Blog

Leo W. Gerard

By Leo W. Gerard
USW International President

The nation’s greedy corporations and insatiable wealthy are fattening themselves on workers. There’s no trickle down. It’s the opposite; the rich have been sucking the economic lifeblood from the middle class for decades.

When reckless Wall Street banksters get taxpayer-funded bailouts, billionaires get tax breaks and gigantic corporations like GE and Bank of America pay absolutely no federal income taxes, they’re getting for free the very public services that enable them to make massive profits in this country – the courts, the roads, the trade regulators, the patent enforcement.

The middle class doesn’t get those big time special deals and loopholes. Workers pay their taxes. As a result, it’s workers footing the bill for the government services that enrich the rich. Greedy corporations, their CEOs and the right-wing politicians they buy with tens of millions in campaign cash are freeloaders.

It’s time workers stood up to the freeloaders. Join Monday’s We Are One rallies. These demonstrations across the country by religious groups, social justice organizations and labor unions will illustrate that the middle class is mad as hell and not going to take trickster economics anymore.

It’s time for greedy corporations and the insatiable rich to pay their fair share. It’s time to stop cuts to the government programs most treasured by and vital to the middle class and the vulnerable in this country – education, public transportation, Social Security. It’s time to stop right-wing attempts to terminate democratic rights like collective bargaining and voting without harassment. It’s time for the middle class to stop paying for everything and for the insatiable rich and greedy corporations to start sharing the sacrifice required to recover from the economic crisis caused by reckless gambling by Wall Street bankster corporations.

March for your rights Monday. March for the middle class facing record rates of foreclosure, unemployment, child poverty, and loss of opportunity as country club conservatives cut off college loans and Head Start.  March for the right of college students to register and vote in the towns where they study. March for the right of workers to band together, elect representatives and bargain with employers for better pay and working conditions. March for the right of the people to insist that corporations pay at least the same rate of taxes as workers do. March to end tax breaks for the wealthiest one percent who have now acquired more wealth than all the workers in the bottom 90 percent.

Greedy corporations, the insatiable wealthy and their purchased politicians have for three decades skewed public policy to enrich themselves while pushing down wages and benefits for the middle class.

From 1947 to 1975, a time of strong unionization in the workforce, real wages of average workers increased with productivity. The 75 percent rise in productivity and the nearly matching rise in wages gave the United States the largest, most vibrant middle class in the history of the world.

Since 1978, productivity grew 86 percent, but compensation for workers grew only 37 percent, and if the cost of benefits, mostly uncontrolled health insurance increases, is removed, the real average  hourly wage did not rise for 35 years, according to Alan S. Blinder, professor of economics and public affairs at Princeton University and a former vice chairman of the Federal Reserve.

Here’s how it works: The nation’s largest corporation, General Electric, earns tens of billions in profits from the labor of its workers but refuses to share the benefits with them. GE is expected to demand that its 15,000 unionized U.S. workers accept benefit cuts. So they’ll pay more for their retirement and health care and have less money to live and to pay taxes.

Meanwhile, the share of national income captured by the richest one percent rose from 8 percent in 1975 to 23.5 percent in 2005.

Under Dwight D. Eisenhower, the president in the 1950s, the nation’s richest paid an effective tax rate of 70 percent after loopholes. Today, it’s 16 percent – significantly lower than the 25 percent forked over through payroll deductions by individual workers earning between $34,500 and $83,600 a year.

That resulted from deliberate policy changes. Beginning with Ronald Reagan, country club conservatives cut taxes for the wealthy, while at the same time ending routine minimum wage increases and undermining the bargaining rights of labor.

The changes were made by increasingly wealthy politicians increasingly influenced by lobbyists. For example, 60 percent of the freshmen in the U.S. Senate and 40 percent in the U.S. House are millionaires. By contrast, only 1 percent of Americans are worth more than $1 million.

Compounding that is corporate influence, which worsened last year when the U.S. Supreme Court enabled corporations to donate unlimited money in secret. The upshot is corporations like General Electric, spending millions to lobby and paying zero in federal income taxes. GE spent $200 million to lobby for loopholes in the federal income tax code over the past decade, made $26 billion in American profits over the past five years, and not only paid absolutely no federal income taxes, but got itself a $4.1 billion rebate from the IRS.

That is far from an anomaly. Two out of every three U.S. corporations paid no federal income taxes from 1998 through 2005, according to a report by the Government Accountability Office. And the situation hasn’t improved since then. U.S. Sen. Bernie Sanders has written repeatedly about tax avoidance by the likes of Bank of America and Goldman Sachs, Wall Street banks that former President George W. Bush handed hundreds of billions in bail out dollars.

Bank of America got a $1.9 billion tax refund from the IRS last year, even though it made $4.4 billion. Goldman paid only 1.1 percent in federal income taxes on its $2.3 billion in profits. New York Times reporter David Kocieniewski wrote in his story about GE that such tax dodging by corporations has resulted in a significant decline in federal revenue from corporations –  from 30 percent in the 1950s to 6.6 percent in 2009.

Tax avoidance is a virtuous cycle for greedy corporations and the wealthy. They pay less in taxes, then have more money to lobby politicians to lower their taxes. In fact, it’s gotten so bad that lawmakers are hiring lobbyists right from their K Street firms to write legislation. And Congress’ new right wingers are increasing this trend. Since they took office in January, nearly half of the 150 former lobbyists working in top policy jobs in Congress were hired.

For workers, however, it’s a vicious cycle. They’re forced to pay the taxes shirked by greedy corporations and the insatiable wealthy. And they’re forced to suffer service cut backs.

Right now, right wingers are trying to cut $51.5 billion from the federal budget – demanding elimination of programs essential to the middle class and poor such as subsidies for home heating for the impoverished. But if the wealthy paid their share, say hedge fund manager John Paulson who earned $2.4 million an hour in 2010 – then those cuts would be unnecessary because the federal government would have an extra $69.5 billion in revenue.

Forty-three years ago on April 4 Martin Luther King was assassinated after standing up for the right of public sector workers in Memphis, Tenn. to negotiate for better lives.

In his last speech, Rev. King said God had allowed him to go to the mountaintop where he’d looked over and seen the Promised Land. “I may not get there with you,” he cautioned, “But I want you to know tonight, that we, as a people will get to the Promised Land.”

Greedy corporations and the wealthy have made it to the mountain top. And they’re shoving American workers down the hillside to ensure the Promised Land is reserved only for the richest.

The promise of America democracy is equality. Equal rights, equal treatment under the law, equal opportunity. Freeloading by greedy corporations and the insatiable wealthy is denying those promises to the vast majority of citizens. Americans must unify and march to wrest back those rights and secure the American Dream for all.

Take a first step. Join one of the 600 We Are One demonstrations on April 4.

***

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.

Leo W. Gerard

By Leo W. Gerard
International President

For a brief moment, when Congress authorized that $700 billion bailout for the Wall Street wise guys whose recklessness caused the financial crisis that we’re all suffering, federal officials actually considered giving part of the money to foreign banks.

Really.

They quickly backed away from using American tax dollars to prop up overseas financial institutions.

But now, the same issue is at stake with the $825 billion economic recovery package. Fifteen groups including the U.S. Chamber of Commerce and the Business Roundtable want to give American tax dollars to foreign manufacturers to create jobs overseas.

That’s right. The U.S. Chamber of Commerce wants to spend the tax dollars of unemployed Americans to create jobs in China and Indonesia, Korea and India.

The 15 business groups sent a letter to Congress opposing provisions added to the recovery package that would strengthen existing laws requiring government agencies buy American steel and other products when building public works projects with tax dollars.

The recovery package would use American tax dollars to pull the United States out of a deep recessionary hole caused by a blind belief that business knows best and shouldn’t be regulated – from banks to pharmaceutical manufacturers.

The package is, essentially, Americans agreeing to increase their national debt to revive an economy sucker punched by greedy Wall Street gamblers. So when business interests want to spend those tax dollars overseas, to create jobs there at the expense of unemployed Americans, while at the same time increasing the U.S. trade deficit, frankly, it looks a bit like treason.

To survive this economic catastrophe, Americans must assert themselves as economic patriots. They must stand up to the likes of the Chamber and the Roundtable and call them out for being economic traitors to the United States of America.

The measures proposed in Congress to strengthen the existing laws requiring that American products be purchased are simple, inexpensive and would not delay construction projects. For example, Ohio Sen. Sherrod Brown wants requests for waivers to the federal “Buy America” requirements to be publicly posted on the Internet in a place where people with knowledge of the situation can comment on them. That way, a government agency will likely quickly find out about attempts to use the waiver process to circumvent the rules.

The Chamber and the other business groups whine in their letter to Congress that strengthening “Buy America” rules may violate international agreements.

That’s bogus and the groups know it. America can honor its international obligations while using U.S. tax dollars to employ American workers. For example, states that receive federal grants for highway and mass transit projects may specify that products for that construction be purchased from U.S.-based producers without violating international agreements.

The Chamber and the other business groups also contended they were worried that strengthening the “Buy America” rules would prompt retaliation from foreign countries, so that U.S. companies would be prohibited from providing materials for construction funded by foreign stimulus programs.

When other nations nurture their industries and employ their own countrymen with their tax dollars, it won’t be retaliation. It will be reasonable. It will make good economic sense.

French President Nicolas Sarkozy announced in December that he would do whatever it took to save his country’s auto industry. No big protest broke out from anyone contending France should buy the auto parts from some low-priced American competitor. No, it seemed logical that France’s president would “buy French” and strive to rescue the industry that employs 10 percent of his population.

India already employs many protectionist measures to shield its industries. China subsidizes its manufacturers and manipulates its currency. But, somehow, the U.S. Chamber of Commerce thinks it’s wrong if U.S. tax dollars are spent in America to employ Americans.

These are the guys who were behind George W. Bush’s tax breaks for the rich these past eight years. These are the very ones whose wrongheaded policies brought America to its economic knees. And they are the business hotshots who don’t see that they’ve done anything wrong that should change.

Those Wall Street business wizards felt so entitled to Americans’ $700 billion in tax dollars given to bail them out that they spent it on $18 billion in year-end bonuses, a $16,000 commode and a $50 million Dassault Falcon 7X manufactured-in-France corporate jet. (Well, the Obama administration did tell Citigroup it had to cancel that jet.)

Here’s the thing to remember about these business groups so worried about preserving “free” trade. A dozen of them put America or U.S. in their names, like the United States Council for International Business. But it’s not the U.S. they care about. Their focus is themselves.

Many of them long ago shipped manufacturing overseas, to benefit from tax breaks provided by the Bush administration, slave wages paid to third world workers and zero enforcement of safety and environmental regulations. That’s why they oppose “Buy America” regulations. They want to use American tax dollars to pay subsistence wages at their factories in foreign countries, then ship the steel or aluminum or rubber back to the U.S. at untold cost to the environment and the trade deficit.

You can trust ‘em same as you can Bernie Madoff.

What you can trust is that empty feeling in your stomach and your pocket, a pang that’s spreading quickly while the U.S. Chamber busies itself trying to thwart “Buy America.” More than 2.55 million Americans have been thrown out of work since Bush’s recession began. On Monday alone, companies announced they would cut 75,000 more jobs. Unemployment stands at 7.2 percent, and it is expected to rise to 10 percent before year’s end if drastic action isn’t taken.

Drastic action isn’t sending American tax dollars overseas to create jobs there.

Last year, the Government Accountability Office reported that “Buy America” policies are effective by “protecting domestic employment through national infrastructure improvements that can stimulate economic activity and create jobs; protecting against unfair competition from foreign firms as a result of foreign government subsidies; and maintaining national security interests through the continued use and development of certain industries within the U.S. economy, like the iron and steel industries.”

That sounds like a policy worth investing in. A policy good for America.

Leo W. Gerard

By Leo W. Gerard
International President

The nation’s most unpopular president – a head of state even more reviled than the one who resigned in disgrace – is cunningly planning revenge.

The legacy of George W. Bush’s final days in office will be degradation of the environment, endangered species and the safety of working people.

The Bush administration is rushing to finalize dozens of new regulations, many without normal hearings or comment periods. Such last minute presidential policy-mucking is so common that the rules have a name — “midnight regulations.” This set reveals Bush’s values.

They show he’s willing to sicken and kill working man and beast to accommodate profit, to further enrich his business buddies, the chamber of commerce, the wealthiest of wealthy to whom he gave that big tax break in the earliest days of his administration.

Killed could be those who drive on roadways with truckers – any of us – as well as the truckers themselves. One new rule will enable employers to schedule truck drivers for a grueling 77 hours in a seven-day period, give them just 34 hours off, then work them another 77 hours over seven days. Public Citizen, an advocacy group that twice in the past three years successfully persuaded courts to invalidate almost identical standards, says the new regulation creates sweatshops on wheels and ignores statistics showing 5,000 people killed and 110,000 seriously injured a year in crashes with large trucks.

Also killed by Bush’s midnight regulations could be endangered species which would lose protection. One regulation eliminates the mandatory outside evaluation of new federally-approved development projects that might affect endangered plants or animals. The assessment was done by experts from the U.S. Fish and Wildlife Service and the National Marine Fisheries Service. The new rule will allow the government agencies involved in the projects to determine whether their roads, bridges, dams, mines or logging would further threaten the species, regardless of the agency’s expertise.

Sickened could be those who work in and live around power plants. Now, when utilities build or renovate plants, they’re required to install the latest pollution control devices. The new rule will allow them to circumvent that Clean Air Act requirement. The Bush administration estimates that its evasion-regulation will put an additional 70 million tons of carbon dioxide — the greenhouse gas that’s warming the planet — into the atmosphere each year. That does not even address the particulates and acid rain that result from power generation pollution.

Also sickened could be those who work with toxic substances and hazardous chemicals. Among the most outrageous of the regulations is one that will make it more difficult for the federal government to limit workers’ exposure to these substances.

The rule will add an extra step to the already lengthy process of creating standards to protect exposed workers. Advocated by business groups, it will require federal agencies to gather and analyze industry-by-industry evidence of workers’ exposure to substances.
The director of occupational safety and health for the AFL-CIO estimates that it will add two years to the process of writing standards that frequently takes eight years as it is. For example, the government has been developing standards for silica, a lung carcinogen, for 11 years.

What makes Bush’s decision to move forward with this regulation particularly egregious is that President-elect Barack Obama clearly stated his objection to it. In September, candidate Obama urged the Labor Department to abandon this proposed regulation, and he and four other senators introduced a bill that would have prohibited the Department from issuing it. The letter says the regulation would “create serious obstacles to protecting workers from health hazards on the job.”

This pile of new rules is the insult to eight years of Bush regulatory injury. For example, for seven and a half years, the Bush Labor Department did not voluntarily issue a single health directive. Only under court order did it finally implement one health regulation. Not only that, it failed to write rules when it should have, for example, on beryllium exposure. The Occupational Safety and Health Administration backed off updating half-century-old standards for exposure to dust and fumes from the metal which can cause debilitating lung disease if inhaled even in tiny amounts. The Bush administration eliminated 22 of OSHA’s proposed health and safety rules. In addition, it gutted OSHA’s budget and staff.

Similarly, Bush didn’t enforce existing regulations to protect workers. The Government Accountability Office, which audits federal departments, has found that the Bush Labor Department failed to adequately provide basic pay and overtime protections for low-wage workers complaining that employers stiffed them for overtime and minimum wage. The GAO also found that the Labor Department reduced enforcement actions for wage violations to a low of 30,000 in 2007. It was 47,000 a decade earlier.

The Labor Department’s own inspector general reported that the agency neglected to complete federally-mandated inspections at more than 14 percent of the nation’s coal mines – in a year when worker deaths more than doubled to 47.

After all of that, Bush is pressing forward on his midnight regulations, knowing that Obama opposes them. He’s doing so even though he publically contended that he wanted to make the transition to the Obama administration as smooth as possible.

Bush told ABC News anchor Charlie Gibson in an exit interview that it’s not his failures or accomplishments in office that are most important to him, but going home, looking in the mirror and being able to say: “I did not compromise my principles. And I didn’t. I made tough calls. And some presidents have got a lot of tough decisions to make.”

There are no tough decisions involved in these directives. There are only political ones. By implementing his midnight regulations, Bush clearly illustrates that his primary concern is not the health of American workers but, instead, the principal of his wealthy business friends.

David Sirota

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

Please, forgive me for saying it. I know it’s a tad annoying, but it has to be said to America’s ruling class in this humble column space. Because if it’s not said here you can bet it won’t be said anywhere else in the media, and it needs to be said somewhere on behalf of the millions of citizens who were right.

We told you so.

In the slow-motion train wreck that became the current economic meltdown, our bipartisan political Establishment and the sycophantic punditburo have been wrong over and over and over again. They told us that eviscerating consumer protections would unleash the markets benevolent power and boost the economy. They told us that a trillion-dollar Wall Street bailout would solve a credit crisis. They told us that bailout would be subjected to intense oversight and scrutiny.

Wrong, wrong and wrong — and when critics predicted just that, sneering commentators and congressional leaders berated us as know-nothing Luddites, conspiracy theorists, or both.

But with the release of three new reports, there’s no debate anymore about who was correct and who wasn’t. The studies prove that the critics were right and the ideologues of Washington were wrong.

When in 2005 Congress overwhelmingly passed a credit card industry-written bill gutting bankruptcy laws, progressives were right to try to stop it — and not just because it was an immoral move to legalize usury. We were right because as the New York Federal Reserve Bank reports, the bill played an integral role in the recent foreclosure surge that crushed the economy.

In the past, bankruptcy laws made sure debtors first and foremost continued paying their mortgages so that they could stay in their home. But the 2005 legislation effectively compels debtors to first pay off their credit cards, meaning many then have no money left to pay their mortgage. The Feds report estimates that the bankruptcy bill is causing 32,000 more foreclosures per quarter than the economy would have already generated.

We told you so. When almost every media voice in America was sounding the alarm of financial panic and demanding a Wall Street bailout plan; when bailout opponents were roundly ridiculed as “irresponsible” by politician and pundit alike — those opponents were nonetheless right to say then what a study from the Minneapolis Federal Reserve Bank says now: that the case hadn’t been made.

While reporters and the Bush administration frantically insisted that bank-to-business lending had ceased, inter-bank lending had stopped, and short-term “commercial paper” loans had dried up, the Minneapolis researchers tell us that “all three claims were false” and continue to be false; that “nobody has explained how the money system has frozen when the data says it has not”; and that “a trillion dollar intervention warrant(ed) a bit more serious analysis.”

We told you so.

When lawmakers said the bailout included strict oversight measures, skeptics were right to say that claim was patently untrue. According to a new analysis by federal officials at the Government Accountability Office, virtually nonexistent oversight of the bailout means “taxpayers may not be adequately protected” and that the bailout’s stated goal of fixing the economy “may not be achieved in an efficient and effective manner.”

Yes, we told you so.

And so now, even though these damning reports have garnered scant news coverage, perhaps there will be a change. As we — the pragmatic progressive majority demand tough new financial regulations; job-creating investments in public infrastructure; labor law reforms; universal health care; revised international trade policies; a repeal of the odious bankruptcy bill and an end to Wall Street welfare maybe, just maybe, our humiliated rulers will start listening.

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

Last week, I appeared on Fox News to discuss Barack Obama’s tax proposals. You can watch the clip here – and make sure to watch the end where Fox News tries to drown me out with music.

Not surprisingly, the “debate” centered around the false premise that Obama’s tax cuts are actually welfare. I say that’s false because – as I pointed out on the show – everyone pays some form of taxes, whether it’s income, property, sales or payroll taxes. When you take all those taxes together, most working- and middle-class Americans pay a higher effective tax rate than the Warren Buffetts of the world (as Warren Buffett, by the way, readily acknowledges). So Obama’s plan to pass refundable income tax credits is only a handout if you look exclusively at one slice of taxes – in this case, income taxes. But in the overall tax scheme, those tax credits are aimed at better equalizing the tax structure so as to diminish the gap between Warren Buffett’s very low effective tax rate and Joe Sixpack’s high effective tax rate. Only in the asylums of Fox News and Republican Party politics is reducing that effective tax rate gap billed as theft from the rich to finance “welfare.”

This concept of effective tax rates (ie. the tax rate actually paid and enforced) is key to understanding the most telling part of this Fox News discussion – the part at the end where former Bush-Cheney spokeswoman Jennifer Millerwise Dyck parrots McCain campaign talking points about America supposedly having a very high corporate tax rate in relation to the rest of the world. This, says Dyck and fellow Republicans, is driving businesses to move offshore.

It sounds like a credible storyline, especially considering that officially, our corporate tax rate is somewhere between 35 and 39 percent. But, as always, the devil is in the details.

To know how high – or low – the effective tax rate is, you have to go beneath the top-line rate and account for all the loopholes, subsidies and write-offs – and the way to do that is by looking at corporate tax revenues as a percentage of a country’s GDP. That way, you know how much corporations are actually paying as a share of your overall economy – in other words, you know the real corporate tax rate, not the fake one advertised by top-line numbers. And when you look at America’s tax structure through this lens, you see that even the Bush Treasury Department admits we have the second lowest effective corporate tax rate in the industrialized world (see page 42 of this report).

Indeed, this explains the dissonance between Republican claims of “highest corporate income tax rate in the world” and the recent Government Accountability report showing that most corporations pay no corporate income taxes at all. The latter is the truth – most corporations don’t pay any taxes because of loopholes, writeoffs and subsidies that allow them to effectively reduce that 35 percent corporate tax rate to zero. In fact, many profitable corporations actually collect tax rebates. But as I told Fox News, we don’t hear criticism of that kind of “corporate welfare” from the Republican mouthpieces deriding Obama’s middle-class tax cuts as welfare.

As you can see from the video clip, when the GOP parrot I’m debating throws out the standard “high corporate tax” canard, I revert to the actual facts over and over and over again, to the point where Fox News feels the need to drown me out with music at the end. And I was, of course, rewarded with the usual river of hate email from Fox News viewers, most of which reaffirmed the dittohead nature of the modern conservative audience in that almost every email included exactly two links purportedly “proving” the GOP talking point – one a link to U.S. News and World Report’s right-wing business columnist, the other to the fringe Tax Foundation, a group funded by Scaife, Koch and the usual constellation of Wingnuttia’s trust-fund babies. You’ll notice that both of these sources focus only on the official tax rate, not the effective tax rate – deliberately misleading their readers about the facts.

The good news is that polling shows most Americans do not think the big problem facing our country is that wealthy corporations are oppressed by high taxes. That is, most Americans live in the “reality-based” world and understand that if anyone is winning big from the Bush-McCain tax policies, it is Corporate America and the super-rich. So if the GOP wants to attack Obama for trying to cut 95 percent of America’s taxes – if they want to lash their electoral hopes to a promise to give Big Business another tax handout – then I say that’s great. They are helping progressives build a landslide and an election mandate.

By Leo W. Gerard
International President

21st century slavery
The Government Accountability Office reported to Congress this week that, under the Bush administration, the Labor Department determined that what amounted to a 21st century case of slavery was just fine with the U.S. government.
A Labor Department investigator told the slave, a night attendant at an assisted living facility in Ohio, to file a civil suit to seek redress if she was aggrieved by her lot. And then he closed the case. With no action against the employer who had neglected to pay the woman any wages for an entire year.
Yep, that’s your U.S. Labor Department working for you, the very Labor Department charged with the duty of protecting 100 million workers, the very Labor Department responsible for ensuring employers pay workers, at the very least, the federal minimum wage, and for overtime hours, under the provisions of the Fair Labor Standards Act.
The GAO report arrived in Congress in the midst of high unemployment and inflation, the subprime mortgage crisis spreading like, well, just like fear of bank failure, taking down homeowners; the former global investment bank Bear Stearns, and now IndyMac Bancorp, the second largest financial institution to fail in U.S. history. Meanwhile, the nation’s two largest mortgage finance companies, Fannie Mae and Freddie Mac, are stumbling, causing havoc on the stock market. The dollar’s value continues to fall, which, of course, forces the price of gasoline in the opposite direction. (more…)