Obama Attacked His Own Sequester Plan

On Tuesday February 18^th, standing in front of several rows of police officers and other emergency responders, being used as props, Obama blamed the Republicans for a long list of terrible things that will happen if Obama’s own sequester plan goes through, including police, teachers, firefighters, TSA and air traffic controllers being laid off and criminals being set free.  But there are several problems with Obama’s political theater.  First, the sequester was his idea in the first place.  Second, police, teachers, firefighters, and other first responders are on local municipal, county and state budgets, and are not part of the sequester.  Furthermore, Mary Schiavo, a former Inspector General of the US Department of Transportation at the time of the Clinton government shutdowns, stated that air traffic controllers, TSA and other federal first responders are exempt from government shutdowns, and that maintenance and repairs are paid out of a prefunded Repair Trust Fund and will not be affected by the sequester either.

Many commentators have pointed out that the $85 billion sequester for this year is only 2.3% of total federal government spending out of a $3.6 trillion budget, and the ten-year $1.2 trillion in proposed cuts out of a projected ten-year spending budget of $47.2 trillion is less than 0.3%.  These alleged “cuts” are actually reductions in the proposed rate of increase and are not actually cuts in the amount of spending.  If the Obama administration cannot find such small amounts of low priority items to reduce or cut back on the rate of increase, they are incompetent. Furthermore, since the sequester is a reduction in the rate of increase of government spending, there should not be a need for anyone to be laid off.  Clearly, Obama was just being a demagogue by telling people he would exact maximum pain by shutting down the most vital services, even ones he does not have control over, rather than cutting the lowest priority items and programs.  Obama has used this political trick before, including during the debt ceiling debate, and everyone should be used to it and call him out on it.

In fact, many people have called Obama out on his now worn out ploy and political theater, including Speaker John Boehner; Senators Tom Coburn, Lindsey Graham, and Rand Paul; as well as former Senator Jim DeMint.  In addition, Larry Kudlow, Karl Rove, Stan Druckenmiller, the hedge fund manager of Duquesne Capital, Mary Schiavo, former Inspector General of the US DOT, Sean Hannity, Rush Limbaugh, Rudy Giuliani, Ford O’Connell, Chairman of the Civic Forum PAC, Robert Woodward, an Associate Editor of the Washington Post, Harvard Business Professor Michael Porter and many others also criticized the President’s histrionics and various aspects of his political grandstanding.  But that didn’t stop Obama from repeating his lies on his Saturday radio address on February 23, 2013.

In an op-ed article in the Wall Street Journal (“WSJ”), Speaker John Boehner made clear that the $1.2 trillion sequester, due to kick in March 1^st, is the result of Obama’s failed leadership and blamed Obama for getting us into this mess in the first place.  Boehner wrote, “During the summer of 2011, as Washington worked toward a plan to reduce the deficit to allow for an increase in the federal debt limit, President Obama and I very nearly came to a historic agreement.  Unfortunately, our deal fell apart at the last minute when the president demanded an extra $400 billion in new tax revenue —50% more than we had shaken hands on just days before.”  “The President Is Raging Against a Budget Crisis He Created,” by John Boehner, WSJ, 2/20/13, p.A15.

In his op-ed article Boehner explained that, since the debt ceiling was looming, he immediately worked out an agreement with Senators Harry Reid and Mitch McConnell that called for immediate caps on discretionary spending to save $917 billion and form a super committee to find an additional $1.2 trillion in savings, and if the super committee failed to meet its target, the debt would not be raised when the ceiling would be hit again in a few more months.  But to insure his re-election, Obama scuttled this bipartisan, bicameral deal and, with the debt ceiling about to hit within hours, Obama forced his solution of the “sequester” on a reluctant Congress.  Id.  Boehner also pointed out that the House Republicans had passed two bills to replace the sequester with sensible alternative spending cuts, but Harry Reid has refused to even take them up in the Senate, and Obama has not made a sensible proposal.

Boehner also said that we should be cutting the budget by even more than the $1.2 trillion the sequester mandates.   Boehner further stated that, because of the way Obama demanded that the sequester be structured, “the sequester is an ugly and dangerous way to do it.  By law, the sequester focuses on the narrow portion of the budget that funds the operating accounts for federal agencies and departments, including the Department of Defense.  Exempt is most entitlement spending—the large portion of the budget that is driving the nation’s looming debt crisis.” Id.  “What Congress should do is replace it with other spending cuts that put America on the path to a balanced budget in 10 years, without threatening national security.”  Id.  Speaker Boehner went on to say that in the fiscal-cliff deal, “The president got his higher taxes-- $600 billion from higher earners, with no spending cuts….He also got higher taxes via ObamaCare.”  Id.  Boehner flatly stated that the American people “understand that the tax debate is now closed.”  Id.  Boehner summed up by saying, “Mr. President, we agree that your sequester is bad policy. What spending are you willing to cut to replace it?” Id.

Bob Woodward, an Associate Editor of the Washington Post, in an op-ed article in the Washington Post, basically confirmed Boehner’s version of the sequester.  Woodward wrote that the sequester was the idea of Jack Lew, now nominated for Secretary of the Treasury, and Obama approved the sequester.  Woodward confirmed that the reason Obama proposed that sequester was to get the debt ceiling moved past the election.  Bob Woodward, “Obama’s Sequester Deal-Changer,” The Washington Post.com, 2/22/13.  Moreover, Jay Carney, White House Press Secretary, confirmed that the sequester idea originated in the White House.

In an editorial, entitled “President Armageddon,” WSJ, 2/20/13,p.A14, The Wall Street Journal excoriated Obama for his “political tricks” and “his usual threat of Armageddon,” if Obama’s own sequester went through.  The Journal also said that “Americans can expect more such melodrama in the coming days.”  The Journal broke down Obama’s three biggest political tricks: (1) what it called “The Washington Monument ploy,” a parade of horribles that went on for several minutes, (2) the recession scare and (3) a tax increase disguised as “tax reform.”  As for the recession scare, the Journal reviewed some of the history of government spending cuts:

After World War II federal spending fell from 42% of GDP to 14.8% in two years, yet the private economy and employment roared back to life.  In the 1980s domestic [government] spending fell by about two percentage points of GDP and in the 1990s it fell by more than three.  Those were decades of government austerity but rapid growth in private output and wealth.  Mr. Obama has taken government spending from 21% to 24% of GDP, yet we’ve had the weakest economic recovery in three generations. Id.

 

The Journal could have continued the history by pointing out that in every one of the eight years of the Warren G. Harding and Calvin Coolidge Presidencies, they reduced tax rates a step at a time from the Wilson era top rate of 74% down to a top rate of 24%, cut government spending each year, and reduced the national debt.  The results were spectacular: the economy boomed, production of everything from cars to refrigerators to radios to airplanes expanded and unemployment was a low 3.6%.  Furthermore, when John F. Kennedy cut taxes 26% across the board, the economy also boomed in the 1960’s.  In addition, the Bush 2003 tax cuts kicked off a five-year boom.  That boom only ended when the Carter/Clinton “Community Reinvestment Act” and Clinton’s levering up Fannie and Freddie, together with Clinton’s increased subprime lending requirements for Fannie and Freddie, caused the inevitable busting of the housing bubble and brought the economy down.

The Journal concluded by stating, if Obama “won’t drop his tax increase and negotiate in good faith, as he hasn’t during his Presidency, then the sequester is the only way that any spending is going to be cut. The economy will be better for it.” Id.

Senator Rand Paul summed up the President’s histrionics in front of the police and firemen this way:

I would say balderdash.  It’s untrue, unfair, dishonest, disingenuous.  The President is making stuff up.  He put law enforcement--he put firemen and policemen, who, 98% of them, are being paid for with your local taxes, and says, you’re going to lose your local policemen, because of this.  It’s not true.  The sequester is a slowdown in the rate of growth of government.  It’s the least we can do.  Our country is drowning in a sea of debt, borrowing $50,000 a second.  We have to slow down spending.  And for the President to use this histrionics is really, I think, beneath the office of the Presidency.  “Happening Now,” Fox News Channel, 2/22/13.

Whenever the progressive, Keynesian policies of tax and spend have been applied they have failed, and the economy, taxpayers and debt levels have suffered.  These policies failed for (1) Wilson, who increased government agencies and spending dramatically, increased the income tax rate from zero to 74%, resulting in  the depression of 1918-19; (2) Hoover, who, together with signing the Smoot-Hawley Tariff, increased taxes, spending and started new government agencies, leading to the depression of 1929-33; (3) Franklin Roosevelt, who put Hoover’s programs of increasing taxes, spending and starting new government agencies on steroids, turning the Hoover depression into the Great Depression with high unemployment continuing for years, often above 20%; and (4) Barrack Obama, who expanded government agencies, increased government spending by over a trillion dollars a year, increased the National debt by some $6 trillion in four years, producing the weakest recovery since FDR and has given us a 14+% unemployment rate by the Labor Department U-6 rate, which includes those who are underemployed and those who gave up looking for work.

We should learn from FDR’s Secretary of the Treasury Henry Morgenthau, who in April 1939 with unemployment at 20.7% said, “[W]e have tried spending money.  We are spending more than we have ever spent before and it does not work…. I say after eight years of this Administration we have just as much unemployment as when we started…. And an enormous debt to boot!”

Everyone Benefits from the Right to Work

In an article the Star-Ledger posted on December 30, 2012, by Stephen Sweeney, President of the New Jersey Senate, it’s not surprising he used AFL-CIO supplied information alleging a $5,538 unfavorable differential in wages in Right-to-Work (“RTW”) States vs. non-RTW States.  After all, he is the General Organizer for the International Association of Ironworkers.  However, according to data from the Bureau of Labor Statistics (“BLS”), private-sector, inflation-adjusted compensation in RTW States increased by 12% between 2001 and 2011, while such compensation increased by only 3% in forced-union dues States during the same period.  See, “Right-To-Work Lies Fall Flat In Michigan,” Investor’s Business Daily (“IBD”) 12/12/12, p.A1.  Inflation-adjusted compensation in the RTW States was better because those states tend to attract more quality jobs and have lower living costs.                                                                                                                            

Senator Sweeney ties RTW Laws to the tea party movement.  The right of each state to pass a RTW Law was part of the Taft-Hartley Law, passed in 1947, long before the tea party movement started in 2009.  Twenty-four states have passed RTW Laws.  Tennessee was one of the first states to do so, passing its law in 1947.  As a result Tennessee has been attracting new domestic and foreign businesses for years and has become a major automobile manufacturing hub.  Nissan opened its Smyrna, Tennessee plant in 1983 and moved its US headquarters to Tennessee in the mid-2000’s.  It recently added 1,000 employees to its Smyrna plant and plans on adding 1,300 more in 2013.  Toyota has a parts facility in Jackson, Tennessee; Bridgestone Tire has its American headquarters in Nashville; and Volkswagen opened its only US plant in Chattanooga in 2010.  Even GM is reopening its old Spring Hill, Tennessee plant. Tennessee has been mainly spared the mass layoffs, plant closures and bailouts that affected the Detroit area.  Many groups credit the fact that Tennessee is a RTW State as the key advantage that saved it the pain that other parts of the country suffered.  Sean Higgins, “Tennessee Auto Industry Thrives Without Unions,” IBD, 3/5/12, p. A1-A6.

Speaking of the automotive industry, you may remember that back in the 1950’s Ford Motor Company had several assembly plants in New Jersey and nearby Pennsylvania.  However, in the mid-fifties, Ford started shutting plants.  Ford closed the Edgewater, NJ plant in 1955, the Chester, PA plant in 1961, the Mahwah, NJ plant in 1980 and the Edison, NJ plant in 2004.  It’s not that cars could not be manufactured profitably in the United States or that the US had insufficient demand for cars, because during this same time frame many automobile manufacturing and assembly plants were built by Toyota, Honda, BMW, Nissan, Subaru, and Volkswagen.  Toyota alone opened approximately eleven plants from California to Pennsylvania, while the big three were closing plants from coast to coast.  However, many of the new plants were built in RTW States, such as Tennessee, South Carolina and Alabama.

The main thrust of Senator Sweeney’s article was, without citations, that RTW Laws “can have devastating impacts on workers and a state’s economy as a whole.”  However, the facts do not support his statement.  There are advantages to the RTW Laws for both employees and employers.  News coverage usually leaves out the advantages to employees of letting employees have the choice of whether or not to join a union.  A recent survey of CEO’s ranked states in which they would like to do business on a variety of measures.  All of the states in the top 10 were RTW States.  Not one of the states in the bottom 20 was a RTW State.  In the ‘worst states for jobs’ list, New Jersey came in 45^th out of 50.   For most expensive states, New Jersey came in 5^th highest, above even New York. 

Economists have noted that RTW States have more labor force flexibility, faster economic growth, higher employment, greater inward migration, lower living costs and higher real compensation.  In the ten RTW States rated the best in the nation, private sector employment increased 10.6% from 2000 to 2010, while in the 10 compulsory-unionism States rated the worst in the nation, which included New Jersey, employment increased just 1.9% over the same period.  It is obvious the increase in employment and greater labor force flexibility, due to the absence of strict union rules, together with lower cost of living in RTW States, helps employees.  RTW Laws are win-win laws for both employees and employers.  See, “More ‘Raspberries’ For Compulsory Union Dues,” National Right To Work Newsletter (“NRWN”), June 2012, p.1.  New Jersey has suffered net outward migration and its high taxes, high living expenses, forced-union dues and excessive regulations are all part of the cause.

Overall, the Commerce Department’s Bureau of Economic Analysis (the “BEA”) reported that from 2000 to 2011 private-sector, nonfarm employment increased 12.5% in RTW States, while in forced-union dues states such employment only increased 3.5%.  Thus, the increase in employment in the RTW States was nine percentage points higher than, or over 3.5 times as great as, in forced-union dues states.  “Right to Work States Have Superior Job Growth,” NRWN, Oct. 2012, p. 6.  All of the bottom ten states in job creation in that period did not have protection for their employees from forced-union dues and monopoly union representation.  Id.

The benefits of the new RTW Law in Indiana are already showing up in a stronger economy.  When Indiana was a forced-union dues state, it had one of the worst economies in the country.  From 2000 to 2010 the BLS determined that Indiana’s private-sector payroll employment declined by 9.1%.  Just two other states, both forced-union dues states, did worse during that time period.  The Midwest’s forced-union dues states as a group experienced a dismal decline of 9.8% during that period.  However, during the same decade, the five Midwestern states with RTW Laws actually experienced a slight increase by an average of 0.5%.  “’We’re Absolutely on the Right Track,’” NRWN, August 2012, p. 5.  By September 2012, six months after Indiana’s RTW Law went into effect, Labor Department data showed that the number of new private-payroll jobs in Indiana increased by nearly 100,000 or 4.1%.  “Indiana Right to Work Statute Is Working,” NRWN, Sept. 2012, p.5.  Furthermore, the job growth is likely to continue. The Indiana Economic Development Corporation, reported that fifty-seven companies have Indiana investment projects in the pipeline, which will bring $1.6 billion in new investment into the state, and many companies indicated RTW was a factor in their decision. Id.  In fact, in signing RTW Laws in Michigan, Governor Snyder cited the favorable results in Indiana, including Indiana’s increase in new jobs and its newfound ability to attract businesses.  Matthew Dolan and Kris Maher, “Unions Dealt Blow In UAW’s Home State,” The Wall Street Journal, 12/12/12 p. 1.

RTW States not only have better job creation, they also have better compensation growth for employees.  According to Commerce Department data, private-sector compensation (wages, salaries, benefits and bonuses) fell by 0.7% from 2001 to 2011 in then forced-union dues Indiana, while it rose by 6.4% nationwide.  Indiana and the six other Midwestern forced-union dues states experienced an aggregate real private-sector compensation decline of 2.7% during the same period.  During the same decade, the five Midwestern RTW States achieved an increase in real private-sector compensation of 13.0%. “Indiana Right to Work Statute is Working,” Id.  Superior job growth and superior compensation growth in the RTW States equals a double win for employees.  Effectively, under current Federal Law, an employer in a unionized company cannot offer merit-based pay increases or bonuses unless the union gives its permission or there is a federal finding of an “impasse.”  Mark Mix, “Union boss bargaining hurts our most productive workers,” The Washington Examiner, May 11-12, 2012.   In a rare occurrence, Governor Christie and the Newark Teachers Union recently agreed to permit merit bonuses in the Newark schools.  It would be good to see more of this type of cooperation.

Right to Work Laws even affect the number of school-aged children.  Apparently, parents would rather raise their children in RTW States for a variety of reasons, including more job opportunities, better compensation, work force flexibility, better chances for job advancement, lower cost of living, better living environment, schools without forced-union dues and lower taxes.  Whatever the reasons, the top seven states with the biggest gains in school-aged population from 2000 to 2011 were all RTW States.  Six of the seven states that lost the most school-aged children were forced-union dues states.  Katrina-ravaged Louisiana was the only exception of a RTW State that lost school-aged children.  In the aggregate, RTW States’ K-12 populations increased by 1.87 million or 9.2% since 2000, while forced-union dues states have seen their school-aged populations drop by 1.21 million or 3.7%.   Naturally, states that are losing school-aged children are also providing fewer opportunities for teachers to obtain employment, keep their jobs and achieve career advancement, and vice-versa in states that are experiencing growth in the population of school-aged children.  “Right to Work = Teacher Job Opportunities,” NRWN, Sept. 2012, p.3.

Senator Sweeney made several other bogus claims, including, among others, that unions are “the reason a strong middle class is even possible in our country.”  Contrary to Senator Sweeney’s spurious claim, it was hard work, economic freedom and the constitutional protection of personal property rights that created the middle class, not unions.  The American middle class actually started during the colonial period by applying the principles of life, liberty and property espoused by John Locke, the Protestant principles set forth in the 1599 Geneva Bible that the Pilgrims carried with them in 1620 on the Mayflower, and the Protestant work ethic.  These principles were set forth in The Declaration of Independence, The Constitution and the Bill of Rights, and they allowed America, including the middle class, to continue to flourish.

The only way an economy can increase the average living standards of its workers is through increased productivity.  This productivity is derived partly by the workers developing their own skills that lead to careers and upward mobility.  In addition, productivity increases have derived primarily from entrepreneurs and inventors developing new productivity-enhancing equipment and production processes.  The progress in inventing production-enhancing machinery and procedures has been going on for hundreds of years, without the help of unions.  The list of inventions that have increased worker productivity is long and storied.  The list includes Eli Whitney’s cotton gin in 1793, Cyrus McCormick’s reaper, developed by 1831, Henry Leland’s contributions to standardized and interchangeable parts and his design and development of the Cadillac and Lincoln automobiles, Henry Ford’s production line and affordable Model T Ford, Thomas Edison’s 1,200 patents including the light bulb, John D. Rockefeller’s improvement of the cracking tower, and continued down to Bill Gates’ operating systems and Steve Jobs’ long list of products at Apple Computer.  If anything unions have hindered this process of improving worker productivity through resisting productivity-enhancing equipment.  For an example of how a union can hurt an economy, just look at what the UAW has done to Detroit.

Senator Sweeney implies that unions represent workers; however, unions represent only about 7% of workers and even fewer in the private sector.  If unions were as great at representing employees as Senator Sweeney claims, then why would the evidence show that, when employees are given a free choice as to whether or not to join a union, many of them choose not to join a union.

The facts clearly indicate that RTW Laws are win-win for the employees, the employers, jobs creation, increased real compensation, and general economic health of the states that have such laws.  Senator  Sweeney should have a more open mind on the advantages to employees and the health of the economy that are provided by permitting employees the freedom to choose whether or not to join a union.

Michigan Became the 24^th State to Adopt a Right-to-Work Law

On December 11, 2012, Governor Snyder of Michigan signed into law two bills that, respectively, would allow private and public sector workers to opt out of joining a union and paying union dues, commonly referred to as Right-to-Work (“RTW”) Laws.  The public sector law carved out police and fire workers, because of safety concerns and the unpopularity of including safety workers in the new public employee law.  Pursuant to the new laws an employee cannot be required to join a union or be forced to have union dues deducted from his or her pay check as a condition for getting or keeping a job.  Contrary to the claims of unions, it does not prevent employees from joining a union, if they so choose.  It just gives the employee free choice.  Governor Snyder cited the favorable results in Indiana, including Indiana’s increase in new jobs and its new found ability to attract new businesses to Indiana, since its RTW Law went in to effect earlier in 2012.  Matthew Dolan and Kris Maher, “Unions Dealt Blow In UAW’s Home State,” The Wall Street Journal, 12/12/12 p. 1.  Governor Snyder also mentions the 9.3% unemployment rate in Michigan and reports that 90 new companies had decided to locate next door in Indiana, since that state had adopted RTW, as reasons for signing the laws.  “In Michigan, Heart Of Progressivism, It’s Right To Work Vs. Right To Pork,” Investors Business Daily (“IBD”), 12/10/12., p. A18.

Michigan’s new RTW Laws will not go into effect for ninety days after the end of the state legislature’s lame-duck session and will not apply to existing union contracts until they come up for renewal.  However, the United Auto Workers Union (“UAW”) has a master contract with the big three auto manufacturers, which doesn’t expire until 2015.  The big three auto companies are among the largest union employers in the state.  Matthew Dolan and Kris Maher, “Unions Dealt Blow,” Id.  Therefore, the favorable results of increased employment, reduced government expenses and reduced taxes, will not materialize to their full benefit in Michigan any time soon. This delay will give the unions a chance to attack the laws in court and by referendum before the residents of Michigan can see and feel the favorable results of the laws.

The UAW is upset because it had already been losing members for decades.  “The UAW once had more than one million members in the U.S., and as recently as 2004 had 654,000 active members.  Now, after years of cuts by Detroit’s big auto makers and their parts makers, the UAW’s national membership is down to roughly 380,000 members, according to Labor Department filings.”  Id.  The approximately 620,000 drop in UAW membership can be considered in very large part due to the UAW’ s excessive demands over the decades in terms of salary, health care, pension, working conditions, work rules, union grievance procedures, mandatory arbitration, strikes and appeals to the NLRB.  An auto manufacture cannot shut down a production line or change the manufacturing equipment without the UAW’s approval, which is likely to be denied or approval may come with onerous union demands.  Overall, between 2000 and 2010, union membership has declined 9.5% in non-RTW states and by 9.2% in RTW states, despite the increased number of union workers in government jobs.  “Right-To-Work Lies Fall Flat In Michigan,” IBD, 12/12/12, p.A1.

You may remember that back in the 1950’s Ford Motor Company had several assembly plants in New Jersey and nearby Pennsylvania.  However, in the mid-fifties, Ford starting shutting down plants.  Ford closed the Edgewater, NJ plant in 1955, the Chester, PA plant in 1961, the Mahwah, NJ plant in 1980 and the Edison, NJ plant in 2004.  It’s not that cars could not be profitably manufactured in the United States or that there was insufficient demand for cars in the United States, because during this same time frame many automobile manufacturing and assembly plants were built by Toyota, Honda, BMW, Nissan, Subaru, and Volkswagen.  Toyota alone opened approximately eleven plants from California to Pennsylvania, while the big three were closing plants from coast to coast.  However, many of these plants were built in RTW states, such as Tennessee, South Carolina and Alabama.  Tennessee was one of the first states to adopt RTW Laws in 1947, soon after the Taft-Hartley Act became law.  Since then Tennessee has become a major manufacturing center, particularly in the automotive field.  For example, Nissan opened its Smyrna, Tennessee plant in 1983 and has its US Headquarters in the Nashville area.  Toyota has a parts facility in Jackson, Tennessee, Bridgestone Tire has its US headquarters in Nashville and Volkswagen opened a plant in Chattanooga.  Even GM is reopening its old Spring Hill, Tennessee plant.  In large part because of its RTW Laws, Tennessee has mainly been spared the mass layoffs, plant closures and bailouts that affected the Detroit area.  Sean Higgins, “Tennessee Auto Industry Thrives Without Unions,” IBD, 3/5/12, p.A1, A6.

According to data from the Bureau of Labor Statistics (“BLS”), private-sector, inflation-adjusted compensation in RTW states increased by 12% between 2001 and 2011, while such compensation increased by only 3% in forced union dues states during the same period.  “Right-To-Work…Michigan,” Id.  Compensation in the RTW states was better partly because those states tend to attract more quality jobs, as well as having lower living costs and, in some cases, no income taxes.  In RTW states, jobs increased 2.4% over that decade, while forced union dues states saw jobs decline by 3.4% during that period.  Id.

Therefore, President Obama’s statement that RTW means “the right to work for less money” is at variance with the truth.   Obama made the statement at a campaign stop at a Daimler Diesel plant in Michigan on Monday 12/11/12; however, he failed to explain that incomes are up more in RTW states than non-RTW states and that new job development was being restrained in forced union dues states.  Id.  Obama conveniently forgot to mention that since the end of the last recession, 72% of all jobs created were in the 22 RTW states that existed during that recovery period; however, he is always quick to claim personal credit for the totals that include states with the very RTW policies that he vigorously opposes.  The obvious attractions of RTW states explain why their populations grew by 15.3% between 2000 and 2010, while non-RTW states populations grew by only 5.9% during that same time period.  Id.

Many polls have consistently shown nearly 80% of the Americans who are regular voters support the RTW principle.  “Hoosiers Deliver Clear Message to Congress,” National Right to Work News Letter (“NRWN”), Feb., 2012, p.3.  “[S]cientific surveys regularly show rank-and-file Democrats and Independents, as well as rank-and-file Republicans, overwhelmingly oppose compulsory unionism.” Id.  The American people feel that forced unionism is morally wrong and that it is also a detriment to the economy.  “Major Right to Work Victory in the Midwest,” NRWN, 2/12, p.1, 2. The Republicans would do well with the general public to support the right of employees to work without being forced to pay union dues.  Hopefully, more states will adopt RTW Laws and give their employees the right to choose whether or not to join a union, have increased employment, merit-based pay increases, bonuses and advancement opportunities, lower cost of living and higher real compensation.   In a country that became great because it was a Meritocracy, anything other than the freedom to choose whether or not to join a union and the ability to choose merit advancement, is downright Un-American.

Everyone Benefits from the Right to Work

 

 In addition to Right-to-Work (“RTW”) Laws being morally correct, there are advantages to the RTW Laws for both employees and employers.  News coverage usually points to the obvious advantages to businesses of letting employees choose whether or not to join a union, but leaves out the advantages to the employees.  A recent survey of CEO’s ranked states in which they would like to do business on a variety of measures.  All of the states in the top 10 were RTW States.  Not one of the states in the bottom 20 was a RTW State.  In the ‘worst states for jobs’ list, New Jersey came in 45^th out of 50.   For most expensive states, New Jersey came in 5^th highest, above even New York.

Economists have noted that RTW States have more labor force flexibility, faster economic growth, higher employment, greater inward migration, lower living costs and higher real compensation.  In the ten RTW States rated the best in the nation, private sector employment increased 10.6% from 2000 to 2010, while in the 10 compulsory-unionism states rated the worst in the nation, which included New Jersey, employment increased just 1.9% over the same period.  It is obvious the increase in employment and greater labor force flexibility, due to the absence of strict union rules, together with lower cost of living in RTW States, helps employees.  RTW Laws are win-win laws for both employees and employers.  See, “More ‘Raspberries’ For Compulsory Union Dues,” National Right To Work Newsletter (“NRWN”), June 2112, p.1.  New Jersey has suffered net outward migration and its high taxes, high living expenses, forced-union dues and excessive regulations are all part of the cause.

Overall, the Commerce Department’s Bureau of Economic Analysis (the “BEA”) reported that from 2000 to 2011 private-sector, nonfarm employment increased 12.5% in RTW States, while in forced union dues states such employment only increased 3.5%.  Thus, the increase in employment in the RTW States was nine percentage points higher than, or over 3.5 times as great as, in forced-union dues states.  “Right to Work States Have Superior Job Growth,” NRWN, Oct. 2012, p. 6.  All of the bottom ten states in job creation in that period did not have protection for their employees from forced-union dues and monopoly union representation.  Id.

The benefits of the new RTW Law in Indiana are already showing up in a stronger economy.  When Indiana was a forced-union dues state, it was one of the worst economic states in the country by several important metrics.  From 2000 to 2010 the BLS determined that Indiana’s private-sector payroll employment declined by 9.1%.  Just two other states, both forced-union dues states, did worse during that time period.  The Midwest’s forced-union dues states as a group experienced a dismal decline of 9.8% during that period.  However, during the same decade, the five Midwestern states with RTW Laws actually experienced a slight increase by an average of 0.5%.  “’We’re Absolutely on the Right Track,’” NRWN, August 2012, p. 5.  During the first three months after Indiana’s new RTW Law took effect, Indiana’s private-sector payroll employment increased by nearly 73,000 or 3.0%, according to the BLS.  The gains were above the national average for that period.  Id.  By September, the Labor Department data showed that the number of new private-payroll jobs in Indiana has increased by nearly 100,000 or 4.1% since Indiana’s RTW Law went into effect.  “Indiana Right to Work Statute Is Working,” NRWN, Sept. 2012, p.5.

Furthermore, the job growth is likely to continue.  Dan Hasler, the head of the Indiana Economic Development Corporation reported that fifty-seven companies have Indiana investment projects in the pipeline, which will bring $1.6 billion in new investment into the state.  Hasler also stated that many companies had informed his agency that Right to Work would be a factor in their decision on whether to locate jobs to Indiana.  Id.

Twenty-three states have passed RTW Laws.  Tennessee was one of the first, passing its law in 1947.  As a result Tennessee has been attracting new domestic and foreign businesses for years and become a major auto manufacturing hub.  Nissan opened its Smyrna, Tennessee plant in 1983 and moved its US headquarters to north of Nashville in the mid-2000’s.  It recently added 1,000 employees to its Smyrna plant and plans on adding 1,300 more in 2013.  Toyota has a parts facility in Jackson, Bridgestone Tire has its American headquarters in Nashville, and Volkswagen opened its only US plant in Chattanooga in 2010.  Even GM is reopening its old Spring Hill, Tennessee Saturn plant for additional production needs.  Tennessee has mainly been spared the mass layoffs, plant closures and bailout that affected the Detroit area.  Many groups credit the fact that Tennessee is a RTW State as the key advantage that saved it the pain that other parts of the country suffered.  Sean Higgins, “Tennessee Auto Industry Thrives Without Unions,” Investor’s Business Daily, 3/5/12, p. A1-A6.

RTW States not only have better job creation, they also have better compensation growth for the employees.  According to Commerce Department data, private-sector compensation (wages, salaries, benefits and bonuses) fell by 0.7% from 2001 to 2011 in then forced-union dues Indiana, while it rose by 6.4% nationwide.  Indiana and the six other Midwestern forced-union dues states experienced an aggregate real private-sector compensation decline of 2.7% during the same time period.  During the same decade, the five Midwestern RTW States achieved an increase in real private-sector compensation of 13.0%. “Indiana Right to Work Statute is Working,” Id.  Superior job growth and superior compensation growth in the RTW States equals double win for the employees.  Effectively, under current Federal Law, an employer in a unionized company cannot offer merit-based pay increases or bonuses unless the union gives its permission or there is a federal finding of an “impasse.”  Mark Mix, “Union boss bargaining hurts our most productive workers,” The Washington Examiner, May 11-12, 2012.  In a country that became great because it was a Meritocracy, this Federal Law is downright Un-American.

Employees seem to appreciate that they are better off without being represented by a union.  In Wisconsin the membership in many of the state’s government unions plummeted within the first year after the adoption of Act 10, allowing employees to choose not to be in a public sector union.  According to the Wall Street Journal’s May 31 issue, membership in the Madison AFSCME Council 24 dropped from 22,300 to 7,100.  “Wisconsin Voters Rebuff Government Union Brass,” NRWN, July 2012, p.1 at p.2.  In another example, Nissan’s Tennessee plant workers rejected joining the UAW by roughly 2-1 in 1989 and 2001 and the UAW announced and then dropped an effort to unionize a foreign auto maker’s US plant last year.  “Tennessee Auto Industry,” Id. at 2.

Right to Work Laws even affect the school-aged populations.  Apparently, parents believe that they would rather raise their children in RTW States for a variety of reasons, including more job opportunities, better compensation, workforce flexibility, better chances for job advancement, lower cost of living, better living environment, non-union schools and lower taxes.  Whatever the reasons, the top seven states with the biggest gains in school-aged population from 2000 to 2011 were all RTW States.  Six of the seven states that lost the most school-aged children were forced-union dues states.  Katrina-ravaged Louisiana was the only exception of a RTW State that lost school-aged children among those seven states.  In the aggregate, RTW States’ K-12 populations increased by 1.87 million or 9.2% since 2000, while forced-union states have seen their school-aged populations drop by 1.21 million or 3.7%.   Naturally, states that are losing school-aged children are also providing fewer opportunities for teachers to obtain employment, keep their jobs and achieve career advancement, and vice-versa in states that are experiencing growth in the population of school-aged children.  “Right to Work = Teacher Job Opportunities,” NRWN, Sept. 2012, p.3.

An example of union action being detrimental to the teacher employees took place in Ohio.   There a union referendum was able to repeal Ohio’s new RTW Law, by flooding the airwaves with misleading ads claiming Ohio’s new RTW Law would lead to massive layoffs of teachers.  In reality, the public sector layoffs in Ohio were much worse than they would have been had the law not been repealed, since the law did not reduce the money spent, but only permitted more prudent allocation of the money.  Furthermore, the Ohio layoffs were much worse than those that occurred anywhere in Wisconsin, where the RTW Law survived union challenges.  For example, the Cleveland School Board laid off 17% of the district’s school teachers in April 2012.  “Government Union Lobby Remains Formidable,” NRWA, July 2012, p. 3.

Many polls have consistently shown nearly 80% of the Americans who are regular voters support the Right to Work principle.  “Hoosiers Deliver Clear Message to Congress,” NRWN, Feb. 2012, p.3.  “[S]cientific surveys regularly show rank-and-file Democrats and Independents, as well as rank-and-file Republicans, overwhelmingly oppose compulsory unionism.” Id.  The American people feel that forced unionism is morally wrong and that it is also a detriment to the economy.  “Major Right to Work Victory in the Midwest” Id. at p.2. The Republicans would do well with the general public to support the right of employees to work without being forced to pay union dues.

Obama’s ‘‘Recovery” Remains Anemic

The Obama Administration announced that 171,000 new jobs had been created according to its October jobs report, but that the unemployment rate had ticked up to 7.9%.  Obama quickly claimed that the report showed that his policies were working, that it was not time to turn back and that he deserved four more years.  However, in the real world, Obama’s policies have caused the worst recovery since Hoover and Roosevelt used similar policies to turn a stock market event into the Great Depression.  Nonfarm payrolls remain 4.27 million below their old high.  In a normal recovery, such as the Reagan recovery of the 1980’s, that number would be much higher by this point in a recovery.   The labor force participation rate remains near an all time low, so that the unemployment rate does not look as bad as the real conditions in the economy.  “Obama Jobs Record Failed In Every Way,” Investor’s Business Daily (“IBD”), 11/5/12, p. A1.  Under Obama, 7.8 million people dropped out of the labor force and stopped looking for work.  Without the dropouts, the unemployment rate would be 10.6%.   According to the Bureau of Labor Statistics (“BLS”) since Obama took office nearly one million more workers are working part time because they cannot find full-time employment.  Id.   Nearly 23 million Americans are unemployed, underemployed or have left the work force, despite Obama’s trillion-dollar stimulus and other alleged stimulus programs.

In addition to the low labor force participation rate, only 59% of the adult population is working, which is below where it was when Obama took office, even though the percentage normally rises during a recovery. This low participation rate is a sign that Obama’s deliberate policies of encouraging dependency are working, and that the economy is not working.   People are signing up for social security disability at record levels, partly because of the poor economy and partly because the Obama Administration has lowered the standards for disability and encouraged people, who are coming off of 99 weeks of unemployment insurance, to apply for Federal disability.  Id.  Meanwhile, there has been an explosion in the number of people in poverty.  Id.  The BLS reported that those who are working have seen their real median weekly earnings drop 5% during the four years of the Obama Presidency.  Id.  Moreover, the median income of all households has dropped by 8%, hammering the middle class.  The number of people on food stamps has increased by 15 million to 47 million. “A Dire Four Years of Deficient Leadership,” IBD, 11/5/12, p. A18.  Obama’s policies have produced an anemic recovery with economic growth and job gains slower than in almost every other recovery on record.  Had Obama’s “recovery” merely matched the post-World War II average, eight million more people would be employed and the GDP would be $1.2 trillion higher. Id.

Lou Dobbs commented that in the 23 million unemployed, underemployed and no longer looking, there are now 5 million people unemployed for 6 months or more.  He also said that the average family income has gone down by some $4,900 under Obama and that there was a 1% increase in the African-American unemployment rate from 12.3% to 13.4%.  “The O’Reilly Factor,” Fox News Channel (‘FNC”), 11/2/12.   It seems that Obama’s policies have hurt the very people he claims to be helping.  Hispanic and African-American unemployment is high and going higher.  The jobless rate among black youth approaches 30%.  “A Dire Four Years of Deficient Leadership,” Id.  The price of gasoline has doubled because of Obama’s policies against fossil fuel.  Food and energy prices have gone up and health insurance premiums have gone up by $2,500 instead of down by $2,500, as Obama promised.  In addition, Obama has passed taxes on items that will hurt the middle and lower classes more than the rich.  Obama promised to cut the National debt by 50%, instead he has increased the National debt by 50% from $10.6 trillion when he came into office to over $16 trillion now.  He has put us on a path to potential insolvency.  Id.

Keith Hall, a senior research fellow at the George Mason Mercatus Center and former BLS commissioner, said, “We’re getting some growth, but it is not recovery growth.”  “Hiring Rises In Oct., Led By Low-Wage Retail, Food Service,” IBD, 11/5/12, p. A1.  He also said that monthly gains need to exceed 250,000 to qualify as recovery growth and the economy would have to expand by more than 3%.  Id.  Furthermore the concentration of jobs has been in low-paying retail and food service jobs. Id.

In his speech in Colorado Springs, Colorado, Romney referred to the economy as “stagnate” and that Obama had promised that at this time unemployment would be 5.4%.  However, Romney pointed out that Obama has fallen 9 million jobs short of that promise.  Romney continued by saying that we have almost forgotten what a real recovery looks like.  Romney stated he will limit government rather than limit Americans’ dreams.  While, if the President is reelected, he will promote government and kill jobs.  “American Election Headquarters,” FNC, 11/3/12.

Romney actually has a five point plan to get the economy growing rapidly again.  The plan includes developing our oil, natural gas and clean coal, including on Federal lands, and approving the Keystone Pipeline.  Romney will make the United States North American energy self-sufficient within eight years.  The plan also calls for actually cutting the Federal Government by 5% on day one, not just reducing the rate of growth.  He will issue waivers to every state from Obamacare, so that businesses will not be afraid to hire.  He will review all of Obama’s regulations with the view to ending the ones that hurt jobs.  Romney will support school children and their parents and not the unions.  He will support school choice, so that children can attend the schools that are successful and not be locked into the zip code school system we now have.  Id.  It is time to get a REAL RECOVERY going by electing Mitt Romney on November 6^th.

The Obama Administration may be “Juicing” the GDP Numbers

The Obama administration just reported 2% Advance Estimate of GDP growth in the 3^rd quarter, after reporting 1.3% GDP growth in the 2^nd quarter.  The Obama administration immediately touted the number as a great accomplishment, proof that his policies were working and that Obama was entitled to four more years to finish the job.  However, Stuart Varney, host of Varney & Company, promptly stated on “American Newsroom,” The Fox News Channel (“FNC”), 10/26/12, that it looked like the Obama Administration may have “juiced the numbers,” because government spending had “jumped” 9.6% in the 3^rd quarter.  Stuart said, “There is some suspicion these numbers had been juiced by government spending, deliberately in that quarter in the report right before the election.”  Stuart also thought the number would be revised downward as it had been in the previous quarters this year.  Even if the 2% is real, it is not enough to reduce unemployment when you consider the new people entering the labor force.  Stuart pointed out that it takes 3% GDP growth just to keep up with population growth.

Is it really possible that the same Administration whose trillion dollar stimulus created or “saved” lots of jobs in non-existent Congressional Districts and cooked up a phony 7.8% unemployment rate in the September unemployment report could have possibly deliberately  “juiced” the GDP growth rate by goosing government spending by 9.6% right before the election, just to win a Presidential election?

Stuart chided that the 2% number will get you a lot of “spin,” but it would not get you a lot of jobs. To have a substantial reduction in unemployment, Stuart said that you needed sustained growth of twice that number or 4% a quarter.  He continued, “What you really need for a robust recovery is 4% and sustain that over a couple of years and maybe growth of 5% just like we had in the rebound from the recession in the early ‘80’s.”  He added that the only time GDP hit 4% in the Obama Administration was the 4^th quarter of 2011.  When Bill Hemmer said that the ‘80’s were 30 years ago and asked haven’t we had sustained 4% growth since then, Stuart replied that the last time we had sustained GDP growth of 4% or above was in the middle of the last decade.  Of course the recovery of the ‘80’s was when Ronald Reagan cut taxes, reduced regulations and encouraged business and oil development, the opposite of the failed Obama policies, and sustained growth in the middle of the last decade was after the Bush tax cuts.

Furthermore, Tim Quinlan, a Wells Fargo Economist, reported that business spending was off more than 25% on a three month annualized basis.  He also pointed out that, “We have not seen that series drop by that magnitude in the last 20 years without a slowdown in overall economic growth.”  Id.  Also, J. D. Foster of the Heritage Foundation remarked that businesses don’t see a lot of hope in the immediate future, so they will just sit pat.  Id.  With these comments, there is not much substance behind the “Hope and Change” team spinning the GDP number as being something to brag about.

When asked whether the 2% was a good number by Martha MacCallum on “America Live,” FNC, 10/26/12, Lou Dobbs with a big smile sarcastically said “It’s a very good number, given that we have an economy that lacks leadership, that has CEO’s absolutely frozen, because of the uncertainly because of the fiscal cliff.  Because they are shepherding their cash, we are actually watching cash balances rise on corporate America’s balance sheets, as they await some greater clarity on the direction of the country.”

Martha MacCallum pointed out that under Reagan we were at 7% growth rate in GDP.   In discussing the 9.6% increase in Government spending, Martha said that some people were saying that the Administration was actually manipulating the numbers.  She went on to say that some people were saying, if you stripped out the defense spending increase, the number would be closer to 1.36% in the 3^rd quarter.  Lou said it was throughout the government and that the 9.6% was an exceptionally high increase in government spending.

When Martha chipped in that at least the number is going up, Lou Dobbs pointed out that the GDP rate was not growing.  It had been 2.4% in 2010, 1.8% in 2011 and even with the questionable 2% in the third quarter, it was still under 1.8% in 2012.  Lou thought that the Administration did not have one ounce of credibility when it came to the economy.  Lou Dobbs summed up, “Our growth is anemic.  We have not seen this Administration preside over a return to prosperity.  I don’t think the American people are willing to put up with much nonsense.”

Investor’s Business Daily(“IBD”) picked up on the theme of “anemic” economic growth in the headline,  “Economic Growth Less Anemic, But Investment Slumps,” by Jason Ma, IBD, 10/29/12, p.1.  The article said that the initial reading reported by the Administration for Q3 economic growth showed a pick up from “anemic” to modest, “but signs of momentum were scarce as business investment retreated ahead of the ‘fiscal cliff’ and exports slumped on global economic woes.”  The article also stated, “Federal government spending rose at a 9.6% pace in Q3, the first gain in five quarters, fueled by military outlays.  The surprise defense jump will likely be followed by a similar reversal later.  Exports probably won’t rebound quickly with Europe still mired in a debt crisis and China’s slump just starting to bottom out.”  Id.

Dylan Matthews headlined “Don’t believe the GDP report!” The Washington Post, Updated 11/26/12, www.washingtonpost.com , as he pointed out how subject to error these early GDP estimates are and that the second quarter was revised down from an initial estimate of 1.7% to 1.3%.  According to the Bureau of Economic Analysis the average revision between the 1^st and 2^nd estimates is .5 points, and 1.3 between the 1^st estimate and the last.  Dylan Matthews said that from 2008 to the 1^st quarter of 2012, “The initial data was generally much too optimistic throughout the recession and recovery.” Id.  In addition, some commentators are already saying that Superstorm Sandy will cause a dip in economic production that will reduce GDP in the 4^th quarter.

Should anyone believe the GDP numbers from the “faux Greek column” President?  The President that claimed his policies “created” 873,000 new jobs in September?  The last time the US economy created some 870,000 jobs in one month was during the Reagan recovery when the economy was growing at 7%, and Reagan’s policies of cutting taxes and regulations and promoting investment and capital spending were in place.  Obama’s policies of higher taxes, more regulation, attacks on energy production, class warfare and Obamacare have failed.  It is time for Obama to go.

There They Go Again: Obama and his Administration are Playing More Games

With the Jobs Numbers

The headline number for the September jobs report, based on the Household Survey, showed the unemployment rate dropping to 7.8%, and Obama immediately hit the campaign trail to tout it as a great accomplishment, proof that his tax and spend policies were working and that he was entitled to four more years.  However, Obama intentionally left out the fact that 582,000 of the 873,000 allegedly new jobs in the Household Survey were part time.  Furthermore, only 114,000 new jobs were reported in the more reliable Payroll Survey.  Although discrepancies have appeared between Payroll Survey and the very volatile, less reliable Household Survey before, the size of this discrepancy strains credibility so much that many people are crying foul, including Jack Welch, Ed Butowsky of Chapwood Capital Investment Management, and Karl Rove.   The skepticism increased because the Bureau of Labor Statistics’ U-6, which measures unemployed and underemployed, stayed stuck at 14.7%.  (Jenna Lee, “Happening Now”, Fox Business News (“FNC”), 10/5/12); Jason Ma, “Payroll Gains Slow; Jobless Rate Falls On Part-Time Spike,” Investor Business Daily(“IBD”), 10/8/12, p1.  Furthermore, the number of Americans that are unemployed, stopped looking and underemployed (working part time) went up by 100,000 from 23.1 million to 23.2 million.

Reporting on CNBC, Doug McKelway noted that unemployed people dropped by 456,000 while only 114,000 new jobs were created.  That means there are 344,000 persons who were unaccounted for. Id.  They just conveniently disappeared.  Dean Baker from the Economic and Policy Research Center said, “The jump in employment reported in September was almost certainly a statistical fluke.”  Id.  Diane Swonk, Chief Economist at Mesirow Financial, pointed out that while almost 600,000 part time jobs were reported on the Household Survey, only 104,000 new private sector jobs were allegedly created in the Payroll Survey.  That number was not enough to absorb all the new job entrants, let alone lower the unemployment rate from 8.2% in August to allegedly 7.8% in September.  She also stated that manufacturing was not doing well, and she predicted a sluggish 4^th quarter GDP.  “Squawk on the Street,” FNC, 10/5/12.   In fact manufacturing lost 16,000 jobs in September and 22,000 in August.  Jason Ma, “Part-Time Work Surge Sets Up One-Time Jobless Plunge,” Posted 4:46, Investors.com, 10/5/12; Jason Ma, “Payroll Gains Slow; Jobless Rate Falls On Part-Time Spike,” IBD, 10/8/12, p.1.  Together with the anemic GDP growth of around 2%, Obama’s jobs report does not add up and is not credible.  Many people are now suggesting the Obama Administration has cooked the books on this jobs report to win the election.  Some even mentioned that the closeness to Obama’s dismal performance in Wednesday night’s debate may be the reason.  Doing anything to win the election, so that he will have “more flexibility after the election,” has been Obama’s standard practice.

Romney’s staff also dismissed the report as an example of a stalled economy.  The Romney statement went on to say, “This is not what a real recovery looks like.  We created fewer jobs in September than in August, and fewer jobs in August than in July, and we’ve lost over 600,000 manufacturing jobs since President Obama took office.  If not for all of the people who have simply dropped out of the labor force, the real unemployment rate would be closer to 11%.” “Happening Now,” FNC, 10/5/12.

This has been the slowest and most sluggish recovery since the Great Depression.  Not surprisingly, the same leftwing, progressive policies that failed for Herbert Hoover and Franklin Roosevelt, also failed for Obama.  You can’t tax, borrow, and spend your out of a recession.  If it was that easy, every country in the world would be able to do it.  That policy is now failing in Europe and has failed everywhere and every time it has been tried.  It is failing in Greece, Spain and Italy and has repeatedly failed in South America.  Every dollar that is taxed or borrowed to spend is a dollar taken from the productive economy and quite often used for unproductive activities, such as the bankrupt Solyndra, Ener 1, Beacon Power, Abound Solar and other bankrupt green businesses.

Tim Phillips, the President of American for Prosperity, also referred to the sluggish recovery by stating, “This mornings job numbers report is further proof that President Obama’s big-government agenda is failing Americans.  This has been the most sluggish economic ‘recovery’ in recent history.  More Americans are unemployed under President Obama than under the past 11 presidents combined.”  Tim Phillips went on to say, “At this rate the Great Recession job gap won’t be closed until 2025.  There are still over 12 million Americans unemployed today!  With 4.8 million of those Americans having been unemployed for more than 27 weeks.”  Tim also remarked, “For many, the American Dream is disappearing.  Our economy is being stifled by the big spending and over-regulation of the Obama Administration’s policies.”  Tim Phillips, “Crisis at the American Dinner Table,” email 10/5/12.