Domestic Policy – Page 4 – The Wrongologist

Autoworkers Have A Deal

The Daily Escape:

Sunrise, Northern VT – October 2023 photo by Kristen Wilkinson Photography

The UAW announced Monday evening it had reached a tentative agreement with GM, the last of the Detroit car companies to complete negotiations with the Union. So all three have a tentative agreement which will now be voted on by UAW members. This is a big deal, even if nobody’s talking about it.

Some details from The Insider:

“The 25% pay increases by April 2028 agreed to in the new contracts raise top pay to about $42 an hour, according to the union. That starts with an 11% immediate boost upon ratification, three annual raises of 3% each, and a final increase of 5%. The UAW said restoration of cost-of-living increases, which were suspended in 2009, could boost the total increases to more than 30%.”

Some industry analysts have estimated that Ford’s contract, if ratified, would add $1.5 billion to the company’s annual labor costs. Ford estimated that this could add up to $900 in labor cost to each vehicle rolling off its assembly lines. Another analyst says the pact will reduce profitability by 1%. To put these numbers into perspective, keep in mind that a fully loaded Ford F150 can run over $80k. That means the car companies can afford this deal.

Labor accounts for 4-5% of the average cost of making a car for the Big Three. Also, the Big 3 have made $250 billion in profits over the past decade and have diverted a substantial amount of that money into stock buybacks to enrich wealthy shareholders and top executives instead of investing in their businesses or paying their workers.

So please spare us the tears about the workers’ hard-fought gains putting the Big 3 in peril. The NYT wrote:

“The terms will be costly for the automakers as they undertake a switch to electric vehicles, while setting the stage for labor strife and demands for higher pay at nonunion automakers like Tesla and Toyota.”

To paraphrase, the NYT says that those evil unions are ruining shareholder value and will cause strife at Tesla, a company renowned for its fantastic working conditions.

Be it ever thus in the media: Unions demand, management offers. Note how the media framing is always “the automakers” as the protagonists, with workers as a mob that’s making trouble. Why can’t those workers be happy and content with their lot in life, which is ordained for them by the Higher Power?

Back in the real world, the tentative UAW agreement rewards autoworkers who had sacrificed much during and since the Great Financial Crisis. They now get record raises, more paid leave, greater retirement security, and more rights at work.

The UAW win is a testament to the power of unions and collective bargaining to build strong middle-class jobs, while helping a few of our most iconic American companies to thrive. The UAW workers have not only seen many of their jobs automated and offshored, they also hadn’t received an inflation-adjusted raise since the early 2000’s.

That the UAW prevailed shows that unionizing on a large scale is a viable path to rebuilding America’s middle class. Fed up with continual economic hardship at the hands of the Big 3’s management, these strikers achieved something good for themselves and their families. Moreover, they did it legally. Despite the NYT’s protests, they didn’t steal anything from anyone. They didn’t ask for handouts. They demanded a good future for themselves and their families.

This should be a lesson to all people whose labor is undervalued. You can organize and negotiate better contracts for yourselves.

And don’t underestimate how important a low rate of unemployment is to low-wage and working-class Americans, and how that also gives unions leverage. Biden’s American Rescue Plan Act of 2021 provided an economic stimulus that boosted US consumer purchasing power to the point that we avoided the expected recession. And today’s scarcity value of labor helped close the deal with the Big 3.

For some context, these landmark gains by the UAW, along with what the Teamsters secured with their UPS contract, and what health care support staff got at Kaiser Permanente go far beyond the pay and benefits that workers receive at their non-union counterparts. Except for railroad workers, it’s been a very good year for unions.

Once again, Biden took a risk that he hadn’t before by explicitly siding with the UAW. It paid off for him and the Union as well.

Finally, kudos to Shawn Fain and the UAW negotiating team!

Wrongo appreciates that Fain seems to understand class consciousness by describing the workers as working class. And their strategy was pure divide and conquer.

The final word on these tentative agreements will ultimately come from UAW members themselves when they vote on the new contracts.

When Perception Isn’t Fact

The Daily Escape:

View of fall colors and Linn Cove Viaduct, Banner Elk, NC – October 2023 photo by David Peak

Polls continue to show that people think the economy is terrible and that it’s Biden’s fault. Biden supporters chalk it up to the general unreliability of surveys: Asking people questions and then assuming their answers are accurate or honest. But often, they are not because people find it difficult to say, “I don’t know.”

A second issue is the astounding changes in polling data over the past decade: People’s self-reported emotional state in 2022 was worse than the very worst events of the past few decades. But are things as bad as people seem to think? From Barry Ritholtz:

“From an economic standpoint, things are much better than people seem to be willing to admit: The rate of inflation has plummeted by two-thirds from 9% to a little over 3%, but 60% of respondents believe inflation is “continuing to increase.” The economy is not on the right track, even as Americans’ Net Worth Surged by Most in Decades During Pandemic.”

And the political fallout may be worse than you think. Bloomberg’s recent poll reveals some significant danger for Biden:

“Donald Trump is leading President Joe Biden in several key swing states as voters reject the economic message that is central to Biden’s reelection bid….Trump…leads Biden 47% to 43% among voters in Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin. The results across those seven states had a margin of error of 1 percentage point.”

Thirteen months before the election, Biden lags Trump in head-to-head matchups in five of the seven swing states. These states will be particularly important in delivering the electoral votes that decide who will be the next president. More from Bloomberg:

“A 51% majority of swing-state voters said the national economy was better off during the Trump administration, and similar numbers said they would trust Trump over Biden on the economy going forward, 49% to 35%. Among independent voters, the chasm on trust to handle the economy is even wider, with a 22-point advantage for Trump.”

Seems like a problem. This is despite the fact that, since 2019, households invested more, home values have jumped, and savings levels have risen. Here’s more from Bloomberg’s polling partner Morning Consult’s Caroline Bye:

“Right now, Biden is not getting any credit for work he’s done on the economy….Almost twice as many voters in the swing states are saying that Bidenomics is bad for the economy, as opposed to good for the economy, which is a really startling fact if you’re the Biden campaign.”

Why is it that people’s perception doesn’t match the data? Back to Ritholtz, who thinks the fault may lie with the media:

“…the 2010s seems to be when they shifted their online presence to a much more aggressive stance. Perhaps most significant is in the way coverage became increasingly “click-bait” oriented via headlines filled with emotionally loaded language….Words that conveyed “Disgust” rose 29% and “Sadness” was 54% higher; words that reflected “Anger” were up 104%. The biggest gain was from perhaps the most emotionally loaded word: “Fear” skyrocketed by a huge 150%. And the words expressing “Joy” or “Neutral?” Down 14% and 30% respectively.”

But it isn’t just the media’s headlines that are hurting people’s perceptions; it’s also the choice of what the media covers that can lead us astray. Ritholtz provides us with a fantastic chart about the causes of death in the US from Our World in Data comparing actual causes of death with what was reported in the NYT:

This shows that the way the media covers deaths this is totally inverted: The things least likely to kill you get the most coverage: The bar chart on the right shows Terrorism, Homicide, and Suicide capture about 70% of the column inches. This is despite the odds that you are most likely to die from heart disease (30.2%), cancer (29.5%), or a car accident or fall (7.6%). The very bottom of the list are suicide at 1.8%, homicide at 0.9%, and terrorism at 0.01%.

So do negatively-laden headlines matched with wildly disproportionate coverage combine to send sentiment readings to places that do not match the reality of the economy or more broadly, the real world around us?

We’ve always had sensationalist journalism. The media’s response to social media is to approach news coverage in a similar manner to social media. Apparently the business plan is: If you can’t beat ’em, join ’em. It’s important to remember that we are what we eat, including our media diet. It’s making us unhappy, and increasingly detached from reality.

There are a few economic realities that may help explain where the public is right now:

Gas prices are both very volatile, and something that annoys an enormous percentage of Americans, because of the need to spend large amounts of money on a weekly basis to fuel their gas guzzling vehicles.
The housing market is a mess. The median sale price of a house in the USA went from $313,000 in 2019 to $480,000 in 2022. Since then the massive spike in interest rates has reduced median price to $416,000, but coupled with high mortgage rates, this is bad news for people wanting to buy homes in this market.

From a behavioral economics viewpoint, the extent of peoples’ reaction to price inflation may reflect the concept that people are loss averse: that is, they dislike what they perceive as losses more than they like what they perceive as gains.

This means if prices and wages were to increase at the same rate, politicians might assume that people would be indifferent to the nominal changes in prices, since they would be offset by wage increases. But if Americans are loss averse, when prices and wages both go up by a significant amount, (as they have over the past three years), people feel worse, because the “loss” incurred through higher prices feels worse than the “gain” of higher wages.

Time to wake up America! Perception isn’t fact until it is. How Dems fight this will determine the outcome of the 2024 election. To help you wake up, watch and listen to Bruce Springsteen perform “How Can a Poor Man Stand Such Times and Live”, live at the New Orleans Jazz & Heritage Festival in 2006. This is one year after Katrina, which Bruce focuses on at the start of the song:

Sample Lyrics:

Well, the doctor comes ’round here with his face all bright
And he says, “In a little while you’ll be all right”
All he gives is a humbug pill, a dose of dope and a great big bill
Tell me, how can a poor man stand such times and live?

We Can’t Give Up Hope

The Daily Escape:

First snow, Great Balsam Mountains, Canton, NC – October 2023 photo by Brandon Montgomery

“To hope is to risk frustration. Therefore, make up your mind to risk frustration.” – Thomas Merton

Everyone’s talking about Hamas, the Gaza hospital and Jim Jordan. Wrongo is certain to write more about those issues, but today, let’s talk about two polls that seem to be telling us a lot about what Americans are feeling right now.

First, the survey by Pew Research “Americans’ Dismal Views of the Nation’s Politics” confirms that millions of Americans are feeling so exhausted and depressed by American politics that they are disengaging from it just when its important to fully engage. Some highlights:

65% of respondents describe themselves as “exhausted” when thinking about politics.
55% say they are “angry” about American politics.
Only 4% say politics makes them feel hopeful.
Pew also asked people to describe American politics in one word. The second most common description was “corrupt”—behind the first-place finisher, “divisive.”

Here’s the tag cloud from Pew:

Notice that there aren’t any positive words that made the cut from the responses. From Robert Hubbell:

“It is no wonder that people want to disengage and look away. Exhaustion is the point of MAGA extremism.”

Hubbell goes on to point out that Republicans turn every issue into an attack:

“Impeach Trump? We’ll impeach Joe Biden, Merrick Garland, Jack Smith, Alejandro Mayorkas, and Christopher Wray.

Indict Trump? We’ll indict Hunter Biden, Hillary Clinton, Nancy Pelosi, and Joe Biden.

Protect Americans from a deadly virus? We’ll undermine trust in science.

Fight human-caused climate change? We will make it illegal to discuss climate change in the classroom.”

These responses are part of a mind game designed to make Democrats and Independents give up and go away. But his great idea is this:

“We have one job: To endure, to abide, to keep the faith until this moment of reactionary extremism subsides. If we can do that, we will leave to our heirs a healthier, stronger democracy.”

John Dean Also wrote about this:

“…I was thinking about how Barack Obama won the presidency in 2008. The first thing that came to mind was his iconic poster with his image and the word “HOPE.” That differentiated Obama from his Democratic party competitors…and his Republican rival, John McCain. Obama embraced hope and the future, and he won.”

Some people attribute the negative messages offered by current candidates to the fact that today’s world is troubled. But as Dean points out, the world was also deeply troubled in 2008 and only Obama was offering hope. He won two terms.

Dark Money Keeps Flowing Into Our Politics

The Daily Escape:

Cranberry Bog, Old Sandwich Road, Cape Cod MA – October 2023 photo by Ken Grille Photography

As usual, we’re enjoying our time on Cape Cod. We visited a cranberry bog operator yesterday and learned that the number one use of cranberries in America is making crasins. Those packages of whole cranberries you purchase at Thanksgiving make up just 1% of US cranberry sales.

Two topics today: First, as much as Wrongo would like, he can’t ignore the escalating war between Israel and Hamas. Many have written about the conflict. Wrongo wants to spend a few minutes on this week’s hypocrisy by House Republicans. Ja’han Jones wrote for MSNBC:

“In February, several Republicans signed on to a bill, introduced by Rep. Matt Gaetz, R-Fla., that was aimed at ending US military and financial aid to Ukraine.”

At the time, Gaetz said:

“America is in a state of managed decline, and it will exacerbate if we continue to hemorrhage taxpayer dollars toward a foreign war…”

But on Sunday, Gaetz said on Meet the Press that we should up our support to Israel:

“The reason we have this multibillion-dollar commitment…to Israel is because we want Israel to have a qualitative military edge over everyone in the region…”

Just last week Gaetz and other Republicans were willing to shut down the federal government over aid to Ukraine. Aiding Ukraine means spending to assist in a fight against Russia, which the MAGAverse is apparently supports only very weakly. But aiding Israel, which this time means spending to assist in a fight against Hamas, is ok. Republicans like spending money fighting Muslims.

Anne Applebaum in The Atlantic warns that the “rules-based world order” is on the verge of breaking down:

“Open brutality has again become celebrated in international conflicts, and a long time may pass before anything else replaces it.”

This applies to both Ukraine and to Israel. We can’t afford to ignore one in favor of the other.

Our second issue today is that the billionaire Charles Koch is using a tax dodge to fund his ongoing political activities. From Judd Legum:

“…Charles Koch…is funneling his wealth into two organizations that can continue his right-wing political advocacy for years. Koch structured more than $5 billion in donations to…allow him to avoid paying capital gains or gift taxes. It’s not surprising that Koch is familiar with the loophole — he spent hundreds of thousands of dollars lobbying to create it.”

Legum cites a Forbes article which states that in 2022, Koch donated $4.3 billion in Koch Industries stock to Believe in People, a newly formed 501(c)4 nonprofit organization. The organization is run by Koch’s inner circle, including his son, Chase Koch along with Dave Robertson, co-CEO of Koch Industries, and Brian Hooks, the co-author of Charles Koch’s last book.

From Forbes: (brackets by Wrongo)

“ [Koch] has already quietly transferred $5.3 billion of nonvoting stock to a pair of nonprofits….Forbes estimates those shares account for nearly a tenth of the 42% stake previously held by Charles (though he still has 42% voting power).”

The other Koch nonprofit is called CCKc4. In 2020, Koch also donated $975 million in Koch Industries stock to CCKc4, controlled exclusively by Charles’ son, Chase Koch. Legum reports that in its 2020 IRS filing, CCKc4 listed its mission as “N/A.” The gift to Believe in People is now the largest publicly disclosed donation to a 501(c)4–a type of nonprofit with fewer restrictions on lobbying and politics than traditional charities.

Unlike a traditional 501(c)3 nonprofit, a C4 can own an entire for-profit company indefinitely and (so long as these activities support its principal purpose) benefit private individuals; engage in an unlimited amount of issue lobbying; and get directly involved in politics.

Since Congress exempted donations to C4s from the usual 40% federal gift tax in 2015, a number of billionaires have donated 100% of their companies to C4s. Before Koch’s gift the largest of these C4 donations was by Patagonia’s founder Yvon Chouinard, who transferred all of his outdoor clothing and gear retailer’s nonvoting stock to an environmentally-focused C4 in 2022. At the time of the gift, Patagonia was reportedly valued around $3 billion.

Legum reports that Koch’s main political spending vehicle, Americans for Prosperity Action (AFP Action), in the 2022 election cycle spent 95% of its money on Republican candidates who were formally endorsed by Trump or who actively campaigned as Trump supporters. AFP Action spent just $3.5 million on candidates not aligned with Trump and zero dollars supporting Democratic candidates.

This is America in the 2020s: $ billions “donated” by billionaires to protect other billionaires. The tax dodge was enacted in 2015 during the Obama administration. This expansion of tax-free funding of political action is something that is unknown to average people, yet it impacts our politics through its substantial invisible influence. It strips money from the government’s coffers while simultaneously further poisoning US democracy. The only way to take back control of our politics is to take back control of the flow of money into our politics.

What A New House Speaker Means For America

The Daily Escape:

Autumn, Rocky Mountain Front, MT – October 2023 photo by Jack Bell Photography

We’re all trying NOT to follow what’s going on in the House. Since Matt Gaetz and friends fired Kevin McCarthy, pretty much every newscast and paper are covering it. Wrongo will add his few words to the hot steaming pile of wordsmith.

McCarthy’s downfall is proof that no good deed goes unpunished. His decision to shake hands with Democrats on a short-term budget deal, kept the government open, but drew a challenge to his Speakership from a small group of chaos caucus Republicans. These eight mutinying members of his Party felt that McCarthy committed the unforgivable sin of compromise with Democrats.

It’s useful to remember that 91 Republicans voted against McCarthy’s bill to keep the government open.

That, along with McCarthy’s unwillingness to make any concessions to the Dems for future funding requirements like Ukraine, made it clear that there was no good reason for them to do anything to help McCarthy and the GOP caucus to resolve their internal differences.

At the highest level, America is now looking at an uncertain period of being (un) governed, in fact, held hostage by a tiny group of eight “chaos Republicans”. If the Republican House members select a new Speaker from the current two front runners, Steve Scalise (LA) and Jim Jordan (OH), their Party will tip further to the Right than it was under McCarthy, and there doesn’t seem to be a middle ground.

Just eight Republicans were in love enough with chaos to vote against Mr. McCarthy; more than 200 other Republicans understood that chaos isn’t conducive to sound policymaking. And 32 of those who supported McCarthy are members of the Problem Solvers Caucus, which is in theory dedicated to bipartisan solutions.

The WaPo has a great chart that lays out just how small the chaos caucus is vs. Republicans who voted for McCarthy:

Those Republican Problem Solvers are very angry at the caucus’ Democratic members for not supporting McCarthy when he was dethroned. All the House Dems who voted, voted against McCarthy (208), while four Dems weren’t present.

So now, a government shut-down seems assured. But the reality is that despite the best wishes of the chaos caucus, the government cannot remain unfunded forever. And their demands for capitulation by Biden to the GOP’s fever dreams for cutting spending will never happen.

The House can’t do anything without a Speaker, so the pressure is massive to choose one. And the Republicans will probably find a way to choose one without requiring any Democratic votes to support their choice. But when government funding runs out in mid-November, we’ll get to the real logical driver of partisan politics, the absolute necessity to fund the government.

When the new Speaker can’t pass a funding bill that is supported by the Senate, the new Speaker will eventually see the value in again seeking Democratic support.

The math drives this. The functional majority in the House will be that group who are willing to pay our bills on time by funding the government. Of the 221 Republican House members, 130 of them voted to avoid the shutdown, and 91 voted for it. The new Speaker needs to wrangle 218 votes to pass a bill on to the Senate. So if only 130 Republicans are willing to govern, Democrats will have to supply the difference.

Roll Call reports that the Republican vote for the next Speaker will take place next Wednesday morning, so we’ll soon see if the impasse can be resolved.

Another interesting turnabout this week was the Biden administration deciding to waive two dozen environmental laws in order to resume building the wall on the southern border. Trump demanded an apology because Biden had promised in 2020 there would “not be another foot” of wall if he won.

The White House now claims the administration’s hands were tied by appropriations bills that required them to spend the money. Said Biden:

“The money was appropriated for the border wall…I tried to get them to reappropriate it, to redirect that money. They didn’t, they wouldn’t.”

Biden added he still doesn’t believe walls are an effective solution, but Republicans are crowing “I TOLD YOU SO” with this announcement. But since it was FY2019 money that couldn’t be reprogrammed, we should be asking why it wasn’t spent while Trump was still in office.

Wrongo is applying for a patent on his new invention. It’s called “the magic button”. You press it and any intractable problem simply disappears without a trace. It will be ready for use sometime after the 12^th. The 12^th of never.

On to the Saturday Soother, where we spend this Saturday of a three-day weekend attempting to escape from the news cycle. Wrongo and Ms. Right are on Cape Cod for our annual fall getaway that dovetails with the various Oysterfests on the Cape.

This means that columns may be light and variable for the next 10 days.

It’s raining in the Northeast, so, it’s mostly indoor sports today. To help you let go of the week’s news, grab a comfy chair by a window and brew up a cup of Kick Ass coffee from Canada’s Kicking Horse Coffee.

Now watch and listen to “My One And Only Love”, the old standard performed here by legendary saxophonist John Coltrane and singer Johnny Hartman. This was recorded in 1963 and features McCoy Tyner on piano. If you want to take your mind off a few things today, this will surely help:

Kevin Shows His Little Spine

The Daily Escape:

Lone Cypress, 17 Mile Drive, Monterey, CA – September 2023 photo by Leila Shehab Photography

“Until we know we are wrong, being wrong feels exactly like being right.” — David McRaney

Wrongo’s Wake Up Call came on Saturday evening when Kevin McCarthy asked House Democrats to bail him out again:

“Congress passed a bill today to fund the federal agencies at FY2023 levels until Nov. 17. The legislation reauthorizes the FAA and the national flood insurance program through the end of this year. There’s $16 billion for disaster relief accounts, too.”

From Politico:

“McCarthy’s move marked an abrupt shift after spending most of the year trying to placate all corners of his party — including a dozen-plus hardliners who have made it next to impossible for him to maneuver anything onto the floor. After the vote, McCarthy all but taunted his critics to come after his gavel if they wanted to.”

Wrongo said here that:

“You’re unlikely to win if you decide to place a bet on McCarthy getting a dose of moral courage and standing up to his Party.“

Well, Wrongo was um, wrong. The 45-day bridge funding passed with more Democratic than GOP votes. That’s a repeat of the debt vote last spring that also angered McCarthy’s opponents.

More Fresh Hell In Washington DC

The Daily Escape:

Sunrise, Linville Gorge Wilderness, NC – September 2023 photo by Thomas Mabry

Today is the Autumn Equinox, bringing its shortened days and cooler nights. It reminds us that we’re running out of time to avoid a government shutdown, because the GOP can’t stop fighting among themselves. Republicans no longer represent a serious national political Party.

From the Hill:

“House Republicans abandoned plans to take up a stopgap funding measure this week after members of the fractious GOP conference warned there would not be enough votes to pass a continuing resolution to avert a partial government shutdown next month.

Party leaders informed members that…the House would recess subject to the call of the chair. Lawmakers were advised to keep their plans flexible, and that “ample notice” would be provided for any votes they planned to schedule on Friday or over the weekend.

Members weren’t being officially sent home for the weekend because House leaders lacked the votes to adopt a motion to adjourn…”

Here’s a quote from House Minority Leader Hakeem Jeffries (D-NY): (brackets by Wrongo)

“…[in] 2018-2019, they shut the government down for 35 days. When the shutdown began, Trump was president, Republicans controlled the House and the Senate… They shut themselves down. That’s how much it’s in their DNA”

It’s actually worse than that. Since 1995, there have been 5 major government shutdowns. The GOP controlled the House for all 5 of them. Anyone other than Wrongo see a trend here?

Politico says that members of the Problem Solvers Caucus is working with Speaker McCarthy on a deal:

“Small groups of centrist Democrats are holding secret talks with several of McCarthy’s close GOP allies about a last-ditch deal to fund the government, according to more than a half-dozen people familiar with the discussions.”

“Lawmakers involved in the talks — who mostly belong to the bipartisan Problem Solvers Caucus, the Republican Governance Group or the centrist New Democrat Coalition — have labored to keep their work quiet. Many Republicans involved are incredibly worried about revealing their backup plan, wanting to wait until every other tool in McCarthy’s arsenal has failed.

That moment may not be until next week, just ahead of the Sept. 30 shutdown deadline.”

Any solution to the impasse has to be bipartisan, given the intransigence of a handful of wacko Conservatives. As Rep. Don Bacon (R-NE) said about the conservative holdouts: (brackets by Wrongo)

“So why negotiate with these five or 10 people who [constantly] move the goalposts?”

Or as Andy Borowitz put it:

“Zelensky Offers to Broker Peace Deal Between Kevin McCarthy and House Republicans”

Moving on, Sen. Bob Menendez (D-NJ) was indicted on federal bribery charges by the DOJ on Friday morning:

“…federal prosecutors alleging the New Jersey Democrat accepted cash, gold and other benefits in exchange for using his office to enrich three businessmen and aid the Egyptian government. The charges, brought by the Manhattan U.S. attorney’s office, mark the second time New Jersey’s senior senator has faced public corruption allegations. An earlier criminal case eight years ago fell apart.”

Menendez wasn’t alone in the indictment; his wife Nadine Arslanian was also included on the bribery charges.

Can Biden’s Union Roots Help Him In 2024?

The Daily Escape:

Red Mountain, San Juan Mountains, CO – September 2023 photo by Daniel Forster Photography

The “the biggest auto strike in generations” got under way last week, with 150,000 US autoworkers, including employees at Ford, Stellantis and General Motors walking off the job after contract negotiations failed to reach a deal. This strike, coupled with the likely government shutdown at the end of the month, will precipitate a very dangerous moment for the Biden administration.

From The Guardian:

“The United Auto Workers (UAW) union says workers have never been fully compensated for the sacrifices they made after the 2008-09 financial crisis, when they agreed to a raft of cuts to save the industry. The carmakers received huge bailouts and soon returned to record profits.”

The WaPo had a good article asking workers why they are striking. Most cited inflation and fairness:

“We’re not making enough money” said Petrun Williams, a 58 year-old Ford repairman. “People should be able to buy their own houses, but right now it’s not possible.”

This is going to be a difficult problem to tackle, because GM, Ford, and Stellantis are wildly inefficient giant bureaucracies with cost structures optimized to make $75,000 trucks, and their move into Electric Vehicles will take a lot of money and time before it pays off.

But the Biden administration isn’t necessarily helping: (Brackets by Wrongo)

“…Biden…is in a tough spot with the United Auto Workers….Through its industrial policies,…[Biden]…is giving away billions to automakers through production tax credits and loans, while supporting the transition to electric vehicles through consumer rebates and funds for charging infrastructure. Biden has promised that those incentives will lead not only to carbon emissions reductions but also good-paying union jobs.”

But the UAW leadership isn’t buying it. As the UAW goes on strike, their members don’t necessarily support Biden, but that doesn’t necessarily mean they support Trump either. Politico asked striking members if Biden had done enough to prevent the strike. They talked to Garry Quirk, the president of the local UAW union in Kokomo, IA:

“I don’t know what he’s done…Ask him. I don’t think he knows what he’s done. Seriously. I’m not trying to be mean.”

Quirk wasn’t freelancing: Fain and the union haven’t yet endorsed Biden’s reelection, throwing into doubt Biden’s standing in autoworker-heavy communities. But Politico reported that Biden had spoken that day with UAW president Shawn Fain and auto company CEOs. The chair of Biden’s Council of Economic Advisers said this week that Biden had been very much engaged.

But his efforts didn’t resonate with union member Denny Butler:

“Historically, man, if you didn’t vote Democrat years ago, and you were in the union, sometimes you got your ass kicked…I’m telling you what, the Democratic Party is not what it was 20, 30 years ago.”

So this is another Politico story about Obama voters becoming Trump voters and not looking back.

What Biden is fighting is the sense that the Democratic Party has not been truly on the side of union workers for a long time. It is true that today the Democrats are more on the side of unions. Neoliberalism is not nearly as powerful in the Democratic Party as it was during Obama’s time, or earlier.

But perceptions can be sticky. Clinton, Carter, and Obama (especially in the first term) all promoted corporate policies over the unions. Workers got screwed as factories closed, and no one offered much to workers beyond retraining programs that they didn’t want, and for the most part, didn’t lead to better jobs.

If you said that Republicans (including Mitt Romney) were no better, you’re correct. But today’s Republican Party offers a way to channel anger and resentment. Union members can opt for the GOP path even if the GOP doesn’t have the union’s interests in mind.

Despite Obama (and Biden) saving autoworker jobs through the 2009 auto bailout, they did little to hold the auto companies accountable. They allowed the expansion of two-tiered wage rates that the union is still fighting during the current strike.

The perception is that the UAW shrank and sacrificed, while the auto industry leadership got richer. Biden absolutely cares about unions, but he’s fighting against decades of belief that the Democrats aren’t what they used to be.

And no matter what Biden does, it’s going to be hard to get by that perception. There’s a mixture of anger and nostalgia that sticks in the minds of people who don’t really pay attention to the details of politics. Let’s take a look at the price of cars over the last ten years:

The Big Three automakers reported $21 billion in profits in just the first six months of 2023. Despite these enormous gains, the companies have cried poverty in response to union demands for wage increases that would make up for decades of pay stagnation. Worse, during the last year, the Big Three automakers have authorized $5 billion in stock buybacks, effectively giving those dollars to shareholders instead of to autoworkers.

The Economist had an excellent observation (paywalled):

“Late last year I took a trip…in a shiny new vehicle, Ford’s electric F-150. The car is in some ways an avatar for today’s Democratic Party. Joe Biden’s administration likes things that are made in America by union labor. It also wants to speed up the transition away from fossil fuels. The F-150 car ticks both boxes. It is also a high-end item that markets itself as a vehicle for working Americans.”

“That’s a bit like the Democratic Party too…with each passing election Democrats lose votes among actual working-class Americans and gain them with college-educated ones (some of whom can actually afford a $75,000 truck).”

“When we talked to a…UAW…representative near Detroit, it became clear the unionized workers are lukewarm on the green transition. Electric vehicles are less labor-intensive than cars powered by internal combustion, which is bad for the UAW members. In fact that is one reason why the union went on strike today. College-educated liberals, on the other hand, like electric vehicles a lot.”

Apparently union members see the problem much more clearly than the Biden Administration.

There could be a settlement reached between the unions and the companies at any moment, but it feels like this will be a protracted situation: If the UAW workers get the 40% pay increase they are asking for, they probably would learn to accept electric vehicles. Don’t hold your breath.

Biden’s relationship with America’s unions is deep and personal, but the next few months are really about his political strategy. And they’re an example of how the Democrats are always trying to balance competing aims.

Time to wake up America! Will Biden continue pursuing his environmental policies and risk losing even more support among working-class Americans? Or will he pump the brakes on environmentalism and alienate upscale Democrats? Biden won only 33% of white, non-college voters in 2020, so maybe that’s where his opportunity to expand his base in 2024 lies. But does Biden really have a path to take back more non-college voters?

To help you wake up, watch and listen to a recent version of the union anthem “Solidarity Forever”, written by Ralph Chaplin in 1915. Although it was written for the Industrial Workers of the World (IWW), the AFL–CIO have adopted the song as their own. Here it is sung in the Wisconsin capitol building in September 2011, by demonstrators who opposed then Governor Scott Walker’s “Wisconsin Budget Repair bill.”

The bill proposed to alleviate the state’s budget shortfall by taking away the ability of public sector unions to bargain collectively over pensions and health care, as well as ending automatic union dues collection by the state. Walker stated that without the cuts, thousands of state workers would have to be laid off. After two days of arrests for “holding signs” on the first floor of the Wisconsin State Capitol, the Solidarity Sing Along took to the rotunda in joyful defiance:

The law passed and remains in effect today.

The Economic Value Of College Is Collapsing

The Daily Escape:

Thor’s Hammer, Queen’s Garden Trail, Zion NP, UT – September 2023 photo by Michelle Strong

We all believe that college graduates make, on average, a lot more money than high school graduates. Economists call the gap that exists between the incomes of college graduates and high school graduates the college wage premium.

But, Paul Campos points out that in recent decades the growth in the college wage premium has been largely caused by declining wages for high school graduates, because wages for college graduates have been almost completely stagnant. For example, here is the Congressional Research Service’s (CRS) median hourly wage in 1979 and 2019, (40 years apart) for someone with a Bachelors degree (in 2019 dollars):

1979: $26.42

2019: $28.85

But it’s worse than that: Over the last 20 years of that 40 year period, the median hourly compensation of people with four-year college degrees increased by a total of $0.31, or 31 cents, just over a penny per year.

From Campos:

“The flip side of all this is that wages have declined for people who have gone to college but either not gotten a degree, or not gotten more than a two-year associate’s degree, falling from $22.86 in 1979 to $20.00 in 2019. And the decline has been even sharper for those with high school diplomas or less — thus driving up the “degree premium” for several decades’ worth of college graduates whose own compensation has not actually gone up, even as the cost of their degrees has gone through the roof.”

Here’s a chart from the CRS:

For both high school and no high school diploma categories, wages have fallen in absolute terms. So as college costs have risen, the college wage premium has stayed about the same because wages for the less educated have fallen dramatically.

As the NYT explains, the college wage premium has one important limitation:

“…It can tell you how much college graduates earn, but it doesn’t take into account how much they owe — or how much they spent on college in the first place.”

The NYT explains how a group of economists devised another way to look at the relative value of a college education: The college wealth premium. The wealth premium is the measure of how much more wealth college graduates can expect to accumulate as opposed to those with no more than a high school degree: (emphasis by Wrongo)

“Then the researchers looked at the wealth premium, and a different picture emerged. Older white college graduates, those born before 1980, were, as you might expect, a lot wealthier than their white peers who had only a high school degree. On average, they had accumulated two or three times as much wealth as high school grads of the same race and generation. But younger white college graduates — those born in the 1980s — had only a bit more wealth than white high school graduates born in the same decade, and that small advantage was projected to remain small throughout their lives.”

More: (emphasis by Wrongo)

“When the researchers looked at young Americans who had gone on to get a postgraduate degree, the situation was even more dire. ‘Among families whose head is of any race or ethnicity born in the 1980s and holding a postgraduate degree, the wealth premium is … indistinguishable from zero,’ the authors concluded. ‘Our results suggest that college and postgraduate education may be failing some recent graduates as a financial investment.’”

This means that Millennials with college degrees are earning a good bit more than those without, but they aren’t accumulating any more wealth. We all know why:

“The likely culprit…was cost: the rising expense of college and the student debt that often goes along with it. Carrying debt obviously diminishes your net worth through simple subtraction, but it can also prevent you from taking important wealth-generating steps as a young adult, like buying a house or starting a small business.”

Since 1992, the sticker price has almost doubled for four-year private colleges and more than doubled for four-year public colleges, even after adjusting for inflation. Over the last 15 years, more young Americans have borrowed to cover those rising costs. From the NYT:

“In 2007, total student debt stood at $500 billion. Today it is $1.6 trillion….Among student borrowers who opened their loans between 2010 and 2019, more than half now owe more than what they originally borrowed.”

When you factor debt into the equation, the financial benefit of a college education begins to look very different. The NYT reports on Douglas Webber of the Federal Reserve, who found that the premium now varies much more than it used to:

“The “downside risk” to enrolling in college, he argues, has become “nontrivial.”

When you look at Webber’s data, higher education is a financial gamble that can still sometimes produce a big windfall, but it can also bring financial disaster:

“If your tuition is free and you can be absolutely certain that you’re going to graduate within six years, then you enter college with a 96% chance that your gamble is going to pay off, meaning that your lifetime earnings will be greater than those of a typical high school graduate.”

But going to college isn’t free. If you’re paying $25,000 a year in tuition and expenses, Webber calculates that your chance of coming out ahead drops to about 66%. At $50,000 a year in college costs, your odds are no better than a coin flip: Maybe you’ll wind up with more than the typical high school grad, but you’re just as likely to wind up with less.

Americans can count, so they are aware that college education has become a financial gamble. They understand that going into high five-figures of debt (that doesn’t go away in bankruptcy) in order to earn a 5-figure salary doesn’t make a lot of sense.

In 2009, 70% of that year’s high school graduates went to college. In the fall of 2010, there were more than 18 million US undergraduates. It’s been falling ever since, dipping below 15.5 million undergrads in 2021. The percentage going straight to college is now 62%.

This tracks polling. In 2019, the percentage of young adults who said that a college degree is very important fell to 41% from 74%. About one-third of Americans now say they have a lot of confidence in higher education. Among Gen Z, 45% say that a high school diploma is all you need today to “ensure financial security.” And almost half of American parents say they’d prefer that their children not enroll in a four-year college.

But, education is an essential pillar of our democracy. The rejection of higher education by so many should be extremely concerning for the future of our nation. You should read the NYT article. Here are Wrongo’s conclusions:

Colleges and universities are pricing themselves out of the market. Pigs get fat; hogs get slaughtered.
Turning higher education into a revenue-maximizing enterprise for the benefit of these institutions is a social disaster.
Higher education’s leadership has zero accountability for their role in making a college education so expensive.

Two Writers Who Speak To What America Needs

The Daily Escape:

Wukoki, Wupatli National Monument, AZ – September 2023 photo by David Erickson

September is underway, and we’re about to have a negotiation about government spending. But that doesn’t mean that the news this month will be any less stupid than last month’s. Also, as the Republican presidential candidates demonstrate every day, we don’t actually know whether the GOP is a dying Party or, the rising single Party of an authoritarian state.

Unless and until the traditional press presents these as the stakes, it is very unclear which it’ll end up being. With this as an introduction, Wrongo wants to introduce two writers who are attempting to break through our chain of bad policies and the bad ideology that threatens our democracy.

First, from Wesley Lowery in the Columbia Journalism Review:

“We find ourselves in a perilous moment. Democracy is under withering assault. Technological advances have empowered propagandists to profit through discontent and disinformation. A coordinated, fifty-year campaign waged by one of our major political parties to denigrate the media and call objective reality into question has reached its logical conclusion: we occupy a nation in which a sizable portion of the public cannot reliably tell fact from fiction. The rise of a powerful nativist movement has provided a test not only of American multiracial democracy, but also of the institutions sworn to protect it.”

Lowery is a Pulitzer Prize-winning reporter. He goes on to say:

“In 2020, I argued that the press had often failed this test by engaging in performative neutrality, paint-by-the-numbers balance, and thoughtless deference to government officials. Too many news organizations were as concerned with projecting impartiality as they were with actually achieving it, prioritizing the perception of their virtue in the minds of a hopelessly polarized audience…”

Lowery also says that news organizations often rely on euphemisms instead of clarity in clear cases of racism (“racially charged,” “racially tinged”) and acts of government violence (“officer-involved shooting”). He says that these editorial decisions are not only journalistic failings, but also moral ones:

“…when the weight of the evidence is clear, it is wrong to conceal the truth. Justified as “objectivity,” they are in fact its distortion.”

Lowery concludes by saying:

“It’s time to set aside silly word games and to rise to the urgent test presented by this moment.”

Second, Bob Lord is a tax attorney and associate fellow at the Institute for Policy Studies. He also serves a senior advisor on tax policy for Patriotic Millionaires. At Inequality.org, he proposes a graduated wealth tax on the rich:

“The United States is experiencing a level of wealth inequality not seen since the original Gilded Age. This yawning gap between rich and poor has unfolded right out in the open, in full public view and with the support of both political parties.

A malignant class of modern robber barons has amassed unthinkably large fortunes. These wealthy have catastrophically impacted our politics. They have weaponized their wealth to co-opt, corrupt, and choke off representative democracy. They have purchased members of Congress and justices of the Supreme Court. They have manipulated their newfound political power to amass ever-larger fortunes.”

The Wrongologist

Geopolitics, Power and Political Economy

Category: Domestic Policy

Autoworkers Have A Deal

Dark Money Keeps Flowing Into Our Politics

What A New House Speaker Means For America

Kevin Shows His Little Spine

More Fresh Hell In Washington DC

The Economic Value Of College Is Collapsing

Two Writers Who Speak To What America Needs