Blog

Peter Morici

Peter Morici
Professor, Robert H. Smith School of Business, University of Maryland

Analysts expect the Commerce Department to report today that the deficit on international trade in goods and services was $39 billion in May, down slightly from the $40.3 billion in April because of lower oil prices.

Non-oil and petroleum imports are rising faster than exports, and the overall trade deficit will increase sharply when oil prices rebound, threatening the economic recovery.

President Obama has cautioned Americans about the dangers of another boom financed by excessive borrowing; but unless the Administration implements policies to reverse the huge trade deficits on oil and with China, the nation risks economic stagnation or depression.

The trade deficit rose dramatically during the Bush expansion and was $66.4 billion in July 2008. This depressed demand for U.S.-made goods and services, causing layoffs in manufacturing and supporting service industries, even as finance, housing, retailing, and other industries grew more important. (more…)

Dave Johnson

By Dave Johnson
Fellow with Campaign for America’s Future

Trade is good. Honest, free and fair trade brings prosperity to everyone involved. Unfortunately the kind of one-sided, exploitative trade deals that have been negotiated in the past might have made a few elites very rich in the short term but threaten to impoverish everyone else. The trick is negotiating better “We, the People” outcomes rather than “shut up and take it or we’ll move your job out of the country” outcomes that allow the wealthy elite to set working people here against working people there.

President Obama is spot on when he says we need to balance our trade to help get the country back on a sound financial footing. Of course one key to this is breaking our oil-import addiction. Another is how we resond to the mercantilist nations of Asia.

Which brings us to KORUS, the Korea-US Free Trade Agreement. As negotiated by Bush, it is typically one-sided and doesn’t sufficiently protect American workers or companies. When the AFL-CIO and Ford Motor Company want some work done on a treaty, some work needs to be done on the treaty.

South Korean trade deal pits Obama against labor base, (more…)

Dean Baker

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

The country is being bombarded with stories claiming that record budget deficits threaten our children’s future and jeopardize the credibility of the dollar. These stories are a serious problem – they have hugely confused the public about the nature of the country’s economic crisis. And both parties share the blame.

Starting with the reality behind the scare stories – trillion-dollar deficits are really huge relative to the money that any of us will ever see in our lifetime. But this is an absurd measure. The United States is a country with more than 300 million people. It doesn’t matter than a trillion dollars is a huge amount to any of us individually. What matters is the size of the deficit and the debt relative to the size of the economy.

Only people who want to deceive the public would talk about the deficit or debt in “trillions” of dollars. This is a very simple lie-detector test since honest economists and policy analysts always refer to these sums relative to the size of the economy.

Relative to the size of the economy, the deficits that we are running are large and the debt that we are projected to incur is substantial, but the deficit level is still not coming close to the levels hit in World War II. Nor is the debt level projected to reach post-war peaks or the levels sustained by countries like Italy and Japan. The idea that we are near some debt-driven crisis is absurd on its face.

The United States had the strongest period of growth in its history in the three decades following World War II. This undeniable fact should put to rest the idea that our debt levels will threaten the prosperity of future generations. We hand our children a whole economy and society. If we give them a bad education, a decayed infrastructure, a ruined environment, then we will be jeopardizing our children’s economic well-being. However, the debt levels we are currently projecting aren’t even large enough to make it to the list of serious problems.

The claim that the dollar faces an imminent crisis because of the budget deficit or national debt is readily refuted by the example of Japan. Japan already has a debt to GDP level that is far larger than we are projected to have by the end of the next decade. In spite of this debt burden, investors are willing to hold ten-year Japanese government bonds at just a 1.5 percent interest rate. If these debt burdens are supposed to make Japan a high risk, someone forgot to tell the people who are putting billions of dollars on the line by holding Japanese government bonds.

There is another side of this Japan story that makes the idiocy of the deficit scare stories even more apparent. According to the deficit fear mongers, the dollar has been falling in recent months because investors are becoming increasingly worried about the US government’s ability to pay off its debt. But one of the currencies that the dollar has fallen against is the yen. Are investors who are worried about the US government’s ability to pay off its debt selling dollars to buy the bonds of the Japanese government, which has an even higher debt burden?

Let’s face it: The deficit hawks will say anything to advance their agenda. Even worse, the media will print it.

This deficit nonsense should have been put to rest long ago, but both parties have hyped it to advance their ends. Currently, the Republicans are making headway in the polls by blaming the Obama administration for a deficit that is primarily the result of economic mismanagement during the Bush years.

But Republicans don’t have a monopoly on demagoging the deficit. During the Bush years, many Democrats spoke of the Bush deficits in cataclysmic terms. This was absurd. The deficits were larger than was desirable during part of the Bush administration (large deficits in 2002 and 2003 were helpful in boosting the economy), but they were not hugely out of line. There is certainly no story that can pass the laugh test in which these deficits are responsible for the collapse of the housing bubble and subsequent recession.

There were plenty of grounds to attack President Bush for the economy’s performance under his watch. Most importantly, he let an $8 trillion-dollar housing bubble grow unchecked, and giving big tax cuts to the wealthy is not the way to create an educated workforce and a modern infrastructure.

But the Democrats often hyped the deficit – it was the easiest way to score political points. That helped to give us a situation in which tens of millions of people somehow think the deficit is the cause of the economy’s problems when in reality it is the only thing keeping it afloat. In short, the Democrats are paying the price of their own political opportunism. Unfortunately, so is the rest of the country.

*** 

This piece was first published on Huffington Post

***

Dean Baker is the author of the new book, “Plunder and Blunder: The Rise and Fall of the Bubble Economy.”

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.

Leo W. Gerard

By Leo W. Gerard
International President

President Bush took to the TV Friday to announce that he wouldn’t walk past the financial crash of America’s Big Three automakers and do nothing to save their lives.

Refusing resuscitation, Bush said, would be irresponsible during the worst economic crisis since the Great Depression.

A week earlier, 31 GOP Senators, mostly from Southern states, voted to avert their eyes and allow American auto companies to die. They opposed $14 billion in federal loans for GM and Chrysler, revealing that their loyalty lies not with America, not even with their own states, but with South Korea and Germany and Japan.

They are Toyota Republicans.

Toyota has non-union manufacturing plants in Alabama, Kentucky, Mississippi and Texas – states whose senators led the GOP quest to slay the Big Three American auto manufacturers – Richard Shelby, R-Ala.; Mitch McConnell, R-Ky, and John Cornyn, R-Tx. Here’s the Republican from Mississippi, Sen. Thad Cochran, explaining why he’d vote against the loans, “Things have changed. It’s not just the Big Three anymore,” he said, pointing out that Nissan and Toyota employ more Mississippians than General Motors, Ford and Chrysler. But, he said, the foreign companies would not share “in the benefits of that automobile bailout program.”

No. But Mississippi did give Nissan and Toyota more than $650 million to entice them to locate in the state. GM, Ford and Chrysler didn’t share in those benefits, Sen. Cochran.

The Toyota Republicans are all for helping the rich with tax breaks and shelters, and they’re all for aiding foreign auto manufacturers with billions worth of tax forgiveness and government-paid infrastructure improvements.

But their disdain for the working class couldn’t be clearer as they organized defeat of loans to the Big Three under this command: “Republicans should stand firm and take their first shot against organized labor.”

They haven’t gotten the message sent out by the electorate in November. Voters rejected politicians prolonging the same old policy of protecting themselves and the rich. The nation’s voters want selfless leaders who will perform in the best interests of the entire country. They want change.

Clearly the allegiance of the 31 Republicans who opposed the loan to save GM and Chrysler is not with the United States of America, which would lose 900,000 jobs if just GM closed, and more than 2.1 million if the Big Three did. Those job losses would occur during the worst economic downturn since the Great Depression. In November, the 11th consecutive month of job losses, another 533,000 people were thrown out of work, swelling the pool of unemployed to 10.3 million. The Toyota Republicans were willing to increase that.

They voted against the interests of their own states as well. Consider what would happen in a few of those Southern States whose senators led the charge against preserving the Big Three. If just GM collapsed, Kentucky would lose 20,000 jobs; Alabama, 21,000; Georgia, 23,000, and Tennessee, 29,400, according to calculations by the Economic Policy Institute.

Sen. Cochran just didn’t think it was right for the U.S. government to aid its auto industry. But apparently he’s fine with foreign governments providing subsidies to the transplant automakers in his state. And, apparently, he’s okay with spending state and federal money to help foreign automakers locate manufacturing plants in the U.S.

Korean and Japanese automakers – including Nissan and Toyota with plants in Cochran’s Mississippi – benefit from manipulation of currencies by their governments, a factor that, according to EPI estimates, reduces their costs by between 10 and 20 percent. In addition, nationalized health care in countries such as Japan and Germany serves as a subsidy.

Also, the Toyota Republican opposed federal money for American companies but supported state and federal money for foreign auto makers estimated at $3.6 billion.
Shelby, for example, got $3 million in federal funds to improve roads near the Hyundai plant in Alabama after the state gave $250 million to the Korean automaker.

Shelby opposed loaning one federal cent to the U.S. automakers, though, telling “Face the Nation” that they should die: “Companies fail every day and others take their place. . . There’s not a bank in this country that would loan a dollar to these companies.”

But for foreign auto companies, his home state of Alabama couldn’t provide enough taxpayer cash – more than three quarters of a billion. In addition to the quarter billion it gave the Korean automaker, it handed another quarter billion to German Daimler for a Mercedes-Benz plant, nearly a quarter billion to Japanese Honda and $29 million to Japanese Toyota.

Similarly, Jim DeMint, another senator who led the Toyota Repubicans’ rebellion against the loans to GM and Chrysler, told the “National Review” recently, “Government should not be in the auto industry.” Yet, his state, South Carolina, got into the auto industry with nearly a quarter billion — $230 million – in gifts to a German auto company – BMW.

The same is true in Kentucky, home of Sen. Mitch McConnell, who said of loans for the Big Three, “Government help is not the only option. It’s not even the best option.” But government help was fine when Kentucky was providing grants for Toyota, which got $371 million from taxpayers since 1986.

It’s clear that the real problem was not a philosophical one. All of these lawmakers were willing to flick free market capitalism out the car window like a cigarette butt if their states could use taxpayer dollars to buy a foreign auto plant. No, what really gags them about the Big Three is that they pay good, middle class wages and benefits as a result of contracts with the United Autoworkers.

Repeatedly, the Toyota Republicans insisted that UAW members bear the brunt of the cost of the bailout. The senators insisted that UAW wages be lowered to match those of non-union auto workers at foreign-owned manufacturers. Toyota Republican Sen. Bob Corker of Tennessee, wrote an amendment to the bailout bill that would have required UAW members to accept pay cuts by a specific date in 2009. When Republicans defeated the bailout, DeMint blamed that on the union, saying, “It sounds like the UAW blew up the deal.”

The Toyota Republicans then conferred the American auto industry to bankruptcy. They said they favored bankruptcy because it would enable the Big Three to break pledges made in labor contracts and promises for health care and pensions made to retirees. The Toyota Republicans want the wages of American workers pulled down. To them, UAW members making an average of $28 an hour, accounting for less than 10 percent of the cost of a car, are earning just too much money.

The Toyota Republicans did not, however, make that claim about the white collar workers on Wall Street who got this country into the financial fiasco that led to the dire circumstances for automakers. And not just for American ones. Domestic car sales declined by 40 percent last month, but Asian producers’ sales dropped too – by 35 percent.

The average salary of white collar, Wall Street employees — workers in “securities, commodity contracts and investments” — is four times that of those laboring in the rest of the economy. Remember, these are the guys who are so smart that they took down Bear Stearns, Fannie Mae, Freddie Mac, Washington Mutual, AIG and Lehman Brothers – in less than a year – and ultimately required $700 billion from taxpayers to bail them out.

The top executives of Wall Street banks receive billions of dollars in year-end bonuses. The New York Times detailed those at Merrill Lynch in a story Dec. 17 entitled “On Wall Street, Bonuses, Not Profits Were Real.” In 2006, the firm gave its top executives between $5 billion and $6 billion in bonuses, which means, for example, a trader earning $180,000 a year got a $5 million bonus.

Merrill’s $7.6 billion earnings that year turned out to be bogus. The company’s losses now have exceeded all of the profits it earned over the previous 20 years. To prevent collapse, it sold itself to Bank of America in September. But then, Bank of America took $15 billion of that $700 billion in bailout money. Despite the gift of taxpayer dollars, the CEO of Bank of American has not publicly announced that he will decline a bonus, and Bank of America plans to tell Merrill Lynch workers the amounts of their bonuses beginning Friday, the New York Times reported Thursday.

When those Toyota Republicans voted in favor of providing $700 billion for Wall Street — including both of Tennessee’s senators, Bob Corker and Lamar Alexander; Kentucky’s Mitch McConnell; Georgia’s Saxby Chambliss and Johnny Isakson; South Carolina’s Lindsey Graham, and Texas’ Kay Bailey Hutchinson and John Cornyn – none asked for high-paid white collar workers to take pay cuts or give up their million dollar bonuses. There was a feeble attempt to limit the pay of chief executives, but that applied only to firms that received federal money under one particular method, and the treasury decided not to hand out the $700 billion that way.

And no lawmaker asked white collar workers or executives who got billions in bonuses based on false profits to return them.

But those Toyota Republicans want middle class, blue collar workers who don’t get year end bonuses, who don’t celebrate with five-figure dinners, to take wage cuts. They want autoworker pensioners to lose the monthly benefits they earned with a lifetime of labor.

And at no time did those Toyota Republicans suggest that they should cut their own salary or top-notch, government-paid health benefits or pensions. Like the reckless speculators on Wall Street, Congress bears responsibility for the crisis condition of the American economy because it deregulated financial markets.

In 2002, during a downturn in Japan, the House of Councillors reduced the pay of Diet lawmakers by 10 percent, and ended the transportation allowance, portrait-painting and  pension given senior lawmakers.

If the Toyota Republicans believe the Japanese way of pay is so great for autoworkers, they should first impose it on themselves.

Robert Borosage

Robert L. Borosage

 

Co-Director Campaign for America’s Future

Does President-Elect Obama represent the change we need? His mainstream appointments — largely veterans of the Clinton administration — have sparked a clamor from worried supporters. But in one of the critical challenges facing the country — how to get the country out of what will be the worst downturn since the Great Depression — Obama is calling for dramatic and long overdue change. While President Bush continues to oppose any major plan for Main Street, Obama has been calling for a substantial recovery program, focused on public investments rather than tax cuts.

His chief economic advisor, Clinton’s former Treasury Secretary Larry Summers, suggests a “speedy, substantial and sustained” fiscal stimulus, at levels of $350 billion a year or more. A key question is whether the stimulus will be strategic — investing in areas vital to our future, rather than in simple one-off expenditures for temporary effect.

On this Obama seems clear. The centerpiece of his plan is a down payment towards moving to energy independence and dealing with global warming. He’ll generate green jobs by investing in retrofitting buildings for energy efficiency, in modernizing the electric grid, in pushing renewable energy, mass transit, and retooling the auto industry.

He could also sensibly use the crisis to make college more affordable again. The cost of college has doubled under President Bush. Grant programs haven’t kept pace. States have been limiting their support. Students have had to take on more and more debt to pay the bill.

Now in the crisis, all will get much worse. Tuition and costs are increasing, as states cut even more costs. Teachers are getting laid off; construction projects stalled; class sizes will increase. As private lenders abandon the student loan area, loans are still available — but the costs and debt burdens are likely to rise.

For this country to prosper as a high wage society in a global economy, we will need greater education for students, particularly in the skill oriented community colleges that are being hit hardest in the downturn. Obama would be wise to raise Pell grants — the grants that go to neediest students back to the level they once were, when the maximum grant covered about 75% of college costs. That would cost $35 billion a year. The money would be spent immediately — and it would keep kids in college and off the unemployment rolls.

Critics argue that the spending program should be temporary — one-time tax rebates, or one-off investments that involve no long term commitments, and can be ended when the economy starts to grow. If we make a downpayment on strategic investments now, they warn, we’ll have to find a way to pay for them when the economy recovers.

Exactly. The fact is that we’ve been starving vital public investments for decades. Just as conservatives pushed for massive tax cuts as a back door way to force cuts in government spending, Obama should be making vital investments as part of the deficit-funded stimulus as a backdoor way to strengthen the argument for paying for these investments in the long run.

A big time recovery plan for Main Street focused on the investments we need is one key element of the change we need. And one that President Obama surely supports.

Leo W. Gerard

By Leo W. Gerard

International President

Congress drove the Big Three CEOs out of Washington, D.C. last week, ordering them not to return with their tin cups until they could guarantee their companies would be viable after a $25 billion bailout.

Just days later, Citigroup, a bank that had already received a $25 billion bailout in October, held its hands out for more. Within 48 hours, federal officials approved giving the bank another $20 billion and providing backing for $306 billion in its risky loans and securities. Even though Citigroup was failing just weeks after getting its first government bailout, Congress didn’t subject its CEO to the public lecturing and demands for business plans that it did the Big Three.

The message here could not be more clear: Washington will bailout out those who shower before work but not those who shower afterwards.

Washington, D.C. is a white collar town. President Bush and members of Congress understand their suited counterparts on Wall Street. In fact, several prominent figures in the banking industry – including Citigroup’s Robert Rubin, a former Secretary of the Treasury, and UBS Investment Bank’s Phil Gramm, a former Texas Senator, – worked in Washington first, aiding and abetting the current crisis by de-regulating the financial markets and everything else they could.

Detroit, by contrast, is a blue collar town. It’s a place where workers at the Big Three earn thousands of dollars — the average production employee making $67,480 last year — not hundreds of thousands, and certainly not Wall Street’s millions. The Citigroup CEO credited with overseeing the bank’s ill-fated investments, Charles O. Prince III, was forced out a year ago as the bank’s massive sub-prime losses began mounting but the board of directors still gave him a $12.5 million bonus, $68 million in salary and accumulated stockholdings, a $1.7 million pension, an office, and a car and driver for up to five years. Heading the board executive committee at that time was Rubin, who would briefly serve as chairman and receive $17 million in compensation as the bank declined further into financial ruin.

Detroit is a place where workers are unionized; Wall Street is not. And right-wing Republicans and conservative pundits have made it clear they want the union workers to suffer. They want federal aid denied to the Big Three so that the firms go bankrupt. Then the companies can renege on pensions they guaranteed to retirees and can break salary and benefit promises to workers in current contracts.

Senate Minority Whip Jon Kyl writes on his web site that Chapter 11 bankruptcy would be best for the Big Three because it would enable them to break their pledges to retirees receiving health care and other benefits earned over decades of service, what he calls “legacy debts”: “Like many other industries, including the airlines, the goal under Chapter 11 is to gain temporary protection, reorganize in a way to reduce legacy debts, and emerge as a more viable and competitive company.”

Conservative columnist George Will, similarly, wrote: “Do nothing that will delay bankrupt companies from filing for bankruptcy protection, so that improvident labor contracts can be unraveled. . .” Will’s fellow Washington Post Columnist Martin Feldstein blamed all of Detroit’s problems on the unions, writing that the basic reason the Big Three can’t compete: “is labor costs imposed by union contracts.” He said if Congress gives the Big Three a loan, it must require “that the unions accept reductions in wages and benefits to levels that allow the firms to compete with imports and with non-union U.S. auto firms. The trustees of retiree benefits should be required to accept reductions in those benefits.”

They want the unions broken. They want retirees’ benefits slashed and union workers’ wages and benefits cut, which, of course, will enable the foreign auto makers – whose U.S. plants are non-union – to reduce their wages. It’ll be an all-American race to the bottom, rather than the preferable opposite, where workers and retirees are treated with dignity and respect for their hard labor.

None of those conservatives, however, is calling for Citigroup’s Charles O. Prince III, who took down Citigroup at a cost of untold billions to taxpayers, to return his $1.7 million pension, office and car and driver.

Unlike Citigroup and the other Wall Street banks, which have their very own inside-the-beltway apologists in the form of Federal Reserve Chairman Ben Bernanke and Treasury Secretary Hank Paulson to argue their case before Congress, the Big Three CEOs had to appear before Congress to plead for themselves.

There, legitimately, lawmakers grilled them about flying to the hearings in expensive private jets and about their multi-million dollar compensation packages. Still, none of the lawmakers has asked Citigroup’s CEO, Vikram S. Pandit, to take $1 for next year’s compensation, as they did the auto executives. Nor have they asked any of the CEOs from the nine banks that shared $125 billion in bailout money in October to sell their private jets, as they did the auto executives.

Conservatives also argued that the Big Three should be left to die because in a free market, that’s what happens to poorly operated companies offering inferior products.

Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee, said, for example, “I do not support the use of U.S. taxpayer dollars to reward the mismanagement of Detroit-based auto manufacturers.”

Shelby made this accusation while part of the Congress that ran up the largest federal deficits known to man and allowed Paulson to broker a deal to sell troubled Wachovia bank to troubled Citigroup – a bank that so far got two bailouts, the first of which arriving within weeks of the failed Wachovia marriage.

Shelby, of course, has a lot to lose if Michigan does well. His home state of Alabama gave tax breaks to foreign car companies Mercedes-Benz, Honda and Hyundai to locate factories there – hardly a free market approach.

So, like many conservatives, he twists reality to suit his circumstances. He’s right that American car companies made mistakes. In October, GM’s sales were off 45 percent from the year before, Chrysler 35 percent and Ford 30. But he’s wrong about that being a result of mismanagement alone, well, unless he thinks his precious foreign car companies made the same mistakes. Toyota was down 23 percent, Honda 25 and Nissan 33 for the same month.

And if aid denial is based on bad products, Wall Street definitely should be the first refused. Its firms built and sold what are now being called “toxic securities,” products so defective that they took down banks, the U.S. economy and international financial stability – creating the deepest economic crisis since the Great Depression. Now that’s mismanagement for you!

When the representatives of blue collars went to Congress hat in hand, lawmakers insisted that to get loans automakers would have to present viable business plans. Congress didn’t impose similar conditions, however, when Bernanke and Paulson went to Congress seeking grants for reckless white collar firms.

In fact, they gave $125 billion to nine big Wall Street banks in October, contending the direct infusion of money would melt frozen credit. It didn’t. The firms apparently didn’t lend the money, and the deal didn’t require them to. There’s a viable business plan for you!

Paulson and Bernanke gave insurance giant AIG $85 billion. And when that didn’t work, they forked over more until it all added up to $150 billion. Now, it’s not clear that will be enough to resolve AIG’s problems. Sen. Jon Kyl, the Republican from Arizona who voted for the Wall Street bailout, didn’t demand a viable business plan for AIG or Citigroup, yet said this about the auto industry request: “There’s no reason to throw money at a problem that’s not going to get solved.”

This year, as Wall Street’s recklessness destroyed the American economy, a million Americans lost their jobs. It’s no wonder no one is buying cars. It’s not just that they can’t get credit. It’s also that they don’t have money to spend or they’re afraid to spend the money they have.

Some of those furloughed had been on Wall Street. Citigroup announced recently it would cut 52,000 jobs by early next year. But of the million jobs lost so far, 100,000, or one in ten, have been auto workers or employees of auto suppliers. Unemployment in Michigan is 9.3 percent – while in the rest of the nation it is 6.5.

Just like Paulson who couldn’t see that Citigroup was too weak to buy Wachovia, the conservatives intent on denying the Big Three loans are shortsighted. They don’t see that 2.3 million jobs in and dependent on the auto industry could be lost. They don’t see the effect of slashing the wages and benefits of people who get their hands dirty for a living.

It would mean even more mortgage foreclosures and even more credit card debt unpaid to those struggling banks. It would mean the Big Three defaulting on the $100 billion they owe to those weak banks and bondholders, some of which is secured, some not.

It’s the big circle of economic life. If Congress spits on the autoworkers and the millions whose jobs depend on the Big Three, the lawmakers may find themselves using more and more taxpayer dollars to scrub new blood off Wall Street.

Bob Cesca

 

By Bob Cesca

Author of One Nation Under Fear

“I find I’m so excited, I can barely sit still or hold a thought in my head. I think it’s the excitement only a free man can feel, a free man at the start of a long journey whose conclusion is uncertain.” — Ellis Boyd ‘Red’ Redding, The Shawshank Redemption

Earlier this year, HBO premiered their brilliant mini-series John Adams, based upon David McCullough’s epic biography of our second president — the founding father who Thomas Jefferson referred to as “a colossus of liberty.”

And as the scenes of the last 24 hours have rolled by, I can’t stop thinking about a poignant scene from third act of episode six: “Unnecessary War.”

The scene follows President and Mrs. Adams as they arrive at the still-under-construction executive mansion in Washington only to discover, to their visible disgust, that African slaves — both men and women — were being tasked with the construction of what would later become known as the White House.

We follow the Adamses, who were vocal opponents of slavery, as they walk below the familiar triangular peak of the north portico and through the front doors — the first presidential couple to occupy that historic building. As they step through the mud in what appears to be silent horror, they’re taken aback by numerous slaves toiling all around. Painting and plastering the walls. Sweeping the floors. Moving furniture.

“The negroes will see to your trunks,” a white foreman offers to “help” with the presidential luggage, and then barks at a slave, “Here! You boy!”

The scene culminates with Abigail Adams, played by Laura Linney, shouting with indignation, “Half-fed slaves building our nation’s capital?!”

Not only was this scene a powerful cinematic illustration of the contradictions and ironies of America’s founding liberties, but it also sets the stage for an event you and I will be fortunate enough to witness just 76 days from right now.

Today, President Bush, of all people, described the forthcoming Inauguration Day and, perhaps inadvertently, presented the ultimate historical bookend to that scene from John Adams when he remarked, “It will be a stirring sight to watch President Obama, his wife, Michelle, and their beautiful girls step through the doors of the White House.”

Indeed it will, sir. After eight years of awfulness, George W. Bush actually managed to say something that touched me in a way that didn’t precipitate, you know, me breaking something. Damm you, Mr. President, you magnificent bastard.

To arrive at this moment has required a too-long and too-painful journey. For African Americans, yes. But also for the maturation of the ideals championed by John Adams and his generation of founding patriots. For a nation that professes to spread freedom and yet continues to deny it to some of its own people. For those of us who have hungered for some kind of redemption to help wash away the original sins lurking between the lines of our Constitution.

President-elect Obama hasn’t and probably can’t absolve those sins, and no single event or person can be expected to accomplish such a task. The southern and Appalachian white vote was evidence of the continued existence of those deep prejudices, and certain Gollum-ish elements of the Republican Party have proved this year that the Southern Strategy is very much alive.

But this new president has set for us an unique example — he’s become a national role-model and a guide, leading a record number of us towards the realization that it doesn’t have to be “that way.” It doesn’t have to be us versus them anymore. The multi-racial, multi-cultural coalition that President-elect Obama achieved in this election — his truly American coalition — has succeeded in further marginalizing the ridiculous and archaic fear-mongers and fire-eaters who feed upon the exploitation of our original, founding sins.

In terms of race, in terms of history, politics and American life we’ve crossed over to a better place and a more hopeful time. Not simply because of one man, but because we were prescient enough to have recognized ourselves and the true nature of America reflected in that one man. From there, we set about the task of freeing ourselves from the darkness of this decade and the skulking shadows that have for too long haunted us. In this respect, all of us — all races — are a little more free at last.

After all these years, we’ve finally arrived at moment when America feels like it’s supposed to feel.

This January 20th, all of America will be stepping through those doors with President and Mrs. Obama as the dark ride of the last eight years reaches its long-overdue conclusion — a conclusion more joyful and overwhelming than I think any of us fully anticipated prior to 11 p.m. eastern time Tuesday night — when we pushed beyond a crucial threshold on our way to a more perfect union. And now, as the pictures roll in from celebrations here and around the world…”I find I’m so excited I can barely sit still or hold a thought in my head.”

—————————————-

Cesca’s One Nation Under Fear, with a foreword by Arianna Huffington of Huffington Post is available on Amazon. For more by Bob Cesca, see BobCesca.com! Go!

By Leo W. Gerard
International President

Here everybody has a neighbor
Everybody has a friend
Everybody has a reason to begin again
Bruce Springsteen – Long Walk Home

Sen. Barack Obama yesterday asked 4,500 delegates and observers at the convention of the United Steelworkers in Las Vegas to help him give America a chance to begin again. The group responded with a roar of applause.
The presumptive Democratic nominee for President appeared before the delegates by videocast after an introduction by former Sen. John Edwards and established solidarity immediately when he said, “Working together, ordinary people can achieve extraordinary things.” That’s something we’ve experienced up close and personal from organizing drives to picket lines. (more…)