Blog

Four years ago, American manufacturing was suffering.  In September 2008, after nine consecutive months of brutal job losses, the economy lost another 51,000 jobs in manufacturing.  By the end 2008, the United States had experienced its worst year since 1945, losing nearly 2.6 million jobs, including 800,000 in manufacturing.

Now, the manufacturing sector is growing.  Over half a million manufacturing jobs have been created since 2010, breaking a decade-long downward trend.  As foreign production costs rise and American businesses become more competitive, economists are predicting 5 million new jobs in manufacturing and supporting industries over the next ten years.

The revitalization of American manufacturing is the result of government policies that have focused on fostering growth.

The auto bailout saved millions of jobs when the industry was struggling in the Great Recession. And the success of the auto companies after the rescue has led to the addition of more than 120,000 auto industry jobs over the past two years. The Obama administration’s decision to enforce international trade regulations against violators like China gave American businesses the opportunity to compete on a level playing field.  In addition, the administration’s investments in research and development of new energy technologies allowed the United States to expand jobs manufacturing products like lithium-ion batteries, electric motor vehicles and solar panels.

To ensure future growth, the Obama administration has advocated tax breaks for manufacturers who keep their plants in the United States—and  penalties for those that offshore jobs.

Four years ago, the government had abandoned American manufacturing, but now a sustained commitment to rejuvenating the manufacturing sector is bringing manufacturing jobs back.

There’s a bold way to create jobs that’s being ignored by Washington!

What’s the plan? Pass a federal law to return to our pre-1970 status of maintaining a positive overall annual balance of  trade with other trading nations.

How would that work? We’d permit total imports each year to match our own ongoing exports. Import certificates  would be issued and traded by the U.S. government to implement the new arrangement. It’s not a protectionist tariff or added cost to U.S. consumers!

Give us the figures. Right now we import $2.3 trillion a year, and we export $1.5 trillion. $300 billion of the $800 billion deficit is from petroleum imports. The remaining $500 billion goods and services deficit would return to the U.S. for production and 5 plus million new jobs! The Obama jobs creation efforts have fallen far short, and there don’t seem to be any big ideas except ones needing heavy deficit spending.

Why hasn’t this balanced trade plan been adopted? Twice, first in late, 2009 and again this year, Obama held jobs summits. He said he’d consider all credible ideas, but both times his “free trade” advisors blocked all balanced trade proposals.

Result: There’s been no action on already-available legislation- “The Balanced Trade Restoration Act.” It wasn’t adopted by former President George W. Bush. It should be updated and passed. It would create millions of new jobs.

It’s time for bold action now!

Kenneth N. Davis Jr.
President, Economic Strategy Associates, Inc.
Stamford, Ct.
Former U.S. Assistant Secretary of Commerce
Former IBM Corp. vice president and chief financial officer
Former investment banker

***

To submit a blog to Free Speech Zone, e-mail it to bstack@usw.org. Keep it to 250 words or fewer. You MUST include your full name, hometown, and state. You may attach a photograph of yourself. Please include a phone number. This WILL NOT be published. Posting any given blog is within the discretion of the USW.  No blog using foul language (this is a family site), false information (we don’t want to get sued), or unnecessary personal attacks (again, we don’t want to get sued) will be used. Wait a reasonable period of time, then blog again! This is a Free Speech Zone.

Deepak Bhargava

Deepak Bhargava
Executive Director of the Center for Community Change

The debate in Washington about deficits has lost touch with reality. The emerging conventional wisdom inside the beltway has taken aggressive job creation strategies off the table because of the deficit crisis. This “eat your spinach” approach is bad politics and disastrous economics guaranteed to produce not only a longer, deeper period of economic hardship but also, ironically, higher deficits. The Great Depression and John Maynard Keynes taught us a fundamental lesson: when you’re in a deep economic tailspin, the private sector won’t get the economy moving, only aggressive and sustained action by government can turn things around. The solution to the unemployment crisis and the deficit crisis is one and the same: a much greater investment by the federal government in creating jobs and helping struggling families. So why isn’t Washington listening? Republicans are playing politics and too many Democrats are running for cover.

For eight years during the Bush Administration, we’ve seen out of control spending that swung our $236 billion surplus to a $2.5 trillion deficit. Conservatives were nowhere to be found on the deficit issue when it came to tax cuts for the wealthy, George Bush’s bailout of Wall Street or the Iraq war. Check out this chart that shows that the recovery act is a tiny part of the deficit puzzle.

Source: CBPP analysis based on Congressional Budget Office estimates via newsreview.com.

The lion’s share of the blame goes to Republican policies of tax cuts and wars, together with the effect on revenue of the recession that was itself caused by deregulation and the casino economy. The Republicans of today remind me of Captain Renault in Casablanca who said he was “shocked, shocked!” to find that gambling was going on in Rick’s Cafe Americain right before receiving his winnings. (more…)

Leo W. Gerard

By Leo W. Gerard
USW International President

Tea Party darling and Republican U.S. Senate nominee Rand Paul spoke last week like the political novice he is – revealing unfiltered GOP “truths.”

First he informed MSNBC talk show host Rachel Maddow that government should not be able to force businesses to serve black people. Corporate desire to discriminate should trump the civil rights of black people, Muslims, Jews, Catholics, and pants-wearing women, according to this Republican candidate, who has since rushed to assure everyone that he personally is not a bigot.

Rand Paul followed up the assertion of corporate-privilege-over-human-rights with two more Republican tenet revelations. First he called the Obama administration “un-American” for holding the corporation BP accountable for the explosion on the Deepwater Horizon oil rig that killed 11 workers and devastated the ecology of the Gulf of Mexico. Then Rand Paul added that society should refrain from the “blame game” in the case of another corporation, Massey Energy, the owner of the West Virginia mine that blew up killing 29 workers. “We had a mining accident that was very tragic,” he said, “Then we come in, and it’s always someone’s fault. Maybe sometimes accidents happen.”

The Republican candidate who openly espoused these views was embraced last Saturday by U.S. Senate Minority Leader Mitch McConnell at a rally in Frankfort, Ky. And during the primary, former GOP vice presidential candidate Sarah Palin and Republican senators Jim DeMint of South Carolina and Jim Bunning of Kentucky actively supported Rand Paul. He simply said what Republicans believe – that this country should focus on promoting corporations and those corporations should have privileges, but not responsibilities. To the GOP, the U.S.A. should be a country of corporations, by corporations, for corporations.

People, by contrast, are trifling to the GOP. In the past couple of weeks, the GOP has made its position on humans clear by trying to end an emergency fund that will create 186,000 subsidized jobs this year for poor people and by blocking an extension of unemployment insurance for those thrown out of work during the worst recession since the Great Depression, a downturn caused by reckless Wall Street corporations. Following the lead of Bunning, who delayed an extension in February, Republican Sen. Judd Gregg of New Hampshire said the unemployed shouldn’t receive the insurance because it “encourages people to, rather than go out and look for work, to stay on unemployment.”

While attempting to deny relief to the desperate, Republicans have also blocked efforts to force oil corporations to assume full liability for catastrophic spills – like the BP disaster in the Gulf. If the oil corporations – which vehemently oppose an increase in their liability — don’t pay for environmental clean up, then taxpayers – including the unemployed – will get the bill. Still, House Minority Leader John Boehner of Ohio opposed raising the laughably-low liability cap of $75 million, and Republicans James Inhofe of Oklahoma and Lisa Murkowski of Alaska have blocked efforts to lift the cap in the Senate.

Like Rand Paul, Boehner didn’t want to assign culpability to BP. Boehner said, “I think it’s important that we get to the bottom, get to the facts, before we begin to point fingers.”

Murkowski and Inhofe have a financial interest in kissing up to Big Oil. Those corporations have handed them buckets of bucks. According to the nonpartisan OpenSecrets.org, the oil and gas lobby has given Inhofe $433,950 over the past five years.  That lobby gave Markowski $240,326 in just the past year. That is 15 times what she got from oil and gas just two years ago, according to the Center for Responsive Politics. A Murkowski spokesman said the senator’s connection to oil and gas corporations is “the same relationship she has to all constituents.”

So, to Republican Murkowski, oil and gas corporations are constituents, exactly like the actual humans who live in her district. That characterization of corporations is consistent with the recent U.S. Supreme Court decision, written by its Republican-selected, right-wing majority, giving corporations the same rights as humans under the First Amendment of the U.S. Constitution, a ruling that will enable corporations to spend virtually unlimited money to influence elections.

Usually such rights come with responsibilities. But Republicans, by impeding an increase in the liability cap, have made clear their opposition to oil and gas corporations bearing the responsibility of paying all costs when their errors kill workers and destroy the environment. Not only that, under the guise of government downsizing, they have thwarted enforcement of regulations intended to prevent deaths and catastrophes. The Bush administration, for example, cut funds for the Occupational Safety and Health Administration (OSHA).

Also during the Bush administration, according to a Department of Interior inspector general report released this week, federal regulators responsible for oversight of drilling in the Gulf of Mexico allowed corporate officials to fill out inspection reports in pencil, then traced over those marks in pen and submitted them. That “self-regulation” is consistent with the Republican contention that the “invisible hand” of the market will adequately smack down bad corporate behavior.

Rand Paul reiterated the Republican policy on government during his rally with McConnell last Saturday. He said, “What unifies Republicans is a belief that the Constitution restrains the size and scope of government.” Louisiana Gov. Bobby Jindal, who Republicans chose to respond in February, 2009 to President Obama’s first address to a joint session of Congress, told that national TV audience he opposed “big government,” like all good Republicans do.

Also in that speech, Jindal joined the Republican chorus of “Drill Baby Drill,” calling for increased domestic oil and gas drilling. Now he’s got the ugly results of drilling-gone-wrong coating his coast. 

Since the spill, Jindal has petitioned the federal government – yes, the very government Republicans want to shrivel – to solve his state’s problems. He asked Obama to pay for 6,000 National Guardsmen for 90 days to help clean up. He wants the U.S. Department of Commerce to provide financial help to fishermen, the Environmental Protection Agency to test air quality, and the U.S. Business Administration to suspend loan repayments for small businesses affected by the gushing oil.

The Republican policy, apparently, is “Drill Baby Drill;” taxpayers can always clean the “accidental” spill. In the Republican world, corporations have the right to do anything they want, but no responsibility to do it right or restore what they wreck. Republicans hold the unemployed accountable – but not corporations.

Leo W. Gerard

By Leo W. Gerard
USW International President

The meeting got testy. Voices rose last Thursday among Democrats over differences in the Senate Finance and Health committee versions of insurance reform.

Max Baucus defended his committee’s bill, voted out last week with one Republican, but lacking a public option and burdening the middle class. He said, according to reports by Sen. Evan Bayh:

“We are doing the best we can.”

Maybe Baucus is doing the best he can, considering the fact that his committee, in search of Republican support, has been kissing elephant trunk so long it doesn’t know which end is up.     

Democrats must stop appeasing elephants whose intent, frankly, is to squash health care reform. Dems have a supermajority in the Senate. They have the support of the American people for health insurance reform – with the latest polls showing more than 60 percent back the public option. And the power of opponents is waning, as last week’s failed attempt by the insurance lobbying organization America’s Health Insurance Plans (AHIP) to scuttle the Senate Finance Committee bill showed.

On Tuesday, as the Senate Finance Committee moved toward a vote, Baucus admonished:

“Colleagues, this is our opportunity to make history. Our actions here will determine whether we extend coverage to more Americans . . . Now is the time to get this done.”            

That’s all true. Except there’s one more thing: it must be done right. There’s no “best we can” when Democrats have a supermajority in the Senate and massive popular support for reform.

Right includes a public option. This is crucial to lower costs. Don’t take my word for it. Take that of Nobel Prize winning economist Paul Krugman. He noted in his Oct. 16 column in the New York Times that AHIP objected to the public option because public plan officials would negotiate for better prices. “Isn’t that an argument for, not against, such a plan?” Krugman asked. The public option, which is offered in the Senate Health Committee bill and House versions of reform, would create competition where there is none. Competition would drive down costs, which have risen exponentially, inexorably and annually – prompting too many companies to drop coverage for workers or increase fees and co-pays to the point where coverage is unaffordable.

The right way means passing reform without burdening the middle class. The Baucus bill smacks a 40 percent tax beginning in 2013 on plans valued at $8,000 for individuals or $21,000 for families, with some adjustments. The Congressional Joint Committee on Taxation estimated that this would quickly affect 40 percent of all plans. Officially, this tax would be levied on insurers, but there’s no question that they would pass that cost forward to the insured– further hiking up the price of insurance. The House legislation offers a much better approach – a surcharge on millionaires. They’ve gotten eight years of huge tax breaks under the Bush administration. It’s time for them to give a little back. 

The right way also means that all employers must pay their share of costs. More than 160 million Americans receive health insurance as a benefit at work, but more than $1,000 of the cost of those family plan premiums goes to cover the cost of the uninsured. And those uninsured are mostly people whose employers fail to provide health insurance. The only way to apportion these costs fairly is to require employers to provide health insurance or, alternatively, contribute a meaningful sum toward the cost of workers’ coverage.

The right way to reform does not penalize individuals who cannot afford to obtain coverage more than employers. Health care reform must ease the burden on workers and families, not worsen it.

Baucus is correct about one thing. This is an historic moment. But the “best we can” must include the public option. It must mandate that employers pay their fair share of costs. And it must not further burden workers. Forget the elephants and serve the Americans desperate for real health insurance reform.

Peter Navarro and Leo Gerard

Leo W. Gerard: Your chapter in the new book, “Benchmarking the Advantages Foreign Nationals Provide their Manufacturers,” describes in devastating detail how China in particular, but also other major U.S. trading partners, violate international rules. The abuses you document make clear that it’s impossible for American manufactures to compete internationally. U.S. corporations responded by off-shoring manufacturing and millions of American jobs. Why does the U.S. put up with this unfair trade?

Peter Navarro: The Bush administration put up with unfair trade because it was distracted by the war on terrorism and because of its blind ideological commitment to free trade, regardless of the unfair trading practices adopted by our trading partners. The Obama administration is putting up with unfair trade with China because it is under the mistaken notion that it’s more important for China to keep financing our budget and trade deficits than for this country to crack down on unfair Chinese trade practices so that we can restore our manufacturing base. Consumers — oblivious to the destruction that the Chinese have done to our job base — have put up with this unfair trade because in the short run they get cheap Chinese goods. The National Association of Manufacturers puts up with this unfair trade because many of its members have offshored their production to China and now find it in their interests to oppose trade reform. What is critical in the politics of this whole situation is that the American people clearly understand how unfair trade practices translate into fewer jobs and lower wages and a bleak future. Only when the American people see the chessboard more clearly will our politicians act appropriately.

Gerard: The result of decades of losses is, as you put, the “hollowing out” of the U.S. economy. It depressed wages, lowered the standard of living, created recession conditions in the Midwest – even before the current great recession. Typically, in the mainstream media, the loss of industry routinely is blamed on unions seeking what we believe is decent wages and benefits. Your chapter provides a shockingly different story. Why don’t we hear that?

Navarro: Labor unions have become a common “whipping boy” for the recessionary ills that have afflicted the US economy off and on for several decades now. One problem is that much of the financial press has a strong, antiunion bias. A second problem is the far too parochial nature of American politics. Far too many Americans — and I include many members of the American press corps here as well — simply don’t understand some of the complexities of the global economic environment that have helped trigger the US recession. The case of Chinese currency manipulation is a perfect example. Very few politicians or pundits — much less the American people — understand how China pegs the yuan to the dollar and how an undervalued yuan acts as a subsidy to Chinese exports to the United States and a tax on US exports to China. Nor do these politicians and pundits understand how this currency manipulation affects the stock market or interest rates or the rate of off shoring. Because the effects of globalization are complex, labor unions make an easy target.

Gerard:  For those unfamiliar, because it isn’t covered much, would you explain how China can be both a mercantilist and a protectionist state, and the effect of that economic behavior on the U.S.?

Navarro:  In thinking about the issue of trade reform, it is important to distinguish between mercantilism and protectionism. A mercantilist state uses tools like illegal export subsidies and currency manipulation to increase its level of exports to other nations at the expense of jobs and income in those nations. In contrast, a protectionist state uses unfair trade practices like quotas, forced technology transfer, and regulatory barriers to prevent foreign competitors from entering its markets. As a practical matter, any state that engages in protectionism likely also is a mercantilist as well. In the world arena today, China is the reigning Emperor of both mercantilist and protectionist practices. The scope of what this “beggar thy neighbor” country does in direct violation of the World Trade Organization rules is breathtaking, and it is precisely these mercantilist and protectionist practices that I outline in my chapter in the book.

Gerard:  Can we talk for a minute about currency manipulation because this is something you hear a lot, but, again, it’s rarely explained. You provide great descriptions in the chapter of why China’s undervaluing the yuan “makes exports cheap and imports dear,” as you put it. Can you give us a primer here?

Navarro:  As a practical matter, any given country can choose between a fixed or a floating exchange rate system for its currency. In a floating exchange rate system, the value of the country’s currency is determined by supply and demand conditions in the international market. Currencies that float and trade freely everyday include the dollar, the euro, the yen, and the Swiss franc.

In fact, floating exchange rates represent a crucial element of any free trade regime that benefits all nations. The reason is that floating exchange rates act as a natural market mechanism to prevent any trade imbalances between countries. If one country like the United States runs a trade deficit with another country like China, the value of its currency should fall relative to the other currency. A falling currency will boost that country’s exports because its exports will be cheaper to sell while it will reduce its imports, because imports will become more expensive. In this way, the trade will come back into balance in a floating exchange rate system.

The problem is that some countries like China embrace the alternative of a fixed exchange rate system. In China’s case, it tightly pegs the value of the yuan to the US dollar. This means that no matter how big the US-Chinese trade imbalance, the dollar can’t fall relative to the yuan and bring trade back into balance. 

China pegs the yuan to the dollar in a very complex process, but in a simplified example you can think of it this way. American consumers go into Wal-Mart and buy a bunch of cheap Chinese goods with American dollars, and these dollars are exported over to China. Ordinarily, the surplus dollars would put downward pressure on the value of the dollar relative to the yuan. However, to reduce these pressures the Chinese government sweeps up these dollars in a “sterilization” process which involves selling bonds to Chinese citizens at interest rates of a little more than 4%. China then turns around and uses these sterilized dollars to buy US government bonds at interest rates of less than 2% — thereby losing a considerable amount of money on the deal. The Chinese government is willing to incur these losses, however, because by buying US government bonds, it bids the value of the dollar back up so that China can maintain its dollar-yuan peg. At the same time, China’s purchase of US government securities also helps lower US interest and mortgage rates — a kind of financial heroin that makes America feel good even as China steals its jobs and destroys its manufacturing base using this currency manipulation as a weapon.

Gerard:  I think that after the Olympics were held in China, a lot of people became aware of the high level of pollution there. So while American companies must pay decent wages and control pollution, Chinese companies don’t. But you detail much more insidious internationally illegal competitive advantages China has over the U.S. One of those is forced technology transfer. Can you describe that?

Navarro:  While currency manipulation and China’s high levels of illegal export subsidies rank as two of its most important mercantilist practices, China’s forced technology transfer represents one of its most insidious protectionist practices. The idea of forced technology transfer is that if a company like General Motors and General Electric or Intel wants to set up production facilities in China and sail into the Chinese market, it must surrender some of its technology to the Chinese in order to do this. This practice is, of course, one of the most blatant violations of the World Trade Organization. However, American corporate executives rarely challenge this practice because they are all too eager to play in the Chinese market. Over time, however, the practice of forced technology transfer in China is a one-way ticket to the destruction of the American technology base. If in the short run, American corporations surrender their technologies to China, eventually, over the longer run, China won’t need these American corporations, and they will be quite ironically run out of China by their own evolved technologies.

Gerard:  You describe virtually all of these practices as being illegal under international treaties or World Trade Organization rules. People who are so hot for free trade must know that China is violating these rules. Is it correct to say that the U.S. simply is not demanding enforcement of the regulations to its own detriment?

Navarro: That is absolutely correct — the US government has failed abysmally at using the tools at its disposal to crack down on Chinese mercantilism and protectionism. The Bush administration failed to do so because of its preoccupation with the war on terror and its misguided ideology. The Obama administration is even more culpable because it fully understands the damage that China is doing to the American economy. However, the President, the Treasury Secretary, and the United States Secretary of State have all decided that it’s more important that China continue to finance our budget and trade deficits than it is to challenge China on trade reform. The problem with this strategy is that it guarantees the long run secular decline of the American economy, which will come as an inevitable result of a further erosion of America’s already weakened manufacturing base.

 ***

Peter Navarro is a best-selling author and CNBC contributor. His most recent book is “Always a Winner: Finding Your Competitive Advantage in and Up and Down Economy.” Mr. Navarro is also the author of the worldwide bestseller, “The Coming China Wars,” and the bestselling investment book, “If It Rains in Brazil, Buy Starbucks.” He also wrote the management book, “The Well-Timed Strategy.” With a Ph.D in economics from Harvard, Mr. Navarro is a business professor at the Merage School of Business at the University of California, Irvine. He is an expert in macroeconomic analysis of the business environment and financial markets. He has been featured on “60 Minutes,” and his articles have appeared in publications such as “Business Week,” “The New York Times,” and “The Wall Street Journal.”

By Leo W. Gerard
International President

The economic structure of Jim Henson’s cartoon realm called Fraggle Rock reflects our own. In one HBO episode, the industrious, hard-hatted Doozers prepare to leave the rock, which would have quickly left the Fraggles starving. Somehow, politicians and powerbrokers in this country don’t see the simple parallel. If the U.S. continues to send its manufacturing overseas — with the latest proposal General Motors plants — the result will be hungry U.S. families.

I saw this up close and personal as I toured the U.S. last week on the 11-state, 32-city “Keep it Made in America” bus tour. I talked to unemployed manufacturing workers who are desperate. Through no fault of their own, they’ve lost their jobs, their homes, their health care. These are the people who are the strength of America, who in better times volunteered in New York City after 9-11 and in New Orleans after Katrina. Now, they’re forced to get groceries at their union hall’s food bank. They’re humiliated.

This economic crisis was inflicted on them by recklessness on Wall Street and in Washington. Over the past 40 years, politicians have eroded regulations that could have helped prevent the sub-prime mortgage bubble and bust. And Wall Street banks and investors took full advantages of that rule-free environment to behave capriciously in the market, causing stocks to tank, driving unemployment up to the current 8.9 percent, and contributing to the loss of 5.2 million manufacturing jobs since 2000.

Let me introduce you to four Steelworkers, four hard-hats struck down by the decisions so disastrous to the economy made in Washington and on Wall Street. They are Diana Arends, an aluminum can maker; Matt Dossett, a rubber worker; Andy Nirschl, a papermaker, and Kevin Vest, a copper miner.

Diana Arends’ employer, Ball Corp., shuttered its Kansas City aluminum beer can manufacturing plant March 27. Ball blamed the economy when it announced the closure that cost 150 Steelworkers their jobs. Beer sales are down. As the economy contracted, Americans had fewer coins in their pockets for every little pleasure, including throwing a few back.

Diana Arends

The plant closure was both an economic and emotional shock to Arends. She’s divorced, and supports a daughter and granddaughter. Before the plant mothballing, she routinely worked 12-hour days, with the overtime paying her mortgage and bills. Now she’s only getting unemployment.

Her house in Lees Summit, Mo., on which she has paid for 10 years, already is going to foreclosure. She doesn’t have any credit cards, but she does owe on a used car she bought a couple of years ago.

When she heard the plant was to shut, she immediately dropped her internet and cable TV services, ended trash collection and stopped eating out. She buys food in bulk at a wholesale store. But it’s just not enough.

She’s thinking about taking the remnants of her stock market-ravaged 401K and using it to support herself, her daughter and granddaughter because she has been unable to find another job. No one has called her back for a second interview, although she also has 28 years experience manufacturing grain bins for CTB, Inc. Let’s face it, she points out, who’s going to hire a 59-year-old?

She recollects, a few years ago, “I got to feeling set. I had a 401K and just a few more years to retire.” But now she’s jobless, and soon she may be homeless. “I did nothing to deserve that,” protests Arends, who went the extra mile, serving as president of USW Local 13, a position she loves, but one she’ll be forced to relinquish May 14 because she no longer is employed as a Steelworker.

Diana Arends is concerned about running up federal debt to pay for the bank bailouts and stimulus package, so she doesn’t understand anyone proposing to use one dollar of that money overseas. The stimulus is American tax dollars designated to create American jobs – not Chinese jobs or Korean jobs or Mexican jobs. So when General Motors submitted a bail out plan in which it would get American tax dollars, then use them to build fewer cars here and more cars overseas that would be sent back here to be sold, Arends just couldn’t believe it. “These are middle class jobs lost, the people who go to the grocery store and support food banks and the Little League,” she noted.

And they’re not just GM assembly line jobs. The more jobs GM sends overseas, the more support and supply jobs go overseas too. And that threatens the economic lives of millions more Americans — workers like Matt Dossett.

Matt Dossett

He’s a rubber worker from Fancy Farm, Ky., furloughed with 50 other Steelworkers from the Goodyear Tire plant in Union City on Feb. 28. Dossett, 27, who tried to get a job at the plant since he graduated from high school, had worked there just a year before the lay off. He knew it was a good job because his father and uncles had all worked there. “They had their whole careers there,” he said, “They worked 40 years and retired there. They had good lives from working there. It is one of the best paying jobs in this area.”

He worked on a balance crew in the curing department – cooking tread onto the tires, a place where it could get well over 100 degrees in the summer. Still, he longs for that call back, “I really enjoyed it down there. I enjoyed the people I worked with and the job I was doing,” he said.

But that’s all jeopardized by the sagging economy, unfair trade practices by China in supporting its tire makers which export to the U.S. and GM’s plan to move production offshore – including to China.

When he was working, Dossett paid off his car loans and saved money just in case he got furloughed. But making the mortgage payments is starting to get tough. His wife works, so that’s helping them pay the bills. And they’ve cut out all frills. They don’t visit her family in Chicago anymore. They don’t go out to eat. They don’t visit Nashville for weekends. Dossett has a credit card, but no debt because he only uses it in emergencies. “I worked hard for everything I’ve got,” he explained, “I’m trying not to lose it all now.”

He sees a clear connection between GM building cars here and his job.  Because billions of American tax dollars have already gone into bailing out GM, they shouldn’t be talking about moving jobs overseas, he says. “We gave them money to build here, to create jobs here. Let the Chinese pay if they want a plant in China,” he said.

Like Dossett, Andy Nirschl worked for an industry damaged by unfair trade. He was a process operator, controlling pulp, for the NewPage Corp. Kimberly mill in Wisconsin. It made the kind of glossy paper used in magazines and new car catalogues. The mill had operated in the town of 5,000 since 1889 and was the largest employer. Kimberly was NewPage’s largest producer, but the Ohio corporation closed it after a defeat in a trade case with China under the Bush administration.

Andy Nirschl

That was Sept. 30, 2008. Nirschl, president of USW Local 2-9, knows all the gory details: 475 Steelworkers lost their jobs, and 125 salaried guys got thrown out of theirs. When NewPage refused to sell or re-open the plant, the town considered renaming its high school teams. They are called the papermakers.

Nirschl’s wife, who had worked at home, had to switch jobs so the family could get health insurance. He’d married late in life, so he had a good start paying off his mortgage. He isn’t behind yet but knows lots of fellow Steelworkers who are. He has only one credit card and no debt on it or on his cars, so he’s in better shape than many of his friends. Still, his family has cut out vacations and eating at restaurants.

Nirschl got a new job earlier this month, a good union job with the state helping the unemployed find work. It doesn’t pay as much as the mill did but has good benefits. The pay comes from the $700 billion stimulus package, and he’s hoping the position is renewed in the state’s next budget year in June.

He says he hopes Congress gets on board to save the American auto industry. He says his friends understand that to have a strong, solid economy, America must manufacture. It’s not clear to them why politicians are willing to back struggling banks with billions but balk at supporting industry.

Like Nirschl, Kevin Vest talks about a cycle of industrial life. It’s obvious to him. The haul truck driver furloughed with 600 fellow Steelworkers Feb. 13 from Freeport McMoRan’s Chino mine in New Mexico, where they extracted copper and molybdenum, a steel hardener, offers this story:

He read in a newspaper about a $100 million wind farm to be built near his daughter’s house in Arizona. The 30 wind turbines are to be manufactured by a company from India and the huge towers are to be constructed in Mexico. Vest wants to know why GE can’t make those turbines. If the American company did the work, they’d probably buy the copper wire for the turbines from an American company. And that company might buy the ore to make the wire from his mine – or some other downed U.S. copper mine, putting some Steelworker back to work. If there’s one cent of tax breaks or stimulus money in this wind farm, then it’s doubly outrageous to employ Indian and Mexican workers.

For the same reason, Vest always buys American cars. There’s copper wire in engines and molybdenum (molly) in other steel car parts. Buying that car keeps him employed, but also fellow Americans who make the glass and axles and all the other parts.

And he’s got news for people who deride the quality of American cars. He’s owned a series of them and driven them more than 150,000 miles with no problems. Now he has a 1997 Chevy Silverado with 160,000 miles on it that he’s planning to drive 1,400 miles to Iowa to visit relatives. His father has owned nothing but American cars, and when his brother bought a Nissan, told him to park it down the street. “When I got out of the service,” Vest said, “my dad tried a Toyota Celica GT. . . He looked at me and said he felt bad to have even test driven it. He bought a Ford Ranger pick up.”

At 54, Vest is without health insurance and behind on his credit card payments. He owes $2,000, and the collector is hounding him. He is hoping to get a job at a mine in Arizona, close to where his daughter lives. But that may not be possible until copper prices rise.

Workers like Vest, Nirschl, Dossett, Arends and me are taking the message to Washington D.C. this week for a teach-in to explain how crucial manufacturing is to the economy of this country and how essential manufacturing is to construction of automobiles in this country, not just the final product, but also all those products leading up to the final car — from glass for windshields to glossy paper for brochures. We are going to try to explain that 7.2 million paychecks are dependent on U.S. autos, including health care, education, service and other jobs, so that the politicians and policy makers understand clearly that the very idea that General Motors would ask for taxpayer dollars to ship more car manufacturing overseas – and then import the cars – is an insult and an affront to American workers – as well as an economic threat to the country. We are not going to allow American manufacturing to starve for support. But that support cannot go to pay for manufacturing overseas, or ever more American families will end up stretched like Arends, Dossett, Nirschl and Vest.

Leo W. Gerard

By Leo W. Gerard
International President

April 30, 2008, two days after Workers Memorial Day last spring, a mammoth steel girder crushed to death a 61-year-old crane repairman who worked at ArcelorMittal in Burns Harbor, Ind. A 33-year-veteran of the mill, the member of United Steelworkers (USW) Local 6787 left behind a wife and two sons.

He became one of the 21 to die that day at work, the 21 who die each day at work.  To reduce that daily toll, to make Workers Memorial Day less memorable, the U.S. Labor Department and the Occupational Safety and Health Administration must be properly funded and empowered.

The 5,680 workplace deaths each year are called “accidents” in hushed tones in funeral homes when widows or widowers speak of what befell the loved ones they’d kissed as they left for work, never suspecting they’d never return. But they’re not accidents if the employer failed to supply safety equipment, sufficient workers to safely perform the task, or, generally, a safe working environment.

Employers must provide safe workplaces. For those who don’t understand that moral requirement, Congress established a legal mandate with the Occupational Safety and Health Act of 1970. Under OSHA, the Department of Labor created regulations and enforcement mechanisms “to promote the safety and health of America’s working men and women.”

August 15, 2008, a 41-year-old electrical apprentice from Superior, Ariz. was fatally electrocuted while replacing the ballast in a 480-volt flood light on the edge of the Asarco LLC Ray Mine copper pit in Kearny, Ariz. He’d trained for a year and 20 weeks as an electrician, but for 13 years before that had worked at the mine as a member of the USW, and his former Steelworkers local union president, Celestino Flores, said of him, “He was such a hard worker. . . Such a good guy.”  The U.S. Department of Labor cited Asarco, saying, “The accident occurred because management policies and controls were inadequate and failed to ensure that the electrical circuit was deenergized, locked-out, tagged, and tested before work was performed.” But the Labor Department never imposed fines, and after all the mine’s electricians received training, it rescinded the citation.   

Something is wrong. Over the past eight years, the Bush Administration managed to emasculate many regulatory agencies, including the Labor Department and OSHA.  The federal OSHA program has 570 fewer inspectors today than it did in 1980, for example, and its budget of $486 million for 2008 amounted to only $3.89 per worker.

An Office of Inspector General audit report describes one terrible result of this government-shriveling process – additional deaths at workplaces with histories of deaths. The March 31, 2009 report carries an intimidating but also chilling title: “Employers with Reported Fatalities were not Always Properly Identified and Inspected under OSHA’s Enhanced Enforcement Program.”

That special enforcement program (EEP) is for “employers indifferent to their obligations” under the OSHA act. In the audit, the Inspector General found that under the Bush Administration, OSHA was not properly identifying employers for enhanced enforcement. And even when it did, OSHA failed to take proper action. For example, in 29 cases, it “did not take any of the appropriate enhanced enforcement actions. Sixteen of the 29 employers subsequently had 20 fatalities.”  In 14 of those, the violations were similar to the initial ones. But the employer suffered no OSHA penalty the first time. The violation recurred. And another worker died.

“While we cannot conclude that enhanced enforcement would prevent subsequent fatalities, full and proper application of EEP procedures may have deterred and abated workplace hazards at the worksites of 45 employers where 58 fatalities occurred,” the auditors wrote.

January 4, 2009, a 46-year-old municipal worker died of drowning and blunt force trauma when he apparently was caught in a conveyor system and dragged into a pit at the Galveston, Texas waste water treatment plant. A member of USW Local 13-1, he worked for the City of Galveston for a decade. The co-founder of the Galveston Hurricanes and the team’s coach for 14 years, he left behind a widow and three sons.

Tuesday, April 28, is this year’s Workers Memorial Day. The date marks passage of OSHA, which clearly needs to be enforced so fewer bells are tolled on this day to commemorate dead workers and so fewer workers die ignominiously in waste water treatment plants.  Two weeks ago, on the deadline for filing federal income taxes, tea bag protestors cavorted across the country at the behest of conservative talk show hosts. Still conservatives are trying to shrink government, end regulation, strangle enforcement. For American workers, who depend on OSHA for their lives, smaller is perilous. For their very survival, workers need robust regulation immediately.

February 2, 2009, a tracked timber-loading crane ran over and crushed a 65-year-old crane operator at International Paper in Augusta, Ga. A 43-year veteran of the plant, he’d been scheduled to be off that day but went in anyway when called and worked a job not normally his. He left behind a wife, two children and five grandchildren, all of whom had hoped to see him retire next year. A member of USW Local 983, he was, ironically, EMS trained, functioned as a first responder for International Paper and taught CPR.

Robert Kutner

By Robert Kutner
Co-Founder and Co-Editor of The American Prospect

Here is a fine example of why a despairing President Truman once said, “Bring me a one-armed economist.” Our quote of the day comes from Martin N. Baily, an economist at the Brookings Institution, who was once on President Bill Clinton Council of Economic Advisers. The quote, incidentally, was the centerpiece of Peter Goodman’s lead article in the Sunday New York Times News of the Week Section, “Printing Money – and its Price” — expressing alarm that President-Elect Obama’s stimulus program will over-spend and over-borrow.
Baily told the Times:

“We got into this mess to a considerable extent by overborrowing. Now, we’re saying, ‘Well, O.K., let’s just borrow a bunch more, and that will help us get out of this mess.’ It’s like a drunk who says, ‘Give me a bottle of Scotch and then I’ll be O.K. and I won’t have to drink anymore.’ Eventually, we have to get off this binge of borrowing.”

But, wait, here comes the predictable “on-the-other-hand” that drove President Truman to look for a one-handed economist. Goodman, in alarmist mode, continues disapprovingly:

“‘This is a dangerous situation,’ says Mr. Baily, essentially arguing that the drunk must be kept in Scotch a little while longer, lest he burn down the neighborhood in the midst of a crisis. ‘The risks of things actually getting worse and us going into a really severe recession are high. We need to get more money out there now.’”

What is totally unhelpful here is the Times’ use of misleading metaphors about drunks, and Baily’s sloppy and promiscuous use of the pronoun, “we.” In fact, “we” did not borrow recklessly. Many financiers speculated with borrowed money to get very rich, and the financial economy is now unraveling as their assets turn out to be worthless. The Bush administration plunged the Treasury deeper into debt so that millionaires could pay lower taxes and a needless war could be waged. The entire economy borrowed from foreign central banks to finance purchases of products that the U.S. economy no longer made at home because of a perverse trade policy. And yes, consumer borrowing increased to make up for wages that were stagnant or declining. But that is not an undifferentiated “we” in the sense of thee and me. Mainly, it is a “we” made up of the rich, the powerful, their political enablers and their perverse policies.

So now that “we” are collectively up a creek, what exactly should we do? First, the rest of us need to take back our democracy from the tiny elite we that got us into this predicament. And in deciding what course to pursue, let’s appreciate that Baily’s left hand is much wiser than his right one: the government needs to spend a lot of money, so that the collapsing private economy does not end up as Great Depression II. When recovery comes, we can get the budget closer to balance. But if we attempt fiscal austerity in a severe recession, depression is all but guaranteed.

However, en route to a sensible stimulus program, President Obama will need to hack his way through a forest of elite nay-sayers like the Times article. Republican Senator Lamar Alexander (TN) said of a proposed stimulus package in the range of a trillion dollars, “I don’t even want to think about a number that big.” The President-Elect will face almost wall-to-wall Republican opposition.

Others contend that government is just not capable of spending large sums efficiently in short order. Infrastructure spending is debunked as taking too long to conceive, plan, and execute. “It’s actually very hard to spend $700 billion quickly,” New York Times columnist David Brooks argued. “If you’ve got a tiddlywinks hall of fame, they’re going to fund that thing.”

In fact, state and local governments and school districts are likely to suffer a revenue shortfall approaching $200 billion by next year. All the federal government has to do is write a check to cover that amount, and not a single policeman, fire-fighter, teacher, or first-responder need be laid off; not a single human service office closed; and not a single public project deferred.

These are not new projects that take time to conceive and plan. This is about preventing layoffs and shutdowns of existing public services. And Washington should also help non-profit social service agencies that are reeling from cuts in charitable giving and foundation losses as well as declining local government aid.

Some housing projects take a while to conceive. But according to Anne Gelbspan, a Boston non-profit community developer, finance for “shovel-ready” affordable housing projects has dried up in the current crisis. That’s because Congress foolishly structured our non-profit housing system to depend on tax credits for private financiers–who are now too traumatized to lend. If Washington substituted direct lending, these projects could move forward.

The federal government could also usefully spend money subsidizing mortgage rates on starter homes and on refinancing mortgages at low interest rates so that people at risk of foreclosure could keep their homes.

And even if universal health insurance is too heavy a lift for Obama’s first hundred days, part of the stimulus could go directly to community health clinics, which are already stretched to their limits.

An emergency infusion of federal cash could make public universities affordable again, and increase the value of Pell Grants. It’s far better to have young people attending classes (and not graduating saddled with huge debts) than to have them clogging unemployment rolls.

Another easy way of raising purchasing power is a temporary cut in the payroll tax. That’s a quick 6.2 percent after-tax raise for all workers. To qualify, businesses would have to resist the temptation to cut wages or employee benefits.

Still other doubters worry about increased deficits rekindling inflation. A loss of confidence in the value of the dollar, warns the same Peter Goodman in the Times, “would force the Treasury to pay higher returns to find takers for its debt, increasing interest rates for home and auto buyers, for businesses and credit-card holders.

Well, in case Goodman doesn’t read the Times’ financial page, the government’s current borrowing cost on 30-year bonds is currently around 2.5 percent. That means private investors here and abroad are willing to lend the federal government money for 30 years at a very low yield. Thirty years! The markets are aware that larger federal borrowing is in the offing. If markets anticipated inflation, they would be demanding far higher rates.

The government should sell lots of these bonds, and lock in a low rate. The national debt is going to have to rise for a time–the alternative is a depression–and the government might as well finance that debt cheaply. A cost of 2.5 percent for thirty years is effectively zero; it’s lower than the likely rate of inflation.

Once recovery comes, more credit will begin flowing to private investments again. There will no longer be a stampede into the safety of Treasury bonds, and government borrowing costs will rise. By then, the government can begin paying down debt, as we did after World War II.

So there is no shortage of good uses for a trillion dollar stimulus package, and no shortage of funds to finance it–and no good alternative. There may, however, be a shortage of political will. And that’s where the exceptional leadership of our new President will face its first big test.

President Obama will need to ignore the nay-sayers, and win over public opinion to the proposition that temporary use of very large deficits is preferable to a great depression. It is bizarre than any educated person thinks otherwise.

Robert Kuttner is co-editor of The American Prospect. His new best-selling book is “Obama’s Challenge: America’s Economic Crisis and the Power of a Transformative Presidency.”

First Published on The Huffington Post

Dean Baker

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

The Detroit automakers have made many mistaken business decisions that have been important factors contributing to their current crisis. However, they are not responsible for some of the factors that have brought them to the brink of bankruptcy.

Most obviously, they are not responsible for the collapse of the housing bubble and the subsequent loss of more than $15 trillion in housing and stock wealth. This falloff in wealth has sent consumption plummeting. The auto industry has been especially hard hit, with sales falling by more than 30 percent year over year in the last two months.

The Big Three are also not responsible for the broken U.S. health care system. If we paid the same amount for health care as Canada, G.M. would have accumulated an additional $22 billion in profits over the last decade.

That would be the savings if we assumed that General Motor’s health care expenditures were reduced by roughly 48 percent to be in line with expenses in Canada. Of course, not all the savings in this counterfactual would have gone to profits. Some of it would have gone to workers in the form of higher wages or to consumers in the form of lower car prices.

On the other hand, G.M. is also picking up the tab for many spouses and dependent children. It would not have to pay these health care expenses in a Canadian type system. So the $22 billion figure is probably not a bad first approximation of the additional money that G.M. might have today if the United States had a more efficient health care system.

Even with these additional profits G.M. and the other domestic manufacturers would still face serious problems. They have made some bad choices in betting their future on SUVs and other low-mileage vehicles. They also have lagged foreign manufacturers in producing high quality, reliable cars.

But the real reason that Big Three are on their deathbeds right now is the economic crisis created by the Wall Street crew and their friends in Washington. It will be tragic if the people of the Michigan, Indiana, and Ohio are made to suffer through a depression because of the failed financial dealings of the Wall Street crew.

This situation is made even worse by virtue of the fact that most of the Wall Street executives who are directly responsible for this disaster are still quite wealthy, in large part because of the generosity of Congress and the Bush administration. While they demanded that the auto manufacturers produce plans for returning to profitability in exchange for providing loans, no similar conditions were imposed on Citigroup and the rest of the Wall Street gang.

As the autoworkers at the Big Three look at their last paychecks before an indeterminate period of unemployment, they should think about the portion deducted for income taxes. With this money, they have helped to ensure that Robert Rubin and other Wall Street types continue to enjoy pay packages in the millions or even tens of millions of dollars.

Happy Holidays!