Tuesday, December 31, 2013

What we could learn from Henry Ford -- Dec. 31, 2013 column


As Congress begins the struggle over raising the federal minimum wage, we can gain some historical perspective from an event 100 years ago this week.

On Jan. 5, 1914, Henry Ford did something extraordinary, even for him.

The man who developed the Model T and the moving assembly line called a news conference in Detroit and stunned the world by announcing that workers in his factory would make $5 per day, more than doubling the average worker’s wages.

“Even the boy who sweeps up the floors will get that much,” the New York Times reporter marveled.
Every schoolchild knows that when Ford hiked wages, his employees were able to buy the cars they built, which had the salubrious business effect of increasing company sales.

The government didn’t order Ford to raise his wages, of course, but proponents of raising the federal minimum wage say doing so is a matter of fairness. Someone working full time should not live in poverty. A full-time minimum wage worker makes $15,000 a year. If she has a child, her income falls below the poverty level of $15,510 for a family of two in 2013.

Besides, and here’s where Ford’s example comes in handy, increasing the buying power of low-wage workers helps boost the economy. When people on the margin get more money, they spend it.

Thirteen states and several cities are wishing workers a Happy New Year by raising minimum wage rates in 2014. In all, 21 states will have higher hourly rates than the federal $7.25 an hour. Eleven other states and the District of Columbia are expected to follow in the coming year.

Democrats on Capitol Hill want to raise the rate to $10.10 in three steps over two years and index future increases to inflation. President Barack Obama supports the move.  

Even though polls show most Americans favor raising the wage floor, it’s a no-go in the House, where Republicans say doing so is a job-killer because employers won’t hire as many young, inexperienced workers if individual wages are higher. Economists disagree about this, but most say adverse effects of raising the wage rate are small.

In Ford’s case, there was another, more practical reason for raising workers’ pay. His primary objective was to reduce attrition, according to a corporate history. Worker turnover on the monotonous assembly lines was high. At the same time he raised pay, he cut the workday from nine hours to eight and said he’d share profit with men workers (but not boys or women unless they were supporting families. It was 1914, remember.)

Ford had innovative ways of treating employees. No one would be fired unless for “unfaithfulness or irremediable inefficiency.” If layoffs were necessary due to decreased demand, he would try to time them with the harvest season so that men wouldn’t “lie idle and dissipate their savings."

Ford’s treasurer,  James Couzens, said, “It is our belief that social justice begins at home...believing as we do, that a division of our earnings between capital and labor is unequal, we have sought a plan of relief suitable for our business.”

Newspapers hailed Ford’s generosity and humanity. Critics wondered if he was a socialist. The Wall Street Journal complained that he had brought “biblical or spiritual principles into a field where they do not belong.”

But Ford’s ploy worked as he intended. Thousands of job-seekers flocked to the Ford Motor Company employment office from the American South as well as Europe.  Turnover in the factory declined, and with an eight-hour day, Ford could run three shifts instead of two, increasing productivity. Ford Motor Company’s profits doubled from 1914 to 1916.

Today, the public is focusing on the plight of low-wage earners. Fast-food workers in at least a hundred cities have staged walkouts to call for pay of $15 an hour, and the right to form unions.

The coming struggle over raising the federal minimum wage may be mostly political theatrics in an election year, but it raises questions about work and its rewards.  It can’t be healthy to see every policy question as a game with winners and losers: If workers win, employers have to lose. Why?

As Ford showed 100 years ago, sometimes doing the right thing can make everyone a winner. The $5-a-day wage helped create the American middle class.

© 2013 Marsha Mercer. All rights reserved.

Tuesday, December 24, 2013

All you need to know about Washington in 2014: It's an election year -- Dec. 24, 2013 column


Trying to put unlucky 2013 behind him, President Barack Obama was upbeat about the New Year.
“I firmly believe that 2014 can be a breakthrough year for America,” he said Dec. 20 at a White House news conference before heading to Hawaii for vacation.

“It’s probably too early to declare an outbreak of bipartisanship,” the president conceded, “But it’s also fair to say we’re not condemned to endless gridlock.”

OK, it’s the holiday season, so let’s be charitable. It’s possible that 2014 will be more productive than 2013 in the nation’s capital. But don’t bet your new MacBook Air on Democrats and Republicans suddenly discovering they have a lot in common.

Everything you need to know about 2014 in Washington can be summarized in two words: midterm elections.

Obama and members of Congress are battling for their survival. Everything they say – and they will say far more than they will do -- will be focused on winning middle-class votes. The technical term is pandering, and both parties are masters of the craft.

The stakes are large. If Obama’s approval rating doesn’t rebound from the miserable 42 percent he hit in the latest CBS News poll, he’ll be an albatross for Democratic candidates running for the House and Senate next November.  And if Republicans don’t stop playing fiscal brinksmanship games without offering alternatives, they risk writing their own political obituaries.

Some things won’t change when the ball drops at Times Square. Health care and the economy will dominate politics. Republicans will keep describing Obamacare as a train wreck and the economy as an abject failure. Democrats hope voters won’t listen once people start getting insurance coverage and the economy continues to grow.  Yes, those are big ifs.

Republicans in the Senate and House are convinced that public disapproval of the Affordable Care Act will translate into GOP votes. That means more hostile hearings presided over by House Republicans and more horror tales from Senate Republicans, although we may be spared another attempt to defund the law, given the political hits the GOP took from forcing a government shutdown last fall in a futile attempt to stop the law.

The bipartisan budget agreement this month showed that compromise is possible on Capitol Hill. An early test of whether bipartisanship will last will come over the debt ceiling. The Treasury Department says the amount the government can borrow must be increased by early March so we can continue paying our bills.

Conservative Republicans will demand budget concessions; Obama has reiterated his refusal to negotiate. Such a standoff also led to the shutdown.  

But 2014 has the added intrigue of Senate Minority Leader Mitch McConnell’s tough re-election fight in Kentucky. With only a 31 percent approval rating in his state, McConnell is the least popular senator in the land. In Kentucky, though, 31 percent was also Obama’s approval rating, which doesn’t help Democrats. 

If McConnell beats tea party challenger Matt Bevin in the Republican primary, he still has a formidable general election competitor in Democrat Alison Lundergan Grimes, Kentucky secretary of state.

For their part, Democrats on Capitol Hill will focus on working families and income inequality. A priority is raising the minimum wage. Sen. Tom Harkin, an Iowa Democrat who’s retiring, has proposed an increase from $7.25 to $10.10 an hour, which Obama supports.

Republicans counter that a higher minimum wage will mean that employers hire fewer workers. Both sides see the minimum wage as a potent campaign issue.

Senate Majority Leader Harry Reid says the first order of business in January will be extending long-term unemployment benefits, which Congress allowed to expire this month.  House Speaker John Boehner may go along with the extension, if spending cuts are part of the package.

Progressive Democrats, including Harkin and Elizabeth Warren of Massachusetts, are defying conventional wisdom that curbing entitlements must be part of any long-term fiscal plan.  They say Social Security benefits need to be raised, not cut.

Critics say it’s irresponsible to suggest raising benefits, which would require higher payroll taxes, and nobody, but nobody, expects anything to happen. But it does make a dandy campaign promise.

So much pandering ahead in 2014, and we haven’t even touched on 2016. Happy New Year!   

© 2013 Marsha Mercer. All rights reserved.

Thursday, December 19, 2013

Stupid spending? You decide. -- Dec. 19, 2013 column


Senator Tom Coburn is making a splash with “Wastebook 2013,” his detailed list of nearly $30 billion in wasteful federal spending projects.

The Oklahoma Republican has become a hero in some quarters for his annual report, revealing the wacky ways the government spends taxpayers’ money. 

Among the 100 projects he ridicules this year:  $325,525 for a National Institutes of Health study on angry wives, $914,000 to promote romance novels, $17.5 million in tax breaks for brothels in Nevada, and $3 million for NASA research into, in Coburn’s words, “the search for intelligent life . . . in Congress.”

Good ones. The report, released Tuesday, always makes for entertaining, if annoying, reading, although few in Congress pay it much attention. That’s because most of the bone-headed spending decisions are more complicated than they first appear -- and because career politicians know it’s better to give and to receive. 
Grateful constituents remember their elected friends, come election time.

Besides, one man’s trash is another’s, well, Christmas tree.

Coburn comes across as a Grinch who’s particularly vexed that the government helps Christmas tree farmers. He scoffs at the Agriculture Department’s Specialty Crop Block Grants that go to the Virginia Christmas Tree Growers Association and five other Christmas tree groups, as well as to the California Dried Plum Board, Vermont Maple Sugar Makers Association, Michigan Maple Syrup Association, and dozens of wine promotions, among others.   

In Coburn’s home state, the Oklahoma Pecan Growers used grant money to attend international trade shows, which they said helped expand their market overseas, benefitting the state’s economy.
Altogether, specialty crop grants totaled $50 million, which tells me the government is spreading a fairly small amount to reach a lot of farmers.   

Coburn called out the Agriculture Department’s Value-Added Producers grant program that gave Glenmary Gardens in Bristol, Va., $213,000 to expand processing and marketing of locally grown fruits and vegetables for jellies, ice creams and flavored syrups.  He also disapproves of free wine and cheese on Amtrak’s Auto Train.

I had no idea my tax money was promoting American prunes in Japan or a “USA Pear Road Show” in China, but that strikes me as more wholesome and sensible than other government endeavors.

Coburn, a medical doctor, concedes that some of the projects are OK. He questions whether they’re the right spending when we’re $17 trillion in debt.  

Much of the big-dollar waste, no surprise, is at the Defense Department, which is trashing $7 billion in military equipment in Afghanistan rather than selling it or sending it home. The rationale is that it costs more to transport it than to leave it. 

Coburn is retiring next year, and one wonders who in Congress, if anyone, will chronicle waste, although Coburn followed Sen. William Proxmire, Democrat of Wisconsin, whose monthly Golden Fleece awards hitting government waste made headlines from 1975 to 1987. Proxmire died in 2005.

Some tea partiers contend Coburn’s 177-page report is itself an example of wasteful spending.  How much staff time and money does it cost to produce a report with 930 footnotes?  Couldn’t he have done it with fewer pages and less flashy graphics?

They’re good questions, but don’t hold your breath for answers.  And that’s another problem with singling out projects as “stupid” and “egregious,” words Coburn throws around liberally. Everyone has a different idea of what’s wasteful.

It’s incomprehensible to me that the State Department spent $630,000 of our hard-earned money to buy “friends” and followers for its Facebook and Twitter pages.  Or that a million-dollar bus stop with wi-fi, heated benches and sidewalks in Arlington, Va., has a roof that barely protects against rain and sun.

The reality is that most of the wasteful projects in this year’s report could appear in the next one because of the inertia of federal agencies, the near total absence of congressional oversight and political support for spending.

“The reason it’s hard work to cut spending is because somebody’s ox gets gored,” Coburn says. “Somebody doesn’t get money. Most members of Congress are more interested in getting themselves re-elected than they are in fixing what’s wrong with the country.”

Economist Milton Friedman took a philosophical approach. “I say thank God for government waste,” he said in a 1975 interview. “If government is doing bad things, it’s only the waste that prevents the harm from being greater.”

© 2013 Marsha Mercer. All rights reserved.


Thursday, December 12, 2013

Defrosting Capitol Hill? -- Dec. 12, 2013 column

Asked how to start writing a novel, Ernest Hemingway supposedly replied, “First you defrost the refrigerator.”
Ah, procrastination. Everyone puts off getting to work – and Congress is the classic repeat offender. But Sen. Patty Murray of Washington and Rep. Paul D. Ryan of Wisconsin deserve kudos for defrosting the Capitol fridge – at least for a while. We can all hope the thaw lasts so Congress can do its job.
Murray, a liberal Democrat who heads the Senate budget committee, and Ryan, a conservative Republican who’s chairman of the House budget panel, did what many thought impossible. They delivered a compromise budget agreement that keeps the government open -- no shutdown! -- for two years. During a couple of months of negotiations, they reportedly bonded over football and fishing and agreed, for the greater good of the country, on a deal neither likes much.
“I see this agreement as a step in the right direction,” Ryan said Tuesday, announcing the agreement. “In a divided government, you don’t always get what you want.”
“For far too long here in Washington, D.C., compromise has been considered a dirty word, especially when it comes to the budget,” Murray said. “We have broken through the partisanship and the gridlock.”
Breaking through partisanship and gridlock, even temporarily and for a modest deal, is no small matter. Since 2011, Congress has staggered from budget crisis to budget crisis, raising the blood pressure of the business leaders and infuriating ordinary citizens. The last crisis ended in a 16-day government shutdown in October and low approval ratings for Congress.
The bipartisan deal is far from perfect. It’s not a Grand Bargain that tames the country’s appetite for entitlement programs. It’s an OK deal that has more thorns than blossoms.
Ryan insists the deal doesn’t raise taxes, but Republicans balk at its higher airport and other fees. Democrats resent the lack of an extension of unemployment benefits for more than a million long-term jobless workers. The deal also trims pensions of younger military retirees and requires new federal workers to contribute more to their pensions.
President Barack Obama approves, saying, “This agreement doesn’t include everything I’d like – and I know many Republicans feel the same way. That’s the nature of compromise.”
My favorite comment on the deal came from Eugene Steuerle, budget expert at the Urban Institute, who told the Washington Post: "With this little package, we're not going to climb out of the hole we've dug. All we're doing is agreeing to stop throwing shovels at each other."
Members of Congress get to go home for Christmas, unlike last year. But the masters of putting off until tomorrow what they should have done yesterday have much work ahead. Their to-do list is long, starting with the farm bill, immigration reform, raising the minimum wage and tax reform.     
On C-SPAN the other morning, a viewer named Johnny from Woodbridge, Va., called Democratic Rep. John Garamendi of California on the carpet for Congress’ slack work habits. Johnny said members of Congress don’t even work 10 hours a month.
“We actually work at least 10 hours a month,” Garamendi said, although he conceded, “The amount of work is very, very slim.”
When another viewer suggested Congress should work harder earlier in the session, Garamendi said, “Congress doesn’t act much differently than most of us did in high school and college.” He sounded flip but Congress loves to bunch its work at the end.
“It’s human nature. Sort of like college students cramming for exams,” says Martin P. Paone, who retired in 2008 after 30 years on the Senate Democratic cloakroom staff.
Senate Historian Donald Ritchie notes that in the very first Congress, Sen. William Maclay of Pennsylvania complained in his diary that he was overwhelmed by bills in the last days of that Congress. Maclay said he didn't have enough time to read everything that was coming through, Ritchie said. Some things never change.
But with the 2014 congressional elections, the House is scheduled to be in session only 113 days next year, nearly two weeks less than this year. More work is likely to pile up or be postponed. Murray and Ryan may have defrosted the refrigerator, but there’s a loaded freezer waiting in the congressional garage.
© 2013 Marsha Mercer. All rights reserved.

Wednesday, December 4, 2013

Moving on, a president hits the campaign trail -- again -- Dec. 5, 2013 column


As I listened the other day to a politician talk about ways to strengthen the economy, a thought flitted across my mind: “This guy has ideas. Maybe he should run for president.”

Ha! OK, I knew the speaker was President Barack Obama. But after nearly five years in the Oval Office, he still manages to sound like an outsider who could do great things if only he had the chance.

And that’s why -- with a job approval rating of only about 40 percent, his signature legislative achievement still under fire and his agenda in jeopardy -- the president hit the campaign trail. He launched a three-week push ostensibly to persuade people to sign up for health care online but also to remind voters why they re-elected him just a year ago. 

Naturally, like many another political outsider, Obama has discovered that middle class frustrations “are at an all-time high.”

The botched rollout of the online health insurance exchanges didn’t instill confidence in him or the federal government, he concedes, but he insists that the law will stand and eventually will work just fine. Even so, that alone won’t cure the middle class malaise that started decades ago, he says. Malaise, by the way, is my word, not his.
“Their frustration is rooted in their own daily battles – to make ends meet, to pay for college, buy a home, save for retirement. It’s rooted in the nagging sense that no matter how hard they work, the deck is stacked against them. And it’s rooted in the fear that their kids won’t be better off than they were,” he said.
Candidates of both parties cozy up to the middle class, of course, but the question is how. Republicans want government to stand aside. Obama and Democrats believe government has a role in ensuring equal opportunity.
“A dangerous and growing inequality and lack of upward mobility…has jeopardized middle-class America’s basic bargain -- that if you work hard, you have a chance to get ahead,” Obama said Wednesday at an event sponsored by the Center for American Progress, a left-leaning think tank that has provided several Obama administration insiders.
He revived a host of ideas: increase the federal minimum wage, now $7.25 an hour; strengthen collective bargaining; end the wage disparity between men and women; tighten the tax code and use the additional revenue to rebuild roads and bridges, extend preschool to every child, and repeal the across-the-board spending cuts called the sequester. 
“I believe this is the defining challenge of our time: Making sure our economy works for every working American…And I know I’ve raised this issue before, and some will ask why I raise the issue again right now,” he said.
His critics say it’s no mystery, that he’s trying to change the subject from the health care mess and trying to give Democrats ground to stand on in next year’s midterm congressional elections. So what? 

Obama and everyone around him have apologized, and the marketplace system finally is running more smoothly. The elections in 11 months could make or break his last two years as president. He acknowledged he’s putting out his ideas as a marker.

“I realize we are not going to resolve all of our political debates over the best ways to reduce inequality and increase upward mobility this year, or next year, or in the next five years,” he says.

What’s important is “that we have a serious debate about these issues. For the longer that current trends are allowed to continue, the more it will feed the cynicism and fear that many Americans are feeling right now.”

Obama says he’s willing to work with Republicans. “If Republicans have concrete plans that will actually reduce inequality, build the middle class, provide more ladders of opportunity to the poor, let’s hear them…” And so on. “You owe it to the American people to tell us what you are for, not just what you’re against.”

But can the battle-scarred Democratic president find common ground with battle-scarred Republican lawmakers?

House Speaker John A. Boehner, R-Ohio, complains that the House has passed nearly 150 bills that he claims would help the economy, but all have died in the Senate, which is controlled by Democrats. They include multiple attempts at repealing the health law.

“When will they start listening to the American people?” Boehner asks.

It’s hard to listen when both sides have turned a deaf ear to the other.

 © 2013 Marsha Mercer. All rights reserved.