Check It Out for Thursday, June 4th
Ross Eisenberg at the Economic Policy Institute (EPI) sets the record straight on the GM bankruptcy with a Q & A that includes:
Q. Who will own the new GM that emerges from bankruptcy?
A. The owners will be:
1. The federal government: 60%.
2. The Canadian government and the Ontario provincial government: 12.5%
3. An independent health care trust (VEBA) for GM retirees: 17.5%
4. Unsecured bondholders: 10%
Q. Isn’t GM’s union, the UAW, responsible for GM’s problems? Aren’t the Japanese companies like Toyota doing better because they don’t have to deal with union work rules and uncompetitive wages?
A. GM’s problems stem from many sources, including bad U.S. trade policies, our failure in the United States to provide health insurance for all or to require all employers to pay their fair share, bad management and product decisions, volatile gasoline prices, and the recession. None of these factors were in the union’s control. Union work rules haven’t made GM less productive. The fact is that the UAW plants are more productive than the foreign-owned plants, including Toyota’s. According to the independent Harbour Report, the 10 most productive assembly plants in the United States are all union facilities.
Auto workers around the developed world are generally unionized and paid wages as high, or higher, than UAW wages, yet French, German, and Italian automakers are in much better financial shape than GM. Toyota and many other foreign companies operating in the United States have set their U.S. wages close to UAW-negotiated levels as a way to attract good workers and deter unionization. It is true, however, that UAW-negotiated retiree health benefits have burdened GM with huge liabilities, made its cars more expensive, and hurt the company’s bottom line. GM, which has been in business in the United States for 100 years, has more than half a million union retirees and dependents drawing health care benefits, but only about 60,000 active workers. The foreign companies operating in the United States, on the other hand, have virtually no retirees and have taken no responsibility for their health insurance. In Japan, by contrast, Toyota, Nissan, and Honda’s retirees all have health insurance coverage paid for two years by the companies and then by national health insurance. The cost is so low that it reportedly does not appear on Toyota’s books.
Over several decades, GM avoided its responsibility to set aside funds to pay the retiree health benefits it promised and did not support national health reform that could have relieved some of its burden. Together, these mistakes doomed the company to eventual bankruptcy.
Wages and benefits at the new GM will be greatly reduced: most new employees will be paid only $14-15 an hour, and they will not qualify for a company pension. All employees will pay more for their health insurance and will not be guaranteed overtime pay for working more than eight hours a day.
Robert Parry at Consortium News argues for placing Ronald Reagan in competition for worst president ever.
"With his superficially sunny disposition – and a ruthless political strategy of exploiting white-male resentments – Reagan convinced millions of Americans that the threats they faced were: African-American welfare queens, Central American leftists, a rapidly expanding Evil Empire based in Moscow, and the do-good federal government.
"In his First Inaugural Address in 1981, Reagan declared that “government is not the solution to our problem; government is the problem.”
"When it came to cutting back on America’s energy use, Reagan’s message could be boiled down to the old reggae lyric, “Don’t worry, be happy.” Rather than pressing Detroit to build smaller, fuel-efficient cars, Reagan made clear that the auto industry could manufacture gas-guzzlers without much nagging from Washington.
"The same with the environment. Reagan intentionally staffed the Environmental Protection Agency and the Interior Department with officials who were hostile toward regulation aimed at protecting the environment. George W. Bush didn’t invent Republican hostility toward scientific warnings of environmental calamities; he was just picking up where Reagan left off.
"While Reagan’s acolytes cite the Soviet defeat in Afghanistan as decisive in “winning the Cold War,” the counter-argument is that Moscow was already in disarray – and while failure in Afghanistan may have sped the Soviet Union’s final collapse – it also created twin dangers for the future of the world: the rise of al-Qaeda terrorism and the nuclear bomb in the hands of Pakistan’s unstable Islamic Republic.
"Trade-offs elsewhere in the world also damaged long-term U.S. interests. In Latin America, for instance, Reagan’s brutal strategy of arming right-wing militaries to crush peasant, student and labor uprisings left the region with a legacy of anti-Americanism that is now resurfacing in the emergence of populist leftist governments.
"In effect, Reagan’s team created a faux reality for the American public. Civil wars in Central America between impoverished peasants and wealthy oligarchs became East-West showdowns. U.S.-backed insurgents in Nicaragua, Angola and Afghanistan were transformed from corrupt, brutal (often drug-tainted) thugs into noble “freedom-fighters.”
"With the Iran-Contra scandal, Reagan also revived Richard Nixon’s theory of an imperial presidency that could ignore the nation’s laws and evade accountability through criminal cover-ups. That behavior also would rear its head again in the war crimes of George W. Bush. [For details on Reagan’s abuses, see Robert Parry’s Lost History and Secrecy & Privilege.]
"Yet even as working-class white men were rallying to the Republican banner (as so-called “Reagan Democrats”), their economic interests were being savaged. Unions were broken and marginalized; “free trade” policies shipped manufacturing jobs abroad; old neighborhoods were decaying; drug use among the young was soaring.
"Meanwhile, unprecedented greed was unleashed on Wall Street, fraying old-fashioned bonds between company owners and employees.
"Before Reagan, corporate CEOs earned less than 50 times the salary of an average worker. By the end of the Reagan-Bush-I administrations in 1993, the average CEO salary was more than 100 times that of a typical worker. (At the end of the Bush-II administration, that CEO-salary figure was more than 250 times that of an average worker.)
"Still, Obama and congressional Democrats continue to pander to the Reagan myth. On Tuesday, as the nation approached the fifth anniversary of Reagan’s death, Obama welcomed Nancy Reagan to the White House and signed a law creating a panel to plan and carry out events to honor Reagan’s 100th birthday in 2011."
"A report on Iran’s nuclear programme issued by the Senate Foreign Relations Committee last month generated news stories publicising an incendiary charge that U.S. intelligence is underestimating Iran’s progress in designing a "nuclear warhead" before the halt in nuclear weapons-related research in 2003.
"That false and misleading charge from an intelligence official of a foreign country, who was not identified but was clearly Israeli, reinforces two of Israel’s key propaganda themes on Iran – that the 2007 U.S. National Intelligence Estimate on Iran is wrong, and that Tehran is poised to build nuclear weapons as soon as possible.
"But it also provides new evidence that Israeli intelligence was the source of the collection of intelligence documents which have been used to accuse Iran of hiding nuclear weapons research.
"The Committee report, dated May 4, cited unnamed "foreign analysts" as claiming intelligence that Iran ended its nuclear weapons-related work in 2003 because it had mastered the design and tested components of a nuclear weapon and thus didn’t need to work on it further until it had produced enough sufficient material.
"That conclusion, which implies that Iran has already decided to build nuclear weapons, contradicts both the 2007 National Intelligence Estimate on Iran, and current intelligence analysis. The NIE concluded that Iran had ended nuclear weapons-related work in 2003 because of increased international scrutiny, and that it was "less determined to develop nuclear weapons than we have been judging since 2005".
"The report included what appears to be a spectacular revelation from "a senior allied intelligence official" that a collection of intelligence documents supposedly obtained by U.S. intelligence in 2004 from an Iranian laptop computer includes "blueprints for a nuclear warhead".
"No U.S. or IAEA official has ever claimed that the so-called laptop documents included designs for a "nuclear warhead". The detailed list in a May 26, 2008 IAEA report of the contents of what have been called the "alleged studies" – intelligence documents on alleged Iranian nuclear weapons work — made no mention of any such blueprints.
"In using the phrase "blueprints for a nuclear warhead", the unnamed official was evidently seeking to conflate blueprints for the reentry vehicle of the Iranian Shehab missile, which were among the alleged Iranian documents, with blueprints for nuclear weapons.
"The 'alleged studies"' collection of documents has never been verified as genuine by either the IAEA or by intelligence analysts. The Senate report said senior United Nations officials and foreign intelligence officials who had seen 'many of the documents' in the collection of alleged Iranian military documents had told committee staff 'it is impossible to rule out an elaborate intelligence ruse.' "
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