According to multiple reports, the Treasury Department has allocated nearly $10 billion more in funds from the Troubled Assets Relief Program (TARP) than Congress has officially released, “effectively making more promises than it can afford to keep.”

Under the TARP legislation, Treasury is allowed to hand out $350 billion of the $700 billion program, and must make a formal request in order to use the rest of the money. However, with the $6 billion allocated to auto-finance company GMAC on Monday, Treasury has appropriated $358.4 billion, which the Wall Street Journal notes “suggests Treasury is tapping into the second half…before it has been released by Congress.”

Treasury defended its actions, claiming that “the agency has complied with the [TARP] legislation” because it has not literally dispersed $350 billion, but has merely decided where it would like to send the money:

A Treasury spokeswoman declined to comment Tuesday on whether the newest commitments were based on the assumption that Congress would release the second installment, or would require reallocating money that had been promised to others.

As Sen. Bernie Sanders (I-VT) said, “They are pushing the envelope here…What they are trying to do is create a situation to put pressure on [President-elect Barack] Obama and the Congress to provide the next $350 billion.” Indeed, Treasury has put Obama in a position from which he may have to renege on the department’s promises, if Congress decides to withhold the second TARP installment.

As The Wonk Room has noted before, it is critical that at least a portion of the remaining TARP funds be directed toward foreclosure relief. Sen. Chris Dodd (D-CT) and Rep. Barney Frank (D-MA) are reportedly drafting legislation to do just that, but it appears that Treasury, intentionally or not, is already tying Congress and the next administration’s hands.

The Occupational Safety and Health Administration’s (OSHA) mission — as stated on its website — is to “assure safe and healthful working conditions for working men and women.”

However, the Washington Post reported today that for the last eight years OSHA has been doing anything but accomplishing this mission. Instead, the agency has become “mired in inaction,” creating only a “legacy of unregulation” — all to the benefit of America’s corporations.

As the Las Vegas Sun recently noted, the Bush administration’s “only real priority has been to prevent the agency from doing its job.” In fact, in just its first two years, the administration “pulled 22 items off the agency’s regulatory agenda, its working list of proposed safety and health rules.”

During Bush’s tenure, OSHA officials issued 86 percent fewer rules or regulations “termed economically significant” than they did under President Clinton. And while these officials have been sitting on their hands, as many as 13 million people — “or nearly a tenth of the American workforce” — are injured on the job each year.

Part of the problem, as the Post reported, is that under Bush, career OSHA officials were shut out by political appointees, and thus “strategic choices were frequently made without input from [the agency's] experienced hands.” This has turned the agency into “a bureaucratic quagmire, where regulations take a decade or more to make and where priorities consistently shift.”

Symbolical of the agency’s shortcomings under Bush, Edwin G. Foulke Jr., a former Bush fundraiser appointed to head OSHA in 2006, “acquired a reputation inside the Labor Department as a man who literally fell asleep on the job“:

His top aides said they rustled papers, wore attention-getting garb, pounded the table for emphasis or gently kicked his leg, all to keep him awake. But, if these tactics failed, sometimes they just continued talking as if he were awake.

A key goal for the next administration should be to get OSHA back on the side of working people. For starters, this means putting teeth into the agency’s safety enforcement mechanisms. As David Madland of the Center for American Progress Action Fund has noted, “Many worker-protection fines are so low — even for the worst violations — that irresponsible employers have begun factoring them in as part of their cost of doing business rather than complying with labor laws”:

In 2007, the median OSHA final penalty for violations that caused a fatality was only $3,675.16. OSHA is one of only five government entities that are exempt from the Federal Civil Penalties Inflation Adjustment Act, which directs and authorizes agencies to regularly adjust their penalties for inflation. These civil money penalties were last adjusted by Congress in 1990 and are not indexed to inflation.

OSHA — and the Labor Department as a whole — has neglected working Americans for the last eight years, harming not only individual workers, but also costing the American taxpayer $108 billion a year. There is no reason for this willful apathy to continue.

Digg It!

According to IRS enforcement data released Monday, “audits of large corporations fell for the third straight year” in 2008. The IRS audited just 15.3 percent of returns of corporations with assets of $10 million or more, which is “the lowest audit coverage level since 2003 and down from a 20% coverage rate in 2005.”

IRS Deputy Commissioner Linda Stiff said 2008 was “a very challenging year,” since enforcement staff levels declined 2 percent and “some enforcement staff were re-directed to help field calls from taxpayers related to tax rebates that Congress ordered as part of economic stimulus legislation.” While this may be true, the turn away from corporate audits comes on the heels of reports that Bush’s IRS is expending a lot of effort to cut corporate taxes.

As Time’s Stephen Gandel found, in 2008 the IRS has been “unusually aggressive in doing what it can to lower corporate taxes, going above and beyond what has been allowed in the past.” The IRS this year has issued 113 notices — breaking the record of 111 set in 2006 — “many of which will lower the taxes companies will pay this year and in the future.”

Furthermore, Dean Zerbe, national managing director of the public accounting firm alliantgroup LP, said that the IRS — in a “disturbing” trend — is simply shifting its focus away from large corporations and onto “small and medium-sized firms“:

Audits of small and mid-sized firms don’t produce as much tax revenue, and about one-third of the time produce no change in taxes assessed, according to Mr. Zerbe. “They spend a lot of time doing root canals on people who are basically compliant,” he said.

The amount that the IRS collected from audits fell by about $3 billion this year. And while Goldman Sachs paid a 1 percent effective tax rate in 2008, the IRS thought its time would be better spent auditing the little guy and finding more ways to lower corporate taxes.

On Friday, Treasury Secretary Henry Paulson said that Congress must release the second $350 billion of the Troubled Assets Relief Program (TARP), since “emergency loans to the nation’s automakers have all but depleted” the initial $350 billion of the $700 billion program.

While neither the White House nor Treasury has made a formal request for the rest of the TARP money, lawmakers have already balked, particularly after reports from the Government Accountability Office (GAO) and a congressional oversight panel found that the Treasury has no idea what banks are doing with their share of the money.

In what should only add to these concerns, the Associated Press has released a series of articles highlighting how little transparency there has been in the TARP thus far:

- The AP contacted 21 banks that have received at least $1 billion in TARP money and asked four questions: “How much has been spent? What was it spent on? How much is being held in savings, and what’s the plan for the rest? None of the banks provided specific answers.”

- The 116 banks that so far have received taxpayer dollars gave their top tier of executives “nearly $1.6 billion in salaries, bonuses and other benefits in 2007…That amount, spread among the 600 highest paid bank executives, would cover the bailout money given to 53 of the banks.”

- Six financial firms that received billions in bailout dollars “still own and operate fleets of jets to carry executives to company events and sometimes personal trips.”

As the AP put it, “the nation’s largest banks say they can’t track exactly how they’re spending the money or they simply refuse to discuss it,” while some banks “said they simply didn’t know where the money was going.”

In light of this information, it is clear that more stringent TARP oversight is necessary, and that at least some of the funds need to be focused on something other than the financial sector. Fortunately, a plan to make this happen is already in the works.

Rep. Barney Frank (D-CA) and Sen. Chris Dodd (D-CT) are drafting legislation “that would release the remaining $350 billion of the financial-rescue fund in exchange for foreclosure help” financed by TARP money. The legislation will reportedly include Federal Deposit Insurance Corp. Chairman Sheila Bair’s foreclosure-prevention plan, as well as revisions to the Hope for Homeowners program and “provisions to hold banks accountable for stepped-up lending to consumers.”

A concerted effort to stem foreclosures is a key facet missing from the response to the financial crisis. While the TARP was ultimately necessary to avoid even wider financial chaos, there’s no reason to continue on the present course or leave banks alone to do what they will with taxpayer money.

Our guest blogger is Lisa Gilbert, a Democracy Advocate with U.S. PIRG.

A foul smell is overwhelming the scent of pine this holiday season as the nation learns more about corruption allegations facing Rod Blagojevich.

Governor Blagojevich has been accused of trying to hold the editorial board of the Tribune hostage for state funding, asking for gifts from contractors and hospital executives, and trying to sell a Senate seat to the highest bidder. Blagojevich should resign effective immediately; however the activities that he so casually engaged in are a loud wake-up call to the undue influence of money on our political system.

The need to constantly seek enough money for campaigns is the reality of our democracy. The candidate with the most money spent on his or her behalf typically wins 85%-95% of elections. The relentless pursuit of this funding, oftentimes from those who have a stake in what happens in legislative decisions and appropriations, creates an environment in which money (and who it came from) can mean more than representing your constituents.

While we can’t stop people like Governor Blagojevich from seeking to game the system for personal gain, we can try to halt the tide of private contributions that lead politicians toward corruption. To do this, we need to clean up our election process by putting in place a strong public financing system.

The public supports this idea. In 2008, unprecedented numbers of small donors supported President-elect Obama. Following this historic upturn in involvement, small donors are looking for a fair system that will recognize their support. According to polling data from Lake Research Partners and the Tarrance Group:

Voters support a proposal for publicly funding elections that includes a ban on lobbyist contributions and accepting only small contributions by over a 5-to-1 ratio.

Even before the Blagojevich holiday scandal, the public was concerned about the corrupting influence of money on politics. 77% of voters also said that they worried that big gifts to politicians would keep Congress from working on critical issues like jobs and the economy.

The Fair Elections Now Act was introduced in the 110th Congress by Sen. Dick Durbin (D-Ill.), Sen. Arlen Specter (R-Pa.), Rep. John Larson (D-Conn.), and Rep. Walter Jones, Jr. (R-N.C.). President-elect Barack Obama was a co-sponsor on the bill, which will put in place a system where opt-in candidates qualify for funds to start their campaign by receiving a significant amount of small donations from individuals. Candidates will agree to take no large donations and to keep their own funds out of the race in exchange for this public funding. Small donations will be matched with public funding to help further level the playing field.

As Americans enjoy this Christmas and hope that under their trees they’ll find a universal healthcare system and green job creation, let’s give them a chance to be heard by their elected officials. President-elect Obama promised to reform the public financing system. Let’s hold him to his word, and transform the big money system that allows corruption at the Blagojevich level to flourish into a participatory clean system of public financing.

In the Wall Street Journal today, Richard Epstein, a professor of law at the University of Chicago and senior fellow at the Hoover Institution, claimed that the Employee Free Choice Act is “unconstitutional” because it “denies all speech rights to the unions’ adversaries.”

Under the Free Choice Act, employers would have to recognize a union if a majority of workers signed cards of consent, which Epstein argues would make it impossible for employers to adequately lay out the supposed cons of unionization. Having a union be recognized after a majority sign-up is important, however, because currently employers can force workers into an arduous, unfair unionizing campaign, even after a majority have formally expressed their desire to unionize.

But if Epstein is so concerned about the free speech rights of employers (and what prevents employers from making their opinions known during a card signing drive is unclear) then he should be equally troubled by this facet of the current unionizing process:

Management is allowed to bombard employees with anti-union messages anywhere, anytime in the workplace. Workers can only talk about the union while they’re on breaks in the break room or before or after work. Union organizers have no right to set foot in the workplace.

That sure seems like a free-speech infringement. Furthermore, as the AFL-CIO has found:

- 92 percent of private-sector employers, when faced with employees who want to join together in a union, force employees to attend closed-door meetings to hear anti-union propaganda.

- 78 percent force employees to attend one-on-one meetings with their own supervisors against the union.

- 75 percent hire outside consultants to run anti-union campaigns, often based on mass psychology and distorting the law.

Employers can also delay the voting process for years. It took “an expensive and emotional 15-year organizing battle,” which just ended last week, for Smithfield Packing in Tar Heel, NC to unionize, even though in 2006, the United States Court of Appeals “ruled that Smithfield had engaged in ‘intense and widespread’ coercion” to prevent the union from forming. Read more

Today, President George Bush gave a speech on his domestic policy legacy at the American Enterprise Institute. Responding to a question about President-elect Obama “blaming the crisis on Bush deregulation,” Bush said that he is “looking forward to the true history of this financial crisis being written,” adding that there’s “no question part of the crisis came about because of excesses in lending in the housing market.” Watch it:

Bush is right to say that excesses in lending had a lot to do with the financial meltdown. However, he then blamed the excess on Fannie Mae and Freddie Mac, a favorite conservative red-herring. Fannie and Freddie can not issue subprime mortgages, and as the crisis was building momentum their market share of subprime securities was falling.

In fact, it was Bush who ignored “remarkably prescient warnings” regarding problems in the housing market, while removing regulations that reined in excesses on Wall Street. The Bush administration actually “backed off proposed crackdowns on no-money-down, interest-only mortgages,” even though regulators were ringing alarm bells. Consider:

- In 2004, housing advocates at the Greenlining Institute warned the administration “that deception was increasing and unscrupulous practices were spreading.”

- In 2005, Federal Reserve Board governor Edward Gramlich “warned his colleagues of the decline of lending standards and the dangers that this posed.”

- In 2006, the Government Accountability Office reported that “from 2003 to 2005, non-traditional mortgages rose from less than 10 percent of all mortgages to about 30 percent.”

Despite these myriad warnings, nothing was done. Plus, as Joseph Stiglitz explained, Bush was “applying the leeches” to an already unstable financial system by slashing taxes for the wealthy and launching a misguided war in Iraq that has cost billions:

The tax cuts played a pivotal role in shaping the background conditions of the current crisis. Because they did very little to stimulate the economy, real stimulation was left to the Fed, which took up the task with unprecedented low-interest rates and liquidity. The war in Iraq made matters worse, because it led to soaring oil prices. With America so dependent on oil imports, we had to spend several hundred billion more to purchase oil — money that otherwise would have been spent on American goods.

Bush is going to pay a large role in the “true history of the financial crisis.” But maybe seeing his name in print over and over is what he’s “looking forward to.”

Bloomberg reported today that Goldman Sachs, which received $10 billion in loan guarantees from U.S. taxpayers earlier this year, will pay just 1 percent in taxes on 2008 profits. In 2007, they paid 34.1 percent.

Maybe their operations in low-tax countries suddenly became very profitable. Maybe they used their fourth quarter losses and accumulated tax credits appropriately to decrease their overall tax burden in tough economic times (this year, Goldman Sachs posted its first quarterly losses since going public, though its annual profits were positive).

Or maybe it’s just another troubling example of huge companies using shelters and loopholes to wriggle out of tax obligations.

Goldman’s financial statements say that this lower rate came partially from changes in the “geographic earnings mix.” Robert Willens, CEO of a tax and accounting advisory firm, told Bloomberg that this meant “they have taken steps to ensure that a lot of their income is earned in lower-tax jurisdictions.”

A recent GAO report found that between 1998 and 2005, by “about two-thirds of corporations operating in the United States did not pay taxes,” either through loopholes and shelters or by incorporating as tax-exempt entities. The United States actually collects much less revenue than its 35 percent statutory rate would suggest because of these tax loopholes, shelters, and giveaways that minimize, or completely eliminate corporate taxes.

Meanwhile, President Bush’s IRS has recently pushed through a series of rule changes that are “unusually aggressive” in lowering corporate taxes, “going above and beyond what has been allowed in the past.”

For bail-out thirsty banks, the excessive income sheltering is a bit unseemly. As U.S. Representative Lloyd Doggett (D-TX) explained, “with the right hand out begging for bailout money, the left is hiding it offshore.”

While giving herself “room to support the measure if it’s brought up later,” Sen. Blanche Lincoln (D-AR) said yesterday that “she doesn’t think federal legislation that would allow labor organizations to unionize workplaces without secret-ballot elections is necessary.” The legislation in question is the Employee Free Choice Act, which allow workers to form a union if a majority sign cards of consent, instead of having to undergo a full and very often unfair “election” process.

The Weekly Standard called this a “shrewd move by Lincoln” as “unions are sure to apply increasing pressure to undecided Senators as the session gets under way and a vote draws nearer.” However, it’s only a shrewd move if Lincoln is against seeing her own constituents earn higher wages and have better benefits.

In 2007, just 8.8 percent of Arkansas workers were members of unions. That same year, an Arkansas worker’s average weekly wage was $712, which was 44th in the nation.

The Center for Economic and Policy Research has found that “unionization raises the wages of the typical low-wage worker (one in the 10th percentile) by 20.6 percent.” Furthermore, were the Free Choice Act to pass, it is estimated that an additional 14,157 workers in Arkansas would receive health insurance, while 11,164 would receive pension benefits.

But there is a potential explanation for Lincoln’s denial of support for the Free Choice Act. As Matthew Yglesias noted, Arkansas is “poverty-stricken and features ultra low wages. But guess who likes low wages? Wal-Mart. And guess who loves Wal-Mart? Arkansas politicians like Blanche Lincoln.”

And guess what Walmart doesn’t love? Unions:

“We like driving the car,” [Walmart CEO Lee] Scott told the Associated Press earlier this month when explaining his opposition to employee free choice, “and we’re not going to give the steering wheel to anybody but us.”

As David Madland noted, “Corporations rather than workers are increasingly rewarded for growth in the economy.” Unionization could help temper that trend, and it will take lawmakers looking out for the interests of workers instead of CEOs to make it happen.

Yesterday, Rep. Michelle Bachmann (R-MN) sent a letter to President Bush advocating that the Troubled Assets Relief Program (TARP) not be used to rescue America’s ailing domestic auto industry:

Exercising options already afforded them by law, under a Chapter 11 reorganization for example, the American automobile industry can make the necessary reforms and could soon return to profitability. A federal bailout of the automobile industry, on the other hand, would put taxpayer money at risk, shield the companies from making the reforms necessary to restore competitiveness again, and set a costly precedent that the federal government will bailout other failing companies and industries.

According to MinnPost.com, while announcing her stance, Bachmann declared that, “The real road out of this recession is through Main Street America, not Washington.”

Bachmann is not alone in advocating Chapter 11 bankruptcy for Detroit’s Big Three. In the Wall Street Journal, Todd Zywicki, a professor of law at George Mason University School of Law, claimed that “bankruptcy is the perfect remedy for Detriot.”

However, as Nobel Prize winning economist Paul Krugman explained, the current financial crisis preempts any chance of Chapter 11 bankruptcy being successful, and thus he is “very reluctantly screaming” in favor of a bailout:

[T]he credit markets are frozen. So normally a company can keep operating, declare Chapter 11 but keep operating — but that depends on being able to continue to get credit lines to do business. And you can’t do that right now. So Chapter 11 quickly becomes Chapter 7 which is liquidation. So we actually see the thing disappear and then we’re talking about a million plus jobs probably disappearing.

As Eugene Robinson explained, “it would be insanity to throw hundreds of thousands of auto company employees, and maybe a few million others in the supply and sales chains, out of work — leaving them and their families at the mercy of an economy that has no replacement jobs for them.”

Indeed, Bachmann’s proposition for the auto companies could result in unemployment for millions of Main Streeters — who would fall back into an already overextended and inadequate social safety net — which would make it awfully difficult for them to lead the way out of the recession.

Our guest bloggers are Will Straw, Associate Director for Economic Growth, and Heather Boushey, senior economist, at the Center for American Progress Action Fund.

With the announcement today that the overnight federal funds rate will be cut close to zero, the Federal Reserve has effectively joined the Looney Tunes chorus: “That’s all folks.” There is now no effective room to maneuver through monetary policy — short of printing money.

The Fed’s release states that, “Since the Committee’s last meeting [on October 29], labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined.” Job losses are accelerating, which will only make the consumption picture worse in the months to come.

Employment has fallen for 10 months in a row and we’ve lost 1.3 million jobs in the past three months alone. The most recent GDP figures show that consumer spending dropped by an annualized rate of 3.1 percent — the largest decrease since the second quarter of 1980. And we’ve known about the atrocious business investment figures since the release of second quarter data in September.

Policy makers have two sets of tools to stimulate the economy: monetary and fiscal policy. Although the markets responded positively, today’s news is proof once again that the Bush administration has put all its eggs in one basket. The need for an economic recovery package aimed at creating jobs has been evident for months, but both President Bush and Senate Republicans have repeatedly blocked attempts to pass a package.

While the House passed a $60 billion package in September, Bush threatened a veto and the Senate never voted on the issue. Now, $60 billion seems paltry compared to the problems at hand, and economists are suggesting something closer to $600 billion will be necessary to get the economy back on track. Read more

Today, President-elect Barack Obama introduced Chicago schools chief Arne Duncan as the next Secretary of Education. Across the board, Duncan is being described as someone “known for taking tough steps to improve schools while maintaining respectful relations with teachers and their unions.”

As the Washington Post put it, Duncan will have to “try and bridge the deep divides among education advocates, teachers unions and civil rights groups”:

Duncan’s résumé appeals to those identify themselves as reformers and tend to support tough accountability, charter schools, performance-pay plans and other steps that shake up the status quo. But his calls for increased funding and willingness to partner with teachers also wins the approval of unions and school officials who think the federal government imposes too many sanctions without offering enough support.

Duncan’s signature program in Chicago is Renaissance 2010, the goal of which was “to increase the number of high quality educational options in communities across Chicago.” The plan is an ambitious one for turning around Chicago’s education system by closing low-performing schools and replacing them with “smaller, entrepreneurial schools.” Under his watch, “high school graduation rates improved…(up to 55 percent from 47 percent), as did college-going rates (up to 50 percent from 44 percent).”

Like Obama, Duncan is a supporter of the accountability standards laid out in the often controversial No Child Left Behind program. And as the Chicago Tribune notes, he “isn’t afraid to rankle the teachers union.”

However, he also “helped craft a five-year teacher contract that promised significant raises each year in exchange for long-term stability.” Furthermore, he worked with the unions “to introduce a pay for performance program that offers bonuses for great teachers” through a federal Teacher Incentive Fund grant.

A report by the Center for American Progress shows that “consistent assignment to high-quality teachers can substantially lower the barriers to realizing academic success imposed by poverty.” While the true efficacy of teacher incentive programs is still unknown, “The only way we will learn more is by experimenting with incentives — financial and otherwise — and then carefully evaluating the results.” Duncan’s record shows that he is willing to try new approaches in order to reform the education system.

The main justification espoused by conservatives for blocking a proposed $14 billion bridge loan to General Motors and Chrysler last week was that the United Automobile Workers (UAW) would not agree to “steep cuts in pay and benefits,” to be implemented in 2009.

During an appearance on CNN’s Late Edition yesterday, Center for American Progress Action Fund Senior Fellow Gene Sperling questioned the rationale behind the conservative demands, asking, “Why, in the middle of a recession, would you want to demand, in 2009, these type of brutal wage cuts? It’s not fair. It’s not economically smart.” Watch it:

The UAW has expressed an openness to negotiating pay cuts in 2011, when its current contract expires. Sperling is correct, though, to note that “it’s not economically smart” to cut wages during a downturn. Keeping people working — and spending — is a key component of reversing the downward trail of America’s ailing economy.

But preventing the loan entirely because there was no immediate UAW wage cut could have even more drastic consequences, if any of Detroit’s Big Three should fail. The New York Times reported today that, “With unemployment claims reaching their highest levels in decades, states are running out of money to pay benefits.” The fund in Michigan — the epicenter of America’s auto industry — has already run out.

The Times produced the following chart, showing that the states in danger of exhausting their unemployment funds are overwhelmingly in the auto-producing belt of the midwest: Read more

As The Wonk Room pointed out last week, “since the 1970s, the U.S. educational system has rested on its laurels, and we are losing ground” to the rest of the world. In a new report, the College Board notes that there has been an “alarming decline of U.S. educational attainment among 25- to 34-year-olds.”

This reiterates an analysis from the National Center for Public Policy and Higher Education, which found that “educational achievement among young workers [in America] has slipped to tenth in the world.” As Matthew Yglesias wrote, “the slippage tends to be masked by the fact that, for now, our substantial lead in those older cohorts [over age 55] outweighs our smallish disadvantage in the youngest cohort, but obviously that’s not going to last forever.”

In its report, the College Board noted that, “A torrent of American talent and human potential entering the educational pipeline is reduced to a trickle 16 years later as it moves through the K-16 system”:

Merely to reclaim our position in the front rank of international educational leadership, many experts say that the United States must establish and reach a goal of ensuring that by the year 2025 fully 55 percent of young Americans are completing their schooling with a community college degree or higher.

As Gaston Caperton, president of the College Board, said, “We once put our faith in creating an educated citizenry, and we have enjoyed the benefits…Without well-educated citizens, we will struggle economically and socially.”

Of course, these revelations come at a time when the economic crisis is causing states to severely scale back their education budgets. In the last few days, Kentucky, North Carolina, South Carolina, and Ohio announced cuts to education funding, which will further clog the educational pipeline. To ensure that states don’t continue making cuts in order to achieve constitutionally mandated balanced budgets, an economic stimulus package should be enacted that provides funding to state and local governments.

Furthermore, public investments in education can and should be made, since research suggests such investments “would grow the economy and earn the government significant positive returns.” Potential measures include: Read more

The world economy is perilously close to slipping into a vicious downward spiral of lowering economic activity and deflation.

Thursday, the Washington Post reported that “sharply lower consumer spending in the United States and other high-income countries is stalling global trade, causing a surprise downturn in exports from China that is dramatically slowing its economy and rippling through other countries that rely on international commerce.” The World Bank says that a “very deep global recession” cannot be ruled out.

Thus, now is the time for concerted, bold action. A new report from the Center for American Progress outlines steps that the United States and countries around the world can take to reverse the downward spiral and turn it into a “virtuous circle of synergistic advances of living standards in rich and poor countries as they integrate.”

The plan calls for the U.S. to first implement a large fiscal stimulus to jumpstart global demand. Next, it calls on the United States and the G20 to re-focus international economic priorities towards institution building, in order to ensure broadly shared gains from trade. The paper contains specific proposals for institution building in three areas:

1) Helping developing countries institute the labor, investor, environmental, and consumer protections and basic social insurance programs that can help them to diffuse the benefits of trade and growth more broadly among their populations

2) Updating international financial institutions to enhance the stability and contribution to real economic activity of financial markets

3) Improving the management coherence of the international economic system as a whole

As the paper’s author, Richard Samans explains, a “Global Deal along these lines amounts to a populist approach to globalization in the best sense of the term — a concrete plan to make it work for more people.“

Our guest blogger is Daniel J. Weiss, a Senior Fellow and the Director of Climate Strategy at the Center for American Progress Action Fund.

Last night a cadre of Senators drove General Motors and Chrysler to the brink of bankruptcy by voting against a $14 billion program to provide bridge loans to the auto companies. The loans have already been agreed to by President Bush and the House of Representatives.

Sixty votes were required to end a filibuster of the bill before final passage, and the vote was 52-35. A batch of conservatives, led by Senator Bob Corker (R-TN), objected to it because they wanted to squeeze even more wage and benefit cuts from factory workers who belong to the United Auto Workers.

The $700 billion Emergency Economic Stabilization and Recovery Act — which created the TARP — passed in October, and included fewer strings and employee wage and benefit cuts than the auto loan package. Yet, there were 20 senators who voted in favor of rescuing the financial system, while voting against extending a $14 billion loan to the automakers. Ten others voted yes to the former and did not cast any vote last night.

These lawmakers were willing to write a huge blank check to Wall Street that gave AIG $123 billion, Citigroup $25 billion, and JP Morgan $25 billion, yet left America’s domestic auto industry out to dry. Had eight of these 20 voted for the White House proposal, the auto companies would avoid catastrophe this year:

Yes to TARP, No to auto

Yes to TARP, Absent for auto

Sen. Max Baucus (D-MT) Sen. Robert Bennett (R-UT) Sen. Richard Burr (R-NC) Sen. Saxby Chambliss (R-GA) Sen. Tom Coburn (R-OK) Sen. Norm Coleman (R-MN) Sen. Bob Corker (R-TN) Sen. John Ensign (R-NV) Sen. Chuck Grassley (R-IA) Sen. Judd Gregg (R-NH) Sen. Orrin Hatch (R-UT) Sen. Kay Hutchison (R-TX) Sen. John Isakson (R-GA) Sen. Jon Kyl (R-AZ) Sen. Blanche Lincoln (D-AR) Sen. Mel Martinez (R-FL) Sen. John McCain (R-AZ) Sen. Mitch McConnell (R-KY) Sen. Lisa Murkowski (R-AK) Sen. John Thune (R-SD)

Sen. Lamar Alexander (R-TN) Sen. Joe Biden (D-DE) Sen. John Cornyn (R-TX) Sen. Larry Craig (R-ID) Sen. Lindsey Graham (R-SC) Sen. Chuck Hagel (R-NE) Sen. John Kerry (D-MA) Sen. Gordon Smith (R-OR) Sen.Ted Stevens (R-AK) Sen. John Sununu (R-NH)

Some of the those who were absent for the vote had understandable reasons, of course. Kerry was in Poznan, Poland, representing the United States at United Nations climate change talks, while Biden was attending to transition duties and Alexander was home recovering from surgery.

In any case, hopefully President Bush will loan money from the Troubled Assets Relief Program to ensure that GM and Chrysler avoid bankruptcy for the next several months, thus enabling them to restructure, recover, and thrive by building the super fuel efficient cars of the future.

Last night, conservatives in the Senate blocked the proposed $14 billion loan to General Motors and Chrysler. As Ali Frick notes over at ThinkProgress, conservatives blamed the bill’s failure on the United Auto Workers (UAW) refusal to accept steep concessions — introduced in a pay-cut amendment by Sen. Bob Corker (R-TN) — that would have effectively neutered the union.

But various media outlets have reported that blocking the bill also had a wider purpose: sticking it to labor unions in advance of the anticipated debate over the Employee Free Choice Act. Often referred to as “card check,” the Free Choice Act would level the playing field for workers looking to form a union.

As the LA Times reported today, conservatives circulated “an action alert” calling for lawmakers to “stand firm and take their first shot against organized labor“:

In doing so, analysts said, Republicans were planting the seeds for a fundraising appeal to big business — other than the Big Three, of course — as they gear up for a major political fight next year over expected legislation that would make it easier for unions to organize.

The BBC noted this line from the conservative talking points:

This is the Democrats’ first opportunity to pay off organised labour after the election. This is a precursor to card-check and other items.

If the rescue loan was a “pay off” to the unions, it was a pretty lousy one, considering the UAW made serious concessions — including delaying Big Three payments into a retiree health care fund — as a prerequisite to the rescue bill proceeding.

Furthermore, conservatives denied the automakers their loan — potentially causing further harm to an already dismal economy — for the sake of preemptively sending a message on legislation that can help the economy. As David Madland and Harley Shaiken point out, competitiveness is “linked to productivity, quality, and innovation — all of which can be enhanced with higher wages” derived from unionization.

Yesterday, President-elect Barack Obama said that he wants to “strengthen the union movement in this country and put an end to the kinds of barriers and roadblocks that are in the way of workers legitimately coming together in order to form a union and bargain collectively.” It would appear that conservatives are already gearing up for the fight, even if that means sacrificing America’s auto industry and all the jobs that go along with it.

Last night, the House of Representatives approved an “emergency plan to rescue the nation’s domestic automobile industry” that would extend General Motors and Chrysler $14 billion in loans. However, the measure currently lacks the votes to pass in the Senate, and Sen. Mitch McConnell (R-KY) has threatened to kill the bill.

And conservatives are not stopping there. Rep. John Boehner (R-OH), Rep. Eric Cantor (R-VA), Rep. Mike Pence (R-IN), and others have put forth their own “no-bailout alternative” to the loan.

The “alternative” is all of two pages, one of which is spent criticizing the proposal passed by the House. With the remaining page, conservatives reveal that their plan for helping “the Big Three to become competitive again” amounts to busting their union. After stating that United Auto Workers hold “to concessions already made” conservatives demand that the union:

Concedes the elimination of Supplemental Unemployment Benefits; Concedes elimination of the Jobs Bank Program; Agrees to either reduce company retiree health care obligations or otherwise convert a portion of such obligations into equity; and Agrees to reduce wages and benefits to the levels paid by non-Big Three manufacturers.

Sen. Jim DeMint (R-SC) said yesterday on NPR that, in regards to an auto loan, “we’re not going to do it with the barnacles of unionism wrapped around their necks.”

First, it is worth pointing out that the UAW has already agreed to suspend the Jobs Bank, and delay automaker payments to a retiree health care fund. Furthermore, the union has implemented a plan to permanently shift retiree health costs into a UAW trust fund in 2010. Therefore, the second and third “concessions” that conservatives are demanding have, for all intents and purposes, already happened.

The other two “concessions,” however, are where the trouble really begins. The last one implies that Big Three workers are paid substantially more than their non-Big Three, non-unionized counterparts. However, as the New York Times and the New Republic pointed out, UAW workers don’t earn significantly more in hourly wages. The first, meanwhile, calls for cutting unemployment benefits at a time when economists and lawmakers are advocating extended benefits as an important response to the financial crisis.

Ultimately, these union-busting demands are counterproductive. As David Madland and Harley Shaiken note, “unions help foster a competitive high-wage, high-productivity economic strategy“:

Unionization and high worker productivity often go hand-in-hand. Fairness on the job and wages that reflect marketplace success contribute to more motivated workers. Given the pressures of globalization and competitiveness today, unions have been responsive to increasing productivity and embracing new innovations.

The UAW has already conceded to help the Big 3 manage their financial troubles. New innovations — not a lower-paid, uncared for workforce — will help Detroit get back on its feet.