Red Ink Red Alert. WaPo Editorial
A congressional report should give the president pause.
WaPo, Sunday, March 22, 2009; A18
THE NEW estimates by the Congressional Budget Office showing a federal deficit of 13.1 percent of gross domestic product for the current budget year, which began Oct. 1, are neither surprising nor particularly alarming, though it's larger than the 12.3 percent foreseen by the White House. Both are stunning numbers -- far and away the largest deficit ratio since World War II. But spending rises in recessions and tax revenue falls, and we're in a big recession. It would be counterproductive to balance the budget in this historic downturn. The huge deficit includes $700 billion for a necessary rescue of the financial sector. Nor is it shocking that the CBO forecasts a deficit of 9.6 percent of GDP in fiscal 2010 if Congress enacts President Obama's $3.6 trillion budget plan -- a deficit also much larger than what the president predicted. The difference largely reflects the CBO's economic forecast, which is more up-to-date and, hence, gloomier than the one Mr. Obama relied on.
What is scary, though, is the CBO's depiction of the remaining years of the president's term, and the half-decade after that -- if his budget is enacted. In none of those years would the federal deficit fall below 4.1 percent of GDP -- and it would be stuck at 5.7 percent of GDP in 2019. This is in stark contrast to the president's projection: that his plan would get the deficit down to about 3 percent or so of GDP by that time. It's true, as Peter R. Orszag, director of the Office of Management and Budget, told us, that the CBO's forecasts are subject to large margins of error, especially in the out years. And Mr. Orszag is correct to point out that, even under the CBO's scenario, the deficit as a share of GDP would decline by half under Mr. Obama.
Still, it's less significant to meet that target than to keep the deficits within sustainable bounds, and few experts believe that years of deficits above 4 percent of GDP are consistent with long-term economic vitality. If the CBO's numbers are subject to revision on account of changing circumstances, then so are the administration's; and those were based on very rosy economic assumptions to begin with. Very little of the claimed deficit reduction in the Obama plan comes from policy changes; it results more or less automatically from the assumed end of the recession, as well as by claiming savings in reducing operations in Iraq and Afghanistan from unrealistically high forecasts. Yet both the White House and House Speaker Nancy Pelosi said that the CBO report is no reason to revise the president's ambitious tax and spending blueprint.
Mr. Obama should treat the CBO report as an incentive to fulfill his repeated promises, during and after the campaign, to make hard choices on the budget. Until now he has offered a host of new spending -- on health care, middle-class tax cuts, education and alternative energy -- without calling for much sacrifice from anyone except the top 5 percent of the income scale. Though his emphasis on controlling health-care costs is welcome, it's not a substitute for reforming the entitlement programs that are the drivers of long-term fiscal crisis, Medicare and Social Security. Yet the president has offered no plan for either and no road map even for achieving a plan. Several members of his own party in the Senate have been expressing doubts about his strategy, and the CBO report will lend credibility to their concerns. He should heed them.
Sunday, March 22, 2009
How the U.S. can help revitalize economies in Pakistan and Afghanistan
Plowshares for Peace. WaPo Editorial
How the U.S. can help revitalize economies in Pakistan and Afghanistan
WaPo, Sunday, March 22, 2009; page A18
AS THE Obama administration formulates its strategy for Pakistan and Afghanistan, pretty much everyone agrees that spurring the economy in both countries -- creating jobs -- is key to defusing militancy. The usual prescription is more foreign aid, which is sure to figure in any new plan. But what doesn't always get acknowledged in these discussions is that such aid often doesn't do much good. The United States wasted billions of dollars in Iraqi reconstruction aid, and given the dangerous environment -- which discourages inspection and monitoring -- you can expect a rerun in Afghanistan and Pakistan. A more effective way to boost both economies would be to allow them to export their products tariff-free into the United States. But that idea arouses the enmity of U.S. labor unions, which means that it's not going to get far in a Democratic Congress.
Enter Rep. Chris Van Hollen, Montgomery County Democrat and member of the House leadership, with a practical alternative. Mr. Van Hollen, with co-sponsors, has introduced legislation to create "reconstruction opportunity zones" within both countries. Certain products, including some (not all) textiles, produced within the zones would enjoy duty-free access to the U.S. market for 15 years. This would encourage investment by local businessmen, who best know the terrain, and create jobs. There's no better formula for discouraging Taliban recruitment.
It's not a magic formula, of course. The investment areas have to be drawn widely enough to make the prospect of investment realistic; if you limit them to the most intense battle zones, you're not going to see many jobs created. The bigger they are, though, the likelier the bill will arouse union opposition, so the politics are tricky. Mr. Van Hollen and his co-sponsors -- including Reps. Sander M. Levin (D-Mich), Peter Hoekstra (R-Mich.) and Mark Steven Kirk (R-Ill.) -- have tried to find the sweet spot, and their bill also insists that any factories in the zones meet core international standards in their treatment of workers.
Maybe the strongest argument for the opportunity zones is that there is no down side; the worst that could possibly happen is they don't trigger much investment. But they would immediately provide a signal of U.S. commitment -- the governments of both countries strongly support the idea -- and they could have a substantial positive effect reasonably quickly, at almost no cost to the U.S. Treasury. Congress and the administration should get behind this idea.
How the U.S. can help revitalize economies in Pakistan and Afghanistan
WaPo, Sunday, March 22, 2009; page A18
AS THE Obama administration formulates its strategy for Pakistan and Afghanistan, pretty much everyone agrees that spurring the economy in both countries -- creating jobs -- is key to defusing militancy. The usual prescription is more foreign aid, which is sure to figure in any new plan. But what doesn't always get acknowledged in these discussions is that such aid often doesn't do much good. The United States wasted billions of dollars in Iraqi reconstruction aid, and given the dangerous environment -- which discourages inspection and monitoring -- you can expect a rerun in Afghanistan and Pakistan. A more effective way to boost both economies would be to allow them to export their products tariff-free into the United States. But that idea arouses the enmity of U.S. labor unions, which means that it's not going to get far in a Democratic Congress.
Enter Rep. Chris Van Hollen, Montgomery County Democrat and member of the House leadership, with a practical alternative. Mr. Van Hollen, with co-sponsors, has introduced legislation to create "reconstruction opportunity zones" within both countries. Certain products, including some (not all) textiles, produced within the zones would enjoy duty-free access to the U.S. market for 15 years. This would encourage investment by local businessmen, who best know the terrain, and create jobs. There's no better formula for discouraging Taliban recruitment.
It's not a magic formula, of course. The investment areas have to be drawn widely enough to make the prospect of investment realistic; if you limit them to the most intense battle zones, you're not going to see many jobs created. The bigger they are, though, the likelier the bill will arouse union opposition, so the politics are tricky. Mr. Van Hollen and his co-sponsors -- including Reps. Sander M. Levin (D-Mich), Peter Hoekstra (R-Mich.) and Mark Steven Kirk (R-Ill.) -- have tried to find the sweet spot, and their bill also insists that any factories in the zones meet core international standards in their treatment of workers.
Maybe the strongest argument for the opportunity zones is that there is no down side; the worst that could possibly happen is they don't trigger much investment. But they would immediately provide a signal of U.S. commitment -- the governments of both countries strongly support the idea -- and they could have a substantial positive effect reasonably quickly, at almost no cost to the U.S. Treasury. Congress and the administration should get behind this idea.
Executives Detail Card Check Legislation Compromise
Executives Detail Labor Bill Compromise. By Alec MacGillis
Washington Post, Sunday, March 22, 2009; A02
As business and labor gird for battle over legislation that would make it easier for workers to organize, the debate could be transformed by a "third way" proposed by three companies that like to project a progressive image: Costco, Starbucks and Whole Foods.
Like other businesses, the three companies are opposed to two of the Employee Free Choice Act's components -- a provision that would allow workers to form a union if a majority sign pro-union cards, without having to hold a secret-ballot election, and one that would impose binding arbitration when employers and unions fail to reach a contract after 120 days.
But the companies' chief executive officers say they also recognize that just opposing the legislation, commonly called "card check," is not enough because of the widespread perception in Democrat-dominated Washington that there is not a level playing field between labor and business. So the CEOs have come up with ideas they hope will form the basis of new legislation.
Their proposal would maintain management's right to demand a secret-ballot election and would leave out binding arbitration. The proposal would keep the third main element of card check -- toughening the penalties for companies that retaliate against workers before union elections or refuse to engage in collective bargaining. But it would also toughen penalties for union violations, and it would make it easier for businesses to call elections to try to decertify a union.
To address labor's concern that businesses intimidate workers before elections, it would set a fixed period in which an election must be held, limiting the delays that give employers time to exert pressure. The proposal does not specify what the time period should be.
The proposal would also provide unions equal access to workers before elections -- for instance, by allowing organizers to address workers on a lunch break in the company cafeteria just as management can.
"We wanted to see what we can do to come up with a compromise position that is going to address the concerns of labor and also protect the sanctity of the collective bargaining process and secret ballot," said Costco Wholesale chief executive James D. Sinegal.
Starbucks chief executive Howard Schultz cast the proposal in more defensive terms. "The way the wind is blowing, we're heading toward a bill that is not the right approach," he said. "My responsibility is to not be a bystander but to offer a voice of reason, offer a more positive alternative that levels the playing field."
The effort is being led in Washington by Lanny Davis, a former special counsel to President Bill Clinton. Davis said he had approached about 20 Senate offices and gotten an overwhelmingly encouraging response. The Employee Free Choice Act has majority support in both chambers, but there are signs it may have trouble getting a filibuster-proof 60 votes in the Senate, where several centrist Democrats who previously supported it are expressing reservations.
Sen. Mark Pryor (D-Ark.), a centrist who is ambivalent about card check, praised the companies' proposal. "I appreciate a good-faith effort that could result in a reasonable compromise on what has become a highly polarizing matter," he said.
Davis said he thought that the proposal would intrigue President Obama, who as a senator was a co-sponsor of the card-check bill in 2007 but signaled in an interview before his inauguration that he was also open to other proposals to help organized labor. "This is consistent with President Obama's overall approach of avoiding polarized positions and looking for third-way ideas," Davis said.
The business lobby has been warning against any moves to tweak card check just enough to give centrists cover to support it. And word that a compromise is circulating from three "progressive" companies prompted business groups to warn yesterday against premature compromise.
But it is possible that the proposal will generate even greater opposition among unions and their supporters in Congress. Some business groups say they are open to limited changes in organizing rules, separate from card check -- a position not so far from what the three companies propose.
Labor unions, though, are adamant that workers be able to choose to organize via card check so they can avoid employer intimidation before elections. They say binding arbitration is needed because so many companies refuse to bargain -- nearly half of new unions never even get a contract.
The three CEOs are at odds with those planks. Whole Foods Market chief executive John Mackey said that binding arbitration is "not the way we normally do things in the United States" and that allowing workers to organize without a secret ballot "violates a bedrock principle of American democracy."
And the CEOs also do not share the labor movement's underlying belief that the decline of organized labor has contributed to income inequality and the economy's current imbalance. "That so few companies are unionized is not for a lack of trying but because [unions] are losing elections -- workers aren't choosing to have labor representation," Mackey said. "I don't feel things are worse off for labor today."
Of the three companies, only Costco has a substantial minority of employees that are unionized -- about a fifth of its hourly employees belong to the Teamsters, with whom it has good relations. Starbucks and Whole Foods have resisted most unionizing efforts.
Giving organizers the ability to use card check, Schultz said, would lead to a slew of separate bargaining units at a company like his, leading to "havoc and significant cost and disruption." Mackey had an even grimmer view. "Armed with those weapons, you will see unionization sweep across the United States and set workplaces at war with each other," he said. "I do not think it would be a good thing."
Washington Post, Sunday, March 22, 2009; A02
As business and labor gird for battle over legislation that would make it easier for workers to organize, the debate could be transformed by a "third way" proposed by three companies that like to project a progressive image: Costco, Starbucks and Whole Foods.
Like other businesses, the three companies are opposed to two of the Employee Free Choice Act's components -- a provision that would allow workers to form a union if a majority sign pro-union cards, without having to hold a secret-ballot election, and one that would impose binding arbitration when employers and unions fail to reach a contract after 120 days.
But the companies' chief executive officers say they also recognize that just opposing the legislation, commonly called "card check," is not enough because of the widespread perception in Democrat-dominated Washington that there is not a level playing field between labor and business. So the CEOs have come up with ideas they hope will form the basis of new legislation.
Their proposal would maintain management's right to demand a secret-ballot election and would leave out binding arbitration. The proposal would keep the third main element of card check -- toughening the penalties for companies that retaliate against workers before union elections or refuse to engage in collective bargaining. But it would also toughen penalties for union violations, and it would make it easier for businesses to call elections to try to decertify a union.
To address labor's concern that businesses intimidate workers before elections, it would set a fixed period in which an election must be held, limiting the delays that give employers time to exert pressure. The proposal does not specify what the time period should be.
The proposal would also provide unions equal access to workers before elections -- for instance, by allowing organizers to address workers on a lunch break in the company cafeteria just as management can.
"We wanted to see what we can do to come up with a compromise position that is going to address the concerns of labor and also protect the sanctity of the collective bargaining process and secret ballot," said Costco Wholesale chief executive James D. Sinegal.
Starbucks chief executive Howard Schultz cast the proposal in more defensive terms. "The way the wind is blowing, we're heading toward a bill that is not the right approach," he said. "My responsibility is to not be a bystander but to offer a voice of reason, offer a more positive alternative that levels the playing field."
The effort is being led in Washington by Lanny Davis, a former special counsel to President Bill Clinton. Davis said he had approached about 20 Senate offices and gotten an overwhelmingly encouraging response. The Employee Free Choice Act has majority support in both chambers, but there are signs it may have trouble getting a filibuster-proof 60 votes in the Senate, where several centrist Democrats who previously supported it are expressing reservations.
Sen. Mark Pryor (D-Ark.), a centrist who is ambivalent about card check, praised the companies' proposal. "I appreciate a good-faith effort that could result in a reasonable compromise on what has become a highly polarizing matter," he said.
Davis said he thought that the proposal would intrigue President Obama, who as a senator was a co-sponsor of the card-check bill in 2007 but signaled in an interview before his inauguration that he was also open to other proposals to help organized labor. "This is consistent with President Obama's overall approach of avoiding polarized positions and looking for third-way ideas," Davis said.
The business lobby has been warning against any moves to tweak card check just enough to give centrists cover to support it. And word that a compromise is circulating from three "progressive" companies prompted business groups to warn yesterday against premature compromise.
But it is possible that the proposal will generate even greater opposition among unions and their supporters in Congress. Some business groups say they are open to limited changes in organizing rules, separate from card check -- a position not so far from what the three companies propose.
Labor unions, though, are adamant that workers be able to choose to organize via card check so they can avoid employer intimidation before elections. They say binding arbitration is needed because so many companies refuse to bargain -- nearly half of new unions never even get a contract.
The three CEOs are at odds with those planks. Whole Foods Market chief executive John Mackey said that binding arbitration is "not the way we normally do things in the United States" and that allowing workers to organize without a secret ballot "violates a bedrock principle of American democracy."
And the CEOs also do not share the labor movement's underlying belief that the decline of organized labor has contributed to income inequality and the economy's current imbalance. "That so few companies are unionized is not for a lack of trying but because [unions] are losing elections -- workers aren't choosing to have labor representation," Mackey said. "I don't feel things are worse off for labor today."
Of the three companies, only Costco has a substantial minority of employees that are unionized -- about a fifth of its hourly employees belong to the Teamsters, with whom it has good relations. Starbucks and Whole Foods have resisted most unionizing efforts.
Giving organizers the ability to use card check, Schultz said, would lead to a slew of separate bargaining units at a company like his, leading to "havoc and significant cost and disruption." Mackey had an even grimmer view. "Armed with those weapons, you will see unionization sweep across the United States and set workplaces at war with each other," he said. "I do not think it would be a good thing."
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