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Dave Johnson

By Dave Johnson
Fellow with Campaign for America’s Future

Ever since President Obama set up the Deficit Commission all the talk has been about Social Security. Why?

Social Security is separate from the rest of the US budget, is separately funded, has a huge trust fund and, most important: Social. Security. Does. Not. Contribute. To. The. Deficit. Speaker of the House Nancy Pelosi said it best at Netroots Nation last month, calling it “apples and oranges:”

“To change Social Security in order to balance the budget, they aren’t the same thing in my view,” the Democrat said today at the Netroots Nation conference in Las Vegas. “When you talk about reducing the deficit and Social Security, you’re talking about apples and oranges.”

So is it a DEFICIT commission or is it a SOCIAL SECURITY commission? If it is a deficit commission, then stop all of this talk about cutting Social Security, please, and start talking about the deficit. Everyone knows the deficit was caused by tax cuts for the rich and the huge increases in military spending that occurred under Reagan and then again under Bush II. (Note – there is no more Soviet Union.)

If you want to fix the deficit then get the money from where the money went. If you decide that it IS a deficit commission, it isn’t hard to know what to do. (Please, click through, it’s not hard.)

But instead, every day now, there is another round of attacks on Social Security. For example, this just in: Social Security, the trust fund and funny money, in this week’s Washington Post, talks about the Social Security Trust Fund as “funny money.” The Trust Fund is all T-Bills. I would worry that the Chinese, Japanese and other major T-Bill holders are very, very nervous about talk like this. The Social Security T-Bills are the same T-Bills as theirs. (more…)

Isaiah J. Poole

By Isaiah J. Poole
Executive editor of the blog site OurFuture.org

Oh, the irony. As Defense Secretary Robert Gates was on Capitol Hill today telling a Senate appropriations subcommittee that Congress has to approve a $33 billion supplemental war funding request by July 4 or else “we begin to have to do stupid things,” the Senate did an incredibly stupid thing itself: By a vote of 45 to 52, it blocked a spending and tax measure that if enacted would prevent the loss of hundreds of thousands of jobs nationwide and would begin to close a particularly egregious tax loophole.

Once again, a majority of the Senate has placed trying to use whipped-up fear of growing deficits to protect their own jobs over aggressive action to create and protect jobs for the American people.

HR 4213, the American Jobs and Closing Tax Loopholes Act of 2010, was the victim today of yet another conservative filibuster. But this time, several Democrats joined the typically unbroken wall of Republican opposition. Those Democrats were Sens. Evan Bayh, Ind.; Mark Begich, Ark.; Russ Feingold, Wis.; Herb Kohl, Wis.; Mary Landrieu, La.; Claire McCaskill. Mo.; Robert Menendez, N.J.; Bill Nelson, Fla.; Ben Nelson, Neb.; Mark Pryor, Ark., and Jim Webb, Va. Independent Sen. Joe Lieberman, Conn., also voted to block the bill. Sens. Robert Byrd, W.Va.; and Blanche Lincoln, Ark., did not vote.

Just a taste of what was at stake in this bill was explained by Pennsylvania Gov. Ed Rendell earlier today. The bill included funding to offset state spending for Medicaid, and without that money “we will have to lay off 20,000 people. These would be teachers, state workers, fireman, policemen and caseworkers,” Rendell was quoted by CQ as saying.

In fact, according to the Center for Budget and Policy Priorities, about 900,000 jobs are likely to be lost in the next 12 months without federal aid that would help states keep these workers. And how stupid would it be to allow that to happen, in the name of deficit reduction?

Critics say that the measure would add $80 billion to the federal deficit. But what do we lose when 900,000 people who are teaching our children, protecting our lives and property, maintaining our public spaces and serving us in innumerable other ways are unemployed?

Here’s one way to think of the loss. On Sunday The Washington Post profiled Angie Walker, a D.C. resident living in view of the Capitol building in the city’s Ward 8. She has a 19-year-old daughter and a 2-year-old grandson. In her neighborhood, the Post reports, “unemployment, estimated at 25 percent, approaches 40 percent when counting the underemployed and those who have given up looking.” Her experience as a cook means that she can get some jobs, “but they’re almost always part time, low paying and temporary.”

What are we saying to Walker and her children when White House officials threaten to do “stupid things” if their defense spending proposals aren’t rubber-stamped by Congress but there are no comparable rumbles of thunder when Congress won’t act on a measure essential to the nation’s economic security?

Angie Walker is like a lot of us. She’s made a couple of wrong turns in her life but she’s now trying to do what those Senate deficit hawks say she’s supposed to do: apply for work and then apply herself when she gets that work. But playing by those rules doesn’t work when Congress won’t make the basic policy decisions that are necessary to get a broken economy to work. We can’t afford to send that message to Walker and her children. And if the economy is not working for Angie Walker and the thousands of other struggling Ward 8 residents, it’s not working, period.

It is time to tell the Senate that it is being stupid. The Senate must pass legislation that will aid the jobless and prevent a massive wave of layoffs.

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This post originally appeared on the  Campaign for America’s Future (CAF) Blog for OurFuture.  Sign up here for the CAF daily summary.

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Isaiah J. Poole worked for 25 years in mainstream media, most recently at Congressional Quarterly. Most of his journalism experience has been in Washington as both a reporter and an editor on topics ranging from presidential politics to pop culture. He is a founding member of the Washington Association of Black Journalists and the National Lesbian and Gay Journalists Association.

Robert Borosage

By Robert L. Borosage
Co-Director of the Campaign for America’s Future

Financial reform, as it is called, shouldn’t be all that complicated. Break up the banks deemed “too big to fail,” since that offends any possibility of market discipline and puts taxpayers on the hook for future bailouts. Crack down on gambling with other peoples’ money in the financial casino. Give consumers a cop on the beat to protect them from the cons and frauds. Tax the big guys to get our money back. Outlaw compensation schemes that give million dollar incentives to make risky bets.

But, of course, finance is its own world, with its own patois, ethos and interests. And banks and regulators have a strong interest in making this stuff complicated. So the debate turns to the intricacies of trading derivatives on an exchange, resolution authority, credit default swaps, policing “systemic risk.” For most Americans, the eyes glaze over, and they reach for the remote. That leaves legislators free to deal with the banking lobby and the regulators mobilized to protect their interests and turf. With the White House still focused on passing health care, and Finance Committee Chair Senator Dodd replaying a poor man’s version of the bipartisan farce that Max Baucus staged on health care, wasting time in backrooms trying to seduce a couple of reluctant Republicans, it is no surprise that reform isn’t going so well.

How bad is it? The independent Consumer Financial Protection Agency is about to be buried in the Federal Reserve. The only talk of banning naked credit default swaps is in Europe. The market oxymoron — banks that are too big to fail — seems about to be embraced in law. I could go on, but again, I can feel the eyes begin to droop.

So how bad is it? All you really need to know was provided by a lead article in Sunday’s Washington Post business page, entitled “Financial reform bill likely to lose measure to protect Main Street investors.”

Tomoeh Murakami Tse reports that when the new bill’s language is released (reportedly sometime this week), it is likely to drop the simple “requirement for stock brokers and insurance agents to act in the best interests of their clients.”

This common sense statement passed the House without mention. It was included in Chairman Dodd’s original draft language. Then the lobbyists went to work and apparently have convinced the Senators that requiring an agent to act in the best interests of his or her client is, well, complicated. So Tse reports that instead of a requirement, the new draft will direct the Securities and Exchange Commission to study the varying rules that govern brokers and investment advisors.

Consider this a tribute to Goldman Sachs. You remember Lloyd Blankfein told the Financial Crisis Inquiry Commission that it was just business as usual for Goldman to create and peddle packages of mortgage-backed securities, lobby for them to be rated triple AAA, and then make independent bets that the securities would go bust. (Astonished Commission Chair Phil Angelides responded: “It sounds to me a little bit like selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars.”)

So at the retail level, your broker — who usually works for a bank or investment house — will have the banks’ interests in mind, not yours. He or she may be encouraged to recommend that you buy the toxic junk in the basement that the bank is trying to get rid of. So it would be complicated — worth study, surely — to require your broker to have your best interests in mind.

Yeah, it’s come to that. Reforms prospects are bleak, but not entirely hopeless. One small thing constrains the Senators, outside of their individual own sense of decency (which is a dependent variable).

The public is furious at the bank ripoffs and bailouts. Across the spectrum, from conservative to liberal, Democrat, Independent and Republican, vast majorities want a crack down on the banks. Folks are looking for tumbrels and guillotines, not SEC studies.

So the bank lobby has millions of dollars and legions of high dollar lobbyists, including literally dozens of retired legislators, who can buttonhole their former colleagues, as Rep. Massa reveals, in the showers of the House gym. (Giving new meaning to whole notion of naked credit default swaps).

The reform coalition — anchored by Americans for Financial Reform — has 200 organizations, and mobilizes citizens, not money. But even obstructionist Republicans (who provided not one vote for financial reform in the House) and corporate Democrats are nervous about appearing to be too deep in the pocket of the banks.

So, folks, you don’t have to have a MBA, or be a sophisticated investor to make a difference. You don’t have to learn what a credit default swap is. All you’ve got to use is your common sense.

If the Senate isn’t prepared to give consumers an independent cop on the beat, if it isn’t prepared to break up banks that taxpayers will have to bail out, if it isn’t even willing to require that your stock broker act in your best interests — then raise bloody hell. Take down names and mobilize.

Check out Americans for Financial Reform Come to the Campaign for America’s Future,. We’ll track the debate and provide a chart on who stands with you and who stands with the banks, with links on how to call them.

We’re not likely to get sufficient reform this year. But, if a few legislators pay the penalty for taking the bank lobby money and voting the bank lobby program — things may get a lot simpler next year.

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Robert Borosage and Campaign for America’s Future Co-Director Roger Hickey are co-editors of the book, The Next Agenda: Blueprint for a New Progressive Movement.

Leo W. Gerard

 By Leo W. Gerard
USW International President

A screwy thing happened after the United Steelworkers and eight domestic steel producers won their trade case late in December against Chinese manufacturers of the steel pipe used for oil and gas drilling.  

Instead of describing it as an important victory for U.S. industry and workers, one in which they proved to the U.S. International Trade Commission (ITC) that China violated international trade rules, the media characterized it as Americans unnecessarily picking a fight with the Chinese.

What else is new? It’s exactly what happened in September when the United Steelworkers won tariffs in a trade case regarding imported Chinese tires.

What’s particularly disturbing about this stance from the media is that it occurs only when a trade case involves manufactured goods. The media strongly supports protections for copyrighted material – movies, music etc.  The media have made clear they oppose Chinese piracy of intellectual property – you know, like the written and filmed products that media members produce. 

But their reaction is completely different when the Chinese violate international rules regarding manufactured goods. Then, the media blame the victims — the U.S. industries and workers – the same way defense attorneys accuse rape victims. 

Here, for example, is the Washington Post  contending that the ITC decision to impose duties of between 10.4 and 15.8 percent on Chinese pipe heightened trade hostilities between the U.S. and China:

“The current tensions began in September, when the United States imposed a staggering 35 percent import fee on tires from China.” 

The Dow Jones Newswire in a story by Henry J. Pulizzi also charged the U.S. with provoking the Chinese by imposing duties, beginning with a reference to the steel pipe decision:

“The ruling adds more tension to the U.S.-China trade relationship. Ties between Washington and Beijing are already frayed by the Obama administration’s imposition of duties on Chinese tire imports and China’s criticism of U.S. moves as protectionist.”

These reporters act like the decisions themselves initiated animosity between the U.S. and China over trade.  That completely disregards how the process starts – with China violating international trade rules it had agreed to obey in ways that cause U.S. businesses to collapse, factories to close, thousands of U.S. paper workers, tire workers, steelworkers and others to lose their jobs, and their communities to suffer.

We could sit back and just take it and allow U.S. industries to die, one after another, while China keeps its citizens employed by providing subsidies and supports forbidden under international law to its industries and then selling the goods in the U.S. at prices below production costs.

But that doesn’t sit well with most Americans. They believe their country should enforce trade rules. That is what U.S. industry and unions are demanding. That is what occurred in the tire and steel cases. That is what the United Steelworkers and paper manufacturers are seeking in a trade case to be heard later this year. 

Demanding adherence to the rules isn’t protectionism. And the media need to stop saying it is. Here’s how Dan DiMicco, chief executive officer of Nucor, the nation’s second largest steelmaker, explained it, “It is not protectionism when countries are held accountable for the agreements and obligations they freely entered into to have access to the USA and world’s markets.”

In addition to falsely making this a protectionist fight, the media wrongly contend the tariffs were political. Dow Jones, for example, tried to make the unanimous ITC decision in the steel case political, writing: 

“The ITC is an independent federal agency tasked with investigating the impact of alleged ‘dumping’ of foreign products on U.S. industries. While its six commissioners are split evenly between Republicans and Democrats, the decision fits with the Obama administration’s push to address U.S. manufacturers’ concerns about Chinese competition.” 

Dow Jones implies here that somehow Obama managed to strong-arm all three Republican ITC members to vote his way in this case. None of the stories suggesting politics were involved in the tariff decisions note that Republican Sen. Richard Shelby of Alabama and nine Republican Congressmen joined dozens of Democrats in signing letters to the ITC supporting the duties. 

Nobel Prize-winning economist Paul Krugman has written that failure to enforce trade laws and compel China to stop manipulating its currency could cost the U.S. 1.4 million jobs over the next couple of years. He describes China’s behavior as mercantilist – supporting industry for export of goods to maintain high employment and trade surpluses.

He quoted economist Paul Samuelson:

“With employment less than full. . . all the debunked mercantilist arguments” – that is, claims that nations who subsidize their exports effectively steal jobs from other countries – “turn out to be valid.”

That is what China is doing to the U.S. – stealing jobs.

The U.S. doesn’t have to let it happen. America can enforce international trade laws. It works. Shortly after President Obama imposed the tire tariffs, Cooper Tire & Rubber Co. announced plans to add capacity to its Findlay, Ohio plant and hire up to 100 workers. Other U.S. tire plants began recalling laid off workers.

American manufacturers, workers and communities are the victims of unfairly traded Chinese exports. They’re fed up with the media blaming them when all they’re asking for is justice.

John Russo

Sherry Linkon

By John Russo
Co-Director of the Center for Working-Class Studies at Youngstown State University
and Coordinator of the Labor Studies Program in the Williamson College of Business Administration

And

By Sherry Linkon
Co-Director of the Center for Working-Class Studies at Youngstown State University

During the 1980s recession, as steel mills closed and auto plants began downsizing around the country, neoconservative economists insisted that the jobs lost to deindustrialization would soon be replaced by new jobs.  In Youngstown then, we knew better.  And as we wrote seven years ago in Steeltown U.S.A., Youngstown’s story in the late 70s and early 80s has not only persisted here, where unemployment is among the highest in the state and the poverty rate hovers around 30%, but has become America’s story today.

Youngstown learned then how real economic shifts could be exacerbated by ideology: the idea that businesses and investments matter more than ordinary human beings and the notion that we should just get used to economic patterns that create long-term hardship for those with the least power and resources.  Youngstown learned more than 30 years ago how damaging such ideas can be.  Once again, the rest of America is learning that lesson today.

The gap between the Wall Street recovery and the continuing jobs recession was highlighted by Friday’s jobs summit.  Communities around the country understand that we are in another jobless recovery that leaves hundreds of thousands of American families vulnerable.  While markets have stabilized for the moment and investors are feeling more confident, the economy isn’t improving for most Americans.

So is the current situation just like the earlier recession? No. It is worse. As Peter Edelman and Barbara Ehrenreich note in Sunday’s Washington Post, the current economic crisis reveals the glaring problems left behind by the welfare reform of the 1990s, a policy change that reflected the long-standing assumption that poverty is a “voluntary condition” and that every able-bodied adult should simply find a job – “even when there are obviously no jobs available.”  When we removed the safety net because of conservative and neoliberal worries about “fostering dependency,” we created the economic conditions that left 17.1 million Americans living in extreme poverty in 2008 – and no doubt even more today. As we learned last year, we’re willing to bail out corporations but not working people.

The current recession is also worse because it isn’t just a matter of jobs.  It’s a matter of ideology.  Blaming the victim and normalizing long-term economic struggle were part of the discourse at the jobs summit, during which Jan Hatzius, chief domestic economist at Goldman Sachs, acknowledged that unemployment will likely remain high for a long time.  She suggested that we may just have to get used to it.  Why?  Because those who have been unemployed for a long time are losing their skills and their work habits.  No doubt, long-term unemployment affects people, but the idea that unemployment will last a long time because workers won’t be prepared to return to work represents the most absurd, cruel version of blaming the victim.

On the other hand, Hatzius is not wrong that we’re in for long-term unemployment and underemployment– problems which are far worse than the official unemployment rate suggests. No doubt, business takes the cautious path during economic downturns, often by adding hours to workers’ schedules rather than by hiring additional workers. But as we learned in Youngstown, the reality is that those jobs may never come back as businesses, especially manufacturers, continue to disinvest in the United States.

At the same time, as we have argued before, we’re also witnessing long-term shifts in the nature of the jobs available.  Promises about a new “creative worker” economy or green jobs that will someday provide some former steelworkers and autoworkers with new versions of manufacturing jobs fall short when we remember the latest predictions of the Bureau of Labor Statistics:  that the job categories predicted to grow most over the next few decades involve primarily low-wage, low-education service positions.  Many of these jobs pay less than $21,000 a year.  That means that poverty is going to be a long-term problem for American workers.

What we need, in other words, is not a single jobs summit. We need long-range policy planning aimed at creating a better system of supports for the working poor and unemployed.  We need to recognize that as much as education matters, it won’t necessarily overcome long-term employment trends and growing income inequality.  We need economic policies that focus on the poor and working class and that treat them with respect, rather than blame.

Too often, economic theory has provided a distraction from the real struggles of real people.  Jan Hatzuis and her colleagues might do well to stop worrying about the work habits of the unemployed and start learning about what it’s like to lose a job after you spent years doing everything right, about the indignities associated with applying for government aid as you struggle to survive job loss, about how limitations of K-12 education, urban transportation, limited access to fair banking, overcrowded housing, persistent hunger, and lack of health care make finding a steady job that pays enough to support a family incredibly difficult.   A little moral education might help as well.

We need to stop thinking about the current crisis as a temporary recession, and we certainly have to stop talking about the economic crisis as part of an inevitable shift we can’t do anything about.  We have to recognize and act on the situation as what it is: a moral crisis.

The Obama administration must take the problem as a moral imperative, acknowledge that the private sector simply won’t solve the problem on its own, and like Franklin Delano Roosevelt, create a jobs-centered stimulus that is environmentally sound, improves the national infrastructure, and provides an economic foundation for working Americans and rebuilding the American economy.

The economy isn’t a game, with winners and losers who deserve what they get, because the players don’t occupy a fair playing field and the rules are biased.  Inequality has long been and is becoming more deeply engrained in the American system.  We cannot continue to view long-term high unemployment rates, minimal public supports for the poor, and a permanent and increasing gap between rich and poor as normal much less acceptable.  We can do better.  “Yes, we can.”  And we must.

Dean Baker

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

Most of the economists and pundits who could not see an $8 trillion housing bubble are telling us that the United States desperately needs for the Chinese government to keep buying its debt. This crew of failed analysts argues that without the support of the Chinese government, interest rates in the United States will rise, choking off the recovery. In reality, the decision by China to stop buying U.S. government debt may not harm the economy’s recovery, but it could be devastating to the recovery efforts at Citigroup and other basket case banks.

The basic logic is simple. China’s central bank has been buying up huge amounts of dollar-based assets for the last decade. Their purchases include short and long-term government debt, mortgage backed securities and to a lesser extent private assets.

The Chinese central bank’s purchases have two effects. First, they help to keep interest rates low. This supports economic growth by keeping down the interest rate on mortgages, car loans and other borrowing that boosts demand.

The other effect of China’s purchase of dollar-based assets is that it keeps down the value of its currency against the dollar. This is the famed currency “manipulation,” that draws frequent complaints from politicians. Of course, it is not exactly manipulation. China has an explicit policy of keeping down the value of its currency against the dollar. It is not buying up hundreds of billions of dollars of U.S. assets in the dark of night. It does it in broad daylight in order to keep its currency at the targeted rate.

Suppose China stopped buying up U.S. government debt. Interest rates in the U.S. would rise, which would have some negative impact on growth. Of course, the Fed could try to offset this rise in rates by simply buying more debt itself. It has already been buying debt and it could simply buy enough to replace the lost demand from China. This would leave interest rates largely unchanged.

Suppose that the Fed doesn’t intervene and lets interest rates rise. This will have some negative impact on growth, but there will also be a very positive side from China’s decision to stop buying dollars. The dollar would fall in value against China’s currency. This would make Chinese goods more expensive in the United States, leading U.S. consumers to purchases fewer imports from China and more domestically produced goods.

A lower-valued dollar would also make our exports cheaper in China. That would allow us to export more to China.

The net effect would be an improvement in our trade balance, bringing back some of the 5.5 million jobs that we’ve lost in manufacturing over the last decade. In fact, since nearly all economists agree that the current trade deficit can’t persist for long, China would be helping the country bring about a necessary adjustment if it stopped buying up dollars.

Even the rise in interest rates would have a positive effect since it would allow for the completion of the deflation of the housing bubble, with house prices finally settling back to their trend levels. This drop in house prices will be a painful adjustment, but there is no way to avoid it. Bubbles cannot be sustained indefinitely and we are better off allowing the housing market to return to normal so we can get back to a path of sustainable growth.

While decision of the Chinese to stop buying dollars might be good for the economy, it is likely to be disastrous for Citigroup and the rest of the basket case banks. If interest rates rose, then the value of the government bonds they hold would plummet. If the interest rate on 10-year Treasury bonds goes from the current 3.5 percent to a still low 4.5 percent, then the banks will have lost 8 percent on their holdings. At a 5.5 percent interest rate, a rate that would still be far below the average for the 90s, the loss would be 15 percent. Citi and the other basket cases could not endure these losses in their current financial state.

This could be why we see shrill pronouncements from the likes of the Washington Post editors, and other “experts” who couldn’t see an $8 trillion housing bubble, that we need the Chinese government to keep buying up our debt. We absolutely do not need the Chinese government to keep buying U.S. debt and would almost certainly be better off if it stopped tomorrow. Citigroup and the other big banks do need the Chinese government to keep the money flowing if they are to have a chance of getting back on their feet. And, we know where the sympathies of the Washington Post’s editors and other “experts” lie.

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

This piece was first published on Huffington Post.

David Sirota

By David Sirota
Political journalist, best-selling author and syndicated newspaper columnist

In the months following the Wall Street meltdown, we’ve seen a stealth marketing campaign that is profound for its boldness — a marketing campaign designed to make us believe that very wealthy people are suffering the most.

We’ve seen this campaign in Wall Street spokespeople insisting that a $500,000-a-year salary isn’t very big, in a New York Times style section that asserts that it’s impossible to live in the city on a half million dollars; in a punditburo that says millionaires are oppressed and can’t afford to pay $9,000 a year more in taxes for universal health care; and in a national press corps that seeks to portray any effort to raise taxes on the richest 1 percent as unfair; and a business press that threatens a class war if President Obama moves forward with his promise to make the payroll tax more progressive. As I said, this is a marketing campaign, and a fairly well coordinated one.

That’s why I wasn’t surprised to see this audacious Washington Post piece over the weekend which reports — with a straight face — that those making $300,000 a year are “barely squeaking by” in this economy. I s*** you not:

Laura Steins doesn’t mind saying that she is barely squeaking by on $300,000 a year… As a vice president at MasterCard’s corporate office in Purchase, N.Y., she earns a base pay of $150,000 plus a bonus. This year she’ll take home 10 percent less because of a smaller bonus. She receives $75,000 a year in child support from her ex-husband. She figures she will pull an additional $50,000 from a personal investment account to “pick up the slack.”

The nanny and property taxes take $75,000 right off the top, but Steins considers both non-negotiable facts of her life and not discretionary. When she bought out her husband’s share of the house after their 2006 divorce, she assumed the costs of keeping it afloat — $8,000 to $10,000 a month. There’s a pool man, a gardener and someone to plow the snow from the quarter-mile-long driveway.

As tight as money is, she has decided that living in a 4,000-square-foot house on three acres is the practical thing to do.

I’m not going to take up text space going off about how absurd this all is, except to say (as I have before) that in a country where the recession is obviously most crushing the middle-class, I’m playing the smallest violin in the world for those making $300,000 a year (ie. the top 5 percent of the country) — especially those who whine about their plight while refusing to cut back on their nannys and gardeners.

What’s fascinating here is not how incredibly out of touch with Middle American reality the super wealthy are, but how willing the media are to promote the super wealthy’s whines as legitimate and justified. The entire economic narrative on Main Street is about how the average family making $50,000 a year is going to put food on the table — and the entire economic narrative in the elite media is about the top 5 percent’s concerns that they might have to cut back on mansion expenses.

This is the real “Two Americas” — the elites and the media outlets they control, and the Rest of Us. And clearly, the former doesn’t give a s*** about the latter. David Sirota is the bestselling author of the books “Hostile Takeover” (2006) and “The Uprising” (2008). Find his blog at OpenLeft.com or e-mail him at ds@davidsirota.com

By Tom Conway
USW International Vice President

Swiss-Russian owned Duferco Farrell Corp. refuses to comply with the Buy American requirements in the $787 billion stimulus package.

One consequence of that decision is the Duferco rolling mill located in Farrell, Pa., north of Pittsburgh, lost a major customer — Wheatland Tube Co., situated a few hundred yards down the street in Farrell.

Another is that Duferco, which opposes buying American, milked that loss for more tons of false publicity than an overloaded truck of steel coils at a weigh station.

Duferco Farrell made itself out to be a victim of Buy American, claiming the provision cost it a customer, and the Washington Post and New York Times swallowed that whale whole, without making any effort to dissect it.

Here’s what really happened:

Wheatland Tube, a pipe maker, stopped buying rolled steel from its Farrell neighbor because Duferco gets steel slabs from Russia and has refused to buy from domestic producers.

Wheatland is sensitive to the issue of imports, having been burned by unfair competition from China. It is among the plaintiffs in trade cases alleging unfair competition. But, more immediately, Wheatland officials feel that under the Buy American provisions, its products must be produced with American-made steel, or they can’t be bought with stimulus funds.

Bill Kerins, president of Wheatland, said he backs Buy American because it provides opportunities for American workers. It is, essentially, American tax dollars dedicated to providing jobs for American workers. And, polls show, a large majority of Americans support it. They oppose anyone spending their tax dollars to create jobs in foreign countries. He has said that more and more of Wheatland’s customers are demanding that it  meet the requirements of  Buy American.

Kerins made it clear to the Sharon Herald, the local newspaper for the town of Farrell, that he’s perfectly willing to buy rolled steel from Duferco again, if the company obtains slabs from domestic producers. Here’s what he said: “We’re prepared to do business with Duferco Farrell when they’re able to be in compliance with the Buy American provision, and we hope they’re able to work that out.”

That would leave you with the sense that Duferco could work something out, right? Well, not if you read the Washington Post or the New York Times. Neither bothered to quote Kerins or the United Steelworkers. Both limited themselves to quoting Duferco  - a one-sided story. They failed to adequately question. As a result, both provide a completely false impression.

The Washington Post, in a May 15 story, says, “The new buy American provisions, the company said, are being so broadly interpreted that Duferco Farrell is on the verge of shutting down.”

The Post story also says, without citing a source, that Duferco “manufactures its coils at its Pennsylvania plant using imported steel slabs that are generally not sold commercially in the United States.”

Finally it quotes Duferco executive vice president Bob Miller saying, “I’ve got 600 United Steel Workers [sic] out there who are going to lose their jobs because of this. And you tell me this is good for America?”

The New York Times followed, on June 3, with an editorial slamming Buy American and citing the Duferco case. The editorial gives Duferco and one other example as the reason Buy American is ‘perilous,” saying Duferco “has cut 600 jobs in Pennsylvania after it lost orders from its biggest customer because some of its goods are partly produced abroad.”

That’s just not true. And if the New York Times or the Washington Post had done an ounce of reporting work, they’d have known it. Look up the Sharon Herald clips – available on line.

Duferco began furloughing hundreds of workers last fall – long before Wheatland stopped buying from them. When the USW local there signed its labor agreement in November, Duferco already had laid off more than half of the mill’s unionized workers.  Manufacturing workers across American began losing their jobs last fall as a result of the downturn in the economy – not Buy American provisions.

In addition, there are other serious problems with the Post story. It says Duferco uses steel slabs not generally sold commercially in the U.S. If the Post had spent a minute listening to Kerins from Wheatland or to the USW, it would have gotten a different story. Kerins’ quote – saying Wheatland is prepared to do business with Duferco when it complies with Buy American – clearly suggests he knows there’s a way for Duferco to do that.

In fact, there is. Two domestic steel companies have offered to supply Duferco with the 10-inch steel slabs it prefers, at the specifications it says it requires, at a market-based price. Both firms have informed Duferco of those offers.

Duferco mostly imports its 10-inch slabs now from OJSC Novolipetsk Iron & Steel Works (NLMK) of Russia, which is the Russian part owner of Duferco. NLMK also owns a mill in Portage, Indiana, called Beta Steel Corp. Like most U.S. mills, its work force has been cut back, so orders for its 8-inch slabs would give its American workers paychecks again.

Wheatland has informed Duferco that it is willing to modify its specifications so that NLMK 8-inch slab produced in Indiana may be used.

Duferco’s response: shipping slabs from NLMK facilities in Portage, Ind. to Farrell, Pa., a distance of 375 miles, is prohibitively expensive, as is the cost of shipping the 10-inch slabs from the Maryland or Alabama mills to Pennsylvania. So Duferco must continue sending steel the thousands of miles from NLMK facilities in Lipetsk, Russia to Farrell, Pa.

Really?

Somehow that doesn’t smack of the truth. In fact, it sounds like Duferco is making every effort to avoid buying American, while its customers, its workers and even potential suppliers are all scrambling to help it buy American and re-employ its workforce.

What is really going on here is Duferco perverted this situation in an attempt to smear the Buy American provision. The Washington Post and the New York Times made no serious attempt to check out the multi-national’s lame allegations.

Not much more could be expected from a Swiss-Russian-owned corporation. That multi-national has no allegiance to America. It just wants to use this country to generate profits. If Duferco can get its hands on American tax dollars to profit in Lipetsk, it will be all the happier. But for the Washington Post and the New York Times to support that is, really, un-American.

Leo W. Gerard

By Leo W. Gerard
International President

The proposition General Motors has presented to the United Auto Workers and American taxpayers in its latest restructuring plan is simple: You must pay for your own execution.

GM, which already took $15.4 billion in bailout money, wants another $11.6 billion and is offering in return this deal: It will close 16 of its American manufacturing plants, terminate 21,000 of its factory workers and double the cars it builds in low-wage Mexico, China and South Korea and ships back to the U.S. to sell.

There it is: GM is demanding that Americans pay to send their own jobs overseas.

In the world where corporate executives live, the one in which boards of directors grant CEOs multi-million dollar bonuses even after companies tank, maybe that’s not a perverse proposition.

But in the world where real Americans live, we’ve had enough of this crap. Decades of foolish tax and other federal policies that encouraged American manufacturing firms to throw Americans out of work and expatriate were bad enough. To expect American taxpayers to bankroll GM’s plans to layoff American workers and move their jobs overseas goes too far.

We’re taking a stand. It’s gotta stop here. The United Steelworkers (USW), the Alliance for American Manufacturing (AAM) and the Mayors and Municipalities Automotive Coalition (MMAC) are conducting an 11-state, 32-city protest bus tour. At each stop so far, hundreds of people have cheered our message: “Keep it Made in America.” And they’ve signed our petition calling for support of a simple idea: Buy it here; build it here.      We will present the petitions at a teach-in conference in Washington, D.C. on May 19 when we will explain to elected officials why GM’s plan fails America and why they must require GM to submit a new plan supporting American jobs.

As much as for the UAW, this is a life and death struggle for the USW, American manufacturing, and for millions of Americans in good-paying jobs. Without manufacturing, America is in danger of attempting to subsist on an economy based on nothing more than amorphous derivatives, credit default swaps and Ponzi schemes. The Steelworkers represent hundreds of thousands of workers whose jobs depend on the auto industry, from steelworkers who make the steel, to the rubber workers who make the tires, to the glass workers who make the windshields, to the paper workers who make the glossy pamphlets.

Altogether, more than 7 million paychecks depend on the U.S. auto industry, including healthcare, education, service, retail and other jobs. This bus tour is about preserving those jobs, all of those jobs.

In just the past eight months of this recession, caused in huge part by recklessness on Wall Street, this country has lost 1.2 million manufacturing jobs, according to the U.S. Department of Labor. GM cannot take tax dollars to slash more. Former U.S. Labor Secretary Robert B. Reich agrees. Here’s what he told the Washington Post, “. . . it raises fundamental questions about the purpose of bailing out these big companies. If GM is going to do more of its production overseas, then why exactly are we saving GM?”

It’s not as if it’s impossible for a U.S. auto company to manufacture here. Ford Motor Co., which is not taking any bailout money, is investing $500 million in retooling its Michigan Truck plant outside Detroit so that it can make small cars that it will sell worldwide, including its next-generation, battery-electric Focus. And Chrysler, which is getting bailout money, has made a deal with Fiat under which the Italian car company will manufacture a small car in one of Chrysler’s U.S. assembly facilities, which, along with other long-term commitments, will eventually create 4,000 U.S. jobs.

On the first day of the bus tour, I was joined by the Rev. Jesse Jackson, actor Danny Glover, the angriest mayor in the U.S., Virg Bernero of Lansing, and U.S. Sen. Debbie Stabenow, among others.

The Rev. Jackson drew cheers as he remarked that somehow we’ve given billions to the “banksters,” yet somehow we’re still hemorrhaging hundreds of thousands of jobs and homes each month. He called for a moratorium on foreclosures and plant closings, and I’m with him.

Bernero is tired of Wall Street describing his father, a retired auto worker, as a legacy cost. His father is a human being, a senior citizen, who worked hard every day of his life and returned home exhausted from an honest day’s work. Now, however, Wall Street thinks it’s fine to reduce him to a sub-human term and cheat him out of the retirement benefits he earned.

Bernero’s father made things, real things that could be touched, held in the hand – not derivatives, not figments of the imagination that turned out to have less than no value at all.

Now Wall Street and GM must be made to understand that Main Street isn’t going to take it anymore. We’re not going to continue allowing corporate America to outsource the American dream. Bernero said it right: “This is America’s fight.”

Join us. Sign the petition. We have no intention of buying our own noose. We intend to win this fight.

Leo W. Gerard

By Leo W. Gerard
International President

AIG Chairman Edward M. Liddy gets the Creep of the Week award for his stunning, overwhelming, dumbfounding display of cluelessness.

Liddy not only awarded $165 million in bonuses to the very AIG employees whose risky speculation in credit default swaps bankrupted the once-great insurance giant, forcing it to beg for $170 billion in taxpayer bailouts, he then claimed he was a helpless victim of retention bonus contracts written before he took over in September. Here’s exactly what he said: “Quite frankly, AIG’s hands are tied.”

No other contender for this week’s Creep prize awarded by the USW sunk close to those depths of obtuseness. And in so many diverse areas! Let’s count the ways:

First, there’s Liddy’s claim that he just can’t squirm out of contracts. Boy, he’d be the first CEO on God’s green earth to be too feeble to break a contract. Think about it: Congress insisted that the Big Three auto companies crack open their contracts with the United Auto Workers to qualify for federal bailout money. Union contracts at all sorts of companies across this country have been broken, bent, re-opened and renegotiated by cooperative labor organizations willing to accept a variety of cuts to preserve employment during an economic crisis caused by the likes of, well, let’s face it, reckless speculators at AIG! But, somehow, Liddy couldn’t find a way to break, bend, re-open or renegotiate contracts with the white collar workers who caused the mess taxpayers are both suffering and cleaning up.

Second, there’s Liddy’s claim that he had to honor the bonus contracts or he’d be sued by his employees. With a straight face, Liddy asserted that the employees in AIG’s Financial Products subsidiary who neglected to account for the possibility of a decline in real estate prices would actually list their names on court documents contending they deserved extra money after bankrupting the company. If Liddy thinks there’s a jury in America that would buy that argument and award the bonuses, I’ve got some credit default swaps I’d like to sell him. It’s clear, in fact, even Liddy doesn’t buy the argument since he’s declined to publicly release the names, though he has given a great deal of information – under duress – to New York Attorney General Andrew M. Cuomo who is working on a lawsuit to recover the bonuses for taxpayers.

Third, there’s Liddy’s failure to understand these simple facts: people who caused a company’s demise don’t get bonuses and neither do employees of companies getting bailouts with federal tax dollars. The average AIG bonus payment was $395,000 – though 51 employees got more than $1 million and the winner of the fattest bonus got $6.4 million. Liddy told Congress he has asked some of the 418 recipients to return half of their bumps. If all 418 complied, the average would decline to a mere $197,500. That may be chump change to a Wall Streeter, but it is a life-saving sum to a middle class worker who has lost his job or can’t pay his mortgage because of Wall Street’s greed and  recklessness. In addition, there’s an important reciprocal issue Liddy failed to understand: the fury he has provoked by paying those bonuses has made the middle class even less willing to invest their tax dollars in any future bailouts that Congress may claim AIG or Wall Street banks desperately need.

Fourth, there’s Liddy’s ability to treat with reverence those who caused the financial meltdown while regarding with disdain those who suffer as a result of it. It was Liddy’s contention that his white collar workers were special. He had to give them the bumps, or they would abandon AIG, refusing to clean up the mess they’d made. That didn’t apply to auto workers, though. No one cared what happened to them. They could be furloughed as a result of Wall Street’s misbehavior — and pay taxes to clean it up as their bonus. But what’s worse is the level of continued boldfaced, outright deception from Liddy and his like. The bumps were crucial for retention, he said, right? Wrong. Cuomo discovered that 11 big time bonus beneficiaries – those who got $1 million or more – had already left AIG.

Fifth, Liddy acted as if the American people didn’t already own 80 percent of his company. Earlier this month, after AIG reported a $61.7 billion quarterly loss, the largest in corporate history, the federal government promised to help prop it up by giving it another $30 billion in taxpayer dollars. The solution here is simple, as the Washington Post pointed out in a story last week. If the feds simply insist on a 100 percent share of the company, which, frankly, the American people deserve for that kind of investment, the bonuses stop.

In addition to Creep of the Week, Liddy gets a special bonus award: Clueless of the Week.