Week In Review

A Weekly Column by Bill Onasch
January 11, 2010

Recalling Buddy’s Wisdom
When asked by a reporter what he had learned from managing the hapless KC Royals, ex-skipper Buddy Bell replied, “I’ve learned to never say things can’t get worse.” I’ve valued that sage approach while following the months of twists, turns, and double-crosses on the road to health care “reform.”

Steven Greenhouse opened a Saturday New York Times article reminding us,

“When millions of blue-collar workers were leaning toward John McCain during the 2008 campaign, labor unions moved many of them into Barack Obama’s column by repeatedly hammering one theme: Mr. McCain wanted to tax their health benefits. But now labor leaders are fuming that President Obama has endorsed a tax on high-priced, employer-sponsored health insurance policies as a way to help cover the cost of health care reform.”

He continues,

“Labor leaders say the tax would hit not only wealthy executives with expensive health benefits, but also many rank-and-file union members who have often settled for lower wage increases in exchange for more generous health benefits.”

By one union estimate one in four union members would be affected by the 40 percent excise tax. A delegation including Trumka, Hoffa, Gerard, and Stern will go to the White House today for a last minute appeal. Stern is not optimistic, telling The Hill the tax will likely remain in the final bill.

Of course, the delegation of leaders could likely prevent this last unkindest twist of the knife and more by calling for the bill’s defeat. They would need only to pry away one Democrat or socialist friend to collapse the 60-vote house of cards in the Senate. But that seems as likely as Buddy Bell’s old team winning this year’s World Series.

For a good analysis of the Senate bill, which will be the basis for the final bill, see Mark Dudzic’s article, A Step In the Wrong Direction.

Double Dip?
Most pundits expected the December jobs report would show modest improvement. The President scheduled a briefing to take advantage of some good news and announce minor tweaking of the recovery process. But when the figures were released Friday some started talking about a double dip recession instead.

Despite the hype of a slowing pace of job loss, the numbers are still brutal. Employers eliminated a net total of 85,000 jobs and a half-million were dropped from the workforce as “discouraged.” The losses were across the board in construction, manufacturing, retail and wholesale trade. Particularly ominous, government jobs were axed as well. There were also more workers who need and want steady full-time employment settling for temporary jobs.

In a separate, annual report, wages and hours took a hit as well. Sara Murray wrote in the Wall Street Journal, “Wages of U.S. employees are generally stagnant and likely to remain so as the pool of unemployed workers helps employers keep wages from rising even as productivity, or output per hour of work, soars” In the past year hourly wages rose 2.2 percent–less than the 2.3 rise in the CPI. Because of reduced hours, average weekly wages rose only 1.9 percent.

The shocking decline in the public sector will become much worse soon. Several states and numerous cities and transit agencies are on the brink of bankruptcy.

• The relatively small state of Kansas has already slashed school and other needed spending by more than a billion. A coalition of unions and advocacy groups is fighting a proposal to cut 300 million more.

• Even the latest round in a long series of draconian cuts in services and jobs in the new budget proposed by California Governor Schwarzenegger counts on an additional seven billion dollars in federal aid–not a sure bet.

• The Chicago Transit Authority is planning to lay off 1,000 bus and train workers next month.

• While we can’t blame the recent snows and arctic air blasts that have gripped most of North America on the Establishment, the collapse of state and municipal infrastructure has left streets and highways in many places–including Kansas City–largely untreated and unplowed.

What about the Administration’s stimulus program? The most visible component–strongly supported by union officials–has been “shovel ready” road and bridge projects. The Associated Press did an exhaustive analysis of this program, including comparing unemployment rates between counties who received lots of shovel money and those that got none. The inescapable conclusion was that these projects made absolutely no contribution to reducing unemployment. They wrote,

“Even within the construction industry, which stood to benefit most from transportation money, the AP's analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program.”

Yet this remains a key strategy in the new jobs bill passed by the House, awaiting action in the Senate.

But the favored form of stimulus remains tax credits to encourage private investment. On Friday the President announced another 2.3 billion dollar round of tax breaks for “clean technology” projects. It’s estimated this might stimulate as many as 17,000 new jobs–less than a quarter of the number wiped out in just December alone.

The situation is hardly better in other countries. China can now boast about passing up Germany as the world’s leading exporter. But it’s a bigger slice of a much smaller pie–Chinese exports were actually down eleven months last year. The real bright spot for China was that its domestic auto sales passed up the USA. The U.S. car market had not been in second place since the days before Henry Ford. Ford and General Motors did see big expansion in China–little consolation for the Buy American advocates of the UAW. Unemployment passed the ten percent mark in the Eurozone for the first time since that entity was established.

Clearly this is not Paul Samuelson’s kind of recession. Under the rules taught by the recently departed author of economics textbooks the recession is already over because of positive growth in the GDP. But severe crisis remains palpable to all. While there will be incremental ups and downs there will be no recovery of the ground lost by the working class as long as it is left up to the capitalist market to correct itself, even with massive government handouts. We’ll have more to say about what we think is needed in future Reviews.

As the World Turns...
The Environmental Protection Agency issued a new regulation Thursday that would gradually reduce the limit allowed for ground-hugging ozone (smog) somewhat below what the Bush administration imposed on the EPA and substantially reduced from what was permitted in the Clinton administration. To the consternation of the Ferengi mentality of companies that will have to shell out a lot more money to comply, the EPA took this action solely out of concern for human health.

While the White House didn’t interfere with the new smog standard the same cannot be said for EPA efforts to finally regulate millions of tons of waste from coal-fired power plants. The Wall Street Journal reports,

“The office of President Barack Obama's regulatory czar, Cass Sunstein, has held nearly 20 meetings with industry groups since October to discuss the potential impact of proposed EPA rules to treat coal ash and other coal byproducts as hazardous waste, according to White House records.”

The Journal article notes it is highly unusual for this level of less than transparent meetings to take place before official publication of a proposed new reg, which then becomes open to public comment. Clearly the utilities and Big Coal want to nip this one in the bud.

The coal barons and their political minions are also incensed at EPA foot-dragging, and occasional outright rejection, of permit applications to blow up mountain tops. They got another jolt Thursday when a group of hydrologists, ecologists and engineers published a paper in Science detailing the extensive environmental damage–especially to water--done by mountaintop removal and calling on the EPA to ban the practice. Another sticky wicket for an administration with both close ties to coal and a posturing of deferral to science.

Chances are you have never heard of the Biomass Crop Assistance Program that was part of the 2008 farm bill. As explained by the Washington Post, it is a half-billion dollar a year handout to sawmills and lumber wholesalers, encouraging them to sell their waste to be converted into high-tech biofuels. Sounds like a sensible green use of waste? Perhaps it would be except–it was never waste. These outfits have been selling their floor shavings for decades to manufacturers of “composite” wood which is used in low-end fixtures and furniture. The lumber barons get more profit out of the subsidy while composite wood products tank, driving up construction and home improvement costs.

Before we leave biofuel–which contributes more than gasoline to the smog problem EPA is trying to reduce–we should note a new threat to switchgrass. AP reports, “Researchers at South Dakota State University have rediscovered a long-ignored moth and found a new fly, both of which like to munch on switchgrass, a crop billed as a future feedstock for next-generation ethanol.” Since until recently switchgrass was considered a weed, it’s no wonder farmers and scientists paid little attention to bugs eating it. Now they will have to be prepared to douse this “green” crop with pesticides.

Finally, we pass along Wal-Mart’s contrite and sensitive statement about the exposure that their suppliers of children’s jewelry that once contained high lead levels were now using even more toxic cadmium,

“Currently there is no required cadmium standard for children's jewelry.”

There’s a lot more we could say about the 238 stories we posted on the Daily Labor News Digest since our last Week In Review. Most folks don’t read all of them but all get read by some. If you’re not a regular reader, give us a try. We update by 7AM Central, Monday-Friday. For now,

That’s all for this week.

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