12.01.2008 0

Were going to have riots

  • On: 12/16/2008 09:33:36
  • In: Economy

    ALG Editor’s Note: As ALG News reported to you last week, Senator Jim DeMint figuratively warned that the government bailouts will end with riots. However, as noted by the following featured column, he was not the only one:


    Labor unions stand to benefit from $900 billion boost. But what’s really getting bailed out?

    By Stephanie Ramage

    Last week, in an eerie and foreboding coincidence, a labor leader and a Republican senator said almost the same thing.

    “If we have Republicans who oppose us, we are going to take to the streets, we are going to occupy places,” Leo Gerard, president of the United Steelworkers union, said during a conference call on a proposed “Main Street” bailout plan. “We are not going to allow any more of our members’ lives to be destroyed.”

    The next day, following the U.S. Senate’s review of a proposed $14 billion bailout of Detroit’s Big Three automakers, Sen. Jim DeMint, a Republican from South Carolina (who wasn’t aware of Gerard’s conference call), when asked where all the bailouts would end, answered: “We’re going to have riots.”

    Americans, who hand over a third of their paychecks to the federal government, are almost numb to the ramifications of this coincidence for two good reasons:

    First, in the past year there has been a string of bailouts involving sums of money that very few people on Earth can imagine. Last March, the federal government approved a $29 billion taxpayer-financed bailout of investment bank Bear Stearns. In September, there was the $85 billion taxpayer-financed bailout of insurance giant American International Group. In October, under the auspices of the newly minted Emergency Economic Stabilization Act, there was the $700 billion “Wall Street bailout.”

    Second, since the 1980s’ Reagan Revolution, unions have been largely a thing of the film noir past. Reagan passed a law that prohibited certain unions from striking if doing so would endanger public safety, and a decade later, in the ’90s, outsourcing caught on, which further eroded unions’ power as employers found less expensive labor markets overseas.

    Fueled in part by blue-collar anger over the Wall Street bailout and in part by panic over the stalled-out economy and years of slow car sales, the United Auto Workers union and the Big Three automobile manufacturers in Detroit—Ford, General Motors and Chrysler—began agitating for a bailout. Yet, even as a $14 billion assistance package came up for debate in the U.S. Senate last week (and Senate Republicans subsequently pushed a plan that would require deep concessions from the union), the biggest bailout yet was proposed by the Campaign for America’s Future (CAF).

    CAF, made up of more than two dozen labor unions, 127 lesser-known economists and assorted activists, hosted a press conference call to announce the proposed $900 billion Main Street proposal, which the group hopes will be ready for President-elect Barack Obama’s signature when he takes office on Jan. 20.

    Everyone who’s ever written the word “deficit” dialed into the conference call.

    Nina Easton, editor of Fortune magazine and a frequent Fox News pundit, was there. So were Bloomberg news service, Time, Newsday, the Wall Street Journal, Investors Business Daily, and, of course, The Sunday Paper.

    On the panel to announce the Main Street Recovery Plan, as it is called, were Robert Borosage, co-director of CAF; Leo Gerard, president of the United Steelworkers union; and James Galbraith, an economist at the University of Texas and author of the new book, “The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too.”

    Anna Burger, chair of Change to Win and secretary treasurer of Service Employees International Union (SEIU), was listed on the panel, but she was absent. Earlier that day, Illinois Gov. Rod Blagojevich had been arrested in connection with corruption charges, and the Department of Justice noted in its complaint that Blagojevich spoke at least twice with an SEIU official (later reported to be Tom Balanoff) to discuss who should fill the U.S. Senate seat left vacant by Obama. According to the complaint, Blagojevich discussed a deal that would have made him national director of Change to Win in exchange for naming a Senate candidate seen as friendly to organized labor. This wasn’t given as the reason for Burger’s absence, but it’s safe to assume she had bigger fish to fry.

    CAF’s Main Street Recovery Plan calls for $900 billion in taxpayer money to be spent over two years in 11 ways, including $30 billion for food stamps and $80 billion for unspecified “poverty reduction,” as well as a $145 billion tax break for the “middle class,” which the organization does not define, among other things.

    CAF sent the Sunday Paper an itemized spending slate:

    Breakdown of the investments outlined in the Main Street Recovery Plan(Investment area: first year, second year. Figures in billions)

    –Green investments — 50, 50

    –Infrastructure — 75, 150

    –Aid to states — 50, 75

    –Education — 40, 40

    –Research and development — 5, 10

    –Health care — 15, 55

    –Unemployment insurance and COBRA subsidy — 15, 15

    –Food stamps — 15, 15

    –Poverty reduction — 40, 40

    –Middle-class tax cut — 145

    –Total over two years — 900

    The biggest chunk—$225 billion—would go into government infrastructure projects like road-building.

    Jack Wells, chief economist for the U.S. Department of Transportation, wrote on the secretary of transportation’s blog in September: “Whenever the economy hits a rough spot, politicians often say that we need to spend more on transportation infrastructure to create jobs. … But a billion dollars doesn’t buy as much as it used to, in highways as in most things, and, because that billion dollars buys less steel, concrete, and employment-hours, recent updates of [previous] studies have cut the number of jobs supported by a billion dollars in federal highway spending to about 34,800 jobs. Moreover, that number is based on a federal investment of $1 billion, assuming that it is matched by $250 million in state spending. If we calculated the number of jobs supported from $1 billion in total federal and state spending, the jobs created would fall to about 27,800.”

    And, he added, not all of those would be newly created jobs; they would really just be old jobs shifted into new areas.

    Wells works for the Bush Administration, which one might reasonably construe as being diametrically opposed to CAF. But even fans of CAF say the Main Street plan has some potholes. On his my.barackobama.com blog, Minnesotan Alan L. Maki says he endorses the plan, even though it “lacks many specifics and intentionally omits support for … socialized health care; with the biggest drawback being that no resources have been made available by these organizations aimed at empowering working people in their communities and where they work … but, the general thrust here is something we all need to support. Also lacking is any clear program relating to legislation for a real living wage, which is the real, fundamental and basic way to redistribute wealth in this country in order to solve the problems of the working class as we seek a more just socialist alternative to capitalism.”

    Then the yelling started

    On the CAF conference call, when Monica Showalter, a reporter for Investor’s Business Daily, pointed out that exports are the strongest sector of the U.S. economy (according to the National Association of Manufacturers, exports accounted for 46 percent of the growth in the U.S. economy in 2007), and asked why Gerard’s union opposes the U.S.-Colombia Free Trade Agreement, he answered: “My union and I, and most of the labor movement, are not opposed to trade. What we are opposed at [sic] is the kind of trade that throws our jobs on the altar of this ideological dialogue. The fact of the matter is we can’t sustain a strong industrial base or a strong manufacturing economy if we are running ongoing trade deficits on an annual basis.”

    When Showalter asked what blue jean factory workers in Medellin might have to do with the agenda of the United Steelworkers, Gerard shouted at her, “We should not do deals with countries that allow the shooting of people who represent the workers!”

    A few minutes later, when the Sunday Paper asked him what the United Steelworkers union has done for the past 20 years to make the U.S. more competitive in the global market, Gerard said the union has reduced man-hours for production.

    “Do you know what that means? Do you know?” he said, raising his voice.

    “That there should be fewer employees?” I asked.

    To which Gerard angrily responded, “Do you want us to work for nothing?”

    Richard Hurd, a professor of labor studies at Cornell University, says Gerard’s emotional response is a reflection of how badly free trade, particularly involving steel from South America, has affected the steelworkers.

    Hurd says that although there has been a tiny bit of growth in union density in the private sector—up to 7.5 percent of jobs in 2007, as compared with 7.4 percent in 2006 (which was down from 7.8 percent in 2005)—overall it has declined steadily since 1955. But with a Democratic administration waiting in the wings, he says, that could change.

    “It appears that labor could be poised for a resurgence if they can change the labor laws,” says Hurd, who is slightly familiar with CAF’s $900 billion plan.

    “It [the CAF plan] is not inconsistent with the incoming Obama Administration’s plan,” he says. “The president-elect has been close to unions, he has been strongly supported by unions, and there is every indication that he will institute some change in the labor laws. The stimulus plan that he is talking about will in all likelihood turn out to benefit unions.” SP

    Stephanie Ramage is the news editor for the Sunday Paper.

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