Obama’s Assault on South Carolina Jobs
May 11, 2011
Throughout the 2010 campaign, in this newsletter and elsewhere, I kept returning to a simple refrain to explain the intractability of America’s economic woes: job killing policies kill jobs.
This equation made sense to the American people. Amidst a bad economy sparked by the financial crisis, the Democrats had passed a $787 billion big government boondoggle, a massive government takeover of healthcare, and threatened to raise income taxes and a new tax on energy. The American people understood that the natural resiliency of the U.S. economy had been damaged by the Left’s big government ambitions and made the Democrats pay at the polls.
Despite a historic defeat in the 2010 elections, however, it is clear that President Obama and the left wing coalition he leads are determined to ignore this lesson.
The latest job killing effort by this administration comes from the National Labor Relations Board (NLRB), which has filed a frivolous and devastating complaint against the Boeing Company.
It is frivolous because the complaint is unprecedented in the 76 year history of the National Labor Relations Act.
It is devastating because the complaint puts thousands of jobs in South Carolina at risk.
Moreover, if this complaint is successful, the precedent set could prevent millions of jobs from being created throughout the United States, as entrepreneurs and businesses decide whether to invest in our country…or outside it.
In October 2009, Boeing decided to open a new production facility in North Charleston, SC to meet the growing demand for its 787 Dreamliner airplane.
The decision came after months of negotiations with the machinists union leadership at Boeing’s main production hub in Puget Sound, WA. Since 1995, there have been five work stoppages in the Puget Sound plant. The most recent strike, in 2008, lasted 58 days and cost the company $1.8 billion.
Still, Boeing negotiated in good faith with the union leadership for the Puget Sound facility to try and find a way to open the new factory there. In exchange, Boeing wanted a ten year moratorium on strikes so the additional capacity upon which the company was about to spend billions of dollars would be a sound investment.
Boeing and the union were unable to reach an agreement so the company looked elsewhere. They eventually settled on South Carolina, which is one of the twenty two “right-to-work” states in our country where workers cannot be forced to join a union.
The complaint filed last month by the NLRB on behalf of the machinists union alleges that Boeing located the new facility away from Puget Sound in retaliation for the 2008 strike, which is illegal under the National Labor Relations Act. It makes this accusation despite the months Boeing spent negotiating with the union to try and reach a deal to open the new facility in Puget Sound, and despite the fact that there is a clear legal precedent that allows companies to consider the impact of future strikes when deciding where to open new facilities.
It is the timing of NLRB’s complaint, in fact, which seems retaliatory in nature, not Boeing’s business decision.
The complaint comes a full seventeen months after Boeing announced the location of the new facility and thirteen months after the union leadership first asked NLRB to look into the issue.
Boeing has already begun construction of the new facility, hiring over 1000 people in South Carolina and investing $1 billion. This complaint puts all those jobs created and all that money invested at risk.
Unelected, Unconfirmed Bureaucrats Running Wild
This action by the NLRB is even more disturbing when you consider that it is being led by Lafe Solomon, the acting General Counsel for NLRB, who still needs to be approved by the Senate. He only holds his position because of a recess appointment by President Obama.
The president also used a recess appointment to place Craig Becker on the NLRB after Becker was rejected by a Democratic Senate in 2010.
As a recent Daily Caller article discovered, Becker’s past writings reveal a disturbing socialist bent that bear directly on the Boeing complaint.
Becker has previously written that the federal government should control and constrain the freedom of companies to direct their capital and resources as they please in order to rig labor negotiations in favor of unions. Becker has also written that the NLRB possesses the power to impose card-check policies on the nation without an act of Congress.
An Assault on the Right to Work
It is clear that President Obama is packing the NLRB board with left wing ideologues as a payoff to his union boss allies, so that the fix is in with regard to this case and others like it.
The move is consistent with an ongoing pattern in the Obama administration, in which they use the apparatus of big government to reward their allies and punish their opponents.
South Carolina Senator Lindsey Graham was exactly right when he characterized the complaint as “one of the worst examples of unelected bureaucrats doing the bidding of special interest groups that I’ve ever seen.”
If the NLRB is successful in overturning Boeing’s perfectly rational business decision, it puts tens of millions of future jobs in all 22 right-to-work states in jeopardy. It would make it effectively impossible for U.S. companies to open new facilities in right-to-work states if they are currently located in one that allows forced unionization.
Global Competition Is a Fact, Not a Theory
The Left simply cannot come to grips with the intensity of global economic competition and the demands it places on U.S. economic policies.
This blindness to reality was on display in the reaction to a recent USA Today article showing that Americans paid less taxes in 2009 than any time since the 1950s. The article has been used by the Left in recent days as a counter to the conservative case that tax increases would be devastating to any economic recovery, possibly driving us back into recession.
Their argument shows the Left is completely missing the point. In the new global economy, America is not competing against itself from 1990, 1970 or 1950.
We are competing against Germany, which today has only a 15% federal corporate income tax (and recently hit a 19-year low in its unemployment rate), compared to a 35% corporate tax rate in the U.S., the highest of any central government in the industrialized world.
We are competing against Singapore, which has a capital gains tax of zero, compared to a potential 35% capital gains tax in the United States.
We are competing against Switzerland, which caps the federal personal income tax rate at 11.5%.
We are competing against Canada, which just last week reelected an incumbent Conservative government that has pledged to cut the corporate tax to 15% and lower the personal income tax for families – all while planning to balance its entire budget by 2015.
Consider the case of the New York Stock Exchange. This icon of American free markets is now owned by a Dutch holding company.
That $10.2 billion takeover was driven by simple economic reality. As Walter Gavin, Vice President of Emerson, explains, the Netherlands has a tax code which makes it more profitable for the NYSE to be owned by a Dutch company than by an American one. In fact, according to Gavin, the United States lost almost forty companies to Amsterdam in 2010 alone thanks to their more business friendly environment.
This brings us back to President Obama and his union allies’ assault on South Carolina jobs and all twenty two right-to-work states in America.
If the NRLB’s complaint is successful, U.S. companies will simply increase their flight of capital and new facilities to places outside the United States. In the midst of a struggling economy, it will make it harder for businesses to operate in America, not easier.
The union bosses and their political allies in the White House aren’t going to save union jobs by attacking right-to-work states. They’ll simply prevent new jobs from being created here in America.
Drop the Complaint, Withdraw the Nominees
In recent months, following his defeat at the polls in the 2010 elections, President Obama had been making overtures to the business community. The hiring of Bill Daley as Chief of Staff was supposed to send a signal to America’s entrepreneurs and businessmen that he is trying to shed his anti-business image.
This action by his appointees at the NRLB will throw all that effort out the window.
The NLRB is an independent agency of the federal government, which means President Obama cannot order it to stop. However, if President Obama really wants to convince American entrepreneurs their government is not actively hostile to job creators, President Obama should speak out against this destructive complaint.
More importantly, he should withdraw the nominations of Lafe Solomon and Craig Becker from consideration for Senate approval, which would effectively stop this complaint in its tracks.
Again, it all comes down to the simple fact that job killing policies kill jobs. The president has a choice whether to allow this job killing policy to continue.
The American people are now watching to see if President Obama values job creation more than he does paying off his union boss allies.
P.S. Our new documentary, A City Upon A Hill: The Spirit of American Exceptionalism, is now available. The movie explores the concept of American Exceptionalism from its origin to the present day. Click here to watch the trailer and learn more.
Week in American Exceptionalism
May 14, 1804 – Louis and Clark embark on their expedition to survey the northwestern United States acquired in the Louisiana Purchase. One of the reasons why America is exceptional is because of a “frontier spirit” which has encouraged our people to take risks and boldly seek out new opportunities. Louis and Clark’s expedition to explore the American northwest set the stage for the great westward migration and expansion of the United States towards the Pacific. It was their bravery, with the help of many others, including Native Americans, that allowed this frontier spirit to expand. Their embarkation is another moment in American Exceptionalism.