In his upcoming State of the Union speech, President Barack Obama is expected to prioritize what is emerging as his legacy issue: combatting America's growing wealth inequality. Expect him to promote policies to create new middle-class jobs, especially in manufacturing, and counter the erosion of wages now undermining workers economy-wide.
But in the speech, Obama is also expected to highlight several major trade initiatives, including his priority Trans-Pacific Partnership (TPP) deal, a massive pact with 11 Asian and Latin American nations that Obama hopes to sign quickly. The business lobby is at full tilt pushing Obama to use the SOTU to call on Congress to pass Fast Track trade authority for the TPP.
The thing is that economists of all stripes agree that U.S. trade policy has been one of the major contributors to growing U.S. income inequality.
There really is no disagreement about that -- the only debate is about the degree of the effect. A study published by the Peterson Institute for International Economics -- an early supporter of the North American Free Trade Agreement (NAFTA) on which TPP is modeled -- estimated that as much as 39 percent of the observed growth in U.S. wage inequality is attributable to trade trends. Other studies have posited greater and lesser contributions.
The TPP would replicate and expand to additional countries the trade agreement model established in the NAFTA. Twenty years of evidence of NAFTA's contribution to U.S. income inequality has become a major problem for Obama's push to get Congress to provide Fast Track authority for the massive TPP deal, described as NAFTA on steroids.
Not a single House Democrat would sponsor the legislation submitted two weeks ago to establish Fast Track. Last week, 17 Senate Democrats made their feelings known in letters to Majority Leader Harry Reid (D-Nev.). And last November, 151 House Democrats signed a letter saying they oppose Fast Track, arguing that lawmakers have been cut out of negotiations.
Congressional opposition to more-of-the-same trade deals has intensified as Obama's past SOTU trade promises have fallen flat. In contrast to Obama's 2011 SOTU promise that his only major past trade deal, the U.S.-Korea Free Trade Agreement, would boost exports, in the agreement's first year, U.S. exports to Korea fell 10 percent, imports from Korea rose and the U.S. trade deficit with Korea exploded by 37 percent. This equates to a net loss of approximately 40,000 U.S. jobs.
The drop in exports to Korea added to last year's sluggish overall two percent U.S. export growth rate. Given current trends, the U.S. will not achieve the president's export-doubling plan until 2032 -- 18 years behind the 2014 deadline Obama set in his 2010 State of the Union speech.
This follows on the recent 20th anniversary of NAFTA, which fueled an explosion of the U.S. trade deficit with Mexico and Canada to $181 billion by 2012, resulting in a net American loss of one million jobs. (The net job loss figure is derived from the U.S. government methodology employed to calculate the employment effects of trade flows.)
U.S. government data show that the average annual growth of our trade deficit has been 45 percent higher with Mexico and Canada than with countries that are not party to a NAFTA-style pact. U.S. manufacturing exports have grown at less than half the rate to Mexico and Canada since NAFTA than in the years before it. Before NAFTA, the U.S. had a small trade surplus with Mexico and a modest deficit with Canada.
While many focus on the number of U.S. jobs lost from NAFTA and similar pacts, the most significant effect has been a fundamental alteration in the composition of jobs available to the 63 percent of American workers without a college degree. And this has had a direct impact on income inequality.
Trade pact investment rules remove many of the risks otherwise associated with sending jobs offshore to where labor costs are drastically cheaper. The United States has lost millions of manufacturing jobs during the 20 years of NAFTA and decade-plus since Congress approved China's entry to the World Trade Organization. As a result, the wages most U.S. workers can earn have been severely degraded even as overall unemployment has been largely stable (excluding the Great Recession) as new low-paying service sector jobs have been created.
According to the U.S. Bureau of Labor Statistics, two of every three displaced manufacturing workers who were rehired in 2012 experienced a wage reduction, most of them more than 20 percent. The list compiled by the Department of Labor's Trade Adjustment Assistance program of more than 845,000 specific American jobs lost to NAFTA and similar pacts reads like the funeral program for the middle class.
The implications for growing income inequality are broad. It is not only those American workers who lost a job to NAFTA or China trade who face downward wage pressure; as increasing numbers of workers displaced from manufacturing jobs joined the glut of workers competing for non-offshorable, low-skill jobs in sectors such as food service and retail, real wages have fallen in these growing sectors as well.
The U.S. government data is striking: The shift in employment from high-paying manufacturing jobs to low-paying service jobs has contributed to overall wage stagnation. The average U.S. wage has grown less than one percent annually in real terms since NAFTA was enacted even as worker productivity has risen more than three times. Since the January 1, 1994, implementation of NAFTA, the share of national income collected by the richest 10 percent has risen by 24 percent, while the top 1 percent's share has shot up by 58 percent.
Offshoring of American jobs is rapidly moving up the skills ladder, expanding the income inequality effect. Alan S. Blinder, a former Federal Reserve vice chair, Princeton economist and NAFTA supporter, says that one out of every four American jobs could be offshored in the foreseeable future. A study he co-authored found that the most offshorable industry is finance and insurance, not manufacturing. According to Binder's study, American workers with a four-year college degree and an annual salary above $75,000 are among those most vulnerable to having their jobs offshored.
The grandfather of modern free trade economics, Paul Samuelson, published a startling 2004 academic paper in the Journal of Economic Perspectives that shows mathematically how the offshoring of higher-paid jobs to low-wage countries can cause U.S. workers to lose more from reduced wages than they gain from cheaper imported goods. Trade theory states that while those specific workers who lose their jobs due to imports may suffer, the vast majority of us gain from trade "liberalization" because we can buy cheaper imported goods. Except, as job offshoring has moved up the wage level, this is no longer necessarily true.
When the Center for Economic and Policy Research applied the actual data to the trade theory, they discovered that when one compares the lower prices of cheaper goods to the income lost from low-wage competition under our current policy, the trade-related losses in wages hitting the vast majority of American workers outweigh the gains in cheaper priced goods from trade. U.S. workers without college degrees (the vast majority) lost an amount equal to 12.2 percent of their wages, so for a worker earning $25,000 a year, the loss would be more than $3,000 per year.
The 20-year record of NAFTA shows that deals like the Trans-Pacific Partnership would contribute to income inequality as more middle-class jobs are lost. Either Obama can prioritize a battle against income inequality or he can push more NAFTA-style trade agreements and the trade authority to railroad them through Congress, but he cannot do both.
Link to original article from Huffington Post
More information is available at http://www.citizen.org/fast-track.
On Thursday, a group of Democratic lawmakers proposed a law to establish a Code of Conduct for the Supreme Court.
It’s surely to have Supreme Court Justices Thomas and Scalia quaking in their Tea Party boots because it would mean they would actually have to be independent of political and other influences. They would also have to have the appearance of independence. They would have to stay away from political activity. That part would be really hard.
On June 23rd the State Senate passed AJR 1, making California the second state in the union to officially call for an Article V constitutional convention for the sole purpose of passing a United States constitutional amendment that would effectively overturn Citizens United v. FEC and limit the corrupting influence of money in our electoral process.
A new organization called ExposeFacts—backed by well-known source of The Pentagon Papers Daniel Ellsberg—is debuting itself in Washington, DC on Wednesday as a new place where government and corporate employees aware of wrongdoing can more safely and securely report their concerns.
The telecommunications industry is creating and funding front groups which pose as consumer organizations and aggressively lobby to kill net neutrality, journalist Lee Fang revealed in an article published in Vice on Friday.
It’s a sad state of affairs when a country that touts freedom of the press depends upon cable TV comedy shows to hear the real news.
Why the Supreme Court’s McCutcheon ruling is good news for the super-rich and bad news for progressive Democrats.
At the 2012 Conservative Political Action Conference, a conservative election lawyer and a baby-faced electrical engineer from Alabama with a made-for-TV Southern drawl began plotting how to unravel federal campaign finance regulations.
This is an idea worth spreading - so - please watch & share with 5 or 10 friends. It’s important to get money out of politics and the average person back in. Also - leave a message on the YouTube and let TED know - this is one of the most important issues of the day."
The U.S. Chamber of Commerce is, as they boast on its website, the world's largest business organization, as well as the nation's largest corporate lobbying group. It is also a recipient of some of the largest amounts of so-called "dark" money in the country, refusing to disclose to the public its donors or even the amounts it receives.
Citizens United is not just the default reference for US Supreme Court decisions—including the 2010 Citizens United v. Federal Election Commission ruling—that have ushered in a new era of corporate dominance of American elections. It’s the name of the conservative group that encouraged Chief Justice John Roberts and the most activist Court majority in American history to tear the heart out of what were already weak campaign finance laws.
PITTSFIELD -- Their signs read "Get Big Money Out of Politics," "Democracy Is Not For Sale" and "This Is What Plutocracy Looks Like." About a dozen of them stood in Park Square on Wednesday evening, one of 130 "rapid response events" coordinated nationwide to protest that morning's Supreme Court decision in McCutcheon v. FEC.
Any doubts about the determination of an activist United States Supreme Court to rewrite election rules so that the dollar matters more than the vote were removed Wednesday, when McCutcheon v. Federal Election Commission was decided in favor of the dollar.
Sam Bell is in the third year of a PhD program in geology at Brown University. Geology as in rocks. But Bell also moonlights as the the state coordinator of The Rhode Island Progressive Democrats, the state affiliate of the 10-year-old Progressive Democrats of America. And in his work with The Rhode Island Progressive Democrats, Bell was instrumental to the investigation that ultimately led to the National Rifle Association paying the second largest campaign finance fine in the state's history.
Postal workers are giving it their all this holiday season, as cards and packages and returns must be collected and delivered amidst ice storms, snowstorms and wild temperature drops.
They deserve our thanks in 2013.
And our support in 2014.
Thanks to a loophole that subsidizes CEO pay, McDonald's, Yum Brands, Wendy's, Burger King, Domino's, and Dunkin' Brands trimmed $64 million from their tax bills in 2011 and 2012.
The fast food industry is notorious for handing out lean paychecks to their burger flippers and fat ones to their CEOs. What’s less well-known is that taxpayers are actually subsidizing fast food incomes at both the bottom — and top — of the industry.
In December 1972, I was part of a nationwide campaign that came tantalizingly close to getting the U.S. Senate to reject Earl Butz, Richard Nixon's choice for secretary of agriculture. A coalition of grass-roots farmers, consumers and scrappy public interest organizations (like the Agribusiness Accountability Project that Susan DeMarco and I then headed) teamed up with some gutsy, unabashedly progressive senators to undertake the almost impossible challenge of defeating the cabinet nominee of a president who'd just been elected in a landslide.
Progressive voices were heard loud and clear at Saturday’s Arizona Democratic Party (ADP) State Committee Meeting in Maricopa, Arizona.
Unlike some past ADP meetings where progressives were ignored or where progressive resolutions were tabled and not heard by the full ADP membership, the Maricopa meeting was dominated by progressives.
Tucson is one of the most impoverished cities in the country—for many reasons. The Arizona Legislature—driven by the American Legislative Exchange Council (ALEC) and short-sighted, “small government” ideology—has routinely swept funds earmarked for counties and cities to “balance” the state’s budget or fund pet projects like lower corporate taxes. Beyond the Legislature’s negative impact on Baja Arizona, the Tucson economy is not diversified enough. Manufacturing is nearly non-existent in Southern Arizona. There is an over-reliance on defense spending, University of Arizona spin-offs, tourism, low-wage service jobs, and growth/development.
MoveOn.org Petition - Congress Don't Renew Fast Track
Public Citizen Petition - Congress Must Reject Fast Track Authority
MoveOn.org Petition - Stop the Trans Pacific Partnership
CREDO Petition - Stop the Massive Corporate Power Grab
Enter your zip+4 and find your elected officials. This link provides name, address and phone number