Washington Watch

Washington Watch

July 2009

EFCA Vote Possible This Month

Congress has reconvened in Washington for four weeks before the August recess. It is rumored that some form of the misnamed Employee Free Choice Act (EFCA) may come up for a vote in the month of July.

Sen. Tom Harkin (D-IA), who is managing the EFCA in the Senate, continues to pledge action on some form of the EFCA before the August recess. Harkin has said that if he doesn’t have the votes to pass an alternative version of the bill, then he will bring the EFCA in its current form to the Senate floor.

Now is the time to contact Senators Lincoln and Pryor and your district representative, urging them to oppose the EFCA.  While many members of Congress have expressed concerns with EFCA in its current form, it important that we continue to urge members – especially Senators - to oppose votes, especially votes on cloture in the Senate, on the EFCA in any form. Even if you have already written either or both senators, please do so again.

We plan to keep you posted when we have a better sense of timing of movement on EFCA and EFCA-related legislation. However, we will not likely have much notice before a vote is scheduled, so it is vital that you act today to make your concerns clear, before it is too late.

For additional information or to become part of the Coalition against EFCA, contact Coalition Coordinator Sarah Beth Turner at (501) 975-8344 or e-mail her at info@yoursecretballot.com.

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U.S. Economy Contracts at Revised Pace of 5.5 Percent

 

The Financial Times reported, "The U.S. economy continued to contract in the first quarter of this year, but at a slower pace than previously thought, official figures showed [at the end of June]." Revised "commerce department figures revealed that U.S. gross domestic product declined by an annualized rate of 5.5 per cent in the first three months of the year. That was better than economists expected and a smaller contraction than the original estimate of a 6.1 per cent contraction and last month's estimate of a 5.7 per cent decline." Economists expect to see "more significant improvement in the second quarter of this year." The article continued, "Housing and manufacturing have shown signs of life lately. Home prices and sales have begun to stabilize in some areas and businesses have begun to ramp up their capital investment with more orders for durable goods." However, analysts "fear that rising joblessness could slow the recovery."

 

In related news, the Wall Street Journal reported, "The number of U.S. workers filing new claims for jobless benefits jumped [at the end of June] amid a pickup in layoffs related to the end of the school year, suggesting the labor market remains weak despite recent signs of stabilization." Initial claims for "jobless benefits rose 15,000 to 627,000 in the week ended June 20, the Labor Department said in its weekly report [June 25]." The surprise gain, "bringing claims to the highest level since May 16, was due in part to larger-than-expected layoffs in the education services sector." While the labor market "remains one of the main weak spots for the economy, there have been some recent indications that the worst of job losses may be over."

 

The AP added, "The Labor Department data released [June 25] show jobs remain scarce even as the economy shows some signs of recovering from the longest recession since World War II." The number of people "continuing to receive unemployment insurance rose by 29,000 to 6.74 million, slightly above analysts' estimates of 6.7 million." Economists expect the "number of initial unemployment insurance claims, which reflects the level of layoffs, to slowly decline over the coming months as the economy bottoms out." Economists say any "recovery is likely to be weak, and the unemployment rate, currently at 9.4 percent, is expected to top 10 percent by the end of this year." Other recent reports "indicate the economy could be bottoming. The Commerce Department said [June 24] that orders to factories for durable goods such as computers, machinery and aircraft increased 1.8 percent in May, much better than analysts expected."

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 Economic Recovery May Not Bring Jobs Rebound

 

The Los Angeles Times reported that even as "the nation's economy begins clawing its way out of the worst recession in 60 years, there are growing signs that this recovery could come with an unsettling twist: The wheels of commerce may begin to turn again without any substantial boost in jobs." The national unemployment rate, at 9.4 percent, is "likely to climb into double digits later this year, but it is also expected to remain there well into 2010, economists say. That would prolong the misery of the unemployed, squeeze retailers and other businesses, and add millions of dollars in government costs and lost productivity. It could even threaten the recovery itself."

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Manufacturing Figures Show Signs of Global Recovery

 

The Financial Times reported, "The global downturn appeared close to a bottom…after manufacturing figures from across the world suggested the worldwide recession was running out of steam in all big economies." According to Stuart Green, global economist with HSBC, "the signs from around the world indicated that 'a spell in the financial wilderness now looks less likely for the major economies...with a slowly improving cyclical picture factored in for the rest of 2009 and 2010 across many regions.'" Yet, Green "and policymakers around the world fear that the coming upturn will be neither durable nor strong," as "the recovery in global manufacturing has come primarily because companies have sold off much of their accumulated stocks and are re-starting mothballed production lines." When "this temporary boost is completed, serious questions remain about the source of longer-term demand to maintain the current momentum."

 

Bloomberg News reported, "Manufacturing in the U.S. shrank at the slowest pace since August 2008 and pending sales of existing homes advanced for a fourth month, underscoring signs the economy began to stabilize in the second quarter." According to Bloomberg, "the Institute for Supply Management's factory index rose in June for a sixth straight month, to 44.8."

 

USA Today reported a "batch of reports [last week] reinforced a growing consensus for an improving if fitful economy, with analysts still expecting a modest recovery by year's end and moderating job losses in today's unemployment survey." Manufacturing activity – "an economic bellwether - declined but at the slowest pace since August as production grew, while new orders shrank, the Institute for Supply Management said." The manufacturing index "was 44.8, up from 42.8 in May, ISM said. Since bottoming in December, the index has risen six consecutive months."

 

The AP added the "brighter news on manufacturing is offering more hope that the longest recession since World War II is near an end. But with construction and many other segments of the economy still weak and unemployment rising, any rebound likely will be slow."

 

Likewise, the Financial Times noted the manufacturing report "suggested that the recession in the US might be abating, but other data [last week] provided a reminder that the country faced a slog of a recovery rather than a quick turnaround." While "pending home sales were hopeful, construction spending continued to slide and the latest private sector payrolls report pointed to another jump in the unemployment rate."

 

And the Wall Street Journal reported the manufacturing declines "slowed last month, raising the likelihood that the sector -- and perhaps the broader economy -- could see growth in the second half of the year. But separate reports showed the labor market remains weak, an obstacle to recovery."

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Climate Control Legislation Passes House, Senate Begins Hearings

 

The Wall Street Journal reported, "Landmark legislation to curb U.S. greenhouse-gas emissions was approved by the House of Representatives in a close vote [June 26] securing an initial victory for a cornerstone of President Barack Obama's agenda." But it isn't "clear how much of the sprawling House bill will survive in the Senate, where moderate Democrats and Republicans could form a majority that backs less ambitious action." Business factions "split on the measure." The U.S. Chamber of Commerce and the NAM "lobbied against passage." Groups that represent "airlines, oil producers and mining companies expressed disappointment, saying the bill, if enacted, would lead to onerous new costs to consumers." Obama and other top Democrats "insisted the measure will spur job-creating investments in 'green' technologies, while lessening U.S. reliance on foreign oil." They said the fear that "higher energy costs will result is overblown, in part because savings from energy-efficiency investments could offset most or all of the costs to consumers."

 

The New York Times reported, "Republicans [after the bill passed] roundly criticized [the] energy plan passed by the House that is intended to address global warming and change the way the United States produces and uses energy." Senator Charles E. Grassley of Iowa said on ABC's 'This Week' that the House bill is a "national energy tax that would drive manufacturers and jobs to countries with less-strict emissions standards." The bill passed the House [June26] "with a vote of 219 to 212, with 44 Democrats voting against it." The legislation "pitted liberal Democrats from the East and West Coasts against more conservative Democrats from areas dependent on coal for electricity and on heavy manufacturing for jobs" And while "some environmentalists supported the legislation, others, including Greenpeace and Friends of the Earth, opposed it." The Times added that "industry officials were split, with the Chamber of Commerce and the NAM opposing the bill and some of the nation's biggest corporations, including Dow Chemical and Ford, backing it."

 

Arkansas ’s Congressmen Ross and Berry were two of the 44 Democrats who voted against the bill. Congressman Boozman also voted against it. Congressman Snyder voted in favor of the measure. His position was unknown to most before the vote and he was one of the last yes votes to come on board with House leadership.

 

The Wall Street Journal reported that in hearings on Tuesday before the Senate Environment and Public Works Committee, "cabinet officials pressed President Barack Obama's case for climate-change and clean-energy legislation...as lawmakers clashed over whether a 'cap-and-trade' system for cutting greenhouse gases would help the US economy or hurt it."

 

During their testimony, the Washington Post reported, "the administration's top energy and resource officials sought to provide a push for the legislation because of the steep climb it faces in the Senate. The officials hailed the emerging legislation as something that would provide a boost to the national economy at a time when it is shedding 500,000 jobs per month."

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GM Bankruptcy Exit Plan Faces Appeals

 

The AP reported, "Groups representing plaintiffs in car accidents said Monday they would oppose General Motors' attempt to quickly exit bankruptcy protection, arguing that hundreds of victims could be hurt by the government-led plan." U.S. Judge Robert Gerber ruled Sunday that the firm's plan "was in the best interest of both the automaker and its creditors, who would get nothing if the automaker was forced to liquidate." Steve Jakubowski, who "filed the appeal notice for the accident litigants, said his appeal would assert that the bankruptcy judge overstepped his authority by preventing victims from pursuing litigation under their state product liability laws." Steve Rattner, the head of the Obama administration's auto task force, said the "government was 'confident that (Gerber's) decision will stand and the sale of GM's assets to new GM will proceed expeditiously.'"

 

The Detroit Free Press reported Jakubowski "quickly filed a notice to challenge the decision but said in an interview that he would not seek a stay to block the deal." Legal experts "doubted any objector could successfully block the deal, especially after a similar Chrysler asset sale closed last month." Opponents to the asset sale "focused on the issue of product liability as part of their appeal. The group is unhappy because the new GM is not assuming any of old GM's liabilities for injuries or illnesses that arose before the sale."

 

BusinessWeek added, "If GM can get through the week without appeals from other bondholders or litigants with product liability claims, the sale could be completed on Friday, July 10, said one Treasury Dept. official."

 

The Wall Street Journal noted, "General Motors Corp. is set to emerge from bankruptcy into an economic downturn that presents a major challenge for the country's largest auto maker -- and for the White House that saved it." GM Chief Executive Frederick 'Fritz' Henderson plans "to introduce a revamped GM as a greener, more customer-focused company with a leaner management," but the firm "has a rough road ahead" as it "continues to lose market share to foreign rivals, having shed nearly two percentage points of its U.S. share in just the past six months."

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Administration Reportedly Strengthening Enforcement of Sherman Antitrust Act

 

The Wall Street Journal reported on enforcement of the Sherman Antitrust Act, noting that while Section 1 cases are "fairly common, the bulk of the headline-grabbing antitrust cases have been under Section 2." Enforcement of Section 2 "went largely dormant under President George W. Bush. ... It took the position that the marketplace, not government regulators or courts, provides the ideal check on anticompetitive business practices." In May, "Christine Varney, President Barack Obama's pick to run the Justice Department's antitrust division, repudiated the Bush administration...squarely placing some blame for the country's economic problems on the Bush administration's laissez-faire regulatory policies." One analyst said the "ultimate focus of any Section 2 inquiry will continue to be what it has been for decades: whether and to what degree consumers are hurt by a company's behavior."

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Economic Downturn Spurs G-8 Trade Repair Discussions

 

The Wall Street Journal reported, "The economic downturn, along with new leadership in the U.S. and India , is spurring G-8 nations to repair trade talks at their coming summit but Washington remains an obstacle, trade experts say." Pascal Lamy, director of the World Trade Organization, said that "the rest of the world 'is waiting for the U.S. ' to detail its position on trade." The so-called "Doha Round of global trade talks...is still in limbo after eight years of negotiation." A global trade deal could "pre-empt protectionism by capping import tariffs at their current, relatively low rates, as well as dismantling barriers to trade in agriculture and industrial goods." The key challenge to "resuming the Doha talks, Mr. Lamy said, is persuading the U.S. and India to repair a rift that emerged at the global trade summit a year ago."

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