Create American Jobs

Our Growth Is Outsourced, Like Our Jobs

Dave Johnson — Wed, 11 Aug 2010 14:00:51 -0400

In the news today, a familiar story: imports increased, exports declined. About $50 billion in one month alone. The trade gap isn't just costing jobs, it's a significant factor in the slow recovery as well. See below.

In 2005, when we were halfway down to where we went, I wrote a post at my own blog titled, The Trade Problem. With (my) permission, here is the entire post:

View of San Francisco from Sausalito.

See how this ship is riding high off the water? This ship is loaded with empty containers, bound for China.

Ships come into the port loaded with goods that we buy from China. But China doesn't buy very much from us. So we have to send ships back loaded with empty containers. (Well almost empty, they're actually filled with dollars, and jobs, and the future.)

June 2010 Trade Numbers: We're Back To Terrible

That was 2005, And now we're importing shiploads of stuff again, and sending the ships back filled with cash - and what's left of our future. The trade deficit widened to $49.9 billion in June,

The trade deficit in the U.S. unexpectedly widened in June to the highest level since October 2008 as consumer goods imports rose to a record and exports declined.

[. . .] Exports from the U.S. decreased to $150.5 billion from $152.4 billion, reflecting fewer shipments abroad of semiconductors, computers and steelmaking materials. Imports increased in June to $200.3 billion from $194.4 billion, led by telecommunications equipment, automobiles and consumer goods such as pharmaceutical preparations, televisions and furniture.

The quantity of imported petroleum increased, while the price per barrel fell to $72.44 from $76.93 the prior month, according to today’s report.

Trade Deficit Cuts Jobs And GDP

We are not just outsourcing jobs, we are outsourcing our own economic growth to others! Charles McMillion of MBG Information Services writes that, "the worsening trade deficit cut the Q2 GDP growth rate by -2.8%."

That is, if trade and production losses in Q2 had remained at Q1 levels, all other things equal, GDP would have risen at a 5.2% rate in Q2 rather than the actual estimate of meager 2.4% growth. Today’s report suggests BEA must now revise its estimate which could show the worsening trade deficit lowering the Q2 growth rate by a full -3.0% leaving growth at just 2.2% with, apparently, worse to come.

A lot of people think it's just "old stuff" like steel that is losing out. But look at this chart:

Note how the chart has to be extra tall to fit the huge decline in exports of advanced products. There are more charts with more bad news. (PDF)

Congress And The President's New "Make It In America" Initiative

Congress and the President are trying to do something about it, with the new "Make It In America" initiative. CAF's Bob Borosage in Politico today, Save American manufacturing,

More than 75 percent of Americans support a “national manufacturing strategy to make sure that economic, tax, labor and trade policies work together to help support manufacturing in the U.S.”

Not surprisingly, the Democrats’ lead initiative now is the National Manufacturing Strategy Act ... It calls for quadrennial review of U.S. manufacturing policy — including assessing strategic industries, reviewing tax and trade subsidies and requiring agencies to coordinate strategies.

. . . Obama’s “new foundation” for the economy offers first steps: public investment in 21st-century infrastructure, in education and training, in research and development. Yet these, slighted in years of conservative control, are necessary but not sufficient.

To ensure products are “made in America” requires hardheaded steps to balance trade and challenging the mercantilist countries, starting with China.

AAM: "Wrong Direction" and "Giving China Benefit of Doubt on Currency Falls Short

Alliance for American Manufacturing (AAM) Executive Director Scott Paul on this morning's latest monthly U.S. trade figures:

"The trade deficit is headed in the wrong direction, and that's bad news for American workers. ...

"The White House strategy of giving China the benefit of the doubt on currency has fallen short. The House and Senate must now step in and pass strong legislation to penalize China's currency manipulation and bring down our trade deficit. Over the longer term, we're encouraged that the recent focus by Congress and the Administration on 'Made in America' solutions to revitalize our manufacturing base and create jobs will bear fruit ...

"The drop in exports is also an enormous blow to the Administration's efforts to double American exports. ... The biggest internal obstacle is the lack of an aggressive strategy to boost American manufacturing. ...."

Are we right back to the "new normal" with even more jobs and industries being shipped overseas? Or are we going to learn from the past and do something about it this time? Conservative "free trade" and "free market" nonsense just doesn't work. It's time to leave that stuff behind instead of trying to accommodate and appease, and all the resulting backup that brought us, keeping us from moving forwards: We need "Buy American" in procurement. We need high-speed rail and local mass transit projects. We need a huge infrastructure rebuilding and modernization effort. We need the Local Jobs for America Act. We need a national Renewable Energy Standard. We need to set a high price on carbon. We need to build out the smart electrical grid. We need to address Chinese currency manipulation and trade violations. We need to restore taxation of the wealthy. We need free education for our people. We need to extend unemployment and COBRA subsidies for the "99ers." We need to increase the minimum wage. We need to pass the Employee Free Choice Act. We need Immigration Reform.

And this is just some of what we need. And these all just buy time until we can figure out how to restructure the economy by reforming who gets what for what and ideas of what "ownership" means, so that we can all move into a prosperous, progressive future.

President Obama, Make Congress Stay In DC Until They Pass Jobs Legislation

Dave Johnson — Tue, 20 Jul 2010 12:47:10 -0400

The Constitution of the United States, Article II, Section 3: "He may, on extraordinary Occasions, convene both Houses, or either of them..."

We have a jobs emergency and the Congress has not acted. Almost everything the Senate does is being blocked by an obstructionist minority that is trying to tank the economy, hoping a demoralized public will blame the other party and won't bother to vote, which will help them take power in November.

The government is not governing and the consequences for working (and out-of-work) people are severe. Millions of unemployed are not finding jobs. People can't pay their mortgages or rent and are losing their health care. Small businesses are reaching the end of their ability to hold out. Communities, even whole states are out of money to cover even basic services.

The President has the the power to do something about this. He has the power to show the public where he and his party really stand on doing something about the jobs crisis. He has the power to show that he can put his foot down and demand action.

The Congress is planning to go on recess in August and the President has the power to make them stay until robust jobs legislation is passed.

This is an opportunity to apply pressure to get badly-needed job creation and further stimulus underway. This is an opportunity to show the public who is acting and who is blocking. This is an opportunity to clarify for the voters who is working to get jobs going and who is keeping the Congress from acting.

The President has the opportunity to lead. He has the opportunity and the responsibility to govern.

This is an emergency. Make them stay.

If You Feed Them They Breed -- And Other Dehumanizing Conservative Idiocy We Should Ignore

Dave Johnson — Tue, 06 Jul 2010 14:38:23 -0400

The country is in an economic emergency. Unemployment -- especially long-term unemployment -- is at extremely high levels and the recovery is faltering. Conservatives are obstructing efforts to solve this because they believe it helps them in the November election. To this end conservatives are throwing out every possible argument against helping the economy to see if any of them stick, and to provide cover for opposing taking any action that might help matters.

The latest nonsense they are spreading is that helping the unemployed keeps them from finding jobs. Good Lord! This is basically the old "if you feed them they just breed" storyline. They say "it makes them dependent" as if hard-working people laid off because of Wall Street's scams are squirrels. Or, to hear the nasty way conservatives talk about these human beings, they are like rats. "Hobos," one Congressman called the unemployed! And the DC elite listen, chuckle and repeat.

But while they say unemployment assistance keeps these lazy parasites from finding jobs, they also obstruct bills that create jobs by maintaining and modernizing our infrastructure. This tells you it's just something they say, to cover for what they do. And what they do is obstruct any effort to fix the problem because they believe they will benefit if it is not fixed.

For example, the big DC drumbeat right now is against "spending." They claim that government spending caused the crisis, ignoring and passing the buck on everything that actually caused it, especially their deregulation and their lack of oversight. They blame government for everything, so why should this be different.

Along these lines they claim that the stimulus didn't work, or even that spending made the problem worse, because there are still people out of work. But look at the following chart. The right side of the chart shows the effect of the stimulus. (Source, Jed Lewison and Karina Newton)

A conservative, anti-government myth that is everywhere now is that "Government forced banks to give loans to people who couldn't pay them back, and this caused the financial collapse" -- and its variant that it was about forcing banks to "help minorities. This is an example of the tactic of repeating a lie over and over until enough people believe it. To deflect people from understanding what really caused the crisis and from seeing that they are obstructing the effort to reform the financial system they made this one up" Unfortunately this has become what bloggers call a "zombie lie" -- no matter how many times you prove it is just a lie, it comes back from the dead.

The Zombie Lie Problem

The "zombie lie" problem shows that it is a mistake to think that just arguing facts is a way to shoot this stuff down. Spending your time arguing facts with people who are trying to mislead misses the point. The lie is not about the facts, it is cover for the obstruction. When you try to argue a fact they will make up something else to throw you off track. Facts are not what this is about, feeding a narrative of no action is what this is about, because they understand that a bad economy helps them in the Fall.

Listening to this stuff at all, and trying to argue facts just contributes to the lack of action. There comes a point when you have to stop llsteneing and getting bogged down by intentional distractions and get something done for the economy and the public.

It Is Time To Stop Listening To This Stuff And ACT

Enough with these stupid, heartless, dehumanizing right wing "if you feed them they breed" arguments that are preventing action. People are out of work and the recovery is faltering. It is time to push aside the nay-sayers, and get something done. The government simply has to step in and act. First, do the minimal, obvious things:

1) Pass the unemployment extension, because people can't find jobs.

2) Continue COBRA subsidies, because so many of the long-term unemployed are older people who cannot get or afford insurance any other way. This is simple humanity, people! And, by the way, COBRA itself is running out for many people, never mind subsidies.

3) Send aid to the states. 900,000 jobs in the states are riding on this help.

At a minimum do this. Don't get lost in the weeds of what bill to attach it to. Just do it. Bring it out by itself for an up or down vote so the public can clearly see who is helping and who is voting against jobs and help for the unemployed.

But what Congress really ought to be doing is passing the George Miller "Local Jobs for America Act." .

As economists like Paul Krugman keep saying we risk going into a serious depression. At the least we are entering a pattern of slight recovery, slight decline for a decade. Look at what happened to Ireland when they tried "austerity."

Here is an undeniable fact about government spending. Government spending on infrastructure creates the conditions that enable businesses to prosper. Tax cuts leave nothing behind, but the roads, transit systems, ports, electric grid, Internet, courts, schools, universities, research, and all the rest that government spending creates make us competitive and are needed by businesses

Do it. Ignore the obstructors who are trying to set the stage for November. Put people to work. Help the long-term unemployed. Pass jobs bills.. And spend on modernizing our infrastructure so American can be competitive again.

Conservatives Call For Massive Deficits To Create JOBS

Dave Johnson — Thu, 10 Jun 2010 10:26:48 -0400

Saying that the Obama "stimulus" was not big enough, conservatives are demanding that the government massively increase deficit spending to create badly-needed jobs. Newt Gingrich, at the conservative media outlet Human Events, calls for an Economic Freedom Act that includes,

• Reducing the payroll tax by half for 2010...;

• Eliminating the capital gains tax ...;

• Reducing the corporate tax rate to 12.5% ...;

• Permanently eliminating the death tax ... ; [note - what he refers to as a "death tax" is an income tax on wealthy children - DJ]

Each of these tax cuts demanded by conservatives would greatly increase the deficit. Many other conservative organizations and politicians are joining this demand for massive deficit spending to create jobs.

In the article, Gingrich also criticized the size of the Obama stimulus because it did not create enough jobs, writing, "The Obama stimulus has clearly failed. It’s time to get back to what we know works for job creation. 2+2=4."

Gingrich was right that the stimulus was insufficient. The CBO recently reported that the stimulus put up to 2.8 million people to work, lowered the unemployment rate by up to 1.5% and boosted the GDP by up to 4.2%. But the conservative-created job and recession crisis is much, much worse than that. We need emergency action to create 10 million jobs!

Tax cuts are the wrong approach because they would also reduce the country's ability to maintain and modernize the infrastructure while increasing the problem of extreme concentration of wealth. Economists say that tax cuts are not effective at creating jobs (and create structural deficit problems), while directly creating jobs through infrastructure investment also leaves behind ... badly-needed infrastructure.

Liveblogging AFN Press Conference On JOBS

Dave Johnson — Tue, 08 Jun 2010 15:10:36 -0400

Bob Borosage introduced Richard Trumka of the AFL-CIO, who said, "Saving and creating jobs is the path to reducing the deficit."

Progressive tradition in America means the same today as for many years. It is the promise of a society built on what unites us not divides us.

Majority voted for change in in 2008. But still the economy is not working for all. The recovery plan did a lot of good - a lot of good - but was underpowered compared to Bush’s economic catastrophe. We face long term mass unemployment if America does not act boldly.

Americans of all persuasions are angry. We need leaders to attack the plutocracy that has run economy into the ground. We have to demand progressive populist leadership now. We need to hold leaders accountable for strong action. We have to demand that elected leaders fight for economic justice.

That begins with good jobs. We need leadership that fights to create good jobs. Do more not less to create jobs. Wall street should pay to create them! Congress should address jobs crisis with same focus and energy they brough to bailing out the banks. We need President Obama to walk the walk to capital hill. We need his help, because handful of dems are afraid to do withat it right for America. Their fears of budget deficits are misguided.

Saving and creating jobs is the path to reducing the deficit. Doing nothing is not an option, now is right time for action. It is always the same people on the hill who stand in the way, stood in the way of health care, financial reform, standing in the way of our economic future. It is time for action not excuses

Terry O'Neill, President of National Organization for Women (NOW), and chair of NOWPAC.

In the early days of the great recession men were hardest hit by unemployment, but as it progressed it is having a devastating impact on women.

High unemployment has depressed state and local revenues, and they are cutting back on services that families, especially families with single parents, have relied on. Health care, education, college cutbacks, colleges are more expensive, domestic violence programs cut back, all services cut back, all at a time when demand is skyrocketing.
For example last year in just one day there were over 9,000 requests for help from women trying to escape domestic violence that went unmet, for things like emergency shelter, transportation, legal representation. If that day is typical this means over 3 million needs are not met yearly now.

If people don't have jobs then states and cities and counties don’t have tax revenue, so people can’t access services just when needed most. Needy family emergency fund expires on September 30, so many states are already shutting down their programs. So there is a rapidly approaching crisis point for needy families.

High unemployment correlates with domestic violence, anxiety is higher, tensions are higher. 68 perecnt of programs report lack of jobs lead to increase in victims with no place to go.

State cutbacks are in jobs where women dominate – teachers, nurses, etc. but because of systematic wage discrimination, these are the very people who do not have savings to fall back on.

Older people are going on Social Security at a younger age, which means for rest of their lives they will get lower payments.

I am deeply concerned about the debt commission. Social Security did not create the deficit problem, deficits should not be cut not on the backs of people who rely on Social Security.

What to do:

Enact a strong jobs bill that puts women and men back to work. Create jobs in the social services area, so people who need them can receive them.

Extend the temporary assistance for needy families emergency fund

Strengthen enforcement of equal pay laws.

Strengthen Social Security and Medicare for current and future generations.

It was disasterous failures of Bush-era policies that got us into this: Iraq, Wall Street and tax cuts for th erich.

Deepak Barghava of Center of Community Change

In communities we work unemployment is not just a problem it is a social catastrophe, worst since great depression. Washington has to stop thinking small and take bold and necessary steps.

No real econ recovery until we solve this unemployment crisis, because consumer demand is the most important driver of economy.

President Obama recently said government cannot create jobs but government plays a critical role in stimulating the economy and is the only realistic option to create jobs quickly and on a scale that makes a difference.

In the 30s government stepped in and restored dignity and self esteem, generated services for people to rely on. We all still rely on. Long unemployment leads to higher deficits. The first step to getting the deficit under control is generate jobs and create more taxpayers. $235 deficit reduction from getting people back to work.

What to do:
Local Jobs for America act in House from Miller and Senate by Sherrod Brown. This is the boldest on table, only one that can act quickly.

Stop dithering put America back to work.

Q What investment is AFL-CIO making in Arkansas to help Halter?
A Phone calls, millions of leaflets, door knocks, staff and volunteer time.

Q Long term unemployed losing skills
A AFL-CIO has skills upgrade programs, pre-apprenticeship training, trying to get training but doesn’t do good to train people if you don’t have jobs to go back to. We do not have a short term deficit crisis, we have a jobs crisis. Not fixing the jobs crisis makes the deficit worse.

Q Obama's export initiatifve, try to create 2 million new jobs by increasing exports. Is this realistic?

A Trumka enforce trade laws, deal with China currency. Otherwise no way to increase exports. Europe has an export strategy. Europe’s austerity program – they will stop buying.

Q How is labor working with broader prog movement
A We have reached out, working talking planning strategizing more than in the past. None of us can do it alone.

We need long term investment in infrastructure. Long term commitment not just a year, so it will bring in private investment. Help with schools. Aid to state and local governments. Wall Street still not lending to small and mid-sized businesses, so take TARP money, give it to regional banks instead. Get the economy going.

Deepak – in previous crisis there was a massive response from washington. It is possible for govt to directly create jobs in things that matter and get them on the street quickly. Very important stepping stone for people to find work in their occupations. For next 5 years unless something dramatic sustained 789 percent unemployment,. No option but to have govt creating jobs.

Q what should debt commissions focus on
A Deepak: Very conserned they could propose solutions that will exacerbate jobs crisis. Maybe efforts to harm Social Security, a critical safety net program. Deficit reduction now will do enormous grave harm to people and to the deficit itself, the long term economic health of the country. Crucial part of deficit reduction is get jobs moving, get infrastructure built, etc.

Trumka: Reiterate, Social Security has no effect on structural deficit, but to show people they are capable of "attacking tough problems", but people’s lives are at stake here. Raise retirement age is a death sentence. I have a personal example, my father worked in a coal mine, couldn’t go another day after turning 62, black lung, to work to 70 he would have died on the job. I guess that is a solution, to have people die on the job. Instead they should focus on health care. We are all told that health care costs were driving the deficit, so we will hope plans to get back to public option, etc. Necessary to drive down health care costs and use money to create jobs.

What about revenue side? Financial transaction tax. $150-300b in revenue. Necessary also to look at 1946-73, productivity and wages went together because collective bargaining was 37%. From 1973 to date productivity increases but wages have been stagnant because union density is down to12%. So we lost the ability for workers to get a share of what they produce, which is what drives the economy. Can’t build an economy without wages, so families used borrowing for the last 30 years.

Oneill: Debt commission, concern there is not much transparency. If they come out with suggestions for Social Security cuts, it will devastate women. Women are twice as likely as men to have zero pension or savings

Trumka:
The only way to cut the deficit is to create jobs. We have no short term deficit problem

Hell No! We Won't Send Our Tax Dollars to China

Leo Gerard — Mon, 09 Nov 2009 11:10:30 -0500

Taking candy from a baby: A consortium of Chinese and American companies goes to Washington and announces plans to build a $1.5 billion windmill farm in West Texas using $450 million in U.S. stimulus funds, which will create 2,330 jobs - 2,000 of them in China.

The baby -- Washington -- doesn't cry or whine or spit in the consortium's face. That's what's really wrong with this story.

So accustomed to being bought and sold, Washington simply begins processing forms so it can hand over your tax dollars to create jobs in a turbine factory in the city of Shenyang, China at a subsidy of $193,133 each.

It's like these bureaucrats live in Wonderland. Or an America where the unemployment rate isn't 10.2 percent. Or where 40,000 American manufacturing facilities didn't disappear in the past decade. Or where banks didn't repossess nearly a quarter million American homes in the past three months.

We've got a message for Washington: Hell no! We're not giving tax dollars to China. What's wrong with these businesses and our government? It is the $787 billion American Recovery and Reinvestment Act of 2009. It's not the Chinese Recovery and Reinvestment Act.

It's bad enough that we've off-shored our factories and technology and jobs over the past 20 years. We're not off-shoring our Stimulus cash too. In fact, we're tired of serving as the schoolyard wimp of the world. We need our own industrial policy so we can stand up and compete in the world market manufacturing the likes of wind turbines. And we need it now.

China has an industrial policy. And it uses that policy to dominate. Here is how Keith Bradsher of the New York Times described China's policy to become a world leader in renewable energy, which of course, would include construction of wind turbine factories:

"Calling renewable energy a strategic industry, China is trying hard to make sure that its companies dominate globally. Just as Japan and South Korea made it hard for Detroit automakers to compete in those countries - giving their own automakers time to amass economies of scale in sheltered domestic markets - China is shielding its clean energy sector while it grows to a point where it can take on the world."

China protects its chosen industries in many ways. It provides low interest loans, some of which don't have to be repaid. It may give free land on which to construct buildings. And there are other perks that Bradsher described:

"When the Chinese government took bids this spring for 25 large contracts to supply wind turbines, every contract was won by one of seven domestic companies. All six multinationals that submitted bids were disqualified on various technical grounds, like not providing sufficiently detailed data. . . even as Chinese companies that had never built a turbine were approved. . ."

Later, Bradsher describes European disgust at the Chinese treatment:

"European wind turbine makers have stopped even bidding for some Chinese contracts after concluding that their bids would not be seriously considered, said Jorg Wuttke, the president of the European Union Chamber of Commerce in China."

China has a policy. It ruthlessly protects its own industries.

China was among the many countries that complained bitterly when the U.S. included "Buy American" provisions in the Stimulus Bill. In fact, Vice Commerce Minister Jiang Zengwei told a press conference in Beijing in February that China would not do such a thing, "We won't practice a 'Buy China' policy," he said. Four months later, that's exactly what China did, instituting its own, stricter "Buy China" policy as part of its economic stimulus program.

China did what China felt was necessary for its economy. And it ignored foreign criticism.

That's hardly the U.S. tactic. Wilting under criticism, Congress diminished the Buy American provisions before passing the Stimulus.

As a result, we've got a consortium -- U.S. Renewable Energy Group, Cielo Wind Power and A-Power Energy Generation Systems - so bold that it believes it can get nearly half a billion dollars in American Stimulus money for 2,000 Chinese wind turbine jobs. The consortium says it would import 240 Chinese turbines to Texas where 300 temporary construction jobs would be created and another 30 permanent jobs established.

The wind turbines could easily be made in the USA. Bradsher, of the Times, says the Chinese concede that while their turbines cost slightly less initially, they have higher repair costs. He wrote, "United Nations data from trading of carbon credits shows that the Chinese-brand turbines produce less electricity because they are more frequently out of action."

Really, is that what we want to buy with American tax dollars for a wind farm in West Texas?

If the United States put half the effort into supporting its renewable energy industry that China does, there'd be no way this consortium building windmills in Texas would be looking overseas for turbines.

China has a plan. In its strategy, it doesn't consider America first or the remainder of the world first. And that's what the USA must do. We need an industrial policy that makes no apologies for putting America and American workers first. And when that's the calculus, no American official would ever countenance a request to give $450 million in American taxpayers' dollars to a turbine factory in China. And no American consortium would consider making such a stupid request.

In the meantime: Hell no! They don't get our dough!

Message To Energy Department: U.S. Greenbacks For U.S. Green Jobs

Isaiah J. Poole — Fri, 06 Nov 2009 10:47:13 -0500

News of the potential use of U.S. stimulus funds for a wind power project in Texas that will produce 2,000 Chinese manufacturing jobs—but a scant number of American jobs—has generated justifiable outrage, including a letter from Sen. Charles Schumer, D-N.Y., to Energy Secretary Steven Chu urging him to "deny Recovery Act funding to this project" unless the majority of the manufacturing of the wind turbines is done in the United States.

It's therefore not surprising that today the Chinese firm that is a primary investor in the project, A-Power Energy Generation Systems, is doing some PR tap-dancing to quell the fury.

But PR tap-dancing from A-Power, and especially from the Department of Energy, which opened the door to the potential of this happening, is not enough. Energy Secretary Steven Chu needs to heed a simple demand: American tax dollars for America's economic recovery must support American jobs. Period.

That's the thrust of the grassroots push the Campaign for America's Future is launching today, which aims to flood Chu's office with this message:

The news that a Texas wind farm is seeking stimulus money to create only 30 jobs here but 2000 jobs in China is disturbing, especially since unemployment in America has surpassed 10%.

China has understandably taken steps to stimulate its economy with its funds and move towards clean energy. We should be taking similar steps at home, not using our tax dollars to offshore jobs that could be created here.

I support Sen. Chuck Schumer's call for you to reject any request for stimulus money unless the high‐value components, including the wind turbines, are manufactured in the United States.

This battle goes to the heart of the economic strategy that this nation will pursue to work its way out of recession and lower unemployment, which today was announced at 10.2 percent.

One reason we are having to fight this battle to begin with is the flawed conservative ideology pursured by the Bush administration and its predecessors. A must-read investigation published lat month by Russ Choma at the American University School of Communications pointed out that while European governments were laying the groundwork for a green manufacturing economy, we "dithered."

The reliance on foreign companies for development of wind energy appears to be at least partially tied to the U.S. government’s resistance to subsidize a home-grown wind energy industry until now. With so few U.S. companies in the business, the door was open for foreign companies to walk away with the bulk of the grants. European companies, in particular, are well positioned to collect stimulus benefits for clean energy.

“Europe was light years ahead of us, in terms of developing these alternative resources,” said Gregory Jenner, a tax attorney and former acting and deputy assistant secretary of the treasury for tax policy, who co-authored a guide for energy companies hoping to collect stimulus money. “The fact that a lot of the European companies are coming over to the U.S., they just see this as an untapped market. Now that the incentives are starting to work out ... it's going to be just like a gold rush for them.”

While the U.S. has dithered with temporary tax incentives for producers, European governments have awarded permanent tax breaks and large subsidies to wind energy companies and poured vast sums into research and technology.

As a consequence, the article says, "European turbine-manufacturers have dominated the world market and continue to do so in the U.S. Indian-manufactured turbines are swiftly moving into the U.S. market as well, complementing Japanese manufacturers who have long been here."

As for China, The Washington Post reported last month that "the government has closed down old cement and coal plants [and] subsidized row upon row of new wind turbines," seeking to generate 120 gigawatts of power from wind by 2020, four times what the United States generates from wind today. And China's government, unlike the United States, sets demands for domestic production.

Earlier this year, a report by the Renewable Energy Policy Project, a think tank that has worked with labor and environmental groups, warned the Obama administration and Congress that it was important that the country has a deliberate policy of focusing government green-energy resources on creating American jobs.

For every megawatt of new wind power capacity — enough potential clean electricity to power up to 300 homes — REPP estimates 4.85 Full Time Equivalent (FTE) jobs are created to manufacture, install and then operate and maintain the wind farm. About 70-75 percent of the total labor required for a typical wind turbine or solar panel is in manufacturing the various component parts that could be supplied by existing U.S. businesses. These are the potential “green jobs” that are key to revitalizing the U.S. and global economy. Without new policies promoting domestic manufacturing, an unnecessarily large portion of these jobs will remain overseas.

We are now seeing that prophecy about to come true. It is time for the Obama administration and Congress to work together on the policies and incentives that will foster the growth of green-energy manufacturing, not just green-energy consumption. It makes no sense to substitute dependence on Middle Eastern oil with dependence on Chinese or European wind and solar technology—not when we have the expertise, the workers and the facilities to build renewable energy products, and especially when taxpayers rightfully demand that every stimulus dollar possible be used to get U.S. workers back into solid jobs.

Let's send Chu that message today.

U.S. Stimulus Helping Chinese, Spanish Wind Energy Industries

Natasha Chart — Tue, 03 Nov 2009 02:53:57 -0500

Wind energy is supposed to be able to create thousands of manufacturing jobs, but unfortunately the early wind energy manufacturing jobs financed by U.S. stimulus money have all gone to overseas manufacturers. There are at least three reasons why this happens, some easier to fix than others.

The Easier Problem

First is the problem of U.S. wind-turbine manufacturing capacity. It's tiny.

This could be improved by the adoption of a well-designed feed-in tariff. Feed-in tariffs are where the government sets mandates for renewable energy and supports the purchase of the resulting electricity at a rate that pays for the initial market entry.

Feed-in tariffs are why Spain is one of the countries whose wind turbines are being purchased for installation in the U.S. Also, many countries have preferential purchasing policies at the local level, which don't violate World Trade Organization rules.

Both feed-in tariffs and state or local government 'buy American' policies could be implemented in full keeping with our international trade obligations and we should do so at once.

The U.S. needs to support its own industries, particularly those with significant environmental benefits, without apology.

The Somewhat Harder Problem

The U.S. government has a bad attitude towards manufacturing and has favored the making of money over the making of things for a long time, the more complicated the scheme, the better. And conventional wisdom from the Commerce Department to all the serious business press has held that offshoring and outsourcing US jobs would cause no net changes in the job picture overall, even if there might be an unfortunate backlash tendency among the public.

Indeed, the policy elite seem baffled when people get upset that their mill or factory job disappears and they had to take work stocking shelves at a store that sells the imported version of what they used to make. Politicians appear confused when workers with degrees in computer science react badly to being told to get an education. But their confusion is surely an act.

It's been clear for a while now that many industries leave and don't come back. Manufacturing capacity and know-how is shipped off first, then the high value research and development jobs follow after them.

Retraining, a solution that politicians like to promote along with stern bromides about 'personal responsibility', is only a solution that works if there are comparable jobs to train for. It only works if the finance industry is willing to invest in businesses that hire skilled Americans, and if the tax code stops advantaging companies who keep jobs and profits overseas.

The reality more Americans live with all the time is that their job prospects have gotten worse over the years, with employers and investors increasingly unwilling to share profits with them.

Obama recognized this when he was campaigning and newly elected, saying that he'd stop offshoring tax breaks all the way through the summer. As of the middle of October, business leaders had convinced the president to shelve those plans.

You might hear politicians, business leaders, news anchors and various policy wonks say that outsourcing creates jobs and increases real wages for Americans. This is a lie unless you're referring specifically to the top 10 percent of U.S. income earners, though wage inequality is a problem all around the globe.

Those offshoring tax breaks need to be rescinded, and more, policy makers need to connect start connecting the dots between an economy that makes useful things and one in which ordinary consumers can afford to buy them. One hedge fund manage making a million dollars off an overseas business deal isn't going to generate the same level of beneficial economic activity as twenty manufacturing workers making $50,000* per year, each.

The Very Challenging Problem

This problem is the real sticker, because unlike adjusting our own policies, economy, or leaders' attitudes, this one involves Chinese policy.

Wind turbines require rare earth elements for their manufacture, which make good permanent magnets, and this is also true of many other green technologies. As Keith Bradsher pointed out, "China currently accounts for 93 percent of production of so-called rare earth elements — and more than 99 percent of the output for two of these elements, dysprosium and terbium," and they've been both more tightly restricting exports every year, as well as securing controlling interests in overseas mines.

The Chinese government is well aware that most wealth is created farther down the value chain than simple extraction, that the real money is in processing and fabrication. They would like their people to earn that profit. Considering that I'd like my government to take the same attitude, I can hardly fault the Chinese on that count.

I even hope the Chinese do continue to grow their alternative energy manufacturing for their own domestic market in particular. At present, they're sending over 95 percent of their solar panels to be exported, while opening a new coal plant every 7-10 days.

Yet it significantly disadvantages manufacturing in other countries that the Chinese government won't allow the materials to be sold on the open market like other commodities.

The Obama administration, acting in concert with the European Union, filed a June complaint with the WTO about Chinese export restrictions of raw materials that have driven prices up for the steel industry. It might be a while before we know how that's going to turn out in the end. Perhaps rare earth mineral exports will be a target of future actions, or perhaps more clean, high grade deposits (rare earths are often found in low concentrations and contaminated with radioactive elements) will come to light that the Chinese don't control.

Either way, something's got to give.

A flourishing US wind industry that does more than installation and maintenance will require steady supplies of permanent magnets. Otherwise, they'll end up over the same barrel as Toyota, whose Prius hybrids use 12 kg of rare earth materials per battery and more for the motor, and whose component manufacture they're now under pressure to move to China.

These issues are solvable, but it'll take quite the fire getting lit underneath the US political establishment to get them sorted out.

* Speaking of which, the median US household income in 2007 was $50,740, and it dropped 3.6% in 2008.

Blowing in the Wind: Aggressive Steps Needed for Clean Energy Manufacturing

Steven Capozzola — Mon, 02 Nov 2009 16:16:48 -0500

On Friday, the Wall Street Journal trumpeted the news that a Chinese firm will be the exclusive supplier to one of the largest wind-farm developments in the U.S. and that the developer of the project would be seeking U.S. taxpayer assistance. The 36,000-acre West Texas development announced that it would purchase 240 2.5-megawatt wind turbines from Shenyang Power Group, a five-month-old alliance with operations in China.

Question: Why aren’t American firms building this clean energy project?

President Obama has made it a priority to expand U.S. production of clean renewable energy, which has the potential to create millions of new, good -paying manufacturing jobs. Aggressive steps should be considered – including domestic sourcing requirements similar to Buy America – to ensure that these jobs are created here in the U.S. and not in countries like China that have a record of providing massive subsidies to its domestic manufacturers, including to steel and glass, in order to undercut U.S. producers.

AAM Executive Director Scott Paul has submitted a letter to President Obama emphasizing the lost opportunity for domestic U.S. manufacturing. In part, the letter notes:

I am deeply concerned that if not done properly, our efforts to rejuvenate our manufacturing base in this country could be unseated by subsidized imports from countries seeking to capitalize on new demand for clean energy products in the United States, such as wind turbines and solar panels.

I was shocked to learn of the massive 36,000-acre West Texas wind farm development that will rely solely on wind turbines manufactured in China. The developer will be seeking federal tax credits and support from the Stimulus package. According to an October 30, 2009, article in the Wall Street Journal, “the project should create 2,800 jobs – of which 15% would be in the U.S. The rest would flow to China, where Shenyang employs 800 people.”

Simply put, U.S. producers can and should be building the same turbines as the Chinese firm. The WSJ cites Elizabeth Salerno, a spokeswoman for the American Wind Energy Association, who says that in the first three quarters of 2009, there were 33% fewer announcements of U.S. turbine-factory expansions than in the comparable period of 2008.

In this case, it means another lost opportunity to revitalize U.S. manufacturing.