James Pethokoukis

Politics and policy from inside Washington

Union attack on Boeing turns into unfunny joke

Jun 18, 2011 01:25 UTC

Obamaland’s assault on Boeing went from economic tragedy to political farce during a House Oversight Committee field hearing in South Carolina on Friday. Lafe Solomon, acting counsel of the National Labor Relations Board, dropped this gem:

These are difficult economic times, and I truly regret the anxiety this case has caused them and their families. The issuance of the complaint was not intended to harm the workers of South Carolina but rather to protect the rights of workers.

Who cares about intent? If the NLRB gets its way, 1,000 workers at the already completed plant will lose their jobs. Ironically, the NLRB can’t point to anyone who has lost their job as a result of Boeing building a second assembly line for its 787 Dreamliner in South Carolina rather than in the state of Washington. That reality produced this bizarre sequence (via Bloomberg) at the hearing:

“Can you name me a single, solitary worker in Washington state” who lost jobs or benefits? asked Representative Trey Gowdy of South Carolina. “Where is the retaliation?”

Solomon repeatedly responded that he couldn’t “at this time” provide evidence of such an effect. “We believe evidence will show Boeing was motivated by retaliation,” he said.

Verdict first, evidence later. But when you are waging ideological war to accomplish via regulation what you cannot via legislation … well, whatever gets you through the night, right?

To recall: Boeing opened its $750 million facility in union-resistant  South Carolina on June 10, employing some 1,000 workers. It’s a second location for the production of the company’s 787 Dreamliner. Boeing might have built the production line back in Washington, but the local union wouldn’t agree to a lengthy no-strike contract. And the company hasn’t forgotten that a 2008 strike helped put the 787 program over budget and behind schedule.

After the new plant was built, the NLRB said the move was retaliatory and the line should be moved to Washington. That smacks of overreach. The pertinent law would seem to bar punitive actions by company bosses against union activists. That’s not the situation here. Boeing decided to open a new plant in a state where it was given financial incentives, labor is cheaper and work stoppages are less likely. Again, there’s no evidence any worker in Seattle lost a job. A previous 787 assembly line remains there, and the company claims to have added some 2,000 workers to that facility.

That suggests the move was a rational business decision that didn’t shortchange anyone already working at Boeing. So it’s hard to see how the union’s objection can really hold water. But the legal fight will probably be lengthy and may end up in the U.S. Supreme Court. And if Boeing were to lose, remedying the situation could get expensive.

But there are much broader implications. The NLRB’s fight comes amid a political debate about unions and the threat from anti-union or so-called “right to work” states. If it turns out a union can block a business decision even when there’s no harm to its members, that could easily deter needed manufacturing investment in America, whether by homegrown or foreign-owned companies.

Team Obama thinks little of the idea that “uncertainty” created by its tax, spending and regulatory policies has created an anemic recovery. But if an American business cannot even rely on the law to protect its fundamental economic right to open a plant in its state of choice, then it really cannot be certain of much.

 

COMMENT

Boeing breaks the law, Dixie complains about being caught. Punish both the South and Boeing, and pursue/capture them if they go offshore.

Posted by ProudYankee | Report as abusive

Andy Stern can now fix a problem he helped cause

Apr 13, 2010 15:10 UTC

Multiple reports suggest Andy Stern will be leaving his job as head of the politically powerful SEIU. The union, which represents healthcare and public employees, was instrumental in passing healthcare reform. In other words, he has contributed in two ways to America’s fiscal woes. First, health reform may prove a budget fiasco since its tax hikes and spending cuts  were used to expand coverage rather than cut the budget deficit. Second,  fat pay and benefit packages for public sector unions are a big reason so many states like California have long-term fiscal woes. As this David Feddoso story found:

Among states whose government workers are less than 40 percent unionized, median per capita state debt is $2,238. Among states with between 40 and 60 percent of their government workers in public sector unions, the average debt is $3,609. Among states with more than 60 percent of the government workforce unionized, the average (median) per capita debt is $6,380.

Interestingly, Stern will be a member of Obama’s deficit commission. So there are at least a couple of issues that need addressing that he will be an expert on.

A storm is coming

Mar 8, 2010 17:00 UTC

Looks like British civil servants are striking over budget plans to cap severance pay (via Clusterstock). A sign of things to come in the United States, where tight government budgets are going to force spending cuts and layoffs. The dissatisfaction over American education plays into this, too. The political impact of this will be fascinating since the public employee unions may be the most important Democratic interest group.

Losing patience with public sector workers and unions

Mar 5, 2010 21:08 UTC

This USA Today story has the kind of numbers that stick with people:

Overall, federal workers earned an average salary of $67,691 in 2008 for occupations that exist in both government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available. These salary figures do not include the value of health, pension and other benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker, according to the Bureau of Economic Analysis.

Me: It’s the benefits that really stand out. There have been more and more stories out there about the fat union benefits of government workers, both federal and state. New Jersey Governor Chris Christie has been railing on this issue since he was elected last year. Here is a bit from a recent speech that got lots of play in the blogosphere:

Our citizens are already the most overtaxed in America. U.S. mayors hear it all the time. You know that the public appetite for ever-increasing taxes has reached an end. So when we freeze $475 million in school aid, I am hearing the reverberations from school boards saying now you are just going to force us to raise taxes. Well there is a 4 percent cap in place as you all know, yet school boards continue to give out raises which exceed that cap, just on salary. Not to mention the fact that most of them get no contribution towards the spiraling increase in health care benefits.

There is also this from USA Today:

The percentage of federal civil servants making more than $100,000 a year jumped from 14 percent to 19 percent during the first year and a half of the recession. At the beginning of the downturn, the Transportation Department had one person making $170,000 or more a year; now it has 1,690 making that.

And this from the LA Weekly:

In the past decade, Los Angeles Unified School District officials spent $3.5 million trying to fire just seven of the district’s 33,000 teachers for poor classroom performance

COMMENT

The Government has long known that monopolies distort market economics they just don’t include unions as monopolies.

And I don’t believe the earlier comment that higher taxes on the 1000 top earners would balance the budget. We are talking about $500 billion and up. They don’t average that much for their entire net worth.

Obama’s union error

Mar 2, 2010 16:27 UTC

The great Ed Yardeni thinks the POTUS is repeating FDR’s mistakes:

In 2016, I expect that Mr. Geithner will make the following speech: “We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job … We have never made good on our promises … I say after eight years of this Administration we have just as much unemployment as when we started … and an enormous debt to boot.”

Those words were actually spoken by FDR’s Treasury Secretary Henry Morgenthau before his fellow Democrats on the House Ways and Means Committee. Revisionist conservative-leaning historians are increasingly blaming FDR’s policies for prolonging and deepening the Great Depression. A recent addition to this perspective is “The Forgotten Man: A New History of the Great Depression” (2007) by Amity Shlaes. She followed it up with an interesting article in the WSJ on Feb. 1 this year, “How to Make a Weak Economy Worse.” She observed that FDR’s anti-business policies were bad for business. She notes, “The 1935 Wagner Act was a tiger that makes today’s union law look like a pussycat. It favored unions over companies in nearly every way, including institutionalizing the closed shop. And after Roosevelt’s landslide victory in 1936, the closed shop and the sit-down strike stole thousands of productive workdays from companies, punishing earnings and limiting ability to hire.”

In yesterday’s WSJ, we learned that the Obama administration is considering union-backed proposals to make it easier for government agencies to bypass low bidders and award contracts to higher bidders that pay more wages and benefits. The AFL-CIO labor federation is pushing for a jobs program called “Jobs Now Make Wall Street Pay.” They want a transaction tax on securities trading to pay for yet another infrastructure spending program.

COMMENT

Revisionist economic historians are anti-labor, just as Holocaust revisionists are anti-you-know-what. Cite them with caution.

Oh, and if you don’t like labor guilds, unions and what they stand for, Jim, namely equal rights, safe workplace environments and decent conditions for working people, which is the antithesis of what we have now, don’t beat about the Bush – just come right out and say so.

Posted by The Bell | Report as abusive

How Obama can earn that Nobel Peace Prize

Oct 9, 2009 17:51 UTC

The Nobel Committee in Norway says it awarded President Barack Obama the 2009 Peace Prize for “his extraordinary efforts to strengthen international diplomacy and cooperation between peoples.” (Congratulations, Mr. President.) In particular, the committee noted Obama’s multilateral approach on the issues of climate chance and nuclear disarmament.

But where has the president been when it comes to using diplomacy and cooperation to promote global trade, which is essential to global peace and prosperity? Given the infamous role of protectionism in the Great Depression, it’s no surprise that open and expanded trade has been at the core of the post-World War Two economic order, particularly during the past two decades.

The Great Recession, though, has shattered that consensus. An analysis by economists Barry Eichengreen and Kevin O’Rourke has calculated that “world trade is falling much faster now than in 1929-30.” Paul Krugman says trade “has fallen through the floor in a way that it literally never has before, including in the Great Depression.” Global Trade Alert, a trade watchdog group with links to the World Bank, found at least 121 protectionist measures had been implemented by G-20 nations during the past year.

Just of late, the EU imposed anti-dumping duties on steel pipe from China, while Australia may impose ownership limits on foreign buyers of big companies. “So far, traditional trade protectionism has been a low-grade fever,” said World Bank President Robert Zoellick said in a recent speech. “But the temperature is rising.”

And actions by the Obama administration and Congress show that America is hardly immune. Indeed, they have been spreading the disease. Among the protectionist outbreaks: The “Buy American” provisions in the $787 billion stimulus package, the blocking of Mexican trucks from U.S highways, the G.M. and Ford bailouts, inaction on pending free-trade agreements with Colombia, Panama and South Korea, tariffs on Chinese tires.

An American administration that seems disinterested in free trade? “You can drop the word ‘seems,’” says Bruce Josten, head of governmental affairs for the U.S. Chamber of Commerce.

Looking for an explanation? Here’s one: Bad economics makes for convenient politics. Since the Obamacrats might not be able to deliver the top two items on Big Labor’s wish list — reopening the North American Free Trade Agreement and passing rules making it easier to organize workplaces — they’re giving union supporters just about everything else.

Obama’s political advisers may not understand the importance of free trade, but his economic ones do. Obama should listen to them and begin to lead. Give Congress the greenlight to pass the free-trade agreements with Colombia, Panama and South Korea. Commit to getting the Doha trade round concluded within a year. The centrist Democratic Leadership Council also suggests that Obama reconnect trade to national security by asking Congress for a broad long-term waiver of tariffs for low-income countries and large majority-Muslim-majority states. Instead of increasing boosting aid to Pakistan, for instance, why not eliminate $360 million a year in tariffs on its exports?.

If Obama did all that, not only would he actually be worthy of the Peace Prize, but probably the Nobel Prize for Economics as well.

COMMENT

The entire NOBEL PEACE PRIZE COMMITY should resign in shame they have given it to a tyrant,despot and communists liar OBAMA

Posted by Flu-Bird | Report as abusive

Obama risks trade war to help union allies

Sep 16, 2009 14:44 UTC

Has President Barack Obama thrown Big Labor under the bus? It sure might seem that way after watching his performance yesterday before two union audiences, G.M. workers in Lordstown, Ohio, and an AFL-CIO convention in Pittsburgh.

Both speeches were fiery, pro-union stem winders. Yet the president barely mentioned the top item on Big Labor’s 2009 political agenda, the Employee Free Choice Act. The legislation would require a company to recognize a union without a secret-ballot election once organizers submitted union cards signed by a majority of its workers. Unions believe it would increase unionization, which is probably a pretty good bet given how hard Corporate America is fighting the bill.

But the card check bill has struggled mightily on Capitol Hill and could clearly use a boost from the White House. Still, the president didn’t speak its name in Lordstown and devoted just a single sentence in Pittsburgh. Is that any way to treat the folks who poured tens of millions of dollars into Democratic campaigns last year?

Maybe not, but you didn’t hear any booing. Heck, there probably wasn’t even a slight grumble given the myriad ways Obama has already helped his union allies. His stimulus package helped prevent layoffs of many government union workers, while key provisions serve to prop up union wages on infrastructure projects. His restructuring of the American auto industry left the United Auto Workers with a majority stake of Chrysler and a fifth of General Motors for the price of relatively minor pay and benefit concessions. And his healthcare reform looks to bolster underfunded union retiree benefit plans, while avoiding taxes that would hit pricey union insurance packages.

Then, of course, there is Obama’s decision to impose a 35 percent tariff on imported tires from China, much applauded by Big Labor. As the AFL-CIO put it, “The trade decision was the president’s first down payment on his promise to more effectively enforce trade laws.”

Not only does the move directly hurt U.S. consumers, but it will certainly encourage more domestic industries, such as steel and apparel, to look to Washington for help. Even more dangerous than copycat protectionism: by blaming China for economic woes here at home, Obama risks rekindling anti-China efforts in Congress, such as pushing China to allow a renewed and rapid escalation in its currency. That is how you could get a full-blown trade war.

Hard truth: When it came time for Obama to choose between his political allies on one hand and America’s economic allies (and consumers) on the other, he chose the former this time.

And who knows, a slightly watered down card-check bill might still get passed by year end and signed by the president. In retrospect, Obama should have dumped his own Pittsburgh speech for that of Labor Secretary Hilda Solis who told the gathering that she “was proud and humbled to be your humble servant.”

Now that’s more like it.

COMMENT

I present products at trade shows all the time. I found that many small businesses are resentful when having to do a trade show where unions are involved.
Once I had to hook up the power to the lights on the booth. I called the electrical guy. He came down and called a rigger to come and tie the cable to the overhead beam. When the rigger arrived all these guys where standing around. I asked them, what is going on? The one guy told me that a supervisor had to be present before they could go ahead and do the job. So then a supervisor turns up after 55 minutes and within less than one minute the electrician pushes in the plug, the rigor ties the cable with a cable tie to the beam and I get charged three hundred Dollars for the job. It took three unions guys and one hour to plug in a electrical extension cable.
When complaining about the price to the show organizers response was that it is union labor and they have no control on the costs.
I suddenly realized why GM and many other American companies are in so much trouble.

Posted by Charles Hibberd | Report as abusive

Obama forgets to talk about unions when speaking to union

Sep 15, 2009 16:53 UTC

It was at this point during the president’s Ohio speech to GM workers today that I thought he was going to talk about card check: “And yes, just in case you were wondering …”

But instead he talked about this:

… we are fighting for an America where no American should have to worry about going without health insurance or fear that one illness could cost them everything. “

Me: Not a good sign for card check, or unionism in general, I would think. I mean, he doesn’t even mention the word “union” — at least in his prepared text.

COMMENT

Very well put. He stated that “we” are fighting for…. I don’t know who “we” are, but it’s not me. After his congressional speech failed miserably last week, I don’t think we have to worry about the government taking control of our healthcare any time soon.

Posted by Frank | Report as abusive

Why economic insecurity isn’t helping Democrats

Sep 8, 2009 13:49 UTC

Some Democrats thought they would have a much easier time pushing through changes in healthcare, trade and labor policy thanks to the recession. The theory was that economic insecurity would nudge people toward the warm embrace of government.  Obviously that does not seem to be happening. Indeed, past polls showed that economic downturns actually make people more skeptical of Big Government. Apparently, that is also true of Big Labor. This from a recent Gallup poll:

The 48% of Americans now approving of unions represents the first sub-50% approval since Gallup first asked the question in the 1930s. The previous low was 55%, found in both 1979 and 1981.

Indeed, there is a statistical relationship between rising unemployment and union disapproval (via Nate Silver):

The regression line finds that, for every point’s worth of increase in the unemployment rate, approval of labor unions goes down by 2.6 points. Alternatively, we can add a time trend to the regression model, to account for the fact that participation in labor unions has been declining over time. This softens the relationship slightly, but still implies a decrease in approval of 2.1 points for unions for every point increase in unemployment. Both relationships are highly statistically significant.

Dems/unions push new wave of investment taxes

Aug 31, 2009 18:42 UTC

American equity investors have suffered a lost decade of portfolio performance — the S&P 500 is about where it was back in 1998 — and trillions of dollars of lost net worth, so it may seem a terrible time to hit them with a $100 billion-a-year investment tax. And, of course, it is.

But good sense isn’t stopping the AFL-CIO from pushing just such an ill-advised plan. The nation’s largest labor organization is proposing a tenth of a percent tax on every stock transaction, to fund infrastructure projects that would, presumably, employ union members.

It would be a version of economist James Tobin’s proposal to levy a tax on currency trades as a way of reducing speculation and volatility.

Anti-globalization forces later latched onto the idea. More recently, so too have financial reform proponents such as Adair Turner, the chairman of Britain’s Financial Services Authority, who recently suggested Tobin taxes may be a way of containing the size of the financial sector.

Now organized labor is genetically hard-wired to figuring out new ways to clobber capital, forgetting that America’s investor class resides on Main Street as well as Wall Street. But you might figure its political allies could be a wee bit savvier.

Yet congressional Democrats are also toying with similar ideas. Earlier this year, a group of House members introduced a bill that would impose a quarter percent tax on all securities transactions, with the hope of raising at least $150 billion a year.

More recently, one of that bill’s sponsors, Representative Peter DeFazio, an Oregon Democrat, has proposed a 0.2 percent tax on crude oil futures contracts to tamp down on speculation and pay for national transportation spending.

With a stock transaction tax, investors would get hit directly through passed-along trading costs, just as a cap-and-trade emissions plan on business would quickly mean higher energy costs for consumers.

But there would also likely be some indirect, though severe, impacts.

To the extent that active traders are nudged aside, volume would thin and spreads widen. Some investment firms might choose to locate offshore or trade overseas.

And if that happens, these various transaction taxes would generate less revenue than expected — as well as cost domestic jobs — perhaps prompting tax proponents to advocate even higher levies to make up for the shortfall.

And don’t forget that the Obama administration is already proposing to raise capital gains tax by a third for wealthier Americans.

Maybe if the unions are really looking to fund more infrastructure spending through higher taxes, they could show some sacrifice by supporting taxes on members’ “gold-plated” healthcare plans, whose benefit costs may be 50 percent higher or more than the plan of the typical American worker.

So far unions have been vetoing efforts in Congress to use just such a tax to pay for healthcare reform. Then again, raising taxes of any kind during a period of economic weakness is a risky proposition.

COMMENT

They dont get it!! .. They will crush and cripple the market.. I pray for this country for the next few years..

Posted by Jeff Gold | Report as abusive
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