No One Understands “How We’re Going To Do Proper Oversight”… House, Senate To Hold Hearings Today

Dean Baker: Summers at Treasury: What Would We Tell the Children?

Former Treasury Secretary Larry Summers’ name is consistently placed prominently on the list of candidates to be President Obama’s Treasury Secretary. This is rather striking since the policies he promoted as Treasury Secretary and in his subsequent writings led to the economic disaster that we now face.

As Treasury Secretary, Summers embraced the high dollar policy promoted by his predecessor Robert Rubin. While it offered short-term benefits in the form of cheap imports and lower inflation, the high dollar also produced a large and growing trade deficit. Just like tax cuts that cause unsustainable budget deficits, the high dollar policy of the Clinton years was unsustainable over the long-run.

Trade deficits also sap demand. In Summers’ Treasury years, this demand gap was made up by a consumption boom, which was in turn driven by the stock market bubble. Like the rest of the Clinton crew, Summers cheered on the stock bubble.

Of course the stock bubble was not sustainable and when it collapsed in 2000-2002, it threw the economy into a recession. While the official recession was short and mild, the economy continued to shed jobs for almost two years after the recession ended. With the over-valued dollar causing the trade deficit to continue to rise, the only way to sustain demand was another consumption boom, this one driven by the housing bubble.

Greenspan kept interest rates at 50-year lows, while the housing bubble expanded to ever more dangerous level. Summers was no longer Treasury secretary at this point, but he did have ample opportunity to weigh in on a wide range of policy issues. While he offered his wisdom on a variety of economic issues during the housing bubble years, he never bothered to take note of an $8 trillion housing bubble or the catastrophe that its collapse would cause.

Silence was not Summers only contribution to the growth of the housing bubble. As Treasury Secretary, he had been a vigorous advocate of the one-sided financial deregulation (the Wall Street big boys all want the government security blanket of “too big to fail”). In particular, Summers had worked alongside Robert Rubin and Alan Greenspan to prevent any regulation of credit default swaps, an instrument that helped provide the financial fuel of the housing bubble.

The collapse of the housing bubble has left one-fifth of homeowners underwater in their mortgages, owing more than the value of their house. Tens of millions of homeowners now find themselves at the edge of retirement with almost nothing other than their Social Security to rely upon. And the economy will quite likely experience the worst recession since World War II as it struggles to overcome the loss of $8 trillion in housing bubble wealth.

Given this record of failure, the question is how can Larry Summers still be considered for the top economic position in the Obama administration? This would be like appointing the arsonist who burned down the city as the new fire commissioner. We like to tell our children that success is rewarded and that failure is punished. But if Larry Summers ends up as Treasury secretary, what are we supposed to tell the children?

Patt Morrison: All Votes are Final — Campaign Couture? Not So Much

The McCain-Palin ticket promised to do something to boost the economy, and even though it lost, it kinda sorta did.

The Los Angeles Times reported that the luxury store Neiman Marcus got whomped with a 26.8% decline in sales from last October. Other chains like Saks and Nordstrom took a big hit, too. And the month before, in September, Neiman Marcus’ sales figures were down by 11% from a year earlier.

Imagine how much worse those numbers might have been if it hadn’t been for the shopping sprees reported by the RNC for the Sarah Palin candidacy: $75,062 at Neiman Marcus, $49,425 at Saks, and an afterthought-looking $9,447 at the mid-market Macys.

The Times also reported that the RNC may be heading north to Alaska to repossess what it can of the Cinderella wardrobe, but on the campaign trail, Palin herself had already said she regarded them as props: “These clothes — they’re not my property, just like the lighting and the staging and everything else that the RNC purchased. I am not taking them with me.”

What, I wonder, is Neiman’s return policy? Full refund up until thirty days with the tags still on? And after that, just store credit?

But is the store credit good until 2012?

Raymond J. Learsy: "J’ACCUSE". This Administration’s Crony Bail Out Bonanza For Wall Street

Today the Financial Time’s front page headline shouted, “Obama to Review Wall St Bail-out.” That means Bush’s $700 billion plan is to be reexamined.

And no, I’m not Emile Zola, though I’ve had a few words on the matter (”Mr. Paulson, this is the nation’s financial future you are dealing with. Please leave that Wall Street mindset behind. That those who got us here would have another bite of the apple would be unforgivable”. Please see “Financial Crisis Bailout Riddled with Conflicts of Interest” 10.07.08)

But out there is someone who speaks with the insight and the passion of a Zola. And that someone is Leo. M. Gerard, International President of the United Steelworkers. On October 28th in an open letter, parts of which were posted here on the Huffington Post, Mr. Gerard stated his case. Here below is a synopsis of its text. Because of its significance to the issues and to this moment, I am adding its full text at the end for those who rightfully want the whole picture.

Initially Mr. Gerard points out that with its investment of $125 billion of taxpayers money, in investment banks such as Goldman Sachs and eight other financial institutions, the government, under Mr. Paulson’s fine hand, was paying twice as much as needed to be paid when compared to the sums Warren Buffett negotiated for a similar investment in Goldman Sachs. Mr. Gerard in his letter to Paulson, goes on to point out that:

“…that it would appear that you intend to reward the institutions that have driven our nation, and it now appears the whole world into the most serious economic crisis in 75 years with a gift of $350 billion from the American taxpayers who have watched 760,000 of their jobs disappear over just the past nine months” (actually 1,000,000 adding in Friday’s job loss numbers).

“…wouldn’t it make sense to have some reason to believe that the recipients of the government largesse won’t just take the money and do it all over again? Perhaps there is some reason I do not understand that you have seemingly handed this chicken coop back to the very same foxes who have been pillaging it for the last two decades?

“It has been reported in the media that these firms have no intention of using this money for intended purposes. Don’t we deserve a commitment that the money will in fact be used for either loans to companies which are groaning under the weight of the credit crisis and being forced to shed tens of thousands of more jobs or to help the millions of Americans struggling with their troubled mortgages? Does it really seem too much to demand that we get a commitment that our gifts to these firms be used to revive the economy that they have driven into the ditch?

“Secretary Paulson, out in the real economy, the unbridled pursuit of greed that
you and your friends on Wall Street have celebrated as a national religion has taken a terrible toll on ordinary Americans. Jobs with stagnant real wages have now given way to massive lay-offs, home foreclosures and real suffering.

“Out in the real economy we need… an economic program that restores the balance of power between workers and business, rebuild the middle class and curbs corporate excess.

“Out in the real economy, we need our government to invest in creating sustainable shared
prosperity-not play Santa Claus to the scoundrels who have laid waste to the American Dream.”

With the advent of the Obama Presidency, Mr. Gerard’s words have more significance than ever before. And the New York Times, today, as if on cue in Joe Nocera’s first page Business Day coverage was moved to comment,

“The Bush Administration has also attacked the crisis almost entirely by focusing on the banking system. It has made huge loans and taken equity stakes- but for reasons largely based on ideology it has refused to demand anything in return. And the Bush administration has been every bit as reluctant to help individual homeowners as the Hoover administration ever was. Its unwillingness to help ordinary citizens is appalling - not just because it is so callous but because the crisis won’t end until housing prices stabilize and foreclosures decline”.

To quote an old hand, Bill Buckley who, when running for mayor of New York, was asked what would be the first thing he would do were he to win the election? His reply — “demand a recount.” President-elect Obama, given all the problems ahead, perhaps its not too late to demand a recount.

_______________ Below Please Find Full Text of Mr. Gerard’s letter___________

United Steelworkers Leo W. Gerard, International President October 28, 2008

Henry M. Paulson, Jr.
Secretary of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

Dear Secretary Paulson,

While I am sure that you face no shortage of advice regarding the crisis that continues to engulf the world’s capital markets, I did want to share with you some questions and concerns regarding your decision to invest $125 billion of the taxpayers’ money into nine financial institutions, including the securities firm which until recently you headed, Goldman Sachs.
While the media was filled with the usual breathless “behind-the-scenes” reports of your “High Noon” bargaining, what seems to have escaped their notice was your decision, on behalf of the taxpayers, to pay roughly twice as much as you needed to for the securities that you purchased.

To me, at least, this is far more important than whether you gave the assembled CEOs two hours, two weeks or two minutes to sign up; whether, as the New York Times helpfully tells us, you have seen “Butch Cassidy and the Sundance Kid”; whether you have worked long hours in the last few months; or what brand of cell phone you use.

While Wells Fargo Chairman Kovacevich, who was forced to get by on only $300 million over the past ten years, may or may not have actually pretended to resist the deal, if he had in fact turned you down, he should have been fired, given the extraordinary deal he was being offered.

I have enclosed with this letter a copy of the analysis that we prepared which values the investment of the taxpayers’ money in Goldman Sachs at only 50% of what was actually paid. Perhaps one of your former colleagues at Goldman could take a minute away from their busy day shorting mortgages to see if we are correct.

Mr. Secretary, this analysis is not rocket science. Just twenty days before Goldman announced that it would “accept” Treasury’s investment, Warren Buffett invested $5 billion into Goldman Sachs and acquired the very same type of security - preferred stock - with the very same form of “upside” - warrants to purchase common stock. For some reason, however, per dollar invested, Mr. Buffett received at least seven and perhaps up to fourteen times more warrants than Treasury did and his warrants have more favorable terms. In addition, Mr. Buffett’s preferred stock has a higher dividend rate and can only be bought away from him at a premium, while Treasury’s investment of taxpayers’ money pays a lower dividend and can be repurchased at par.

Now I know that you have a lot on your plate, but I am sure that someone at Treasury saw the terms of Buffett’s investment. In fact, my suspicion is that you studied it pretty closely and knew exactly what you were doing. The 50-50 deal - 50% invested and 50% as a gift - is quite consistent with the Republican version of the “spread-the-wealth-around” philosophy that seems so much in vogue.

If the result of our analysis is applied to the deals that you made at the other eight institutions - which on average most would view as being less well positioned than Goldman and therefore requiring an even greater rate of return - you paid $125 billion for securities for which a disinterested party would have paid $62.5 billion. This means that you gifted the other $62.5 billion to the shareholders of these nine institutions. This is no different than if you paid me $10,000 for a car for which no one else would pay more than $5,000. You bought it for $5,000 and gifted me the other $5,000. In my world such gifts are rarely offered to working people.
It’s hard to list all of the ways in which this is disturbing, but let me note just a few:

• If this deal is the model for how you intend to spend the whole $700 billion that you got from the Congress, then it would appear that you intend to reward the institutions that have driven our nation, and it now appears the whole world, into its most serious economic crisis in 75 years with a gift of $350 billion from the American taxpayers, who have watched 760,000 of their jobs disappear over just the past nine months.

• The recipients of the first wave of gift-giving include Goldman Sachs. It has been widely reported that you have surrounded yourself with former Goldman employees as well as individuals from other Wall Street firms. Yet it has never been revealed whether in fact you and they have fully divested yourselves of your Wall Street holdings. Doesn’t it seem just a wee-bit of a conflict of interest for those setting the price of the investment to be either so directly linked to the firms receiving the investments or, even worse, direct beneficiaries of the decision to overpay with taxpayer money?

• Your investments do nothing to deal with the causes of the current crisis. Now that even Chairman Greenspan has discovered a “flaw” in his theories, wouldn’t it make sense to have some reason to believe that the recipients of this government largesse won’t just take the money and do it all again? Perhaps there is some reason I do not understand that you have seemingly handed this chicken coop back to the very same foxes who have been pillaging it for the last two decades?

• It has been reported in the media that these firms have no intention of using this money for its intended purpose. Don’t we deserve a commitment that the money will in fact be used for either loans to the companies which are groaning under the weight of the credit crisis and being forced to shed tens of thousands of more jobs or to help the millions of Americans struggling with their troubled mortgages? Does it really seem too much to demand that we get a commitment that our gifts to these firms be used to help revive the economy that they have driven into the ditch?

• Your terms also undercut the more stringent restrictions that the Brits imposed, thus making it clear that not only are you fronting for American wastrels, but European ones as well.

Now I do not doubt for a minute that the irresponsible and fraudulent actions of Wall Street have indeed put the world financial system and now the real economy at grave risk. And I also do not doubt that the literally hundreds of billions of dollars of undeserved bonuses ($38 billion in 2007 alone), reckless speculating and dividends to shareholders have left many of these institutions woefully under-capitalized and in need of new equity dollars. Where I get a little lost is why you think that the system or the American taxpayer is better off if the government gets half as much for its investment as Mr. Buffett did.

Let’s agree that America’s nine largest banks need $125 billion of new money and let’s further agree that no one else, not even Warren Buffett, has that kind of money lying around. That still does not explain why our $125 billion should buy us securities worth half of what we paid for them. Nor does it explain why the nearly $25 billion per year that the firms pay out in dividends to their shareholders should continue. At current levels, dividends to shareholders will distribute all of our money that you invested in just five years.

Secretary Paulson, out in the real economy, the unbridled pursuit of greed that you and your friends on Wall Street have celebrated as a national religion has taken a terrible toll on ordinary Americans. Jobs with stagnant real wages have now given way to massive lay-offs, home foreclosures and real suffering.

Out in the real economy, we need to once and for all bury the philosophy that worships only business, free markets, deregulation and free trade, and replace it with an economic program that restores the balance of power between workers and business, rebuilds the middle class and curbs corporate excesses.

Out in the real economy, we need our government to invest in creating sustainable shared prosperity - not play Santa Claus to the scoundrels who have laid waste to the American Dream.

I eagerly await your response.

Sincerely,
Leo W. Gerard
International President

Comparison of Berkshire Hathaway and US Treasury Investments in Goldman Sachs Group, Inc
This analysis is based on the assumption that Warren Buffett is an intelligent third party investor who paid no more for his investment than he had to. It also assumes that Goldman Sachs’ job is to protect its existing shareholders, so that it extracted from Mr. Buffett the most that it could. In other words, Mr. Buffett paid fair market value for what he bought. Further, it is assumed that Henry Paulson is likewise an intelligent man and that if he paid any more than Mr. Buffett - if he paid $1.00 for something for which Mr. Buffett would have paid $.50 - that the difference is a gift from the taxpayers of the United States to the shareholders of Goldman Sachs.
In order to compare Buffett’s investment to Treasury’s the first step is to understand and value the two parts of each investment, starting with Buffett’s.
Buffett invested $5.0 billion and in return received preferred stock and warrants. The warrants give their holder the right to purchase, at any time over the next five years, common stock worth 100% of his original investment amount, or $5.0 billion worth of common stock, at a price of $115.00 per share, or 43.5 million shares. ($5.0 billion ÷ $115.00)
The value of these warrants is determined using a technique called the Black-Scholes Pricing Model. This model is almost universally regarded as the correct way, from an efficient market perspective (which of course Mr. Paulson believes in), to value such securities.
Using publicly available data, the right to purchase one share was, at the time of Buffett’s purchase, worth $40.95, so the right to purchase 43.5 million shares is worth $1.8 billion ($40.95 X 43.5 million). While recently the volatility of Goldman shares have been very high making each warrant far more valuable, this analysis uses a very conservative and more historically representative volatility of 30% for its valuation. This more than offsets the slightly lower value for the warrants caused by the dividends associated with the common stock.

If the warrants are worth $1.8 billion, this implies that Buffett spent the rest of his $5 billion, or $3.2 billion, buying the preferred stock. Knowing that the market value of the preferred stock without the warrants is $3.2 billion, one can use a simple cash flow model to calculate the return that Mr. Buffettt demanded and Goldman agreed to on the preferred stock. If one assumes that Goldman pays quarterly dividends at 10% per year and redeems the preferred stock in ten years at the required 10% premium, the return (or yield to call) is 19%. If they redeem it sooner, the yield is higher.

Turning now to Treasury’s investment, there are four key differences regarding the warrants. First, Treasury will only receive warrants to purchase common shares worth 15% of amount of its original investment; second, Goldman can, by issuing new shares, reduce the number of warrants that Treasury is able to purchase by half, to 7.5% of the amount invested; third, Treasury’s right is based on a somewhat higher price per share; and fourth, Paulson’s warrants grant him the right to purchase shares for a longer period.

Again using Black-Scholes, each of Treasury’s warrants were worth $51.81 on the date that Goldman Sachs agreed to participate in the Treasury Program. For the sake of calculating their value, if we use for the number of warrants the midpoint between 7.5% and 15% (11.25%) or 9.2 million warrants, the total value of Treasury’s warrants is just under $500 million.
Turning to the preferred stock, Treasury will buy preferred shares with a face value of $10 billion and a dividend rate of 5% for five years and 9% thereafter and no call premium. If we use the same 19% return (yield to call) that Buffett’s investment will provide, and assume the same 10 year time period, the current market value of Treasury’s preferred shares is $4.5 billion.
This means that Treasury will invest $10 billion of the taxpayers’ money and will receive warrants worth $500 million and preferred stock worth $4.5 billion, or total value of $5 billion.
The other $5 billion represents the gift that Mr. Paulson, on behalf of the taxpayers of the United States, will be making to the shareholders of Goldman Sachs.

If we assume that this gift will be comparable at the other eight big banks, then the total gift will add up to $62.5 billion and if this approach prevails with the entire $700 billion, the gift from the taxpayers to the shareholders of financial institutions will be $350 billion.

Andrea Chalupa: If Life Gives You Limes, Make Margaritas

“If life gives you limes, make margaritas.”

-Jimmy Buffett

Palm trees, sun melting on the horizon, booze in the blender. This is just another day at the “office” for Jimmy Buffett and his tens of thousands of fans, known as Parottheads.

No economic downturn can intrude in this world.

“There’s a recession on, but we’re still rocking in the free world,” he recently told a crowd in Mountain View, California, according to the San Jose Mercury News.

He also made a special stop at the nearby Google headquarters, where he ate in the cafeteria with Googlers and received a Google phone.

Buffett, the king of easy living, is set to do well in this recession. He’s the first to tell you he sells escapism, allowing his audiences to forget their job insecurity, slumping home values, the market, and instead parachute into paradise for a little while.

I caught up with Buffett last week at Bette Midler’s annual Hulaween Ball. Donning a smoking jacket and pencil-thin mustache as the lady-lovin’ Continental made famous by Christopher Walken on Saturday Night Live, Buffett mused on the economy. In down times like these, with companies laying people off, it’s important for people to find and focus on their niche, he said.

His island empire may be laid back but it’s no fool’s gold. In 2006, Buffett ranked number seven on Rolling Stone’s list of Richest Rock Stars, beating out Dave Matthews Band, Celine Dion, and mogul rapper 50 Cent.

Buffett raked in $41 million from his amphitheater tour in 2006, and around $15 million from his ten Margaritaville restaurants. He also has a deal with Sirius Satellite Radio, owns his own record label, Mailboat Records, which brings in $5 per record compared to the usual $1 to $2.50, and just closed a $270 million deal with Donald Trump to turn Trump Marina Hotel Casino in Atlantic City into another Margaritaville destination, increasing the cache for his License to Chill.

For those just laid off from their high pressure jobs, may now’s the time to follow him around from concert to concert for a little while, being transported by his 1977 smash hit, Margaritaville. Buffett himself would be the first to prescribe that medicine.

As he told USA Today last June, “Bad times have always been made better if you can laugh at yourself or laugh at the ridiculousness of the situation.”

Take that with a grain of margarita salt.

Stephanie Neely: Investing in our Nation’s Infrastructure

As the glow of this historic election begins to fade, we as a nation must acknowledge the numerous and daunting challenges that lie ahead. Americans see the cost of food, gas and health care coverage rising to unaffordable levels, while their earnings remain the same. Our military is stretched thin by being entrenched in two wars - costing taxpayers billions of dollars per month - and monies that once flowed from the federal government to state and local governments have all but dried up.

In April, Congress issued its first economic stimulus package of $168 billion with the expectation that a $600 check would help boost the economy. Then in September, Congress bailed out Wall Street with $700 billion in an attempt to ease a credit crunch that was keeping banks from loaning money to each other. Now Congress is once again calling for quick action on a bill to stimulate the troubled economy, essentially a second stimulus package mirroring the first.

In April, I wrote a letter to the editor of Crain’s Chicago Business explaining that the notion that we could spend our way out of trouble was incorrect. Instead, I argued that urging Americans to save should be the message from Capitol Hill, and that the prevalent culture of “instant gratification” should be discouraged as it is a major contributing factor to our dismal economy.

A second economic stimulus package, similar to the first, will further exacerbate the “I want it now” culture, rather than encourage citizens to tighten their belts. It will fail to ease the economic hardships that our nation and many individual Americans face. The second stimulus package being proposed by the “lame-duck” Congress would cost an estimated $150 billion and add to the ballooning federal deficit. It will not help grow our economy, nor will it create jobs for struggling Americans who must provide for their families. Another flat-screen television made in Asia or a new pair of designer shoes made in Europe will not prevent another bridge from collapsing in Minnesota.

Our country needs a plan that highlights and addresses the need for investment in national infrastructure. Such a plan should be bold and far-reaching, certain to stimulate growth and development within cities, while creating jobs and productivity in these challenging economic times. We must meet the needs and demands of transportation that have become increasingly significant in the 21st century.

President Roosevelt also faced a similarly momentous economic challenge and enacted the New Deal to create jobs for many Americans. Today, we see evidence of our nation’s infrastructure crumbling throughout many cities. Here in Chicago, our roads, bridges, mass transit systems and schools are in dire need of updating. Now is the time to begin critical reinvestment in our nation’s infrastructure. This investment will help strengthen our nation’s transportation system, while creating jobs for many Americans. Reinvesting in our nation’s infrastructure will help America compete in the global economy and yield tangible, visible and lasting benefits.

To re-emphasize, another economic stimulus check for each American is the wrong idea. Congress has an opportunity to keep this nation moving forward and it is my hope that our president-elect will continue to call for a $60 billion investment in infrastructure over 10 years, in order to tackle the financial challenges we face and address the desperate need for revitalization.

Stephen Viscusi: Work is Not a Democracy

I am receiving hundreds of e-mails a week from people who are finally “getting it” on how to save their jobs. They finally “get” the concept that during a recession and job cuts (which are mostly a knee-jerk reaction to the economic media news), there are unique and secret tips to bulletproof your job.

Getting back to the point of this blog, in Bulletproof Your Job (HarperCollins) I have 50 rules to follow that will guarantee that you can “bulletproof your job” in these economic times. HarperCollins asked me to write the book in 45 days so they could rush it to bookstores by Labor Day. Clearly, the publishers that work for Rupert Murdoch (who owns NewsCorp), which in turn owns HarperCollins, are better at forecasting an economic downturn than the economists at Standard & Poor’s. They hit it right on the nose with the turnaround time when I brought them the book proposal. Some of the other publishers did not, and that’s what attracted me to HarperCollins — they were intuitive enough to know that turnaround time was key to the success of this book.

Today I am receiving e-mails from the book buyers and booksellers who Harper initially asked me to appeal to in order place out-of-buying-schedule orders, as well as many of the TV producers and print journalists I met with to do pre-launch media, who are in fear of or have since lost their jobs. Many of the book buyers, booksellers, TV producers, and print journalists who were the first to review the book were of the age group who had not experienced the economic downturn of 1991, or even been working during the post-9/11 mini-recession. Their response to my formula of how you can beat that bullet instead of biting it job-wise was taken as a gimmick. A trick, smoke and mirrors. This response was mostly based on the belief that working hard — be a top performer — was all that was needed to keep one’s job. “Aren’t you telling people to brown nose?” was the question reporters asked me most often.

Cynical booksellers, who dream of America’s money diva, Suze Orman, told me they can slap her frosted-haired head on any book cover and sell it. But… investments? What do you have to invest if you don’t have a job?

I’m talking about something new and relevant that wasn’t an issue 15 years ago. Who had ever heard of Google, or even Starbucks, then? Talk about relevant. Get it?

I’m the first to admit that a monkey could have written this book. But the basic premise is that work is not a democracy, and that it’s important to build a personal relationship with your boss. Maybe President-elect Obama should consider hiring my publishers as economic forecasters. They obviously were ahead of the curve with Bulletproof Your Job.

Stephen Viscusi is the author of Bulletproof Your Job (HarperCollins) and can be reached at stephen@viscusi.com. Please visit him on the web at www.bulletproofyourjob.com.

David Bonior: On November 4th, Workers Won, Corporate Interests Lost

After a long and bitter campaign cycle, the polls have closed, the pundits’ predictions have been proven right or wrong, and the dust of the 2008 election has begun to settle. One momentous outcome from this historic election is that voters chose to elect a pro-worker president and majority in Congress.

Our new pro-worker Congress is significant in light of how big business front groups tried — and failed — to use the Employee Free Choice Act as a wedge issue. A top legislative priority for workers’ rights advocates, the Employee Free Choice Act is opposed by powerful special interests because it would help restore balance in this economy by making it easier for workers to form unions. These groups are funded by the same corporations who refuse to pay their employees a decent salary, provide health care, and keep jobs here in the United States. Their opposition to workers standing up for themselves by organizing unions should come as no surprise.

It’s important to point out the ineffectiveness of their cynical crusade against the legislation and unions in general. Groups such as the Coalition for a Democratic Workplace and the U.S. Chamber of Commerce spent nearly $20 million on misleading ads in Senate battleground states. Through melodramatic TV and radio ads and outrageous newspaper columns across the country, these anti-union ideologues threw everything, including the kitchen sink, hoping something would stick. In fact, the opponents of the Employee Free Choice Act failed to affect these races, and often those candidates supporting the bill steadily rose in the polls despite massive advertising on the issue.

Not only did voters ignore these ads, they remained twice as likely to be concerned with the power of corporations than with the power of unions. For example, a survey among voters in Senate battleground states by Peter D. Hart Research Associates found that candidate support for the Employee Free Choice Act did not play a significant role in voters’ decisions. Instead, issues such as the economy and corporate power were high on the electorate’s minds. But the poll also revealed that 60 percent of respondents believe it is important to pass the Employee Free Choice Act, and nearly one-third (31 percent) of voters strongly believe it should be a priority for Congress.

Newly-elected Senators like Mark Udall, Jeff Merkley, and Jeanne Shaheen withstood millions of dollars in attack ads criticizing their support for the bill. They managed to not only score victories, but actually improve their polling numbers despite the negative onslaught. Why? Americans know we can’t continue the status quo of stagnant wages, rampant outsourcing, reduced healthcare coverage, and high unemployment. Unions make a difference in improving not only working conditions, but wages, access to medical care and job security. Through an aggressive public education and grassroots campaign, workers’ rights advocates and unions were able to remind and convince the public that policies to help more workers join unions ultimately will help save our failing economy.

Over the coming weeks and months, these new leaders will help strengthen the support that already exists for passage of the Employee Free Choice Act. New leaders on Capitol Hill and in the White House will be engaged to ensure that workers’ rights are a high priority when Congress reconvenes in January. President-elect Barack Obama has already signaled his strong support of the bill, proclaiming, “I’ve fought to pass the Employee Free Choice Act in the Senate. And I will make it the law of the land when I’m President of the United States of America.” The future of the middle class that drives our economy, and of a strong labor movement that stands up for those who don’t have a voice, depends on the same courage and conviction that propelled candidates to victory on November 4.

We have only seen the beginning of the fight to restore workers’ rights in this country as we can expect more sound and fury from opponents of this bill. But voters have clearly spoken. In our current economic climate, the American public is hungry for measures to strengthen the middle class, and our new Congress should heed this call and make it a priority to pass the Employee Free Choice Act.

David Bonior is a former Congressman from Michigan, and is Chair of American Rights at Work, a workers’ rights advocacy organization in Washington, DC.

Dave McCurdy: The Auto Industry and the Obama Administration

Today’s challenging economic environment presents a powerful opportunity for the incoming administration to bring America’s largest manufacturing sector together with the environmental lobby, state governors, as well as Congress, to unite in providing America with a comprehensive solution on issues of energy and climate change, while also addressing issues that impact the broader American economy as a whole.

Automakers want very much to improve fuel economy and reduce CO2 emissions, thereby doing their part to eliminate problems and be part of a serious solution in the above regard.

During the campaign President-Elect Obama stated, “Few have been harder hit by our credit crisis than the workers who make our cars and the companies that supply their parts. Now, when it came to rescuing Wall Street, Washington didn’t waste a minute. But now that autoworkers are suffering, Washington’s put on the brakes. It turns out it could take a year for the auto industry to get the loan guarantees we passed a few weeks ago. Well, the workers who are being laid off and the companies that are seeing their sales drop — they can’t afford to wait a year, they need help right now. That’s why I’ve called on Washington to fast-track those loan guarantees and provide more as needed — because that’s how we’ll secure our auto jobs and save our auto industry.”

President-Elect Obama was absolutely correct in his analysis and suggestions as regards Washington’s response to the current crisis.

As America’s largest manufacturing industry suffers, so too does the economy and American middle class as a whole. Fewer car sales mean less production and available work. Parts suppliers are all but immediately impacted and their large work forces feel the impact through reduced employment and potential lay-offs.

In its entirety, the scope of America’s auto industry, now in trouble, means the negative ramifications will eventually be felt broadly across the economy, hitting everyone from home lenders, state and local governments and major and small retail operators, too.

Ultimately, the impact comes full circle, reducing car sales even more and a vicious downward spiral reeking havoc across the nation’s economy will result.

The auto industry does not represent simply executives, manufacturing plants and parts. It defines a large sector of America as a community which is representative of the best and most productive of America’s middle class. And that community needs help.

At the same time, the auto industry recognizes and accepts its important responsibility to be on the leading edge of a new energy economy. To produce the next generation of technology and vehicles to meet the challenges of fuel economy and CO2 reduction requires a healthy, competitive auto industry and clear national leadership.

Our industry wants to and is prepared to be a major part of that leadership. But it requires a healthy and robust car industry in order to efficiently produce what America now requires.

Even now, our engineers and designers continue working toward the next technology breakthroughs that will even further reduce oil dependence and carbon dioxide emissions. A thriving auto sector working towards meeting a national solution could create the biggest wave of “green jobs” our nation has ever seen.

But currently those efforts face significant risk.

To get on track and begin meeting these challenges America’s auto makers need the certainty of a single national standard set by the federal government and fast-tracking of the loan guarantees to help automakers retool for the next generation of fuel-efficient autos.

And this also requires an economic stimulus plan that includes adequate measures to help consumers get back into auto showrooms. Increased credit availability as part of an effort to spur consumer sales will help all of America to achieve important goals during this time of economic distress.

In the current difficult times, we need a comprehensive effort to shore up an important portion of America’s middle class and significantly advance America’s Green technology efforts toward meeting goals we all see as critical to America and generations of hard-working Americans to come.

Sheryl Sandberg: Larry Summers’ True Record on Women

Larry has been a true advocate for women throughout his career. In 1992, as Chief Economist of the World Bank, Larry argued in front of the world’s Finance Ministers that the highest return investment they could make in their economies was to educate their girls. Through his work, girls’ education became a focus for development experts and a topic not just in education ministries, but in financial ministries worldwide.

I first met Larry when I was a junior at Harvard. A friend and I were forming a new student organization, Women in Economics and Government, to encourage women to major in these subjects. We told all of our professors of our efforts and of all of them, the one who helped us the most was Larry. He served as our champion and helped rally the support of his fellow professors behind our efforts. The following year, when I wanted to write my senior thesis on the economics of spousal abuse, Larry volunteered to be my advisor because he recognized the importance of the issue.

I went on to work for him both at the World Bank and at Treasury. At the World Bank, he was a tireless advocate for girls’ education. At Treasury, he fought for social security benefits for women working in their homes, better enforcement of child support obligations, and an expansion of child care tax credits. And through all of these years, he was a supportive and deeply caring mentor for me and many other women who had the opportunity to work for him.

Larry has been attacked by some in the women’s community for remarks he made about women’s abilities. As he has acknowledged himself, this speech was a real mistake. What few seem to note is that it is remarkable that he was giving the speech in the first place - that he cared enough about women’s careers and their trajectory in the fields of math and science to proactively analyze the issues and talk about what was going wrong. To conclude that he communicated poorly — and even insensitively — is fair. To conclude that he is opposed to progress for women overlooks the fact that improving this progress was precisely the subject he was addressing.

Many people note that our nation has few economists with his intelligence. They should also know that we have few leaders, if any, in the financial world who have done more for women.

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