Posts tagged with 'David Moberg'
War On Unions Goes Viral, Wisconsin is Patient Zero
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by Lindsay Beyerstein, Media Consortium blogger
In a shocking move, Republicans in the Wisconsin state Senate convened in the Capitol on Wednesday night to pass a union-busting bill without a quorum. The bill passed the State Assembly on Thursday afternoon, and Gov. Scott Walker signed it into law this morning. The Democratic state senators have returned from exile. Now, activists are shifting their attention to recall campaigns, court challenges, and even a general strike.
Madison Firefighters Union President Joe Conway was in the Capitol on Wednesday night to witness what he called “a criminal act by the Republicans” and “game changer for everyone.” Conway called for a general public strike.
John Nichols of the Nation describes the procedural move the Republicans used to pass the bill without a quorum, on what he calls “one of the most remarkable days in American political history”:
After weeks of intense debate inside and outside the Capitol, and at a point when most Wisconsinites thought a compromise was in the offering, Republican legislative leaders suddenly announced that they would pass the most draconian components of Governor Scott Walker’s budget repair bill – including a move to strip public employees of their collective bargaining rights.
At this point, the 14 Senate Democrats were still in exile in Illinois, attempting to deny the Republicans the quorum they needed to pass the bill. Under Wisconsin law, the state Senate only needs a quorum to pass non-fiscal legislation. So, the Republicans ostensibly stripped out all the fiscal language from the bill and passed it hastily, without hearings or debate, in the dead of night.
Budgetary hypocrisy
Micah Uetricht and George Warner of Campus Progress call this “non-fiscal” dodge the height of hypocrisy. For weeks, Walker has justified stripping unions of their bargaining rights as a measure needed to balance the budget. The bill clearly affects the state’s budget, arguably making it a fiscal bill in disguise, and possibly opening the door to a court challenge. If it is a financial bill after all, then the state Senate didn’t have the power to pass it without a quorum.
Uetricht and Warner also note that the South Central Federation of Labor, the labor council that represents unions in the Madison area, with a combined membership of 45,000 workers, voted in February to begin preparations for a general strike.
The Progressive‘s Matthew Rothschild, who was at the Capitol, estimates that 15,000 people converged there as word spread that the bill had been passed. Cries of “General Strike!” rang out in the Capitol on Wednesday night.
As I reported in Working In These Times, the Senate Republicans may have violated Wisconsin’s strict open meetings law, which requires 24 hours’ notice for meetings, unless there’s some kind of emergency that prevents organizers from getting the word out earlier, in which case, a minimum of 2 hours’ notice is still required. The Senate was in emergency session, but nobody is claiming that there was any kind of real-life emergency that prevented the Republicans from notifying the public in a timely manner.
Andy Kroll of Mother Jones notes that the bill would allow the state to fire public employees who join a strike, walk-out, sit-in, or make a coordinated effort to call in sick.
Here’s more news from Wisconsin:
- In a special comment on GritTV, host Laura Flanders asks if it’s time for the first U.S. general strike since 1909.
- Peter Rothberg of the Nation asks whether the time has come for a general strike.
- David Moberg of Working In These Times explores the history, and possible future, of general strikes in America.
- Jessica Pieklo of Care2 writes about Madison as a birthplace of the labor movement.
- Jeff Leys of Truthout argues that the Madison could once again become the crucible for a powerful progressive movement.
- Public News Service argues that Walker’s government is staging a power grab at the expense of local control, a value Republicans supposedly hold dear.
- State Rep. Kelda Hellen Roys tells The UpTake that last night’s vote was illegal because the original bill wasn’t even drafted when it was voted on.
- At TAPPED, Pima Levy argues that the strategy that Republicans in Wisconsin used to pass the bill was similar to that used by federal Democrats to pass the Affordable Care Act. After the U.S. Senate Democrats lost their filibuster-proof majority, they passed a “budget neutral” version of the bill, which bypassed the filibuster. She predicts that the Wisconsin GOP will face a significant backlash.
Wisconsin isn’t the only state waging war on the collective bargaining rights of public employees. Ohio’s Republican governor and Republican-controlled legislature are poised to restrict the collective bargaining rights of 350,000 public servants. Michigan seems poised to pass a “hostile takeover” bill that would give the Republican governor unchecked power to declare cities bankrupt and appoint a manager who could cancel union contracts. In Indiana, state House Democrats are boycotting the legislature in an attempt to derail anti-union legislation.
Michigan
Michigan’s Republican-controlled state senate passed and sent back to the state house a “hostile takeover” bill that would give the governor the power to declare cities insolvent and appoint a city manager, who in turn, could cancel collective bargaining agreements and sell off city property without anyone else’s approval, Adele Stan notes in AlterNet. Hundreds of pro-union demonstrators rallied in the state capital of Lansing on Tuesday to protest the measure.
Eartha Jane Melzer reports in the Michigan Messanger that the bill is on the fast track to passage, despite raising serious constitutional questions about the limits of executive power. “This is a takeover by the right wing and it’s an assault on democracy like I’ve never seen,“ Michigan State AFL-CIO president Mark Gaffney said.
Indiana
Republicans in Indiana have had their sights set on public sector unions since they took the General Assembly in 2010. Huge crowds gathered in Indianapolis on Thursday in support of union rights. This was the 18th day of uninterrupted union protests outside the state House. Police estimated a turnout of 8,000. Democratic lawmakers, who had fled the state to prevent the passage of an anti-collective bargaining bill, said they had no plans to return.
Ohio
About 3,200 people gathered at the Statehouse in Ohio to protest a bill that would severely limit the collective bargaining rights of some 350,000 public workers including teachers, firefighters, and police. Democrats say they will fight to recall the bill if it is signed into law. Mark Miller of Change.org summarizes the key provisions of the bill, SB 5, which recently passed the state Senate. Ohio Democrats are trying to stall the progress of the legislation by demanding public hearings. Unlike their counterparts in Indiana and Wisconsin, they don’t have enough seats to deny the Republicans a quorum by leaving the state.
The public sector is the last bastion of high union density in the United States because public sector workers have historically been protected from the kind of union-busting tactics that are routine in the private sector. If the public sector unions are destroyed, the U.S. labor movement will die with them. The very future of the middle class is at stake.
This post features links to the best independent, progressive reporting by members of The Media Consortium. It is free to reprint. Follow us on Twitter. For the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, The Pulse, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Weekly Audit: Republicans Poised to Declare War on Welfare State
by Lindsay Beyerstein, Media Consortium blogger
Senate Republicans scuttled a bipartisan $1.2 trillion dollar spending omnibus bill last week. Now, Majority Leader Harry Reid (D-NV) is scrambling to pass a temporary funding bill to keep the federal government’s lights on.
The GOP abruptly pulled the plug on the omnibus, a massive piece of legislation that Republicans and Democrats had collaborated on for months. Why? Because the Republicans want to start over in the next session of Congress when they will control the House and pick up seats in the Senate. They intend to rewrite the spending bill with much less Democratic input. In other words, bipartisanship proves once again to be a racket.
War on the welfare state
At Truthout, economist Dean Baker offers some predictions on what Republicans have in mind for the 112th Congress. The Bush tax cut extensions that passed with great fanfare are supposed to be 2-year extensions. However, Baker asks why we should expect that the GOP will allow the tax cuts to expire? (more…)
Weekly Audit: Millions of Americans Could Lose Unemployment Benefits
Editor’s Note: Happy Thanksgiving from the Media Consortium! This week, we aren’t stopping The Audit, The Pulse, The Diaspora, or The Mulch, but we are taking a bit of a break. Expect shorter blog posts, and The Diaspora and The Mulch will be posted on Wednesday afternoon, instead of their usual Thursday and Friday postings. We’ll return to our normal schedule next week.
by Lindsay Beyerstein, Media Consortium blogger
According to official statistics, nearly 15 million Americans are unemployed. Between 2 and 4 million of them are expected to exhaust their state unemployment insurance benefits between now and May. Historically, during times of high unemployment, Congress provides extra cash to extend the benefits. Congress has never failed to do so when unemployment is above 7.2%. Today’s unemployment rate is above 9% and the lame duck session of Congress has so far failed to extend the benefits.
Congress has until November 30 to renew two federal programs to extend unemployment benefits, as David Moberg reports for Working In These Times. Last week, a bill to extend benefits for an additional three months failed to garner the two-thirds majority it needed to pass in the House. The House will probably take up the issue again this session, possibly for a one-year extension, but as Moberg notes, it’s unclear how the bill will fare in the Senate. The implications are dire, as Moberg notes:
The result? Not just huge personal and familial hardships that scars the lives of young and old both economically and psychologically for years to come. But failure to renew extended benefits would also slow the recovery, raise unemployment, and deepen the fiscal crises of state and federal governments.
But wait! There’s more:
- The Paycheck Fairness Act died in the Senate last week, as Denise DiStephan reports in The Nation. The bill would have updated the 1963 Equal Pay Act to close loopholes and protect employees against employer retaliation for discussing wages. All Republican senators and Nebraska Democrat Ben Nelson voted not to bring the bill to the floor, killing the legislation for this session of Congress. The House already passed its version of the bill in 2009 and President Barack Obama had pledged to sign it.
- Economist Dean Baker talks with Laura Flanders of GritTV about quantitative easing (a.k.a. the Fed printing more money) and the draft proposal from the co-chairs of the deficit commission. Baker argues that we’re facing an unemployment crisis, not a deficit crisis.
- Charles Ferguson’s documentary “Inside Job” is a must-see, according to Matthew Rothschild of The Progressive. An examination of how Wall Street devastated the U.S. economy, the film details the reckless speculation in housing derivatives, enabled by crooked credit rating schemes, that brought the entire financial system to the brink of collapse. The film is narrated by Brad Pitt and features appearances by former Governor and anti-Wall Street corruption crusader Eliot Spitzer, financier George Soros, and Prof. Nouriel Roubini, the New York University economist who predicted the collapse of the housing bubble.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Weekly Audit: Silencing Conservative Deficit Hawks
by Zach Carter, Media Consortium blogger
The same conservatives who spent the past year senselessly screaming about the U.S. budget deficit are now demanding an extension of the Bush tax cuts for the rich. The extension simply doesn’t make sense, and the policies implied are a recipe for massive job loss in the middle of the worst employment crisis in 75 years.
Deflation nation
As William Greider explains for The Nation, the major problem facing the U.S. economy is not the budget deficit, but the prospect of deflation. Deflation was one of the driving forces behind the Great Depression. Under deflation, the value of money increases, which drives prices down. When millions of Americans are deep in debt, deflation makes those debts much larger. It also creates total economic paralysis, as Greider explains:
Deflation essentially tells everyone to hunker down and wait. Instead of buying big-ticket items, consumers wait for prices to fall further. Instead of investing in new production, companies wait for cheaper opportunities, cheaper labor. (more…)
Weekly Audit: Wall Street Goes to the Movies
by Zach Carter, Media Consortium blogger
Last week, the U.S. Senate rejected a plan that would have broken up the nation’s six largest banks firms into firms that could fail without wreaking havoc on the economy. Even though the defeat reinforces Wall Street’s political dominance, there is still room for a handful of other useful reforms, like banning banks from gambling with taxpayer money and protecting consumers from banker abuses. After looting our houses, banks are now pushing for the ability to bet on movie box-office receipts, and will keep trying to financialize anything they can unless Congress acts.
Wall Street calls the shots
Writing for The Nation, John Nichols details last week’s Capitol Hill damage. Today’s financial oligarchy, in which a handful of bigwig bankers and their lobbyists are able to write regulations and evade rules they don’t like, will still be in place after the Wall Street reform bill is passed. The lesson is clear, as Nichols notes:
Whatever the final form of federal financial services reform legislation, one thing is now certain: The biggest of the big banks will still be calling the shots.
Still worth fighting for
As I emphasize for AlterNet, Congress has made a terrible mistake here, but there is still room for reform. It took President Franklin Delano Roosevelt seven years to enact his New Deal banking laws. It took even longer to reshape public opinion of monopolies when President Theodore Roosevelt took on Corporate America in the early 1900s.
What’s still worth fighting for? We have to curb the derivatives market—the multi-trillion-dollar casino that destroyed AIG. We have to impose a strong version of the Volcker Rule, which would ban banks from engaging in speculative trading for their own accounts. We have to change the way the Federal Reserve does business and force the government’s most secretive bailout engine to operate in the open. And we have to establish a strong, independent Consumer Financial Protection Agency to ensure that the horrific subprime mortgage abuses are not repeated.
As Nomi Prins details for The American Prospect, the current reform bill will not effectively deal with the dangers posed by hedge funds and private equity firms—companies that partnered with banks to blow up the economy through investments in subprime mortgages. That means that whatever happens with the current bill, Congress must again take action next year to rein in other financial sector excesses.
The derivatives casino at the movies
As Nick Baumann demonstrates for Mother Jones, banks are doing everything they can to gobble up other productive elements of the economy. The economy crashed in 2008 in large part because banks had used the derivatives market to place trillions of dollars in speculative bets on the housing market. This wasn’t lending, it was pure gambling: Instead of using poker chips, bankers placed their bets with derivatives. But, as Baumann emphasizes, banks are now looking to expand the sort of thing they can make derivatives gambles with. The latest proposal is to allow banks to bet on the box office success of movies. That’s right, banks would be gambling on movies.
Hollywood may be shallow, but it isn’t stupid. It doesn’t want to see the banking industry repeat its destructive looting of the housing industry on the movie business, and is pushing hard to ban banks from betting on movies. But we can’t count on every industry having a powerful lobby group to counter every assault from the banking system.
Taking stock in schools
Consider the unsettling report by Juan Gonzales of Democracy Now!. Gonzales details how big banks gamed the charter school system to score huge profits while simultaneously saddling taxpayers with massive debts that make teaching kids supremely difficult. By exploiting multiple federal tax credits, banks that invest in charter schools have been able to double their money in seven years—no small feat in the investing world—while schools have seen their rents skyrocket. One school in Albany, N.Y. saw its rent jump from $170,000 to $500,000 in a single year.
About that unemployment rate…
It’s not like public schools are flush with cash right now. The $330,000 increase in rent could pay the salaries of more than a few teachers. As the recession sparked by big bank excess grinds on, even the good news is pretty hard to swallow. As David Moberg emphasizes for Working In These Times, the economy added 290,000 jobs in April, but the unemployment rate actually climbed from 9.7 percent to 9.9 percent in March. That’s because the unemployment rate only counts workers who are actively seeking a job—if you want a job but haven’t found one for so long that you give up, you’re not technically “unemployed.” All of those “new” workers are driving the official figures up.
In other words, it’s still rough out there. And likely to stay rough as state governments try to deal with the lost tax revenue from plunging home values and mass layoffs. Nearly half of all unemployed people in the U.S. have been out of a job for six months or more. And while we’d be much worse off without Obama’s economic stimulus package, that percentage is likely to grow this year, Moberg notes.
This is what unrestrained banking behemoths do. They book big profits and bonuses for themselves, regardless of the consequences for the rest of the economy. Congress absolutely must impose serious financial reform this year. After the November election, breaking up the banks must once again be on the agenda when Congress considers the future fate of hedge funds, private equity firms, Fannie Mae and Freddie Mac. If we don’t rein in Wall Street, banks will continue to wreak havoc on our homes, our jobs and even our schools. Congress must act.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Weekly Audit: Wall Street Reform, Financial Fraud, and Foreclosures
by Zach Carter, Media Consortium blogger
Last week, Senate Democrats broke the Republican filibuster on Wall Street reform. This week, Senators are introducing key amendments to strengthen the bill. While the current legislation is not strong enough to seriously curtail Wall Street abuses, all hope is not lost: A mere handful of amendments could make reform a reality. Unwinding the excesses of the Bush-era economy will require tough new rules on the nation’s largest banks. It will also require aggressive prosecution of fraud, and a serious new plan for helping homeowners in distress.
Ending too-big-to-fail
As Sen. Bernie Sanders (I-VT) emphasizes in an interview with GRITtv’s Laura Flanders , the four largest U.S. financial institutions have more than $7 trillion in assets—that’s over half the size of the entire U.S. economy. With that kind of political and economic muscle, banks can influence just about any financial reform that makes it through Congress simply by intimidating the regulators who try to implement them. (more…)
Weekly Audit: Jobs, Jobs, Jobs
By Zach Carter, Media Consortium Blogger
President Barack Obama invited leading economic thinkers to a job creation summit on Thursday to help combat the worst unemployment crisis in decades. The stakes couldn’t be higher: If Obama can’t build momentum for robust legislation that will create jobs, the unemployment rate could remain in double-digits all the way through 2011.
In Salon, Andrew Leonard highlights some positive comments Obama made at the jobs summit. In an exchange with The American Prospect‘s Robert Kuttner, Obama said that the long-term budget deficit is an issue, but that the best way to reduce that deficit is to spur economic growth. When the economy is growing, the same tax rates reap greater returns for the government. (more…)
Weekly Audit: Bigger Than ‘Too Big to Fail’
by Zach Carter, TMC MediaWire Blogger
Now that trillions of taxpayer dollars have been pumped through the financial system, Wall Street giants JPMorgan and Goldman Sachs are reporting record profits—and giving out record bonuses. Goldman is planning to pay out $11.4 billion in compensation “earned” with our money. Even worse, attempts to regulate reckless financiers or empower ordinary workers are still being stymied by influential corporate lobbyists.
How did Goldman score the biggest quarterly profit in its history? Matt Taibbi explains in an interview with GritTV’s Laura Flanders. The $10 billion in direct capital that Goldman received from taxpayers under the Troubled Asset Relief Program (TARP) is actually one of the minor offenses. The company also converted corporate charters to become eligible for guarantees, and issued a whopping $28 billion in debt guaranteed by the government.
Banks were foundering last Fall, and very few investors were willing to supply them with emergency capital. So the FDIC guaranteed their debt, which allowed banks to raise funds at extremely low interest rates. The FDIC guarantee means that taxpayers will get stuck with the bill if the company defaults. If you can raise money at absurdly low rates, its very easy to turn over huge profits, as both Goldman and JPMorgan did.
There are other outrages: We still don’t know how much money the Federal Reserve loaned Goldman through its emergency lending facilities. The government’s bailout of AIG served as a huge windfall for the company, funneling at least $12.9 billion in taxpayer largesse directly to Goldman Sachs.
“AIG owed Goldman about $20 billion, and if AIG had gone through a normal bankruptcy, Goldman probably would have gone out of business. Instead, they got paid 100 cents on the dollar for every dollar that AIG owed them,” says Taibbi, author of a blistering take-down of the investment banking giant in the most recent issue of Rolling Stone.
In Salon, former Clinton Secretary of Labor Robert Reich says that this year’s big bank failures have resulted in a heavier concentration of financial influence in the few surviving firms, namely Goldman Sachs and JPMorgan. We have taken the “too big to fail” problem and made it bigger. JPMorgan acquired rival Bear Stearns for a pittance last March with billions of dollars in government guarantees. The company also picked up national banking giant Washington Mutual last fall. That means more risk in our economy and a greater concentration of lobbying power in our political system.
“We’ve ended up with two giants that now have most of the casino to themselves, are playing with poker chips backed by taxpayers, and have a big say in what the rules of the game are to be,” Reich writes.
Adam Schlesinger of Air America took to Wall Street to compile a hodgepodge of one-on-one interviews with bailout critics and condescending financiers. Schlesinger underscores the absurdity of Goldman’s pending bonuses by posting his own checking account balance ($13.75). The point of this massive bailout was to make the economy function for ordinary people. Instead, we’ve made sure that it benefits extremely wealthy bankers.
The government so completely resists doing anything about this staggering inequality, as Eyal Press writes for The Nation. There are two ways to approach the inequality problem. We can rein in the recklessness at the top by imposing serious regulations, and empower those at the bottom by giving them greater negotiating leverage with their employers (i.e., promoting unionization). While the bonus money flows on Wall Street, the Employee Free Choice Act (EFCA), a key bill to empowering unions, was just stripped of a crucial provision that would have made it easier for workers to organize, as David Moberg reports for In These Times.
As EFCA is gutted, bills proposing regulations for the financial sector are moving at a snail’s pace—even after two years of economic turmoil. Last week, Congressional leaders from both parties nominated members for a new panel, the Financial Crisis Inquiry Commission, to investigate the causes of the financial crisis. The investigation seems doomed to failure by its very design. Zachary Roth details the committee’s various shortcomings for Talking Points Memo. Of the panelists, six were nominated by the Democratic leadership, while four were nominated by the Republican leadership. If all four Republican nominees vote to block a subpoena, the committee cannot issue it, and without broad subpoena power, the entire exercise is futile.
Roth also emphasizes the excessively political nature of the appointees, particularly on the Republican side, which named former Rep. Bill Thomas, R-Calif., as Vice Chair. The Democratic picks are generally uninspiring, except for Brooksley Born, who fought to regulate derivatives in the 1990s as head of the Commodity Futures Trading Commission. But the Democrats have nobody anywhere near as frightening as Rep. Thomas, a vicious partisan who specialized in ushering money to special interests during his tenure as Chairman of the House Ways and Means Committee.
Mary Kane of The Washington Independent explains the troubling record of another Republican commission appointee, Peter Wallison of the American Enterprise Institute (AEI), a conservative think tank. The various conspiracy theories Wallison peddled include a robustly debunked belief that a decades-old anti-discrimination law is responsible for the mortgage meltdown. The law in question, known as the Community Reinvestment Act (CRA), dates back to 1977, and Wallison’s conspiracy theory has been rejected by nearly everyone in the financial commentariat, including regulators appointed by George W. Bush.
The Community Reinvestment Act requires banks to make loans to communities where they collect deposits. If you accept deposits at a branch in a poor neighborhood, you have to offer responsible loans in the same community. The idea is to expand access to affordable credit in the inner cities, while the subprime crisis is heavily concentrated in the suburbs. CRA loans have to be affordable, which means high-interest subprime loans do not count. CRA does not require banks to lower their lending standards, because any recipients have to be credit-worthy. Only 6% of high-interest mortgages were made by companies subject to CRA regulations, and lest we forget, this law was passed in 1977, while financial crisis erupted in 2007.
Instead of appointing toothless commissions, we should be making sure the financial oligarchs do things that are good for the rest of us. Congress should be writing regulations to curb risk in the financial system as fast as bankers are paying themselves bonuses. They’re our representatives, after all, and it’s our money.
This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Audit: EFCA Vital for Recovery
It’s official: The U.S. economy has been in a recession for a year and a half and many of the economic troubles worrying progressives in 2007 have yet to be addressed. While the Obama administration has taken steps to relieve some problems, a series of counterproductive bailouts, woefully inadequate labor laws and rampant inequality are still in urgent need of attention.
Severe economic inequality has persisted for decades in the U.S., but the current crisis is bringing things into focus. Unfortunately, while Wall Street excess and the corporate jet-setting of Detroit executives have dominated headlines and garnered plenty of justified outrage, the other side of the inequality coin has been largely neglected. As Katrina vanden Heuvel explains in The Nation, the routine exploitation of day laborers and domestic workers has grown even more pervasive since the recession began. Workers who managed to survive by laboring for predatory wages under abusive conditions now see those wages stolen with increasing regularity, as contractors simply refuse to pay up when the work is done. Huge portions of domestic workers are not only living below the poverty line, but subject to verbal and physical abuse. And as jobs have grown increasingly scarce, vanden Heuvel writes, speaking out against employer mistreatment has become a thoroughly daunting prospect for workers with no savings to help them endure unemployment. For the millions undocumented workers who are not protected by U.S. labor laws, an abusive work situation leaves them without any legal recourse.
Our labor laws desperately need to be revamped. Currently, Capitol Hill’s biggest battle for workers rights is the Employee Free Choice Act (EFCA), which would make it easier for workers to form a union without fear of employer reprisals or intimidation. The corporate executive class is lobbying hard against EFCA by claiming it revokes workers’ rights to a secret ballot in union elections, but the bill would do no such thing. As the law currently stands, employers can force workers who want to unionize to hold an election in order to actually establish a union. EFCA would require that a union be legally recognized as soon as a majority of workers sign cards saying they want to unionize. Union leaders are still elected by a secret ballot, but the election is permitted to take place later on, preventing employers from using the election period to bully their workers out of unionizing at all.
Writing for In These Times, David Moberg illustrates the commonplace peril of employer intimidation under the current organizing process:
“In 2005 [electrician Dan Luevano] and most of his fellow workers at Ries Electric near Denver asked their boss to recognize the Electrical Workers as their union to help resolve problems. The boss called everyone in and threatened to fire them if they voted for a union. Luevano said he would, and the next workday he was fired. Though the National Labor Relations Board reinstated him, his boss isolated him and cut his hours while continuing to violate labor laws by fighting the union.”
Workers and unions have pushed for EFCA for years, but when it comes to the economy, the federal government reacts fastest to problems on Wall Street. In Salon, Andy Kroll outlines the generous subsidies the government has paid to companies that drove themselves into the ground, effectively rewarding the economically destructive behaviors that caused the current crisis, while neglecting the workers whose hours and wages have been slashed as business credit tightens ups.
The bailout isn’t just unfair—it seriously risks delaying economic recovery. If the government refuses to take over failed institutions, wipe out their shareholders and fire their executives, the U.S. economy will likely be burdened with a constantly faltering financial sector for years. The Wall Street CEOs who caused the problem have every incentive to cover up for their mistakes and resort to complex accounting tricks to hide losses. But until those bank losses are recognized, the government will not be able to fill the hole and get credit flowing again. As Robert Kuttner argues in a column for The American Prospect, “We still face a prolonged Great Stagnation, one that could be far worse than necessary because of the administration’s circuitous, Wall Street–friendly approach to reviving the banks.”
Just as bad, whenever the economy actually recovers, executives at the surviving banks will have learned that they can score huge bonuses virtually risk-free by gorging themselves on risky loans and letting taxpayers clean up after them. This sets the stage for another catastrophe. So far, Obama’s decision to extend the bank bailout plan enacted under George W. Bush is the single greatest single blunder of his presidency, and as Kuttner argues, it’s a mistake that jeopardizes both the economy and the political sustainability of progressive ideas.
Beyond Wall Street, the administration has also faltered with it’s handling of General Motors, which finally filed for bankruptcy Monday morning after steadily disintegrating since the 1980s. After pouring in money to keep the ailing car manufacturer afloat, the government watched the company lay off tens of thousands of workers without overhauling its failed business model. Under the bankruptcy arrangement, U.S. taxpayers will emerge with a 60% stake in the company, but rehabilitating the company remains an enormous task. GM’s primary business is making cars that people do not want to buy. Without GM, the U.S. manufacturing sector would all but disappear, but turning the company around will require a huge long-term investment. So far, the government has settled for keeping the company on life support. Kevin Drum puts it succinctly for Mother Jones: “This whole deal just keeps getting worse and worse.”
The U.S. economy broke down for a reason: It was heavily dependent on a booming financial sector and failed to adequately protect or reward the workers who actually built the economy up. Both Congress and Obama have the power to give workers families the same economic leverage that corporate executives currently enjoy. It’s up to progressives to convince them to take action.
This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
Weekly Audit: Stop Subsidizing Wall Street
Treasury Secretary Timothy Geithner rolled out his new Wall Street bailout plan on Monday and the progressive verdict is already in: This bailout doesn’t look much better than the last one. In fact, Geithner’s latest plan isn’t much different from several other flawed proposals policymakers have floated over the past year. At its core, Geithner’s program is just another attempt buy up “toxic assets” from banks at inflated prices.
If most major U.S. banks accepted current market prices for the bad, mortgage-related assets on their books, they would be insolvent. Geithner is trying to convince Wall Street that the assets are worth a lot more than everyone thinks they are, rather than deal with the fundamental problems of the assets and their owners. The plan unveiled on Monday involves a smorgasbord of guarantees for Wall Street investors, all part of an effort to sweeten the pot and convince them to buy toxic mortgage-related assets from troubled banks. Unfortunately, Geithner’s revisions create new problems without solving key previous dilemmas inherent in the plan.
In a post for Talking Points Memo, Josh Marshall highlights a clip of Nobel Prize-winning economist Joseph Stiglitz rejecting a very similar plan in early February. Marshall asks “Why are we still at this?”
Under older formulations of the toxic asset purchase model, the government would have purchased the assets directly from banks. Since the assets are hard to value, this approach would have carried the risk that the Treasury would pay too much and provide banks with what amounts to a bailout (inflated price = free money + no strings attached). Geithner’s new plan offers incentives that encourage hedge funds and private equity companies to buy toxic assets from banks. But the incentives do nothing to make sure the funds do not pay too much for those assets. Indeed, Geithner’s plan actually encourages the private sector to pay too much. The troubled banks are still likely to be bailed out, thanks to a strong possibility that investors will pony up artificially high prices for their assets. The result is a set of economically irrational subsidies for both banks and Wall Street investment houses.
As Ezra Klein puts it for The American Prospect: “Imagine an art auction. Now imagine an art auction where Sotheby’s loans money to the participants and promises to pay the losses if the paintings fall in value. Think the pricing will be the same? And who would you say is being protected: Sotheby’s or the private investors?”
Still worse, all of those subsidies and guarantees for hedge funds mean that taxpayers are on the hook for much more than our private sector “partners,” since buying up assets that nobody wants to buy is an intrinsically risky plan. In a sane investment world, taxpayers would benefit from a greater share of any gains from the investment. But the Geithner plan actually works the opposite way, as David Corn writes for Mother Jones: “The feds are shouldering much more of the risk burden than the private firms. Yet the feds would not get any greater split of the profits—if they ever materialize.”
The government has intentionally created a gamble in which taxpayers bear the brunt of the blow for any losses, but allows Wall Street investors to enjoy a disproportionately large share of any gains. Subsidizing hedge funds and private equity firms serves no real economic function– they do not make loans that help small businesses or consumers. If we are going to bail out troubled banks, we might as well control how our funds are spent and ensure that the mistakes that created this problem are not repeated: wipe out the shareholders who made bad bets on poorly run companies and kick out the management teams who drove those companies into the ground.
Everyone, of course, is still angry about those AIG bonuses. But excessive executive compensation is not only a problem for companies that have been bailed out, as David Moberg explains for In These Times. Outrageous CEO paychecks distort timelines for executives, encouraging them to take short-term risks at the expense of long-term profitability. This is bad not only for individual companies, but for the entire economy. The current financial crisis is a direct result of executives binging on risky securities to score big paydays without worrying about future damages to their companies’ balance sheets.
It’s also easy to forget that corporations are not merely wealth machines for their top executives—they are supposed to serve a useful economic function and fulfill actual social needs. Moberg argues persuasively that we need new rules for corporate accountability that align the interests of companies with the well-being of our society.
Over at Yes!, David Korten emphasizes the risk that important reforms on Wall Street will fall by the wayside if the government continues to focus on short-term emergency bailout plans instead of serious regulatory changes. It’s past time for regulators to impose new rules on the game. The current financial crisis hit in the summer of 2007. Bear Stearns collapsed over a year ago. If the government had devoted more time to restructuring a broken financial system and less time orchestrating short-term bailouts, policymakers would have a much more effective set of tools to combat the crisis with. The most important lesson we have learned so far is that when a bank is considered too big to fail, it has become too big to exist. If lawmakers do not force over-sized financial behemoths to downsize, the entire economy will be jeopardized again when Wall Street’s next speculative bubble bursts.
At present, however, Geithner seems content to simply blow another bubble with a new set of windfalls for Wall Street. If that sounds like a raw deal for taxpayers, that’s because it is.
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