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Archive for the ‘trade’ Category

Fast-Track-NRD-600

 

From Arthur Stamolis of Citizen’s Trade Campaign

Hi everyone:

Congratulations on yesterday’s impressive victory! In case you missed it, the House voted to block Fast Track from moving forward — a huge win for Main Street over Wall Street, and a testament to your years of strategic organizing. Thank you!

Unfortunately, the offshorers, the polluters, the lobbyists and the profiteers haven’t given up quite yet, so we’ve got more work to do — and we need to get to back to work fast.

Here’s how Friday’s win went down: the House separated the Fast Track bill passed by the Senate into two parts. First was a vote on an inadequately-funded and exclusionary Trade Adjustment Assistance (TAA) program for displaced workers. Then was a vote on the Fast Track process itself. Both parts needed to pass for the bill to pass. You can see how Reps voted on TAA  here and how they voted on the Fast Track process here. Bottom line: when TAA was voted down, the entire Fast Track bill was sunk.

After the vote, Speaker Boehner called for a re-vote on TAA. That vote is supposed to happen within two legislative days, so it’ll either be on Monday or Tuesday (although the Speaker may be able to find ways to extend that if he wants). Voting on Monday starts at noon Eastern, so that’s the earliest the re-vote could occur.

It’s critical that we are profusely THANKING those who voted against TAA and Fast Track and urging them to do so again. We also need to keep respectfully trying with those who voted for TAA, but against Fast Track — urging them to vote against TAA next week. (No-holds-barred with those politicians who voted for both.)

Unfortunately, there is still some confusion about the proposed TAA program even among our allies, and you’d better believe the White House, Republican leadership and others are working overtime this weekend to increase that confusion.

Here’s what you need to know about TAA. Normally, we’re all for it. It’s an important lifeline that provides job retraining benefits to people whose careers are shipped abroad as a result of bad U.S. trade policy. But nobody in their right mind would ever argue that a job retraining program is a smart trade-off for rubber-stamping massive trade agreements like the Trans-Pacific Partnership (TPP) that will offshore jobs, drive down wages and more. That’s what a vote for TAA next week is. It’s a vote for Fast Tracking the TPP. The current TAA proposal is a cynical ploy that needs to be stopped.

As if that weren’t bad enough, the TAA program being offered isn’t even a strong one. It excludes public sector workers whose jobs are offshored and it is significantly under-funded. The $700 million in Medicare cuts made to pay for it may be partially addressed, assuming the Senate goes along, but even if that is fixed, another $250 million in cuts to a Medicare kidney dialysis program and a whole lot of political liability are still in there.

The good news is that Republican leadership and the White House face a heavy lift to win on TAA next week, as we destroyed the measure in a 126 – 302 vote on Friday. That said, the President wants this BAD. Speaker Boehner wants this BAD. We need to keep pushing so that we win that vote, and that we win whatever sorry plan Team TPP comes up with next to try to squeeze Fast Track through this month.

They know the clock is ticking on the TPP, and they’re going to keep trying — at least for a while. We are winning. Here’s what we need to keep it going:

* If you represent an organization, please make sure to call any Reps who voted against Fast Track and the TAA this weekend and early on Monday to thank them and urge them to do so again.

* If you haven’t yet, please send a personal email now thanking or spanking your representative for their votes on Friday.

* Take a moment to look up your your Reps Twitter and Facebook accounts, and spend a couple moments on social media today urging them to vote against Fast Track and the cynical TAA ploy next week.

Be ready for any rapid-response action requests that come early next week. Again, we could see new voting as soon as Monday.

Together, we’re going to keeping riding this wave of success. Thank you again for everything you’ve done to get us this far.

In solidarity,

Arthur Stamoulis, Executive Director
CITIZENS TRADE CAMPAIGN

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Four Graphs that Will Make You Boiling Mad About the Trans Pacific Partnership–Or Why President Obama, along with executives from Nike, Microsoft, Apple and other US corporations Steadfastly Support China’s Currency Manipulations

income inequality

Originally published May 19, 2015 by John Hively

When China manipulates its currency vis-a-vis the US dollar it increases the profits of US job exporters that produce stuff in China and exports that cheap stuff to the USA.

That’s most likely why President Obama said he will veto any congressional legislation that seeks to stop the Chinese government from manipulating its currency.

Why do President Obama and executives of US based multinational corporations, like Nike, want the Chinese government to manipulate its currency? And what does this have to do with the Trans Pacific Partnership and Fast Track Authority?

The answer to one of these questions is simple: the TPP will force China to manipulate its currency even more than is currently the case.

Take a look at the graph below. On the left side is the Yuan, which is the Chinese currency. On the bottom line is the dollar. Now look at the two intersecting lines, which is the supply and demand for dollars. In this example, 600 yuan can purchase $100 in the currency markets, which is roughly what the two currencies currently exchange for.

So when Nike, Microsoft or Apple Inc. manufacture a product in China that costs the consumers, say, 600 yuan in China, given the exchange rate, the same product will cost $100 in the United States, after, of course, it is exported from China to the USA. Assume these US corporations have a 25% profit margin. That means these companies get 150 Y profits in China per product, and $25 profit when they export their products to the United States.

The same is true for companies that manufacture products in the USA, and then export them to China. American manufacturing companies earn $25 per $100 of product sold in the USA, and 150 Y when their products are exported from the USA to China.

The government of China has been accused of manipulating the value of its currency. So what happens when it does this? It purchases dollars. This shifts the D1 line to the left, because there are less dollars on the market, which is shown in the graph below as line D2. This makes the Yuan less expensive in terms of dollars.

Why would President Obama encourage the Chinese government to manipulate its currency by threatening to veto US legislation aimed at stopping it? Why would Wall Street Senator Ron Wyden only pay lip service to the evil of Chinese currency manipulation, while apparently supporting it? Why are the higher up folks at Nike, Microsoft, Apple and every US corporation that is producing goods in China for export to the United States against any legislation that seeks to address Chinese currency manipulation? There is a very good reason they’re all for this.

Look at the example in the next graph below. When the Chinese government manipulates it’s currency by purchasing dollars, 800 Y will now purchase $75. Do the math; 600 Y will purchase now $56. What does that mean?

It means that when Nike manufactures a pair of shoes in China which costs 600 Y there, in the US it should cost $56 rather than $100, thanks to China’s currency manipulation, but that rarely happens. The US corporate propaganda machine will lie to you and tell you it makes Chinese imports less expensive. However, the truth is that China’s  manipulation increases the profits of Nike.

Nike still gets 25%, or 150 Y, in profits when its shoes are sold in China. When it exports the same shoes to the USA from China, Nike still gets 25% profit on $56, which is $14 dollars. However, Nike still sells it’s shoes for $100 in the United States, which means another $44 in earnings per pair, in addition to the $14.

That means Nike’s profit margin on a $100 pair of shoes goes from 25% at the old exchange rate to 58% at the new exchange rate. This sends its earnings and stock prices higher. The same thing occurs with Microsoft, Dell, Hewlett-Packard, Apple, and every US corporation manufacturing in China, that are exporting their products to the United States.

So who pays the price for this?

You do; if you work for a living in the United States, or if you’re a  small or medium size business owner. Here’s how. Suppose you are a US manufacturer producing shoes in Oregon that sell in the USA for $100. You ship them to China at 600 Y for $100, and earn 150 Y, or $25, in profits. Now suppose the Chinese government, with the encouragement of your corrupt government and many US business leaders, manipulates its currency by purchasing tens of billions upon tens of billions of dollars. The supply of dollars on the international currency markets shrinks, making dollars more expensive, and as noted above, the D1 line shifts to D2, which represents the new supply of money. BTW, the space between D1 and D2 represents the amount of dollars the Chinese purchased.

Those $100 US made shoes now costs 1000 Y in China. Okay, my graph isn’t too high tech, but the actual figure is 1066 Y, if you do the math, but let’s stick with the 1000 Y, for simplicity sake. There’s still a 25% profit margin per pair of shoes, but at the 1000 Y price, there’s not a whole lot of buyers in China. The US manufacturer could lower the price of the shoes to 750 Y, but he or she isn’t making a penny at that price, and they’re still overpriced for the Chinese market. Say goodbye to the Chinese market for all US products at the new exchange rate.

US exports to China are going to shrink quite rapidly under this scenario. This means fewer American jobs, and less wages for everyone. It means less tax dollars going to schools and other government services, it means no retirement pay for a larger percentage of the 99 percent. Rich folks don’t need the money they’re going to steal from us, except to keep the latest stock market bubble surging, at least until it pops. However, greater profits mean the bubble can keep expanding for a while longer.

So how can US corporate leaders and their corrupt politicians encourage the Chinese government to manipulate its currency even more than it already has?

The scams that have been created to do this are called the Trans Pacific Partnership and Fast Track Authority. So what do these two things have to do with Chinese currency manipulation? More importantly, why would the Chinese

government want to engage in currency manipulation?

The answer in one word; Vietnam.

Vietnam is one of the nation’s involved in negotiating the Trans Pacific Partnership. As you can see from the graph below, China’s annual minimum wage is nearly twice that of Vietnam. The wages in China at those Nike and Microsoft and Apple and Hewlett-Packard factories and their suppliers and contractors and subcontractors have been going up rapidly over the past fifteen years. Those labor costs have been able to go up because the Chinese government has increased the profit margins of its US manufacturers by manipulating its currency. But there’s another reason why China needs to manipulate its currency vis-a-vis the dollar.

As you can see from the map below, there are nearly 313,000 Nike workers toiling in Vietnam, and nearly 250,00 in China. Vietnam clearly has lower labor costs than those in China. The Chinese government, however, can offset its labor cost disadvantage by manipulating its currency. So it can keep those jobs in China, and still allow the wages of Chinese workers to expand. But that might not be the case should the Trans Pacific Partnership (TPP) become a reality.

Tariff is another word for tax. When a US company like Nike manufactures its products in Vietnam, and then exports them to the US, a tariff is charged against the products of between 10 and 15 percent. So another $10 to $15 dollars is added to the cost of a $100 pair of Nike’s Vietnamese made shoes exported to the USA. That means less profits, lower dividends, and lower share prices than would otherwise be the case without tariffs. The US tariffs on US corporate goods manufactured in Vietnamese factories helps to offset some of the Vietnamese labor cost advantages vis-a-vis the cost of Chinese labor.

Under the TPP, should it become law, those tariffs will likely be gone, giving Vietnam a much larger labor cost advantage over Chinese workers.

In which case, the Chinese government will have two options; let millions of Nike and Dell and Apple and Microsoft jobs head south to Vietnam, along with the jobs of contractors and subcontractors, or manipulate its currency even more, which means all of those US corporations manufacturing stuff in China for export to the US will see unprecedented and explosive growth of their profits; and all of this will occur at the expense of small and medium sized US companies that make stuff in the United States and export them to China.

That means several unpleasant things will occur to the US economy: US unemployment will grow with the TPP, as exports to China diminish, inequality in wealth and income will continue to increase during the reign of Obama and Wyden, the stock market bubble will continue to expand, the coming stock market crash will be even worse than imaginable, US businesses will need to export more US jobs to China, and all of these bad things will trickle down to more crowded classrooms, less government services, reduced wages, fewer jobs, more poverty, and much more negative stuff for the 99 percent. However, the super rich will become even more super rich. And Chinese currency manipulation will not be the only thing in the TPP contributing to all of these things. See https://johnhively.wordpress.com/2015/04/21/how-the-trans-pacific-partnership-will-destroy-american-jobs-by-destroying-us-exports/

The political game in the US over the TPP and Fast Track Authority currently being played out is a complete farce.

Start with Fast Track Authority, which President Obama, Nike, Microsoft, Ron Wyden, Orrin Hatch, Mitch McConnell and just about every major US corporate CEO and investor desperately want Obama to have. Fast track will limit congressional debate on trade deals, it will scuttle any possible congressional amendments, and eliminate the use of the filibuster in the senate to stop the TPP. Fast track needs to pass through both houses of congress.

As a condition for bringing Fast Track Authority to a debate on the floor of the US senate, on May 13, a number of Democrats who traditionally vote to redistribute income from the 99 to the 1 percent (Ron Wyden, Harry Reid, Patty Murray, Heidi Heitkamp, Bill Nelson, Tim Kaine, Claire McCaskell, and Ben Cardin) agreed to first bring a vote for a bill by which the US will crackdown somehow on China for manipulating currency.

These folks know such a bill may not pass the senate, much less the house of representatives. If it did pass, then it will sit on Obama’s desk until Fast Track Authority passes both chambers of congress. Then he will veto the currency manipulation bill. There’s a ton of income to be redistributed from the 99 to the 1 percent resting on his shoulders.

Then the above senators will pretend to the folks back home that they did all that they could, when in fact, they did nothing when they could have done something to protect the folks back home from the TPP.

Every US senator and every US house representative knows this is the game, and many are willing to play this deadly game so as to justify their support for giving President Obama Fast Track Authority, even though the TPP will likely rip out the guts of the middle class, as well as the US economy.

If the above named Democrats were at all serious about Chinese currency manipulation, then they would agree to wait until Wall Street President Barack Obama signed the bill into law before opening debate on fast track authority.  That won’t happen.

Fast Track Authority is the only way the president can ram the TPP through congress. It’s an income and political power redistribution agreement falsely marketed as a trade agreement. Most of those in the know say the TPP is dead if the president doesn’t receive fast track authority. So fast track is the key.

Save the United States. Fight against this madness called Fast Track Authority. The TPP will only create greater trade deficits in the future than is currently the case. As US Congressman Alan Grayson famously and recently said, “You will find that the largest fourteen trade deficits in the history of the world have been the US trade deficits in each of the last fourteen years….What sane person can look at these trade deficits and conclude we need more free trade?”

The political fight over the Trans Pacific Partnership, Fast Track Authority, and Chinese currency manipulation isn’t about sanity; it’s about greed and government corruption. It’s about raising the already soaring share prices, dividends and earnings of US corporations that have exported millions of US jobs to China and other third world nations, and doing so at the expense of everybody else. It’s about redistributing your standard of living to a small minority of overly rich people who have corrupted and rigged your government in favor of themselves. It’s about redistributing your income and wealth to the 1 percent so as to keep the current stock market bubble expanding. It’s about redistributing the American dream to the 1 percent. It’s about taking the opportunities that once existed for the majority of American citizens and wiping them out by giving 100 percent of all income growth to the 1 percent, and leaving more and more people in poverty.

Currently, the 1 percent steal 37 percent of all income produced in the United States compared to 8 percent in 1980, back when opportunities for financial advancement existed for most Americans. Now the big boys, and the politicians they’ve bought off in one way or the other, want to eliminate your opportunities, as well as those of your children.

Call your senators. Call your congressmen and congresswomen. Stop Fast Track in the senate. Stop the corruption. Stop the insanity.

Over the past fourteen years, since China was granted most favored nation trade status, Nike’s stock price has risen over a thousand percent, from $10 a share to over a $100. Chinese currency manipulation has helped fuel this bubble. So if you purchased a million shares of Nike in the year 2000, today the value of those shares would be over $10 million. With the TPP and Chinese currency manipulation, the value of Nike’s stock will continue to increase, but only at the expense of everybody else. Much of the US stock market bubble is fueled by the same force, and that goes for the stock prices of Apple, Microsoft, Dell, Adidas, Hewlett-Packard and more. And if the TPP goes through, more US manufacturers will need to shift production to China.

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Knowing the truth can set you free. Knowledge of the forces that constrain you is the first step toward achieving freedom. Great spirits always encounter violent opposition from mediocre and bought off mouths and minds.

So here’s economic myths numbers four and five.

4. Myth: Free trade is good, but only if you’re rich.
Fact: International income redistribution agreements are falsely marketed as free trade agreements. These agreements are perhaps the biggest reason why the 99 percent receive only 66 percent of the income created in the United States nowadays, compared to 8 percent.

5. Myth: The United States is a democracy in which all the people are represented.
Fact: The United States is a plutocracy, which is a government of the rich, by the rich, and for the rich. At times in the past, the USA has had a national government that represented most of the people, but never all of the people. When this has occurred the rich only received 8 percent of national income. Today the rich steal 36 percent of the total national income.

In other words, income distribution is solely linked to political power. Whosoever has the gold makes the rules.

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The war on the middle class began in 1981 with a well orchestrated anti-labor union message spread throughout all aspects of the national news media. It was a full frontal assault. It still is.

According to the Economic Policy Institute, “As a broad attack on unions continues, with Republican politicians leading efforts to eliminate unions or weaken them in Illinois and Wisconsin, Missouri and West Virginia, and county-by-county in Kentucky, it’s wise to think about what’s at stake. We now know what happens when employers hold most of the cards and employee power is diminished: profits and CEO pay skyrocket, and worker pay flat lines.

It is no coincidence that, as the Figure (above) shows, the share of income going to the broad middle class began to fall as union membership and power were reduced. The middle 60 percent of families depend primarily on wages for their income, so as the unions’ ability to raise wages diminished, so did the ability of middle class families to earn a fair share of the nation’s growing income. Research has shown that as unions were less able to establish wage standards the wages of nonunion workers in the same occupations and sectors were also reduced. Politicians who care about the middle class should be looking for ways to help workers gain access to collective bargaining and restore union strength. They certainly ought not weaken them further and limit or forbid collective bargaining.”

International income redistribution agreements, falsely marketed as free trade agreements, have been the primary tool used by corporate CEOs in their war against labor unions. These agreements allowed US corporations to export nearly 30 million jobs between 1990 and 2010, and millions more since then. See Exporting Jobs–Global Intersection. Millions of these were labor union jobs.

When a job is exported the difference between the old higher wages and the new lower wages is redistributed from the 99 to the 1 percent via higher corporate profits, rising dividends and surging share prices. The citizens who lose their jobs might wind up with unemployment insurance, if they’re lucky.

This is one of the reasons why Thomas Piketty is able to write in his international best seller Capitalism in the Twenty-First Century that the US has the greatest mal-distribution of labor income of any nation in the history of the world. CEO pay has skyrocketed in large measure because they are able to ship millions of jobs overseas and redistribute part of the proceeds into their own pockets.

This is also why the 1 percent have gotten wealthier over the last thirty years. Currently, the 1 percent steal a little over 36 percent of all the income produced in the United States, up from 8 percent in 1978. At the current rate of growth, the 1 percent will steal about 40 percent of the total income produced in the USA by next year.

The economic and political strategy of the 1 percent has been quite sound; destroy the middle class by shipping jobs overseas, while simultaneously attacking labor unions at home. That’s why there is such a vicious assault on public employee labor unions, and such a large push to give Fast Track Authority to President Obama, so that he can sign the Trans Pacific Partnership into law when it is introduced into congressional debate. This is the largest income and political power redistribution scam in US history, and it is falsely being labeled a free trade agreement.

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Why does President Obama want congress to grant him Fast Track Authority and the Trans Pacific Partnership? Why do Wall Street Senators like Orrin Hatch, Mitch McConnell and Ron Wyden want the president to have these things?

Richard Trumpka, president of the AFL-CIO, tells you in the video above it’s above shipping jobs overseas and lowering wages. He’s correct, and incorrect.

More precisely, the president wants Fast Track Authority in order to limit senate debate on the issue of the Trans Pacific Partnership (TPP), the largest income redistribution scam of all time, falsely labeled as a free trade agreement.  The TPP will ship millions of jobs overseas and lower wages here at home, but it will do so to redistribute the difference between the old higher wages here and the new super lower wages overseas to the 1 percent via higher share prices, rising profits and soaring dividends.

That should tell you who the president and Ron Wyden really represents in the white house (Goldman Sachs, Warren Buffett, massive hedge funds, etc….) and who Orrin Hatch and Mitch McConnell represents (Goldman Sachs, Koch brothers, and massive hedge funds).

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“Somebody told us Wall Street fell, but we were so poor that we couldn’t tell–Song of the South by Alabama

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The top two percent do not pay any social security taxes on any amount of income they earn over $110,000. That’s called a cap on contributions. So a person who earns $110,000 a year pays the exact same amount in social security taxes as people who earn $4 billion a year. Currently, the 1 percent steal over 36 percent of the total income produced in the United States, up from 21 percent in 2009, and 8 percent in 1980. The 1 percent are stealing more of your income via federal legislation, such as Fast Track, free trade agreements, privatization scams, and tax cuts for the rich. the-rigged-game-how-much-do-us-corporations-pay-in-taxes?-well-now-how-much-did-bank-of-america-pay-in-taxes-in-2013-on-profits-of-over-4-billion-in-profits?-and-what-does-fast-track-legislation have to do with this?–JohnHively.wordpress.com

To make the social security trust fund more solvent, and it’s pretty solvent right now, the obvious initial thing to do in order to by-pass the government corruption that has brought about this lopsided and non-market related redistribution of income over the last thirty years is to eliminate the cap on social security tax payments. Let Warren Buffett and the Koch Brothers pay their fair share.

The social security trust fund has a surplus of $2.6 trillion that earns nearly $200 billion a year in revenue. Those figures would go way up if the cap were eliminated. If the 1 percent were stealing only 8 percent of the nation’s income, the surplus would be closer to $4 trillion, and collecting $350 billion a year in interest payments.

Obviously, under current circumstances, as income continues to be redistributed to the 1 percent from the 99 percent, less and less money is paid into the social security trust fund because of the cap. This will bring about the program’s insolvency by roughly the year 2042. Some estimates are 2035 or so. In other words, rising inequality brought about by government policies is jeopardizing the social security program.

President Obama and Wall Street Senator’s Ron Wyden, Orrin Hatch and Mitch McConnell want to ensure you and your grandparents live in utter, abject poverty so that the rich can continue to steal more of your grandparents money because they support the Trans Pacific Partnership (TPP), the largest and most sinister international income and political power redistribution scam in the history of the United States, which is falsely labeled a free trade agreement, and which has virtually nothing to do with trade. See the link above for more information of this.

See the link below for more information of the effect of government sponsored inequality on the social security trust fund.

The Effect of Rising Inequality on Social Security–Center for American Progress

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