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Leo W. Gerard

By Leo W. Gerard
USW International President

The GOP has adopted the Ken Lay principles – that is obfuscation, false statements and feigned innocence. Republicans are obfuscating about the real reason for their opposition to extending unemployment benefits, the way Enron CEO Ken Lay concealed the truth about billions in losses his corporation racked up.

Lay assured Enron workers the corporation was strong – five weeks before it failed. When the nation’s 7^th largest corporation collapsed into bankruptcy in 2001, Lay walked away, by his own estimate, with $20 million. By contrast, Enron’s 4,000 workers and creditors left with debts. The employees lost their jobs and pensions, and the creditors lost $65 billion.

Lay cooked the books. A jury, and a judge in a separate case, convicted him of it in 2006 – finding him guilty of fraud, conspiracy and false statements. He obscured Enron’s massive losses with accounting hocus-pocus then lied about it so pervasively and persuasively that in February of 2001, ten months before the bankruptcy, Fortune magazine awarded Enron first place for innovation and second for management quality.

Republican acolytes of the Ken Lay way contend that the federal budget deficit prohibits spending $65 billion to extend emergency unemployment insurance for a year. But, at the same time, they insist the deficit doesn’t constrain extending tax cuts to the richest 1 percent at a cost of $61 billion for the year 2011. It’s masterful. And as corrupt as Ken Lay.

In the past 60 years, Congress has never terminated emergency unemployment benefits when joblessness was this severe. The highest point at which Congress ended the program previously was 7.2 percent, and that rate was declining. Now, unemployment is stuck at a rate significantly higher — 9.6 percent. There are 14.8 million unemployed workers, five jostling for every single job opening. They subsist on unemployment checks averaging less than $290 a week, which for too many is insufficient to forestall foreclosure because it’s half of what an average family spends for necessities.

Despite that six-decade precedent, Republicans blocked extension of unemployment benefits on Tuesday, then on Wednesday announced they’d vote on no measure until they got renewal of the Bush tax cuts and a resolution continuing funding for the federal government. As a result, 800,000 jobless Americans lost those small, family-preserving checks. Republicans are holding them hostage, with a ransom demand of tax cuts for the nation’s richest 1 percent. If the GOP doesn’t get what it wants, 2 million will lose unemployment insurance by year’s end.

Like Ken Lay, Republicans mouth right-sounding words. They claim they care about creating jobs and improving the economy. All the while, just the way Lay covertly defiled accounts, the GOP kicks the economy in the stomach.

The non-partisan Congressional Budget Office (CBO) ranked unemployment insurance as among the best economic boosters and job creators. CBO determined it generates as much as $1.90 in economic activity for every government dollar. Similarly, a study by the Economic Policy Institute showed that extending the benefits for a year would create as many as 488,000 jobs, which, ultimately, would reduce the cost of benefits because those workers would pay taxes rather than seek food stamps.

Republicans swear that the way to create jobs is to extend the Bush tax breaks for the nation’s richest – people earning more than a quarter million dollars a year. The GOP slyly says those words over and over, hoping repetition will spin them into truth. Like Ken Lay’s assertion that Enron was strong as it disintegrated, the GOP tax cut talking point defies truth.

The CBO concluded that extending tax cuts for the rich was among the least effective economic stimulators. It calculated that extending unemployment insurance would revive the economy up to 19 times as much as extending tax cuts for the nation’s wealthiest 1 percent.  In addition, those tax breaks didn’t achieve promised job creation during the Bush administration. Since Harry Truman, no president but George H.W. Bush and Gerald Ford, both one-termers, generated fewer jobs than the 3 million George W. Bush did over his eight years. Even one-term “stagflation” President Jimmy Carter produced more than three times as many jobs as George W. Bush.

Again, aping Ken Lay, Republicans are engaging in accounting fraud. Professing deep concern over the budget deficit, Republicans say they’d extend unemployment insurance for a year if Democrats would cut federal spending by $65 billion to pay for it. They don’t acknowledge any parallel requirement to cut federal spending by $61 billion to pay for extending tax cuts for the rich for a year.

Just like Enron furloughing 4,000 while Ken Lay and fellow executives stole away with millions, Republicans would take food from the mouths of the unemployed while bulking up the deficit to appease the rich who feast on Almas caviar and White Alba truffles.

That’s corrupt accounting.

And it makes sense. It comes from the party of Ken Lay, who flew George H. W. and Barbara Bush on an Enron plane to George W’s inauguration. You can betcha Republicans won’t take responsibility for the personal and economic devastation caused by their decision to continue moving wealth from the middle class to the rich, just like Ken Lay denied responsibility for Enron’s bankruptcy – right up to his death — which occurred at a Colorado resort as he awaited sentencing.

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Leo W. Gerard also is a member of the AFL-CIO Executive Committee and chairs the labor federation’s Public Policy Committee. President Barack Obama recently appointed him to the President’s Advisory Committee on Trade Policy and Negotiations. He serves as co-chairman of the BlueGreen Alliance and on the boards of the Apollo Alliance, Campaign for America’s Future and the Economic Policy Institute.  He is a member of the IMF and ICEM global labor federations and was instrumental in creating Workers Uniting, the first global union.

Mike Hall

By Mike Hall
AFL-CIO Senior Writer

The number of working-age Americans who get their health care coverage through work dropped for the ninth year in a row in 2009, according to a new study by the Economic Policy Institute (EPI). The main reason, says the report, is the lousy economy and an unemployment rate that jumped from 5.8 percent in 2008 to 9.3 in 2009.

The latest figures show that employment-based health insurance fell from 61.9 percent of workers in 2008 to 58.9 percent in 2009. Says Elise Gould, Director of Health Policy Research at EPI and author of the report:

The current recession and its negative impact on access to health care highlight how dependent Americans are on a healthy labor market for all facets of economic security.

The report points out that the new health care reform law will make it easier and more affordable for Americans to secure and maintain health insurance coverage. But the “continued poor labor market will likely lead to”

further losses in insurance coverage before this major relief takes effect in 2014. (more…)

Robert Roth

By Robert Roth
Retired public interest lawyer

Family-wage jobs in manufacturing have been “exported” until there are no longer enough to sustain the economy.  They’ve been replaced, if at all, by lower-paying service jobs without comparable benefits.  The social safety net is shredded, the health care system a mess, and basic services like education and public safety threatened.  Inequality between super-rich and increasingly-impoverished Americans has reached levels not seen since 1928.

The World Trade Organization  and “free trade agreements” (FTAs) have made things worse.  These include NAFTA and CAFTA (the North American and Central American FTAs).  They have facilitated the loss of millions of jobs.  And the proposed Korea FTA would do to us what NAFTA and CAFTA have done to other countries, empowering multinational corporations operating here to attack consumer, food safety, environmental, labor, and other laws as interference with profits.

We have to restructure the economy to serve working people and to produce what we really need.  We can create permanent jobs in regionalized manufacturing, energy conservation, truly green energy production like solar power and mass transit.  We can have a food system that produces living-wage jobs, improves soil quality and uses less petroleum.  We can have a functioning and affordable health care system, repair the safety net and restore basic services.  Redirected military spending and fair taxation can pay for much of this.

The example of Germany shows how public services support a competitive economy.  Germany’s unemployment rate is lower than ours, and in recent years, Germany (population 82 million) has often led the United States (population 307 million) in exports.  Poverty rates for children and the elderly are less than half of ours.  Germany’s health care system takes only 11 percent of GDP, while corporate-run health care here takes over 17 percent.  Yet with six weeks of vacation time, Germans work less.  The average German isn’t perpetually in debt because unions maintain fair wages and basic “public goods” (healthcare, education, childcare, public transit) are paid for by the state.  Thomas Geoghegan explores all this and more in his book, Were You Born on the Wrong Continent?: How the European Model Can Help You Get a Life (The New Press, 2010). (more…)

Amy Traub

By Amy Traub
Research Director Drum Major Institute for Public Policy

This week brings a surge of new data affirming that city and state employees are compensated less than comparable private sector workers. New studies, conducted by researchers at the Political Economy Research Institute at the University of Massachusetts, Amherst, the Center for Economic and Policy Research, Rutgers University, and the Economic Policy Institute delve into the specifics of public employee compensation in New England and nationwide. Their findings broadly confirm existing research indicating that when relevant workforce factors like education and experience are taken into account, public workers earn lower pay and benefits than those working in the private sector. The Economic Policy Institute’s new national study, for example, finds that full-time state and local employees make 3.7% less (accounting for pay, benefits and work hours) than similar private sector employees, on average. Looking just at the New England area, the PERI/CEPR economists find a 3% pay shortfall for public workers.

The data is strong and substantiated: the question is how much of an impact it will have on a public debate dominated by entrenched misperceptions about our public institutions and the people who work to clean our streets, keep us safe, and educate our children.

Simply put, the right wing has created such a powerful narrative demonizing “big government” and “big unions” that facts to the contrary will have great difficulty penetrating. Consider the online comments in reaction to a recent article about public workers by my colleague Dan Morris: his evidence-based statements are dismissed as outright lies because people “know” that government workers make twice as much as the rest of us. Like the conviction that undocumented immigrants somehow have access to generous welfare benefits, a belief that most public employees are paid far more than they’re worth – and therefore that public wages and pensions can be slashed dramatically without harming the quality of public services or the workforce more broadly - may prove durable despite mountains of evidence to the contrary. (more…)

Leo W. Gerard

By Leo W. Gerard
USW International President

China is disrespecting America.

The Asian giant is an international trade outlaw, and U.S. manufacturers and workers are its crime victims.

China illegally subsidizes its export industries and unlawfully manipulates its currency. That kills U.S. industry and destroys U.S. jobs. Earlier this year, the Obama administration asked China nicely to allow its currency value to float up naturally on international markets. On June 19, China said it would.

And then it didn’t.

That’s flipping the bird at America.

Before China’s June 19 promise, bipartisan groups of lawmakers in the U.S. House and Senate proposed legislation that would force the U.S. Treasury Department to even the score and to call China out for what it is: a currency manipulator. Hearings on the bills are being conducted this week.

Pass the legislation. It’s time for America to flip the bird back.

Negotiation and threats have failed to produce a sustained, substantial currency float by China. Now, the Chinese currency, the renminbi, is undervalued by as much as 40 percent, a figure accepted by conservatives like C. Fred Bergsten of the Peterson Institute for International Economics. Even the International Monetary Fund managing director said the currency is undervalued.

China simply denied it. In March, the Chinese premier, Wen Jiabao, said he did not believe the renminbi was undervalued. That’s flipping off the world.

It works like this: China prints renminbi to buy billions of U.S. dollars, which makes them appear more desired and valuable, and the renminbi, by contrast, less valuable. That undervaluation of the renminbi acts as a subsidy for Chinese exports, artificially making them as much as 40 percent cheaper when sold in the U.S. Conversely, it acts as a tax of as much as 40 percent on American-made goods sold in China.

This dynamic contributed significantly to the rise of manufacturing in China. Earlier this year, China surged past Japan to become the world’s second-largest economy. And it contributes significantly to America’s massive trade deficit. The gap in July was $42.8 billion, more than half of which — $25.9 billion — was a result of trade with one country – China.

China’s rapid economic growth has ended poverty for millions of its workers.  Here in the United States, however, China’s flouting of international trade law is destroying the lives of millions of workers. The Economic Policy Institute estimates that 2.4 million American jobs have been lost or displaced since 2001 as a result of the trade deficit with China. American workers celebrate their Chinese counterparts’ improved quality of life, but they condemn the government of China for accomplishing that with beggar-thy-neighbor trade practices.

Earlier this year, it briefly looked like threats would prompt China to act. In March, a bipartisan coalition of U.S. Senators introduced legislation specifying the factors necessary to label a country as a currency manipulator and detailing American reprisals. And in April, the Treasury Department delayed its report identifying countries that manipulate currency rates, suggesting that it was ready to take on China.

China appeared to respond to that pressure in June. It announced it would allow the renminbi to float toward its real value on the open market. The Treasury Department backed off, omitting China from its list of currency manipulators in July.

China then permitted the value of the renminbi to rise less than one percent. One percent. When it’s as much as 40 percent undervalued. That’s flipping the bird at America. Big time.

Still, America didn’t react.

On Aug. 25, the Commerce Department announced 14 new measures to crack down on trade violations, such as ending certain exemptions from duties.

It did not, however, mention currency manipulation.

Dan DiMicco, CEO at Nucor Corp., the largest U.S. steelmaker, said the 14 measures are important, but the problem with China won’t be resolved until the United States takes on currency undervaluation. Here’s what he said:

“As long as we continue to let them get away with it, they’ll keep doing it.”

Six days later, in a trade case filed by the U.S. Aluminum Extrusions Fair Trade Committee, a coalition of domestic manufacturers of aluminum extrusions and the USW, the Commerce Department again squirmed out of dealing with currency manipulation.

Commerce imposed import duties on Chinese aluminum companies because China unfairly subsidized $514 million in aluminum exports to the U.S. in 2009. But Commerce refused to investigate the Fair Trade Committee’s evidence that China’s currency manipulation functions as an additional illegal export subsidy.

Sen. Chuck Schumer of New York, a sponsor of currency manipulation legislation, said afterward:

“The Commerce Department made its finding while still managing to ignore the elephant in the room, which is China’s currency manipulation.”

Commerce and Treasury have decided the proper response to China flipping off America is averting their eyes.  See no evil.

Yesterday Japan followed China’s lead. It bought dollars and sold yen, decreasing the value of yen and increasing the value of dollars. This, the New York Times explained, was “a bid to protect its export-led economy.” That’s exactly what China is doing.

It’s a very public show of contempt for international regulations and for American citizens.

Normally, Americans don’t respond passively to contempt.  Be normal, America.

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Leo W. Gerard also is a member of the AFL-CIO Executive Committee and chairs the labor federation’s Public Policy Committee. President Barack Obama recently appointed him to the President’s Advisory Committee on Trade Policy and Negotiations. He serves as co-chairman of the BlueGreen Alliance and on the boards of the Apollo Alliance, Campaign for America’s Future and the Economic Policy Institute.  He is a member of the IMF and ICEM global labor federations and was instrumental in creating Workers Uniting, the first global union.

Robert E. Scott

By Robert E. Scott
Senior International Economist and Director of International Programs, Economic Policy Institute

An op-ed published in The New York Times last week (August 23) claimed that revaluation of the Chinese yuan would “make barely a dent in America’s trade deficit.” This ludicrous assertion flies in the face of basic economic theory and our own economic history. The U.S. trade deficit with China displaced 2.4 million U.S. jobs between 2001 and 2008 alone. Treasury Secretary Geithner should identify China as a currency manipulator, and Congress should pass legislation that would authorize the president to impose substantial tariffs on Chinese goods if they fail to substantially revalue the yuan by the end of 2010.

Currency manipulation by China and several other Asian nations makes their goods artificially cheap and makes U.S. exports artificially expensive in China and in world markets. Chinese foreign exchange reserves, the main instrument of currency manipulation, reached an unprecedented $2.5 trillion this past June. The Chinese yuan or renminbi (RMB) is estimated to be at least 35% to 40% undervalued, relative to the U.S. dollar. With no change in exchange rates and the growth of illegal subsidies and other unfair trade practices, it is no surprise that structural imbalances in trade and capital flows are resurfacing as the global economy recovers from the worst recession in 70 years.

In “The Yen’s Lesson for the Yuan,” Joseph A. Massey and Lee M. Sands admit that getting tough with currency manipulators can work, as it did in August 1971, when President Nixon imposed an import surcharge and took the dollar off the gold standard. That December, Japan and nine other countries agreed to revalue their currencies. (more…)

Amy Traub

By Amy Traub
Research Director Drum Major Institute for Public Policy

The fiscal relief bill signed into law by President Obama on Tuesday will unquestionably benefit New York City and other states and municipalities across the country. At a time of sluggish job growth and straight-jacketed local budgets, the bill will help cities and states to maintain critical public services, especially funding for education. By passing this legislation, Congress has acted to mitigate the impact of the crippling recession on America’s children and on our long-term economic prosperity, which relies on an educated workforce. Yet praise for the new law has been muted. The state and local support it provides will help to prevent the recession from getting worse – yet it is far from enough. Opposition from the right forced legislators to limit the size of the bill, hamstringing the nation’s economic recovery. Mayor Bloomberg and other city and state officials should continue to make the case for additional federal support.

First the good news: The new law will direct $200 million in education aid directly to New York City and will provide $400 million in additional support for the city’s Medicaid program. In New York State as a whole, the law will enable 8,200 teachers to stay on the job in our classrooms.

Had the legislation not passed, cities and states across the country would have laid off more workers, more services would be lost, and additional taxes would be raised to cope with budget shortfalls. Consider those services first: as Paul Krugman pointed out in his powerful recent column, the lights are already going out in America. Classroom are more crowded, over-stretched fire companies are responding more slowly to emergencies, dangerous bridges go unrepaired, smooth and efficient roads are turned back into gravel. In New York we already see transit cutbacks, shorter library hours and shuttered senior centers.

Pundits and politicians on the right have tried to portray fiscal relief as nothing more than a giveaway to teachers and the other public employees who work to keep our communities running, but the reality is that the loss of public services has a powerful immediate impact on our quality of life and the nation’s future. Thankfully, the law passed by Congress will soften some future impacts in New York and nationwide. Yet even as he hailed the new federal aid to the city, Mayor Bloomberg warned of continuing revenue shortfalls that may leave him calling for more cuts in the next year.

The bill is also important for helping to sustain state and city spending and employment that provides vital support to the private economy. Wall Street economists, no liberals themselves, find that state and local spending cuts are a drag the nation’s economic growth. In short, cutting city and state spending kills private sector jobs, and maintaining some of that spending, as the fiscal relief bill does, preserves them It’s no wonder that the Economic Policy Institute projects the legislation will save more than 300,000 jobs, keeping not only teachers and police officers, but employees of the local businesses they patronize out of the unemployment line. As the U.S. Conference of Mayors notes, “This money will save jobs, and is an important first step in strengthening our nation’s economy.”

But the emphasis is one the “first step.” As we struggle to recover from the loss of millions of jobs, saving 300,000 positions is not good enough. Preserving employment for 161,000 teachers is necessary but not sufficient for cities facing layoffs of 500,000 employees in the coming years. It’s telling that the U.S. Conference of Mayors moves directly from praising Congress and the President for passing critically needed aid to calling for passage of the Local Jobs for America Act, which would more adequately address the devastating employment and budget consequences of the deep national recession. Rather than resigning themselves to killing jobs and slashing services to deal with the city’s continuing budget deficits, Mayor Bloomberg and New York City’s leaders should join the U.S. Conference of Mayors in demanding the support our communities genuinely need.

Postscript: A misguided focus on deficits and tax cuts also drove legislators to seek funding from a deplorably source, redirecting money from future food stamp benefits to pay for the budget relief our communities need now. This trade-off between our schools and hungry families occurred for political, rather than budgetary reasons. Congress should act to restore funds for food stamps as soon as possible.

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Follow Amy Traub on Twitter: www.twitter.com/AmyTraubDMI

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Amy Traub is the author of the book, From Disaster to Diversity: What’s Next for New York City’s Economy. She also wrote a chapter for the book, Thinking Big: Progressive Ideas for a New Era (Berrett-Koehler Publishers, 2009).  She has authored several influential DMI reports, including “Principles for an Immigration Policy to Strengthen and Expand the American Middle Class.” In 2008, the Jewish Funds for Justice gave her its  Cornerstone Award.

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This piece was first published on The Huffington Post

Roger Bybee

By Roger Bybee
Milwaukee Freelance Writer

Recent news provides a set of unusally illuminating numbers.

They drive home several critical messages about where America stands today: the value (and limits) of President Obam’s stimulus efforts and the preposterousness of GOP tax cut plans as an economic cure for a very fragile economy, among others. The numbers truly tell much of the story:

16%: A crucial new report How the Great Recession Was Brought to an End was just released. Written by Princeton economist Alan Blinder and Moody’s Analytics chief economist Mark Zandi, it estimates that without Obama’s stimulus, TARP, and other emergency initiatives, unemployment would have reached 16% and 8.5 million fewer people would have jobs.

2015: Reflecting the limits of Obama’s stimulus, the Economic Policy Insitute noted,

Considering that even if the country were to sustain the strongest pace of job growth seen in the boom of the late 1990s (2.6% in 1998), it would still take until 2015 to return to pre-recession levels of unemployment. The much slower rate of growth seen in recent months suggests that without additional policy action, unemployment will remain high for years to come.

83%: “In 2007, of the 100 largest publicly traded U.S. corporations, 83 ran subsidiaries in offshore tax havens,” as Too Much reported. (more…)

Robert Kuttner

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

The jobs situation stinks, even as corporate profits keep rising. Another 131,000 jobs were lost to the economy in July, according to the Labor Department’s latest report released Friday. The measured unemployment rate stayed stuck at 9.5 percent.

The only reason it wasn’t worse was because more workers gave up looking for nonexistent jobs, leaving a smaller labor force to measure against the meager supply of work. Small comfort.

Meanwhile, another important government report, by the Social Security Trustees, showed only a trivial improvement in the gap between what Social Security owes the next generation of retirees and the tax receipts that it can expect.

There is, of course, a direct connection between rising unemployment, declining wages, and the condition of Social Security. That’s because Social Security is funded by payroll taxes.

If wages had continued to rise with the growth of the economy’s productivity, instead of profits and bonuses taking an ever larger share, Social Security would be enjoying an endless surplus. (more…)

Amy Traub

By Amy Traub
Research Director Drum Major Institute for Public Policy

Left to itself, the U.S. economy may not return to its pre-recession rate of unemployment until 2021, says a new study from the Center for Economic and Policy Research. Even under the more optimistic growth assumptions of the Congressional Budget Office, we’ve got five more years of high unemployment coming, as CEPR notes.

If that’s not troubling enough, consider this: millions of jobless Americans means lower wages for those lucky enough to be employed. Median wages rose just 0.8% over the last year, according to the Bureau of Labor Statistics, failing to keep up with even the low 1.8% rate of inflation. In real (inflation adjusted) terms, that’s a wage drop. “Excess supply in the labor market — 14.6 million Americans were unemployed as of June — has helped keep wage growth in check,” the Wall Street Journal explains. Or, in the more gleeful terms used by a financial analyst quoted by Bloomberg news last month:

“Companies are getting higher-productivity employees for the same or lower wage rate they were paying a marginal employee. Not only are employees higher skilled, you have a better skill match. You have a more productive and more adaptive labor force.” (more…)