Washington Watch
January 2009
While passage in the US House is virtually assured, the real fight will occur in the US Senate, where opponents were able to sustain a filibuster during the 110th Congress. We will need to redouble our efforts in 2009, as the results of the 2008 elections have changed the dynamics on Capitol Hill for this issue. We are asking all members of Arkansas’s business community to send a letter immediately to both of Arkansas' senators and to the U.S. House member who represents your district. Instructions and tips for letter writing are available online at www.yoursecretballot.com or by phone at 501-975-8344.
It is important that you provide us with copies of letters you send so that we can evaluate our activities and grassroots lobbying efforts. Please fax your letters to 501-975-6045.
All State Chamber/AIA members are strongly encouraged to spread the word about this issue to fellow members of the business community as well as to employees. It is vitally important that our members of Congress hear the business perspective on this issue. We thank you for your efforts and look forward to hearing from you soon as we continue to work to preserve workers' rights to a secret ballot.
“Stop Employee FORCED Choice Act” CEO Day on Capitol Hill
The National Association of Manufacturers (NAM) is joining with several other organizations to plan a “Stop Employee FORCED Choice Act” CEO Day on the Hill event in Washington, DC. The event, scheduled for Wednesday, February 4, 2009, is being conducted to help illustrate the detrimental impact this legislation has on manufacturing and the overall business community. Event organizers have targeted Senators in several states, including Arkansas’s Blanche Lincoln and Mark Pryor, as priority targets for this event.
This CEO Day on the Hill is designed to provide an opportunity for Senators to hear directly from business leaders exactly how EFCA will hurt jobs and hinder America’s competitiveness.
If you are interested in participating in the CEO Day on the Hill event, you may register online here. Registration deadline is Friday, January 23, 2009. Upon confirmation of your participation, the NAM staff will schedule meetings on your behalf with Senators. For additional questions or concerns, please contact Keith Smith, the NAM’s Director of Employment & Labor Policy at ksmith@nam.org or (202) 637-3045.
Economic Report
Dave Huether, Chief Economist with the National Association of Manufacturers, reported six of the nine major economic indicators that came out last week deteriorated, indicating that conditions continue to be depressed as the economy heads into 2009. New reports on the housing sector showed no rebound in sight while lower chain store sales in December pointed to very depressed holiday spending by consumers.
The most closely watched indicator that came out last week was Friday's employment report covering the month of December. Nonfarm payrolls fell 524,000 last month and the unemployment rate rose from 6.8 percent in November to 7.2 percent, the highest level since January 1993. For the year overall, the economy shed 2.59 million jobs in 2008. This was the largest 12-month decline since 1945 (though in percentage terms, the 1.9 percent drop in payroll employment last year was smaller than the declines that took place in the recessions of 1982 (-2.3 percent) and 1974-1975 (-2.7 percent).
The fact that 75 percent (1.9 million) of the jobs lost in 2008 came in the last four months of the year illustrates the impact of the financial crisis that hit the economy in the August-September time frame.
Manufacturing employment fell 791,000 last year (accounting for nearly a third (31 percent) of the overall job loss in 2008.) This was the largest drop since the 800,000 decline in 2002. As with overall payroll employment, most (56 percent) of the manufacturing jobs lost last year came in the last four months of the year. And while the job losses earlier in the year were concentrated in the motor vehicles sector as well as industries closely connected to the housing market, the declines in recent months have spread to most manufacturing industries.
U.S. Factory Orders in November Drop Twice as Much as Forecast
Bloomberg News reported, "Orders placed with US factories in November fell twice as much as forecast, signaling businesses are cutting back on investments as the recession deepens." According to the Commerce Department, "demand fell 4.6 percent after a revised 6 percent decrease in October that was larger than previously estimated. ... The back-to-back decline was the biggest since records began in 1992." Firms "are likely to pare spending further as access to credit dries up and global demand slows." Douglas Smith, chief economist for the Americas at Standard Chartered Bank, said, "'With weakness overseas, you're also seeing fewer orders for US manufactured goods." Further, "orders for durable goods, which are those meant to last at least three years and make up just less than half of total factory demand, dropped 1.5 percent. Commerce estimated the decline at one percent."
The AP added, "Demand for nondurable goods, items such as food, paper and petroleum products, dropped by 7.4 percent in November following a 3.8 percent decline in October. The declines for nondurable goods reflect falling demand and a big drop in prices, particularly for energy products. The declines in November were led by a 37.7 percent plunge in demand for commercial aircraft, an extremely volatile series. Boeing Co. has been seeking to resume normal operations following the interruptions caused by a strike last year."
Economic Turbulence Expected to Continue "For Most of 2009"
In a 2008 year-end article, the Christian Science Monitor reported, "The economic storm that has engulfed the United States -- and the world -- is expected to continue for most of 2009. If there is a silver lining, it is that as the year progresses, economists expect the rate of decline in the economy to start to slow -- with some modest growth possible by the last quarter of the year. Before the skies brighten, however, unemployment will rise, business bankruptcies will accelerate, housing prices will continue to fall, and consumer confidence will remain low, according to most forecasts." The "worst of the economic news may be just arriving, economists say. Consumer spending for the holidays will be the worst in years," and "by the end of March, the economy, as measured by GDP, will shrink another 4 percent on an annualized basis," according to an IHS Global Insight estimate.
In his Washington Post (12/29, A15) column, Robert Samuelson wrote, "It's the end of an era. We know that 2008, much like 1932 or 1980, marks a dividing line for the American economy and society. But what lies on the other side is hazy at best. The great lesson of the past year is how little we understand and can control the economy. This ignorance has bred today's insecurity, which in turn is now a governing reality of the crisis."
111th Congress Convenes: U.S. House Moves Quickly on Labor Front
The new 111th Congress convened on January 6, and the U.S. House of Representatives quickly passed two labor-supported bills: the Lilly Ledbetter Fair Pay Act and the Paycheck Fairness Act.
The Paycheck Fairness Act (H.R. 1338 ) aims to amend the Fair Labor Standards Act (FLSA) to allow victims of pay discrimination to potentially recover more remedies than those currently provided in the FLSA. Among other things, it would enforce a new concept of “equal pay for comparable work,” require employers to disclose job categories and pay scales as needed to enforce the law, entitle employees to unlimited punitive and compensatory damages, regardless of whether the wage discrimination was intentional, and require the Department of Labor to establish guidelines for employers to use in determining compensation.
One of the challenges facing employers under this bill is determining what constitutes work that is comparable in “value” albeit unequal in position. The “value” of one job versus another often involves subjective factors that will necessarily be defined by the court system. Even assuming the DOL could establish detailed guidelines to assist employers in making this determination, it is inevitable that the regulatory burden on employers will grow and that the number of pay equity lawsuits will increase should this bill be enacted.
The Lilly Ledbetter Fair Pay Act (H.R. 2831 ) seeks to amend many federal civil rights statutes, including the Civil Rights Act, by imposing the “paycheck rule.” Under this rule, which was expressly rejected by the U.S. Supreme Court in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007), the statute of limitations is reset each time the employee receives his or her paycheck if it can be proved that the compensation decisions generating the pay were discriminatory. This would allow plaintiffs to bring discrimination claims impacting their pay years after the alleged discriminatory acts occurred.
Both the Paycheck Fairness Act and the Ledbetter Fair Pay Act are expected to come before the U.S. Senate as soon as Thursday.
Congressional Elections Update
In the Minnesota Senate race, Al Franken (D) has been declared the winner over incumbent Senator Norm Coleman (R). However, Coleman has challenged the results and by Minnesota law Franken cannot be provided with a certification from the Minnesota Secretary of State while an election challenge is pending. On Tuesday, the Franken campaign asked the Supreme Court to intervene.
In Illinois, embattled Governor Rod Blagojevich appointed former Illinois Attorney General Roland Burris to fill the Senate seat left vacant by President-elect Barrack Obama. After initially turning Burris away when he showed up to be sworn in with other Senate members on January 6, Democratic leaders in the Senate reversed course and decided to seat Burris. Burris was actually sworn on Thursday.
President-elect Obama Completes His Cabinet Nominations
President-elect Obama has completed his nominations to Cabinet posts.
The incoming President named Steven Chu as Secretary of Energy, Carol Browner to lead the newly-created policy council on environment and energy and Nancy Sutley to chair the Council on Environmental Quality. The President-elect has made clear his intention to move aggressively on climate change, which will translate into a significant change of our national energy mix, and all three of these individuals share his commitment to that goal.
The President-elect announced he will nominate Rep. Ray LaHood (R-IL) to serve as Secretary of Transportation, former Dallas Mayor Ron Kirk to serve as U.S. Trade Representative and Rep. Hilda Solis (D-CA) to be Secretary of Labor.
Obama Presses Congress to Pass Economic Stimulus Quickly
The New York Times reported, "President-elect Barack Obama last week urged Congress to act quickly to pass sweeping economic stimulus measures, including a tax cut and an infusion of as much as $800 billion, or face the likelihood that 'this recession could linger for years.'" Obama said he "aimed to double the production of alternative energy within three years, a seemingly ambitious target; computerize all medical records in the country within five years, a move he said could save lives, money and jobs; modernize 75 percent of federal buildings and improve energy efficiency in 2 million homes; upgrade classrooms, libraries and laboratories in thousands of schools, and expand broadband access to rural areas."
The AP noted, "Obama is spelling out the key elements of an 'American Recovery and Reinvestment Plan' that he is touting to treat a sick economy. Obama told an audience at George Mason University that the plan includes a host of programs to revitalize the economy and create jobs."
The Financial Times added Obama's "remarks were made as several big retailers, including Wal-Mart, announced disappointing sales over Christmas and weekly data showed the number of people claiming unemployment benefits hitting a 26-year high." He "wants to pump as much as $775 billion into the economy over the next two years through tax cuts and investment in public infrastructure." He originally "wanted the stimulus ready to enact as soon as he took office on January 20, but legislation now looks likely to be delayed until February as his economic advisers wrangle with Congress over the fine print."
Bloomberg News reported that in his speech Obama "drew a portrait of a nation where family income is falling, the unemployment rate is rising and a 'generation of potential and promise' may be lost without federal action." Obama "blamed the economy's troubles on 'an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, D.C.'" The article notes, "The president-elect didn't put a price tag on his plan, though he has said it will widen the federal budget deficit, which the Congressional Budget Office yesterday forecast would hit $1.18 trillion this year. Democratic officials have said Obama's target is a package of about $775 billion."
The Chicago Tribune added, "Obama portrayed his planned stimulus as not a series of new government programs, but a sweeping and renewed 'foundation' for the economy that would make the nation generally and its children and future generations more competitive in the global economy. The changes would reach across the economy, touching health care, education, energy, and infrastructure like bridges and Internet broadband links."
Transportation Panel Urges Congress to Raise Fuel Taxes
The AP reported a "50 percent increase in gasoline and diesel fuel taxes is being urged by a federal commission to finance highway construction and repair until the government devises another way for motorists to pay for using public roads." The National Commission on Surface Transportation Infrastructure Financing, "a 15-member panel created by Congress, is the second group in a year to call for higher fuel taxes. With motorists driving less and buying less fuel, the current 18.4 cents a gallon gas tax and 24.4 cents a gallon diesel tax fail to raise enough to keep pace with the cost of road, bridge and transit programs." In a report "expected in late January, members of the infrastructure financing commission say they will urge Congress to raise the gas tax by 10 cents a gallon and the diesel fuel tax by 12 to 15 cents a gallon. At the same time, the commission will recommend tying the fuel tax rates to inflation."
NAM Welcomes Customs and Border Protection's Interim 10+2 Rule
The Gulf Shipper reported, "Customs and Border Protection has finally published the interim rules for its much-anticipated Importer Security Filing, better known as 10+2. ... The interim rule will take effect on January 26, with enforcement to begin one year later. It includes an additional public comment period for certain data elements and economic effects of the rule." Customs is "allowing flexibility in what importers report in six data elements: manufacturer, consolidator, stuffing location, country of origin, tariff commodity number, and the 'ship to' party." The National Association of Manufacturers "welcomed the changes from the original version." John Engler, NAM's president, said, "The 10+2 rule, as originally drafted, would have cost US manufacturers as much as $20 billion annually, created huge delays and missed shipments in the global supply chain, risked shutting down US production lines and actually worsened security by increasing the amount of time containers sat around available for tampering at foreign ports."
NAM Announces Creation of New Customs and Border Coalition
The Journal of Commerce Online reported, "The National Association of Manufacturers announced the creation of a new Customs and Border Coalition charged with making sure that business concerns are addressed when government agencies are developing security rules and procedures that govern exports and imports." John Engler, NAM president and chief executive, said, "The NAM is launching the CBC because we see a critical need for a unified business voice on border issues. We can have secure borders without shutting down commerce." Engler "cited as an immediate issue of concern the controversial 10+2 security filing rule proposed by Customs requiring importers to submit 10 types of information and shippers two new types prior to loading a container for shipping." Engler added, "With the new administration coming to Washington, we will have much work to do to make certain our concerns are reflected in government policies and regulations enacted by the Department of Homeland Security and Customs and Border Protection."
Traffic World reported, "The Customs and Border Coalition will bring together individual businesses and associations to review government programs and regulations affecting transportation of manufactured products across the nation's borders. The group will assess where changes are needed and work directly with government officials to make certain that new regulations provide for security without impeding commerce." Engler said, "It is imperative that our leaders understand that the US economy is dependent upon international trade. In this era of deep economic instability and uncertainty, that dependence is more critical than ever."
More on the Governor’s Climate Change Commission
Editor’s note: The following column was written by David J. Sanders of Stephens Media/Arkansas News.)
In my last column, I pointed out how, either willingly or unwillingly, the Arkansas Governor’s Commission on Global Warming is a front for an out-of-state organization called the Center for Climate Strategies. CCS travels the country convincing state governments to set up working groups so that it can funnel to lawmakers prefab policy reports containing recommendations for punitive and confiscatory environmental regulations costing billions of dollars.
CCS has wealthy donors — global warming alarmists — to please and, by its own admission, uses states to pressure the federal government to adopt sweeping policies related to global warming. Unfortunately CSS acts without regard to the cost in terms of dollars and jobs to states’ economies, governments or their taxpaying citizens.
The global warming commission’s final report contains 54 of CCS’s policy recommendations — implementation costs could top $3.7 billion — nearly half of which lacked cost estimates. Even if Arkansas lawmakers enacted all the commission’s policies, the actual benefit of reducing greenhouse gases would be insignificant.
In May, the Science and Public Policy Institute released a policy paper about the effects of reducing greenhouse gas emissions in Arkansas. According to the report, “Globally, in 2003, humankind emitted 25,780 million metric tons of carbon dioxide, of which Arkansas accounted for 62.4 mmtCO2, or only 0.24 percent.”
SPPI’s Roy Ferguson illuminated this measurement: “If Arkansas stopped all carbon emissions tomorrow, then it would only take 23 days for the rest of the world to replace what was lost.”
My timing couldn’t have been better.
State Rep. Kathy Webb, D-Little Rock, who also co-chairs the commission, said representatives from GCGW met with Gov. Mike Beebe last week in an attempt to iron out the details of what, if any, of the recommendations Beebe will include in his legislative package.
After the column ran, Kevan Inboden, an administrator with Jonesboro’s municipal utility and a commission member, contacted me and said he was appreciative of what I had written.
Despite what he said were commissioners’ good intentions, Inboden said he suspected early on that someone was pushing an agenda. Without naming names, he said it appeared the commission’s more extremist members — those who advocated “extreme (carbon) mitigation measures” — had been “working behind the scenes” to steer the group’s work. What about CCS? “They were more than just a facilitator,” he said.
“As a commissioner, when I hear that the commission recommended this or that, it doesn’t tell the whole story. There was a lot of dissension and opposition,” he said.
The commission’s reports show several close votes on controversial policy recommendations that, according to Inboden, if enacted into law would drive up the cost of living and the cost of doing business in Arkansas.
He voted against the carbon tax, energy portfolio mandates for utilities, a proposed moratorium on coal-fired plants and what he called “a regional cap-and-trade system,” or what he said the commission misleadingly labeled “Approaches benefiting from regional application.”
“The number we heard for a carbon tax was $20 to $30 per ton of CO2 or million metric tons of CO2 equivalent,” he explained. “If an industry was paying $.05 per kilowatt hour and you had a $25 carbon tax, then it would add 2 1/2 cents per kilowatt hour to their rate, which would increase their electric bill by 50 percent.”
He explained that the portfolio mandate would drive up the cost of renewable energy, which in turn would hurt Arkansas ratepayers.
Inboden said the commission should have taken a more balanced approach in its deliberations.
“Our approach didn’t work for both sides,” he said. “We let what other states were doing influence what we did as a commission.”
In fact, many of the states held up as examples for Arkansas were states in which CCS had worked.
Getting something for nothing is usually too good to be true, but in this case, getting nothing for something is insanity.
