For the better part of a week, Donald Trump boasted about saving more than 1,000 jobs at the Carrier air conditioning plant in Indianapolis [later reduced to 800]. Representing only about half of the positions candidate Trump promised to protect from relocation to Mexico, Jon Perr reported at DailyKos.com (12/3), the murky Carrier deal appears to be a one-off bargain combining the carrot of state tax breaks with the potential stick of retaliation against the manufacturer’s parent company, defense contracting giant United Technologies. For UTX, it was a small price to pay for some favorable PR. For its part, the Obama administration begrudgingly gave credit where credit is due, with press secretary Josh Earnest acknowledging, “This is good news and, obviously, we’d welcome that good news.”
President Obama gets little credit for the 800,000 new manufacturing jobs in the US since 2010. “Thanks to his stimulus program and auto rescue which Donald Trump, Mike Pence, and virtually the entire GOP opposed, President Obama deserves much of the credit for the tens of thousands of jobs produced during the economic turnaround of the Hoosier State. Of course, you’d never know that based on what the good people of Indiana say, or how they vote,” Perr wrote.
When Obama narrowly carried Indiana in 2008, the state’s unemployment rate of 7.6% was already well above the national average. On Inauguration Day just two months later, the jobless rate hit 9% and kept climbing a year after that, when the unemployment rate peaked at a staggering 10.9%.
The February 2009 Obama stimulus package, which, in addition to tax relief for 95% of working Americans, brought $8.8 bln in American Recovery and Reinvestment Act funding to Indiana. (Though he opposed the $800 bln stimulus program, then-Rep. Mike Pence, R-Ind., nevertheless requested funds for his district because they would “provide real and long-term economic and livability benefits.”) In 2008 and 2009, Obama made four trips to Elkhart, Ind., to highlight his efforts to reduce an unemployment rate that topped a horrific 20%. Then, that spring, President Obama followed up on George W. Bush’s 2008 loans to Chrysler and GM to launch an $82 bln rescue of the American auto industry. That move, too, was opposed by Donald Trump and his future running mate Mike Pence. As Pence boasted in a 2010 speech in Detroit:
“I even opposed bailing out GM and Chrysler. I welcome the rebound of that company with an open heart, but I still think that most Americans know that it would have still been better for GM and for the country if GM had been allowed to go through normal bankruptcy proceedings,” Pence said.
By 2016, the New York Times reported, the landscape in Indiana had changed dramatically for the better. The private sector has added roughly 300,000 jobs, bringing the unemployment rate down to 4.5% now (nearly half a percentage point below the national unemployment rate). But the state still voted for Republicans Mitt Romney in 2012 and Donald Trump in 2016.
“Elkhart’s unemployment rate, at 3.8%, is among the country’s lowest,” the Times’ Jackie Calmes wrote, “so low that employers here in the self-described R.V. capital of the world are advertising elsewhere for workers, offering sign-up bonuses, even hiring from a local homeless shelter.” But when it comes to giving credit for that amazing return to prosperity, there is a bipartisan consensus among local officials:
“Whether he gets the credit or not, people’s home equity has gone back up, fuel prices are the best we’ve had in a long time, there’s a lot of things that make this all go,” Larry Thompson, a former longtime mayor of nearby Nappanee and a Republican, said as he showed off an expanding cabinetry factory, Kountry Wood Products.
“But I think that maybe it’s just some of the other things he’s been involved with that people in our area” — Mr. Thompson stopped, shaking his head in unspoken reference to various social issues...
“He gets very, very little credit, and I think that’s too bad because we got quite a bit of help,” said Dick Moore, Elkhart’s mayor the past eight years, a Democrat who lost election to a third term in November. “I don’t know what we would have done without it.”
In 2008, Sen. Obama lost Elkhart County by a 55 to 44 percent margin. Four years later, Obama didn’t even contest the state, and got drubbed in Elkhart County by 63 to 36 percent. In 2016, Donald Trump expanded on Mitt Romney’s numbers, drubbing Clinton by 64 to 32 percent. While manufacturing employment statewide has not returned to its pre-recession levels, some Hoosier State analysts think something else may be behind the rejection of Obama since 2008:
Brian A. Howey, publisher of the Howey Politics Indiana newsletter and once a reporter in Elkhart, sounded stumped, even allowing for the state’s conservatism: “I’m a lifelong Hoosier. I’m just amazed that not only do people not appreciate what happened in ‘09, but there’s a lot of hostility toward Obama. I think part of it is racial and a lot of it is political.”
“This state stood to lose 150,000 auto jobs if Chrysler and G.M. had liquidated,” Howey added. “We would have had a bona fide depression here.”
A bona-fide depression, not just in Indiana, but across the entire US if not for the federal interventions, including the Obama stimulus. As Lori Montgomery of the Washington Post reported in 2012, the nonpartisan Congressional Budget Office (CBO) certainly thought so. Its director, Douglas Elmendorf, explained to Congress that “CBO’s own analysis found that the package added as many as 3.3 mln jobs to the economy during the second quarter of 2010, and may have prevented the nation from lapsing back into recession.” Economists Alan Blinder and Mark Zandi certainly agreed. As their October 2015 showed, the combined federal efforts to rescue the American economy from its greatest collapse since 1929 “dramatically reduced the severity and length of the meltdown that began in 2008; its effects on jobs, unemployment, and budget deficits; and its lasting impact on today’s economy.”
The decision to rescue GM and Chrysler, derided by Trump, Pence and Romney, had an outsized impact for Indiana. Ultimately, the federal government spent almost $80 billion to save the two companies. But after selling off its remaining shares, the price tag was much lower at $9.3 billion. But as the Center for Automotive Research documented in December 2013, that sum may have been the best investment Uncle Sam ever made.
Had GM and Chrysler failed altogether, the result could have been 4.1 mln jobs lost across the US economy in 2009 and 2010, with federal transfer payments and $105 bln in lost income and payroll tax revenue for the US Treasury.
As the Center’s chief economist Sean McAlinden put it, “This peacetime intervention in the private sector by the US government will be viewed as one of the most successful interventions in US economic history.”
Especially in Indiana. As the Northwest Indiana Times documented in August 2013, the Obama administration’s actions enabled General Motors to rebound from bankruptcy and invest hundreds of millions of dollars in plants and jobs in Fort Wayne. The north central Indiana city of Kokomo came roaring back, as Delphi and Chrysler respectively pumped $190 mln and $1.6 bln into facilities there. As the Times’ Joseph Pete summed it up, “Indiana’s automotive industry has raced ahead to second place nationally and is not letting off the gas.”
Unfortunately, the voters of Indiana, along with those in Ohio, Pennsylvania and Michigan, appear to have ignored the economic recovery. As the series of New York Times features shows, their distrust of Hillary Clinton, of “people who’ve been here 12 years who don’t even care to learn the language but want to reap all the benefits of this country” and of the “status quo” drown out Obama’s record and Clinton’s platform. As Jeff Guo detailed in the Washington Post, “Yes, working class whites really did make Trump win. No, it wasn’t simply economic anxiety.”
(Jon Perr is a contributing editor at DailyKos.com. See the full story at http://bit.ly/2gFF697)
TRUMP WAGES WAR ON US UNIONS. President-elect Donald Trump, a supposedly populist candidate who rose to power on promises made to frustrated American workers, has now seemingly launched what Politico is describing as an outright “war on unions.”
Labor leaders and advocates across the nation are rallying in support of United Steelworkers Local 1999 president Chuck Jones of Indianapolis, after Trump publicly attacked the Indiana union leader for calling him out for lying about the number of Carrier jobs the incoming president claimed to have saved from being outsourced to Mexico, Lauren McCauley noted at CommonDreams.org (12/9).
“An attack on [Jones] is an attack on all working people,” Richard Trumka, president of the AFL-CIO labor federation, declared (12/8).
The hashtag #ImWithChuck has drawn a groundswell of support for Jones, including from national labor groups and prominent progressive politicians Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.), who called Jones personally to “commend him for holding the president-elect accountable.”
Amid that public battle, Trump doubled-down on his anti-worker agenda on 12/8 with the nomination of fast-food executive and union critic Andrew Puzder for secretary of labor.
“Trump might as well rebrand the Labor Department as the ‘anti-worker department,’” Politico reported SEIU president Mary Kay Henry as saying. “Somebody like Andrew Puzder earns in one day what the workers in his stores earn in a year,” Henry added, pointing to the low wages earned by workers at Carl’s Jr. and Hardee’s, which are part of Pudzer’s CKE Restaurants. “The absolute economic inequality that he represents is the actual thing that we’ve counted on the Labor Department to stand against.”
The feud with Jones, followed up with his nomination of Pudzer, have together sent a clear message to labor groups and American workers that, despite his campaign rhetoric, the president-elect is not on their side.
“Anyone who believes in robust, pluralistic democracy should be worried that a national leader, so soon after being elected, is assailing labor unions with an eye to weakening them,” wrote former New York Times labor reporter Steven Greenhouse (12/8).
“It’s part of a larger agenda,” RoseAnn DeMoro, executive director of National Nurses United, told Politico, “and you can see it playing out in terms of his picks, which is to destroy the labor movement.”
“They want to do away with democracy,” she continued. “That’s the problem. Labor is a check on the balance of power with corporations and they want labor out of the way.”
In a Washington Post op-ed (12/8), Jones shrugged off the taunts of the president-elect and threatening phone calls received from Trump supporters.
“I’ve been doing this job for 30 years,” he wrote. “In that time, people have threatened to shoot me, to burn my house down. I’m not a macho man, but I’m just used to it.”
“What I can’t abide,” Jones continued, “is a president who misleads workers, who gives them false hope. We’re not asking for anything besides opportunity, for jobs that let people provide for their families. These plants are profitable, and the workers produced a good-quality product. Because of corporate greed, though, company leaders are racing to the bottom, to find places where they can pay the least. It’s a system that exploits everyone.”
HOW DID TRUMP WIN? FBI & RUSSIANS. Sam Wang, a professor and founder of the Princeton Election Consortium, found that Hillary Clinton was ahead of Trump in national polls by about 6 percentage points in the week before FBI Director James Comey released his letter (10/28) notifying Congress that the agency was looking at Clinton emails found on Anthony Weiner’s laptop computer. After release of the letter, opinion swung toward Trump by 4 points before settling at 2 points. Clinton still led in national polls, but the 2 points Trump gained was larger than the victory margin in Michigan, Pennsylvania, Florida and Wisconsin, Wang noted. “Many factors went into this year’s Presidential race, but on the home stretch, Comey’s letter appears to have been a critical factor in the home stretch.”
Kevin Drum noted at MotherJones.com (12/12) that Wang’s finding jibes with Nate Silver’s estimate at FiveThirtyEight.com that the Comey letter cost Clinton 2 points.
“Without Comey’s letter, Clinton likely would have won the popular vote by four points and the Electoral College by 300 votes or more” Drum wrote. “Who knows about the Senate? Maybe Democrats would have won that too. Eliminate the Russian ratf***ing and Clinton would have won in a landslide. Instead, a game show host is about to be sworn in as president of the United States and everyone is convinced that the Democratic Party is practically on its last legs.”
REPUBLICANS UNVEIL PLAN TO CUT SOCIAL SECURITY. Republicans are planning to pass major cuts to Social Security this year with a bill introduced by Rep. Sam Johnson, Chairman of the House Ways and Means Committee’s Social Security Subcommittee.
Unlike the Bush-era plan to partially phase out Social Security and replace it with private investment accounts, this plan simply cuts benefits and introduces means testing, which cuts benefits at higher income levels — and reduces political support for Social Security at those levels.
According to a Social Security actuaries’ report, a worker who makes less than $12,000 a year would see a 22% increase in benefits, people earning $12,000 to $22,000 would get about the same benefits and everybody else would see their benefits slashed. A retiree who averaged $60,000 income would see a 33% cut in benefits, Kevin Drum noted at MotherJones.com (12/10).
The Social Security Trust Fund is predicted to be drawn down in the mid-to-late 2030s. But the fund will not be bankrupt, as critics often suggest. At that point Social Security would only be able to pay about 79% of benefits recipients will be entitled to in those years. By 2090, that percentage falls to 74%. So it’s fairly stable after that drop-off in the 2030s.
The most obvious way to remove that shortfall, Josh Marshall noted at TalkingPointsMemo.com (12/9), is to remove or change the $118,500 cap on Social Security taxable wages, without increasing the tax on lower wage earners. “Once you get over $118,500 of income per year you stop paying Social Security taxes. Change that and most of the problem disappears.”
A 2015 bill sponsored by Democrats, including Sens. Bernie Sanders (I-Vt.), ranking member of the Senate’s Budget Committee, and Sherrod Brown (D-OH), ranking member of Senate Finance’s Social Security subcommittee, would raise the cap in 2015 to tax 90% of the nation’s applicable income. That would close Social Security’s $11.1 tln shortfall over the next 75 years by more than one-fourth, according to the Center for American Politics.
Instead, the new GOP bill would solve this problem entirely with cuts to middle-class and wealthier retirees. It would raise the retirement age for workers from the current 67 to 69. It would slightly increase benefits for below-average earners and slightly decrease benefits for above-average earners. Over 75 years, the GOP proposal has the Trust Fund growing substantially out into the infinite horizon. In other words, a lot of the cuts are more than are necessary to pay for all benefits even if you leave the “cap” in place.
On the campaign trail, Donald Trump promised not to cut Medicare or Social Security benefits. He already has suggested he might be open to “changes” in Medicare and he chose Rep. Tom Price (R-Ga.), who wants to privatize Medicare, as his secretary of health and human services. The $12 trillion-dollar question posed by Steve Vernon of CBS Moneywatch (12/12): Will he keep his word and stand up to his fellow Republican lawmakers?
TRUMP KEEPS UP LYING PACE. Donald Trump has continued to dissemble at a prodigious pace since his apparent election as president. PolitiFact has examined 339 controversial statements since Trump started his campaign for president last year, and so far it has found 63, or 19%, mostly false; 114, or 34%, false; and 61, or 18%, “Pants on Fire” (for a total 71% mostly false or worse). PolitiFact also found 51 of his statements, or 15%, half true; 37, or 11%, mostly true; and 14, or 4%, true. Since the election, PolitiFact has examined nine Trump statements through Dec. 12 and found two half-true, three false and four “Pants on Fire,” including his statements (11/28) that he “won the popular vote if you deduct the millions of people who voted illegally” and that there was “serious voter fraud” in California, New Hampshire and Virginia (each state was rated separately).
MAYBE TRUMP IS TOO INDEBTED TO DIVEST. Josh Marshall of TalkingPointsMemo.com suggested (12/8) that Trump might not be able to divest his far-flung business enterprises because he’s too “underwater” to do so, or he’s too dependent on current and expanding cash flow to divest or even turn the reins over to someone else.
Marshall noted that Trump was planning to remain as executive producer of *The Apprentice*, now starring Arnold Schwarzenegger, in addition to his duties as chief executive of the United States. “Of course, it may simply be a title that entitles him to draw a check,” Marshall noted. “But does he need the check that bad?”
Marshall also noted that Trump loaned his campaign $50 mln during the primaries. As it became increasingly likely that he would win the nomination, donors were wary because they didn’t want their money to go to paying back Trump. It was only in June that Trump finally forgave the loan to his campaign — about the same time his spokesman said Trump sold all his stock because of concerns they might present a conflict of interest, which Marshall said “doesn’t pass the smell test.” The most obvious explanation, he said, is that forgiving that debt from his campaign required him to free up more cash, either for the campaign or personal expenses or perhaps to have a certain amount of cash on hand to take care of other debts.
“Since we don’t have Trump’s tax returns, there’s just a huge amount we don’t know about his businesses,” Marshall wrote. “What we do know is that Trump appears to wildly exaggerate the scale of his wealth and exhibit a stinginess that is very hard to square with a man of the kinds of means he claims. A heavily leveraged business, one that is indebted and dependent on cash flow to keep everything moving forward, can be kind of like a shark. It has to keep moving forward or it dies.
“Perhaps Trump simply doesn’t feel like he can trust anyone else to keep the whole shambling enterprise afloat. More plausibly, and consistent with Trump’s history over the last couple decades, Trump’s business is dependent on an ever expanding number of deals not just to grow but to stay afloat at all. It is certainly plausible that if Trump simply sold off his company in toto, he’d be in debt. Maybe there wouldn’t be anything left to put in a blind trust.
“This is all necessarily speculative because Trump has kept the details of his business empire hidden from the public. But behavior, circumstantial evidence and lots of evidence of tight reliance on cash flow to service debts of various sorts suggest that Trump may not be able to divest or separate himself from his business. Why doesn’t he? Why does he court all this controversy? Because he can’t.
“If all this is true, the peril of Trump’s foreign deals is larger than we may realize. It’s not just a matter of hitting the billionaire big time. It could be a matter of staying afloat at all.”
From The Progressive Populist, January 1-15, 2017
Blog | Current Issue | Back Issues | Essays | Links
About the Progressive Populist | How to Subscribe | How to Contact Us
PO Box 819, Manchaca TX 78652