Blog

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.

By David Sirota
Author of “The Uprising: An Unauthorized Tour of the Populist Revolt Scaring Wall Street & Washington”

Last night on MSNBC, Rachel Maddow and I discussed John McCain’s new rhetoric claiming he supports better financial regulation.

But instead of focusing only on McCain’s words, we tried to follow in the spirit of the Institute for America’s Future’s call for a substantive debate by examining the Arizona senator’s career as a public official – one who’s formative regulatory experience was being a member of the Keating Five pressing federal financial regulators to stop doing their job in advance of the S&L crisis (ie. the most analogous crisis to today’s Wall Street meltdown).
You can watch the conversation here:

McCain, as the S&L scandal first suggested, is no run-of-the-mill free-market fundamentalist. Yes, he voted for the ill-advised repeal of the key Depression-era law that might have prevented the rampant consolidation and speculation that brought on today’s emergency.

But, then again, Bill Clinton and his DLC Democrats supported it too. Yes, McCain’s top economic adviser is Phil Gramm, the UBS investment banker who pushed through so much deregulatory legislation as a senator. But then again, Barack Obama’s top economic adviser is Robert Wolf, Gramm’s UBS boss.

Where McCain really leaps to the fringe and differentiates his extremism from others is in his use of the deregulatory label to publicly define himself. That’s how you can really tell what a politician believes in.

This is not a guy who just votes for the corrupt legislation his Wall Street friends tell him to vote for – this is a guy who has staked his name on being “fundamentally a deregulator,” as he recently described himself.

On 11/19/93, McCain took to the Senate floor to support an early financial deregulation bill and decry what he called “the tremendous regulatory burden imposed on financial institutions.” The guy who now claims to be the trustbusting Teddy Roosevelt back then lamented “the rapidly increasing regulatory burden imposed on banks is to cause them to devote substantial time, energy and money to compliance rather than meeting the credit needs of the community.”

Ten years later, McCain was bragging to the Associated Press that “I have a long voting record in support of deregulation,” and to CNN that “I am a deregulator. I believe in deregulation.”
And, during this year’s presidential campaign taking place in the shadow of financial meltdown, McCain was only months ago insisting on PBS that “we need less government [and] less regulation” and that “I’m always for less regulation.”
Of course, there’s plenty of good news for both Democratic partisans and ideological progressives about McCain’s about-face.

For partisans concerned only about Obama winning the election, McCain’s 180 on regulation opens up an obvious chance for Democrats to label him a against-it-before-I-was-for-it, say-anything-to-get-elected hypocrite – and Obama is (finally) moving to seize that opportunity.

For ideological progressives long fighting the good fight to resurrect the common-good regulatory agenda of the New Deal, McCain’s shift reflects a broader shift in the public debate. Suddenly, regulation isn’t a four-letter word anymore. Suddenly, even John “I’m always for less regulation” McCain is for regulation. That rhetorical shift could help create an election mandate forcing whoever wins the presidential contest to actually move away from Reagan-style extremism for the first time since, well, Reagan.

But as I told Maddow (and as I will examine further in my upcoming newspaper column on Friday), we have to all follow the money and the actions. Both Obama and McCain have taken huge sums of cash from the industries that caused this crisis. Both Obama and McCain continue to rely on Wall Streeters who engineered the meltdown as their top economic advisers (though only McCain employs lobbyists intimately involved in the crisis). That kind of influence doesn’t just slink away with a boom-bust crisis – it fights hard to make sure nothing concrete comes out of the situation (think the weak Sarbanes-Oxley after Enron).

Whether we get the kind of populist reforms will be decided by how much grassroots pressure is put on either of these potential presidents when they reach the Oval Office. The talk right now from both candidates may be good – and Obama is smart to point out McCain’s absurdly dishonest rhetoric. But talk is cheap when it comes time to write legislation.

By
Leo W. Gerard
United Steelworkers International President
and
Cathy Zoi
Alliance for Climate Protection Chief Executive Officer

Labor Day
The thousands of hardworking United Steelworkers in the Northwest who lost their jobs didn’t know climate change was their adversary.
Before 2000, 40 percent of the aluminum made in the United States was smelted in Washington, Oregon and Montana. At the time, more than 5,000 USW members worked in eight regional smelters. Low-cost power from the Columbia River hydroelectric system made these smelters cost competitive in the global economy.
But several years of increasingly diminished snow falls in the Cascade Mountains meant less water in rivers and smaller reservoirs, reducing the supply of inexpensive hydroelectricity. Combined with Enron’s infamous energy market manipulations, higher electricity rates caused the permanent closure of a number of these smelters. Today, only three smelters remain in the Northwest, and over 4,500 USW members lost their jobs because of this change in the regional climate, a consequence of the global warming already taking place.

Economic outlook
On Labor Day, the outlook for American workers remains cloudy. Aweakened economy and high energy prices are making it harder for middle class men, women and families to make ends meet.Americans deserve an affordable and stable economic future, and we can get there by pursuing a comprehensive and long-term approach that creates good jobs here in the United States, increases our energy security, and reduces our reliance on harmful fossil fuels. Repowering America with 100 percent clean electricity over the next decade is the way for us to do that.
Pennsylvania has been leading the way, proving that we can create good, permanent jobs that improve the environment. The state recently passed a law requiring energy from renewable sources, a law the United Steelworkers supported. Gamesa Wind, knowing there was a certain demand for the turbines and blades for wind-generating equipment, opened a plant on the site of a closed steel mill in Fairless, Pennsylvania.

Gamesa

Gamesa now employs 1,100 United Steelworkers – sheet metal workers, machinists, electrical equipment assemblers, construction equipment operators, industrial truck drivers – helping to produce renewable energy. What Pennsylvania has started can be expanded with a new, nationwide target and a timetable commensurate with economic and energy challenges the country now faces.
Such a bold target will support a comprehensive national upgrade in energy efficiency that will reduce the energy bills of homeowners and businesses even as fuel costs are on the rise. We will expand the use of existing clean technologies – wind, solar, and geothermal – stimulating construction of dozens of new clean power plants. And we must create a system that delivers power economically from where it is generated to where people live with a unified national grid. Achieving these goals will deliver the jobs that our economy needs – jobs that can’t outsourced, jobs that reassert America’s commitment to opportunity, innovation and environmental protection for all. This is what it means to Repower America.