Saturday, November 17, 2012

AFGE Week in Review - Nov. 17, 2012

Nov. 17, 2012

CEOs Lobby for Debt Deal to Slash Corporate Taxes, Shift Costs onto Poor, Elderly: Wall Street wants your Social Security, Medicare, and Medicaid. As the White House and Congress are working out a ‘grand bargain’ that would affect government spending, taxes, and jobs, the CEOs of America’s most powerful corporations are pushing hard to make sure cuts to our social safety net benefits are on the table so that the savings can be used to fund their tax breaks. Under the guise of a debt reduction plan, their recently launched Fix the Debt campaign’s goal is to fatten their own pockets at the expense of the American people. They are calling for a “pro-growth tax reform”  -- code word for a series of corporate tax breaks, including a permanent exempt from U.S. taxes on all of their overseas earnings brought back to the U.S. According to a new report by the Institute for Policy Study, 63 of the Fix the Debt publicly held companies are set to reap a tax windfall of $134 billion if Congress approves this territorial tax system. That amount of money is enough to hire 1.9 million elementary school teachers. The following are the 10 top potential winners if they successfully lobby Congress: General Electric ($37.5 billion), Microsoft ($19.4 billion), Merck ($15.5 billion), Cisco Systems ($14.5 billion), JP Morgan Chase ($4.9 billion), Goldman Sachs ($3.3 billion), Bank of America ($2.5 billion), Qualcomm ($5.7 billion), Corning ($3.8 billion), and Dow Chemical ($3.5 billion).

The U.S. government is already subsidizing the taxes these companies pay to foreign governments in the form of a full tax credit. The territorial tax system would only enrich the companies with no guarantee they would invest in the U.S. and create jobs. In fact, they didn’t the last time they had this kind of tax holiday. In 2004, they successfully lobbied for the deceivingly named American Jobs Creation Act, which let them pay only 5.25 percent instead of 35 percent if they brought back foreign earnings to the U.S. to invest and create jobs. The following year, 843 companies brought back $312 billion, but instead of creating jobs they laid off people. Pfizer, for example, cut more than 10,000 U.S. jobs in the six years after the company brought back $40 billion.

Obama: Middle Class Should Not Be Held Hostage while Debating Tax Cuts for the Rich: In his first post-election news conference on Wednesday, President Barack Obama said Congress should immediately act to keep middle-class taxes low since everyone agrees on it.

“We should not hold the middle class hostage while we debate tax cuts for the wealthy,” President Obama told reporters. “We should at least do what we agree on, and that's to keep middle class taxes low.”

The Bush tax cuts that disproportionally benefit the rich will expire at the end of the year, and the president wants to keep only the middle-class tax cuts while letting those for the rich expire. But many in Congress want to extend tax breaks to the wealthy, which will then be funded by major cuts to social safety net programs the elderly, the disabled, children, and most Americans rely on.

Obama Tells Labor Leaders He Stands Firm on Opposing Tax Cuts for the Rich: President Barack Obama told leaders from the labor movement and progressive groups at a meeting on Tuesday that he won’t budget on the Bush tax cuts for the rich.

“The president was really standing firm on taxes,” said Neera Tanden, president of the Center for American Progress. “Everyone in the room talked about how much they have the president's back in this fight.”

“It was a very, very positive meeting,” AFL-CIO President Richard Trumka said. “We're very committed to making sure that the middle class and workers don't end up paying the tab for a party that we didn't get to go to, and the president is committed to that as well.”

According to some attendees, the president asked the group to keep pressure on lawmakers, reminding them that the American people made it clear on Election Day they wanted the rich to pay their fair share. But the labor movement is already ahead on that front. Two days after the elections, the AFL-CIO organized dozens of events across the country to pressure lawmakers and make sure they don’t commit a ‘Grand Betrayal’ and cut Social Security, Medicare, and Medicaid benefits.

Again on Thursday, AFGE teamed up wtih Senator Bernie Sanders of Vermont and labor and retiree organizations to fight back and protect these social safety net programs.

"It would be a huge shock and disappointment if the president forgot the reality that he just won a major victory," Sen. Sanders told reporters.

A Case for Government Spending and Deficit: In this outstanding presentation with New America Foundation, Stephanie Kelton, associate professor of economics at the University of Missouri-Kansas City, explains the effects of the fiscal cliff and the grand bargain, arguing that in order to drive economic activities in the private sector and boost the economy, the public sector needs to run the deficit. Kelton points out that one cannot discuss the right size of the deficit without thinking about its impact on other sectors in the economy – the domestic private sector and the rest of the world. If one sector is going to accumulate a surplus, it can only be done if some other sector is running a deficit. So the government’s deficit is the private sector’s surplus and vice versa. She argues that a 'grand bargain' that the White House and Congress are discussing is a bad idea because it is austerity, which will worsen the economy as it doesn’t put money in the hands of those who want to spend it. The government needs to spend, not tighten its belt, when the private sector, whose record profits spurred a 6 percent rise in CEO pay last year, refuses to spend (since there is little demand for products/services as people don’t have the money to spend). The U.S. private sector has been running a trade deficit while the rest of the world is accumulating a surplus. So the only way that we can keep the domestic private sector in surplus is for the public sector to be in deficit, which also has to be big enough to cover the current trade deficit of 4.5 percent of GDP.

“The federal government is not like a household. The U.S. dollar comes from the U.S. government. It doesn’t come from China [China is a holder of U.S. government securities whose credit risk is essentially zero]. We control our currency…We cannot be forced into default….There is no economic reason for a grand bargain.”

She added that businesses need customers as sales create jobs. Austerity is the opposite of income creating sales. “Spending cuts reduce income,” she said. “We’ve seen the effect of austerity [in Europe]. We don’t want to follow these countries over the cliff.”

Kelton is also research scholar at The Levy Economics Institute and director of Graduate Student Research at the Center for Full Employment and Price Stability. She is creator and editor-in-chief of New Economic Perspectives.

New Poll: Public Blames Right Wing Lawmakers for Fiscal Cliff: Sticking it to the White House might not be the best strategy to win public support on tax cuts for the rich and spending cuts for middle-class programs. If the country bears the brunt of the so-called fiscal cliff, a majority of Americans put most of the blame on right-wing lawmakers, not the White House. In a new, post-election survey conducted by Pew Research Center, 53 percent of Americans said right-wing lawmakers would be to blame if the country failed to reach agreement to avoid the fiscal cliff. Twenty nine percent said they would blame Obama while 10 percent blame both.

AFGE Battles Attempts to Kill Merit System, Protection in Federal Pay: AFGE Public Policy Director Jacque Simon on Wednesday refuted the attempt to dismantle the merit system and protection against discrimination in federal pay during a panel discussion sponsored by Partnership for Public Service and the Coalition for Effective Change.

Wednesday’s panel was second in a series designed to build support for replacing the General Schedule with either a pay for performance system or one in which pay raises would vary by grade and occupation, with higher raises reserved for professional and managers. The panel opened with the host’s claim that while the President’s Pay Agent claims federal employees are underpaid by 34%, recent studies by conservative think tanks and the Congressional Budget Office say that federal employees, especially those GS-7 and below, are overpaid by similar amounts. One side must be wrong.

Simon explained the discrepancies by tearing apart the think tank’s “human capital” approach. Their studies compare the pay of African American females with bachelor’s degrees and finds that the federal government pays them more than the private sector does. Their conclusion? The federal government is paying too much. The President’s Pay Agent/Federal Salary Council approach, in contrast, doesn’t look at demographics. Like the General Schedule itself, it is blind to demographics. It doesn’t care about the race or gender or education of whoever holds a federal job, just the pay associated with that job in the federal government vs. the private sector or state and local government. And Simon explained that this blindness to demographics is one of the General Schedule’s biggest virtues – it largely avoids the kind of discrimination that is rampant in the private sector.

“Since in the private sector, women make just 77% of what men make, and African Americans are paid just 58.7% of what whites are paid, their approach makes it look like the government overpays when it pays the same rates to an African American women that it pays to a white man holding the same job,” she said.

The pay issue was also discussed on Thursday at the National Academy of Public Administration Fall Meeting, in which Simon debunked myths about the General Schedule system. Her presentation focused on a critique of the suggestion to provide different annual pay adjustments by occupation and grade level with a focus on diverting higher raises to those in GS-9 and above. Simon recounted all the shortcomings with NSPS that led to its repeal, and emphasized again that all of these schemes would have a discriminatory impact. She noted that 75 percent of the federal employees who earn $30,000 or less are either women and/or minorities, and that targeting this group for lower pay raises, and using the money saved to provide pay increases to their bosses was an idea that AFGE rejected categorically.

Senate to Take up Defense Spending Bill with Potential Cuts of 36,000 Civilian Jobs: AFGE is working with Sen. Ben Cardin of Maryland to strike a provision in the fiscal 2013 Defense Authorization Act that would impose an arbitrary 5 percent cut in funding for civilian personnel, which could result in the loss of 36,000 jobs. The union is asking its DoD Locals to urgently reach out to their members of Congress as the Senate is scheduled to take up the bill the week of Nov. 26. AFGE expects that the six original cosponsors of Cardin's stand-alone bill (S. 3617) will become cosponsors of his amendment because the two measures are almost identical. But without more sponsors, the Cardin amendment may never get offered as floor time is limited. If the 5 percent cut is enacted without strong opposition, lawmakers, who always prefer the path of least resistance, will soon be back for more cuts.

On its own, apart from sequestration, DoD is preparing for varying levels of cuts from 3 percent to 10 percent with no exceptions for any part of the workforce. If the union doesn’t fight back against this arbitrary cut from Congress, the more severe DoD will be in imposing its own cuts on the entire workforce.

AFGE to Congress: Federal Employees Are Not Your ATM:Federal employees and their families are so far the lone group of Americans who have suffered cuts worth more than $100 billion to help reduce the deficit they didn’t cause. As the White House and Congress are negotiating a deal, federal employees must not be asked again to sacrifice, especially if that sacrifice is to fund tax breaks for the wealthy.

In a letter dated Nov. 14 to members of Congress, AFGE wrote that new hires who don’t get paid a whole lot to begin with are now having to shoulder more burden as the government is reducing its contribution to their pension plans. As a result, a GS-3 nursing assistant earning $27,322 caring for our veterans, for example, will have to pay $628 more annually. A GS-5 USDA meat and poultry inspector earning $31,825 while working to keep our food safe will have to pay an additional $732 a year. This is on top of a pay freeze that has been in effect since 2011 for the whole workforce and the massive downsizing in the federal government as a result of the Budget Control Act.

“Millionaires, billionaires, federal contractors, large corporations, recipients of agriculture subsidies, and hundreds of other legitimate targets haven’t given up a nickel,” AFGE Legislative Director Beth Moten wrote. “It’s not “shared sacrifice” if no one else is sharing the pain.”

Moten also wrote that it’s grossly unfair that Defense contractors can charge taxpayers up to $763,029 for the compensation of a single employee while an enlisted soldier’s starting pay is under $20,000 a year and the Secretary of Defense earns $200,000. David Wineland, a scientist at the Commerce Department’s National Institute of Standards and Technology who just won the Nobel Prize for physics for his work to improve atomic clocks, a technology that underlies everything from smart phones to GPS mapping, and many other Nobel laureates working at government labs earn well below $200,000 a year.

This Week in Labor History: November 13, 1909 - 259 miners died in the underground Cherry Mine fire. As a result of the disaster, Illinois established stricter safety regulations and in 1911, the basis for the state’s Workers Compensation Act was passed.

This Week’s Tweet: “I spend too much time thinking about where we could be today if the deficit doves hadn't played into the deficits-are-dangerous-things bull.” ~ Stephanie Kelton ‏@deficitowl

Inside Government: Tune in now to AFGE’s “Inside Government” to learn about the dedication of federal employees during Superstorm Sandy. The show, which originally aired on Friday, Nov. 16, is now available on demand. AFGE Council of Prison Locals Northeast Regional Vice President Phil Glover discussed Sandy’s impact on Bureau of Prisons facilities and the commitment of federal correctional officers during the storm. AFGE General Counsel David Borer then detailed the ratification by Transportation Security Administration workers of their collective bargaining agreement with the agency. Alliance for American Manufacturing Executive Director Scott Paul also addressed the state of U.S. manufacturing and outlined his expectations during President Obama’s second term. Lastly, AFGE Federal Emergency Management Agency (FEMA) Local 4060 President Robert Autrey discussed FEMA’s response in the aftermath of Superstorm Sandy.

Listen LIVE on Fridays at 10 a.m. on 1500 AM WFED in the D.C. area or online at For more information, please visit

Quote of the Week

House Minority Leader Nancy Pelosi is hoping President Obama won’t budge on raising taxes on those making over $250,000 a year:

“Now, the president campaigned on [raising taxes on earners over $250,000], the American people support that, I think that’s where a good deal of leverage is in these negotiations.”

American Federation of Government Employees, AFL-CIO 80 F Street, N.W., Washington, D.C. 20001 | Tel. (202) 737-8700 | Fax (202) 639-6492

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