4 Hightower Lowdown January 2009

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����!�����!������2 Ban cluster bombs3 New Year wishes for

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CHICAGO’S TRIBULATIONThe Tribune Company,

which owns the LosAngeles Times, ChicagoTribune, Baltimore Sun,South Florida’s SunSentinel, Orlando Sentinel,Hartford Courant, 23 televi-sion stations, cable stationWGN, and the ChicagoCubs, was bought last yearby a Chicago real estatebaron named Sam Zell.

Sam didn’t have anywherenear enough money to paythe $8.2 billion purchaseprice, but, hey, that’s noprob lem for a striver. Zellsimply got the company’sCEO to let him use theemploy ee’s pension fund ascollateral for bank loans tobuy the Tribune. Theemploy ees had no say inthe deal, nor in how theircompany was run, and it was run badly. Facing anintolerable debt load—$900million just in interest pay-ments in 2009, for example—Zell tried slashing news-room staff and substitutingmarketing for journalism.That didn’t work, and now,less than a year after Zell’stakeover, the Tribune isbankrupt, and employeesare likely to lose jobs, sev-erance payments, andpensions.

And those who pulled offthis heist? The former CEOgot more than $40 million,Citigroup and Merrill Lynchgot about $36 million eachfor being “advisors” on the deal, and another Wall Street bank, MorganStanley, got $7.5 million just for writing an “opin-ion” that Zell’s use of thepension fund was “fair.”

And Zell? He had put upless than 4% of the pur-chase price to get controlof the company, and whilehe might lose some of that,he cut the deal so he will befirst in line to get his moneyback—before the employ-ees whose company andpensions he wrecked.

In a just world, Sam Zellwould not be in bankruptcycourt—he’d be on trial forgrand theft.

for November 2008 were down 41%from the previous year, Toyota wasoff 34%, Ford 30%, Chrysler 47%,Honda 32%, Nissan 42%…right ondown the list.

The people responsible for theuniquely bad situation of Detroitautomakers are not the workers on the factory floor, but the suitsup in the executive suites. UAWmembers are not the ones whodecided to make Motor City’s busi-ness model dependent on a never-ending supply of cheap oil; the rankand file were not the ones myopi-cally fighting better fuel-efficiencystandards; and GM workers did notmake the decision a decade ago torecall and kill the EV-1, the forward-looking electric car that the com-pany had pioneered. The folks mak-ing these strategic businessdecisions are CEOs who pay them-selves from $7,000-an-hour (GM’sWagoner) to $10,000-an-hour(Ford’s Mulally).

Speaking of pay, am I the onlyone who thinks it’s ridiculous tohear senators chastise workingfamilies over earnings? Come on—Corker, DeMint, Kyl, and the otherswho’re throwing hissy fits aboutUAW wage levels are drawingnearly three times as much fromus taxpayers in base pay, plus get-ting platinum-level health care,golden pensions, and all sorts ofsenatorial perks. And, unlikeautoworkers, senators don’t haveto have any real skill, do any heavylifting, or produce any products.

Yes, these union workers makea good living—but what exactly iswrong with that? Indeed, they’re a tremendous American successstory. UAW members define ourcountry’s middle-class ideal. Theycan afford to buy homes (and cars),send kids to college, take vaca-tions—and pay taxes, includingthose that cover salaries and bene-fits for U.S. senators.

Sustaining, expanding, andextending such a vibrant, produc-tive middle class ought to be thetop goal of economic policy mak-ers. Yet, too many Washington offi-cials keep pushing in the oppositedirection, constantly pursuing acheap-labor America that enrichesthe few at the expense of ournation’s true economic strength.They are doing the bidding of a corporate elite whose only indus-trial idea of the past 30 years hasbeen to kick labor in the shorts.

We saw this tired old ploy triedagain last month when Detroit’shonchos finally presented their re -structuring plans to Congress. Tono one’s surprise, all of the restruc-turing would be down on theassembly line. GM, for example,bluntly promised that in exchangefor $18 billion in taxpayer money, itwould gladly boot another 25,000workers out the door. A tax-paidmass firing—what a deal!

These executives—and the con-gress critters who enable them—should be given Henry Ford bobble-heads to remind them of thepower of a democratic economy.The auto pioneer famously out-raged his competitors by payingFord workers $5 a day, more thandouble the industry standard at the time. As he explained in 1926, “An underpaid man is a customerreduced in purchasing power. Hecannot buy. Business depression iscaused by weakened purchasingpower. Purchasing power is weak-ened by uncertainty or insufficiencyof income. The cure of businessdepression is through purchasingpower, and the source of purchas-ing power is wages.”

That remains true today. Middle-class wages are the lifeblood of theAmerican automobile industry…and of the American economy.

Union faces down banker greedIRONICALLY, AT THE VERY TIME that boneheaded senators in Washington were work-ing furiously to impose their anti-union extremism on our country, most Americans werecaptivated by some 250 feisty union members in Chicago, joyously cheering them on.

These were members of United Electrical Workers (UE), who were employed atRepublic Windows and Doors. I say “were employed” because on December 5, it wasannounced that Bank of America had abruptly yanked the company’s financing. Withonly 3 days notice, the workers were terminated, their health coverage was cancelled,and they were denied the vacation pay and severance they were due. “Adios, chumps,”they were told, “out the door you go.”

Well… “No,” said UE’s members, “we won’t go.” For 6 days, they simply stayedin the plant, refusing to leave until they were paid what they were owed. Bank ofAmerica certainly could afford to do what’s right, since it was getting $34 billion from ustaxpayers in Washington’s Wall Street bailout scheme.

The union’s defiant stand captured the public’s imagination. “We’re doing this for theother working people in the country,” said a 14-year machine operator. “What’s happenedto us can happen to anyone.” Bank of America could not weather the outrage it had gen-erated—so the union members won, getting $1.75 million to cover the pay and bene-fits the bank had taken from them. They left the building chanting, “Yes, we did!”

“Sen. Richard Shelby of Alabama…

is a bought-and-paid-for advocatefor non-American carmakers.Toyota, Honda, Hyundai and

Mercedes-Benz all operate inAlabama, a so-called right-to-workstate where unions are scarce—but

taxpayer help for corporations is not.”— ERROL LEWIS, columnist, New York Daily NewsLOWDOWN

Edited by J im Hightower and Phil l ip Frazer ! Vol. 11 No.1 ! January 2009

The

or the men and women who actually do the work in automobilemanufacturing (America’s quintessential industry), the onlyhope left for dealing with a catastrophic economic meltdownseems to be prayer. Their corporate leaders have failed them,and Congress has stiffed them. Only last month’s begrudgingagreement by the White House to consider a $14 billion bridge

loan for the Big Three automakers has given then any optimism as their industry limps into 2009. But the ongoing bailout battle is no longer about economics. It’s aboutclass in America.

Republican lawmakers, backed by a raucous chorus of right-wing punditsand corporate lobbyists, have turnedMotor City’s economic woes into an excuse for launching a mendacious and perniciousassault on America’s hard-work-ing, highly skilled, unionized workingfamilies—and on the middle-class

ideals that they embody.Okay, admittedly Detroit’s bailout request to Congress was botched

from the start by the industry’s own boneheaded bosses. Rick Wagonerof GM, Alan Mulally of Ford, and Bob Nardelli of Chrysler gooberedbadly by winging off to Washington for the bailout hearings ensconced

in their separate-but-equal corporate jets. What, were no carsavailable to them?

Pampered CEOs jetting in for taxpayer hand-outs is what corporate image consultants

call “bad optics”— which is to say, itlooks really, really bad. As Rep.

Gary Ackerman askedduring the hearing,

“Couldn’t you allhave down-

graded to first-class or jet-

pooled, orsomething,

to get here?”

Hawking the myth of the $73/hour auto-worker

Senators bail out their banker buddies but stiff workers and their unions

FTHE 8,000-MEMBER GREATER GRACE TEMPLE in Detroit is the home church of many autoworkers, and its Sunday serviceon December 7 spoke directly to their troubles. The tone was set by the choir’s opening selection, “I’m looking for aMiracle.” The Pentecostal pastor kept the spirit moving with a sermon he titled “A Hybrid Hope,” after which the con-gregation joined in a full-throated, hallelujah version of the gospel classic, “We’re Gonna Make It.”

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structure with high unionized laborcosts,” adding that taxpayers“should not be forced to pay forthem.” Then came Sen. John Kyl ofArizona: “They have a bad businessmodel. They have contracts negoti-ated with the United Auto Workersthat impose huge costs.” How huge?“It’s $73 [an hour],” hissed Kyl.

Wow, that’s a paycheck of about$146,000 a year. I want that job!

Problem is, the $73 figure is ahoax. The right-wing contrived it bylumping in all of the health-care andpension costs of retirees, plus toss-ing in training costs and the payrolltaxes that the companies owe.

No Detroit autoworker is skip-ping away with anywhere near $73an hour. In fact, the base wage of a veteran UAW member in a BigThree auto company is about $29per hour, compared to $26 per hourfor a non-union worker in Toyota’sKentucky factory.

Also, the learned senatorswho’re now moonlighting as labornegotiators failed to do any rudi-mentary homework before assail-ing the UAW. Last year, the unionagreed to concessions in their newcontract with Ford that, by 2010,will lower the company’s total laborcosts to a level on par with whatJapanese corporations are payingnon-union American autoworkers.In addition, a new contract withGM is expected to give that U.S.company a labor-cost advantageover Toyota.

In fact, it’s not wages that bur-den the auto companies—it’s theskyrocketing cost of health care in America. Japanese, Korean,European, and other carmakersdon’t pay this cost because theircountries have national health carefor all, financed by taxpayers.Curiously, none of the senatorswho now profess to be outragedby American labor costs have

stepped forward to support univer-sal health care in our country,which would drastically improvethe global competitiveness of all of our industries.

There’s one more number thatunion-busting senators don’t men-tion: 10%. That’s the share of amade-in-Detroit car’s price tag thatgoes to cover all labor costs,including health care, pensions,etc. That’s it. Ten percent. In short,labor is nowhere near the financialburden it’s portrayed as being. Tothe contrary, unionized workersbring award-winning productivity to the industry. They are assets, notliabilities. Meanwhile, 90% of whatwe consumers pay for cars goes to

bankers, bondholders, investors,executives, suppliers, dealers, anda myriad of others who are part andparcel of every vehicle we drive.The senators could force UAWmembers to work for free, but thatwould not begin to solve the indus-try’s financial problems.

Look upstairsAgain, the current squeeze on all

automakers—domestic and foreign—is the result of the same tight-fisted lenders who’ve already pock-eted trillions of our taxpayer dollars.Since these bankers won’t lend tothe companies or to consumers,cars are either sitting on dealers’lots or not being made. GM’s sales

NEW YEAR WISHES FORA BETTER AMERICATo celebrate the big

changes in Washington in2009, I’ve come up with mynew year’s wishes forsome special people.

For members of Congress,for example, I wish that, fromnow on, all 535 of them willrestrict themselves to theexact same level of annualpay, health care, and pen-sion that the typical citizengets. No more, no less. Ifthey have to live as we do,I’ll bet they’d take a personalinterest in raising every-one’s standard of living!

For the CEOs of Citigroup,Bank of America, JPMorgan Chase, and all theother barons of Wall Streetwhose ponzi schemescrashed our economy, I’vesent hand-lettered pinkslips. With gold-leaf edging,of course. Having madesuch a mess, why shouldthey still be on the job? Withtime on their hands, somemight even have a moralepiphany and volunteerwith Habitat for Humanity tohelp a few of the familieswho were ruined by WallStreet’s machinations.

For George W, “Buckshot”Cheney, and Karl Rove, Ichose leather-bound copiesof Constitutional Law forDummies. This tome mightcome in handy this year asthey wonder why they arebeing hauled before grandjuries and being subpoe-naed by congressional com-mittees. Bush could alsouse his copy as a starterbook for his new, secretly-funded presidential library.

And I’ve sent President-elect Obama a jumbo gluegun filled with super glue.When the corporate lobby-ists and business-as-usualpoliticians descend, Obamacan give himself a shot to stiffen his spine so hecan stand up firmly for thepeople’s interest.

This year is also the start of the Lowdown’ssecond decade. OurFebruary issue will cele-brate our feisty little letter’s10th anniversary.

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January 2009 Hightower Lowdown 3

EDITORS: Jim Hightower, Phillip FrazerRESEARCH: Laura Ehrlich CIRCULATION: John Ernst

COPY WIZ: Gwenda Blair ARTISTE: Matt WuerkerLAYOUT: Sahu Barron INTERWEB EMISSARY: Deanna Zandt

PUBLISHER: Phillip FrazerThe Hightower Lowdown (ISSN 1524-4881) is publishedmonthly by Public Intelligence Inc., 375 South End Ave#14P New York NY 10280. ©2009 in the United States.Periodicals postage paid at New York, NY. Subscriptions: 1 year, $15; 2 years, $27. Add $8/year for Mexico orCanada; add $12/year for overseas airmail. Back issues $2postpaid. Allow 4-6 weeks for receipt of first issue and forall subscription transactions. POSTMASTER: Send addresschanges to: The Hightower Lowdown, P.O. Box 20596,New York, NY 10011.Moving? Missed an issue? Call our subscription folks toll-free at (866) 271-4900 or write lowdown@pipeline.com.Send us fan mail or hate mail at: P.O. Box 20596, New York,NY 10011 or editors@hightowerlowdown.org.Printed with 100% union labor on 100% recycled paper.

LOWDOWNThe

Congress gives Citi all it wantsA DECADE AGO, CITIGROUP led a full-court lobbying press on Washington, ulti-mately winning what big bankers, insurance giants, and high-rolling investmentwizards wanted: government deregulation. By forcing the regulatory cop off theWall Street beat, these geniuses were then able to merge into huge financial con-glomerates and amass fortunes on such inherently risky Ponzi schemes as sub-prime-mortgage derivatives (see Lowdown, November 2008).

Now, just a few years later, the house of cards they built has crashed down on ourentire economy, and Citigroup went down as well. But this avaricious and arrogant con-glomerate was quickly deemed “too big to fail,” by Bush and Congress, so Treasurychief Hank Paulson rushed to its side with plenty of taxpayer balm to revive it. Thebungling bankers got $25 billion from the original Wall Street bailout fund, another $20billion cash injection from the feds and a $249 billion government guarantee to coverlosses on those bad investments it made.

No congressional hearing was held on this $300 billion giveaway to one bank—even though it was being handed twelve times more money than all three ofAmerica’s auto companies sought. Nor did Washington impose any requirement thatCitigroup use our public largesse to make loans to American businesses—like, say,the hard-hit, capital-starved auto industry. On its own initiative, however, Citi hassince made a major investment in the transportation industry. In November, thebank agreed to spend $10 billion to buy a toll road operator…in Spain.

By the way, where were those senators who’re now so loudly demanding that unionautoworkers take wage cuts as a price of federal loans being given to their corpora-tions? Apparently, lawmakers didn’t even ask how much Citigroup’s CEO is beingpaid this year. So, for the record, it’s $216 million. Or breaking it down to terms awage-worker can relate to, $108,000 an hour. Why didn’t the senators whack his pay?

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BAN CLUSTER BOMBSWars tend to be run by

smart people doing stupidthings.

Take the gross stupidityof cluster bombs, whichAmerica’s political andmilitary leaders embraceas an effective weapon of warfare.

A cluster bomb has hun-dreds of small bombletspacked inside it. When thecontainer bomb explodes,it showers the bombletsover a wide area. Someexplode, but a big percent-age fall to the ground andjust lie there, stupidly.

Days, months, or evendecades later—after thebattles are over—alongcomes a child, a farmer, or someone just walkingalong. BLAM! Another stupid bomblet goes off,maiming or killing anotherinnocent. HandicapInternational reports that98 percent of cluster-bombvictims are civilians, and27 percent are children.

Last month, nearly 100nations signed a treaty,agreeing to ban clusterbombs—but the UnitedStates was not one ofthem. Our nation has abouta billion of these murder-ous weapons in ready sup-ply, and our leaders do nothesitate to deploy them.Nearly four decades agoour military left an esti-mated 80 million of theseunexploded bomblets inLaos. Since then, some15,000 Laotians have beenkilled by them, and manymore horribly wounded.

When White Housespokeswoman DanaPerino was asked why the Bush administrationopposes the ban on clusterbombs, she said, “I haveforgotten.” No doubt sheforgot because no ration-alization makes a lick ofsense. But if anyone needsa reminder of why ourgreat country should takethe lead on banning thisstupid weapon, contactThe Cluster MunitionCoalition: www.stopclustermunitions.org

Then the optics got worse.Having arrived, the bumbling hon-chos proceeded to act as thoughshowing up was all they had to doto get bailout funds. They wereunprepared to tell Congress howthey came up with the $25-billionnumber they were requesting. Theyhad no plan, no explanation of howthey’d spend the money. Congressgot its back up, giving a gaggle oftongue-clucking, sanctimoniousRepublican senators the politicalopening they needed to deny anyfunds for automakers.

The double standardWhat the auto execs didn’t grasp

is they are not Wall Street bankers,our country’s ruling financial royalty.They are from Detroit and run aworking-class industry. As theDetroiters soon learned, royalty istreated differently, even deferen-tially, by Washington. After all, had-n’t the purple-robed princes ofCitigroup, AIG, JPMorgan Chase,Bank of America, and other baileesfrom The Street also flitted in andout of Washington aboard their jet-powered corporate carriages? Yes,they had—but not a peep of protestwas uttered by those holding thepublic purse strings.

Also, while Congress squawkedabout the blue-collar crowd’s rela-tively paltry request, it had totallycaved in to the banking elite, whodid not request money butdemanded it. Lawmakers meeklyrushed out $700 billion for them, ataxpayer gimmie nearly 30 timeslarger than the one Detroit was seek-ing. What plan did the bankers pres-ent? What explanation did they giveof how they’d spend our money?

None. They simply dispatchedtheir designated consigliere,Treasury Secretary Hank Paulson(formerly the reigning prince ofGoldman Sachs), to hand Congressa three-page ultimatum. It con-tained not a single specific orpromise of results. It was, ineffect, a hold-up note.

But that $700 billion was just for openers. It has not been widelyreported, but the total Wall Streetbailout—counting governmentloans, stock purchases, debt guar-antees, and backdoor handouts by the Treasury and the FederalReserve—is nearly $8 trillion. That’s eight followed by 12 zeroes!

What have we gotten for thisgargantuan giveaway? Zip. Therationale for indiscriminately pour-ing public funds into big banks,investment houses, insurancegiants, hedge funds, and the like was that our money would“unclog” the financial markets,allowing credit to flow again tobusinesses and consumers—as though America is having aplumbing problem and our nationaltreasury is a bottomless vat ofLiquid Plumr.

But, guess what? It didn’t work.Credit is still not flowing. As a result,an economic crisis has swiftlyspread across the country, includinga rash of business bankruptcies,construction shutdowns, massivejob losses—and, yes, a credit crunchthat is crushing auto sales, autodealers and suppliers, auto makers,auto workers…and Detroit.

The reason that the Wall Streetbailout has not worked is quite ele-mentary: Congress and the WhiteHouse attached no requirementwhatsoever that the recipients ofour money use it to make loans! It seems that Washington didn’tfeel that it should “interfere” in thedecisions of the financial deities.

Country rubes attending theirfirst carnival sideshow are not this gullible.

With no conditions put on thephenomenal taxpayer windfall theyreceived, the wizards of Wall Streethave chosen to spend it selfishly,rather than for any public purpose.They’ve already used billions to buyout some of their competitors, aperverted use of bailout funds thatwill reduce our banking choicesand raise the bank fees we’re

charged. Other billions have goneto the banks’ big investors, toexecutive pay, to pad the bottomline, or simply into bank vaults tobe hoarded—while Americaremains starved for capital.

Even more amazing, the verysame Congress that harrumphedabout trusting Detroit automakerswith taxpayer money was not eventold where most of the $8 trillionWall Street bailout went. Whichbanks got government backing, andhow much did each get? That’s asecret, Congress was told by theBushites. What are they doing withthe money? We can’t tell you, saythose who doled out the cash.

Moving from amazing to reck-less audacity, Secretary Paulsonhas even taken the law into hisown hands. Last September, heunilaterally, secretly, and illegallynullified a federal law because itwas in the way of his unauthorizedplan to help big banks take oversmaller ones. Hank’s autocraticdecree allows banks to use off-shore tax dodges that Congressbanned 23 years ago. This execu-tive maneuver provides an under-the-table tax subsidy for predatorybanks wanting public financing toabsorb their rivals—a subsidy thatwill cost our national treasuryupwards of $140 billion even as itreduces bank competition.

This is a flagrant usurpation ofCongress’s constitutional power anda kleptocratic transfer of public wealthby executive fiat. Yet it was met withbarely a meow from lawmakers.

Roar of the kittiesOh, but what tigers some of

the congressional kittens becamewhen Detroit showed up!

Right-wing senators from theSouth and West were suddenlybaring claws and hissing furiouslythat to get aid these supplicantshad to restructure their businessesin accordance with governmentdictates. These congressional one-time free-market holy rollers madea demand that was specific andblunt: Whack your unions.

Sen. Bob Corker, a multimillion-aire real-estate baron fromTennessee, led the charge,demanding that all three automak-ers close plants, cut jobs, and slashpay of union workers. “Before weeven contemplate making a loan tothese companies,” popped Corker,“we need to put in place specificand rigorous measures.”

Sen. Jim DeMint of SouthCarolina piled on, asserting authorita-tively that Detroit manufacturers “arestruggling because of a bad business

2 Hightower Lowdown January 2009

DoSomething!At least since the days of Ronald Reagan, corporate interests have aggressively spread

the myth that the American people hate unions. Not so. In fact, 68% of the public today saythat unions are necessary to protect working families, and nearly 60 million unorganizedAmerican workers say they would form a union tomorrow if they could.

There’s the rub. Presidents, lawmakers, regulators, and judges have succumbed to cor-porate pressure over the years to rewrite American labor law so that it now effectivelyprevents the formation of unions in the workplace. Corporate executives are routinely ableto harass, intimidate, stall, coerce, and fire employees who try to organize.

To stop these tactics and to give Americans a fair chance to join together and bargain withcorporate bosses, the AFL-CIO has launched the Employee Free Choice Campaign.

For information and action items, go to www.aflcio.org/joinaunion.

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