advice from a fake consultant

out-of-the-box thinking about economics, politics, and more... 

Monday, August 22, 2011

On Doing Better Than 50%, Part Two, Or, Is “Made in USA” A Jobs Program?

When last we met, it was to discuss a Big Idea that the Obama Administration might apply to get some job creation going, despite a difficult Congress; the Big Idea was to look at the “Buy American” provisions that exist in our laws, regulations, and Executive Orders and see if we could practice a bit of “jobs arbitrage” by not just meeting the “Made in USA” requirements when governments across this country make purchases, but exceeding them.

(As it stands today, pretty much any “good or service” with more than 50% Made in USA content qualifies as a Made in USA purchase, even if 49% of the “good or service” comes from somewhere else).

At the time, I told you that if all went well we could look forward to comments from both Labor and the Administration as to the practicality of the Big Idea, and as it turns out I have comments for you that hit close to that mark – and a bit more besides:

On Saturday I just happened to bump into Congressman Adam Smith (WA-09); in the course of that conversation I told him what we’re doing here, and he wanted to offer a few thoughts of his own…and when you put all that together, I think we’re going to have a lot to talk about.

“Tis surprising to see how rapidly a panic will sometimes run through a country. All nations and ages have been subject to them; Britain has trembled like an auge at the report of a French fleet of flat bottomed boats; and in the fourteenth century the whole English army, after ravaging the kingdom of France, was driven back like men petrified with fear; and this brave exploit was preformed by a few broken forces collected and headed by a woman, Joan of Arc.

--From The Crisis, by Thomas Paine; essay of December 23, 1776

So the two-second recap of the Big Idea is that if government, at all levels, were Buying More American we could create More American Jobs, and as we mentioned above, the way the rules stand today, 51% Made in USA is good enough – and that seems to leave a lot of room to do better.

Of course, nothing is as simple as it seems, and despite what Tom Lehrer might say, it’s not all skittles and beer for this proposal either.

I have a source in the Administration who would not go on the record for this story; nonetheless I was sent a detailed email response “on background”, which I’ll paraphrase for our use today:

We are looking to expand US trade abroad, and we have made deals for access. We agree not to restrict, for the most part, where purchases can be made, and we expect reciprocity from the rest of the world when their governments do their purchasing - or at least from those governments with whom we have a WTO Government Procurement Agreement (GPA) or a Free Trade Agreement (FTA). (Want even more details? Check out either the Trade Agreements Act of 1979 or this Congressional Research Service report).

The Administration would tell you that 95% of the world’s consumers live outside the USA, making trade reciprocity particularly valuable for the US.

They would also tell you that if we decide on our own to “change the deal”, then we should expect retaliation from other governments.

Beyond that, they would suggest that there are US companies that source many of their products or product components globally, and those companies would actually be hurt by stricter Made in USA requirements.

Finally, the Administration points out that there is a dollar cost for more Made in USA, as opposed to using what can often be cheaper foreign sourcing.

In the introduction I suggested that I had a comment from Labor, and that’s somewhat correct. I contacted the Washington Sate Labor Council (WSLC) for a comment, and they sent me material that came from the Alliance for American Manufacturing (AAM), at the same time telling me that the AAM’s position on Buy American is the same as their own.

It is inaccurate to refer to the AAM as a Labor organization, however, as they are a partnership of Unions, manufacturers, and other interested parties. Among those partners are the AFL-CIO and the United Steelworkers (USW); the USW was one of the founders of the group.

They take issue with a great deal of what the Administration has to say, and I’ll start with a quote from an email sent to me Friday by the AAM’s Steven Capozzola:

The threat of retaliation for buy America is ridiculous. The law [the Buy American Act, 41 USC 10a-d] is specifically written so as to be applied when permissible under our existing trade obligations.

Here’s a quote from AAM material that was referred to me by the WSLC:

…the U.S. is, by far, the world’s largest importer, soaking up a net $819 billion in goods in 2007…The U.S. imports far more than it exports, a balance of sales that our trading partners are anxious to preserve. This is not about restricting imports. It is about using taxpayer dollars, when allowed by our international obligations, to purchase U.S.-produced goods. As the global downturn has progressed, many industrialized countries such as France and China have already taken similar action to support their domestic manufacturing base.

…These trade agreements do however allow for domestic preference under a number of circumstances…These preferences were negotiated for a reason. It would be irresponsible not to utilize them to the fullest extent possible.

…By contrast, other countries have held themselves out of the reform movement and have instead opted to promote their own manufacturing base through closed self-procurement programs. A good example is China, which, in addition to a recent $586 billion stimulus program, continues to subsidize its own producers via deliberate (and illegal) currency undervaluation. Until countries like China make the same commitments, and sign-on to internationally accepted procurement agreements, the U.S. will accomplish nothing by making yet more unilateral concessions.

In addition, as noted above, these contentions rely on the baseless assumption that the U.S. currently has any significant access to foreign procurement markets that would be at risk if other countries “retaliated.” The majority of the foreign stimulus in PPI’s tally is made up of $614 billion being spent by countries that have no procurement obligations towards the United States and that already apply domestic procurement preferences (principally China, but also India and Brazil).

-- Alliance for American Manufacturing, The Facts on ‘Buy America’ and Domestic Sourcing, February 2009

The AAM would also want you to know that in addition to China numerous other countries, specifically Canada, certain European nations, Japan, and Brazil all use other forms of “discrimination” to “preference” their goods over ours when it comes to government procurement: impossible-to-meet technical standards, “murky” purchase procedures, and bid rigging are all tools used around the world to make sure local suppliers are just a bit more, shall we say…reciprocal…than a US supplier might be.

Look, I hate to do this to everyone, but we’re once again running longer than we should, and we still have a lot more to talk about, so at this point I’m going to call “cliffhanger!” and set us up for a Part Three.

Here’s the “agenda”:

We’ll be talking about how the devil’s in the details: specifically, we’ll be looking at what “Buy American” is already excluded from these various trade agreements– and there’s a lot more than you might think, even as some of it is targeted in amazingly specific ways (to do that we’ll be paying particular attention to the annexes to the WTO agreement); we’ll also get Congressman Smith’s reaction to all of this…and once again, we’ll see if we can’t get it all done in 1500 words or less.

And on a lovely summer’s day, what could possibly be better beach reading…what with the redolence of the lazy sea breezes and the surf washing gently up on the shore and all…than 1500 more words on the annexes to the WTO agreement and how it all relates to sneaking a jobs program past recalcitrant Republicans?

I can’t think of anything else either, and I can’t wait to see you there.

Monday, August 15, 2011

On Doing Better Than 50%, Or, Could More “Made In USA” Mean More Jobs?

We gotta grow some jobs, and that’s a fact, and we probably aren’t going to be able to do it with big ol’ jobs programs funded by the Federal Government, what with today’s politics and all, and that means if this Administration wants to stay in the jobs game they’re going to have to find some smaller and more creative ways to do it.

They are also going to have to come up with ideas that are pretty much “bulletproof”, meaning that they are so hard to object to that even Allen West and Louie Gohmert will not want to be on record saying “no no no!”; alternatively, solutions that work around the legislative process entirely could represent the other form of “bulletproof-ery”.

Well, I have one of those “maybe bulletproof” ideas for you today, and it has to do with how “Made in USA” the things are that our Government buys.

The archer sees the mark along the path of the infinite, and He bends you with His might that His arrows might go swift and far.

Let your bending in the archer’s hand be for gladness;

For even as he loves the arrow that flies, so he loves also the bow that is stable.

--From The Prophet, by Kahlil Gibran

For the rest of the story to make sense, we’ll have to define a term; specifically, “Made in USA”.

Most manufacturers in the US have to meet a very stringent standard before they can refer to a product as “Made in USA”; here’s how the standard is described by the Federal Trade Commission:

Traditionally, the Commission has required that a product advertised as Made in USA be "all or virtually all" made in the U.S.

There are special rules, most notably for automobiles (also textiles, wool, and fur), but for the most part everyone else goes by the “all or virtually all” standard when they claim something is “Made in USA”.

With one giant exception.

When the Federal Government “Buys American”, anything with over 50% US content is considered “Made in USA”; this according to the provisions of, naturally enough, the Buy American Act, 41 USC 10a – c. (Beyond the law, there are also certain Federal Regulations and Executive Orders involved; for now we’ll just call it all “the law” and let it go at that.)

Now there doesn’t seem to be anything immediately evident in the law that would prevent the Federal Government from purchasing more than 50% US content if we wanted to, and the Big Idea here today is that if government at all levels began to purchase more than 50% US content, we could create more US jobs, now and in the future, and we could do it with a minimum of muss and fuss.

Obviously, there are practical limits as to how far you could take such an approach (for example, good luck buying a Made in USA laptop), and the current law has exceptions that reflect that reality.

But consider this: there are about 450.000 vehicles in the Federal inventory (that does not include military combat vehicles), with roughly half of those belonging to the Postal Service; the General Services Administration buys about 65.000 vehicles a year (they run the Federal motor pool, and that’s the other half of the inventory).

Beyond that, think of all the billions upon billions of dollars of more mundane things the government buys every year: janitorial supplies, paper and toner, desks and chairs…well, you get the idea; now imagine if more of all of that was made right here.

One example of how we can do better can be found in Celina, Tennessee, where a garment factory that was doing work for the Air Force found itself unable to compete for a subcontract on $100 million worth of uniforms being made for the TSA; that’s because the uniforms were being made in Mexico instead.

If the work was being done here, it could mean about 300 jobs in a town that could really use ‘em. (By law, military uniforms are supposed to be made in USA; that’s an imperfect process.)

Some things already are restricted: if we don’t have a reciprocal trade agreement with a country, they generally can’t sell to the US government; China and Taiwan fall into that group.

I’m often guilty of running stories too long, so we’re going to cut this short today with a summary…followed by a cliffhanger that should keep you looking forward to Part Two:

Government buys a whole lot of stuff, and we could be buying more of it in the USA, and if we did, it could translate into jobs in places like Celina, Tennessee.

But it’s not as simple a picture as you might think, and when we get together next time, we’ll talk about the impact of free trade agreements on “Made in USA” purchasing, we’ll get the AFL-CIO’s reaction to all of this, and, if all goes well, we’ll see if we can provide official reaction from the Obama Administration.

And even though you’ll be sitting in your seat…you’re only gonna need the edge…

Thursday, August 4, 2011

On Organizing Anger, Or, Could Olbermann Primary Obama?

It was just a couple of nights ago that Keith Olbermann was challenging us, in one of his “Special Comments”, to rise up in the streets and take back this country.

He pointed out that the only way those on the left were going to be able to fight against those who are looking to get all “Tea Party” is to be as angry and as organized and as aggressive as the Tea Party community, and if we’re smart, we’ll take him up on that challenge.

But if you really want to push “professional” Democrats to the left, most especially this President, and you want to do it in time to impact the ’12 cycle, the only way to do it is to run a candidate in primary contests that either moves the conversation your way…or leaves you with a surprising new Candidate.

And right here, right now, we actually have a chance to do exactly that – and that’s why, in today’s discussion, I’m going to challenge Olbermann right back.

“Then white men began to fence the plains so that we could not travel; and anyhow there was…nothing to travel for. We began to stay in one place, and to grow lazy and sicker all the time. Our men had fought hard against our enemies, holding them back from our beautiful country by their bravery, but now with everything else going wrong, we began to be whipped by their weak foolishness…”

--Pretty Shield, of the Crow Nation, quoted in the book The Native Americans: An Illustrated History

So imagine, if you will, how the political conversation would be different right now if this President was facing a primary challenge from an unabashed Lefty.

Let’s go further: just imagine how things would be different over at 1600 Pennsylvania Avenue or over at the Capitol if someone announced they were running against this President from the left – and on the day that person announced, they had 15-20% of the Democratic electorate in their pocket, with an increasingly unpopular President on the other side.

Now imagine if that person had no qualms about “pooping in the Democratic pool”, and was willing to call out the Party establishment for having let the Nation down in so many different ways these past couple years, which would presumably make that candidate very interesting to those who support the interests of Labor, just to give one example.

And most importantly of all, imagine if this President, having just caved, again, for a second, and, soon, a third round of Republican hostage-taking (and facing a fourth in January of 2013), had to face a riled-up and articulate opponent on a debate stage.

Of course, for that to happen, you’d need a credible figure with national recognition, and in this environment, it wouldn’t hurt if that person wasn’t too closely associated with either Washington or the existing political parties.

(All of this would also make that candidate interesting to centrist voters as well; you’ll recall that the ’08 Obama Campaign appealed to many centrist voters for many of the same reasons.)

It also wouldn’t hurt if that person looked like a President, and even better, if that person was entirely familiar with the world of television.

So think about all that for a minute…and after you do, consider this: is there anyone else out there that you’d rather see primarying this President than Keith Olbermann?

Now let me take a minute and talk directly to you, Mr. Olbermann:

I know you said that it’s time for us to get organized and angry, but in this media world, if you don’t have Astroturf to get your movement off the ground, you need a celebrity with respect in all the right places, and that describes you pretty well.

Movements need to raise money, and if you were to go out there and do a week of hustling, I’ll bet you could raise seed money from both the “Left Coast” and “Upper West Side” communities (and you might even be able to hit your boss up for a donation); you could also draw a lot of PAC money (Labor, for starters, the gAyTM, for another) and lots of individual, enthusiastic, Internet contributions – and what happens to the political conversation if the Olbermann Campaign begins to raise money at a pace that puts The Fear on the Obama Campaign?

Al Gore took a big risk, and a made a big financial commitment besides, when he decided to bring you over to Current, and I don’t want you to have to worry about what’s going to happen over there; with that in mind I’m going to suggest that we ask Michael Moore to step in to take the wheel for a short time, at the same time you let Schuster run the actual newsgathering operation, so that we know you’ll be able to come back to something that has been in pretty good hands.

“…(baseball is) our national pastime, that is if you discount political campaigning.”

--Ronald Reagan

Before you dismiss this idea out of hand, Keith (can I call you Keith?), I want you to think about one thing, and I want you to think about this very, very, carefully:

You know what happens to those lucky few who actually make it through a Presidential campaign and win?

They get to throw out the first pitch of the new baseball season – at least four times.

You could take a few months out of what you have done so well and really change the direction of this nation’s politics, and you could think of it as a patriotic duty– but it would also be an incredible learning experience, and you’d come back to your own job with an understanding of the inner workings of realpolitik that very few on television could ever match…and after it’s over, since you wouldn’t be running again, you could actually talk about “where the bodies are buried” in a way no one else can.

Maybe you’re thinking: “How can I be credible if I have no real ability to run a government?” The answer can be found, literally, right here.

The Blogosphere is entirely capable of providing the appointees who would run a Government – after all, we have experts, including a Nobel laureate, to run an economy (Secretary of the Treasury Paul Krugman? Robert Reich for Council of Economic Advisors?), and folks like Lawrence Wilkerson who could take over at State…and I could go on and on and on, all the way down to my man Marshall Adame, who, I promise you, has all the training and skills we would need to ramrod the actual physical process of withdrawal from Iraq and Afghanistan (you’ll find him at BlueNC; on his resume is a stint running the Basra Airport, a couple of decades as a Marine logistician, and an unsuccessful run for Congress).

And it’s not like you would be more subject to scrutiny than you are now: virtually every hard-right Conservative out there already sees you as the Devil incarnate – and that’s actually an advantage in this situation that can’t be ignored.

So…whaddaya think?

You want to go from making Special Comments about how The Fear has overtaken Democrats to being the one who puts The Fear upon them?

You wanna drive Grover Norquist and Steny Hoyer absolutely nuts, both at the same time?

You want to finally do what Craig Nettles got to do, that you never did: play baseball and join the circus?

Well, here’s your chance to do something that could change the whole political conversation – and before we’re done, President Obama might even find those “comfortable shoes” we’ve heard so much about.

So let’s take one for America, and let’s get this thing on the hump, or whatever cliché you prefer…but let’s do it now, and let’s do it well, and let’s create something that brings the “discouraged” public to bear in a way they aren’t today.

This is your chance to do something big, something profound…something that takes your “diva tendencies” and plays them to their best advantage…and I think it’s time for you to get behind this idea; before, as you suggested could happen, the window to fight back closes.

Monday, August 1, 2011

On Speaking To Power, Or, When Sanity’s Gone, There’s Always Satire

So everybody’s hearing the news, right?

There is a tentative debt ceiling deal, and this Administration and Congressional Democrats seem to have won everything they wanted: Republicans get to have multiple “we don’t approve” votes before 2012 on raising the debt ceiling, there won’t be any new revenue, there’s going to be another “hostage-taking” event around Christmastime, for many Democrats the issue of the Ryan Budget and the dismantling of Medicare is likely off the table for the 2012 electoral cycle, and the Administration seems to have figured out a way to not involve itself in shaping the way that entitlement reform will work out.

All in all, it’s some pretty slick negotiating, and I’m sure this Administration and Democratic Congressional leaders must be very proud.

Even on bad days, however, you gotta have some fun, and that’s why I’m encouraging everyone to take a minute today to say #thanksalot.

“This is tremendous, Don, just tremendous. The atmosphere heavy, uncertain, overtones of ugliness; a reminder in a way of how it was in March of 1964, at Miami Beach, when Clay met Liston for the first time and nobody was certain how it would turn out.”

--Howard Cosell, from the Woody Allen movie Bananas

There are a thousand other people today who will detail exactly where this went wrong, but I’m all about at least sending some kind of message; in order to say “thanks a lot” I’ve been Tweeting satire to the White House, and I’m hoping you’ll take some time today to do the same thing, using the #thanksalot hashtag.

“But I don’t Twibble, or Twister, or whatever they do on twitter”, you might say “and I don’t really get how it works”.

No problem.

If you want to send a message to a twitter user, you just put an “@” in front of their name, as in @whitehouse, usually right at the beginning of your message.

Hashtags are keywords that allow for lots of similar messages to be located, all together; when you put an “#” in front of a “word” it becomes a hashtag, as in #thanksalot or #arentyoutiredof. Popular hashtags become “trending” hashtags, and that’s one way how you make a big public statement on twitter (“Retweeting” someone else’s message is another way it’s done; retweeting and the sending of hastagged messages often occur symbiotically.)

Just to get you in the sarcastic spirit of the thing, here are some of the Tweets I’ve sent so far today:

@whitehouse Obama visits fallen building, a collapsed trench, and Carlsbad Caverns; says he'll "never cave" on debt deal. #thanksalot

@whitehouse republicans propose "logan's run", obama seeks reasonable compromise. #thanksalot

@whitehouse offers 1 Wet-Nap for each American thrown under bus yesterday; Republicans protest new "entitlement" #thanksalot

@whitehouse Prozac pill commits suicide; says in note that White House caving once again is "too depressing" #thanksalot

@whitehouse To avoid uncertainty in December, Obama Administration announces today they're caving on Bush tax cut extension #thanksalot

@whitehouse Dec. 23, 2011-Boehner: "We'll agree to revenue increases when both houses have a clean vote to repeal Obamacare..." #thanksalot

@whitehouse Dec 25, 2011-Administration announces entitlement compromise: cat food now food stamp-eligible #thanksalot

@whitehouse Obama Administration announces they prefer to negotiate with hostage-takers: "It makes us feel less guilty..." #thanksalot

@whitehouse Obama Administration "feels America's pain", announces nationwide program to distribute K-Y after debt deal #thanksalot

@whitehouse is there some sort of political viagra that could make obama "stand firm", just once? #thanksalot

At this point it looks like the only way this stinker goes down is if House Democrats vote against this bill and take the “Debt Ceiling Sword of Damocles” that the President has placed over their heads and put it right back on his, forcing either a 14th Amendment solution or a “clean” debt limit increase; if they do they not only stop this next hostage-taking dead in its tracks, but they create, for this Administration, the same level of fear that the Tea Party has today, and if that happens, then we move into the next stage of debt reduction negotiations from a position of strength.

If they fail to stop this deal, then when Medicare gets whacked in December the Democrats become co-conspirators – and at that point, for a Congressional Democrat up for reelection in ‘12 it’s gonna be either go down with all the other incumbents or run against Obama.

And at that point, the most interesting political question might be: did Obama depress turnout enough to cause Democrats to lose even more seats in Congress, or, when the details are better-known, is there going to be a huge “throw out all the bastards” vote that hammers Republicans just as ferociously as it does Democrats?

And what about Michelle Bachmann?

I don’t know, but it should be quite a soap opera between now and then, so stay tuned, make sure to say #thanksalot…and then do it a few times more…and most importantly of all, try to have as much fun in a bad situation as you can.

After all, as long as it’s happening to everyone else, it’s still comedy; until it finally does hit you…it’s not yet officially tragedy.