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Leo W Gerard: GOP Goes for Win on Taxes, Consequences be Damned

An entire year of legislative defeats has grated on the GOP.

Getty Images/marvinh

Their promised Affordable Care Act repeal failed – again and again and again. Their Muslim ban was, well, banned by the courts. And now, in the waning days of November, their infrastructure bill, big beautiful border wall and brand new NAFTA are all missing.

Republicans have lost so much, they’re downright desperate for a win. And that’s why they’re pushing a tax scam supported by a mere 25 percent of Americans, according to the latest Quinnipiac Poll.

They’ve just got to rack up a win, consequences and American workers be damned. They’re so desperate that GOP Sen. Bob Corker, a self-described deficit hawk, agreed in committee Tuesday to send the bill to the floor for a vote after he got promises for changes. What he wants is cancellation of the bill’s tax breaks if they don’t stimulate economic expansion as Republicans say they will. The GOP keeps swearing the cuts will cause growth despite the fact that the Bush tax breaks didn’t and despite the fact that the Congressional Budget Office (CBO) projects the cuts will add $1.44 trillion to the deficit.

Some deficit hawk. But, hey, anything for a win.

Republicans are so desperate that they’re shoving this scam through what is supposed to be a deliberative process without any of that deliberation – without, for example, routine hearings or assessment by the Treasury Department or Joint Committee on Taxation. So there’s no bipartisan government evaluation of the GOP assertion that the tax breaks will generate economic growth sufficient to account for the massive revenue losses they’ll cause.

Americans hate this scam for good reason. And they do hate it. The latest Harvard-Harris survey showed 54 percent oppose it and the same percent say the scam is likely to hurt them financially. They know a swindle when they see one.

But Republicans feel like they’ve got to have a win. No matter what. Poor people, working people, old people be damned.

And damned they are by the GOP scam.

The GOP bill delivers massive tax cuts for the wealthy and corporations. The House version, for example, eliminates the estate tax. This is charged only on estates worth $5.49 million or more. So only the richest of the rich, the top 0.2 percent pay. And among the tiny number nationwide that owe estate tax in 2017, the average effective rate paid is less than 17 percent, according to the Tax Policy Center. That’s because the rich employ experts to exploit loopholes so they never pay the official rate of 40 percent.

In addition to generating essential funds for the federal government for more than a century, this tax prevents America from reverting into a kingdom dominated by royal dynasties whose pampered scions thrive by the merit of their grandfathers rather than by the sweat of their brows. This was the system Americans fought a revolution to escape.

But Republicans are voting to bring it back. Anything for a win.

Their scam also bestows on corporations the privilege of paying zero U.S. taxes on the profits of their foreign factories. So instead of the current 35 percent, or the new, low 20 percent rate that Republicans plan to award companies in their tax scam, corporations will pay nothing at all if they move manufacturing from Iowa to India or from Idaho to Mexico.

This will kill American manufacturing and American jobs. Factories will flee even faster to low-wage, high-pollution countries like China where Republicans will absolve them from paying any U.S. income taxes at all! Those Michigan and Ohio auto parts factories – gone. Those Pennsylvania and Illinois steel mills – gone. Those family-supporting jobs – shipped overseas by Republican tax policy.

Republicans are appeasing fat-cat CEOs and shareholders to get themselves a win on taxes. Family-supporting jobs be damned.

The fattest of those cats, the richest 1 percent, rake in 62 percent of the benefits of this tax con by 2027.  Many in the middle class will get tax cuts in the first few years too, but by 2027, their rates rise back up. At that time, this GOP tax fraud would stick 87 million families making less than $200,000 a year with tax increases.

But by then, by 2027, many of those Republicans will have left Congress to become overpaid lobbyists – the kind now demanding income redistribution from the pockets of the poor and middle class up and into the treasure chests of the wealthiest. The tax scam seems like a win for Republicans now, and secure job offers from lobby firms later.

The CBO has estimated that those tax breaks in the Senate GOP bill will dig a $1.44 trillion deficit over 10 years. This hole will be dredged by the party that spent 8 years while President Barack Obama was in office decrying anything that would increase the deficit by a penny. But policy consistency be damned. Anything for a win.

To keep the deficit “down” to $1.4 trillion, Republicans slash and burn programs vital to workers and the elderly like Medicare and the tax credit for student loans.  Democrats have estimated the tax scam will slash $470 billion from Medicare over 10 years. The CBO has estimated those cuts will start next year with $25 billion.

Worse though, is the real potential for Republicans to contend by year five or six, as their tax cuts for the rich and corporations gin up government debt, that programs workers cherish like Social Security and Medicaid must be gutted as well.

So what looks like a Republican win in 2017 could be a tragic loss to American workers by 2027.

Ok. The American people get it. Republicans have had a rough year. They are aching for a win. But doing the wrong thing just to do something is not a win. It’s a scam perpetrated on American workers.

Leo W Gerard: Republican Tax Plan — Make America Grieve Again

A giant sucking sound, louder than a freight train, noisier than a tornado, shriller than Ross Perot yelling, “I told you so,” blasted across the nation Thursday as Republicans in the U.S. House passed their tax plan.

It was the terrible sound of jobs swept out of this country. When Perot ran for president, he said the North American Free Trade Agreement (NAFTA) would siphon off American jobs. And he was right. It did.

PHOTO BY STEVE DIETZ, UNIONPIX.COM

But this is much, much bigger.

House Republicans approved a scam exempting corporations from all taxes on their foreign operations. Under the GOP proposal, corporations like Carrier and Rexnord can benefit from protections provided by American patents, courts and armed forces, while moving their factories from the United States to Mexico. Or to other low-wage, high-polluting countries like China. Or to countries that charge little or no corporate tax. Once there, instead of paying the new, super-low 20 percent corporate rate Republicans propose for U.S-based producers, the expat factories will pay no taxes to the United States. Nothing. Not a cent.

Rather than Making America Great Again, Congressional Republicans plan to Make America Grieve Again as even more family-supporting factory jobs get shipped offshore to take advantage of the new tax rate of zip.

The math behind that job transfer is simple. Continue manufacturing in the United States and pay a corporate income tax dramatically lowered from 35 to 20 percent. Or move to a ridiculously low-tax country like Switzerland, Montenegro or Paraguay, and pay a measly 9 percent to that nation and nothing to the United States.

With the proposed corporate tax gift from Republicans, CEOs could uproot factories in places like Illinois, Indiana and Western Pennsylvania and ship them to brand new facilities in Bermuda, Palau or Turks & Caicos, where the corporate tax rate is zero. The corporation would pay no taxes on profits to the country hosting the factory and nothing to the United States, which hosts the headquarters.

Republicans contend such corporations will bring those foreign profits back to the United States and invest here. Why would CEOs do that when any American plant they invest in would be billed taxes on profits while the same factory located in certain other countries would pay nothing?

Why would they do that when they didn’t before?

Right now, corporations are sitting on $2.6 trillion in overseas profits. They have not invested that money in U.S. research, factories or jobs because they don’t want to pay the current 35 percent tax rate that would be charged when those profits are returned to the country.

To lure that money back, Republicans propose to give corporations a tax holiday, cutting the rate to between 5 and 12 percent for repatriating the $2.6 billion. The GOP insists corporations will take advantage of that tax deal to bring those billions home and invest in American production. But they won’t. The proof is that they didn’t last time.

Congress gave corporations a tax holiday in 2004 during which CEOs could return foreign profits to the United States and pay a mere 5 percent tax on them in exchange for investment in U.S. research, factories and jobs.

CEOs brought back the money and grabbed that 5 percent rate, alright. But they didn’t use the repatriated cash to conduct research, build factories or create jobs. Just the opposite.

A study by the Democratic staff of the Senate Permanent Subcommittee on Investigations found that the 15 corporations that benefited most from the tax holiday turned around and cut more than 20,000 jobs and diminished their pace of research spending.

Labeling the 2004 tax holiday a failed policy, the report cautions against repeating it, saying it cost the U.S. Treasury $3.3 billion in lost revenues over 10 years and led to U.S. corporations sending more funds offshore.

“There is no evidence that the previous repatriation tax giveaway put Americans to work, and substantial evidence that it instead grew executive paychecks, propped up stock prices, and drew more money and jobs offshore,” said former Michigan Senator Carl Levin, then-chairman of the subcommittee, when the report was released in 2011.

So the contention that corporations now would invest in U.S. research, factories and jobs because Republicans plan to give them another tax holiday is about as solid as smoke — the stuff emitted from American factories pre-NAFTA and now flowing from mills moved to Mexico. The same goes for the contention that corporations will invest in U.S. research, factories and jobs with completely untaxed foreign profits.

In fact, suspending taxes on foreign profits would create a perverse incentive for corporations to make it overseas instead of making it in America. But Republicans intend to do it anyway.

Republicans say they must cater to the tax demands of corporations because other countries – Germany and Ireland, for example – offer corporations low rates. And those same Republicans contend they must cease charging American corporations taxes on their foreign operations because other countries have stopped.

That describes a race to the bottom. Pretty soon, corporations won’t pay any taxes at all, anywhere to anyone. They’ll provide nothing toward the roads they use to transport their products, the school systems that educate their workers, the Army Corps of Engineers that protects factories from floods.

If countries don’t work together to stop corporations from playing one against the other, workers will get stuck with all of the costs. That’s what’s happening under the GOP tax scam. The tax changes were supposed to benefit middle-class workers. But they do not.

An analysis of the Senate tax plan, released this week by the Joint Committee on Taxation, which is the official nonpartisan review agency serving Congress, showed the scam would give large tax cuts to corporations and millionaires while raising the levies charged to families earning $10,000 to $75,000 – that’s low-income and middle-class families.

White House National Economic Council Director Gary Cohn said this week, “The most excited group out there are big CEOs, about our tax plan.” Of course they are. Those 1 percenters and their corporations get all the breaks.

To help pay for big fat tax cuts for millionaires and zeroed-out taxes for corporations, Republicans plan to slash programs crucial to workers – like Medicare and Medicaid – and vital deductions, like those for property taxes and student loan interest.

Just like NAFTA, this GOP tax scheme is a scam, a bait-and-switch ruse. Workers pay more and get less – fewer government services and far fewer job opportunities. This time, their jobs won’t just be going south of the border. They’ll be shipped anyplace in the world touting the lowest tax rates.

Leo W Gerard: Workers Wary of GOP Flimflam Tax Scam

Congressional Republicans are selling a trickle-down tax scam times two. It’s the same old snake oil, with double hype and no cure.

A single statistic explains it all: 1 percent of Americans – that is the tiny, exclusive club of billionaires and millionaires – get 80 percent of the gain from this tax con. Eighty percent!

But that’s not all! To pay for that unneeded and unwarranted red-ribbon wrapped gift to the uber wealthy, Republicans are slashing and burning $5 trillion in programs cherished by workers, including Medicare and Medicaid.

Look at the statistic in reverse, and it seems worse: 99 percent of Americans will get only 20 percent of the benefit from this GOP tax scam. That’s not tax reform. That’s tax defraud.

Republican tax hucksters claim the uber rich will share. It’s the trickle down effect, they say, the 99 percent will get some trickle down.

It’s a trick. Zilch ever comes down. It’s nothing more than fake tax reform first deployed by voodoo-economics Reagan. There’s a basic question about this flim-flammery: Why do workers always get stuck depending on second-hand benefits? Real tax reform would put the rich in that position for once. Workers would get the big tax breaks and the fat cats could wait to see if any coins trickled up to jingle in their pockets.

House Speaker Paul Ryan claimed Republicans’ primary objective in messing with the tax code is to help the middle class, not the wealthy. Well, there’s a simple way to do that:  Give 99 percent of the tax breaks directly to the 99 percent.

The Republican charlatans hawking this new tax scam are asserting the pure malarkey that it provides two, count them TWO, trickle-down benefits. In addition to the tried-and-false fairytale that the rich will share with the rest after collecting their tax bounty, there’s the additional myth that corporations will redistribute downward some of their big fat tax scam bonuses.

A corporate tax break isn’t some sort of Wall Street baptism that will convert CEOs into believers in the concept of paying workers a fair share of the profit their labor creates.

Corporations have gotten tax breaks before and haven’t done that. And they’ve got plenty of cash to share with workers right now and don’t do it. Instead, they spend corporate money to push up CEO pay. Over the past nine years, corporations have shelled out nearly $4 trillion to buy back their own stock, a ploy that raises stock prices and, right along with them, CEO compensation. Worker pay, meanwhile, flat-lined.

In addition to all of that cash, U.S. corporations are currently sitting on another nearly $2 trillion. But CEOs and corporate boards aren’t sharing any of that with their beleaguered workers, who have struggled with stagnant wages for nearly three decades.

Still, last week, Kevin Hassett, chairman of the President’s Council of Economic Advisers, insisted that the massive corporate tax cut, from 35 percent down to 20 percent, will not trickle, but instead will shower down on workers in the form of pay raises ranging from $4,000 to $9,000 a year.

Booyah! Happy days are here again! With the median wage at $849 per week or $44,148 a year, that would be pay hikes ranging from 9 percent to 20 percent! Unprecedented!

Or, more likely, unrealistic.

Dishonest, incompetent, and absurd” is what Larry Summers called it. Summers was Treasury Secretary for President Bill Clinton and director of the National Economic Council for President Barack Obama.

Jason Furman, a professor at the Harvard Kennedy School who once held Hassett’s title at the  Council of Economic Advisers, called Hassett’s findings “implausible,”  “outside the mainstream” and “far-fetched.”

Frank Lysy, retired from a career at the World Bank, including as its chief economist, agreed that Hassett’s projection was absurd.

Hassett based his findings on unpublished studies by authors who neglected to suffer peer review and projected results with all the clueless positivity of Pollyanna. Meanwhile, Lysy noted, Hassett failed to account for actual experience. That would be the huge corporate tax cuts provided in Reagan’s Tax Reform Act of 1986.

Between 1986 and 1988, the top corporate tax rate dropped from 46 percent to 34 percent, but real wages fell by close to 6 percent between 1986 and 1990.

Thus many economists’ dim assessment of Hassett’s promises.

The other gob-smacking bunkum claim about the Republican tax scam is that it will gin up the economy, and, as a result, the federal government will receive even more tax money. So, in their alternative facts world, cutting taxes on the rich and corporations will not cause deficits. It will result in the government rolling in coin, like a pirate in a treasure trove. That’s the claim, and they’re sticking to it. Like their hero Karl Rove said, “We create our own reality.”

Here’s Republican Sen. Patrick J. Toomey, for example: “This tax plan will be deficit reducing.”

If the Pennsylvania politician truly believes that’s the case, it’s not clear why he voted for a budget that would cut $473 billion from Medicare and $1 trillion from Medicaid. If reducing the tax rate for the rich and corporations really would shrink the deficit, Republicans should be adding money to fund Medicare and Medicaid.

While cutting taxes on the rich won’t really boost the economy, it will increase income inequality. Makes sense, right? Give the richest 1 percenters 80 percent of the gains and the remaining 99 percent only 20 percent and the rich are going to get richer faster.

Economist Thomas Piketty, whose work focuses on wealth and income inequality and who wrote the best seller “Capital in the Twenty First Century,” found in his research no correlation between tax cuts for the rich and economic growth in industrialized countries since the 1970s. He did find, however, that the rich got much richer in countries like the United States that slashed tax rates for the 1 percent than in countries like France and Germany that did not.

This Republican tax scam is a case of the adage that former President George W. Bush once famously bungled: “Fool me once, shame on you. Fool me twice, shame on me.”

Republicans, like P. T. Barnum, think workers are fools who can be continually conned. But they aren’t. They’ve been duped too many times to believe this new GOP scam will serve anyone but the rich.

Leo W Gerard: NAFTA Negotiators Send Corporate Whiners Back to Swamp

Photo by Gerenme on Getty Images

Giant corporations, loyal to coin and faithless to country, staged a public display of blubbering in the run up to this week’s fourth round of negotiations to revise the North American Free Trade Agreement (NAFTA).

Whaa, whaaa, whaaaa, groups like the U.S. Chamber of Commerce sniveled into the swamp from which they crawled to conduct their press conferences. President Trump isn’t doing what corporations want, they wailed.

The President’s trade priorities, which he repeatedly stated on the campaign trail, do not include groveling to the whims and whining of corporations or their toady, the U.S. Chamber of Commerce. President Trump said he would create good, American jobs. To do that, he wants more stuff made in America and less stuff made in factories off-shored by greed-motivated American corporations.

“We’ve reached a critical moment,” Chamber of Commerce President Thomas Donohue sobbed this week. “The Chamber has had no choice but to ring the alarm bells.”

He said it, by the way, from Mexico City, where the Chamber, which calls itself the U.S. Chamber, had gone to scheme with Mexican government officials to subvert the NAFTA negotiation goals of the U.S. government.

Chamber Vice President John G. Murphy, meanwhile, was carping from the place the President calls the swamp, “So we’re urging the administration to recalibrate its approach and stop and listen to the business community, the agriculture community, the people who actually engage in trade.”

That is the crux of it, right there. The president had failed to place corporate profits over American workers.

Really, what Murphy and Donohue were saying is that the President should ignore the hundreds of thousands of Americans who lost their jobs because of NAFTA and concentrate instead on the profits to be made by wealthy CEOs and shareholders. Those are the guys who uprooted American factories and transplanted them in Mexico, where corporations can more easily exploit both workers and the environment.

United Technologies (UT) is a good example. UT had two perfectly profitable factories in Indiana where American workers manufactured Carrier gas furnaces and electronic controls. UT decided, however, that it could make even more money if it moved the factories to Monterrey, Mexico.

After Vice President Mike Pence, then governor of Indiana, handed UT $7 million of the state’s tax dollars, the corporation agreed to keep some of the Carrier jobs in the United States, but in the end, it moved all 700 electronic controls jobs to Mexico and 632 of the furnace jobs.

In Mexico, UT can pay its new workers a dime for every dollar in wages earned by its skilled American workers in Indiana. U.S. corporations like UT that transplant factories and kick their American workers to the curb pocket the difference in wages.

NAFTA, which encourages this kind of move, doesn’t benefit Mexican workers either. The poverty rate in Mexico is 52.3 percent, virtually the same as it was in 1994, when NAFTA took effect. Wages there rose just 2.3 percent. Economic development in Mexico has fallen behind that of most other Latin American countries.

But, whaa, whaaa, whaaaa, the Chamber of Commerce cries about the President’s intention to keep his campaign promise to build a trade wall to stop corporations from sneaking across the border.

Emily Davis, a spokesperson for the Office of the U.S. Trade Representative, gave the Chamber a good smack upside the head after Donohue and Murphy told the President that he should stop listening to workers and do exactly what the Chamber and corporations tell him to do.

Here’s what Davis said: “The president has been clear that NAFTA has been a disaster for many Americans, and achieving his objectives requires substantial change. These changes, of course, will be opposed by entrenched Washington lobbyists and trade associations. We have always understood that draining the swamp would be controversial in Washington.”

The Wall Street Journal explained the problem for the likes of Donohue and Murphy. The newspaper quoted an outside trade adviser to the administration. He said that the administration wants to “create more uncertainty and reluctance for U.S. businesses to invest in Mexico. . . They want to change the decision making around outsourcing and the offshoring of investment.”

The U.S. negotiators, for example, want to weaken, or maybe even eliminate, the NAFTA-created Investor State Dispute Settlement (ISDS) system. Corporations love this thing. It’s a secret court presided over by corporate lawyers where corporations can sue countries for passing laws that CEOs claim take a bite out of profits.

So, for example, a corporation could claim that a U.S. safety regulation prohibiting a cancer-causing chemical in plastic baby bottles diminishes expected future profits from its Mexican chemical factory. The corporate lawyers acting as judges in the secret NAFTA court can order the United States to compensate the corporation.  And, to top it off, the amount that the secret court can order taxpayers to hand over to corporations is unlimited.

The secret court reduces risk for corporations moving American factories to Mexico, where they might not have the same confidence that they would in American courts to protect their property rights.

Eliminating or curbing the secret court would reverse one of the NAFTA incentives for corporations to transfer manufacturing to Mexico. The administration wants to change several other aspects of NAFTA for the same result.

For example, it wants the government to be able to insist that more of what it buys be made in the United States. That would mean U.S. tax dollars would create more jobs in the United States. That discourages offshoring because the government is a super consumer.

The administration also wants a higher percentage of a product, such as a car, to be made in the United States, or at least in one of the three partner countries, for it to attain NAFTA duty-free status.  Right now, it’s 62.5 percent. The administration is talking about 85 percent, which would deter offshoring to Asian countries.

The administration is also demanding labor rights for Mexican workers. Enabling them to form real, worker-run labor unions would raise their wages, and, as a result, make transplanting U.S. factories in Mexico less profitable.

Murphy told the administration that it should do none of this. It should, he said, follow the administration’s own guidelines and “do no harm.”

Basically, big corporations and the Chamber want no change to NAFTA. They’re fine with all harm falling on U.S. workers’ shoulders ­ – 800,000 of whom lost their jobs because of NAFTA. And that doesn’t include the 1,600 lost at Rexnord and the two United Technologies factories in Indiana this year.

President Trump isn’t fine with that outcome, however. And that’s why his spokesperson at the Office of U.S. Trade Representative told the Chamber this week to waddle back down to the swamp and shut up.

Leo W Gerard: Unfair Trade, Uncertainty Killing American Aluminum and Steel

Kameen Thompson, president of the USW local union at ArcelorMittal’s Conshohocken mill

Kameen Thompson started his workday Sept. 15 thinking that his employer, ArcelorMittal in Conshohocken, Pa., the largest supplier of armored plate to the U.S. military, might hire some workers to reduce a recent spate of overtime.

Just hours later, though, he discovered the absolute opposite was true.

ArcelorMittal announced that, within a year, it would idle the mill that stretches half a mile along the Schuylkill River. Company officials broke the bad news to Kameen, president of the United Steelworkers (USW) local union at Conshohocken, and Ron Davis, the grievance chair, at a meeting where the two union officers had hoped to hear about hiring.

ArcelorMittal wouldn’t say when it would begin the layoffs or how many workers would lose their jobs or which mill departments would go dark. The worst part for everyone now is the uncertainty, Kameen told me last week.

“If ArcelorMittal said they would shut down on a date certain, everybody could move on to something else or prepare. Right now, we are in limbo. We have a lot of guys with a lot of time, but they’re still not old enough to retire. The only thing we can do is ride it out. But the uncertainty is very, very hard on them. It’s difficult not knowing who and what departments are affected and how long we are going to run,” Kameen said.

Uncertainty from Washington, D.C., is a major contributor to the idling of the plant. ArcelorMittal and every other aluminum and steel producer in America are in limbo as they wait for a decision on import restrictions that could preserve U.S. capacity to produce defense materials – like the light armored plate that’s Conshohocken’s specialty ­– and to build and repair crucial infrastructure, like roads, bridges and utilities.

Initially, the Trump administration promised a determination in June. But June came and went. As the months dragged on, imports surged. That threatens the viability of mills like Conshohocken. Then, just last week, administration officials said they would do nothing until after Congress passes tax legislation.That compounded uncertainty.

The Conshohocken mill may not survive the delay. Kameen, Ron and the 203 other workers there could lose their jobs because Congress dawdles or fails to act on taxes. America could lose its domestic capacity to quickly produce large quantities of high-quality light-gauge plate for armor.

After work at other, non-union jobs, Kameen began at Conshohocken at the age of 25. He finally had a position that provided good wages and benefits. “That gave me an opportunity to plan for a future and build a family,” he explained.

Ron, the mill’s training coordinator, is 45 and has worked at the plant for 22 years. “This was my first true job that I could sustain a family with,” Ron told me.

He has five children ranging in age from five to 26. He needs a good job with good benefits. He knows jobs like the one he has at the mill are rare, but he’s not giving in to gloominess. “I am just trying to stay positive,” he said. “That is all I can do right now.”

Photo is of Ron Davis, grievance chair for the USW local union at ArcelorMittal’s Conshohocken mill

Both Ron and Kameen are frustrated by the Trump administration’s failure to penalize the foreign producers whose illegal trade practices have killed steel and aluminum jobs, closed mills across the country and threatened America’s domestic capability to produce metals essential to construction of critical infrastructure and vital to the defense department to safeguard the country.

Since the Trump administration launched the national security probes into steel and aluminum imports under Section 232 of the Trade Expansion Act in April, imports have risen significantly. Steel imports are up 21 percent over last year. Countries like China, fearing impending penalties for predatory and illegal trade practices, dumped more than ever.

The administration has nine months to complete the Section 232 investigation. It could be January before the results are announced. Then the president has another three months to decide what to do. Instead of the two months the administration initially promised, the whole process could take a year.

A year could be too long for mills like Conshohocken.

“It doesn’t take that long to investigate this,” Kameen said. “We are losing jobs. They are dropping like flies. The administration needs to act now to prevent these unfair imports from killing more American jobs.”

Because of unfair and illegal imports since 2000, particularly from China, U.S. steel mills idled sections or closed, cutting the nation’s capacity to produce by 17 million tons a year and throwing 48,000 steelworkers out of jobs.

Now, there is only one surviving U.S. mill capable of producing grain-oriented electrical steel (GOES)required for electrical transmission.

The same decline occurred in aluminum, only it happened even faster. The number of U.S. smelters dropped from 14 in 2011 to five last year. That is the loss of thousands more good, family-supporting jobs. It happened because China expanded its overcapacity to produce cheap, state-subsidized aluminum, depressing the global price by 46 percent in just eight years.

Now, there is only one surviving U.S. smelter capable of producing the high-purity aluminum essential to fighter jets like the F-35 and other military vehicles.

While ArcelorMittal may contend that it can manufacture military-grade steel plate at its other U.S. mills, the loss of Conshohocken would mean a dangerous decline in U.S. capacity.

Capacity is crucial in emergencies. An example occurred in 2007 when U.S. military deaths were rising in Iraq and Afghanistan. In response, former Secretary of Defense Robert Gates ordered a 15-fold increase in production of mine-resistant, ambush-protected (MRAP) vehicles. That meant the number produced each month had to rise from 82 to more than 1,100. The Conshohocken plant produced much of the steel needed to achieve the goal.

Without that mill, the nation’s ability to gear up in such an emergency is compromised.  Two weeks ago, 10 retired generals wrote President Trump warning: “America’s increasing reliance on imported steel and aluminum from potentially hostile or uncooperative foreign governments, or via uncertain supply routes, jeopardizes our national security.”

They also said of the Section 232 investigation, “Prompt action is necessary before it is too late.”

When Kameen started at the mill 11 years ago, he felt good about the work. Conshohocken was making a lot of armor for soldiers in Iraq and Afghanistan, and that gave him the sense that he was doing something for his country.

Now, he’s concerned for his local union members, whose average age is 50.

As their president, Kameen, who is only 37, feels responsible to help each of them through the uncertainty and the difficulties ahead. “My members are looking at me for answers and leadership,” he told me. “So if I don’t stay strong and lead, then I’m the wrong man for the job.”

Every steelworker and aluminum worker in America is looking to President Trump for that kind of leadership. Their uncertainty could be relieved if the administration would announce the results of the Section 232 investigation now and act immediately to ensure the United States has the domestic ability to produce essential metals.

Leo W Gerard: Canadian Mounties to the Rescue of American Workers

The Canadian Royal Mounties have offered to ride to the rescue of beleaguered American workers.

It doesn’t sound right. Americans perceive themselves to be the heroes. They are, after all, the country whose intervention won World War II, the country whose symbol, the Statue of Liberty, lifts her lamp to light the way, as the poem at the statue’s base says, for the yearning masses and wretched refuse, for the homeless and tempest-tossed.

America loves the underdog and champions the little guy. The United States is doing that, for example, by demanding in the negotiations to rewrite the North American Free Trade Agreement (NAFTA) that Mexico raise its miserable work standards and wages. Now, though, here comes Canada, the third party in the NAFTA triad, insisting that the United States fortify its workers’ collective bargaining rights. That’s the Mounties to the rescue of downtrodden U.S. workers.

This NAFTA demand from the Great White North arrives amid relentless attacks on labor rights in the United States, declining union membership and stagnant wages. To prevent Mexico’s poverty wages from sucking U.S. factories south of the border, the United States is insisting that Mexico eliminate company-controlled fake labor unions. Similarly, to prevent the United States and Mexico from luring Canadian companies away, Canada is stipulating that the United States eliminate laws that empower corporations and weaken workers.

The most infamous of these laws is referred to, bogusly, as right-to-work. Really, it’s right-to-bankrupt labor unions and right-to-cut workers’ pay. These laws forbid corporations and labor unions from negotiating collective bargaining agreements that require payments in lieu of dues from workers who choose not to join the union. These payments, which are typically less than full dues, cover the costs that unions incur to bargain contracts and pursue worker grievances.

Lawmakers that pass right-to-bankrupt legislation know that federal law requires labor unions to represent everyone in their unit at a workplace, even if those employees don’t join the union and don’t make any payments. These dues-shirkers still get the higher wages and better benefits guaranteed in the labor contract. And they still get the labor union to advocate for them, even hire lawyers for them, if they want to file grievances against the company.

The allure of getting something for nothing, a sham created by right-wing politicians who prostrate themselves to corporations, ultimately can bankrupt unions forced to serve freeloaders. Which is exactly what the right-wingers and corporations want. It’s much easier for corporations to ignore the feeble pleas of individual workers for better pay and safer working conditions than to negotiate with unions that wield the power of concerted action.

Canada is particularly sensitive about America’s right-to-bankrupt laws because they’ve now crept up to the border. Among the handful of states that in recent years joined the right-to-bankrupt gang are Wisconsin and Michigan, both at the doorstep of a highly industrial region in Ontario, Canada.

So now, the governors of Wisconsin and Michigan can whisper in the ears of CEOs, “Come south, and we’ll help you break the unions. Instead of paying union wages, you can take all that money as profit and get yourself even fatter pay packages and bonuses!”

Then those governors will make American workers pay for the move with shocking tax breaks for corporations, like the $3 billion Wisconsin Gov. Scott Walker promised electronics manufacturer Foxconn to locate a factory there. That’s $1 million in tax money for each of the 3,000 jobs that Foxconn said would be the minimum it would create with the $10 billion project.

Right-wing lawmakers like Walker and U.S. CEOs have been union busting for decades. And it’s been successful.  In the heyday of unions in the 1950s and 1960s, nearly 30 percent of all U.S. workers belonged. Wage rates rose as productivity did. And they climbed consistently. Then, one wage-earner could support a middle-class family.

That’s not true anymore. For decades now, as union membership waned, wages stagnated for the middle class and poor, and compensation for CEOs skyrocketed. And this occurred even while productivity rose. By January of 2016, the most recent date for which the statistics are available, union membership had declined to 10.7 percent. The number of workers in unions dropped by nearly a quarter million from the previous year.

This is despite the fact that union workers earn more and are more likely to have pensions and employer-paid health insurance. The median weekly earnings for non-union workers in 2016 was $802. For union members, it was $1,004.

It’s not that labor unions don’t work. It’s that right-wing U.S. politicians are working against them. They pass legislation and regulations that make it hard for unions to represent workers.

It’s very different for unions in Canada. For example, union membership in Canada is growing, not dwindling like in the United States. In Canada, 31.8 percent of workers were represented by union in 2015, up 0.3 percentage points from 2014. That is higher than the all-time peak in the United States.

And it’s because Canadian legislation encourages unionization to counterbalance powerful corporations. In some Canadian provinces, for example, corporations are prohibited from hiring replacements when workers strike; striking workers are permitted to picket the companies that sell to and buy from their employer; labor agreements must contain “successorship” rights requiring a corporation that buys the employer to recognize the union and abide by its labor agreement; and employers must submit to binding arbitration if they fail to come to a first labor agreement with a newly formed union within a specific amount of time.

The second round of negotiations to rewrite NAFTA ended in Mexico this week. The third is scheduled for later this month in Canada. That’s a good opportunity for the northernmost member of the NAFTA triad to showcase its labor laws and explain why they are crucial to defending worker rights and raising wages.

Getting language protecting workers’ union rights into NAFTA is not enough, however. The trade deal must also contain penalties for countries that fail to meet the standards. This could be, for example, border adjustment taxes on exports from recalcitrant countries.

Canada’s nearly 20,000 Royal Canadian Mounted Police only recently filed papers to unionize. That occurred after the Canadian Supreme Court overturned a 1960s era federal law that barred them from organizing.

Canada’s Supreme Court said the law violated the Mounties’ freedom of association, a right guaranteed to Americans in the U.S. Constitution. Now, Canada is riding to the rescue of U.S. and Mexican workers’ freedom of association by demanding the new NAFTA include specific protections for collective bargaining.

Working on Labor Day to Recover from Harvey

Watching helplessly as flood waters rose was not an option for Brandon Parker. This Texas refinery worker and member of the United Steelworkers (USW) union has a jacked-up Suburban and a friend with a boat. There was no way he was going to let family members, neighbors or strangers drown.

Like Brandon, many union members couldn’t sit still through the storm. One drove her high-riding pickup truck two hours to find baby formula for co-workers rescued from their roof with a newborn. Another used his pickup truck to rescue people whose cars got caught in fast-moving water.

These are among the many workers across Texas and across the United States whose sense of community drove them to respond to the crisis created by Hurricane Harvey.

Brandon’s most harrowing rescues occurred on Sunday, Aug. 27, when he joined the citizens armada, the flotilla of boats owned by civilians who drafted themselves to serve as first responders when the catastrophic size of the emergency overwhelmed professionals.

The crew on Brandon’s boat was all union. His longtime friend, Kenneth Yates, a member of Plumbers Local Union 68 in Houston, owned the Bay Stealth craft. Yates’ stepfather, Robert Young, a retired member of the American Federation of Teachers, joined them on the expedition through engulfed Dickinson, Texas.

A home in Dickinson, Texas, on Aug. 27 as seen from Brandon Parker’s rescue boat.

The crew on Brandon’s boat was all union. His longtime friend, Kenneth Yates, a member of Plumbers Local Union 68 in Houston, owned the Bay Stealth craft. Yates’ stepfather, Robert Young, a retired member of the American Federation of Teachers, joined them on the expedition through engulfed Dickinson, Texas.

They launched the boat into deep water on Interstate 45. Bands of storm clouds pelted them with rain, paused, then resumed. The flood water was about six feet deep, not quite over the front door of most homes they passed. The current was strong, making it hard to maneuver the boat.

Kenneth Yates and Robert Young on Yates’ Bay Stealth boat in Dickinson, Texas, on Aug. 27 as they set out to rescue people.

At one point, Brandon saw – just two inches below the water’s surface – an iron fence topped by arrow-shaped finials. He quickly shoved the boat away with an oar, preventing the metal points from puncturing the hull and sinking the craft. They were lucky. They saw rescue boats that were flipped over and one wrapped around a light pole. Ultimately, though, both the hull and propeller of Kenneth Yates’ boat were damaged from striking unseen underwater objects.

They picked up nine people. One family came from a second-story deck. They climbed down the deck’s steps and got into the boat. Another group was on the second story of an apartment building and descended its exterior staircase to the boat.

This was before evacuation was ordered, and Brandon was frightened for the people who chose to remain in their homes. He said he urged everyone he saw to leave while they could but many refused. “Because all the professional resources were being used, it might be hours before they could be rescued in an emergency,” Brandon told me last week.

When it got dark, Brandon, Kenneth and Robert went home. They didn’t have lights on the boat, so it wasn’t safe to continue.

Brandon wasn’t done though. That night, a family in his neighborhood needed to get out of their house after water had risen four feet inside. It was a young boy, a friend of Brandon’s 11-year-old son, and the boy’s uncle. Brandon drove as close as he could to the house, then got a guy in a boat to go in and bring them out to where the car was.

Brandon’s neighborhood in League City, Texas, on Aug. 29.

That is how Brandon started rescuing people – with his car, which would end up with damage to the steering system, differentials and wheel bearings from driving in high water. He first put his car into service Saturday night, Aug. 26. He was headed home from his brother-in-law’s house where he’d watched boxer Floyd Mayweather defeat Conor McGregor. Rain was pouring down and lightning flashing. He saw people walking along the swamped road, drenched.

Some had lost their cars in the rising water. Some had parked, afraid to drive further. Brandon picked up about a dozen in his high-riding, 1990 Suburban and drove them to their homes, most to the neighborhood where his brother-in-law lived.

By Sunday, Aug. 27, the roof of Brandon’s house in League City, Texas, was leaking, and he and his wife and three children had taken in flooded out in-laws. Still, he told his wife that he wanted to go out and help people. “She wasn’t too happy, but she understood that I needed to do that,” Brandon recounted. “I have been in situations where people have helped me. Why wouldn’t I go and help other people?”

That morning, he drove to a neighborhood in hard-hit Dickinson, where nearly every house was flooded. He found hurricane refugees walking through deep water carrying plastic garbage bags of belongings over their heads. This is dangerous because people can step in the wrong place and suddenly slip under water. That’s because there were deep ditches on both sides of the road and floods push manhole covers off.

He piled people into his Suburban and drove them to a bar that was still on dry ground. Other volunteers ferried them to shelters from there.

The 1990 Suburban Brandon Parker used to rescue people.

On Monday, Aug. 28, Brandon drove his truck through high water to get to a donation center in Galveston. He picked up cases of water, food, toiletries and other supplies. He distributed them in his neighborhood because many elderly residents had refused to leave their homes. “I went door to door giving out water and food. A lot of people turned me down. They said they didn’t want to take what others needed.”

The supplies were crucial because even when people with high vehicles like Brandon could get out, they found stores closed and gas stations out of fuel. Brandon continued checking on his neighbors and handing out provisions through Wednesday, when water started receding and he had to go to work at the LyondellBasell refinery in Houston.

Like Brandon, Felicia Weir of Santa Fe, Texas, is a USW refinery worker with a high-riding truck. Even after her home flooded, she drove for hours on Wednesday, backing up constantly to circumvent flood-closed roads, to get baby formula and clothes for a couple who had been plucked from their rooftop with an infant granddaughter and two other young grand kids.

Felicia Weir of Santa Fe, Texas, with supplies to distribute from her union hall.

Marcos Velez, a USW staff member from Pasadena, Texas, drove his pickup truck through flood waters to rescue a refinery worker whose car was inundated by three feet of fast moving water in Baytown, Texas, as he tried to drive to his job before dawn. Then Velez turned around and, despite blinding rain, rescued another dozen people whose cars were bobbing in the fast-rising water in that same neighborhood.

Meanwhile, the Texas AFL-CIO set up a charitable organization, the Texas Workers Relief Fund to aid working families, and local unions from across the country began donating. The National Nurses United Registered Nurse Response Network, an organization of volunteer unionized nurses, deployed its first unit to Houston on Thursday. Three Texas USW local unions handed out food and water to first responders and the public.

These efforts won’t stop when the rain does. This Labor Day, workers from across the country will be volunteering. They’ll be helping victims of Hurricane Harvey recover. And they’ll continue donating their services for months.

Leo W Gerard: No More Trickle-Down Trade Deals

Free trade be damned.

People don’t need any more free trade. They need jobs. And not just any jobs. They need good jobs with living wages and decent benefits.

That’s what negotiators from the United States, Canada and Mexico must prioritize as they begin talks this week to rewrite the reviled and failed North American Free Trade Agreement (NAFTA). Negotiators must focus on improving the lives of people, not boosting the profits of corporations.

NAFTA betrayed the citizens of the United States, Canada and Mexico because it was based on the same servility to the rich that trickle-down economics was. Under trickle-down, the wealthy and corporations got the biggest, fattest tax cuts. Everyone else supposedly was to benefit somehow someday.  A microscopic pinch of the immense monetary gift granted to the high and mighty was supposed to magically appear in everyone else’s pockets. It never did.

And that’s the problem with NAFTA. Its negotiators placed corporations on a pedestal, awarding them rights and privileges that no human, no labor organization, no environmental group got. Again, the wrong-headed idea was that if corporations made big bucks, some of the benefits would trickle down to workers. That never happened.

NAFTA was great for corporations. It provided incentives for them to move to the lowest-wage, lowest-environmental regulation location – that being Mexico. Profits, dividends and CEO pay all rose as corporations like United Technologies uprooted profitable American factories – like its Carrier plant in Indiana – and moved them to Mexico. There, dirt-poor wages and lack of environmental regulation provide even higher profits, dividends and CEO pay.

Workers in none of the three NAFTA signatory countries saw any benefits. Wages in the United Statesand Canada stagnated.  In Mexico, wages are actually lower than before NAFTA. The poverty rate in Mexico is almost exactly the same as it was in the mid-1990s, before NAFTA took effect.

NAFTA ensured there was no wall between the United States and Mexico for corporations to scale. Humans get stopped at the border, but not corporations. United Technologies faced no barriers this year when shipped manufacturing from Indiana to Mexico. It was the same for Rexnord, which closed its ball bearing plant in Indianapolis this year and sent it across the border to Mexico, no problem.

As the United States’ trade deficit with both Canada and Mexico skyrocketed in the 20 years after NAFTA took effect in 1994, the United States lost 881,700 jobs. That figure is three years old, so it does not include United Technologies and Rexnord moving 1,600 Indiana jobs to Mexico. Since NAFTA, more than 60,000 factories closed in the United States.

Clearly part of the lure is wages. While a manufacturer may pay $20 an hour in the United States, it’ll only pay $20 a day in Mexico, where the average manufacturing wage is $2.49 an  hour. Labor organizations there are almost always completely controlled by corporate employers, rather than by the workers. So securing raises is nearly impossible.

And while many formerly American manufacturers moved just across the border to special industrial areas, overall job growth in Mexico was not significant. That is because subsidized corn exported from the United States bankrupted huge numbers of small Mexican farmers and many corporations have moved their factories again, this time from Mexico to even lower-wage China and other south Asian countries.

That’s just great for rich investors and fat cat CEOs. It’s been horrible for workers in Mexico, Canada and the United States. What has trickled down has been toxic – lost jobs, stagnant wages and worry.

The difference in the way NAFTA treats corporations and workers is stark. Corporations get special perks in the main NAFTA document. The rights of workers are dealt with in an addendum. They’re an afterthought.

NAFTA gives corporations an extraordinary privilege. They can sue governments for what they contend are “lost profits” if they don’t like regulations or legislation. They don’t have to present their cases to real judges in open court, either. They get to go before a tribunal of corporate lawyers whose decision cannot be appealed by the governments ordered to pay unlimited billions of tax dollars to the corporations. Corporations can force governments to pay if lawmakers protect citizens by, for example, banning a neurotoxin or limiting sale of dangerous products.

There’s no counterpart for workers. NAFTA provides no way for the Carrier workers laid off in Indianapolis by United Technologies to sue. The workers can’t ask three hand-picked worker-jurists in a secret court for income lost because the corporation moved to Mexico to make even bigger profits on the backs of underpaid workers there. There’s no way for Mexican workers to sue when a corporation endangers worker health with pollution or when a company-controlled labor organization pushes down wages.

In fact, NAFTA’s labor addendum bows to corporations before even mentioning workers. The addendum’s preamble says the NAFTA signatories resolved to expand markets for goods and services and to enhance corporate competitiveness globally. Then, after that, the preamble says a goal is to create new jobs, improve working conditions and living standards, and protect “basic” workers’ rights.

Leo W Gerard: Workers Need Better Trade Deals, Not More Talk

President Donald Trump, author of “The Art of the Deal,” said this week that China is giving American workers and companies a crummy one. He promised to do something about it.

This occurred within days of his Commerce Secretary, Wilbur Ross, demanding “fair, free and reciprocal” trade in an op-ed in the Wall Street Journal.

At the same time, Congressional Democrats offered a seven-point plan to give workers what they called “A Better Deal on Trade and Jobs.”

American workers want all of these proposals achieved. They’ve heard this stuff before and supported it then.  That includes ending tax breaks for corporations that offshore jobs – something that never happened. It includes the promise to confront China over its steel and aluminum overcapacity – a pledge followed by delay. Talk is cheap. Jobs are not. The factory anchoring a community’s tax base is not. America’s industrial strength in times of uncertainty is not. All the talk is useless unless workers get some action.

President Trump is expected to announce within days the launch of an investigation into China forcing American corporations to transfer technology to the Asian giant’s companies as a price of doing business there. The technology transfer boosts China’s goal of becoming the leading manufacturer within a decade in high-tech areas such as semiconductors, robots, and artificial intelligence. In addition to seizing American research and know-how, Beijing advantages its technology companies by granting them government cash.

This is the kind of unfair competition that Secretary Ross talks about in his Wall Street Journal op-ed.Under so-called free trade rules, governments aren’t supposed to subsidize industry or demand that foreign investors fork over research.

These kinds of violations, not just with China but with other trading partners as well, have occurred for decades now. And the upshot for American workers is lost jobs and stagnant wages.

More than 5 million American manufacturing jobs disappeared between 1997 and 2014. Most of these vanished, according to the Economic Policy Institute (EPI), because of growing U.S. trade deficits with countries like Mexico and China that had negotiated trade and investment deals with the United States.

The United States’ massive trade deficit with China alone accounted for 3.4 million jobs lost between 2001 and 2015, with 2.6 million of those in manufacturing, according to EPI research.

While offshoring manufacturing has often padded corporate profits, it has suppressed wages in the United States and in trading partner countries like Mexico. United Technologies (UT) is a good example.

UT moved to Mexico this year its Electronic Controls unit, which manufactures microprocessors for heating, ventilation and air conditioning (HVAC) equipment. UT did this even though its 700 American workers had produced consistent profits for UT at a factory in Huntington, Ind. UT also moved a big chunk of its profitable Carrier HVAC manufacturing from Indianapolis to Mexico this year. UT’s stock price rose, so the already-rich who have cash to invest, made out.

They did it on the backs of workers in the United States and Mexico, however. The move to Mexico rendered jobless more than 1,000 skilled American workers. Studies show that if they’re lucky enough to land new employment, the pay will be substantially less.

Mexican workers gained the jobs, but the pay they’re getting is little better than before NAFTA. More than half of Mexicans still live below the poverty line, a figure no different than before NAFTA. The New York Times cited this case: “For 10 years, Jorge Augustín Martínez has driven a forklift for Prolec, a joint venture with General Electric that makes transformers. A father of two, he earns about $100 for a six-day workweek.”

Mexican wages have remained stagnant for a decade.

In the United States, wages have been flat for longer – several decades.

This as corporate profits rise, the stock market skyrockets and CEO pay surges limitlessly.

Trade deals worked great for the already-rich, CEOs and corporations. They’ve crushed workers.

So it’s encouraging that both President Trump and the Democrats are talking about solutions.

The president is right. American corporations shouldn’t have to transfer technology to China to operate there. The United States doesn’t require that of Chinese companies manufacturing here. No such demand was made of Foxconn when it agreed to build a $10 billion factory in Wisconsin last week – though it is true that Wisconsin Republicans plan to force the state’s taxpayers to contribute $3 billion toward the plant, nearly a third of the total cost.

And the Democrats are right about every point in their “Better Deal” plan. Workers need an independent trade cop they can turn to for quick results to combat trade violations before they cost Americans jobs. Corporations like UT and Rexnord should be penalized when they offshore and when they seek government contracts. Corporations that restore jobs to the United States should be rewarded.

So do it. And don’t procrastinate like the administration is doing on its investigation of the national security threat posed to the United States by steel and aluminum overproduction in China. The report in that case originally promised for June 30 now has been indefinitely delayed. Each day’s wait means more American workers without jobs as illegally subsidized, grossly underpriced Chinese steel and aluminum floods the international market.

America’s highly skilled, dedicated steel and aluminum workers perform their jobs faithfully every day with the expectation that their government will enforce international trade regulations. They also expect their government to support their right to join together and collectively bargain for better wages and benefits. As right-wingers have eroded workers’ bargaining rights over the past half century, unions have declined, and with them, workers’ ability to secure raises. This is true in Mexico too, where there are virtually no legitimate, worker-run unions.

Timothy A. Wise, a research fellow at Tufts University, put it this way to the New York Times: “Mexico is seeing exactly the same phenomenon as in the United States. Workers have declining bargaining power on both sides of the border.”

To ensure there are no more crummy trade deals, workers must be at the table when these pacts are negotiated. To get better wages, workers in all the countries involved in these deals – from China to Mexico to the United States – must be able to form real, worker-controlled labor organizations to bargain with corporations.

Leo W Gerard: Don’t Dawdle on Economic and National Security

The future of the American steel and aluminum industries is not a matter for dithering.

Steel worker takes a sample from oven

Each mill and smelter that remains operating is too vital. Each is too crucial to the economic viability of a corporation, a community, and thousands of workers and their families. Each also is too essential to national security, which relies on American-produced metals for critical infrastructure, from bridge construction to the electrical grid, and for munitions, from fighter jets to bullet-proof vests.

There is no more time for waiting. International trade law must be enforced now. Throughout his campaign, Donald Trump pledged his support to workers and these industries. And he followed through by launching within three months of taking office as president special investigations into the effects of steel and aluminum imports on national security. Such inquiries may take as long as a year to conclude, but the administration expedited the process. Until it didn’t. Now steel and aluminum corporations, their communities and their workers are being told to wait. It’s a delay that could kill more American mills and smelters.

The nation lost nine aluminum smelters over the past six years, leaving only five in the entire country, and most of them are now operating at reduced levels. Beginning in January 2015, steel companies laid off 14,000 workers as they closed mills and sections of mills. For example, Allegheny Technologies shuttered a plant that made grain oriented electrical steel in 2016, leaving only one U.S. company, AK Steel, now producing this component critical to electricity transmission.

As mills and smelters disappear, the military is further restricted in its ability to secure domestically produced essential metals in time of crisis.

The primary culprit in this scary scenario is overcapacity and overproduction in China, which overwhelms the world market with illegally subsidized, grossly underpriced aluminum and steel.

China has promised repeatedly to solve this problem. On Thursday it pledged again, this time contending it wanted to work globally to deal with the issue of aluminum overcapacity – a problem Beijing created. Over the past six years, using massive government subsidies, China quickly ramped up capacity to become the largest aluminum producer in the world.

China can’t be trusted on this because it never keeps its promises. It has never cut its steelmaking capacity after announcing again and again that it would. In negotiations last week, Trump cabinet members could not even get a specific commitment out of China to do it. There’s no evidence China will stop overproducing steel or aluminum now. Waiting is useless. And destructive to American manufacturing.

The American steel and aluminum industries have fought back, filing and winning dozens of trade cases against imports of specific products. But the resulting tariffs and other penalties imposed by the U.S. Commerce Department and U.S. International Trade Commission (ITC) didn’t solve the problem. Instead of paying U.S. tariffs, China shipped its government-supported excess of these products to other countries, artificially suppressing world prices and warping what is supposed to be a free market.

Also, this traditional process for seeking relief from unfair trade takes too long. More than a year may elapse before companies and workers get a final decision. And that will be for just one product, like aluminum extrusions, aluminum foil, welded stainless steel pressure pipe or corrosion-resistant steel, to name a tiny number of cases from recent years.

That’s part of what made the special investigations into steel and aluminum imports so attractive. If the U.S. Commerce Department determined under Section 232 of the Trade Expansion Act of 1962 that imports of steel and aluminum jeopardized national security, then the president could impose penalties broadly to ensure the country could meet its own needs. The effort might also spur allies to join the United States in finally pressuring China sufficiently to actually reduce capacity.

Although Section 232 allows for nine months of investigation, after which the President would have three months to determine a remedy, the administration promised quick action when it announced the inquiries in April. The steel report was to be completed by June 30, with a speedy decision by the president after that.

That suggested the administration understood this was urgent.

But June 30 came and went. Now there’s an official delay. The administration told the Wall Street Journal that the steel investigation is on hold until after health care reform, tax changes and infrastructure spending are accomplished.  “We don’t want to do it at this moment,” the president said Tuesday of the steel case.

That’s devastating. Especially because steel imports have jumped 22 percent since Jan. 1, placing additional pressure on the American industry.

The delay occurs as efforts are made by a new company to reopen at least one potline at an aluminum smelter in New Madrid, Mo., that the now-bankrupt Noranda company idled last year. Postponing the Section 232 decision makes for uncertainty for these investors.

It also occurs as a Chinese company is trying to buy Aleris, an Ohio-based manufacturer that supplies aluminum for use in vital infrastructure and military applications. That Asian firm, China Zhongwang, is accused of dodging tariffs and is under civil and criminal investigation for possible smuggling, conspiracy and wire fraud by the Justice Department, Department of Homeland Security and Commerce Department.

Maybe the Aleris smelters would keep operating if China Zhongwang bought them, but at what risk to national security?

The delay occurs as companies that buy steel fear monger that tariffs or quotas would raise prices.

An expert, Stephen Koplan, chairman of the U.S. ITC under Presidents Bill Clinton and George W. Bush, says that’s hogwash. “Predictions of disaster were wrong 15 years ago when I chaired the ITC, and they are wrong again today,” he wrote in an op-ed in The Hill newspaper this week.

When President George W. Bush imposed tariffs and quotas on steel imports under Section 201 of the Trade Act of 1974, there was no price shock afterward, according to a study by the nonpartisan U.S. ITC.  Here is what Koplan, who also served as an attorney at the Small Business Administration, wrote:

“Downstream industries were not devastated by higher steel prices. Nor was the U.S. economy thrown into depression. The U.S. steel industry, however, earned a much-needed relief as the result of action taken by the president that allowed it to restructure and reinvest for the long term. In other words, the Section 201 measures worked as intended.

“We are facing similar challenges again today. . .Now, however, U.S. national security is at great risk if firm action is not taken immediately. The U.S. primary aluminum industry is on the verge of disappearing entirely, and the U.S. steel industry is not far behind.”

AK Steel Corp. CEO Roger Newport agreed with Koplan’s assessment that this is not a time for dawdling, telling the Commerce Department in his testimony on the steel case:

“High-end electrical steel is an incredibly difficult product to manufacture, as it requires a significant amount of dedicated, capital equipment and a sophisticated, well-trained workforce. Therefore, if AK Steel were to exit the market, there would be no operational electrical steel manufacturing equipment in the United States, the specialized labor and related expertise in operations would be lost, and many of AK Steel’s talented operators and researchers would either relocate to other businesses, industries and/or foreign countries, or become unemployed.”

Workers’ and companies’ economic security is at risk. The nation’s security is at risk. Resolution of these cases should be speeded, not delayed.

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