Lawrence Mishel

By Lawrence Mishel
President, Economic Policy Institute

Earlier this week I testified before Congressman Barney Frank’s committee on the need to do more — much more — to create jobs. The unfortunate but unavoidable fact, I told the Committee, is that the private sector won’t create jobs in sufficient numbers anytime soon to put a dent in the massive joblessness the country is experiencing.

Republicans on the Committee didn’t like what I had to say. They claim the Recovery Act hasn’t created any jobs (even though many of them have touted Recovery Act-funded projects in their districts which, they baldly announce, will create good jobs for their constituents). They argue that spending more on job creation would be throwing good money after bad.

They are totally wrong on both counts. As the independent Congressional Budget Office reported this week, the jobs crisis would be far worse without the Recovery Act. And additional properly targeted spending could create millions more jobs.

Still, there are many reasonable people — Republicans and Democrats — who are concerned that more spending on job creation will worsen our budget problems at a time when annual deficits already exceed a trillion dollars. I’d urge them to check out this Politico.com opinion piece which I just co-authored with David Walker. It makes the case that job creation is not inconsistent with deficit reduction — in fact, high deficits will be with us as long as high unemployment is.

Walker is the former U.S. Comptroller General and the President of the Peter G. Peterson Foundation, which focuses largely on long-term fiscal issues. He has been arguing for years that the U.S. is on an unsustainable fiscal path; as a result, he has built up a lot of credibility with deficit hawks. Walker and I come from different philosophical viewpoints; there’s probably a lot we don’t see eye-to-eye on. Yet in the piece, the two of us agree that “deficits will have to go even higher to help address unemployment.” Here’s what we wrote:

With more than a fifth of the work force expected to be unemployed or underemployed in 2010, there is an economic and a moral imperative to take action. Persistently high unemployment drives poverty up, makes it harder for families to find decent housing, increases family stress and, ultimately, harms children’s educational achievement. For young workers entering the workforce, the current jobs crisis reduces the amount they will earn over their lifetime.
In deep recessions, businesses tend to make fewer critical investments in research and development that can improve our economy’s productive capacity over the long term. Entrepreneurs usually find credit hard to obtain if they want to start a new business. These factors hurt U.S. global competitiveness and growth potential.

That’s why we agree that job creation must be a short-term priority. Job creation plans must be targeted so we can get the greatest return on investment. They must be timely, creating jobs this year and next. And they must be big enough to substantially fill the enormous jobs hole we’re in. They must also be temporary — affecting the deficit only in the next couple of years, without exacerbating our large and growing structural deficits in later years.

We also point out that the reason we have these enormous deficits is that we’re in a severe recession. This should be common sense. But often the deficit is talked about like it’s disconnected from what’s going in the economy. With fewer people working and paying taxes, government revenues take a nosedive, and bigger deficits are the result.

I’m not sure how to convince lawmakers that we need to do more to create jobs if they’re unwilling to see the reality that’s right in front of them — that is, that the Recovery Act worked. But for reality-based lawmakers with a genuine concern about the budget outlook, they should know that there is a way to come to agreement on the need to create jobs now and at the same time come up with a plan for addressing deficits that will persist even once the economy has recovered.

***

Lawrence Mishel has co-authored numerous books, including The State of Working America, Emerging Labor Market Institutions for the Twenty-First Century, The Charter School Dust-up: Examining the Evidence On Enrollment And Achievement, and The Teaching Penalty: Teacher Pay Losing Ground

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This piece was crossposted from Huffington Post

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For more information, please visit EPI.org.

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

“Yesterday, we took a step, a strong first step toward putting Americans back to work, but … it’s a first step. This is the beginning, not the end,” Senate Majority Leaded Harry Reid said, hailing the pending passage of a $15 billion jobs bill, as five Republican Senators, led by newly elected Massachusetts Senator Scott Brown, joined to break the reflexive Republican filibuster.

The Christian Science Monitor suggested Reid had discovered “the secret for moving legislation” — proceed in piecemeal fashion, focusing on measures that have broad popularity. Next up, a thirty day extension of unemployment insurance, and then a second jobs bill focused on “a tourism promotion bill, a series of measures to help small businesses, and a package of popular tax-credit extensions, including an extension of unemployment benefits.”

Is this the measure of bipartisan success — passing legislation that scarcely measures up to a gesture? Next, they’ll celebrate bipartisan cooperation in creating jobs by joining together to expand the presidential libraries of Bill Clinton and George Bush (well, maybe not).

Democrats are currently bedeviled. With control of the White House and both houses of Congress, they are expected to produce. And most Americans, the polls suggest, want the parties to work together to solve the country’s staggering problems. So every politician — left, right and center — pays at least rhetorical tribute to bipartisan cooperation. This week, Washington is awash in bipartisan treacle — from Evan Bayh’s parting complaints, to Thursday’s White House Showtime on health care.

But there is a small problem. We’re in the midst of a pitched battle about direction.
Republicans — reduced to an overwhelmingly conservative, largely Southern caucus — are more ideologically unified than ever, and wedded to tax cuts, domestic spending cuts, and deregulation. Now despite the recession, they proclaim a politically convenient reborn belief in balanced budgets. Their conservative base is aroused. They see the Obama program as a nefarious attempt to transform America into a “socialist” — read social democratic — country. Their natural congressional strategy has been one of obstruction: just say no to whatever Obama says, and use the filibuster and the hold and other arcane Senate rules that empower the minority to block progress.

This strategy is enforced by conservative activists and corporate lobbies. Thus, every Republican pre-presidential candidate appearing at the recent Conservative Political Action Conference celebrated the “Party of No” strategy against Obama, while arguing that bipartisan cooperation could take place only on their terms. Want a bipartisan dialogue on health care? Scrap the plans that passed the House and Senate and start over. Want a bipartisan dialogue on financial reform? Torpedo any hint of an independent agency to protect consumers. Want progress on energy? Drill, baby, drill.

This strategy has been surprisingly effective. After Scott Brown’s victory in Massachusetts, Republicans are salivating about big gains in the fall. They aren’t about to change strategy.

So what are Democrats to do? The latest gambit is to try bite sized legislation, defined largely on conservative terms. The $15 billion “jobs” bill is a perfect example. It won’t add much to the deficit and is composed almost entirely of corporate tax cuts.

It only suffers from one flaw. It can pass, but it won’t matter much. The US now has some 25 million people unemployed or underemployed. Long-term unemployment is at record levels. In urban areas, the level of unemployment among the young reaches towards one in two. States and localities are facing brutal fiscal crises that will require further layoffs of teachers, police, fire fighters and other state workers and contractors. Americans, reeling from the loss of $13 trillion in assets, are reducing debts and tightening their belts. Consumers and companies are paying down debt, not spending or investing. Banks are raking in record profits, but are cutting lending to the real economy. The first Recovery Plan staunched the collapse of the economy, but simply was not sufficient. In response, the House passed a $150 billion jobs bill in December. Obama sought a $250 billion package, largely for corporate tax cuts, infrastructure, and aid to the unemployed. Even that was probably inadequate to the task.

In comparison, the $15 billion “jobs” bill doesn’t merit the name. It consists primarily of tax breaks for businesses — waiving the employers’ payroll tax for a year for the hire of someone unemployed over 60 days. If the employee is kept on the payroll for a year, the company can earn a $1000 tax credit.

The CBO generously estimates this might create 250,000 jobs — not even a dent in the jobs shortage. But the real number is likely to be far less. Even in a recession, some employers are hiring while more are laying off folks. The tax credit will go almost entirely to reward employers who are hiring people that they would hire anyway. And the rest is likely to reward employers who game the system (close down a union plant in Michigan and open a non-union one in Mississippi and collect the tax credit along the way).

If this lands on the president’s desk, it will be celebrated as an example of bipartisan cooperation. Senate Majority Leader Harry Reid is committed to holding a series of votes on various bite-sized elements of a jobs program to see if he can gain the handful of Republican votes needed to get by the inevitable Republican filibuster.

But Reid’s strategy is likely to end up with both bad policy and bad politics. Bite sized bills on conservative terms won’t begin to address the challenges we face. They aren’t likely to be viewed as a success by Americans — who are far less interested in process than in results. Reid’s strategy may well succeed in letting Republicans look cooperative and Democrats look ineffective.

At the end of the day, Americans must be presented with the real choices we face. The crisis is too severe for the argument to be ducked. Democrats would be well advised to force votes on a real jobs program, a serious measure to curb the banks, comprehensive health care. Republicans will obstruct. Democrats should make them filibuster, expose the corporate interests that are behind them, and lay out their alternatives. Then move as much as possible by majority rule, and take the argument to the American people. Mobilize progressives rather than dismaying them. Americans deserve a choice. And Democrats are likely to fare better by making it a clear one.

***

Robert Borosage and Campaign for America’s Future Co-Director Roger Hickey are co-editors of the book, The Next Agenda: Blueprint for a New Progressive Movement.

Robert Borosage

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

“Yesterday, we took a step, a strong first step toward putting Americans back to work, but … it’s a first step. This is the beginning, not the end,” Senate Majority Leaded Harry Reid said, hailing the pending passage of a $15 billion jobs bill, as five Republican Senators, led by newly elected Massachusetts Senator Scott Brown, joined to break the reflexive Republican filibuster.

The Christian Science Monitor suggested Reid had discovered “the secret for moving legislation” — proceed in piecemeal fashion, focusing on measures that have broad popularity. Next up, a thirty day extension of unemployment insurance, and then a second jobs bill focused on “a tourism promotion bill, a series of measures to help small businesses, and a package of popular tax-credit extensions, including an extension of unemployment benefits.”

Is this the measure of bipartisan success — passing legislation that scarcely measures up to a gesture? Next, they’ll celebrate bipartisan cooperation in creating jobs by joining together to expand the presidential libraries of Bill Clinton and George Bush (well, maybe not).

Democrats are currently bedeviled. With control of the White House and both houses of Congress, they are expected to produce. And most Americans, the polls suggest, want the parties to work together to solve the country’s staggering problems. So every politician — left, right and center — pays at least rhetorical tribute to bipartisan cooperation. This week, Washington is awash in bipartisan treacle — from Evan Bayh’s parting complaints, to Thursday’s White House Showtime on health care.

But there is a small problem. We’re in the midst of a pitched battle about direction.
Republicans — reduced to an overwhelmingly conservative, largely Southern caucus — are more ideologically unified than ever, and wedded to tax cuts, domestic spending cuts, and deregulation. Now despite the recession, they proclaim a politically convenient reborn belief in balanced budgets. Their conservative base is aroused. They see the Obama program as a nefarious attempt to transform America into a “socialist” — read social democratic — country. Their natural congressional strategy has been one of obstruction: just say no to whatever Obama says, and use the filibuster and the hold and other arcane Senate rules that empower the minority to block progress.

This strategy is enforced by conservative activists and corporate lobbies. Thus, every Republican pre-presidential candidate appearing at the recent Conservative Political Action Conference celebrated the “Party of No” strategy against Obama, while arguing that bipartisan cooperation could take place only on their terms. Want a bipartisan dialogue on health care? Scrap the plans that passed the House and Senate and start over. Want a bipartisan dialogue on financial reform? Torpedo any hint of an independent agency to protect consumers. Want progress on energy? Drill, baby, drill.

This strategy has been surprisingly effective. After Scott Brown’s victory in Massachusetts, Republicans are salivating about big gains in the fall. They aren’t about to change strategy.

So what are Democrats to do? The latest gambit is to try bite sized legislation, defined largely on conservative terms. The $15 billion “jobs” bill is a perfect example. It won’t add much to the deficit and is composed almost entirely of corporate tax cuts.

It only suffers from one flaw. It can pass, but it won’t matter much. The US now has some 25 million people unemployed or underemployed. Long-term unemployment is at record levels. In urban areas, the level of unemployment among the young reaches towards one in two. States and localities are facing brutal fiscal crises that will require further layoffs of teachers, police, fire fighters and other state workers and contractors. Americans, reeling from the loss of $13 trillion in assets, are reducing debts and tightening their belts. Consumers and companies are paying down debt, not spending or investing. Banks are raking in record profits, but are cutting lending to the real economy. The first Recovery Plan staunched the collapse of the economy, but simply was not sufficient. In response, the House passed a $150 billion jobs bill in December. Obama sought a $250 billion package, largely for corporate tax cuts, infrastructure, and aid to the unemployed. Even that was probably inadequate to the task.

In comparison, the $15 billion “jobs” bill doesn’t merit the name. It consists primarily of tax breaks for businesses — waiving the employers’ payroll tax for a year for the hire of someone unemployed over 60 days. If the employee is kept on the payroll for a year, the company can earn a $1000 tax credit.

The CBO generously estimates this might create 250,000 jobs — not even a dent in the jobs shortage. But the real number is likely to be far less. Even in a recession, some employers are hiring while more are laying off folks. The tax credit will go almost entirely to reward employers who are hiring people that they would hire anyway. And the rest is likely to reward employers who game the system (close down a union plant in Michigan and open a non-union one in Mississippi and collect the tax credit along the way).

If this lands on the president’s desk, it will be celebrated as an example of bipartisan cooperation. Senate Majority Leader Harry Reid is committed to holding a series of votes on various bite-sized elements of a jobs program to see if he can gain the handful of Republican votes needed to get by the inevitable Republican filibuster.

But Reid’s strategy is likely to end up with both bad policy and bad politics. Bite sized bills on conservative terms won’t begin to address the challenges we face. They aren’t likely to be viewed as a success by Americans — who are far less interested in process than in results. Reid’s strategy may well succeed in letting Republicans look cooperative and Democrats look ineffective.

At the end of the day, Americans must be presented with the real choices we face. The crisis is too severe for the argument to be ducked. Democrats would be well advised to force votes on a real jobs program, a serious measure to curb the banks, comprehensive health care. Republicans will obstruct. Democrats should make them filibuster, expose the corporate interests that are behind them, and lay out their alternatives. Then move as much as possible by majority rule, and take the argument to the American people. Mobilize progressives rather than dismaying them. Americans deserve a choice. And Democrats are likely to fare better by making it a clear one.

***

Robert Borosage and Campaign for America’s Future Co-Director Roger Hickey are co-editors of the book, The Next Agenda: Blueprint for a New Progressive Movement.

Les Leopold

By Les Leopold
Author, “The Looting of America”

“They are frequently led by political neophytes who prize independence and tell strikingly similar stories of having been awakened by the recession. Their families upended by lost jobs, foreclosed homes and depleted retirement funds, they said they wanted to know why it happened and whom to blame.” ~ David Barstow, “Tea Party Lights Fuse for Rebellion on Right”, New York Times

“All right, now, if all of this sounds like a government out of control, go back to the progressive movement. It is not what our founders of this country intended. One hundred years of this movement, and the government growing while our rights are shrinking. I’ve been saying now for awhile, and it really has clicked in my mind, um, that it is the progressive movement, it is the cancer that is inside both parties. It’s why you don’t feel like there is a choice. It’s why John McCain and Barack Obama, you’re going, ‘You gotta be kidding me, right?’” ~ Glenn Beck, Fox News

Senator Joseph McCarthy (R, WI) rode to power in the late 1940s by claiming the government was riddled with Communists bent on destroying our way of life. Many Americans, who indeed were worried about the Cold War and our nuclear-armed adversaries, found his fear-mongering credible. Institutions, large and small, purged themselves of anyone suspected of having been a member of the Communist Party or even having sympathized with it. It didn’t matter if the suspicions were based on anything real, and even if they were, if the dalliance had happened twenty years earlier.

The FBI fanned the flames by collecting dossiers on tens of thousands of Americans and then privately leaking damaging information to employers. Blacklists were common. Due process and free speech were violated repeatedly and careers were destroyed. It was one of the darkest periods of our history. McCarthy went one step too far when he claimed that the Army was coddling scores of communists. The televised Army-McCarthy hearings finally brought him down. He was censured by the Senate and died in a drunken stupor. But McCarthyism — virulent red-baiting — lived on for many more years.

Can we expect a replay?

Glenn Beck, a recovering alcoholic, is much more affable. His personal story of picking up the pieces of his shattered life is hard to ignore and seems utterly genuine. All of which makes him perhaps even more dangerous than McCarthy.

He’s knows it’s very hard to effectively red-bait Americans, especially since the fall of the Soviet Union and since “Red” China became the world’s most dynamic capitalist economy. Railing about Cuba and Venezuela won’t cut it.

So he’s building a better mousetrap. He’s going after progressives, all of whom he claims are a “cancer” in our society. Sure, conservatives have been attacking liberals for over a generation, and liberals have been getting more and more embarrassed about the label. But I don’t recall anyone else of Beck’s prominence claiming that progressivism is a cancerous growth on the body politic. Even Joe McCarthy didn’t stoop that low.

Beck’s argument is simple, direct and full of raw meat for his ultra conservative audiences: the only difference between communists and progressives is the difference between revolution and evolution. Otherwise they are the same. At the recent CPAC conference he used as “proof” a 1938 Rhode Island Communist Party pamphlet which argued that during the United Front period, Communists should make alliances with progressives. That’s proof? During that period the CP was willing made alliances with anyone, including the Boy Scouts.

Beck dresses up his Manichean worldview with a twisted history lesson through which he shows that the progressive movement of the early 20th century, which he claims was led by Teddy Roosevelt and Woodrow Wilson, was all about communism. Here’s what Beck says about the great communist Rough Rider:

“We have a guy in the Republican Party who says his — his favorite president is Theodore Roosevelt. Well, I thought so too until I read Theodore Roosevelt. By the way, Theodore Roosevelt, the guy who started the Bull Moose Party, which was the progressive party. Theodore Roosevelt, quote -

(reading) ‘We judge no man a fortune in civil life if it’s honorably obtained and well spent.’
Oh? Well thank you.

(reading) ‘It’s not even enough – it’s not even enough that it should have been gained without doing damage to the community. We should permit it only to be gained so long as the gaining represents benefit to the community.’

Is this what the Republican Party stands for? Well, you should ask members of the Republican Party, because this is not our founders’ idea of America. And this is the cancer that’s eating at America.”

Like Joe McCarthy, Beck doesn’t let slippery facts stand in the way. For example, he rails against the income tax amendment because the government’s right to collect such a tax was not in the original constitution. Well, that’s not exactly a tight argument given that freedom for slaves also was not in “original” constitution. He seems to forget that the amendment process is part of the constitution as well. He further implies that passing the income tax amendment was President Wilson’s doing, even though it started under President Taft, and 36 states ratified it before Wilson came to office. (Come on Beck, I dare you call accuse Taft of being a progressive communist.)

In effect, Beck believes that just about anyone writing on Huffington Post or Alternet or Firedoglake is an evolutionary communist in progressive clothing. He says that all of us progressives want to see a totalitarian socialist, state controlled society that will rob Americans of their freedoms.

I wish this were just a bad joke, but Beck isn’t. In fact, he’s providing an uncontested analysis to economically distressed Americans. He’s saying that progressives and their big government ideas are the fundamental causes of the crisis. They bailed out the banks, created a pork-filled stimulus program, and stole your jobs away. That deeply flawed analysis is gaining ground rapidly. It won’t take long for people to forget that Wall Street gambled our economy into the ground. Bankers have already forgotten.

Beck is way too smart to believe his new form of red-baiting will stick right now. Instead he’s getting ready for the next crash which he claims will come soon enough and will be catastrophic. He’s working out his argument for the next wave of angry unemployed Americans. He’s warming up by painting bulls’ eyes on the back of every progressive.

Of course, there is no way in hell he could possibly build a new kind of McCarthyism that turned progressives into communists. There are just too many of us and we’re not even close to being communists. Arianna Huffington, a communist?

But what are we? What is our definition of progressivism? What is our agenda for the economic crisis, and for the millions who are unemployed?

We don’t have one. As a result, we’re letting Beck and company define progressivism. Worse still, by not building a new movement, we’re letting Obama and the Democrats define it by their actions which repeatedly kowtow to Wall Street interests. How do we explain how bankers were able to walk off with a record $150 billion in bonuses while getting more that $12 trillion in government support? How do we explain that to the nearly 30 million who are without jobs or forced into part-time work?

We could start by reclaiming the very mantle of progressivism that Beck is distorting. The Progressive Party’s platform of 1912 is not a cancer: It’s a the road to economic health. Among many other things, it calls for giving women the right to vote, protecting working people from employer abuse, and tackling concentrated corporate power, which was turning America into a plutocracy. Progressives formed a new party and platform in order to focus directly on a condition that is still with us:

“Political parties exist to secure responsible government and to execute the will of the people.

From these great tasks both of the old parties have turned aside. Instead of instruments to promote the general welfare, they have become the tools of corrupt interests which use them impartially to serve their selfish purposes.

Behind the ostensible government sits enthroned an invisible government owing no allegiance and acknowledging no responsibility to the people.

To destroy this invisible government, to dissolve the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of the day.

The deliberate betrayal of its trust by the Republican party, the fatal incapacity of the Democratic party to deal with the new issues of the new time, have compelled the people to forge a new instrument of government through which to give effect to their will in laws and institutions.”

It would be a great joy to debate Beck about the following planks of that 1912 platform that called for the government to protect workers against death and destruction on the job:

Effective legislation looking to the prevention of industrial accidents, occupational diseases, overwork, involuntary unemployment, and other injurous effects incident to modern industry;

The fixing of minimum safety and health standards for the various occupations, and the exercise of the public authority of State and Nation, including the Federal Control over interstate commerce, and the taxing power, to maintain such standards;

The prohibition of child labor;

Minimum wage standards for working women, to provide a “living wage” in all industrial occupations;
The general prohibition of night work for women and the establishment of an eight hour day for women and young persons;

One day’s rest in seven for all wage workers;

The eight hour day in continuous twenty-four hour industries;

The abolition of the convict contract labor system;

Standards of compensation for death by industrial accident and injury and trade disease which will transfer the burden of lost earnings from the families of working people to the industry, and thus to the community;

The protection of home life against the hazards of sickness, irregular employment and old age through the adoption of a system of social insurance adapted to American use;

The development of the creative labor power of America by lifting the last load of illiteracy from American youth and establishing continuation schools for industrial education under public control and encouraging agricultural education and demonstration in rural schools;

We favor the organization of the workers, men and women, as a means of protecting their interests and of promoting their progress.

This is from 1912! Why haven’t modern progressives been able to produce something like this that calls for mass job creation and for tight controls on Wall Street?

The truth is that Beck and the Tea Party, along with the entire conservative echo chamber, really have no answers for the unemployed — none at all. They have no answer for the continued Wall Street rip off of our people. In fact, Beck is a de facto shill for the rich and powerful who stand to lose the most from tough government regulations, progressive taxation and jobs programs for the unemployed.

But we’ve allowed Beck to have the field by himself. Progressives are still stunned by the failure of the Obama administration and the Democrats to do the job. But they never will until a new progressive movement forms with the guts take on Wall Street.

Unfortunately, Beck is right about one thing. There will be another crash. Then the battle will be drawn clearly between his kind of McCarthyism versus a new progressivism that once again engages in on-going dialogue with everyday people about how to create jobs and protect our well-being.

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Les Leopold is the author of The Looting of America: How Wall Street’s Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It Chelsea Green Publishing, June 2009.

If the USA could re-industrialize, make the things that we consume, and export some of the things that we manufacture, then the USA would not have to borrow from industrialized nations to pay for U.S. government expenses.

Instead, if the USA re-industrialized, it would have the resources to expand government to provide healthcare benefits, unemployment benefits, and other benefits with the income taxes provides by fuller employment with the industrial manufacturing jobs that the USA would re-create.

We will very soon have no technology base available if the USA fails to  re-industrialize.

Over the past few decades, the U.S. government has destroyed our manufacturing capability with “Free Trade” legislation. The loss of manufacturing also has contributed to the destruction of the nation’s technical capabilities – the same ones that won WWII and created the economic power that the USA enjoyed for a few decades after WWII.

The US future is bleak unless we change our educational and foreign trade priorities.

Gerald R. Spencer, P.E., President
Spencer Engineers, Inc.
Houston, Texas

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Leo W. Gerard

Richard McCormack

Q&A

Leo W. Gerard: Richard, when you appeared recently at Youngstown State University as a guest of the Center for Working-Class Lecture Series, you talked about how essential manufacturing is to the U.S. economy and how politicians seem clueless about that. In fact, you said, “Politicians don’t get it.” When did that happen because clearly politicians in the 1950s understood that a solid economy rests on manufacturing products of real value?

Richard McCormack:  It happened imperceptibly over the past three decades, but perhaps the defining (though little observed) event was when Wal-Mart overtook General Motors as the country’s largest employer. When that happened, the retail industry became one of the most powerful political entities in the country, replacing the manufacturing industry.

The crossover from GM to Wal-Mart is important because retail started setting the terms of the debate not only with politicians, but also with manufacturers. Retailers are driven by increasing profits by pennies on the dollar by paying workers low wages with no benefits and buying cheap imports.

The loss of the manufacturing sector’s political influence also occurred with the rise of the finance sector, which became the dominant force in political gift-giving. The Wall Street financial sector does not give one-half hoot about American jobs.

The loss of America’s industrial capability also coincided with the persistent selling of economic ideology to the American public and its politicians that the country would be a lot more prosperous getting rid of crappy manufacturing jobs and creating jobs in the service and “knowledge” sectors. That grand experiment in creating a “post-industrial economy” just suffered a monumental collapse.

Americans have allowed the big corporate multinational companies and their agents to take control of their political system. It remains to this day a system that is stacked against American workers and American taxpayers. Americans have not entered the fight to save American jobs. I wonder if the middle class is drugged up on Britney Spears, Michael Jackson and Tiger Woods; addicted to sugar, salt and fat; fake “news” shows on television; and Prozac to deal with depression and lull them into thinking that their condition is beyond control. Something is stopping Americans from getting off their couches and demanding a voice in America’s economic future. Americans have lost their country to a few people who make a lot of money off outsourcing, off-shoring and importing everything Americans used to make and continue to buy. Americans must take their country back before it is too late.

Gerard: You have written about this problem in the book, “Manufacturing A Better Future for America,” and elsewhere. How do we make politicians understand how vital manufacturing is?

 McCormack: Politicians need to be hit over their heads with a baseball bat as forcefully as is possible, with Americans insisting that they at least acknowledge that a country that doesn’t make what is consumes is going to fail. It is a simple concept. There are many historical precedents of countries and empires failingafter having lost their productive capacity. It is an ancient concept: a country that does not have industry cannot support an army. 

The United States has just gone through a period of unprecedented loss of wealth. Its citizens have taken a collective economic step down. Yet politicians are sitting smug in the belief that they can borrow more money. They work in Washington, D.C., where I live. This place is humming. Most of them have no idea what the country looks like. Have they been to Detroit, Saginaw, Youngstown – America’s heartland? America’s heartland is dead. That means its heart has stopped beating. What happens to a person when their heart stops beating?

The financial meltdown wasn’t caused by the housing bubble or the financial bubble or the dot-com bubble, although all of those things contributed. It was caused by the simple fact that American consumers have sent all of their wealth to China, Korea, Japan, Germany and Mexico buying all of the things they once made. Tell that to the politicians. They don’t get it. They don’t get it and they don’t get it, which means they have to be hit over the head and be hit over the head and be hit over the head as hard as is possible to hit them with the simple message, over and again: the country cannot survive if it sends all of its wealth offshore. The country has to produce what it consumes. Our politicians do not understand this basic FACT. Have they looked at why China is becoming a superpower? It’s not because China exports its sports heroes and pop culture. It’s because China has embraced manufacturing as THE means to economic superiority. It is the same path the United States took to reach global dominance. Inexplicably, the United States abandoned that path.

Gerard: In Youngstown, you quoted Ralph E. Gomory, the retired IBM senior vice president for Science and Technology and a winner of the Heinz Award for Technology, the Economy and Employment, as saying the interests of American corporations have diverged from the interests of America, yet politicians act as if they’re still the same. Can you explain what that means both in terms of the economy and employment?

McCormack: Ralph Gomory has made one of the most profound and important observations on the current global economic situation. He says that outsourcing is not free trade. Yet the federal government still represents the interests of the powerful companies that are firing millions of American workers and shifting those jobs offshore. 

Domestic manufacturers have told me repeatedly that the greatest protectionists in our country are the corporate and financial companies that are doing everything in their power to protect their assets in China. To influence policy in their favor, the multinationals, retailers, importers and foreign producers fund think tanks, trade associations, lobbyists, lawyers and public relations firms. These are the real protectionists, not American businessmen who want to save American jobs and the American middle class.

The U.S. government continues to craft policies that are beneficial for companies that outsource jobs. For instance, the U.S. government refuses to confront China over its currency manipulation because the companies that benefit most from China’s undervalued currency are the American companies that have shifted their production there. Who does the U.S. government represent? The tens of millions of American workers who get the ax due to China’s blatant cheating, or the few CEOs at multinational companies and the financial class who make more and more money?

It was no coincidence that the stock market had its best year ever in 2009 – the same year millions of Americans were losing their jobs. The dynamic still hasn’t changed, despite the financial sector’s meltdown: Every time a company announces American worker layoffs, its stock price goes up. Yet policymakers equate the stock market with a healthy economy. They are as wrong on that as they are on the belief that the world is flat.

Gerard:  You have also said that politicians’ decision to implement the concept of free trade – which is not fair trade – has largely contributed to the nation’s problems. Would you talk about how something as positive-sounding as free trade devastated American industry?

McCormack:  A friend of mine works at the Commerce Department. He says that free trade is a farce. The United States has tariffs of 2 percent or 3 percent on incoming products. Yet the United States trades with countries with tariffs that are 10 times higher. Is that free trade? He has a simple solution to the U.S. trade crisis: hold up a mirror to any nation trading with the United States. Whatever their tariffs are on U.S. products entering their country, that is what the U.S. tariff should be on their products entering America. 

How can U.S. producers compete when they must pay for all of the costs that foreign producers don’t have to add to the price of their product? These costs include things like scrubbers and baghouses on coal plants. Not requiring the generation of clean power is a Chinese subsidy offered to all manufacturers setting up shop in China. It is an unfair subsidy that U.S. companies cannot counter without the U.S. government saying that it is unfair. Even worse, 75 percent of the mercury pollution in the United States can be attributed to Asian coal-fired plants that do not have emissions controls. The majority of these plants are located in China. China is poisoning America. If it was happening in the United States, the federal government would take the American utility or industrial company to court and impose fines of millions of dollars. What does the U.S. government do about China’s toxic emissions drifting over U.S. airspace? Nothing.

U.S. manufacturers have to abide by a thousand EPA rules and OSHA standards. Not so in China. That is a huge advantage. The United States government lets American companies that have set up shop in China get away with not having to abide by American standards – even though their products are being sold in the United States.

It is morally wrong.

Any foreign product sold in the United States should be required to be produced under the same conditions as is required for producers of the same product in the United States. If these requirements are not going to be enforced on overseas competitors, as they are here so vigorously by our federal government, then those cost advantages should be calculated and tacked onto the price of the product entering the United States.

Foreign producers should NOT have this unfair advantage. It is an outrage that the United States has allowed this to occur.

It is time for the country to stop listening to importers, their agents in Washington, including foreign governments, retailers and the financial industry. The U.S. government has to start representing the interest of American manufacturers, workers and business owners. It does not now. This is not a conspiracy theory. This is reality.

Gerard: In the chapter you wrote for the book, “Manufacturing A Better Future for America,” you said something that every American should find frightening. You said that when Congress cuts the taxes of individuals or gives them tax rebates in an attempt to stimulate the economy, the actual effect is to create jobs in foreign countries. Can you explain that?

McCormack: The U.S. government has just spent the past 10 years trying DESPERATELY to stimulate the U.S. economy, with trillion-dollar tax cuts, tax giveaways, low interest rates and even two wars that have lasted for nine years. Then the Democrats took office in 2009 and enacted their own $787 billion “stimulus.” Every time Americans have had a few extra bucks in their pocket (from tax cuts to direct government payments to home equity loans) they have spent that money on products that are now made somewhere else in the world. Is it any wonder why China’s economy was growing by 10 percent per year during the past 10 years, as U.S. consumers shipped more and more of their hard-earned dollars there to buy everything? 

Gerard: You have been critical of the second economic stimulus bill – called a jobs bill – that Congress is now talking about. You contend that the proposed bill won’t create new jobs. Here’s what you actually said, “I don’t see any jobs there. I just see more money being spent.” What’s wrong with that bill?

McCormack:  It is more of the same. Only a very small percentage of the bill encourages investment in U.S. production. There is not a single program aimed at countering the incentives that foreign countries are providing their companies and U.S. producers to set up operations in their country. The United States has to start competing – to start countering those incentives with its own incentives to manufacturing companies. It doesn’t matter if these companies are American companies or foreign companies. To create lasting, decent jobs, the United States needs global companies to open production in the United States to serve the U.S. market.

Small American companies do not need a $30-billion tax cut to hire workers. They need CUSTOMERS. They won’t hire a soul unless they have a customer to sell them a product. Yet the country continues to lose manufacturing plants to China.

Gerard: If you could actually get Congress to listen to you, what would you tell them is necessary to create good new jobs?

McCormick: Ask the 50 economic development officers from each of the states to form a U.S. Economic Development Council. These people and their offices know what is being planned in terms of company expansions. Give them a war chest, some of the TARP money or funding from the proposed “jobs” bill, and tell them to deploy the same tactics they use in their states to attract industry to America. All of the states are competing against each other to attract industrial investment. They should be working together, especially since supply chains cross state borders.

Gerard: When I go to Washington, what I hear is that we don’t need manufacturing. That’s old and dirty. So many politicians say the U.S. can move to a financial and service economy. You disagree with that. Why?

McCormick: I hear it too, though a little less often, thank goodness.  This argument is what has led to the demise of the United States. People are just starting to realize that as manufacturing goes offshore, high-end jobs in design and research and development go with it. When a plant closes, the supply chain disappears. This supply chain includes materials and parts producers, software providers, like CAD (computer-aided design), ERP (enterprise resource planning) and dozens of other high-tech equipment providers, machine tool companies, maintenance, accounting, packaging – the list goes on to include such things as the local restaurants, janitorial services and those dependent on the plant’s tax revenues, like librarians, county clerks, police officers and teachers. These are service jobs, all of which depend on manufacturing. One manufacturing job supports 15 other jobs. No other category of job has such a high multiplier. The United State must do whatever it can to start creating manufacturing jobs.

Gerard: We are losing at the international trade game with imports far exceeding exports and creating a massive trade deficit. Is it over for the U.S., or can Washington actually do something to reverse this situation?

McCormick: The game is not over. Not yet. But the country is perilously close to a period of sustained pain caused by continuing huge trade and budget deficits. The United States is assuming greater and greater debt. The country cannot borrow its way to prosperity. At some point very soon, the United States has to stop accumulating debt and start the process of paying it down. The only way to do this is by producing the products Americans consume – like cellphones, televisions, digital cameras, computers, semiconductors, printed circuit boards, autos, steel, household items, appliances, luggage, clothes – everything – and to start producing a new generation of radical and revolutionary products that the rest of the world needs to buy.

***

Richard McCormack is editor and publisher of Manufacturing & Technology News, a publication he created in 1994. It is read by industry executives, government officials and academics on five continents. McCormack has reported on science and technology, industry and government in Washington, D.C. for 26 years specializing in economic competitiveness and globalization. He has won numerous journalism awards for investigative, analytical and interpretative reporting. He is author of the book, “Lean Machines: Learning from the Leaders of the Next Industrial Revolution.” And he is the editor of the new book, “Manufacturing A Better Future for America,” for which he wrote the first chapter, “The Plight of American Manufacturing.”

I have developed several boycott petitions at http://www.facebook.com/l/be685;www.democratz.org. People interested in liberal causes can sign these, and an e-mail goes out right away. The petitions demand action on important issues, such as a strong public option, EFCA, ending Republican filibusters, stopping Republican holds on Presidential appointments and a $10 an hour minimum wage. Since companies have taken over the legislative process for decades, we need to use our purchasing power to pressure companies that give money to conservatives in both parties. Thank you for taking a look. If you sign, spread the word.

Den Baer
Bethpage, NY

The other day I posted Whirlpool Bites Hands Of American Taxpayers That Feed It saying, in summary,

• Whirlpool closes a plant in Evansville
• Taxpayers will shoulder the unemployment and other costs.
• All the local supplier, transportation and other third-party jobs are destroyed.
• Even more home foreclosures in the area as a result.
• Local businesses are stressed or have to go out of business.
• They are playing nearby Iowa against Indiana for tax breaks and subsidies to keep just a few of the jobs.
• Whirlpool is profiting from making all this someone else’s problem.
• And, of course, Wall Street celebrates the move.

A Whirlpool spokesperson responded, leading to the post, Whirlpool Exec Responds: The System Made Us Do It, taking a look at the bigger picture that forces our companies like Whirlpool to do these things that destroy people, communities and our economy,

“The spokesperson for Whirlpool is exactly right. It is the system that makes them do this. They are only following the market’s orders.”

I thought that was the end of it, but whoa, what’s this? Whirlpool Threatens Workers: Protesting Plant Closure Risks ‘Future Jobs’

A major corporation planning to shut down a factory in Indiana has warned its union workers that they’ll endanger their future job prospects if they protest the plant’s closing.

. . . Activists planned a high-profile protest for this Friday, with AFL-CIO president Richard Trumka visiting the plant for the first time. But Whirlpool says the effort is futile — they are fully committed to shutting the plant down. The company, however, still seems quite wary of the potential for bad publicity. In a memo sent to its employees and passed along to the Huffington Post, Paul Coburn, division vice president for Whirlpool’s Evansville Division, offers a fairly explicit warning to his workers: If they join Trumka’s protest they would seriously risk future employment opportunity.

Threatening workers who show up at the protest that they risk future employment? Click through to read the entire report and to see Whirlpool’s letter.

And take action: Tell Whirlpool: Keep It Made in America and Save Our Jobs.

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This post originally appeared at the Campaign for America’s Future (CAF).

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Johnson also is a fellow at the Commonweal Institute and a Senior Fellow at the Institute for the Renewal of the California Dream.

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Follow Dave Johnson on Twitter: www.twitter.com/dcjohnson

Mike Elk

By Mike Elk
Of Campaign for America’s Future

Conservatives have started a disturbing pattern of attacking Democrats for the consequences of weak Buy America provisions in last year’s Recovery Act, even though they opposed the tougher Buy America provisions that would have averted the problems in the first place.

Last week, I wrote about how Republican National Committee Chairman Michael Steele launched this Republican talking point:

… Steele blasted the Obama administration in a fund-raising email earlier this week for allowing stimulus money designated for clean energy solutions to be spent on overseas companies. Which is interesting, because stimulus money going to overseas firms was the direct result of conservative opposition to attempts to keep that money in America.

Now it seems that Sarah Palin has joined the chorus of flip-flopping conservatives opposed to Buy America, who ignore the fact that progressive Democrats were fighting for Buy America language in the stimulus. Palin wrote on her Facebook wall:

“We were promised it would provide “green jobs” for Americans, but 80% of the $2 billion they spent on alternative energy went to purchase wind turbines built in China!”

While some of the money did go to foreign companies to spend on windmill components built overseas, a lot of that money went to the U.S.-based subsidiaries of foreign companies. Russ Choma, author of the study which Palin cites, rebuts Palin in this Politifact article:

The Investigative Reporting Workshop’s story on stimulus dollars and the wind industry came in two parts. In October 2009, it published its first analysis. The group found that of the $1.05 billion in clean-energy grants already handed out by the Department of Energy, about 84 percent — or $849 million — ended up in the hands of foreign wind companies. We spoke with Russ Choma, the story’s author, who explained that these grants are given to U.S.-based wind projects, but that many of these projects are being built by the American subsidiaries of foreign-owned companies. For instance, on Sept. 22, 2009, the DOE awarded $464.2 million to wind projects, and all of it went to local subsidiaries of foreign companies, according to the report. Those companies include Iberdrola, a Spanish company that received $250.9 million; the American subsidiary of Japan’s Eurus Energy, which got $91.3 million; and the American subsidiary of Germany’s E.ON Group, which received $121.9 million. Choma also points out that the wind turbine manufacturing industry in the United States is relatively weak compared to those abroad; of the 1,807 turbines erected in the United States as a result of the stimulus grants, foreign-owned manufacturers made 1,219, according to the report.

Besides Palin misrepresenting the facts, Palin fails to note that her fellow conservative Republicans opposed Buy America language, labeling it“bad for America.”

As I noted last week:

Republican presidential candidate John McCain went on CBS’s Face the Nation on February 8, 2009:

“I think it has policy changes in it which are fundamentally bad for America. For example, their ‘Buy America’ provision: that’s protectionism, and that did not work in any time in our history.”

As recently as October 2009, GOP Congressional leaders held an event to call for the rollback of Buy America provisions claiming that Buy America provisions were “costing American jobs.”

This is just another example of Republicans obfuscating their positions in order to win votes. But what’s disturbing is that there is a margin of truth in what they say. Because Buy America provisions were weak in the stimulus bill, some of the money (though not as much as Palin claims) did go overseas. It happened because Democrats failed to put up a strong enough fight.

That can’t happen again. As Congress considers a jobs bill, it’s important that we encourage members not to compromise on Buy America provisions. If Democrats allow Buy America to be weakened, conservatives will use the result to attack them anyway. They should instead force Republicans into a real, round-the-clock filibuster Buy America language. That will show just how patriotic conservatives are when its comes to using American taxpayer money to give Americans jobs.

Robert Kuttner

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

March 2010 will either be remembered as the month when the scales fell from Barack Obama’s eyes and he realized that the bipartisan fantasy, given the current Republican Party, is a fool’s errand. Or it will go down in history as the moment when Obama had a chance to change course and emerge as a leader — and flinched. Which will it be?

Right up until the moment of the February 25th summit on health reform, the administration seems determined to send out mixed signals. The president has been stressing all of the areas in which his own plan overlaps some Republican bill or another. But, as Obama surely knows, most of the supposed areas of consensus are superficial.

For example, in theory both Obama and the Republicans would allow health insurance policies to be marketed across state lines. But the Democrats’ version would include consumer safeguards. The Republican counterpart would encourage insurance companies to re-incorporate in the state with the weakest regulation and promote a race to the bottom.

Bipartisanship was also the word du jour when the president announced his fiscal commission. Everything is supposedly on the table. Yet no Republican seems willing to raise taxes. And no Democrat worthy of the name would sacrifice Social Security. If we had the nerve to restore progressive taxation in this country, we could have our fiscal balance and our social investment, too. No bipartisanship there.

When Alan Simpson, the Republican co-chair, was in the Senate, privatization of Social Security was one of his big causes. Under the commission’s rules, it will take 14 out of 18 votes to recommend a blueprint for budget reduction. I asked a senior member of Obama’s economic team how they expected a commission to reach agreement with this kind of requirement, given that Republicans block all Senate action using a much more modest supermajority. He had no good answer.

Yet the narrative of the day, articulated by Evan Bayh, Pete Peterson, and repeated by one journalist and pundit after another, is that “Washington” has become “dysfunctional.” Sen. Bayh’s recent op-ed in the New York Times is enough to make you vomit.

Our most strident partisans must learn to occasionally sacrifice short-term tactical political advantage for the sake of the nation. Otherwise, Congress will remain stuck in an endless cycle of recrimination and revenge. The minority seeks to frustrate the majority, and when the majority is displaced it returns the favor.

The blame, in other words, is absolutely symmetrical. That’s just malarkey. But it has become pervasive conventional wisdom.

Jackie Calmes, writing in the New York Times, treats a massive lobbing campaign by foes of social insurance as dispassionate expert analysis in the public interest.

Many analysts say the president and Congress could send a strong signal to global markets by agreeing this year to a package of both long-term tax increases and spending reductions, especially in the popular entitlement programs, that would not take effect until 2012. That is the recommendation of two new studies, one by the National Research Council and the National Academy of Public Administration and the other a separate joint project of the Peter G. Peterson Foundation, the Pew Charitable Trusts, and the Committee for a Responsible Federal Budget.

Well, many other analysts say Pete Peterson, who funds so much of this tripe, is a billionaire scoundrel who is using an economic catastrophe brought about by his chums on Wall Street to cut the Social Security of people who don’t have his massive wealth to fall back on.

There is nothing dysfunctional about “Washington.” The Republicans have simply decided to use the filibuster to block anything that President Obama proposes, and the president, thus far, hasn’t quite mustered the nerve to take them on.

As John Podesta puts it, we have a kind of perverted parliamentary system, in which the opposition party has the power to block, but the governing party doesn’t have the power to govern. Kind of like Italy before it got a quasi-dictator, or France during the Fourth Republic.

Or the kind of failed states where nobody governs, and power reverts to tribes, mobs, and warlords (or in our case, to Wall Street.)

So it’s show time. As Finley Peter Dunne’s Mr. Dooley famously said, politics ain’t beanbag. Either Obama has been playing chess all along, and he will soon spring his elegant trap on the obstructionist Republicans, or he has been playing beanbag.

Option One: The televised summit happens. It’s clear once and for all that there is no common ground to be had. And Obama gives the speech we’ve all been waiting for.

“My fellow Americans, I’ve gone the last mile to find consensus, but the Republicans have made clear by their actions that they put destruction of my administration ahead of the needs of the American people. I can’t let that happen, because the stakes are too high. So I am asking the House to pass the Senate bill, and then to improve the law using the budget reconciliation process.”

His approval rating jumps ten points overnight just because the voters admire guts in a leader, and will settle for some sign of a pulse.

Option Two: the Republicans offer him a few scraps. He takes them. Negotiations keep dragging on. Game, set, match, Republicans.

Option Three: Obama attempts to pull off Option One, but the House and Senate Democrats are so sick of this drama, and the bill has become so toxic, that he can’t muster the votes. Since the bill passed the House last November 7 by just five votes, one Democrat, John Murtha, has died. A second Democrat has changed parties. And the one Republican who voted for the bill, Joseph Cao of Louisiana, has switched to the opposition. That leaves the Dems down one. The proposed “Cadillac tax” on premiums of good insurance, the diversion of Medicare funds, the punitive mandate on individuals, coupled with the relative free ride for employers who fail to provide insurance, are even more unpopular now than in the late fall. A double defeat for the president.

It would take an uncharacteristic leap of leadership for Obama to opt for a Democrats-only bill; and even more leadership to get the Dems to vote for the thing. If he pulls it off, and also improves the bill along the way, it will mark a welcome change of direction — but only the beginning of a long road back to the presidency we thought we were voting for. Stay tuned.

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Robert Kuttner’s forthcoming book is A Presidency in Peril (March, Chelsea Green). He is co-editor of The American Prospect and a senior fellow at Demos. In addition, he is the author Obama’s Challenge.