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Dave Johnson

 By Dave Johnson
Fellow with Campaign for America’s Future

What will it mean to American businesses if – I should say when – Chinese imports cost as much as they should cost?

A currency and trade rebalancing is going to happen sooner or later because it has to. We can’t run a trade deficit forever. If something is unsustainable it can’t be sustained. Eventually we have to earn the money to pay off what we are borrowing and the only way to do that is with exports. The first step to that is to stop importing so much and at least make things to sell to ourselves.

This rebalancing could happen because China lets its currency approach market levels. Or, if China refuses to stop unfairly subsidizing their exports (their currency manipulation is just one piece of that) our government will have to impose tariffs on imports from China. There are other things that could change the current trade imbalance. The only thing that is for sure is that the current situation can’t just continue. We can’t just keep sending factories, supply chains, jobs, and dollars away. It’s a bubble that has to pop. And it will. American business should be planning for this approaching new era of American manufacturing.

Once the Chinese import bubble pops new phrases will enter the lexicon, so start getting used to them. “Re-shoring,” “on-shoring” and “insourcing” will replace “offshoring” and “outsourcing.”

A week ago I wrote about a CNBC segment on this,

For many years we’ve been hearing about outsourcing and offshoring. President Obama has started taking steps to rebalance world trade and the pendulum is about to start swinging the other way. More and more often you’ll be hearing new words: “insourcing,” “on-shoring” and “re-shoring.”

Watch this CNBC segment from Friday, Made in America Making a Comeback.

American businesses — are you ready? It’s coming.

P.S. Here’s a stock tip: machine tools.

Update and P.S. –

Re-Shore at the NTMA/PMA Contract Manufacturing Purchasing Fair

Help bring manufacturing back to the U.S.!
At last somebody is doing something: the May 12, 2010 NTMA/PMA Purchasing Fair focuses on re-shoring. The dollar  is down vs. many currencies. JIT and R&D are best supported, and carbon footprint minimized, by local sourcing. The time is right for this effort to succeed.
Customers bring your off-shored work! Vendors bring your best technical ideas and sharp pencils! Learn More

Click through!

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project..

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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

GOP Chairman Michael 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.

Steele wrote:

Obama Promised Recovery Act “Will Create Good Jobs That Pay Well And Can’t Be Shipped Overseas.” (The White House, “Remarks By the President and the Vice President on the American Recovery and Reinvestment Act,” 4/13/09)

REALITY: Recently Distributed Stimulus Funds Going To Foreign Corporations Creating Jobs Overseas. “Nearly half of the $2.4 billion in federal grant money awarded Wednesday to stimulate the U.S. economy and boost the production of hybrid and electric vehicles went to six companies with ties to places as far away as Russia, China, South Korea and France. … But because so few American companies have the necessary technology, much of the money will initially go toward manufacturing electric vehicle batteries overseas.” (Jerry Seper, “Obama Sends Stimulus Aid To Foreign Firms,” The Washington Times, 8/6/09)

Steele is pointing out a fact that United Steelworkers President Leo Gerard noted months ago on CAF’s website:

Of the $1.05 billion in clean energy grants awarded by D.C., $849 million — 84 percent — went to foreign wind companies, according to an analysis by Russ Choma of the Investigative Reporting Workshop.

Gerard, who as president of the nation’s largest industrial union in the country was intimately involved in the negotiations, said :

A strong, broad Buy-American clause in the stimulus bill could have prevented the off-shoring of U.S. tax dollars intended to create jobs for unemployed Americans. My union, the United Steelworkers, and the AFL-CIO pushed hard for that language, and polls showed 86 percent of Americans supported it. Republicans and lobbyists for multinational corporations that wanted to spend U.S. tax money overseas opposed Buy American provisions.
Congress adopted weak, limited Buy American language. Now D.C. exports stimulus dollars to create jobs in foreign countries.

Republicans went all out attacking Buy America as “bad for America”. 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.”

The truth is, as studies show, infrastructure investment can create by up to 33 percent more jobs when strong Buy America provisions are included.

It’s ironic that Republicans who make a point of using strong rhetoric against Islamo-fascist terrorists go mute as Wall Street economic terrorists attack our country’s manufacturing base by shipping jobs overseas.

Buy America provisions are supported by 86 percent of the American public who thinks American taxpayer money should go to create American jobs. Furthermore, as a recent Gallup/USA Today poll shows, Americans think the best way to create jobs is through protecting manufacturing from foreign threats.

Meanwhile, Steele issues another smoke-and-mirrors press release, hoping that voters won’t recognize that his conservative party is opposed to a policy that is essential to allowing American manufacturing to revive.

Bill Scher

 

 

By Bill Scher
Online editor for

Campaign for America’s Future

Source: Economic Policy Institute

 Sen. Majority Leader Harry Reid unveiled plans for a series of job-related bills, but details remained sketchy apparently because negotiations are still ongoing to secure enough Republican support to avoid filibuster. Unsurprisingly, weaker tax cut proposals are more likely to get bipartisan support than robust public investment proposals.

So far, Senate leaders are not saying how big their proposals will be, nor how much jobs they are expected to create.

Perhaps they need us to put a fine point on how giant the jobs hole is that we’re in.

To return the level of employment we had before the recession began, we need to create 402,000 jobs month for three years straight.

The $154 billion House jobs bill won’t come close to filling that jobs gap either — only a third of the cost goes towards creating jobs, the rest to prevent layoffs and help the jobless — but it would least take a bigger step than what the Senate is cooking up.

Unless the magnitude of the jobs crisis is made clear, and unless the grassroots loudly demands bold action that meets the size of the crisis, the Senate process will be a race between the parties to see how small can you make a jobs bill and still call it a jobs bill.

Click here to tell your Senators: Pass a real jobs bill!

Jobs Now: The Urgency Of The Need

The official unemployment rate stood at 10.0 percent in December 2009. But that only tells part of the story. To understand the real magnitude of the recession, add those forced to work part-time or who have given up searching for a job altogether. That means a combined unemployment/underemployment rate of 17.3 percent. That’s 27 million Americans who need a full-time job. That’s double the number of people needing work in 2008.

We’re making progress, but not nearly enough. We still lost more than 7 million jobs since the recession began. According to the Economic Policy Institute, to fill the gap in employment and keep up with population growth, we need to create about 402,000 jobs a month over the next three years. That’s ambitious, but we’ve come close before: In 1994, the economy created an average of 320,000 jobs a month. But we never came close to that performance between 2001 and the start of the economic meltdown, and we’re certainly nowhere close to that right now.

The best jobs are disappearing most quickly. In December 2009, we lost a total of 85,000 jobs—but a third of those jobs were in the manufacturing sector. Overall, service-producing sectors have fared much better, and in some instances gained jobs, in the recession compared to the goods-producing sector. This indicates that workers may be settling for lower-paying jobs in order to find work.

America’s manufacturing sector has been on the decline as a result of offshoring, global competition and absence of a national industrial policy. In 1980, manufacturing jobs made up 20 percent of the workforce; today manufacturing represents just 9 percent of jobs. Since 2000, one in three manufacturing jobs has been lost—1.2 million of those in 2009.

We know what works. We just need the political will. We can jump-start the economy by putting people to work doing the work that needs to be done. Here are the facts:

• Every dollar spent on infrastructure projects generates $1.59 worth of economic benefits: people hired, goods and services purchased, taxes paid. Every dollar spent on corporate tax cuts or on making the Bush tax cuts for the wealthy permanent only generates about 30 cents of economic benefit. (EPI/Moody’s Economy.com)
• Every billion in federal transportation investment supports 35,000 jobs (SharedProsperity.org); every billion spent on school construction supports 8,000 jobs (Congressional Research Service).
• Each billion spent on the Apollo Alliance green-energy investment program would create 200,000 jobs; the full $60 billion program would create 1.2 million short-tern and long-term jobs, plus yield billions of dollars worth of economic and environmental benefits. (Apollo Alliance)
• A transaction tax on Wall Street trading of just 0.5 percent—less than one-tenth of the percentage tax many people pay in sales tax on clothes or a restaurant meal—would in 10 years cover the full cost of a robust jobs and economic recovery plan. It would have a negligible impact on routine stock trades but it could curb the kind of high-velocity, speculative trading that helped inflate the Wall Street bubble and set up the financial crash. (EPI)

With 27 million Americans out of work or underemployed, now is not the time to cut deficits and freeze spending. The Obama budget projects unemployment to be at 9.8 percent when the domestic discretionary spending freeze kicks in, and the biggest danger is that spending restraints will stall recovery—and increase deficits as mass unemployment continues.

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In addition to writing for CAF, Huffington Post and Bloggingheads.tv, Bill Scher has his own blog at LiberalOasis.com. He’s also the author of the book, Wait! Don’t Move To Canada!: A Stay-and-Fight Strategy to Win Back America and a fellow of the Commonweal Institute.

Roger Bybee

By Roger Bybee
Milwaukee Freelance Writer

As rescue attempts go, the Obama administration and its Auto Task Force are pursuing a peculiar course: They seem intent on keeping General Motors and Chrysler afloat as corporate entities by tossing more U.S. workers overboard.

Even as unemployment rates soar in longtime GM-centered communities hit by shutdowns, such as Janesville, Wis. (14.7 percent), and Flint, Mich. (15.3 percent), Obama and his task force pressed GM and Chrysler for more cuts. GM plans to shut down at least 14 factories and discard some 21,000 workers. Chrysler is closing eight U.S. plants, though it claims that somehow its merger with Fiat will result in a new increase of 5,000 jobs. In a telling observation that carried unsettling echoes of Bill Clinton’s push for NAFTA, the New York Times called the job cuts and other worker sacrifices “steps that most analysts thought could never be pushed through by a Democratic president allied with organized labor.”

The most recent version of GM’s recovery plan-closely tailored to the demands of the task force-calls for a stunning 98 percent increase in autos produced in Mexico, China, South Korea and Japan for the U.S. market. In May, the United Auto Workers (UAW) and United Steelworkers launched a 36-city campaign to prevent GM “from importing small cars from China, a move that would have increased GM’s profits while very likely reducing the number of domestic automobile jobs,” the New York Times reported June 2. This last-minute drive was successful, but it’s still unclear exactly what modifications GM will make.

For its part, Chrysler announced May 1 (the day after it filed Chapter 11 bankruptcy) the closing of its Kenosha, Wis., engine plant and the transfer of many of the plant’s 850 jobs to Mexico. As recently as the day before, top Obama administration and Chrysler officials had assured Wisconsin legislators that the Kenosha plant would be preserved. Faced with a firestorm of protest for using federal dollars to transfer jobs to Mexico, Chrysler now says that Fiat will consider keeping the plant open.

On top of all that, job losses will balloon with the closing of more than 1,100 GM and 789 Chrysler dealerships, eliminating tens of thousands more jobs.

Although Obama hasn’t ordered auto industry cuts himself, “the revamping of the nation’s largest car company is being guided by the administration’s auto-industry task force, and it follows the president’s calls for a leaner, healthier industry,” DowJones.com reported on May 12. The Obama administration’s downsizing of the auto industry, established as a precondition for approximately $30.5 billion extended thus far in loans to GM and Chrysler (with another $20 billion in the pipeline), sharply contrasts with the lightly-conditioned, larger bailout of Wall Street. Nomi Prins, author of It Takes a Pillage, a forthcoming book on the Wall Street meltdown and its roots in Washington, estimated that Wall Street has received $12.5 trillion-nearly 400 times more-in loans, loan guarantees and taxpayer subsidies for the sale of risky loans.

Contradictory policies

Only three of the Auto Task Force’s members were notably pro-labor, despite protests from labor and auto-state lawmakers. “The Auto Task Force members are basically red-pencil types who looked at saving the auto industry on the cheap without much consideration to social costs, let alone generating green alternative jobs for auto,” says economist and author William K. Tabb. “They have the narrowest business criteria for auto, unlike the banks that got capital and loan guarantees worth trillions. So their focus was to save the auto companies but not the auto workers.” Essentially, Obama and the task force wanted a quick and cheap solution to the Big Three’s ailing finances rather than providing an endless flow of resources, as the government did to the “too-big-to-fail” financial sector.

Bizarrely, the Auto Task Force’s policy direction dramatically undercuts Obama’s $787 billion economic stimulus program. “The problem with GM’s new Washington-mandated restructuring plan is that it steps on the gas in the wrong direction,” UC Berkeley professor Harley Shaiken told NPR’s “Marketplace.” “The stimulus package spends $800 billion to create jobs, while billions in loans to GM are conditioned on eliminating them.”

In addition to the factory job and dealership cuts, GM will unload its Pontiac, Saturn and Hummer brands. By contrast, the Italian government provided $1.7 billion in aid to Fiat as long as Italian plants stay open, noted Robert L. Borosage of the progressive coalition Campaign for America’s Future. Also, France loaned $8.5 billion to its big three automakers, in exchange for pledges to keep jobs in France.

Labor advocates fight back

After months of the UAW trying to avoid a fight with Obama, in early May it began openly challenging the use of taxpayer loan money to finance the outsourcing of jobs. “We believe (GM) should have an obligation to build in this country the vehicles it will be selling in the U.S. market, thereby maintaining the maximum number of jobs in the United States,” UAW legislative director Alan Reuther wrote to the Senate.

Former Clinton Secretary of Labor Robert Reich blasted the notion of paying billions of taxpayer dollars to keep companies afloat while they cut tens of thousands of jobs and wages. “We’re transferring money from taxpayers to Big Three shareholders for no apparent reason other than the Big Three are headquartered in America,” he said. “Why should taxpayers foot any of this bill unless the Big Three agree to keep their workers employed while they try to turn themselves around?”

The full answer to that question remains unanswered at this moment, as the two corporations’ plans for future outsourcing are unavailable. But significantly, the Auto Task Force didn’t explicitly require that federal assistance be directed to renewing production in the United States. Furthermore, following conventional management wisdom, “the Obama administration structured the GM and Chrysler plans to lessen the union’s voice in management,” the New York Times stated.

But so far, the mainstream media hasn’t much noticed or criticized the contradictions between Obama’s plans to simultaneously stimulate job growth and shrink GM and Chrysler. With all the attention on unwarranted Wall Street bonuses, major media lump Wall Street brokers’ compensation and CEO pay with autoworkers wages as part of the same culture of “excess.” Reports that autoworkers were paid as much as $73 an hour quickly spread through the media.

Actually, the typical wage is $26 to $28 an hour, plus an additional $10 or so in benefits, according to the Center for Automotive Research. UAW’s agreement to accept a new starting wage of $14.20 an hour with vastly reduced benefits received little attention. Neither did the fact that UAW-represented plants ranked “very favorably” on quality and productivity compared to Japanese “transplants” in the United States, according to independent industry assessments.

Shielded by a lack of accurate and coherent media analysis, the Auto Task Force used a narrow and conventional single-firm turnaraound framework to create a strategy for GM and Chrysler. “A hedge fund wants to make money fast for its client-in this case, the taxpayer-without regard to social cost,” Shaiken says. “Unlike most clients, however, the taxpayer picks up the social cost. Longer unemployment lines and more foreclosures are devastating for the victims, not cheap for the rest of us.”

But the Auto Task Force seemed largely oblivious to the human costs of eliminating thousands of U.S. auto jobs. Obama and his task force withheld billions of dollars in new loans requested by GM until after the company came up with a more aggressive program of job cuts, plant closing and outsourcing. The Auto Task Force rapidly divorced the reinvigoration of GM and Chrysler from a longer-term shift to a fuel-efficient economy and production not just of high-mileage cars, but also of mass-transit equipment for buses and high-speed rail.

Ironically, GM’s ruthless downsizing of its U.S. workforce and outsourcing of jobs over the last 25 years diminished its leverage with the Obama team. GM has discarded 85 percent of its domestic production since 1990-and that was before it hit the current recession and the resultant nosedive in sales. It was no longer “too big to fail.”

So Obama and the Auto Task Force felt free to promote a recovery strategy for the two ailing auto firms that stands in appalling contrast to the generosity shown Wall Street. GM and Chrysler headquarters will remain intact, but thousands of U.S. workers will be vaporized, retiree health benefits could be put on the chopping block (especially at Chrysler) and numerous industrial communities will suffer permanent damage. And the Obama team has forfeited the opportunity to recast the current crisis into a fuel-efficient re-industrialization of America-right when the country needs the stimulus of  high-wage green jobs the most.

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• First published in In These Times. To subscribe, click here.

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Roger Bybee is a Milwaukee-based freelance writer and progressive publicity consultant whose work has appeared in numerous national publications and websites.

David Sirota

By David Sirota
Author of “The Uprising: An Unauthorized Tour of the Populists Revolt” 

The most-stunning and least-reported news about President Obama’s press conference with health-industry executives this week wasn’t those executives’ willingness to negotiate with a Democrat. It was that Democrat’s eagerness to involve those executives in a discussion about health-care reform even as they revealed their previous plans to pilfer $2 trillion from Americans.

That was the little-noticed message from the made-for-TV spectacle administration officials called a health-care “game changer”: In saying they can voluntarily slash $200 billion a year off the country’s medical bills over the next decade and still preserve their profits, health-care companies implicitly acknowledged they were plotting to fleece consumers, and have been fleecing them for years. With that acknowledgment came the tacit admission that the industry’s business is based not on respectable returns, but on grotesque profiteering and waste – the kind that can give up $2 trillion and still guarantee huge margins.

Chief among the profiteers at the White House event were insurance companies, which have raised premiums by 119 percent since 1999, and one obvious question is why – why would Obama engage those particular thieves?

It’s a difficult query to answer, because Obama is a health-care mystery, struggling to muster consistent positions on the issue.

Listening to a 2003 Obama speech, it’s hard to believe he has become such an enigma. Back then, he declared himself “a proponent of a single-payer universal health-care program” – i.e., one eliminating private insurers and their overhead costs by having government finance health care. Obama’s position was as controversial then as today – which is to say, controversial among political elites, but not among the general public. ABC’s 2003 poll showed almost two-thirds of Americans desiring a single-payer system “run by the government and financed by taxpayers,” just like CBS’s 2009 poll shows roughly the same percentage today.

In that speech six years ago, Obama said the only reason single-payer proponents should tolerate delay is “because first we have to take back the White House, we have to take back the Senate, and we have to take back the House.”

This might explain why when Illinois contemplated a 2004 health-care proposal raising insurance lobbyists’ “fears that it would result in a single-payer system,” those lobbyists “found a sympathetic ear in Obama, who amended (read: gutted) the bill more to their liking,” according to The Boston Globe. Maybe Obama didn’t think single-payer was achievable without a Democratic Washington. And when in a 2006 interview he told me he was “not convinced that (single payer) is the best way to achieve universal health care,” perhaps he was following the same rationale, considering his insistence that he must “take into account what is possible.”

Of course, even as a senator aiming for the “possible” in a Republican Congress, Obama promised to never “shy away from a debate about single payer.” And after the 2008 election fulfilled his single-payer precondition of Democratic dominance, it was only logical to expect him to initiate that debate.

That’s why the White House’s current posture is so puzzling. As The Associated Press reports, Obama aides are trying to squelch any single-payer discussion, deploying their health-care point-person, Sen. Max Baucus, D-Mont., to announce that “everything is on the table with the single exception of single-payer.”

So it’s back to why – why Obama’s insurance-industry-coddling inconsistency? Is it a pol’s payback for campaign cash? Is it an overly cautious lawmaker’s paralysis? Is it a conciliator’s desire to appease powerful interests? Or is it something else?

For a president who spends so much time on camera answering questions, these have become the biggest unanswered questions of all.

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 David Sirota is a fellow at the Campaign for America’s Future. Find his blog at OpenLeft.com or e-mail him at ds@davidsirota.com

Robert Borosage

By Robert L. Borosage

Co-Director

Campaign for America’s Future

Free fall. The US has lost private sector jobs for 10 straight months. One quarter of all businesses in the US plan to cut payroll over the next year. Retail sales fell in October by the largest monthly drop on record. Auto sales have collapsed, driving the auto companies towards the precipice. Unemployment is up to 6.1%, with most analysts predicting it will soar past 8% over the next year. (That translates into unemployment among young minority men at rates of 50% or more). States are now facing $100 billion in deficits in operating budgets for the next fiscal year. Twelve million homes are “under water,” worth less than their mortgages. The US has joined Germany and Japan in what is becoming a global recession.

The era of big government is over is over. In the crisis, we are, as Richard Nixon once said, “all Keynesians now.” Former Clinton Treasury Secretaries Robert Rubin and Lawrence Summers, until recently notable deficit hawks, now call for substantial fiscal stimulus — deficit funded federal spending — to get the economy going.

Summers whose alliterative guidelines for this year’s earlier $150 billion stimulus — “timely, temporary and targeted” — helped to fix its mistaken focus on tax rebates, has changed his consonants. Now he says the stimulus should be “speedy, substantial and sustained,” noting that some estimates on Wall Street have gone as high as “$500 to $700 billion.” Rubin agreed, saying “we need a very substantial stimulus,” while mumbling about needing to reduce the budget deficit over the longer run.

A major recovery program — featuring substantial public investment — will be inevitably the first initiative of the Obama administration. It should feature more spending than tax cuts — investing in renewable energy and conservation, in rebuilding everything from schools to bridges to a smart electric gird, in helping cities and states avoid crippling cuts of services, in keeping college affordable, providing health care to children, and aiding those most in need.

Our public investment needs can easily use the money. A stunning report by Eric Lotke at the Campaign for America’s Future details the staggering investment deficits that have accumulated over the last thirty years. For decades, we’ve chosen to cut taxes on the wealthy while starving vital public investments. The result is an America that is literally falling apart, while much of the private wealth was squandered in the speculative frenzy that now has leveled our economy. Rather than adding to that folly, we should be focusing on strategic public investments that will put people to work in the short term while contributing to a more competitive economy, a better educated citizenry and a cleaner environment.

The time to get started has already passed, as the downturn is accelerating. Tomorrow, as Senate Majority leader Harry Reid suggests, Congress should pass a $100 billion down payment on recovery, while instructing the Treasury Secretary to use some of the $700 billion rescue fund to help keep the auto industry from going belly up, with devastating effects throughout the Midwest.

But, as this is written, it looks like that won’t happen. Republicans didn’t get the message from the election, and apparently don’t read the financial section of the papers. The Republican minority in the Senate seems intent on adding one last obstruction to its ignominious record. Secretary Paulson has indicated that while he’s happy to throw $250 billion at Wall Street banks with no conditions, he isn’t ready to save the Midwest with a $25 bridge loan for the automakers under strict conditions.

In the face of the threatened Republican filibuster, this Congress is likely to adjourn for the final time without acting on the deepening economic downturn. When the new administration and the new Congress convene next January, the crisis here — and across the globe — will surely be far worse. Make no small plans, President Obama, you are about to inherit the full catastrophe.