Trade Deficit = Slower Economy = Fewer Jobs = Baltimore

Free Trade at Last, an OtherWords cartoon by Khalil BendibKhalil Bendib/OtherWords

If you make things and sell them, you do better over time than if you borrow to buy things. If you send jobs and factories out of the country, you end up with devastated cities like Baltimore.

Sure, a few people get rich from that, but 99 percent of us get poorer. How hard is it to see that?

You may have heard that gross domestic product growth was dismal in the last quarter. You may have heard that there were riots in Baltimore. You may not have heard that these are both at least partly caused by our enormous, humongous and continuing trade deficit.

Trade Deficit

A trade deficit is when we import more than we export. It means that there is a certain level of demand in our economy, but some of that demand is leaking out to other countries. When this deficit is significant and goes on for a while it means that jobs are lost, factories close and we get poorer.

We started having trade deficits in the late 1970s with the ascension of free-market, free-trade ideology. We have continued to have trade deficits every single year since, and they have grown into the hundreds of billions. So … millions of jobs, tens of thousands of factories, trillions of wealth … gone.

You can see the result in Detroit, Cleveland, the “Rust Belt,” towns full of boarded-up houses and empty storefronts – and the economic devastation and desperation that leads to what we see playing out this week with riots in Baltimore.

Here is a chart of our trade deficit over time:

0.2 Percent Growth Partly Due To Trade Deficit

The Bureau of Economic Analysis reported Wednesday that “real gross domestic product – the value of the production of goods and services in the United States, adjusted for price changes – increased at an annual rate of 0.2 percent in the first quarter of 2015.”

The reasons? “The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE) and private inventory investment that were partly offset by negative contributions from exports, nonresidential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.” (Emphasis ours.)

Also, “Real exports of goods and services decreased 7.2 percent in the first quarter, in contrast to an increase of 4.5 percent in the fourth. Real imports of goods and services increased 1.8 percent, compared with an increase of 10.4 percent.”

Dragging Us Down

The Wall Street Journal explains how much the trade deficit is dragging us down, in “Trade Woes Bedevil Obama, Fed.” President Obama, they write, “is trying to sell a trade deal just as trade is dragging the U.S. economy down.” This is because, “Net trade subtracted a whopping 1.25 percentage points from first-quarter growth.” Also, “Indeed, trade has been a drag on growth in four of the past five quarters. It subtracted 0.22 percentage points from growth in 2014 as a whole.”

Take a look at this chart from the WSJ story:

The trade deficit keeps dragging us down, down, down, year after year, so that a few already-wealthy plutocrats can pocket the difference between what we pay in the U.S. and the pittance they pay exploited workers and pay to protect the environment “over there.”

Not An Accident – It’s Policy

An important analysis of our situation appeared this week. Robert Reich wrote about how our system is rigged against us, lowering wages and causing terrible insecurity. Underneath that insecurity is the widespread fear many of us have that we could end up facing the hopelessness of the people trapped in places like Baltimore and Detroit (and city after city after city devastated by year after year after year of decline as we ship our jobs and factories away…).

At The American Prospect, Reich writes, in “The Political Roots of Widening Inequality,” that “key to understanding the rise in inequality isn’t technology or globalization. It’s the power of the moneyed interests to shape the underlying rules of the market.”

He writes that so many of us feel job insecurity as a result of intentional rigging of the rules in favor of those at the top and against the rest of us:

For example, some of their economic insecurity has been the direct consequence of trade agreements that have encouraged American companies to outsource jobs abroad. Since all nations’ markets reflect political decisions about how they are organized, so-called “free trade” agreements entail complex negotiations about how different market systems are to be integrated. The most important aspects of such negotiations concern intellectual property, financial assets, and labor. The first two of these interests have gained stronger protection in such agreements, at the insistence of big U.S. corporations and Wall Street. The latter—the interests of average working Americans in protecting the value of their labor—have gained less protection, because the voices of working people have been muted.

Policy, Not Something That Just Happened

Dean Baker drove this point home this week in, “‘Globalization’ Was Policy, Not Something That Happened“:

The downward pressure on wages was the deliberate outcome of government policies designed to put U.S. manufacturing workers in direct competition with low-paid workers in the developing world. This was a conscious choice. Our trade deals could have been designed to put our doctors and lawyers in direct competition with much lower paid professionals in the developing world.

As I wrote above, it is not just our trade policies rigging the system against most of us. Government policies across the board have been dragging us down for decades. Tax cuts for the rich have resulted in cuts in the things government does to make our lives better. (Just this week, Kansas cut taxes for the rich, and now Kansas’ schools are out of money and closing.)

We are not investing in maintaining – never mind modernizing – our infrastructure. We keep cutting back on science and health research and education. These are basic investments in our economy but are derided as “government spending” as if the function of our government shouldn’t be to do things that make our lives – and economy – better.

Look at what is happening in Baltimore, where desperate people and hopelessness combine until a match is lit. We have to change this. We have to demand we balance our trade and invest in our people and economy again. We have to demand political leadership that responds to us, not just wealthy donors. This country is not intended to be a plutocracy of by and for the rich; it is intended to be a democracy of by and for We the People.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

Death To Pensions – Video

From AFSCME:

ENRON BILLIONAIRE ARNOLD HAS A PROBLEM WITH LIBRARIANS’ PENSIONS
Former Enron trader and hedge fund billionaire John Arnold is launching a multimillion dollar national PR campaign attacking the hard-earned pensions of public sector workers. Arnold has already quietly poured tens of millions of dollars into his efforts to persuade politicians to reduce middle class retirement security and now it looks like he may really just be getting started.

How TPP Increases Corporate Power vs. Government – And Us

Power is the ability to control, to tell what to do, to get your way. Corporations have a lot of power over working people in our country now, and they might be about to get a lot more.

The proponents of the Trans-Pacific Partnership (TPP) tell us that it will have unprecedented “progressive” protections for the rights of working people, the environment, even wildlife. So there is likely to be flowery-sounding language in TPP, just as President Obama says.

What matters is whether there will be clear and guaranteed enforceability of those words.

Enforcement Matters

Rules are great; enforcement is greater. Without enforcement, a rule may as well not exist – especially when everyone knows there is not enforcement.

We see rules with no enforcement all around us. Here’s an obvious example. Right now several obvious presidential candidates say they aren’t candidates so they can get around rules about contribution limits to their campaigns and coordination with super PACs. The Federal Election Commission is not enforcing the rules that say candidates can’t do this. These candidates know there is no enforcement and thus continue to violate the rules.

Another example is Wall Street. The Obama administration does not prosecute the people at the top of the big banks for violating laws. Instead they reach “settlements,” and the shareholders – not the executives who committed wrongful acts – pay fines, usually without even admitting wrongdoing. In the early 1990s there were 5,490 investigations and 1,100 prosecutions of individuals, with 890 convictions for major fraud following the “savings and loan crisis.” The number of prosecutions and convictions following the Too-Big-To-Fail Wall Street collapse of 2008 and resulting bailouts has been close to (if not) zero. The banks know there is no enforcement and continue to run various scams and manipulations. (See “Watchdog: Wednesday’s Big Wall Street Settlement Is “Laughably Inadequate”,” “Prosecute Now: The Justice Department Can Still Act Against Bad Bankers,” “Bank of America Settlement Only Proves Invincibility of Wall Street,” “How Big Is a $16 Billion Bank Fraud Settlement, Really?,” “10 Things We Learned (or Re-Learned) In Chase’s Latest Fraud Deal,” “Why Is The FDIC Helping Banksters Avoid Trial?,” “Wrecking an Economy Means Never Having to Say You’re Sorry” and dozens if not hundreds of similar stories.)

An example of (non-)enforcement as it applies to the words in trade agreements is illustrated by the situation in Colombia. The recent Colombia trade agreement has labor standards. The U.S. Trade Representative’s office explains at their website, in “Labor in the U.S.-Colombia Trade Promotion Agreement“:

The U.S.-Colombia Trade Promotion Agreement … includes strong protections for workers’ rights, based on the May 10, 2007, bipartisan Congressional-Executive agreement to incorporate high labor standards into America’s trade agreements. In addition, President Obama insisted that a number of serious and immediate labor concerns be addressed before he would be willing to send the Agreement to Congress. These concerns included violence against Colombian labor union members; inadequate efforts to bring perpetrators of murders of such persons to justice; and insufficient protection of workers’ rights in Colombia.

As a result, the U.S. and Colombian governments announced, on April 7, 2011, an ambitious and comprehensive Action Plan that included major, swift and concrete steps for the Colombian government to take. The U.S. Government has confirmed that Colombia has met all of its Action Plan milestones to date. In addition, successful implementation of key elements of the Action Plan will be a precondition for the Agreement to enter into force.

But since this agreement went into effect, “Colombian workers have suffered over 1,933 threats and acts of violence against unionists – including 105 assassinations of union activists and 1,337 death threats.” The labor standards in trade agreements are meaningless without enforcement.

Flowery language about labor rights vs. labor organizers murdered without enforcement of the flowery words: The contrast between words and results doesn’t get clearer than that.

The words that show up in TPP are relatively meaningless unless there is strong enforcement.

Who Enforces?

Currently enforcement of trade laws is up to the governments that sign the agreements. While China was grabbing tens of thousands of U.S. factories and millions of U.S. jobs in the 2000s, the Bush administration only filed around three trade violation cases per year. The Obama administration created a trade enforcement office in 2012 to “bring the full resources of the federal government to bear on investigations … to counter any unfair trading practices around the world, including by countries like China.” However, according to Politico last August, the Obama administration had also filed around three trade violation cases per year.

That is the record of all trade enforcement, not just enforcement of labor, environmental and other stakeholder language. According to Zach Carter and Dana Liebelson in “Here’s The Biggest Problem With Obama’s New Trade Push” at The Huffington Post:

The U.S. has a poor record on enforcing human rights and labor terms under trade agreements. A 2009 Government Accountability Office report found that American enforcement of labor terms was “ad hoc and very limited” with “minimal oversight.” Another GAO report from November 2014 found that the situation hadn’t improved much. While the Labor Department has brought a handful of workers’ rights cases under prior trade agreements, they have taken years to investigate and remain unresolved.

How Corporations Get Enforcement

The corporations writing the TPP agreement wrote into it a special channel for corporations to get enforcement when they need it. That’s what the Investor-State Dispute Settlement (ISDS) provisions are for. With ISDS, corporations get a special “corporate court” channel which they can take claims to and the cases are decided by corporate lawyers acting as judges. (The post “Now We Know Why Huge TPP Trade Deal Is Kept Secret From The Public” discusses the leak to WikiLeaks and the NY Times of this chapter of TPP. From The New York Times report of the leak, “Trans-Pacific Partnership Seen as Door for Foreign Suits Against U.S.“:

… the accord, still under negotiation but nearing completion, companies and investors would be empowered to challenge regulations, rules, government actions and court rulings — federal, state or local — before tribunals organized under the World Bank or the United Nations.

Corporations get a special channel of their own for enforcement of rules written by their representatives at the negotiating table. Labor, environment and other stakeholders don’t get that in TPP. This is how TPP will increase corporate power over governments and working people.

So if TPP is passed, corporations can, for example, move factories and jobs to Vietnam and take advantage of their low wages and lack of labor protections. The corporations are protected from violations of the agreement that harm their interests – but labor violations depend on the kind of enforcement that lets Colombian labor organizers get threatened and murdered. Then the big corporations can tell any workers left here to accept even more wage and benefit cuts or their jobs will be moved as well.

Corporations get a special channel for enforcement; labor organizers get murdered. That’s how power is shifted.

Lee Saunders, President of the American Federation of State, County and Municipal Employees, recently summed it up, saying, “We cannot create better trade agreements until we get our priorities straight. These priorities should include lifting wages, protecting workers, environmental and safety standards, and enforcing workers’ rights. Unfortunately, TPP will be no different from previous trade agreements that ignore these priorities and approach trade the same old way: by focusing on corporate goals and giving special rights to corporations at the expense of workers and consumers.”

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

A Look At The Fast Track Bill Shows It’s The Wrong Thing To Do

The “fast track” trade promotion authority bill has been introduced in the Senate. Article 1, Section 8 of the Constitution says, “The Congress shall have power to … regulate commerce with foreign nations.” But under fast track, Congress relinquishes that power and agrees to pass trade bills brought to them by the executive branch in a very short time frame with little debate and without making any changes should any problems present themselves.

Though it was announced that this year’s fast track bill was the result of a “deal” between Sens. Ron Wyden (D-Ore.) and Orrin Hatch (R-Utah) the 2015 bill is nearly identical to the 2014 bill that died in Congress without support for a vote. See this side-by-side comparison from Rep. Sander Levin of the House Ways and Means Committee. It is unclear from this comparison why the “negotiations” between Hatch and Wyden took so long, and what Wyden got that enabled him to put his name on it, enabling the bill to be sold as “bipartisan.”

Fast Track Sets Aside Normal Procedure

Congress does not set aside normal procedure, debate, the ability to fix problems that turn up and agree to vote within 90 days except for trade agreements – even though trade agreements have now proven to have such a tremendous and often detrimental effect on our economy, jobs, wages and inequality. Where did the idea to do this come from? According to Public Citizen, this unusual procedure was “initially created by President Richard Nixon to get around public debate and congressional oversight.”

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The Fast Track Fight Begins In The Senate

The final fight to stop fast track begins this week. The new trade promotion authority (“fast track”) bill could be released in the Senate at any moment. (It might be out by the time you read this.)

Hatch and Wyden Poised to Introduce Bill

With literally zero reporting from the national TV networks and a virtual news blackout at most newspapers around the country, at least Politico sets the stage for insiders in their report, “Trade fight looms as Congress returns“:

Senate Finance Committee leaders Orrin Hatch and Ron Wyden appear poised to introduce a “fast track” trade promotion authority bill along with House Ways and Means Committee Chairman Paul Ryan. But months of closed-door negotiations were continuing on Friday, congressional aides said.

The power, largely embraced by Republicans, pits many congressional Democrats, including Sen. Elizabeth Warren and potentially Senate Democratic leader-in-waiting Charles Schumer, against the White House.

The measure would allow President Barack Obama to submit free trade agreements to Congress for straight up or down votes without any amendments. It’s seen as key to completing his signature 12-country trade deal known as the Trans-Pacific Partnership pact.

Fast track is, in essence, congressional pre-approval of the Trans-Pacific Partnership (TPP) trade agreement. With fast track Congress agrees to give up its much of constitutional duty to define negotiating objectives, carefully deliberate and debate, and fix problems that might turn up. With fast track rendering Congress unable to fix flaws, even if any problems do turn up that might seriously hurt the country or our economy, a vote on the trade agreement will occur under the enormous pressure of the media blasting, “surely they won’t just kill the whole thing over a few problems.”

The idea is that allowing Congress (democratic government) to “meddle” will get in the way and keep other (non-democratic) countries from “making their best offers.” Congress is considering this pre-approval of TPP and future trade agreements even though the national news media is not reporting on fast track or TPP, and Congress and the public haven’t yet even seen the agreement (never mind had time to analyze it and consider its ramifications).

Week Of Action

The AFL-CIO is organizing a “Week of Action Against Fast Tracking Trade Deals.”

On Wednesday at 11 am in Washington D.C.’s Upper Senate Park, more than 600 union members will rally at an event organized by the United Steelworkers (USW) on Capitol Hill. The rally will feature Senators Sherrod Brown (D-Ohio) and Al Franken (D-Minn.), Representatives Rosa DeLauro (D-Conn.) and Keith Ellison (D-Minn.), USW President Leo Gerard, AFL-CIO Executive VP Tefere Gebre, AFGE President J. David Cox, National Association of Letter Carriers President Fred Rolando, American Federation of Teachers Secretary-Treasurer Loretta Johnson, and Sierra Club National Campaign Director Debbie Sease.

On Saturday, the AFL-CIO and its member unions are organizing over 50 events throughout the country in conjunction with hundreds of events planned as part of the global day of action in over a dozen countries.

Click here to find an event or to organize an event.

A Monday story in The Hill, “Labor unions ramp up opposition to Obama trade agenda,” has more on the Week of Action:

Lawmakers, labor union leaders and their members will hold a rally Wednesday on Capitol Hill and follow that up with 50 grassroots events around the country and in more than a dozen countries on Saturday as part of the weeklong effort. …

The efforts include letter-writing campaigns, phone calls, petitions and door-knocks.

Meanwhile CREDO and other organizations are petitioning to ask presidential candidate Hillary Clinton to lead the opposition to fast track and TPP.

Don’t Trade Our Future Demonstration April 20

There will also be a “Don’t Trade Our Future” demonstration on April 20, the final day of the Populism2015 Conference in Washington, which is sponsored by the Campaign for America’s Future (CAF), National People’s Action (NPA), USAction and the Alliance for a Just Society. People will assemble at 11:30 a.m. at AFL-CIO headquarters at 815 16th Street NW, and will march first to the headquarters of the Chamber of Commerce and then to the U.S. Trade Representative’s office. They are urging Congress to vote down fast track.

Sen. Bernie Sanders (I-Vt.), columnist Jim Hightower and Communication Workers of America (CWA) President Larry Cohen will address the demonstration.

Public Against More Job-Killing Trade Agreements

As the fast track fight enters the Congress, polls show that politicians will take a great risk by voting for fast track or TPP legislation. For example, one recent poll shows one senator’s vote for fast track could bring a primary opponent. The Huffington Post reported in February in, “Secretive Trade Deal Could Pose Problems At Home For Ron Wyden,”

“Half of the Oregon voters polled said they would be less likely to vote for Wyden in 2016 if he joins Republicans to approve the Trans-Pacific Partnership, a massive trade deal between the United States and countries in the Asia-Pacific region, as well as fast-track authority, which Obama is seeking in order to get TPP and other trade deals through Congress without amendments or filibusters.”

Other polling shows that public sentiment against trade deals and fast track is strong. One poll in January 2014 shows the breadth of public opposition,

By more than two to one, voters say they oppose (62%) rather than favor passage of fast-track negotiating authority for the TPP deal. Among those with a strong opinion, the ratio climbs to more than three to one (43% strongly opposed, just 12% strongly favorable). Demographically, opposition is very broad, with no more than one-third of voters in any region of the country or in any age cohort favoring fast track. Sixty percent (60%) of voters with household incomes under $50,000 oppose fast track, as do 65% of those with incomes over $100,000.

… Republicans overwhelmingly oppose giving fast-track authority to the president (8% in favor, 87% opposed), as do independents (20%-66%), while a narrow majority (52%) of Democrats are in favor (35% opposed).

People believe our trade agreements destroy jobs and lower wages. In a September 2014 Pew Poll, Americans say “trade” generally is good, but only 20 percent say it creates jobs while 50 percent say it destroys jobs, and 17 percent say it raises wages while 45 percent say it lowers wages.

This can have election consequences. In an April 2014 NBC News/Wall Street Journal poll a plurality of Americans said they would support “a candidate who says that free trade with other countries will mainly be negative for America because it will cause the loss of U.S. jobs to other countries, which will hurt wages and jobs here.”

Resources

So it appears that the battle will be in the Senate this week. Here are some resources to visit.

The Stop Fast Track coalition website, stopfasttrack.org.

Expose the TPP.

Flush the TPP!

Stop TPP.

CWA’s TPP info.

10 Ways the TPP Would Hurt U.S. Working Families

Global Trade Watch.

Eyes on Trade and 50 Reasons We Cannot Afford the TPP.

Real Progressive Coalition for American Jobs. (“Every U.S. labor union and almost 600 environmental, consumer, faith, family farm, civil rights, seniors, LGBT and other civil society organizations opposed Fast Track. This is the REAL Progressive Coalition for American Jobs.”)

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

As Fast Track/TPP Becomes New Third Rail, Where Is Clinton?

The Trans-Pacific Partnership (TPP) — and the rigged “Fast Track” process designed to pass it before the public has a chance to react — has become a new “third rail” for progressives and the activist Democratic “base.” (This is also true on the right, by the way.)

This game-rigging is creating a race to the bottom for people and the planet. The thing is: more and more people are seeing it. And more and more people are asking Hillary Clinton to lead the fight against it.

A Rigged Game

People are fed up with the rigged “trade” game that pits American wages, environmental regulations, consumer protections and other benefits of democracy against exploitative, paid-off, non-democracies. “Free trade” has made democracy’s good wages and environmental and safety protections into a competitive disadvantage in world markets.

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How Our Trade Policies Kill Jobs

Trade is great. We all trade. A lot of us trade labor for money that buys other things. A farmer trades corn for money that buys other things, and so on. No one is “against trade.”

But is anything called “trade” always good for all involved? Imagine you’re a farmer and you make a deal to trade corn and wheat to get money for a new tractor. So the farmer orders a new tractor, but the “trade partner” never buys any corn or wheat. After a while the “trade partner” shows up with a big bill, saying the farmer owes money for the tractor. And then the farmer finds out that the “trade partner” plans to use the proceeds from the sale of the tractor to grow their own corn.

In modern terms, we would say that the farmer was “running a trade deficit.” How much damage do you think that “trade deficit” is doing to that farmer, and the farmer’s ability to make a living in the future? How long do you think that farmer would let that “trade agreement” continue?

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Anti-Fast-Track Momentum Builds

Opponents of fast track and the Trans-Pacific Partnership (TPP) are gaining momentum. In spite of a virtual media blackout, public awareness of the coming trade deal is increasing.

More and more public-interest organizations are organizing and denouncing the rigged fast-track approval process and TPP trade agreement. One after another, members of Congress are announcing opposition to fast track and demanding that trade problems like currency manipulation be covered by the TPP agreement.

Meanwhile, the expected fast track bill has been delayed again.

Fast Track “Stuck”

Fast track is a process under which Congress agrees to bypass its duty to define, consider, debate and approve trade deals. Fast track limits discussion and debate and gives Congress only 90 days in which to bring the deal up for a vote. It is a rigged process designed to ensure that the Trans-Pacific Partnership (TPP) trade agreement, the “history’s largest trade deal“, is pushed through Congress before the public has time to fully analyze, understand and consider its ramifications and organize opposition if opposition is warranted.

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Silicon Valley Rising Fights for Worker Justice

Silicon Valley is an area of contrasts. When you stop at a traffic light in Silicon Valley you will often find a Maserati or Tesla on one side of you and a beaten up, 15-year-old Accord on the other. It seems there are more high-end Mercedes, Jaguars, Bentleys or the occasional Maybach than in other areas.

Silicon Valley companies, many run by stock-billionaires, pay a lot at the top, and squat at the bottom. There are the lucky employees, and a huge number of “contractors” – employees who are not called employees. The employees that reach over a certain age are discarded.

There are not a lot of people in the space between Silicon Valley’s top and its bottom. One in three Silicon Valley workers cannot even afford to live anywhere within a one-hour drive. The regular three-bedroom house costs a million dollars and don’t even ask about the rents (starting at more than $2,000 a month for a one bedroom apartment), but on the streets in working-class neighborhoods there are so many cars parked that you can barely pass – because there are so many people and families crammed into the housing. And, of course, the traffic is terrible, but you have to use a car because public transportation is cut back due to tax-dodging by giant companies like those in Silicon Valley.

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Postal Workers And The Public Want A Postal Banking Public Option

Contract talks between the American Postal Workers Union (APWU) and the U.S. Postal Service for a new contract start Thursday. Along with asking for fair wages and benefits, the APWU wants improvements in customer services, including postal banking.

“There are two competing visions of the future of the Postal Service,” said APWU President Mark Dimondstein. “Postal management’s policy has been to severely degrade service, dismantle the postal network, and engage in piecemeal privatization. … Management has shortened hours at neighborhood post offices, closed mail processing centers, lowered delivery standards, and slowed mail delivery.”

Instead of trying to “save money” by cutting service with layoffs and closings that cause more customers to turn away, which costs revenue, the Postal Service should add services such as postal banking. This would also help millions of people who currently are left wide open to predatory services like payday lending.

Postal Banking: A Public Option For Banking

Until 1967, the Postal Service (then called the Post Office) operated postal banking through the United States Postal Savings System. Reviving postal banking would be like offering a “public option” for financial services. It would let people have accounts they could use to cash checks, get small loans, pay bills and even get prepaid debit cards. These services would enable lower-income Americans to avoid the exploitative “payday lenders” and check-cashing “services” that eat up working people’s earnings.

The Postal Service would use existing bank infrastructure as the backbone for these services, particularly the debit card service. In “A public option for banking,” Mike Konczal explains how the Treasury Department is already doing this with their Direct Express debit card program for disability and pension payments.

The program allows unbanked recipients of Social Security, federal disability and a few pension-related federal programs to receive their benefits on a debit card. The program emerged from congressional efforts in the 1990s to move from paper checks to direct deposits for these benefits. Congress tasked Treasury to make sure there were low-cost accounts available to the unbanked so they could access deposits.

… By 2007, the department initiated a competitive bidding process for the cards, and Comerica won the account by offering the low-fee schedule the cards now have.

The Treasury Department is already offering this service. There is no reason the Postal Service could not do the same thing with postal banking.

Millions Would Benefit

A lot of people would benefit if the Postal Service offered postal banking. The term for people with no bank accounts is “unbanked.’ According to the 2013 FDIC National Survey of Unbanked and Underbanked Households, “7.7 percent (1 in 13) of households in the United States were unbanked in 2013. This proportion represented nearly 9.6 million households.” On top of that, “20.0 percent of U.S. households (24.8 million) were underbanked in 2013, meaning that they had a bank account but also used alternative financial services (AFS) outside of the banking system.”

In “The Post Office Should Just Become a Bank, David Dayen explains how this idea could free these millions from the grips of “check-cashing stores, pawn shops, payday lenders, and other unscrupulous financial services providers who gouged their customers to the tune of $89 billion in interest and fees in 2012,” and help the Postal Service at the same time. With small fees for services, including small, low-interest loans, the Postal Service would be helping Americans and increasing its funding.

Post offices could deliver the same services at a 90 percent discount, saving the average underserved household over $2,000 a year and still providing the USPS with $8.9 billion in new annual profits, significantly improving its troubled balance sheet. The report calls simple financial services “the single best new opportunity for the posts to earn additional revenue.”

These millions are not being served now by the financial industry, as Dayen explains,

Banks don’t want these customers; if they did, they would actually make a play for their business. Large banks have closed branches in the very low-income communities with the largest percentages of unbanked Americans. In fact, banks find it more profitable to fund payday lenders that charge junk fees and outrageous interest—currently the subject of a Justice Department investigation—than actually take market share away from them.

Instead of partnering with predatory lenders, banks could partner with the USPS on a public option, not beholden to shareholder demands, which would treat customers more fairly.

If ever there was an idea whose time has come (again) it is the idea of a public option for postal banking. It would help millions of people, would boost the revenue of the Postal Service and would demonstrate that our government actually can be on the side of regular people. (Note that a government service in a democracy should be providing a government service, not trying to “operate like a business” and “make money” off of citizens.)


Also see “A “Grand Alliance” To Save Our Public Postal Service.”

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

A “Grand Alliance” To Save Our Public Postal Service

The Conservative/Wall Street/1 Percent/Republican anti-government strategy is to set government up to fail (usually by starving it of funding). Then they point to the resulting “crisis” they created and say it proves that government doesn’t work so we should “privatize” it – in other words, rig the system against We the People by handing our common wealth over to a few wealthy people to harvest for personal profit.

Now they’re coming for the U.S. Postal Service.

Manufacturing A Crisis

Republicans created the problems with the Postal Service. In 2006 Republicans in Congress required it to come up with $5.5 billion per year to pre-fund 75 years of retiree costs. This means the Postal Service has to set aside money now for employees who are not even born yet. No other government agency – and certainly no company – has to do this.

They also require the Postal Service to make a profit – or at least break even. But democratic government is supposed to provide services to We the People. It is not supposed to be about making a profit off of us. Yet Republicans say government should be “run like a business.” Then they hamstring it, preventing it from competing with businesses because they say it has too many advantages and any competition would be unfair.

From the post, “You Should Be Outraged By What Is Being Done To Our Postal Service”:

Here are a few things you need to know about the Postal Service “crisis”:

  • The Postal Service is the second largest employer in the United States after Walmart. But unlike Walmart, which gets away with paying so little that employees qualify for government assistance, the Postal Services is unionized, pays reasonable wages and benefits and receives no government subsidies.
  • Republicans have been pushing schemes to privatize the Postal Service since at least 1996. In 2006 Republicans in the Congress pushed through a requirement that the Postal Service pre-fund 75 years of retiree costs. The Postal Service has to pay now for employees who are not even born yet. No other government agency – and certainly no company – has to do this.
  • Unlike other government agencies (like the military) since 1970 the Postal Service is required to break even.
  • While required to break even the Postal Service has to deliver mail to areas that are unprofitable for private companies to operate in. A letter sent from a small town in Alaska is picked up and transported across the country to a farm in Maine for 46 cents. … [M]any people for one reason or another still send letters. In a democracy these people are supposed to count, too.
  • But along with requiring the Postal Service to break even, Congress has restricted the Service’s ability to raise rates, enter new lines of business or take other steps to help it raise revenue. … [W]hile detractors complain that the Postal Service is antiquated, inefficient and burdened by bureaucracy, the rules blocking the Postal Service from entering new lines of business do so because the Postal Service would have advantages over private companies. …

The Postal Service is a public service for We, the People, not a business. The Service is hamstrung by people who pretend it is supposed to compete and then won’t let it. They won’t help with taxpayer dollars and say it has to compete in the marketplace … they give it rules that no private company could survive. Then when it gets into trouble, say that government doesn’t work, start laying people off, selling off the public assets, and saying it has to be “privatized” …

Privatization Destroys People And Communities

Privatizing the various parts of the postal service will move the workforce from good union jobs to low-wage, no-or-low-benefit private-sector jobs. Aside from the effect this would have on employees and their families – not to mention the inexpensive delivery of mail to even the most remote locations – privatization also destroys the surrounding communities. The USPS is the country’s second largest employer, so in this case the surrounding communities are … all of the communities in the United States.

In “The Privatization Scam: Five Government Outsourcing Horror Stories,” I wrote about a study that showed that wage and benefit cuts resulting from privatization hurt communities, including declining retail sales, greater reliance on public assistance and a larger share of at-risk children in low-income families.

Fighting Back

Now the people who work for the Postal Service are fighting back. The American Postal Workers Union (APWU) is announcing “A Grand Alliance to Save Our Public Postal Service.” As the alliance’s new website explains,

“In the face of aggressive attacks, a wide range of national organizations have come together to create A Grand Alliance to Save Our Public Postal Service. These organizations are united in the demand that the public good must not be sacrificed for the sake of private investment and profit. A strong public Postal Service is our democratic right. The Alliance is fighting to protect and enhance vibrant public postal services now – and for many generations to come.”

This Grand Alliance consists of a large number of organizations (At least “63 religious coalitions, retiree organizations, educational and postal unions, lawmakers and progressive advocacy groups”, according to The Washington Post, and more being added as I write) as well as individuals (you) who sign the pledge to “support the fight to protect and enhance vibrant public postal services now—and for many generations to come.”

Two Years In The Making

At his swearing-in ceremony in November 2013, APWU President Mark Dimondstein pledged to build a “Grand Alliance” to save the postal system, saying,

“We must build a grand alliance between the people of this country and postal workers. We must mobilize our allies and their organizations, including seniors, retirees, civil rights organizations, veterans groups, the labor movement, community and faith-based organizations, the Occupy movement, and business groups in defense of America’s right to vibrant public postal services.”

Two years later, at a press conference Thursday, Dimondstein explained that this alliance is forming “because the postal service belongs to the people and it is in danger.” He said there are “two competing visions of the future” – privatizing vs. staying public – and that there will be a conversion from “living wage to low-wage jobs” if the Postal Service is privatized.

Dimondstein said that the Postal Service “is our democratic right” and that it can operate cost-effectively “if you get rid of the manufactured crisis created in Congress.”

Also at the press conference, Melanie Campbell, President and CEO of the National Coalition of Black Civil Participation and convener of Black Women’s Round Table Public Policy Network said, “this is a fight for the people, we the people.” She called the Postal Service “a national treasure” and said, “We’re here today to stand in solidarity … Our national postal offices have faithfully served communities.”

The mission of this Grand Alliance:

The United States Postal Service is a wonderful national treasure, enshrined in the Constitution and supported by the American people. Without any taxpayer funding, the USPS serves 150 million households and businesses each day, providing affordable, universal mail service to all – including rich and poor, rural and urban, without regard to age, nationality, race or gender.

The U.S. Postal Service belongs to “We, the People.” But the USPS and postal jobs are threatened by narrow monied interests aimed at undermining postal services and dismantling this great public institution.

Even some postal executives have been complicit in the drive toward the destruction of the Postal Service and ultimate privatization: They have slowed mail service, closed community based Post Offices and mail processing facilities, slashed hours of operations, tried ceaselessly to end six-day service as well as door to door delivery, and eliminated hundreds of thousands of living wage jobs.

Good postal jobs are vital to strong, healthy communities, and have provided equal opportunities and the foundation for financial stability for workers from all walks of life, including racial and ethnic minorities, women and veterans. Postal services are essential to commerce and bind together families, friends and loved ones. In the day of e-commerce, a public postal service is as relevant as ever.

Yet those corporate forces who want to privatize public services allege that curtailing postal services and eliminating jobs are necessary due to diminishing mail volume and “burdensome” union wages and benefits. Nothing could be further from the truth.

In reality, a Congressionally manufactured USPS “crisis” imposed an unfair crushing financial mandate on the Postal Service that no other government agency or private company is forced to bear. (The Postal Accountability and Enhancement Act of 2006 compels the USPS to pay approximately $5.5 billion per year to fund future retiree healthcare costs 75 years in advance.) Without this unreasonable burden, the USPS would have enjoyed an operating surplus of $600 million in 2013 and over $1.4 Billion in 2014.

The people of this country deserve great public postal services. We advocate expanded services, such as non-profit postal banking and other financial services. We call on the Postmaster General and Postal Board of Governors to strengthen and champion the institution.

The public good must not be sacrificed for the sake of private investment and profit. A strong public Postal Service is our democratic right. Join us in the fight to protect and enhance vibrant public postal services now – and for many generations to come.


Meghan Byrd contributed to this post.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

Invite: Special Call On Fast Track/TPP Sunday 7:30ET / 4:30PT

“Deconstructing the Corporate Case for Fast Track”

with

Special Guest Speaker: Dave Johnson, Campaign for America’s Future (me)

Sunday, February 8, 2015 – 7:30 p.m. EST/4:30 PST

Always be sure to phone in FIRST: 605-562-3140 PIN: 951146(lines open 15 minutes before call start)

THEN…

Click here to link to the video-only portion and access the interactive, real-time chat features*

Call details: Dave will dismantle claims made by lobbyists, and explain, point by point, exactly WHY fast track authority for the president (and the trade deals he plans to use it to force through) would be an economic disaster for American businesses and workers.

We’ll also hear from Celeste Drake, Trade and Globalization Policy Specialist with the AFL-CIO, about the current climate in Washington and plans for Presidents’ Day recess week actions targeting Congress, beginning next weekend and continuing through February 22.

*ABOUT THE CALL: We don’t use AnyMeeting for audio; you can’t connect with your computer to the phone line we use, so disregard onscreen audio codes. After you follow the link above and enter the requested information, just click on the phone receiver icon you see on the screen, advance to the next screen, and click “close.” You’ll be in the meeting room.