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Obama’s War on Labor April 6, 2009

Posted by rogerhollander in Barack Obama, Economic Crisis, Labor.
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Stephen Lendman

www.opednews.com, April 6, 2009

Voters expecting change keep getting rude reminders of what kind, none they can believe in reiterated again on March 30 in Obama’s remarks to the auto giants. While stating “We cannot….must not (and) will not let (this) industry vanish,” he laid down a clear marker. Labor, not business, is targeted. More on that below.

“We (won’t) excuse poor decisions,” he said. “We cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars.” In rejecting their aid request, he added: “These companies – and this industry – must ultimately stand on their own, not as wards of the state….What we are asking is difficult. It will require hard choices by the companies. (Their plan doesn’t go) far enough to warrant the substantial new investments these companies are requesting.”

Imagine the hypocrisy – open-checkbook trillions for Wall Street criminals v. a thinly disguised war on organized labor by scolding the auto giants for not forcing their workers to make greater sacrifices.

They’re needed, said Obama. Their “best chance for success” is a “surgical” bankruptcy lasting for as little as 30 days – meaning workers will lose everything while CEOs get seven-figure compensation for betraying them.

A March 31 New York Times Michael de la Merced/Johathan Glater article suggested that Washington may seek a “controlled” bankruptcy – somewhere between “prepackaged (and) court chaos by persuading creditors to agree” to divide GM in two pieces, sort of like a good and bad bank to create a healthier company, free of its troubled assets and liabilities.

Under the plan, GM would declare a prearranged bankruptcy. Then, the bankruptcy code’s Section 363 would authorize selling off desirable assets to a new government-financed company. Details are being discussed so it looks like a done deal, either prepackaged or through a bankruptcy court, either way very worker-adverse with UAW bosses pressured to go along, take it or leave it.

The administration also decided Chrysler can’t survive alone. It was given 30 days to ally with Fiat SpA or with another automaker if that fails, even though such a deal may combine two dogs into a bigger one with even greater problems than going it on their own.

Obama drew a line in the sand for “workers who have already made painful concessions to make even more” through additional restructuring sacrifices, including:

– permanent job losses;

– lower wages;

– gutted work rules, including health and safety protection on the job;

– forfeited security through lost benefits and pensions, including for retirees, on top of everything given up in fall 2007 negotiations when the UAW leadership surrendered to management, then muscled the rank and file to go along; and

– more sacrifices the Bush $25 billion bailout demanded, unreported in the mainstream: banned GM and Chrysler strikes, meaning effectively on the big three; more wage and benefits cuts; ending the UAW’s “jobs bank” that provided help to furloughed workers and more.

It’s a dark age for US auto workers and a prelude for what’s coming – compared to earlier times when they earned substantial wages, got cost of living and productivity increases, and had impressive benefits, including medical coverage with defined extras, employer-funded pensions, improved safety and health benefits, paid vacations, and supplemental unemployment insurance guaranteeing up to 95% of pay if laid off.

Replacing them was a two-tiered wage and benefit package with new skilled hires getting little more half the previous arrangement and for a new non-core category even less.

Much more was lost as well:

– plant closures resulting in permanent job losses; for GM alone it meant 85% fewer production jobs than in 1990 over a period when high-paying manufacturing ones disappeared, offshored, or were replaced by machines;

– for new hires, an ill-conceived 401k arrangement replacing employer-paid pensions with one dollar invested in company stock for each hour worked that turned out to be worthless two years later as the companies head for bankruptcy;

– major health care concessions under a union-run VEBA (voluntary employee beneficiary association) putting UAW bosses in the healthcare business for potential big profits at the expense reduced worker benefits and companies relieved of their obligations after putting up an initially-funded amount;

– employee buyouts, early retirements and other downsizing efforts to replace high-wage workers with cheaper new ones; and

– Chrysler workers getting even less overall than their GM and Ford counterparts.

A final coup de grace is planned with disturbing implications for all workers – after decades of hard won gains. The UAW alone lost almost one million jobs from 1979 through 2007 (from 1.5 million to about 512,000). At yearend 2008, membership stood at 431,000, and tens of thousands more may now go given industry conditions and administration demands. In addition, more major concessions are coming through the back door – by a prepackaged bankruptcy or court-appointed judge to relieve Obama of responsibility.

If GM and/or Chrysler go down either way, prearrangers or the court will do the honors. The current union contract will be replaced by new demands, meaning 60 years of gains will be lost with the stroke of a pen, and no negotiations can mitigate them. It gets worse.

Whatever’s decided will be a model for all industry. The idea isn’t to end unions, just neutralize them, then leave workers out in the cold with poor wages, few if any benefits, self-funded only retirement plans if any, and other management-demanded concessions in a new dark age for labor heading it back to its earliest days when all gains gotten were hard won and few achieved until the mid-1930s under the Wagner Act.

Labor always struggled and learned the hard way that winning meant organizing, pressing their demands, taking to the streets, going on strike, holding boycotts, battling police and National Guard forces supporting management, and paying with their blood and lives to get results.

They were impressive – an eight-hour day, a living wage, generous increases, good benefits, and pensions because strong unions went head-to-head with management and won. It’s world’s different today with government in bed with business, Democrats as bad as Republicans, weak unions under corrupted bosses, millions of high-paying jobs already lost, and a global economic crisis stripping workers of all bargaining power and heading them for sweatshop serfdom under a leader even more anti-labor than his predecessor.

He appointed an auto task force (headed by Tim Geithner and Larry Summers) to be judge, jury and executioner, then let them (quietly) or a bankruptcy judge pull the switch to absolve him of responsibility, be able to declare victory, and apply the same terms across industry as every sector struggles to survive, the result of a Washington/Wall Street-created crisis.

Their scheme is to:

– crush world economies;

– recapitalize the IMF to entrap developing ones in perpetual debt bondage, neo-feudalism, a virtual dystopia;

– structurally adjust their populations to a living hell – impoverishment through “shock therapy” loss of employment, essential benefits, and democratic freedoms;

– tank financial markets;

– destroy competitors;

– use trillions of taxpayer dollars to consolidate the FIRE sector (finance, insurance and real estate);

– buy other assets on the cheap;

– toxic ones from each other, mostly with public money paying the cost and assuming the risk;

– declare war on labor; and

– force companies to downsize, then strip workers of their rights and futures.

Social Security, Medicare, and Medicaid are next to supply more funds for Wall Street, selected corporate favorites, and generous amounts for military adventurism, global imperialism, and a homeland police state apparatus to quell restive opposition when it erupts. Obama’s promised change is betrayal of the constituency that elected him. Looking ahead, things appear very grim.

Promised Hope from the Employee Free Choice Act (EFCA)

EFCA legislation was first introduced on November 21, 2003 in the 108th Congress as S. 1925 (with 37 co-sponsors) to: “amend the 1935 National Labor Relations (Wagner) Act to establish an efficient system to enable employees to form, join, or assist labor organizations, to provide for mandatory injunctions for unfair labor practices during organizing efforts, and for other purposes.” It was referred to the Health, Education, Labor, and Pensions Committee but never passed.

It was reintroduced on April 19, 2005 in the 109th Congress as HR 1696 (with 215 co-sponsors) for the same purpose. It got as far as the Employer-Employee Relations Subcommittee but not passed.

It was again introduced on March 1, 2007 in the 110th Congress as HR 800 for the same purpose. It easily passed in the House (241 – 185), then was blocked in the Senate when supporters couldn’t get the required 60 votes to end debate and bring it to a vote.

On March 10, the 111th Congress revived it for the fourth time as S. 560 (with 39 co-sponsors), again for the same purpose. It’s been read twice and referred to the Health, Education, Labor and Pensions Committee where it’s pending.

Facts about EFCA

Change to Win aims “to unite the 50 million workers whose jobs cannot be outsourced and who are vital to the global economy. (It represents) seven unions and six million workers united….to build a new movement of working people to meet the challenges of the global economy and restore the American Dream (for) a paycheck that supports a family, universal health care, a secure retirement, and the freedom to form a union to give workers a voice on the job.” It strongly backs EFCA and states:

“EFCA respects that the right to join a union is a fundamental freedom, just like freedom of speech or religion, and that employees should be able to do so without interference from management (or government).”

If enacted, it will change federal law for the better at a time worker rights are in tatters. Overall, it would be a boon for organizing with a free and fair “card check” system under which workers merely sign them in support of a union. They may do it openly or in secret, their choice free of company coercion or intimidation. If a majority do, companies must recognize it. Unlike current rules, they presumably can’t veto the decision, coerce or bribe employees to vote “no,” or fire those who do.

Current law requires good faith bargaining. But it’s eroded to near worthlessness and become a mere shadow of the landmark Wagner Act. It guaranteed workers the right:

“to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in concerted activities for the purpose of collective bargaining or other mutual aid and protection.” In other words, it leveled the playing field to let workers bargain on equal terms with management, but never easily.

From the start, its provisions were attacked, then severely restricted under the 1947 Taft-Hartley Act. In the “national interest,” it lets presidents stop strikes by court-ordered injunctions for 80 days, and it’s been done numerous times, 10 alone by Harry Truman who opposed the law but used it against labor.

It also allows stiff penalties for union violations but minimal ones for companies. It enacted a list of “unfair (union) practices prohibiting jurisdictional strikes (relating to worker job assignments), secondary boycotts (against firms doing business with others struck), wildcat strikes, sit-downs, slow-downs, mass-picketing against scabs, closed shops (in which employees must join unions), and more while legalizing employer anti-organizing interventions.

It eroded worker power that continues to this day. It’s so weak that employers can (illegally) fire union sympathizers with only minor fines if proved. They can fire workers for any reason or none at all, and, of course, offshore high-paid jobs, freely move to low-wage “right-to-work” law states that restrict organizing under Taft-Hartley, and use those threats to extract more concessions from unions, easily intimidated or coerced to go along.

The result is that union membership declined steadily from the 1950s, and since the 1970s, worker wages and benefits have eroded under rigged market-based rules against them.

EFCA aims to restore labor rights affirmed by the Supreme Court in decisions like Virginian Railway Co. v. Railway Employees (March 29, 1937) when it ruled that “employees (have) the right to organize and bargain collectively through a representative of their own selection, doing away with company interference and ‘company union.’ “

It reaffirmed the right in National Labor Relations Board v. Jones & Laughlin Steel Corporation (April 12, 1937) by ruling: “the corporation (engaged in unfair labor practices by) discriminating against members of the union with regard to hire and tenure of employment, and was coercing and intimidating its employees in order to interfere with their self-organization.”

It added that:

“Employees have as clear a right to organize and select their representatives for lawful purposes as the respondent has to organize its business and select its own officers and agents. Discrimination and coercion to prevent the free exercise of employees to self-organization and representation is a proper subject for condemnation by competent legislative authority. Long ago we stated (that) labor organizations were organized (of necessity); that a single employee was helpless in dealing with an employer; that union (representation) was essential (to resist unfair treatment and) give laborers opportunity to deal on an equality with their employer.”

We’ve come a long way from a friendly High Court. The current Roberts one is “supremely” pro-business. It’s why passing EFCA is essential even given enough congressional votes to kill it and an anti-labor president who won’t mind.

Today, over 90% of employers oppose unions with government on their side. Nearly 50% threaten to close plants or other work sites. Many coerce, threaten and/or bribe workers to be union-free, and around 30% illegally fire pro-union employees and get away with it.

Current election law mandates secret ballots one month after organizers collect enough signatures, but in the interim, companies can discourage, threaten and/or coerce employees to vote “no.” They can also deny union recognition even if 100% of them want it.

EFCA turns the tables by enforcing fair collective bargaining under the following procedure. Federal Mediation and Conciliation Service (FMCS) arbitrators get to write first contracts (for a two-year period) covering wages, benefits, and work rules. NLRB union certification will be based on “card check” majority votes. Employers must then make “every reasonable effort to conclude and sign a collective bargaining agreement” within 10 days of the union’s request. If none is reached in 90 days, either party may ask FMCS to intervene. If resolution fails after 30 days, an arbitration board “renders a decision settling the dispute” – binding for two years, unless both sides agree in writing to amend the contract.

The NLRB will be empowered to take legal action to immediately reinstate workers fired for union activity and enforce triple damages on companies.

EFCA levels the playing field by letting workers vote up or down on whether to form a union – freely by majority vote without fear of employer retribution. Overall, it’s the first pro-labor law since Wagner, if only a first step at a time their rights are greatly eroded. It’s high time Congress reinstated them, but don’t bet on it or that Obama will exert pressure to do it. Business fiercely opposes it with good reason. They’ve got it all their own way and resist change. EFCA will force it for the better at a crucial time for workers.

Stephen Lendman is a Research Associate of the Center of Research on Globalization. He lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting.org Monday – Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.

The Sanctity of AIG’s Contracts March 16, 2009

Posted by rogerhollander in Criminal Justice, Economic Crisis, Torture.
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by Glenn Greenwald

Larry Summers, Sunday, on AIG’s payment of executive bonuses:

We are a country of law. There are contracts. The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve system.

Associated Press, February 18, 2009:

The United Auto Workers’ deal with Detroit’s three automakers limits overtime, changes work rules, cuts lump-sum cash bonuses and gets rid of cost-of-living pay raises to help reduce the companies’ labor costs, people briefed on the agreement said today.

The UAW announced Tuesday that it reached the tentative agreement with General Motors Corp., Chrysler LLC and Ford Motor Co. over contract concessions, as GM and Chrysler sent plans to the Treasury Department asking for a total of $39 billion in government financing to help them survive.

Concessions with the union are a condition of the $17.4 billion in government loans that the automakers have received so far.

Apparently, the supreme sanctity of employment contracts applies only to some types of employees but not others. Either way, the Obama administration’s claim that nothing could be done about the AIG bonuses because AIG has solid, sacred contractual commitments to pay them is, for so many reasons, absurd on its face.

As any lawyer knows, there are few things more common – or easier — than finding legal arguments that call into question the meaning and validity of contracts. Every day, commercial courts are filled with litigations between parties to seemingly clear-cut agreements.  Particularly in circumstances as extreme as these, there are a litany of arguments and legal strategies that any lawyer would immediately recognize to bestow AIG with leverage either to be able to avoid these sleazy payments or force substantial concessions.

Since the contracts are secret and we’re apparently just supposed to rely on the claims of AIG and Treasury Department lawyers, it’s impossible to identify these arguments specifically.  But there are almost certainly viable claims to be asserted that the contracts were induced via fraud or that the bonus-demanding executives themselves violated their contracts.  Independently, it’s inconceivable that there aren’t substantial counterclaims that AIG could assert against any executives suing to obtain these bonuses, a threat which, by itself, provides substantial leverage to compel meaningful concessions. Many of these executives were, after all, the very ones responsible for the cataclysmic losses.

The only way a company like AIG throws up its hands from the start and announces that there is simply nothing to be done is if they are eager to make these payments.  One might expect AIG to do so — they haven’t exactly proven themselves to be paragons of business ethics — but the fact that Obama officials are also insisting that nothing can be done (even while symbolically and pointlessly pretending to join in the populist outrage over these publicly-funded “retention payments”) is what is most notable here.

Legal strategies aside, just as a business matter, one of the first things which every compnay in severe distress does is go to its creditors, explain that it cannot make the required payments, and force re-negotiations of the terms.  That’s as basic as it gets.  To see how that works, just look at what GM and other automakers did with their union contracts – what they were forced by the Government to do as a condition for their bailout.  Obviously, if a company goes into bankruptcy, then contracts to pay executive bonuses are immediately nullified, but the threat of bankruptcy or serious financial distress is, for obvious reasons, very compelling leverage to force substantial concessions. And the idea that, in this economy, AIG executives (of all people) will be able simply to leave and go seek employment elsewhere unless they receive their “retention bonuses” (even assuming that’s an undesirable outcome) is nothing short of ludicrous.

There may be other reasons why the Treasury Department decided it wanted AIG to pay these bonuses (Marcy Wheeler considers some of those reasons here), but this claim from Larry Summers that the sanctity of contracts precludes any alternatives is not just false, but insultingly so.  It’s difficult to recall anything quite so vile as watching hundreds of millions of dollars in taxpayer money flow to AIG executives.  One would expect the Obama administration to do everything possible to prevent that from happening.  Instead, they seem to be doing the opposite.

UPDATE:  Jane Hamsher has more here on AIG’s insultingly frivolous claims as to why these contract obligations are unavoidable, and here FDL has a petition, to be delivered to the House Financial Services Committee during Wednesday’s hearing on the AIG payments, demanding full disclosure before any more payments are made.

On a related note, could someone please reconcile Larry Summers emphatic declaration that “we are a country of laws” with this

 

To use Larry Summer’s eloquent phrase (perversely deployed to justify the AIG bonus payments):  if “we are a country of law,” we would probably do something about these severe violations of law that are right in front of our faces, particularly since we all know exactly who the lawbreakers are.  

Apparently, this “we are a country of law” concept means that hundreds of millions of dollars in taxpayer money must be transferred to the AIG executives who virtually destroyed the financial system, but it does not mean that something must be done when high government officials get caught plainly breaking the law.  What an oddly selective application of the “rule of law” this is.

Glenn Greenwald was previously a constitutional law and civil rights litigator in New York. He is the author of the New York Times Bestselling book “How Would a Patriot Act?,” a critique of the Bush administration’s use of executive power, released in May 2006. His second book, “A Tragic Legacy“, examines the Bush legacy.

“Reconciliation” and “Looking Forward Not Backward:” Code for No Justice? February 19, 2009

Posted by rogerhollander in About Barack Obama, About Justice, Barack Obama, Criminal Justice, Dick Cheney, George W. Bush.
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nuremberg-trial

The President of the Tribunal, Lord Chief Justice Lawrence, pronounces the sentences and reads the dissenting Russian opinion

 by Roger Hollander

www.rogerhollander.wordpress.com, February 19, 2009

 

(SEE UPDATE BELOW)

 

An essay entitled “Obama’s Justice: Reconciliation Not Retribution” appeared recently in the progressive online journal, Truthout.com (http://www.truthout.org/021809J).  Its author is Cynthia Boaz, assistant professor of political science at Sonoma State University, who is described as a specialist “in political development, quality of democracy and nonviolent struggle.”

 

Professor Boaz’s approach was most annoying in that she felt the need to set up a straw man (the notion that those who want justice want it for purposes of retribution) and resort to the ad hominem by characterizing those who are pushing for investigations and prosecution of the Bush era crimes as “disgruntled, self-identified progressives” and comparing them to “villagers wielding torches and pitchforks.”

 

But such annoyances pale in light of the implication of her thesis in support of Obama as a “unifier,” and his mission of “reconciliation, not retribution” in an attempt to justify Obama’s oxymoronic and disingenuous statement that he believes in the rule of law but would rather look forward rather than backward.

 

(To her credit Professor Boaz acknowledges that the Bush administration may have committed misdeeds “which in some cases, rise to the level of crimes against humanity” and does not argue that they should not be brought to justice.  Her point is that justice should not be politicized, that the president should not seek “retribution” for his predecessor)

 

In the real world justice in fact usually occurs in a political context – especially when crimes occur at the higher levels of government.  Obama recognizes this and his remarks to George Stephanopoulos were in response to overwhelming public sentiment for him to appoint a special prosecutor as reflected in his transition sounding exercise.  Presidents do appoint Special Prosecutors and the United States Attorney General.  Presidents grant pardons, often controversial and often of a political nature (Ford/Nixon; Reagan/Weinberger, North, Irangate).  The political and the judicial are indeed intertwined.

 

Talking about “reconciliation” and “looking forward rather than backward” is in itself a blatant political intrusion in the world of justice.  If Obama were not signaling to the heads of the Justice Committees in both houses of Congress (and the American people) that he would prefer for them to back off, then he simply would have affirmed his commitment to the rule of law and left it at that.

 

The evidence that is already in the public domain with respect to the knowingly false pretense for the invasion of Iraq, the high level authorization of torture, the extraordinary renditions, the wiretapping, the U.S. Attorney firings, etc. is so overwhelming that – in spite of the sacred principle of “innocent until proven guilty” – the American and world public cannot be faulted for demanding that the Nuremberg principles be applied to the neo-fascist Bush clique.  That former Vice President Cheney, who is universally considered to have been the Bush administration Godfather, has been making the rounds boasting about his role in committing in effect what are crimes against humanity, constitutes an open challenge to anyone who takes the rule of law seriously.  Given the literally millions of human beings whose lives have been destroyed or seriously debilitated by the actions of the Bush administration and the gross violations of constitutional and international law, the imperative for speedy justice within the context of due process is overwhelming.

 

What I fear is some kind of Truth Commission based on the premise of giving immunity for the sake of getting the truth out.  This, I believe, is what Obama was getting at with his “looking forward” remark and what Professor Boaz would like to see.  Such a notion mocks the concept and dignity of Justice.  It gives no closure to those who have suffered at the hands of high level war criminals and it has little or no deterrent effect.  What it is is politically expedient. 

 

Do I expect to ever see Bush, Cheney, Rumsfeld, Gonzales, Wolfowitz et. al. in a United States court of law charged with high crimes?  Honestly I do not (but I didn’t ever expect to see the election of an Afro-American president in my lifetime either).  But genuine truth, reconciliation and justice demand that such high crimes be investigated and prosecuted; those who suffered deserve justice; and the future of what is left of constitutional democracy is worth fighting for.

What is more, if President Barak Obama or anyone else acts in any way to impede or frustrate the carrying out of justice, they become to some extent complicit with the principal perpetuators.

UPDATE (May 1, 2009)

There has been a lot of -pardon the pun – wate(boarding) under the bridge since I wrote this piece in mid February.  If you surf around my Blog or the many Blogs I post on it, you will find dozens if not hundreds of articles on the issue of torture and criminal responsibility for it.  Just today, for example, I posted an excellent article by Glenn Greenwald that appeared in salon.com which documented the words of, of all people, Ronald Reagan, who, in introducing the law that made torture a serious crime in the United States, states that torture is a crime, with no exception for extraordinary circumstances (including, presumably, the phony “ticking time bomb” scenario).  Ronald Reagan!

 

Professor Boaz, who is the target of my criticism in the original article above, had argued that those of us demanding that now President Obama take criminal action against the Torturers were misunderstanding the role of the presidency.  Investigation and criminal prosecution in the bailiwick of the Judicial System, not the presidency she tells us.  I wonder what she is thinking now that President Obama has heard, tried and exonerated the CIA agents who carried out the war crime known as torture.

 

During the longest eight years in history that we lived through under Bush/Cheney, one felt that what was happening as if it were in the realm of the surreal.  Anti-war election results, and the war escalates (excuse me, surges).  Torture with impunity.  Habeas Corpus out the window.  Warrantless wiretapping.  An ideologically politicized Justice Department.  Signing Statements allowing the President to ignore laws passed by Congress.  Dr. Strangeglove figures such as Rumsfeld, Wolfowitz, Rice, Gonzales; and Darth Vader himself disguised as Dick Cheney, bunker and all.

 

May the goddess help me, I am having the same surrealistic dizziness all over again.  The Attorney General declares that waterboarding is torture.  Torture is a crime.  Therefore … do nothing about it.  The President releases evidence in the form of the infamous torture memos that, that along with photographic and other (International Red Cross, for example) evidence, leaves no doubt about the nature and extent of the torture; and then he proceeds to grant amnesty to those who committed the crimes.  They were only following orders, he says, as the Nuremburg amnesia sets in alongside the swine flu.  Pelosi and Reid want investigations … in secret (!).  The mainstream media, as it did under Bush/Cheney, plays along with the Alice in Wonderland fantasies, and the maniacs on the neo-Fascist Right have convinced a signficant percentage of Americans that torture is not a crime under “certain circumstances.”  The torture memos written by John Yoo and Jay Bybee are so patently phony and Kafkesque that Yoo is invited to teach law in Orange County and Bybee is made a Federal Judge.

 

It has been suggested that President Obama doesn’t feel there is the political will to prosecute the war criminals, which is why he has been so wishy-washy, but that he has released the tortue memos and is soon to release more photos as a way to achieve that will.  I don’t believe this, but that doesn’t matter.  Only by latching on to the the issue like a pit bull and refusing to let go can we who believe in Decency and Justice bring the American War Criminals to justice.

torture-with-bush

abu-ghraib-matthew-langley

 

 

 

 

Why You Can’t Buy a New Car Online February 13, 2009

Posted by rogerhollander in Economic Crisis, Environment.
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By Stephanie Mencimer, MotherJones.com. Posted February 13, 2009.

Blame two Republican presidents and the influential car-dealer lobby who worked hard to ensure that this will never happen.

Americans can buy virtually anything over the Internet these days — sex, booze, houses — everything, that is, but a new car. If you want to buy a new Ford Fusion, you have to go down to your local dealership and haggle with the car salesmen, an unpleasant and daunting task. The process usually subjects consumers to hours in the dealership hotbox and can add hundreds, if not thousands, of dollars to the price of the car. Wouldn’t it be nice if you could cut out the middleman and just order your Prius straight from Toyota?

But you can’t. And there’s one reason why: the car-dealer lobby, which has worked hard to ensure that this will never happen. Since the late 1990s, car dealers have used their considerable political clout to pass or better enforce state franchise laws that in many cases make it a criminal offense for an auto manufacturer to sell a new car to anyone but a state-licensed car dealer. The laws governing who can sell new cars are among the most anti-competitive of any domestic industry. By creating local monopolies for dealerships and prohibiting online sales for new cars, they constitute a major restraint on interstate commerce; in 2001, the Consumer Federation of America estimated [pdf] that the laws added at least $1,500 to the price of every new car.

These parochial state laws also make the distribution system for new cars incredibly inefficient and expensive, one factor in the financial problems facing the Big Three in Detroit. Online sales would help companies like GM and Chrysler align production to sales better by allowing more people to buy their cars built-to-order from the factory, rather than having Detroit send out truckloads of vehicles to sit around on dealer lots for months in the hopes that a rebate offer will finally entice someone to buy them.

Now that the federal government is bailing out GM and Chrysler to the tune of $13.4 billion, and Congress is demanding major changes in the way they’re run, consumer advocates think the time is ripe for Congress to clear the way for online sales as part of its effort to move Detroit out of the Stone Age. You’d think they would find a sympathetic ear among deregulatory Republicans who take great umbrage over any state interference with the free market, but you’d be wrong. Most free-market Republicans have no interest in taking on the car dealers, who are among their strongest local supporters. Since 1990, American car dealers have given more than $66 million to federal candidates, with more than three-quarters going to Republicans.

For decades, Republican governors have been some of the dealers’ biggest champions and have signed much of the legislation creating their bulwark against real competition. California legislator Mark Leno discovered just how entrenched these roadblocks are in 2005, when he introduced legislation to let consumers buy hybrid and other low-emission vehicles directly from manufacturers online. The bill came in response to evidence that local dealerships were price-gouging consumers seeking hybrids, which were then in short supply. Environmentalists believed the savings consumers were likely to get by purchasing online would spur more sales for the cleaner cars and encourage automakers to produce more of them.

The bill would have allowed people to order their Priuses online and have the manufacturer deliver them to their doors — or, alternately, they could pick them up at Costco or the local dealership. The bill would have even allowed people to buy the cars on eBay or Amazon. Leno’s office estimated that the bill would have little impact on the dealerships, because hybrids accounted for less than 1 percent of all new car sales. But he underestimated the power of the dealers, who were the reason legislation was needed in the first place.

Back in 1973, then-California governor Ronald Reagan signed a law that effectively prohibited any new car dealerships from opening within a 10-mile radius of another existing dealership selling the same make of car. The law was a gift to one of Reagan’s “kitchen cabinet” members, Holmes P. Tuttle, and decades later would have made it difficult for hybrid manufacturers to create pickup facilities (which required dealer licenses) for cars ordered online.

Tuttle had famously sold a car to Reagan when he was an out-of-work actor. Tuttle went on to create one of the nation’s largest car dealerships and helped fund Reagan’s first run for governor. Reagan repaid him by signing the dealer franchise law. “A statutorily created monopoly was signed into law by Reagan to help his friend Mr. Tuttle,” says Leno. He says Tuttle had been pushing for a law that prohibited the establishment of any new dealership without the majority support of the dealerships in that part of the state. Instead, he got the 10-mile exclusionary zone. Leno notes that the law was vigorously opposed by California state senator George Moscone, who was later assassinated, along with Harvey Milk, when he was mayor of San Francisco. Moscone labeled the bill “the turkey of the year,” and issued a prescient statement observing that the bill would “freeze, for all time, the ability of new car dealers to make money without worrying about competition…How in the name of free enterprise could the governor even consider signing a bill that shuts off any future competition?”

Moscone’s objections fell on deaf ears. Today, Tuttle’s son Robert, who still owns the family auto chain, is the outgoiong US ambassador to the UK, an indication of just how strong the political clout of the car dealers — and the Tuttle clan — remains. Needless to say, Leno’s bill to amend the franchise law never even made it out of a Democrat-controlled policy committee.

His experience isn’t unusual. In the late 1990s and early 2000, the auto manufacturers themselves, sensing the potential of the Internet, attempted to challenge state franchise laws that restricted their ability to sell over the Internet. They got clobbered, and in no small part because of Republican governors, who, like Reagan, counted local car dealers as political supporters.

In 1999, as governor of Texas, George W. Bush signed what was then the nation’s toughest law in the country banning new car sales online. Egged on by local car dealerships, state regulators invoked the law to help shut down Ford’s fledgling attempt to sell used cars online. Ford had started letting people buy used cars on its website; local dealerships delivered them. But Texas regulators cracked down, threatening Ford with $10,000 daily fines for allegedly violating a state law banning manufacturers from selling their products directly to the public. Ford tried to fight back in court, arguing that the state franchise law was a restraint on interstate commerce, but the court was no more sympathetic than the governor. The federal judge hearing the case wrote that if Ford were allowed to sell cars online, “all state regulatory schemes would be nullified” as they “fall before the mighty altar of the Internet.” Texas regulators, never known for regulating much of anything, also forced GM to abandon its foray into e-commerce. The automaker had bought a handful of dealerships in the state to use as distributors for cars bought online, but regulators refused to give GM a dealer license. GM gave up and sold off the dealerships.

Texas inspired car dealers in other states to seek similar protections from competition. Arizona, for instance, passed a law that not only blocked manufacturers from selling cars online but also restricted manufacturers from offering other services online, such as financing. Other states followed suit, as car dealers feared predictions that only half of them would survive the next seven years thanks to competition from the Internet. Since then, the manufacturers have largely given up the fight.

“We have a very good relationship with our dealerships,” says Charles Territo, a spokesman for the Alliance of Automobile Manufacturers, which represents 11 manufacturers, including the Big Three. “The dealers are the faces of the manufacturer.” Territo says that after their experience trying to change state laws in the 1990s, the manufacturers have no interest in picking a battle with the dealerships over online sales, which he considers unworkable anyway.

“What about sales tax?” he demands, suggesting that if people start buying cars over the Web, local governments would be deprived of revenue that supports their communities. He says that in California, fully 25 percent of state tax revenue comes from vehicle sales. Even if people could buy new cars online, he says, the nature of the sales means that the “dealer would still need to be part of the equation,” either because they would need to service the cars or arrange delivery of them.

Territo says that the lack of Internet sales is the least of the problems for the automakers right now, when the credit markets have made it virtually impossible for many consumers to buy new cars. “It doesn’t matter whether you buy it on the Internet or on a street corner — if you can’t get credit, you’re not going to be able to buy that car,” he says.

Territo’s argument mirrors that of the car dealers. Jack Fitzgerald, the owner of a chain of dealerships in Maryland who’s known as an honest broker among consumer advocates, calls online new car sales “a pipe dream.” From his perspective, the state franchise laws that prevent manufacturers from selling their own products “are what little protection dealers have against the abuses of the manufacturers,” which have a long history of beating up on both their own employees and their dealerships, which the companies force to assume much of the risk of the sales business, he says.

Fitzgerald suspects that if the manufacturers could sell new cars directly over the Internet, consumers would actually pay more for them than they do now. Right now, he says, dealerships actually pay about $2,500 more for a car from the manufacturer than they sell it for. Dealerships make their money elsewhere — on repairs and servicing, financing, and other products. Fitzgerald says that the manufacturers haven’t sold cars directly to the public in 75 years, since the days when you could buy a car at Sears. Those sales didn’t work out, he insists, because someone still has to service the car, and that’s usually the dealership.

Jack Gillis, the Consumer Federation’s executive director, says allowing online new car sales wouldn’t necessarily remove dealerships from the equation. It would just introduce more competition into the marketplace and reduce some of the inefficiencies in the distribution system. If Ford or GM could sell cars through Amazon or eBay, for instance, the dealerships could still handle the deliveries and warranty work. Indeed, Fitzgerald concedes that under such an arrangement, he might actually make more money than he does now.

“It’s unfortunate that the car companies have capitulated to the desires of the dealers,” says Gillis, noting that allowing online buying might actually stimulate sales. “The loser there, first and foremost, is the consumer, but ironically, so is the industry,” he says. “People would flock to the Internet.”

A Recipe for Corporate Success in Tough Times? SaladShooters, Adult Diapers and Tactical Ammo December 16, 2008

Posted by rogerhollander in War.
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housing-propagandaWhile many companies have moved away from arms production, the line between civilian industry and military contracting continues to shift. (Photo: State Museum of Pennsylvania)

www.truthout.org

15 December 2008

by: Nick Turse, TomDispatch.com

Is it possible that one of the Pentagon’s contractors has a tripartite business model for our tough economic times: one division that specializes in crock-pots, another in adult diapers, and a third in medium caliber tactical ammunition? Can the maker of the SaladShooter, a hand-held electric shredder/dicer that hacks up and fires out sliced veggies, really be a tops arms manufacturer? Could a company that produces the Pizzazz Pizza Oven also be a merchant of death? And could this company be a model for success in an economy heading for the bottom?

Once upon a time, the military-industrial complex was loaded with household-name companies like General Motors, Ford, and Dow Chemical, that produced weapons systems and what arms expert Eric Prokosch has called, “the technology of killing.” Over the years, for economic as well as public relations reasons, many of these firms got out of the business of creating lethal technologies, even while remaining Department of Defense (DoD) contractors.

The military-corporate complex of today is still filled with familiar names from our consumer culture, including defense contractors like iPod-maker Apple, cocoa giant Nestle, ketchup producer Heinz, and chocolate bar maker Hershey, not to speak of Tyson Foods, Procter & Gamble, and the Walt Disney Company. But while they may provide the everyday products that allow the military to function, make war, and carry out foreign occupations, most such civilian firms no longer dabble in actual arms manufacture.

Whirlpool: Then and Now

Take the Whirlpool Corporation, which bills itself as “the world’s leading manufacturer and marketer of major home appliances” and boasts annual sales of more than $19 billion to consumers in more than 170 countries. Whirlpool was recently recognized as “one of the World’s Most Ethical Companies by the Ethisphere Institute.” The company also professes a “strong” belief in “ethical values” that dates back almost 100 years to founders who believed “there is no right way to do a wrong thing.”

In the middle of the last century, however — as Prokosch has documented — Whirlpool was engaged in what many might deem a wrong thing. In 1957, Whirlpool took over work on flechettes — razor-sharp darts with fins at the blunt end — for the U.S. military. While International Harvester, the prior Pentagon contractor producing them, had managed to pack only 6,265 of these deadly darts into a 90mm canister round, Whirlpool set to work figuring out a way to cram almost 10,000 flechettes into the same delivery vehicle. Its goal: to “improve the lethality of the canisters.” (In addition, Whirlpool also reportedly worked on “Sting Ray” — an Army project involving a projectile filled with flechettes coated in a still-undisclosed chemical agent.)

In 1967, an Associated Press report noted that U.S. troops were using new flechette artillery rounds to “spray thousands of dart-shaped steel shafts over broad areas of the jungle or open territory” in Vietnam. “I’ve seen reports of enemy soldiers actually being nailed to trees by these things,” commented one Army officer.

On a recent trip to Vietnam, I spoke to a Vietnamese witness who had seen such “pin bullets” employed by U.S. forces many times in those years. In one case, Bui Van Bac recalled that a woman from his village, spotted by U.S. aircraft while she was walking in a rice paddy, was gravely wounded by them. Local guerillas came to the woman’s aid and brought her to a hospital where a surgeon found a number of extremely sharp, three centimeter long “pins” inside her body. Medically, it was all but hopeless and the woman died.

A top player in lethal technologies back then, Whirlpool is now among the tiniest defense contractors. While, in recent years, the company has ignored requests for information from TomDispatch.com on their dealings with the Pentagon, records indicate that last year, for example, it received just over $105,000 from the Department of Defense, most of which apparently went towards the purchase of kitchen appliances and household furnishings.

Similarly, Whirlpool’s predecessor in the flechette game, International Harvester, is now Navistar International Corporation. Navistar Defense, a division of the company,
remains one of the Pentagon’s stealth “billion dollar babies.” But while it did more than $1 billion in business with the DoD last year, Navistar appears to have been building vehicles for the Pentagon, not creating anti-personnel weaponry. There are, however, companies that can’t seem to say goodbye to lethal technologies.

National Presto Industries

National Presto Industries traces its history to the 1905 founding of the Northwestern Iron and Steel Works in Eau Claire, Wisconsin, according to the Business & Company Resource Center. By 1908, the company was making industrial steam pressure cookers and, in 1915, began making models for home use. On the eve of the U.S. entry into World War II, the company entered the arms game when it scored a multi-million dollar contract to produce artillery fuses. Even with that deal in hand, it was reportedly on the verge of bankruptcy when its new president, Lewis Phillips, landed a series of other lucrative military contracts.

In the early years of the Cold War, about the time Whirlpool was getting into the flechette business, National Presto Industries had just introduced “a revolutionary new concept in electric cooking… a complete line of fully immersible electric cooking appliances employing a removable heat control” — and was about to launch “the world’s first automatic, submersible stainless steel coffee maker.” The company was also still churning out war materiel.

In 1953, National Presto announced plans to build a multi-million dollar plant to produce 105mm artillery shells. In 1955, it was awarded millions to make howitzer shells for the Army, and the next year, millions from the Air Force for fighter-bomber parts. By 1958, company President Lewis Phillips would declare, “The future of this company in Eau Claire and hence the security of our jobs here is now almost wholly dependent upon defense contracts awarded by the U.S. Government.” When the Army cancelled its contracts with Presto in 1959, Phillips lamented, “With little or no notice, this Government decision has forced us completely out of the manufacturing business here in Eau Claire.”

The tough times didn’t last. Soon enough, National Presto returned to the fray, benefiting from the disastrous American war in Vietnam. From 1966 to 1975, the company manufactured more than two million eight-inch howitzer shells and more than 92 million 105mm artillery shells. In Vietnam, 105mm shells would kill or maim untold numbers of civilians, but it was a boom time for National Presto, which took in at least $163 million in Pentagon contracts in 1970-1971 alone for artillery shell parts. Finally shuttered in 1980, the company defense plant was kept on government “stand-by” into the 1990s, a sweetheart deal that earned Presto $2.5 million annually for producing nothing at all.

As the Vietnam War wound down, National Presto turned back to the civilian market with a series of new kitchen gadgets: in 1974, the PrestoBurger, an electric, single-serving fast broiler for hamburgers; in 1975, the Hot Dogger; and in 1976, the Fry Baby deep fat fryer. In 1988, the company introduced its wildly popular SaladShooter, followed in 1991 by its Tater Twister potato peeler. When sales of its SaladShooters, corn poppers, pressure cookers, deep fryers, and griddles became sluggish, however, weaponry again proved a savior.

In 2001, National Presto decided to get back into the arms game. Months before 9/11, the company’s chairman Melvin Cohen expressed fears that a future war might mean ruin for the company’s kitchen appliance business. As a result, Presto purchased munitions manufacturer Amtec. In the years since, according to Securities and Exchange Commission filings, Presto has also “made other complementary acquisitions in the defense industry.” These have included Amron, a manufacturer of medium caliber ammunition (20-40mm) cartridge cases and Spectra Technologies, which is “engaged in the manufacture, distribution, and delivery of munitions and ordnance-related products for the DOD and DOD prime contractors.” Such types of ammunition are extremely versatile and are fired from ground vehicles, naval ships, and various types of aircraft — both helicopters and fixed-wing models.

Additionally, in the months after 9/11, National Presto entered the diapers trade, setting up that business in its old munitions plant. In 2004, with Melvin Cohen’s daughter MaryJo now at the helm, the company further expanded into the business of adult-incontinence products. “I spent a couple of days wearing them,” the younger Cohen told the Milwaukee Journal Sentinel at the time. “They’re very comfortable.”

In 2005, Presto’s Amtec was awarded a five-year deal by the Pentagon for its 40mm family of ammunition rounds. By the end of last year, it had already received $454 million and was expecting the sum to top out, at contract’s end, above $550 million.

Just as 105mm shells of the sort produced by Presto were a nightmare for the people of Vietnam, so too has 40mm ammunition spelled doom for civilians in Iraq and Afghanistan. Earlier this year, the BBC reported on a typical joint U.S./U.K. attack on a home in Iraq in which insurgents had taken shelter. After exchanging ground fire, coalition forces called in an airstrike. According to the BBC, “The aircraft fired 40mm cannon rounds at the two houses, finally dropping a bomb on one of them. It collapsed. The other house was set on fire. The two insurgents in the house were buried but so were a number of women and children.” Similarly, in August, news reports tell us, U.S. troops called in an airstrike by an AC-130 — which packs 40mm cannons — that helped kill approximately 90 civilians in the village of Azizabad in Afghanistan, according to investigations by the Afghan government and the United Nations.

As in the past, war time has been a boom-time for Presto. In 2000, before the start of the Global War on Terror, National Presto’s annual sales clocked in at $116.6 million. In 2007, they totaled $420.7 million, with more than 50% of that coming from arms manufacturing. Earlier this year, Presto nabbed another 40mm ammunition contract (a $97.5 million supplemental award) set to be delivered in 2009 and 2010. According to official DoD figures, from 2001 through 2008 National Presto received more than $531 million, while Amtec has taken home another $171 million-plus. Their combined grand total, while hardly putting Presto in the top tier of Pentagon weapons contractors, is still a relatively staggering $702.8 million — not bad for a company known for slicing and dicing vegetables.

Death is Our Business and Business is Good

These days, most civilian defense contractors aren’t like Presto. General Tire and Rubber Company, for example, once lorded it over a business empire that produced not only car tires, but antipersonnel mines and deadly cluster bombs. Today, the company seems to have left its days of supplying the U.S. military with lethal technologies behind.

Dow Chemical classically drew ire from protestors during the Vietnam War for making the incendiary agent napalm that clung to and burned off the flesh of Vietnamese
victims. Dow got out of the napalm business long before the war ended, but, due to widespread protests at the time, the company is still living down the legacy today.

At a 2006 Ethics and Compliance Conference, Dow’s President, CEO, and Chairman Andrew Liveris recalled, “Believe me, we have had our share of ethical challenges, most of them very public… starting with the manufacture of Napalm during the Vietnam War… when suddenly we went from being a company that made Saran Wrap to keep food fresh to a kind of war machine… at least, according the characterizations of the time.” While Dow is still a defense contractor, its DoD contracts appear not to include the manufacture of weapons of any type. Instead, such companies have largely ceded the field to dedicated “merchants of death” — weapons-industry giants like Alliant Techsystems (ATK), Lockheed Martin, and Boeing.

Right now, National Presto Industries may look like a throw-back to an earlier era when companies regularly made both innocuous household items and heavy weapons. In a new hard-times economy, however, in which taxpayer dollars are likely to continue to pour into the Pentagon, could it instead be a harbinger of the future? Having proved that outfitting real shooters is even more lucrative than making SaladShooters, Presto has gotten rich in the Bush war years. It has, in fact, greatly outperformed the big guns of the weapons business. While the stocks of top defense contractors Lockheed Martin, Boeing, and Northrop Grumman have all lost significant value in the last year — down 29.3%, 55.3%, and 50.1%, respectively — National Presto’s stock price was up 28.1% as of mid-December.

It isn’t hard to imagine more civilian firms, especially ones which are already Pentagon contractors, getting into (or back into) the weapons game. After all, when the Big Three Detroit automakers were scrounging around for a bailout just a few weeks ago, they used America’s persistent involvement in armed conflict as one argument in their favor. For example, Robert Nardelli, Chrysler’s chief executive, told the Senate that the failure of the auto industry “would undermine our nation’s ability to respond to military challenges and would threaten our national security.” While that argument was roundly dismissed by retired Army Lt. Gen. John Caldwell, chairman of the National Defense Industrial Association’s combat vehicles division, it probably wouldn’t have been if the automakers made more weapons systems.

Will Presto be the back-to-the-future model for Pentagon contractors in the lean times ahead? Only time will tell. At the very least, it seems that, as long as Americans allow the country to wage wars abroad, require their salads to be shot, and have bladder issues, National Presto Industries has a future.

Copyright 2008 Nick Turse

Cutting Wages Won’t Solve Detroit Three’s Crisis December 9, 2008

Posted by rogerhollander in Economic Crisis, Labor.
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auto-workers1Automakers have blamed workers for the financial collapse of the Detroit auto industry. (Photo: motortrend.com)

by: Mark Brenner and Jane Slaughter, The Detroit News

 In the 1980s, Chevrolet proclaimed itself the “Heartbeat of America,” but today the American auto industry barely registers a pulse. As Washington considers Detroit’s plea for life support, the only place where pundits, politicians and Big Three executives seem to agree is that auto workers must make do with less or watch their jobs disappear.

    Some lawmakers have complained that unions are the source of the problem, but they fail to understand some inconvenient truths. According to the latest figures from the U.S. Commerce Department, every worker in Big Three factories could work for free and only shave 5 percent off the cost of their cars. The auto companies pay as much for hubcaps and fenders as they do in wages.

    Data from the Harbour Report – the industry’s gold standard – reveal that even including their benefits, labor costs in the Big Three’s plants account for less than 10 percent of the sticker price.

    No matter how you cut the numbers, demolishing auto workers’ living standards will not transform the industry. The Big Three have been trying for years. They have slashed at least 200,000 jobs since 2004, and last year they wrung billions of dollars in concessions from the United Auto Workers. The union instituted a second-tier wage of $14.50 an hour for new hires, lower than pay in the nonunion, foreign-owned auto companies in the South.

    The impact is all too apparent in auto communities across the Midwest. Forty thousand Detroit homeowners are in foreclosure, and the unemployment rate has hit double digits in many auto towns. That suffering will multiply if one of the Big Three collapses, or if retired auto workers are punished for decisions they had no hand in.

    Automakers’ decisions have been disastrous. While competitors developed gasoline-electric hybrids, Detroit mined the gas-guzzling truck and SUV market, making $104 billion in profits between 1994 and 2003. Wall Street and Congress weren’t calling for more research and development or curbing the company’s dividend payments and high-flying executive salaries back then.

    Pundits crow for us to “Dump Detroit,” but they don’t advertise that through a bailout or the bankruptcy courts taxpayers will shoulder the burden of the automakers’ colossal missteps.

    Washington shouldn’t back into a bailout – it should jump in feet-first. What’s needed is not a half-measure, a cash infusion in exchange for selling the corporate jets. Now is the time to take a sweeping look at the country’s needs.

    Our first steps should confront global warming and oil dependence through a comprehensive overhaul of the transportation system. Federal policy hasn’t changed since the 1950s, when gas was a nickel a gallon.

    Detroit, the Arsenal of Democracy, retooled in a matter of weeks when we needed tanks, not cars, in 1941. We could produce this century’s answer to the interstate highway system and build mass transit and high-speed trains.

    That same sense of urgency is needed for vehicles that don’t run on petroleum. If American engineers can build satellites that read your license plate from outer space, they can develop an alternative to the gasoline engine.

    Automakers need direction as much as financial support from Washington, just as Japan’s government molded Toyota into a world-class performer.

    In every other industrialized nation, government has stepped in and given their auto companies a significant edge. Most important, they all adopted national health care and pension systems decades ago.

    General Motors alone provides health coverage to a million people – workers, retirees and families. The annual price tag is about $5 billion, which, as CEO Rick Wagoner is fond of pointing out, is more than GM spends on steel.

    That burden could be lifted, to the benefit of 47 million uninsured Americans, by adopting a Medicare-style program for everyone. It would save the nation as much as $350 billion per year now spent for insurance companies to shuffle paper and deny claims.

    The fate of the Motor City captivates us because it speaks to our future. For 30 years, politicians have bowed to Wall Street, sitting by while wages for most workers stagnated. Big Three workers have maintained their living standards better than most, in no small part because they have a union. In a country where investment bankers gave themselves $30 billion in bonuses last Christmas, have we reached a point where $58,000 a year with benefits is too much to ask?

    We once promised the pursuit of happiness to all, including the workers who make our factories run, not just those who trade credit default swaps. Now more than ever, we need to recapture that spirit with a thoroughgoing plan to rescue the environment, care for the sick and transform transportation.

    Mark Brenner and Jane Slaughter work for Labor Notes, an independent monthly labor magazine in Detroit. It receives no support from the United Auto Workers.

Poll: 61% Oppose Auto Bailout December 4, 2008

Posted by rogerhollander in Economic Crisis.
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Survey shows that Americans think federal aid for the Big Three is unfair and won’t help the economy.

By Ben Rooney, CNNMoney.com staff writer


 

Map
Auto workers by state
More than 2 million workers in every state – including Alaska and Hawaii – draw their pay from the auto industry. »»

NEW YORK (CNNMoney.com) — A majority of Americans oppose a bailout of the troubled U.S. auto industry, according to a poll released Wednesday.

The CNN/Opinion Research Corp. poll, conducted by telephone on Dec. 1-2 with nearly 1,100 people, showed that 61% of those surveyed oppose government assistance for the major U.S. automakers.

The poll comes at a critical time for the American auto industry. Ford Motor (F, Fortune 500), General Motors (GM, Fortune 500) and Chrysler LLC are requesting up to $34 billion in emergency loans from the government amid the weakest auto sales in 25 years and persistently tight credit.

General Motors and Chrysler, burning through billions of dollars in cash, are the most imperiled. All three companies submitted plans to Congress on Tuesday that made their case for funding, and industry executives are set to testify Thursday and Friday as lawmakers debate whether to take emergency action.

But Wednesday’s poll suggests that Americans believe bailing out the Big Three is a bad idea.

A full 70% of respondents indicated that a bailout is unfair to taxpayers.

In addition to being unfair, the poll showed that a majority of those surveyed think a bailout would not help the economy.

Sandeep Dahiya, a professor of finance at Georgetown University, said the poll results were “quite surprising.” The large percentage of those opposed to the bailout “tells you much about how what is good for GM is not good for America.”

But the disapproval reflected in the poll may not result in the kind of public backlash that occurred in response to the $700 billion bailout package Congress passed in October, Dahiya said.

“The numbers are a lot smaller and there’s more apathy,” in the public following a string of other bailouts in recent months, Dahiya said. Still, public resentment is “festering” and an auto industry bailout is “not going to be an easy sell,” he added.

Despite being opposed to federal support of the industry, the possibility of a bankruptcy among one or more of the Big Three automakers is a concern for a significant number of poll respondents.

While only 15% of those polled think a bankruptcy in the auto industry would have an immediate impact on their families, 43% think a bankruptcy would eventually have an effect on them.

Dahiya pointed out that a bankruptcy does not necessarily mean an automaker will stop making cars. “Ideally, a bankruptcy leads to a fresh start,” he said.

The margin of error for the poll is plus or minus 3%. To top of page

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