con’s of emergency fiscal aid to the states versus a tax credit for job creation in the private sector, subsidized job-sharing, and direct public works employment. But it was clear that the administration considers a Stimulus II a non-starter. The view is shared by Fed Chairman Ben Bernanke, who testified last week that there was not much we could do about rising unemployment except wait it out.

This is economically deplorable and politically self-defeating. When the administration considered its $787 billion stimulus bill last winter, its projection was that unemployment would peak at 8.9 percent. It’s clear that joblessness is going to be a lot worse, and nobody has a convincing story about where the new jobs are going to come from once economic growth turns positive. Time magazine recently ran a cover story suggesting that we might just have to get used to a new reality of persistently high joblessness, and compensate with other policies such as more heroic job training (but for non-existent jobs?)

But that view is malarkey. Economists were making the same argument in 1938 and 1939. The economy, supposedly, had reached a level of maturity and technological sophistication that there just weren’t enough jobs. Unemployment was just stuck around 15 percent. Then along came World War II. The federal deficit rose to 29 percent of GDP (this year it will be about 11 percent) and unemployment disappeared.

The president should be making the case for increased deficit spending on job-creation in 2010 and 2011, followed by a program of deficit reduction financed by progressive taxation. Public opinion on these issues is not static, and in fact a recent poll done by Hart Research Associates for EPI shows that the public cares a lot more about joblessness than it does about the deficit. 53 percent of respondents said lack of jobs was the most important issue, but only 27 percent said the deficit was. Fully 83 percent sand that unemployment was a big problem, and just two percent said it was not a problem. Presidential leadership could make a huge difference in translating these attitudes into action.

The Blue Dog Democrats in Congress are opposed to larger deficits, but many of them would support a ten-year program of more public outlay now coupled with deficit reduction after recovery comes. Unfortunately, a lot of Washington’s centrist savants are skipping directly to the deficit reduction, overlooking the fact that we are still a long way from recovery. As EPI was holding a conference releasing the results of its research, the more moderate Center for American Progress (CAP) was holding a big event on alarm about the national debt. CAP President John Podesta, former director of the Obama transition team, is an enthusiast of value-added taxes as deficit-reduction medicine.

My own view is that VAT’s are highly regressive taxes on consumption. I could go along with them if they were part of a deal that included progressive taxes such as a tax on financial transactions and if some of the money went to expanding public services rather than just reducing deficits. But this is only half of the conversation, and the less urgent half. Unless we get a bigger recovery going, and get unemployment down well before the 2010 mid-term elections, all this center-left policy wonkery will be beside the point because the Republicans will be running the country.

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Robert Kuttner is co-editor of The American Prospect, a senior fellow at Demos, and author of Obama’s Challenge.

Leo W. Gerard

By Leo W. Gerard
USW International President

In an Oct. 1 editorial, the Los Angeles Times echoes the sentiment that the United Steelworkers union has been expressing for years – corporate supporters of paramilitaries in Colombia who murder trade unionists must be held criminally accountable. 

Specifically, the Los Angeles Times is applauding the order of a Colombian judge that top officials of the Alabama-based mining corporation, Drummond, be investigated as the intellectual authors of the brutal slayings of three union leaders in 2001. 

As the Los Angeles Times opines:

 “[i]t is troubling . . .  that when a defendant is convicted [in Colombia], it is generally a hit man or low-level thug and almost never the mastermind or shot-caller who ordered a labor leader’s murder.  That’s why it is significant that a judge in Colombia has asked the attorney general to launch a criminal investigation of top executives at Alabama-based Drummond Co., a multinational coal company.”

The Los Angeles Times explains:

 “[a]t issue is whether Drummond executives collaborated with the United Self-Defense Forces of Colombia (AUC in Spanish), a U.S.-designated terrorist organization, to murder union leaders organizing the Drummond coal mine in La Loma in 2001.”

This issue arises in the context of an epidemic of anti-union violence in Colombia unprecedented in the world.  As the Los Angeles Times notes:

 “Colombia is the most dangerous place in the world to be a union organizer. In the last 17 years, more than 2,700 teachers, farmworkers, coal miners and other laborers have paid with their lives for seeking rights that Americans have long taken for granted, such as safe working conditions. During that same period, there were more than 4,000 reported death threats against labor leaders, 350 disappearances and kidnappings, and 75 cases of torture.”

It is in light of this problem of anti-union violence that Colombia, and the U.S. as well, must vigorously prosecute corporations that have supported paramilitary groups which in turn have gone on to kill literally thousands of innocent civilians.  According to Colombia’s Attorney General, Mario Iguaran, the support which Chiquita Brands International admittedly gave to the AUC paramilitaries over a 7-year period (guns as well as $1.7 million), facilitated the AUC’s murder of about 4,000 civilians.   And, while Chiquita was indicted and pled guilty to this support of a designated terrorist organization, it was merely fined $25 million which it was allowed to pay over a five-year period.

Meanwhile, just as the Los Angeles Times says, “ex-paramilitary soldiers are naming top Drummond executives as having requisitioned and paid for two of the murders,” top ex-paramilitary commanders have also fingered other U.S. multi-nationals for supporting the AUC over the years.   Most notably, Salvatore Mancuso, a former top AUC paramilitary commander who is currently in U.S. custody on drug-trafficking charges, has claimed that Del Monte, Dole, and Drummond have all made regular payments to the AUC over the years.

While there have been a number of civil actions against U.S. multi-nationals for their role in supporting paramilitary atrocities in Colombia, the Los Angeles Times rightly points out that there:

 “is no substitute for a criminal investigation in Colombia. The perilous environment for workers there exists not only because of the violence they face but the historical impunity of their attackers.” 

The USW would further submit that there is no substitute for a criminal investigation by the U.S., which has the tools to effectively investigate and prosecute corporations on its own soil for the wrong-doing they committed in Colombia.  Both Colombia and the U.S. should carry out such investigations and prosecutions to put an end to impunity for corporations which bankroll the killing of labor leaders and innocent civilians.

Natasha Chart

Throughout last year, they were far more likely than other age groups to have reported unemployment in their households. Labor force participation for those ages 16-24 has decreased to its lowest levels since WWII as a Pew report on the graying work force notes that the recession has tilted the job market towards older workers and those with degrees.

Those college costs are usually financed instead by loans which are currently not eligible for bankruptcy protection. Loan repayment therefore eats up larger percentages of future earnings which have been plummeting for 8 years for those under 55. Bad timing for anyone who’s taken out student loans in recent years in the hopes that the job market would catch up to their education expenditures, and worse luck if their parents’ declining wages reduce the possibility for family assistance.

A third of adults under 27 also lack health coverage, with nearly half of those young adults earning less than $14,000 per year. Since wages for most people have been effectively stagnant, they have not kept pace with health coverage increases, and the lower you go down the economic ladder, the truer that is. Especially because there’s been an ongoing decline in employer-based coverage that has disproportionately affected low-income workers and the small businesses that create the most jobs.

For another worrying indicator, an AARP poll earlier this year indicated that around a quarter of adults 18 and over are living with parents or in-laws. Another 15 percent were worried they might have to do so soon, while one in seven lived with a sibling.

I don’t know about you, but the American Dream I was sold didn’t include worse buying power and relative wealth than my blue-collar, high school-educated parents for myself , my peers and those who came after me.

The United States’ lack of an industrial policy has been cherished for its ability to bring us ever cheaper consumer goods by steadily outsourcing manufacturing work to other countries. It’s been great for people who already had money, it’s destroyed opportunities for entry-level blue collar work that leads to a reasonable degree of financial security.

You can see the results in the balance sheets of young adults’ households and the narrowing of their prospects. They’re being pressured to take on the increasingly bad investment of the typical college education to go after a declining pool of jobs that provide dwindling levels of wage and health benefit compensation.

Maybe we don’t have to make all the same things we used to make, but our current and future workforce needs the upward pressure on wages and benefits that entry-level and longstanding manufacturing careers used to create. The United States can’t continue to support export-led growth elsewhere in the world if our upcoming workforce continues losing the ability to sell their labor in return for a reasonable standard of living. It stands to reason that if financial capital isn’t invested in the American workforce producing things that others want to buy, these trends will only continue as the US spends down the accumulated gains of previous productivity.

If Americans want a better future for their children, there needs to be a concerted effort to make more things in America.

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This piece was first published on the Campaign for America’s Future Blog