Janus case threatens unions and much more

Opening arguments were presented on Monday before the Supreme Court of the United States in a case that that has essentially never been easily settled: should those public employees, represented by a union, be forced to pay dues to an organization whose views that they do not agree with; even if those dues get a different name, just for them, or are even partially reimbursed to give equality to their viewpoints, or at least their disagreements with the views espoused by the union?

The case Janus v. AFSCME has hit the media like fireworks on Independence Day, and everyone has shouted, from all sides that this is about First Amendment rights guaranteed in the U.S Constitution, that says that all citizens have the right to free speech, that cannot be infringed upon.

At first blush, this does indeed seem to be the case, but then like a multilayered fruit, peeling back the cut pieces shows less than the sum of many parts. Part one of course is union busting an effort from the state of Mark Janus, Illinois,whose Republican governor, Bruce Rauner has tried just that, even holding it over the heads of his Democratic controlled state assembly as a condition of passing a state constitution mandated budget; and which finally had to be passed, by a veto, after a two year stalemate, as the state bonds were threatening to be get junk bond status by the rating agencies.

Now comes Janus with a case that can threaten the financial and political influences, and even livelihood of public sector unions, (there are 35,000 of them across the nation) especially in Democratic states. That seems obvious to many. Yet, that is only part of commonly held beliefs - in fact Republican states and GOP elected officials have just as much to gain as the Dems, in fact more so, since they support and in return receive support from some of the largest, albeit conservative, group: firefighters and police. Lose them and they lose a significant chunk of dollars that can be used in many ways, such as the gubernatorial races, in states, such as Illinois which is expected to cost as much as $300 million.

“The plaintiff, Mark Janus, is a child-support specialist who works for the Illinois Department of Healthcare and Family Services. Under current law, no one can be forced to join a union, and Janus chose not to become a member of AFSCME, the union that negotiates collective bargaining agreements with the state on the behalf of him and more than 35,000 other public employees in Illinois,” identified Progressive.org.

Adding to the failed efforts of Rauner, to bust the unions, after his budgetary defeat, it is worth noting that Janus is represented by the National Right to Work Legal Defense Foundation Inc., a business-backed anti-union group.

“Right-to-work laws are currently in place in twenty-eight states. The Janus litigation, if successful, would extend them to public-employee unions in the remaining twenty-two, including California and New York, the states with the greatest number of unionized public employees.”

Turning yet another page in the unfolding drama -- a decision is not to be expected to be made until June -- is that, in Illinois, 26 percent of the budget is spent on retiree healthcare, a sizeable amount, and as in other states, there have not been provisions for advanced budgeting, but instead the funds are often made through collective bargaining, or backroom committees, where the final terms are footnoted, some say buried, in thick legislative binders.

As The Washington Post noted, these terms were not even required to be made public until a law in 2008 that forced them into the light of scrutiny, and then the costs were seen to feed underfunded pension programs that promised much, and held little, forcing increases in property taxes. As of 2016, nationwide, there is $1.1 trillion underfunded pensions.

In Illinois there is an unfunded liability of public employee pensions of $129 billion, that is also accompanied by nearly $16 billion in unpaid bills from the budget impasse.

Rooted in an earlier decision, Abood v. Detroit Board of Education, there was a chance to maybe get it right, with Friedrichs v. California Teachers Association yet that was put on hold, after the death of Justice Antonin Scalia.

With Abood in a 4:4 deadlock, there were some provisions made - one was to have the worker that objected to the dues, get a portion back - in cash -- after political activities were stripped out; but as imagined this was a less Solomon like decision in an attempt to separate wheat from chaff, in an effort whose lines were easily blurred.

Over 20 states currently have laws that let unions charge non-members fees for work done on their behalf.

The general counter argument was that the objecting worker was still enjoying the benefits of the union, despite their disagreement with the political arm of the union. And, that is where the First Amendment comes in, since Janus argues that the very process of negotiation, seeps into political speech, or actions, some, or all of which may be objectionable to some members.

As some have believed, the benefits largely fund Democrats, there is truth, in that, and the Post “found that states with stronger unions have higher liabilities. Moreover, they tend to be states run by Democrats. Unionization rates — the percentage of public employees who are union members — are twice the national median in New Jersey and Connecticut, states where 60 and 61 percent of public employees belong to unions. In each of these states, liabilities are also twice the national median, totaling $7,770 and $6,785, respectively, when divided across those states’ total residents.”

But there is a rub: “Second, and more surprising, public unions also secure generous benefits in Republican-controlled states. Contrary to Republicans’ reputation for austerity, GOP lawmakers are frequently aligned with unions, especially those representing police, fire and corrections officers. Such alliances result in promises of future benefits — and the accompanying liabilities. Moreover, workers in these fields are more likely to retire earlier and draw on their public benefits longer than other public-sector employees. Hence, red and purple states like Michigan, Ohio and New Hampshire also have significant liabilities,” said the Post researchers.

In fact Republicans can get twice as much -- $91,000 in union contributions to be exact --  in a state with strong unions, versus the opposite. So, the opposition form the mostly GOP leaders is only when union contributions don’t help their party; otherwise it’s anathema, a fact not always generally known.

Politics aside, this is on one significant level, about the state balance sheet, not just in Illinois, but across the country. That fact, is getting buried in the avalanche of partisan politics, but despite the gnawing chasm, help is needed. And, one way to treat the financial liabilities are to create retiree medical trusts, or go to that old GOP bete-noire, the health care exchanges generated by the Affordable Care Act, known as Obamacare.

Since that is mostly being shoved aside the concentration is on the partisan divide in the Court where it was clearly seen that there was not going to be much change since Abood.

“Illinois Solicitor General David Franklin, who was at the lectern defending the state's compulsory fee scheme, told the Court that "the state has a much freer hand when it manages its personnel as an employer than when it regulates its citizens as a sovereign, and...that freer hand includes broad authority to put conditions on employees' speech.

Unfortunately for Franklin, that argument apparently did not sit well with Justice Kennedy, who often casts the decisive vote in closely divided cases. "What we're talking about here is compelled justification and compelled subsidization of a private party, a private party that expresses political views constantly," Kennedy retorted. A little bit later, Kennedy told Franklin, "it seems to me your argument doesn't have much weight,” reported Reason.com.

Returning to the core of the case, says the Los Angeles Times, “Janus' argument is that, because wages and benefits for public employees have an effect on budgets and taxes, they are inherently "political" issues. Therefore a non-union employee whose fees support negotiations that result in a contract that raises his and other employees' pay is being forced to "speak" on a matter of public concern.”

Accepting that conclusions, the Court would undermine “the view it has expressed in other cases that public employees' 1st Amendment rights aren't identical to those of private citizens — as the lawyer for the state of Illinois suggested at Monday's argument,” they note.

Justice Stephen G. Breyer suggested that the fees, seen earlier, should only go towards those that affect “wages, hours [and] working conditions”, and not to any “political” activities; and to make it explicit that  these"fair share" fees do only that, which are subject to collective bargaining under state law, is one direction the Court might take in June.

In the larger world the consequences of a complete overturn, as Justice Elena Kagan noted, if the Court were to rule for Janus, labor laws in 24 states, the District of Columbia and Puerto Rico “would be declared unconstitutional and thousands of municipal contracts covering millions of workers would be invalidated,” creating havoc and chaos for an important block of U.S. employees.

"What would be the justification for doing something like that?" she asked Janus' lawyer.

Indeed, and the question has become a national one; “Today’s economy is rigged against working people in favor of the wealthy and the powerful,” AFL-CIO Massachusetts President Steven Tolman said. “It’s not by accident. Corporate CEOs and the politicians who do their bidding have written the rules in favor of their own special interest, and now those same corporate billionaires have taken the case Janus v. AFSCME to the Supreme Court, and it’s not done to help us.”

American Federation of Teachers president, Randi Weingarten wrote in an email to members, on Tuesday, that “This case isn’t about petitioner Mark Janus, it’s about defunding unions. It’s about who will have power in our country—working people or big corporate interests. That’s why it’s being funded by the Koch brothers, the DeVos family, and other wealthy and corporate interests. First, they pledged $80 million to “defund and defang” unions. Then, the Kochs, after getting the Trump tax cut, upped the ante with $400 million to undermine public education and “break” the teachers unions. And now, with the Janus case, they are pushing to prevent workers from having a union at all. Why? Because unions are our vehicle to fight for and win a better life for people, and corporate interests see that as a threat to their power.”

Justice Ruth Bader Ginsburg said that without the fees in place, unions would be deprived of the monies they need to advocate for the people they represent. Presciently, she said “not only would people opposed to the union stop paying fees, but also people who want the union’s representation without the cost,” said the Daily Northwestern the student paper at Northwestern University in Evanston, Illinois.

“You’ll have a union with diminished resources, not able to investigate what it should demand at the bargaining table, not equal to the employer that it faces,” Ginsburg said

In a Tweet posted after oral arguments, Rauner, who attended the proceedings, said he was confident that the Supreme Court would side with “free speech” for workers in state government, and that “The gravity of the Court’s decision will be felt not just in Illinois, but across America.”

Totally silent, on Monday, was Neil Gorsuch the newest justice on the court and for awhile the only victory claimed by President Donald Trump, who as an established younger conservative, and has previously been downright loquacious; at his first case he practically bubbled over, peppering attorney's with questions.

Considering his pro-business record, his vote in support of Janus would create the resulting chaos that Kagan predicted.

This blog profiled him a year ago and noted, “What has been examined by concerned liberals is his support for the Hobby Lobby decision decision which says that business owners do not have to violate their religious beliefs to fulfill the law - in this case the contraceptive mandate of the Affordable Care Act. Seen as a landmark victory by those that support religious freedom the decision also affected another case with The Little Sisters of the Poor, a Roman Catholic women's religious order.

For the former he wrote: “The ACA’s mandate requires them to violate their religious faith by forcing them to lend an impermissible degree of assistance to conduct their religion teaches to be gravely wrong.”  And, for the latter he wrote, ““When a law demands that a person do something the person considers sinful, and the penalty for refusal is a large financial penalty, then the law imposes a substantial burden on that person’s free exercise of religion.”

If Gorsuch sees Janus’ first amendment rights violated, and possibly views them in the light of legislative sin, then risking the wellbeing of public sector worker rights, might just be worth it.

January Jobs Report: Wages up, workers down

Friday’s release by the Bureau of Labor and Statistics for the January Jobs Report was highly anticipated by nearly everyone -- including President Trump and his team. It was to be, for them, a vindication for his business friendly policies, and also to tag onto his key piece of legislation, the tax reform bill, but it was also eagerly anticipated by those that wanted to see one key piece of news: a wage increase.

The report did not disappoint -- it showed that the economy added 200,000 jobs, much more than the 180,000 anticipated, and the bonus was that average hourly wages increased to 2.9 percent, a welcome bump of 0.3percent from a figure that seemed on hold for several previous months at 2.5 percent.

This is a welcome change from the unwelcome images of income inequality that spilled from the media, and also led to political upheaval, even turmoil, said many.

Wages represent the real test of our economic strength and getting there, as we noted previously is half the battle and in earlier months there was optimism, when last month, it was noted by Business Insider that “Economists, however, remain optimistic that wage growth will accelerate with the labor market near full employment. The unemployment rate, which has declined by 0.7 percentage point since January, is now at its lowest level since December 2000 and below the Fed’s median forecast for 2017.”

Leading, or perhaps even lauding, the good news was economist Joseph Brusuelas who told Fortune Magazine that this would signal the “tightest labor market in a generation.”

The headline number remained at 4.1 percent, the lowest it has been since December 2000. The combination is likely, say observers, to lead to a March interest rate increase of a quarter-point, by the Federal Reserve, under the new chair Jay Powell. The usual disclaimer is still present: the headline, or marquee number, does not include those that want a job, but have given up, discouraged workers, or those that are not of working age; or those that want full time employment, but are stuck in part-time jobs; It does, by definition, include those that are simply unemployed and looking for work.

The good news is also that the discouraged worker rate has fallen by 15 percent in the last year.

While the champagne corks popped in many quarters, others were less sanguine, as they considered a Labor Force Participation Rate of 62.7 percent, that has been steady for four months, with seemingly no abatement to come. In 2000, the rate peaked at 67.3, but was depressed by long term joblessness, and the aforementioned discouraged workers.

The downward spiral has many reasons, and one is the continued opioid crisis, that has given the LFPR a 20 percent drop, say employers. Going further some have even said that the rate has been nibbled away by those that have claimed disability, often by jobseekers lacking relevant skills; and this was joined by the fact that Baby Boomers have retired at a steady clip, with younger workers filling the void, but not always, “shovel ready” as employers say that many of them lack the skills and education needed to perform.

To fill that void, some employers are lowering standards, including hiring those that test positive on marijuana, or lack requisite skills and need that “in-house” training, but mostly occurring in lower wage jobs. In fact, the largest increases were in bars and restaurant work, 31,000; health care (mostly lower-salaried aides) at 21,000; and manufacturing, of 15,000, welcome news, but most economists are taking a wait and see approach, as these numbers are subject to revision.

In a unique turnabout some employers are paying them increased wages after training them, and then, and only then, increasing wages giving employers an advantage, but simultaneously saving money.

Market Watch reported that “Dan North, chief economist at Euler Hermes North America, says a labor shortage has reached the critical stage.” He says that employers are “desperate for potential employees who have skills, or at the least, who can pass a drug test.”

“Companies are having to hiring unskilled people at unskilled wages, and train them. That’s part of the reason wages remain weak.," he emphasized.

While the White House seems to suggest that they have the wherewithal with this new bill to increase these overall numbers, some economists are saying this short-term boost from a deficit funded legislation is not enough, and that what is needed is an examination of the social causes of worker discouragement.

State of the Union address shows a new visionary Trump

Donald Trump’s first State of the Union address showed a remarkable change in both tenor and tone, than has been seen before. Gone, at least for the moment, were the bellicose statements, and the bombastic rhetoric that has endeared himself kudos from his base, and pans from his critics. In its place was a clearly articulated vision of his America, one that can, and will return to its strength and might - Pax Americana.

While the team of speech writers went into overtime, Tuesday’s result gave a magnificent mantle to what has been not only a contentious record, but a thin one, that gave even his supporters pause. But, freshly imbued with the legislative victory of tax reform, and the Senate confirmation of conservative Neil Gorsuch to the Supreme Court, Trump could crow a bit, and the writers obviously gave pause to how much that bit contained.

More than one observer noted the similarities between Tuesday’s address and that of the iconic GOP hero Ronald Reagan whose script was both flawlessly delivered, and executed, as the former Hollywood actor sailed through it.

Trump did hit all of the points that led him to victory in 2016: a stronger military, border security - including the infamous wall, changing the structure of legal immigration and countering illegal immigration, trade deals that don’t debilitate the U.S. economy, and jobs, those “beautiful” jobs that he heavily touted, in the early days of the administration.

As usual there were guests in the First Lady’s box, there as examples of what lay at the core of his agenda --- almost part and parcel of what the televised audience expects to see from any modern president in a State of the Union address.

One of those were family members of a victim of the infamous MS-13 gang that had killed their daughter; and while no one watching could not share their grief, the moment was a playbook from the old 60’s “law and order” tag, which was a coded term for race, and tags onto the remarks that candidate Trump made about Mexico sending its rapists, thugs and criminals, and painting an already troubled legislative landscape with fear.

Seen also in a familiar pose, that the Republicans once held, was the minority party, sitting on their hands, as the hall erupted into applause, at prime points; at least those Democrats that actually showed up, as there were those such as Rep’s John Lewis, of Georgia, and Jan Schakowsky, of Illinois that boycotted the evening because of the recent intense partisan battles that have defined the Trump presidency, perhaps even more than his predecessor.

There were some cringe worthy moments, however, after the  announcement, or more accurately, re-announcement of the path for the DACA recipients, Trump later said, that “Americans were dreamers, too” in a direct reference to the former Obama program for those children brought to the country, illegally, as toddlers, or infants, 1.8 million of them.

But, pitting one group against another is dirty politics, that can lead to more than we hope for, and far less, that, as a nation, we deserve.

It was reported that some Democrats brought some DREAMers as their guests for the evening, only to have Rep Paul Gosar, a Republican from Arizona, express his desire that the police arrest, and deport them on the spot.

Care of the veterans, those that fought the nation’s wars when revealed next to a decade earlier, to rove far less than adequate, and now have become part of the arsenal against an entrenched liberal presence, intent on robbing these men and women of their  rights of care. While those problems are complex, and vary widely, the problems seem less than liberal but neglectful, a sad bureaucratic reality.

Ron Elving of NPR, perhaps said it best, when in his analysis he noted the gaping hole of bipartisanship, saying, “the president might have chosen to make a very different speech — aimed at meeting his various opponents halfway. He might have credited, for example, some of the members of the Senate who have been trying to negotiate a compromise on immigration. He might have saluted the Democrats in the Senate who voted for his tax cut last year, or who have been negotiating with his administration on infrastructure and other areas of shared concern.”

For those viewers,and listeners, that might have been pleased with the new tune, whose lyrics were the same, regrettable during a time of near savage partisanship, the issues of race (which dog him), the class divisions; indeed the whole lot, that has plagued the nation for decades, have been purposefully exacerbated, as political exercise.

In a possible attempt to heal,and win over Black Americans, Trump advanced the low unemployment rate for African Americans, and giving himself credit for it - yet that rate, still higher than those for white people or Asians, is not an end unto itself, but a beginning, and one that was not helped by the recent tax reform bill that gives some relief to some taxpayers, living in some places; but mostly, not to black Americans, like their white cohorts, on a reliable basis.

Jesse Jackson, in an editorial for the Chicago Sun-Times noted that the headline rate, what we’ve referred to as the marquee number, in previous blogs, is not wholly accurate as it does not include those that are stuck in part-time work and want full-time work, or those who have given up looking.

The diligent staff of factcheck.org gave their estimation: “When Trump took office in January 2017, the black unemployment rate was 7.8 percent, the lowest it had been in nearly 10 years, according to the Bureau of Labor Statistics. Under Trump, it dropped a full percentage point to 6.8 percent in December. That’s the lowest rate since the bureau began regularly breaking out unemployment rates by race in 1972.

A similar drop of 1 percentage point was recorded during the same 11-month period in 2016. The drop was even more pronounced in each of the three years before that. It fell 1.9 percentage points in 2015, 1.5 percentage points in 2014 and 1.8 percentage points in 2013.

In other words, the downward trend has continued under Trump, albeit at a slower pace than in recent years.”

While others have blasted the president for this bout of hubris, the conclusion was this:  “. .  .  the gap between white and black unemployment remains largely unchanged under Trump. While black unemployment fell to 6.8 percent in December, the white unemployment rate that month was 3.7 percent. So the white rate is 46 percent lower than the black rate, about the same as the gap in December 2016.”

The tax reform bill that Trump has widely trumpeted - his only legislative victory is a  mixed bag, but one that primarily gives huge deductions for wealthy individuals and  corporations while slicing away at the deductions that most average income, and above, earners need, such as the state and local income tax deductions.

Many polls have revealed how deeply unpopular the bill, titled the “Tax Cuts and Jobs Act,” is; in fact 64 percent of Americans oppose the Act and say that it favors the wealthy, and 76 percent for corporations, more than it does the average American; especially families living in high tax states, such as New York and California.

“The average household would get a tax cut of $1,610 in 2018, a bump of about 2.2 percent in that average household's income, according to a report by the Tax Policy Center, a nonpartisan think tank that has been critical of the tax overhaul plan,” says National Public Radio.

Most revealing of those figures is that “however, extremes make averages, and the benefits would be much larger for richer households. A household earning $1 million or more would get an average cut of $69,660, an income bump of 3.3 percent. Compare that with the a tax cut of $870, or 1.6 percent, for the average household earning $50,000 to $75,000.”

Hearing the president crow about the bill made many observers wonder about the old “fuzzy math” of yesteryear. On a more serious note, most of the economic gains that Trump has claimed for himself came about as a result from the work of outgoing Fed Chair Janet Yellen, whose dovish, and data driven, approach made the grade, along with President Obama’s economic policies, and rescue of the auto and banking industries, coupled with a growing global economy.

The end result --- Pax Americana writ large - was the central theme, the rebuttal by Rep. Joe Kennedy III, said much about how regular wage earning people, of the so-called rank and file needed more than has been given this past year.

“Kennedy, a millionaire scion of the famed political family, pushed the official Democratic message of a “better deal,” with paid family leave, higher wages, and affordable child care and education. He argued that Trump is turning American life “into a zero-sum game” where one group can win only if another loses,” reported the Boston Globe.

Without mentioning the president by name, he said this, about the record that was touted that evening: “Their record is a rebuke of our highest American ideal: the belief that we are all worthy, we are all equal and we all count,” Mr. Kennedy said as he delivered the official Democratic Party response to Mr. Trump’s State of the Union address, said The New York Times.

Ripping the well-stitched cover from the evening, Kennedy also helped to reposition the Democrats when he noted, “We are bombarded with one false choice after another: coal miners or single moms, rural communities or inner cities, the coast or the heartland,” Kennedy said. “So here is the answer Democrats offer tonight: We choose both. We fight for both.”

U.S. Gov faces shutdown with DACA as bargaining chip

With the Friday night deadline looming over Congress, and the spectre that the U.S. government would effectively shutdown -- except for essential services -- looms largely as the lights burn late in Capitol Hill offices. Part and parcel of a permanent spending bill hangs on the slender threads of an agreement for the DACA kids, as they are known in some quarters, but in reality, young adults who came to this country as toddlers and most have attained education, and jobs, and nearly one-quarter have earned college degrees, despite not having access to the federal school loan programs. 

As a rider to the spending bill their fate also faces great political and even moral dilemmas for those that are deciding, mostly Democrats, whether they should vote for a bill that keeps the government open, and leaves no decision for the DACA kids, or includes them, but risks the inclusion of the president’s demands to build a wall at the southern border with Mexico. 

The wall notwithstanding, the White House also wants increased border security, an end to previous programs that extended immigration though lottery programs, that also included relatives, what the president refers to as chain migration, noted the Deputy Press Secretary Raj Shai in an interview with Chris Cuomo on his CNN program, "The President has been pretty clear about what it will take to get us to the next phase," he said, speaking on "Cuomo Prime Time." This week White House Chief of Staff, General John Kelly, said that a continuous wall across thousands of miles would prove impossible and that Trump was misinformed. 

The Administration also is asking for $18 billion in funding versus the $1.6 billion that is being proffered by the bipartisan proposal form by Sens. Lindsay Graham and Dick Durbin, of South Carolina and Illinois. Thursday saw the Rev. Samuel Rodriguez, an evangelical minister throw his support toHouse Minority Leader Nancy Pelosi for her continued support for these young people. Rodriguez who offered prayer at President Trump's inauguration, gave this unexpected show of support based on the needs of the 800,000 affected. "You have always taken the lead. Your commitment to the immigrant community to the 'Dreamers' is second to none. So America is in a better place because of your prophetic leadership on this matter," he said at a news conference Thursday. The fate of those who fall under the Deferred Action for Childhood Arrivals who could be deported to countries that they know little of, could happen sooner rather than later, but also face the near Byzantine machinations of the Trump administration, who has also asked that the Supreme Court of the United States, hear the DACA case, even as it is still in the circuit court, a previously unknown precedent,(called petition for certiorari in advance of judgement). 

This might allow the White House to circumvent a recent ruling, “issued last week by Judge William Alsup, ordering the administration to resurrect part of the DACA program and allow the 690,000 young unauthorized immigrants protected from deportation under the program when the Trump administration started shutting it down in October to apply for renewals of their two-year work permits,” reported vox.com.. 

The Administration in its own manner gave three conditions for revealing applications, at an individual cost of $495 dollars, before the March 5, 2018 deadline, of no renewals. As Vox said: “It took the administration less than five days to announce that it would begin to accept renewal applications for three broad categories of people who had already received DACA

● Immigrants whose work permits were set to expire after March 5, 2018 (who previously had been barred from renewing) 

● The 22,000 immigrants whose work permits expired (or are about to expire) between September 5 and March 5, who didn’t get the chance to renew in the narrow window DHS created in September 

● Immigrants whose work permits had already expired in the year before Trump wound down the program.” In this sense the Trump White House gave a partial restoration, that belies what the GOP called President Obama’s unconstitutional move, giving credence to the old adage that politics makes strange bedfellows. 

Judicial reality has shown that the earliest time that the case could be taken up is during the Court’s new term in October, and that a ruling might not come until June, at the earliest. On the presidential campaign Trump was not supportive of DACA, but then as president, we have been told that he has wrestled with the dilemma of the DACA youth, and wanted to be fair, yet his actions belie that narrative, as he has held firm to his base, and their mantra of “build the wall,” amid the chants of “USA! USA!” hovering in the background like a movie score. 

With the DACA fate as a bargaining chip, Trump, fresh from his only legislative victory with the tax reform bill is flexing his muscles to try and fulfill a campaign promise to satisfy them, and the agenda of division that he heralded on the trail, which has the support of such conservative personalities such as Dr. Laura Ingraham who has been quoted as saying: “The No. 1 reason I voted for him was for the immigration. I want the wall. I want it to be seen in space like the Chinese wall.” 

The issue which has for many become a cause celebre, like Ingraham, has a large racial component against Mexicans, but in fact, the reality is far different than the fears that are played upn. For all of the fear, the actual illegal immigration on the southern border has actually decreased from its peak in 2009, and went lower in 2015, as has the influx of unauthorized immigrants from Mexico, according to the Pew Research Center, who concluded that, “There were 11 million unauthorized immigrants in the U.S. in 2015, a small but statistically significant decline from the Center’s estimate of 11.3 million for 2009.” 

It’s going to get a lot rougher and the number one question is whether, the Dems can win playing by the rules; will Trump score a legislative victory by triangulation, that is by working with the Democrats, or will his base, fueled by the thundering, and condemning rhetoric of Ingraham and the redoubtable Ann Coulter, who in a Twitter rant, said, “At this point, who DOESN’T want Trump impeached,” survive unscathed, even in office. 

For the Dems, they face being blamed for a government shutdown, rather than Trump, yet there is another play that they could make, and that is let the government shutdown in the absence of either a temporary, or permanent fix; stand on the morality of the DACA issue and hope. But, that play may not be for the best, and some say, putting all of their political capital in one basket when they could play a stronger hand in March might be the better option. 

That could be gamble for the political gap between now and then, say other observers John Cassidy writing for The New Yorker, also on Thursday, noted that “The racist comments that President Trump made in the Oval Office last week have inflamed things further, and many Democratic activists are demanding that Schumer and other elected Democrats vote against the G.O.P. spending bill even at the risk of a government shutdown, which could happen as soon as this weekend. On Wednesday, three protesters from the Dream Action Coalition, a group that advocates for the undocumented, were arrested while demonstrating outside Schumer’s office in New York City, and there were more protests in Washington.” 

The stakes are at their highest, and the emotions that have boiled over can make this issue galvanize into even more, now, and certainly into the 2018 midterm elections, and if the Democrats capitalize on the “shithole” adjectives that the president used, they might have a chance, if only in the court of public opinion.  

December jobs report show wages still flat

Closing the year’s job outlook, was something that most economists, lawmakers, and even the president, were looking forward to. Many were anticipating a great report, if not outstanding, based on prior months. But, there was no joy in Mudville, when the December Jobs Report was released by the Bureau of Labor and Statistics (BLS) this past Friday, as it showed a disappointing 148,000 jobs created, versus an anticipated 190,000.

As often stated, success has many fathers, while failure is an orphan; yet this time around, some claimed paternity of sorts, while others abandoned the baby to the Christmas shopping season, that added, then subtracted its annual flow of temporary workers.

Others still were quick to reassure the public that this was not a time to panic, and reassured them that this was no time to panic, repeat -  no time to panic; and the same reassurance kept hitting the internet and Twitter. Methinks they protest too much.

"It's a disappointment in the headline but on the other hand, lower payroll growth is exactly what we expect," said Josh Wright, the chief economist at iCIMS. "We haven't managed to sustain job growth of above 200,000 jobs per month for three months in a row since the end of 2015,” reported Business Insider.

The details then began to emerge: 20,300 jobs lost in the retail sector. There is no real surprise here, just as a decade ago, a “surprise” loss of employment was seen when temporary census workers were released after their duties.

To be fair, there were some good signs - construction jobs soared with 30,000 jobs, bars and restaurants hitting 25,000, as well as manufacturing, and professional business services, at 15,000, but that’s a figure that we have seen before as being suspicious, since it’s a catchall category that can hold temporary clerical workers, as well as clerks and copyists, and even some of dubious “business” distinction.

The banner rate of unemployment held steady as most predicted, and wanted, at 4.1 percent, reaching a 17 year low rate, which pleased many. But, as the name implies, it gets all of the attention, but is not a wholly accurate number, the broad number is the indicator that should get more attention, than its big brother, but doesn’t. That rate includes discouraged workers who have given up looking and those that are stuck in part-time jobs, but prefer, and often need, full-time employment.

That news is not good -- the rate dropped to 7,9 percent last month, and has not been that low since December 2006; it showed a decreased from 8.3 percent in September.

One uptick was that Black unemployment reached a record low of 6.8 percent, giving encouragement to leaders in the nation’s urban centers.

Still problematic is that wages are  low, with an average of 2.5 percent in November, and little changed in December, where it was 0.3 percent, rising from 2.5 percent the previous year.

“This still broadly reflects the sluggish pay increases we've seen through much of the recovery. With headline unemployment so low, employers should be competing for the best workers on pay. Some indicators like the Atlanta Fed's alternative wage tracker do show this pay pressure,” continued Business Insider.

One important and overlooked factor: “the average hourly earnings are skewed as older, better-paid workers retire and leave the equation.” Going even further, "Average hourly earnings probably is one of our lowest-quality indicators because it doesn't control for changes in composition," Wright said. "Anecdotally, there are wage pressures growing, especially in particular industries and more so in some occupations like data scientists and programmers."

Wages represent the real test of our economic strength and we are not there yet, say some, but then there is still optimism and the not-so greek chorus that have been extolling the banner rate: “Economists, however, remain optimistic that wage growth will accelerate with the labor market near full employment. The unemployment rate, which has declined by 0.7 percentage point since January, is now at its lowest level since December 2000 and below the Fed’s median forecast for 2017.”

For those that watch the Federal Reserve and their anticipated moves, and their mandate, of 2 percent inflation,”October’s job growth acceleration reinforced the Federal Reserve’s assessment on Wednesday that “the labor market has continued to strengthen,” and the sluggish wage data did little to change expectations it will raise interest rates in December.”

“The weakness in wages will not go unnoticed at the Fed, particularly for members that remained more concerned over the inflation outlook,” said Michael Hanson, chief U.S. economist at TD Securities in New York. “Overall, sustained job growth and labor market slack at pre-crisis lows keeps December in play.”

If the outlook seems murky, to naysayers, then the labor participation rate, which measures those workers that hold a job, and those seekers that are searching for one, fell four-tenth of a point and is now 62.7, a rate that has remained virtually unchanged, over the last year.

The New York TImes did note one trend, primarily in professions that don’t require post-secondary education, such as warehouse stocking, and low paying security jobs, that have shown significant pay increases.

Business observers note that some corporations are taking recent savings and reinvesting them in plant and machinery, which leads to increased hiring and higher wages, some as high as 7 percent, affecting a group that President Trump targeted during the 2016 presidential campaign; but it’s too early to tell is whether the recent tax reform bill has had any direct effect.

In certain jobs, and in some geographic areas, such as Indianapolis, the increase has been from 3.1 percent to 5 percent, seen in the second quarter of 2017.

For e-commerce warehouse workers the increase has also been seen, they noted, in such far flung areas as Inland Empire, Ca.; all of which points out that this is not your father’s economy.

More common is that companies are using perks, rather than wage increases, to attract, and retain worker;, finding this easier than prematurely offering higher wages, only to have to pull them back later. Such perks include paying for, or reimbursing the cost of daycare.

Even more common are those that have been shy about wage increases all along, in the post recession era, with its economic uncertainty, despite the optimism of some.

Taking a wider look is the Economic Policy Institute that has seen the flat wages as a barometer of the American economy. They have noted that “On some fronts, the economy is steadily healing from the Great Recession. The unemployment rate is down, and the pace of monthly job growth is reversing some of the damage inflicted by the downturn. But the economy remains far from fully recovered.

A crucial measure of how far from full recovery the economy remains is the growth of nominal wages (wages unadjusted for inflation). Nominal wage growth since the recovery officially began in mid-2009 has been low and flat. This isn’t surprising–the weak labor market of the last seven years has put enormous downward pressure on wages. Employers don’t have to offer big wage increases to get and keep the workers they need. And this remains true even as a jobs recovery has consistently forged ahead in recent years.”

They advise that the Fed hold off on increasing interest rates till nominal wages increase at least from 3.5 percent to 4 percent. They also feel that “there is no threat that price inflation will begin to significantly exceed the Fed’s 2 percent inflation target. And it will take wage growth of at least 3.5 to 4 percent for workers to begin to reap the benefits of economic growth–and to achieve a genuine recovery from the Great Recession.”

Say it again, Sam.

Victory for the GOP: Senate passes tax reform bill

With a 51-48 vote the U.S. Senate, on Wednesday, approved a sweeping tax reform bill, the first in 30 years, and what supporters, are calling “historic” and a chance to increase both jobs and income for American families, despite polls that show those that the bill purports to help, believe that it is solely designed to help wealthy corporation and individuals.

It’s a boon for the Trump Administration as it limped along for the last ten months without a legislative victory, seeing most of its efforts shot down in appeal courts, dying in committee, or getting congressional nays, respectively with the travel ban, and the attempt to repeal the Affordable Care Act.

After what was considered a rocky start with defectors in both chambers, from both original intent, and also with genuine concerns, they eventually succumbed to party loyalty, and a desire to show in 2018, that not only could they legislate, but they could do so in a long sought after area, thus the “:aching for a victory” that some in the press noted.

This path to the midterm elections is now a rallying call for Democrats to tailgate onto their victories in Virginia and Alabama, and the public’s distrust of the bill, to score big, and take some of the joy from the jubilant faces that were shown on the South lawn of the White House, as President Trump held sway.

On Tuesday elated members of the U.S,. House of Representatives voted, in an overwhelming vote of 227-203, to pass their version that like its Senate counterparts offers steep cuts to corporations and wealthy individuals, and also claims to be a bill that offers Americans fatter paychecks; as Speaker of the House Paul Ryan says will give the people of the United States their money back, “because after all it’s their money.”

“The bill, which marks the largest tax overhaul in 30 years, would permanently slash the corporate rate from 35 percent to 21 percent, a reduction Ryan, President Trump and other Republicans say will lead to investment, new jobs and economic growth,” noted The Hill.

Others are less sanguine pointing out that the tax cuts are dependent on who you are and where you live, and how you file your tax returns. For working families the modest tax cuts will expire in a decade due to Congressional rules that harness any tax cuts to a limit of $1.5 trillion dollars.

While the bill comes in a hair underneath the limit, many polls have revealed how deeply unpopular the bill, titled the “Tax Cuts and Jobs Act,” is; in fact 64 percent of Americans oppose the Act and say that it favors the wealthy, and 76 percent for corporations, more than it does the average American; especially families living in high tax states,such as New York and California.

Sen. John Cornyn (R-Texas), asked why the bill polled poorly, even while in final conference, pointed to misinformation” and “lying.”“So many people are lying about it, for one thing. ... Unfortunately that sort of information tends to get around faster than the truth, so it’s our job to try to tell the truth about it,” he said.

On the House side, Rep. Greg Walden (R-Oregon), said, “I don’t think we’ve done a good job messaging.”

As it inched towards final form, the House version, as well as the Senate, and now the final law, chipped away at the state and local tax deduction that many middle-class families depend on, which now has a cap of $10,000.dollars.This has stung many residents in high tax states, (New York, New Jersey, and California) which as we have noted before, held high Democrat majorities that voted for Clinton in 2016, and has  especially stung them, as critics noted; in fact, the only House defector was Rep. Rodney Frelinghuysen from New Jersey.

“The average household would get a tax cut of $1,610 in 2018, a bump of about 2.2 percent in that average household's income, according to a report released Monday by the Tax Policy Center, a nonpartisan think tank that has been critical of the tax overhaul plan,” says National Public Radio.

Most searing of those figures is that “however, extremes make averages, and the benefits would be much larger for richer households. A household earning $1 million or more would get an average cut of $69,660, an income bump of 3.3 percent. Compare that with the a tax cut of $870, or 1.6 percent, for the average household earning $50,000 to $75,000.”

For those that itemize on their returns, approximately 28 percent of all filers, then the odds that what was previously gained, will be a lot less.

“No Democrats have backed the tax bill at any time, which would have been a surprise at the beginning of the year.  The House revote is the latest evidence of just how shoddily written the GOP tax scam really is,” said House Minority Leader Nancy Pelosi (D-Calif.).”

A bonus for the GOP was the repeal of the individual mandate for the ACA, colloquially known as Obamacare, that required all Americans to have health insurance, or to pay a penalty. While most received a subsidy for coverage, there was a number of high earners that did not qualify for help, and paid the higher premiums (now part and parcel of healthcare in America) but yelped at the price, despite having higher than average incomes.

As we have noted before, “According to the Congressional Budget Office (CBO), the repeal of the individual mandate penalties could result in as many as 13 million fewer Americans having health insurance. About 5 million are projected to be people who previously bought health insurance as individuals either within or outside the ACA’s marketplaces. Some will choose not to buy insurance because the penalty has disappeared. Others, especially higher-income individuals who don’t qualify for subsidies under the ACA, will drop insurance because of increases in average premiums predicted by the CBO.”

Politico noted the following from the president’s remarks: “When the individual mandate is being repealed, that means Obamacare is being repealed. Because they get their money from the individual mandate,” Trump told reporters during a Cabinet meeting at the White House. “Obamacare has been repealed in this bill.”

“Yet while the bill removes the requirement that individuals must possess health insurance, large portions of the law would remain intact, though others have been weakened during the Trump administration,” they emphasized.

The Harvard Business Review said, “It will mean less health insurance for individuals; less coverage for elderly and poor Americans; less revenue for doctors, hospitals, and myriad health care businesses; and, quite possibly, a less-healthy, less-productive workforce.”

“These premium increases will occur because, with the repeal of the mandate, many young, healthy people will exit markets, leaving a sicker, more costly insurance pool behind. Older individuals will be most affected. For example, a 60-year-old not receiving subsidies could face premium increases of $1,781, $1,469, $1,371, and $1,504, respectively, in Alaska, Arizona, Nevada, and Maine,” they concluded.

Additionally, The GOP saw an opening to slash at what they have long-called entitlements, and the opportunity to delete the mandate also urged them to go further: with further cuts,“Because Medicare and Medicaid together accounted for about $1.25 trillion in federal spending in 2016, about 30% of the federal budget, they will be the major targets for deficit reduction”

While there is no guarantee that they would succeed (although they have Ryan’s support) but these,“reforms could take a number of directions. For Medicare, this could include increasing the eligibility age from 65 to 67 or beyond (resulting in fewer covered elderly), caps on spending per beneficiary (possibly reducing covered benefits), or increases in cost-sharing that would lead to beneficiaries using fewer services. For Medicaid, reforms would likely lead similarly to fewer people covered, reduced benefits, and/or higher cost-sharing.”

With the devil being in the details, one area to pay close attention to are those expiring tax cuts. For example, as NPR noted, “the bill changes tax rates across income brackets, increases the standard deduction and increases the child tax credit — but only until the end of 2025. As a result, the Tax Policy Center predicts that in 2027, the average tax cut would amount to $160, or just a 0.2 percent income bump,” hardly a long-term solution.

“This would mean a tiny tax bump for many lower- and middle-class households — the average $50,000 to $75,000 — earning household would have a tax bill that is $30 higher than today. The average household earning more than $1 million would get a cut of more than $23,000,” they continued.

While Sen. Marco Rubio of Florida was able to increase the child tax credit from $1,100 to $1,400 dollars the push also comes with a cost of other health reductions that hurt other populations, an aspect that many might have not been aware of in the rush to get the bill through Congress, and to President’s Trump’s desk.

“The proof will be in the paychecks,” said Ohio senator, Rob Portman, but the details don’t suggest that there will be sustained increases.

On the job front, most critics have noted that Ryan and others are returning to the old David Stockman, (budget director under Ronald Reagan) mantra,that the “trickle down” will result in greater job creation, and benefits, an argument, long discredited, even by Stockman.

Previous temporary reductions resulted not in job gains, but rewards to stockholders, and in this case many are saying that this could be another benefice, and for middle income earners who invest in a retirement plan that is stock heavy, gains might be seen.

Most are predicting that fewer than 339,000 jobs over a decade will come from the House predictions, with 925,000  predicted from the Senate version; now merged into one bill, some are saying maybe 250,000, at best guess.

While the top rate of 39.6 percent has been decreased under the bill to 37 percent, only one-third of all Americans believe this will benefit them in the long run.

The president’s Council of Economic Advisers predicted a $4,000 salary increase for the average worker, but that seems wildly optimistic, to many economists. For a family of four, with a median income of $73,000, the tax cut would be $2.059.

A poll this Monday from Monmouth University said that 26 percent disapprove of recent tax bills. And 50 percent say they will go up,and only 14 percent believe will go down. Yet, Ryan insists that “Results are what’s going to make this popular.”