Fool Me Twice (11 page)

Anna Burger was then secretary-treasurer of the corrupt community action group ACORN, and its affiliate, the Service Employees International Union, and was chairman, until August 2010, of the SEIU-affiliated Change to Win federation. Burger was also a board member of the union-affiliated Economic Policy Institute.

Richard L. Trumka at the time was secretary-treasurer of the AFL-CIO, soon to be elected president in September 2009. Trumka now serves on the president's Council on Jobs and Competitiveness and is an EPI board member.

Another union heavy-weight and former EPI board member is Andrew L. Stern, SEIU's president until April 2010. SEIU is the second largest labor union in the U.S. and Stern was one of the most frequent visitors to the Obama White House. We reported in our previous book—
Red Army
—that Stern told a
Los Angeles Times
reporter that SEIU has had a close relationship with Obama since 2004, when Obama ran for the U.S. Senate from Illinois. In February 2008, during the Democrat presidential primary contest between Obama and a Hillary Clinton who was still widely considered to be “unbeatable,” Stern announced that the SEIU was endorsing Obama in the name of its 1.9 million members. Stern's union would ultimately deposit some $60 million in the Obama campaign piggy bank. But the real debt owed by unions to their progressive president in the White House is incalculable.

And if unions are the workers' best friend, then greedy corporate America is their worst enemy.

“[F]ar more American workers would like to be part of a union than is now the case,” claimed Demos officials, citing unspecified polls. The reason for this, they assert, is that Big Business lobbyists have worked for decades to “water down the nation's labor regulations so that corporations can, with near impunity, obstruct their employees' efforts to choose a union.”
³¹
The Demos solution for this troubling situation is for Congress to pass the controversial Employee Free Choice Act (EFCA), also known as Card Check. If passed (though they concede the bill's prospects are doubtful), EFCA would “streamline the process of forming unions in the workplace and prohibit some current forms of union-busting by employers.”

There have been many pros and cons bandied about regarding EFCA. One negative consequence, for employers as well as employees, was explained in February 2009, by a group called the Center for Union Facts:
³²

Consider current labor election procedures. If union organizers hit a threshold of employee signatures, a federal agency conducts a secret ballot election, usually within 60 days. In that time period, employees have the opportunity to hear from both sides regarding the pros and cons of unionization.

As in a presidential campaign, the campaign window allows people to make the best decision by giving access to all the information about the “candidates.” But [the] “your signature equals your vote” process means a small workplace unit can be unionized overnight. Employers could be blindsided with little chance for informing their employees about the downsides of a union-run workplace.

Not to mention the fact that the workers could show up the next workday to discover they are working in a union shop against their will.

Beyond “Card Check,” the Demos group wants an increase in the federally mandated minimum wage to $10 per hour.
³³
The problem is that pushing up the minimum wage has the corollary effect of eliminating many jobs. As a senior fellow at conservative Colorado think tank, the Independence Institute wrote:

In practice they often price low-skilled workers out of the labor market. Employers typically are not willing to pay a worker more than the value of the additional product that he produces. This means that an unskilled youth who produces $4.00 worth of goods in an hour will have a very difficult time finding a job if he must, by law, be paid $5.15 an hour.
³⁴

Again, Demos touts Obama's proposal to extend unemployment benefits as being “among the most urgent elements of his plan.” But there were problems. Congress has already extended unemployment benefits a number of times, and the “average duration of unemployment” has reached a postwar record of ten months. In the debt ceiling deal reached by Congress in August 2011, unemployment benefits that were due to expire by the end of the year were not extended.

Meanwhile, the unemployment rate passed a new milestone in February 2012. Despite coming in at 8.3 percent—a three-year low—the rate had exceeded 8.0 percent for the longest stretch since the Great Depression.
³⁵
According to the Bureau of Labor Statistics, the actual number of non-farm unemployed stood at 12.8 million. The long-term unemployed—those who had been jobless for 27 weeks and more—remained at 5.4 million, and accounted for 42.6 percent of all those unemployed.
³⁶

Speaking of unemployment benefits, Obama's closest political confidant—senior White House adviser Valerie Jarrett—shockingly told a Durham, North Carolina, university audience in February 2012:

Even though we had a terrible economic crisis three years ago, throughout our country many people were suffering before the last three years, particularly in the black community. And so we need to make sure that we continue to support that important safety net. It not only is good for the family, but it's good for the economy. People who receive that unemployment check go out and spend it and help stimulate the economy, so that's healthy as well.
³⁷

Her clear implication was that unemployment—and not simply unemployment benefits—is “good for the economy.” But Jarrett was simply pushing an official progressive political message in advance of the 2012 presidential election: that Congress's failure to extend unemployment benefits would be exploited to the maximum advantage.

Some of the leading Keynesian economists have consistently promoted the idea that unemployment is good for the economy. For example, Alan S. Blinder served on the Clinton administration's Council of Economic Advisors and was appointed by Clinton to the board of the Federal Reserve,
while Mark Zandi is chief economist of Moody's Analytics and served as economic advisor in 2008 to Senator John McCain. Both claim that the $787 billion “stimulus” of 2009 has worked.
³⁸
In July 2010, they claimed that unemployment benefits are “among the most potent forms of economic stimulus available.” Why? Because, they rationalize, most unemployed workers “spend their benefits immediately.” With a total price tag for benefits approaching $300 billion, they claimed economic activity like this made “such spending far more effective than most tax cuts.”
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A study from the Economic Policy Institute claimed that failure to extend the payroll tax and emergency unemployment insurance would reduce U.S. GDP by $241 billion in calendar year 2012, a decrease of 1.5 percent, relative to projected levels. EPI's study claimed it would also “decrease economic activity by $70 billion (–0.4 percent) and decrease employment by roughly 528,000 jobs.”
⁴⁰
Thus, at the end of January 2012, President Obama and Congress extended unemployment benefits for an additional two months, though they did not add any benefits beyond the current ninety-nine-week mark.
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How the Obama administration intends to deal with the needs of a massive labor force that is no longer seeking employment has not been addressed. In March 2012, for example, while the “good for the economy” unemployment rate declined from 8.3 percent to 8.2 percent, the dip in the unemployment rate was accompanied by an all-time high of 87,897,000 people no longer seeking employment.
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This leads us to the gigantic—and completely false—spin Democrats gave to official employment numbers released at the beginning of 2012.

New jobs and unemployment data from the Bureau of Labor Statistics were released on February 3. On the one hand, they showed an improved 8.3 percent unemployment rate—still much higher than Obama had inherited, or promised, but the lowest rate since February 2009. At the same time, the BLS numbers also revealed
that 1.2 million people had disappeared from the workforce in a single month.
⁴³
So the unemployment rate had “improved” by 1.2 million Americans exiting from the workforce altogether!

This sleight of hand was well explained at ZeroHedge.com, an American financial blog:

Do the following calculation with us: using BLS data, the US civilian non-institutional population was 242,269[,000] in January, an increase of 1.7 million month over month: apply the long-term average labor force participation rate of 65.8% to this number…. and you get 159.4 million: that is what the real labor force should be. The BLS reported 154.4 million: a tiny 5 million difference. Then add these people who the BLS is purposefully ignoring yet who most certainly are in dire need of labor and/or a job to the 12.758 million reported unemployed by the BLS and you get 17.776 million in real unemployed workers. What does this mean? … [The] real unemployment rate actually rose in January to 11.5%.

[…]

It also means that the spread between the reported and implied unemployment rate just soared to a fresh thirty-year high of 3.2 percent. And that is how with a calculator and just one minute of math, one strips away countless hours of BLS propaganda.
⁴⁴

Jim Pethokoukis, writing in the
American Enterprise
, put it another way:

We need only to go back to January 2011, when the “unemployment rate was 9.1 percent with a participation rate of 64.2 percent.” At the current participation rate, the unemployment rate would be 8.9 percent, instead of 8.3 percent, he wrote, adding, “As an analysis from Hamilton Place Strategies concludes,
most of the shift of the past year is due not to the improvement in the labor market, but the continued drop in participation in the labor force
.”
⁴⁵
[Emphasis added.]

This “rosy ruse” of an 8.3 percent unemployment rate was deconstructed further by John Crudele in the
New York Post
. “Seasonal adjustments,” he said, are intended to “smooth out holiday bumps” in employment numbers. A milder-than-expected winter meant fewer layoffs and fewer people laid off than expected, which further skewed the numbers.
⁴⁶

Yet another Demos plan from their September 2011 offensive—“work-sharing programs”—would “compensate employers who reduce hours for workers, but don't fire them.”
⁴⁷
President Obama had, in fact, already included a measure in his proposed American Jobs Act that would support all fifty states in creating work-sharing programs.
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Or, as the Center for Economic and Policy Research progressive think tank put it, at the same time Demos was pushing the idea:

[The] quickest, and likely cheapest, way to increase employment would be to aggressively promote a policy of work sharing, for which President Obama already proposed some funding in his 2012 budget.
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(It should be noted that CEPR is a prominent supporter of, and apologist for, Venezuela's communist president, Hugo Chavez, and is supported in part by George Soros's Open Society Institute.
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)

A further rationale for work-share dollars came from Demos:

Work-sharing payments allow employers to retain workers and avoid the disruption of lay-offs even as they lower their labor costs during a downturn. They also deliver even more stimulus bang for the buck than traditional unemployment benefits.

Demos also reported that some work-share assistance had already been provided to states as part of the initial federal “stimulus” in 2009.

CEPR's co-director, Dean Baker, elaborated on the purported “stimulus” benefit to work-share:

In an economy that is operating well below its potential—and projected to remain so for much of the next decade—work sharing may be the most viable way of bringing the economy back closer to full employment.

Baker also claimed his work-sharing proposal would “give employers
an incentive to maintain workers on their payroll at reduced hours as an alternative to laying them off”; would be “attached to the existing system of unemployment compensation, with short-time compensation as an alternative to unemployment compensation”; and would not require any “new” government bureaucracy.
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Unfortunately for Baker—given the recent nosedive in Europe's economy—his plan holds up for emulation the failed role models of Spain, Germany, and Italy. Each of these European Union countries tried work sharing to help avoid massive unemployment. But the numbers speak for themselves. For Spain, the unadjusted unemployment rate from July 2010 to December 2011 was around 23 percent. Using adjusted unemployment figures for the same time period, Germany showed around a 7.5 percent rate, and Italy 9 percent—all according to the U.S. Bureau of Labor Statistics.
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In a more recent article for the UK
Guardian
, Baker finds a major flaw in the Obama economic blueprint.

He cites a December, 2008, memo by Larry Summers, who headed Obama's National Economic Council, showing the economy to be in “much worse shape than was implied by the projections the Obama administration used in crafting its stimulus.” In short, the numbers were “hugely overly optimistic.” The administration expected that “job loss would peak at around 5 million in the 4th quarter of 2009.” But they expected to regain all jobs lost by the end of 2011. Instead, by May 2009, almost 7 million jobs had been lost, and the hemorrhaging, in Baker's estimation, did not end until February 2010. Baker claimed the “stimulus” had failed to keep the job loss from falling even further, resulting on 6 million jobs lost below the pre-recession level.
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The “unemployment rate had already hit 9.4%,” he wrote, “when the stimulus first started to be felt in May of 2009. It eventually peaked at 10.0% in October of 2009.”