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Leo W Gerard: Trump’s Infrastructure Con

The administration’s infrastructure proposal, released this week, is a shift from Donald Trump’s campaign pledges, a shirk of the fundingburden, and a stop to government construction projects serving the public good.

Candidate Trump boasted that he would double what his opponent Hillary Clinton said she’d spend on infrastructure. But the scheme released by the Trump administration this week not only fails to do that, it would rob vital and cherished social safety net programs to pay for a pittance of improvements.

It is nothing but a con.

During the campaign, in August 2016, candidate Trump said his infrastructure plan would be bigger and better than his opponent’s. “I would say at least double her numbers, and you’re going to really need a lot more than that,” Trump said in an interview on the Fox Business Network.

Clinton said she would increase federal spending on infrastructure by $275 billion. The Trump administration this week proposed $200 billion in federal spending on the likes of roads, bridges, water systems and airports over the next decade.

That’s $75 billion less than Clinton. And, Clinton said hers would be in addition to current spending. Trump slashes traditional infrastructure spending in his budget. He snatches $178 billion over a decade from existing transportation programs. The Center for American Progress calculated that altogether the Trump budget cuts $281 billion from traditional infrastructure programs over the decade.

That means the administration actually intends to spend $81 billion less on infrastructure than would otherwise be allocated. That’s not bigger and better. It’s smaller and worse.

Administration apologists contend that Trump’s 200 billion in federal infrastructure dollars will be matched by $1.3 trillion in private, state and local investment, for a grand total of $1.5 trillion. This would shift the burden from the feds to state and local governments and private investors.

The time-honored deal was 80 percent federal dollars matched by 20 percent local. The infrastructure con would flip that, forcing state and local governments to pony up 80 percent of the cost to win 20 percent from the feds.

This comes after Republicans passed a tax break for the rich and corporations that eliminates the deduction citizens previously received for their state and local taxes. That makes it harder for states and cities to raise taxes to pay for infrastructure.

In addition, it’s not like states and cities are swimming in cash. In many, state lawmakers quarrel for months over what to cut. In some, politicians who slashed essential programs like education faced citizen backlash.

This responsibility dodge was explained last month to the U.S. Conference of Mayors by D.J. Gribbin, Trump’s special assistant for infrastructure. He said, “What we really want to do is provide opportunities for state and local governments to receive federal funding when they’re doing what’s politically hard, and increasing investment in infrastructure.”

Of course, federal officials are ducking what’s politically hard by failing to increase investment in infrastructure. Instead, they’re telling mayors and governors to do it.

The American Society of Civil Engineers (ASCE) says that investment should be $4.59 trillion by 2025. Even if this con job managed to rustle up every cent of the demanded $1.3 trillion matching investment, the total would be $3 trillion less than the amount that the ASCE calculates is necessary to avert serious economic consequences, including $3.9 trillion in losses to GDP and 2.5 million lost jobs.

Not all of the matching money would have to come from cities and states under the infrastructure scam. Some of it could come from private investors who would then own what were once public assets, like airports.

This is a shift from federal investment for the public good to corporate investment for private profit.

For 200 years, economic development, national defense and public health have been the pillars supporting federal investment in infrastructure, not profit.

Under this new plan, the ability of a city or state to provide its own money or garner private investment accounts for 70 percent of the proposed formula for selecting projects. So, it’s not how important the construction would be to public health, like improving the Flint, Mich., water system or how crucial it would be to economic development in struggling states like West Virginia or whether the proposal would assist in transporting heavy military hardware.

No, the new criteria would be whether Wall Street would make sufficient return on investment. This infrastructure program would provide a path to filling corporate coffers with more billions to top off those that the GOP granted businesses and the wealthy in the recently passed Republican tax plan. Without that $1.4 trillion in tax handouts, the federal government could properly pay for infrastructure repairs.

Sadly, this proposal is an abandonment of Trump’s campaign pledge to honor the enduring covenant between the U.S. government and the American people. The covenant began in 1935 with the initiation of Social Security and expanded over the decades with the launch of Medicare and Medicaid.

It was an agreement that if Americans pay into the system their entire working lives, the government will ensure they won’t face destitution in their dotage, and that in the richest country in the world, the most vulnerable citizens will not be rendered homeless, hungry and terminally ill for lack of medical care.

The budget proposal that accompanied the infrastructure plan calls for $1.8 trillion in cuts to Medicaid, Medicare, the SNAP benefit that feeds impoverished pregnant women and infants, and other programsthat Americans consider sacred.

Trump himself told the Wall Street Journal in January that he intended to take money from such programs to pay for the $200 billion in infrastructure spending.

Candidate Trump also told workers in Monessen, Pa., in June of 2016, “A Trump administration will also ensure that we start using American steel for American infrastructure . . . It will be American steel that will fortify America’s crumbling bridges . . . It will be American steel that rebuilds our inner cities . . .We are going to put American-produced steel back into the backbone of our country.”

But the administration’s proposal sidesteps that pledge, neglecting to close gaping loopholes in existing made-in-America requirements for federally-financed projects while at the same time specifically opening more yawning exemptions.

That doesn’t Make America Great Again. It Makes China Great Again.

The introduction to the infrastructure proposal says this: “Our nation’s infrastructure is in an unacceptable state of disrepair, which damages our country’s competitiveness and our citizens’ quality of life. For too long, lawmakers have invested in infrastructure inefficiently, ignored critical needs, and allowed it to deteriorate. As a result, the United States has fallen further and further behind other countries. It is time to give Americans the working, modern infrastructure they deserve.”

All of that is true. Unfortunately, the scam that follows that preface utterly fails to give Americans the working, modern infrastructure they deserve.

Leo W Gerard: America Needs Cops On The Trade Beat

The Trump Administration placed tariffs on imported washing machines and solar cells this week, provoking wailing and gnashing of teeth worldwide.

The same over-the-top beating of breasts can be expected if the administration penalizes steel and aluminum imported from countries that violate trade regulations.

Every time the United States enforces trade law, the recrimination starts. America, the free traders say, has no right to shield its domestic manufacturing from the onslaught of unfairly traded imports. There should be no cops on the trade beat, free traders say. It should be the Wild West when it comes to international trade, with the last factory standing the winner, no matter how many trade rules it defied to get there.

American manufacturers – including those that make steel, aluminum, solar panels and washing machines – can compete and win against any challenger in the world when the contest is fair, when all firms that export follow trade rules. But American manufacturers lose when foreign producers export underpriced products after receiving loans that don’t have to be paid back, government-subsidized raw materials and other massive state aid.

American manufacturers shouldn’t be patsies in a rigged game. That’s why they are demanding trade law enforcement. They’re not seeking protectionism, which is shielding domestic manufacturing from fairly traded imports. Instead, they want prosecution, which is punishing trade violators whose cheating destroys American manufacturing and jobs.

China, probably the most flagrant trade rule violator in the world, was among the first to cry “protectionism” after the Trump administration announced the washing machine and solar panel tariffs on Monday. Chinese president Xi Jinping’s chief economic advisor, Liu He, said at Davos this week that his country stood against protectionism and for globalism.

Sure, China wants globalism after its trade violations have destroyed every other country’s industrial base, leaving the Asian giant standing as the only producer globally.

And it’s close to achieving that in the manufacture of solar cells and panels after more than a decade of trade violations. China issued a renewable energy law in 2005 including measures to promote solar manufacturing. Then in 2010, the China State Council listed renewable energy as one of seven industries eligible for special government incentives and loans.

Before China began giving solar manufacturers special perks in 2005, its share of global production was 7 percent. Now, it makes 60 percent of the world’s solar cells and 71 percent of solar modules.

In 2011 the U.S. Commerce Department determined that China was improperly subsidizing its solar producers and that they were selling panels and cells in the United States for less than fair market value, both of which violate trade rules.

As a result, the United States imposed penalties on the imports. Chinese manufacturers ducked the tariffsby moving production to Taiwan.  When American producers asked the Commerce Department in 2013 to deal with this dodge, Chinese companies moved production again.

The Commerce Department concluded that from 2012 to 2016 imports of Chinese solar cells and panels grew 500 percent and the price declined 60 percent, bankrupting and driving out of business American producers. Between 2012 and 2017 – a period of just five years – 25 American solar manufacturers closed. And now, another has shut down and declared bankruptcy.

Last May, two U.S. solar companies asked the U.S. International Trade Commission (ITC) to investigate. The ITC recommended tariffs even higher than those that the president ultimately imposed this week. They penalties are worldwide this time, preventing Chinese companies from evading them by shifting production again.

This kind of trade law flouting by China is exactly what is ravaging the American aluminum and steel industries.

Twenty years ago, there were 23 aluminum smelters in the U.S. Now there are five.

Similarly, in the steel industry, thousands of good, family-supporting U.S. jobs were lost and mills and parts of mills closed as China ramped up production, flooded the world market and drove down prices. Between 2000 and 2014, Chinese steel production rose 540 percent. U.S. production, a mere fraction of the Asian giant’s, fell 13 percent.

As with solar, China put government money into its aluminum and steel industries, improperly tipping the trade scales in its favor. And as with solar, when U.S. aluminum and steel companies won trade cases, some Chinese producers moved or falsely marked products as made elsewhere to skirt American tariffs. The European Union’s anti-fraud office determined the same thing – that Chinese steel was shipped through Vietnam and given fake certificates of origin to evade EU tariffs.

At just about the same time the solar and washing machine trade cases were filed last year, the Trump administration announced it would investigate whether the damaging effects of unfairly traded steel and aluminum were threatening national security. If so, the administration could impose import quotas and tariffs. Initially, Commerce Secretary Wilbur Ross said these investigations, under Section 232 of the Trade Expansion Act of 1962, would be completed by June 30, 2017.

Integral to every jet, submarine and military weapon, steel and aluminum are vital for defense. Infrastructure is part of national defense as well, from interstate highways to pipelines. The inability to produce these metals in sufficient quantities and qualities domestically jeopardizes national security.

The Commerce Department report was delayed for months, during which time foreign producers flooded as much steel and aluminum as they could into the United States before the anticipated tariffs. Steel imports rose almost 20 percent. Aluminum and bauxite imports rose nearly 32 percent.

The Commerce Department finally delivered the steel report on Jan. 11 and the aluminum report on Jan. 19. Neither was made public, and the administration can, under the terms of the law, wait another 90 days to act. White House Deputy Press Secretary Lindsay Waters said the administration would announce its decision at an appropriate time.

That time is now. It is great that the administration punished the trade-violating exporters of solar products and washing machines. The American steel and aluminum industries and workers want that same enforcement immediately from the nation’s top trade cop.

Leo W Gerard: CEO Tax Con

By Ivan Bandura/Flickr

Apple CEO Tim Cook announced this week that the company would repatriate $252 billion, give or take a few billion, then invest in America and create some American jobs – for a change.

This is a result of the massive tax cut Congressional Republicans awarded corporations like Apple that were hoarding trillions in profits overseas.

Corporate lobbyists told Congress to lower the tax rate on those overseas caches or companies like Apple wouldn’t pay a cent of the taxes they owed on those profits. Congress complied. That is highly productive corporate extortion.

As a result, Apple’s announcement that it would invest some of the repatriated profits in U.S. operations is tainted. Also sullied are the brags by other corporations that they’ll use small parts of their annual tax savings to pay workers one-time bonuses and tiny wage increases – only to turn around and lay off thousands of workers.

The corporate extortion and maltreatment of workers defy the advice that BlackRock CEO Laurence D. Fink offered the CEOs of the world’s largest companies in a letter delivered Jan. 16. Fink’s words carry some weight since his firm is the largest investor in the world with more than $6 trillion. The letter described as flawed the CEO-favored philosophy of shareholder capitalism, under which corporations shirk responsibility to everyone but shareholders.

Fink said stakeholder capitalism, under which corporations are accountable to employees, customers and communities, as well as shareholders, is a more effective long-term strategy. “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society,”  

But CEOs at the likes of Apple, AT&T and AFLAC don’t want to hear that. These executives want their corporations to be considered people for the legal perks. But they don’t want their firms to assume humans’ citizenship obligations. These CEOs are trying to make Americans think corporations should get good citizenship awards because a handful of the nation’s 30 million employers are paying bonuses to workers from the gargantuan tax savings Congress gave them.

But it’s a con. The bonuses are fine, but they’re one-time events and trivial compared to the bountiful and permanent tax breaks corporations reaped from their years of lobbying Republicans.

In addition, the President’s Council of Economic Advisors said that slashing the corporate tax rate would boost the average American’s wages between $4,000 and $9,000 a year. A one-time bonus of $1,000 doesn’t get close to that.

Apple, for example, held $252 billion in profits off shore, refusing for years to pay the 35 percent corporate tax rate that would be required to return it to the United States. Now, however, Republicans in Congress have slashed the rate corporations will have to pay on overseas profits to 15 percent. Republicans also cut the rate that corporations must pay on U.S. profits to 21 percent, giving firms like Apple that moved work offshore a better deal than corporations that remained exclusively American.

It means Apple will pay only $38 billion in taxes on its overseas profits and get to keep $43 billion that it otherwise would have owed the federal government. For actual-human American citizens, as opposed to corporate-humans like Apple, that means the federal government will have $43 billion less for important services like the Children’s Health Insurance Program, opioid addiction treatment, federal school funding for special-needs children, adoption services for foster kids and workplace safety inspections.

Cook tried to sound like a Boy Scout in a statement about bringing the money home: “We have a deep sense of responsibility to give back to our country and the people who help make our success possible.” But if the corporation really had a deep sense of responsibility to the United States, it would have paid the taxes it owed and not moved all of its manufacturing off shore.

But, hey, Apple will invest its ill-gotten gains in the United States, right? Well, maybe not so much.

Apple, which had more money stashed overseas than any other American corporation, projected that its direct impact on the U.S. economy over the next five years would be more than $350 billion, but the New York Times determined, based on Apple’s past spending and projections, that its investment would be only about $37 billion more than what Apple would be expected to spend over that time in the United States. That’s good. But it’s not $350 billion in new dollars. It’s a con.

Apple says its investment will include a new headquarters and 20,000 new hires. And that’s great too. But it pales before Amazon, which had 10 percent of what Apple did overseas.  Long before any tax break, Amazon’s CEO Jeff Bezos promised a second headquarters and 50,000 new high-paid positions.

BlackRock CEO Fink told Apple’s Cook and other large company CEOs this week that they have a duty to explain to investors and shareholders what they will do with the extra cash that the Republican tax break will afford them and how they’ll use it to create long-term value.

Fink, whose investment firm is looking for sustainable, enduring growth, not illusory, short-term profits, warned, “Without a sense of purpose, no company, either public or private, can achieve its full potential. It will ultimately lose the license to operate from key stakeholders. It will succumb to short-term pressures to distribute earnings, and, in the process, sacrifice investments in employee development, innovation, and capital expenditures that are necessary for long-term growth.”

But the vast majority of executives who announced they’d share the bounty of the Republican tax breaks with their employees didn’t explain how they’d spend their windfalls or offer workers long-term value.

The conservative group Americans for Tax Reform, which supported tax breaks for the rich and corporations, compiled a list of about 125 companies that announced their workers would benefit this year from some portion of the corporate tax break.

The overwhelming majority of these are one-time bonuses. It’s true that the average worker will appreciate an extra $200 to $1,000. But none of the companies promised that $1,000 would arrive in workers’ paychecks every year, even though corporations will enjoy the tax breaks every year.

Some firms, mostly banks, said they would increase the wages of their lowest-paid workers to $15 an hour. That bank workers, responsible for the correct calculation of savings and withdraws and for safekeeping depositors’ life savings, are making starvation wages of less than $15 an hour, is frightening.

In addition, the list of financial institutions includes big ones like Wells Fargo, Capital One and PNC Financial, all of which pay their CEOs more than $12 million a year, raising the question of why those fat cats made sure they got the big bucks but never got around to paying the workers who handle the money a living wage.

Other big names that have announced one-time bonuses or pathetic wage increases are Walmart, AT&T, Comcast, Boeing and AFLAC. Again, it’s great any time additional money finds its way into the pockets of those whose labor creates corporate profits. But all of these companies were involved in a massive public relations con.

Comcast and AT&T announced $1,000 bonuses, then laid off workers. Comcast dumped 500 and AT&T dumped thousands.

Walmart pulled the same trick. It boasted of bonuses ranging from $200 to $1,000 and raises for its lowest-paid workers to $11 an hour. That’s still not a living wage and was done only to keep up with Target, which announced in September a base wage of $11. And Walmart topped it off with layoffs. About 11,000 former Walmart workers won’t be around to get those raises.

AFLAC said it would place a one-time contribution of $500 in workers’ 401(k) accounts amid allegations in lawsuits that it lied to applicants about the pay they would receive and failed to give workers commissions they had earned.

Boeing got in on the good publicity by saying it would spend $300 billion on workers, but its workers will see no new money. Instead of raises or bonuses, Boeing will spend the money on worker training, upgrading its factories and matching workers’ donations to charities – for which, of course, it can claim another tax break.

Clearly, none of these con men CEOs actually care about their workers. Maybe, however, they will care about what activist investor BlackRock thinks. And its CEO has made it clear he believes good corporate governance takes into consideration worker, community and environmental needs.

(Leo W Gerard) Offshorers Demand: No Taxes, No Risk

Ford is moving its electric vehicle factory to Mexico. PHOTO BY MIKE MOZART/FLICKR

Ford hit Michigan and its auto workers with some crappy holiday news. Instead of building a $700 million electric vehicle factory in Michigan as promised in January, Ford will construct the plant in Mexico.

Ford reneged on its promise to Michigan workers just days after the Senate passed a tax plan intended to end levies on corporate profits made at factories offshore – in places like Mexico. News of the letdown also arrived just days before new negotiations on a revised North American Free Trade Agreement (NAFTA) are to begin in Washington, D.C.

Ford and other giant corporations got what they wanted out of Republicans on taxes, dramatically lower levies on domestic profits and total elimination on foreign profits. That makes Mexico an even more attractive manufacturing site for them than NAFTA did. So now they’re lobbying the Trump administration hard to retain the privileges that NAFTA bestowed on them. If they win that argument, they’ll have secured double incentives to offshore.

Trump administration officials don’t sound like they’re buying the corporate line, however. And they shouldn’t. NAFTA has cost Americans nearly a million jobs as thousands of factories migrated to Mexico. As he campaigned, President Trump promised untold numbers of factory workers and their families across the nation’s industrial belt that he would fix or end NAFTA to keep jobs and industry in America. He needs to keep that promise.

That means elimination of the Investor State Dispute Settlement (ISDS) scam that allows corporations to sue governments in secret courts presided over by corporate lawyers when legislatures pass laws corporations don’t like. That means standing strong on the Trump administration demands that the new pact expire in five years if it’s not working and that a substantial portion of automobiles – including Fords – be made in the USA to attain duty-free status. It means strong protection for workers’ right to organize and collectively bargain. It means substantially raising the Mexican minimum wage, which now stands at $4.70. That’s for a day, not an hour.

What it really means is prioritizing the needs of workers over the demands of corporations, something that was not done the first time around by NAFTA negotiators. As it stands now, NAFTA places all of the jeopardy on the shoulders of workers and communities while substantially eliminating normal business risks for corporations.

The jeopardy NAFTA created for workers is that its corporate-friendly provisions prompt employers to close American factories that sustain both workers and communities and move them to Mexico. This exodus of American manufacturing to Mexico has continued apace this year, even as the Trump administration began renegotiating NAFTA, probably because corporations assume they’ll get everything they want in the end. They have, after all, always done so in the past because they are, after all, massive political campaign donors and lobby firm patrons, while hourly workers are not.

Bloomberg reported in October, for example, that firms whose function it is to help corporations move factories from the United States to Mexico had a boom year in 2017, with one reporting it had done more offshoring this year than in any during the previous three decades.

Mexico is alluring because of its dirt-cheap wage rates, the paucity of environmental enforcement and the ISDS scam that lets corporations sue the government if Mexico would regulate in a way some CEO claims would crimp his profits.

The ISDS along with NAFTA’s unlimited lifespan reduce risk for corporations. Normal business decisions in capitalist systems involve some jeopardy. A chemical company could, for example, invest in developing a new pesticide, but then lose when the government bans the product after determining it kills babies as well as bugs.

NAFTA provides corporations with investment protection because it ensures they’ll get their profits even if a government changes regulations. ISDS enables corporations to sue to recoup money the corporations supposedly would have made if the government hadn’t issued new laws or regulations. The corporate-run court can order a country’s citizens to pay tens of millions to the corporation.

Some say this government-financed investment insurance corrupts capitalism. Among the significant people who have is U.S. Trade Representative Robert Lighthizer. He said corporations are insisting the government absolve CEOs of political risk. CEOs are using ISDS as a guarantee rather than buying risk insurance or factoring political risk into economic decisions about whether to move.

Lighthizer said businessmen have literally told him the administration cannot change ISDS because corporations wouldn’t have invested in Mexico without it. “I’m thinking,” he said, “‘Well, then, why is it a good policy of the United States government to encourage investment in Mexico?’”

These are the same corporate honchos who object to a five-year sunset clause for a new NAFTA, he said. They want a free eternal warranty on the provisions of a deal they describe as the world’s greatest. Lighthizer’s response is that if the deal is so great, why would the government choose to end it after five years? What are they really worried about?

The worry may be that those CEOs know NAFTA is great for their bottom line but not for the workers who elected Donald Trump President.

They know NAFTA was drafted by CEOs for CEOs. Its priorities were determined by corporate bigwigs behind doors closed to the public. Corporations designed it at the expense of workers and ordinary citizens, Joseph Stiglitz, the Nobel Prize winning economist, said in an op-ed in the Guardian newspaper this week.

It often seems, he wrote, “that workers, who have seen their wages fall and jobs disappear, are just collateral damage – innocent but unavoidable victims in the inexorable march of economic progress. But there is another interpretation of what has happened: one of the objectives of globalization was to weaken workers’ bargaining power. What corporations wanted was cheaper labor, however they could get it.”

U.S. corporations like Ford got it by writing a trade deal that gave them market-distorting profit protections, then abandoning their dedicated American workers and moving to Mexico where they could pay $4.70 a day and pollute unfettered.

President Trump has threatened to withdraw from NAFTA if his negotiators can’t get new reasonable terms that protect American manufacturing and American workers.

That is right. It’s appropriate that corporations like Ford sustain the actual risk of offshoring rather than workers bearing it all.

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: 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.

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.

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