David Letterman doesn’t work for CBS, and Letterman’s production company, Worldwide Pants, has said it has a sexual harassment policy that somehow allows Letterman’s conduct. “Dave is not in violation of our policy and no one has ever raised a complaint against him,” a company spokesman told the Los Angeles Times. But the extortion attempt related to his affairs with subordinates has set off alarm bells for many lawyers. Atlanta attorney Andria Ryan told the National Law Journal that while the public hears his confession and “says, ‘Oh, what a shame for his wife, his family or his job,’ my first reaction was, ‘This is a sex harassment suit waiting to happen.’” San Francisco attorney Mark Askanas said the danger for employers is that other co-workers will see favoritism connected to the affair. “You can contain the relationship, but how do you contain the impact it has on other employees?” Askanas asked. The Equal Employment Opportunity Commission saw 14,000 sexual harassment complaints in 2008, a 16 percent spike from 2007 and the first increase since 2000.
“Now that we’ve stepped back a few paces from the brink — thanks, let’s not forget, to immense, taxpayer-financed rescue packages — the financial sector is rapidly returning to business as usual,” columnist Paul Krugman warned. “Even as the rest of the nation continues to suffer from rising unemployment and severe hardship, Wall Street paychecks are heading back to pre-crisis levels. And the industry is deploying its political clout to block even the most minimal reforms.” Krugman argues that one of the biggest problems is that investment bankers are still “lavishly rewarded if they deliver big short-term profits — but aren’t correspondingly punished if they later suffer even bigger losses,” which encourages excessive risk-taking.
The use of the term “French tanker” by Rep. Todd Tiahrt, R-Goddard, rankles more than the French. The “flag-waving” plays well politically, noted Mobile (Ala.) Press-Register columnist George Talbot. “But consider that its chief end is to prevent Airbus and its American partner, Northrop Grumman Corp., from investing $600 million in a new U.S. assembly plant. . . . Ultimately, the problem is not that the tanker contract would be a jobs program for European workers, as Tiahrt asserted. It’s that the jobs would be located in Alabama, Florida and Mississippi instead of Washington state and Kansas. The next time Tiahrt and other pro-Boeing backers argue that Alabama isn’t part of the U.S., remember that the state and its Deep South neighbors send an outsized number of young men and women into military service. And that the region, improbably, is leading the U.S. out of a recession that has crippled domestic manufacturers across the Rust Belt.”
In ruling that Airbus received illegal government subsidies for its A380 superjumbo jet and other airplanes, the World Trade Organization didn’t settle the long-running dispute between Europe’s Airbus and America’s Boeing. But Boeing and its congressional defenders, including the Kansas delegation, got a global acknowledgment that the “launch aid” that European governments provided for the A380 was illegal and that the rivals haven’t been competing on an even playing field. Though complicated enough that both sides see vindication in it, the ruling certainly should give Pentagon officials more to think about as Boeing and Airbus approach a new round of bidding on an Air Force air-refueling tanker contract. As Rep. Todd Tiahrt, R-Goddard, said in a statement, the report “raises new questions of whether the Department of Defense should bid out national security contracts to a foreign entity entangled in illegal subsidy dealings.”
Kansas City Star columnist E. Thomas McClanahan thinks President Obama’s era already looks a lot like Jimmy Carter’s. He wrote: “As in the Carter years, both political branches — White House and Congress — are now dominated by Democrats from the left wing of the party. As Michael Barone wrote in ‘Our Country,’ liberals from this tradition are inclined to seek ‘economic redistribution by always asking more’ — without worrying too much about whether they might be approaching the point at which ‘the public sector would start to squeeze the life out of the private sector.’
“More voters are saying, in effect: That point is fast approaching. That, in a nutshell, is what the ‘national conversation’ is currently about. That’s what the tea parties are about. That’s why angry people are crowding town hall meetings, shouting ‘read the bill!’ at their elected representatives.
“Many legitimately fear that if not stopped, Obama and the Democratic Congress will take this country well beyond the point where the public sector starts to ‘squeeze the life’ out of the economy.”
Sen. Sam Brownback, R-Kan., has been of two minds about the whole “cash for clunkers” idea, co-sponsoring a “budget-neutral” Senate version in May, voting against a bill in June and then voting last week to add $2 billion to the rebate program. About the latest vote, Brownback told The Eagle editorial board through a spokeswoman: “I would rather the deficit be reduced but that wasn’t the choice. The choice was funding more government buildings or stimulating car sales. I supported stimulating the economy rather than stimulating even more the federal government.”
“Cash for clunkers” was so successful that a program that was meant to take until November achieved its goals in a week or two. Thousands of cars were sold, helping dealerships and car companies to move toward recovery. Thousands of gas-guzzlers were scrapped, helping the country move toward improved energy efficiency. Just as it starts to become clear that the government has a winner on its hands, we start to see reports in the conservative media that call the program a failure. The lesson they all teach is this failure shows what will happen if we pass health care reform. Draw your own lessons. Was a program that wildly overachieved its goals, stimulated the economy, improved the country’s fuel efficiency and brought a great price for a new car to tens of thousands of Americans a success or not? I say it was, and I say it shows why we want a public option choice in the health care reform. — Dave Johnson, Huffington Post
What the clunker policy really proves is that Americans aren’t stupid and will let some other taxpayer buy them a free lunch if given the chance. It’s hardly surprising that Peter is willing to use a donation from his neighbor Paul, midwifed by Uncle Sugar, to class up his driveway. On the other hand, this is crackpot economics. The subsidy won’t add to net national wealth, since it merely transfers money to one taxpayer’s pocket from someone else’s, and merely pays that taxpayer to destroy a perfectly serviceable asset in return for something he might have bought anyway. By this logic, everyone should burn the sofa and dining room set and refurnish the homestead every couple of years. Since money is no object, let’s give everyone a $4,500 voucher for other consumer goods. As long as everyone thinks we can conjure wealth out of $4,500 giveaways, let’s go all the way. — Wall Street Journal editorial
Carol Smith, senior vice president for the Elle Group, said recently that “female bosses tend to be better managers, better advisers, mentors, rational thinkers.” That prompted the New York Times to ask some executives, professors and a psychologist what research shows about the differences between women and men as managers.
Some of their comments:
“Women are less ‘bossy,’ probably because people dislike bossy women even more than bossy men.”
“None of this behavior matters if it’s accompanied with a denial of the continued existence of sexism in the workplace.”
“Women are often better communicators because their brains are more networked for language.”
“Carol Smith is wrong about her blanket statement about women being better managers. But she’s right about something else. Whether we’re talking about mentoring, managing or office politics, the research is clear: Men and women together are the best.”
It would take $9.92 today to match the buying power of the minimum wage at its peak in 1968. In today’s dollars, the 1968 hourly minimum wage adds up to $20,634 a year working full time. The new federal minimum wage of $7.25 comes to just $15,080. That’s $ 5,554 in lost wages. The long-term fall in worker buying power is one reason we are in the worst economic crisis since the Great Depression. When the minimum wage became law in 1938, President Franklin Roosevelt called it “an essential part of economic recovery.” And so it is today. Consumer spending makes up about 70 percent of our economy. We can’t build a strong economy on poverty wages. A growing share of workers make too little to buy necessities. If the minimum wage had stayed above the nearly $10 value it had in 1968, it would have put upward pressure on the average worker wage. The Let Justice Roll Living Wage Campaign, which I advise, is calling for a minimum wage of $10 in 2010. It’s time to break the cycle of too-little, too-late raises. — Holly Sklar, McClatchy-Tribune News Service
On July 24, the federal minimum wage increased for the third time in three years to $7.25 per hour. A small business with 20 entry-level employees will see more than $30,000 in new labor costs due to the increase. That doesn’t include the higher taxes the employer has to pay. Research has shown that minimum-wage hikes take a sledgehammer to the entry-level job market. In a 2007 survey, 73 percent of labor economists said increases in the minimum wage lead to employment losses. Teens get hit especially hard. Adult entry-level workers find themselves displaced. Businesses respond by laying off workers and cutting back on hours. The companies that are still hiring seek out more skilled applicants who are worth the higher wage, or switch to automated labor. The latest minimum-wage hike will only prolong the nation’s affliction with high unemployment — hurting job prospects for our most vulnerable workers and denying teens the opportunity to gain valuable on-the-job training this summer. — Kristen Lopez Eastlick, Employment Policies Institute
From the Washington Post: “The number of jobs on employers’ payrolls fell by 467,000, the Labor Department said. That is many more jobs than were shed in May and far worse than the 350,000 job losses that economists were forecasting. Job losses peaked in January and had declined every month until June. The steep losses show that even as there are signs that total economic activity may level off or begin growing later this year, the nation’s employers are still pulling back.”
In a New Yorker profile titled “The Contrarian,” Federal Deposit Insurance Corp. chairwoman Sheila Bair is variously referred to as a “Republican regulator liberals love” and “the skunk at the picnic.” A Bush appointee, Bair was among the few voices warning about the economic threat posed by subprime mortgages. The University of Kansas graduate, former aide to Bob Dole and onetime Kansas congressional candidate discusses her roots in Independence (“It’s an area where people make it, but you’ve got to work at it,” she said) and recalls working as a teller in a small-town bank in the simpler ’70s. “Everybody had a 30-year fixed-rate mortgage back then,” she said. “It was a ritual to come in and make your mortgage payment personally. There was a kind of pride in living up to your obligations, and, on the lender side, in making loans that people could understand and afford.”
Given the loot stolen by investor Bernard Madoff and the lives he ruined, the maximum 150-year sentence imposed today seems just — if symbolic, given that he’s 71. But Madoff and one of his accountants, who also has been criminally charged, represent just a sliver of the global financial collapse. Texas billionaire R. Allen Stanford faces charges of bilking investors, too. But where are the other perp walks, prison sentences and accountability for what has cost so many investors so much?
You know there is momentum for reducing auto emissions when Lamborghini, the Italian high-performance sports car manufacturer, is researching a possible hybrid engine. The move is the company’s effort to lower emissions by 35 percent by 2015, USA Today reported.
“We are acting as reluctant shareholders, because that is the only way to help GM succeed,” President Obama said today about General Motors’ bankruptcy filing. But Obama isn’t reluctant enough for some. “Although the bureaucrats disclaim any interest in micromanaging the automaker, it isn’t hard to imagine them nudging and guiding decisions in directions they would like them to go,” wrote Alex Taylor of Fortune magazine. A Wall Street Journal editorial said that Obama “has made himself GM’s de facto CEO. Our guess is that he’ll come to regret it as much as taxpayers will.”
The Sedgwick County commissioners still had too many questions Wednesday to feel comfortable going forward with a proposal to buy 808 acres in Bel Aire for an industrial park. There is a lot to consider, especially with the county budget so tight and other priorities so pressing. But the delay should not be the death of the plan, which was harshly criticized by several local developers and anti-tax activists at the meeting. If the commission does what the critics want, which is nothing, the county will remain uncompetitive in the high-stakes contest to land large businesses with large numbers of jobs. It was good to hear Commission Chairman Kelly Parks indicate that he sees the urgent need for such a shovel-ready industrial park.
It’s impressive that automobile manufacturers, both foreign and domestic, are supporting a significant increase in fuel-efficiency standards, after years of fighting higher standards. In the case of GM and Chrysler, though, that may be because they have no choice.
Requiring an average of 35.5 miles per gallon should have a dramatic impact on the environment and our fossil-fuel dependency, saving an estimated 1.8 billion barrels of oil through 2016. But it remains to be seen whether automakers will be able to achieve this standard and do so profitably, given that many American consumers prefer bigger cars. A Wall Street Journal editorial noted: “All that’s left to arrive at the president’s new destination for the American way of driving are huge, unanswered questions about technology, financing and the marketability of cars that will be small and expensive.”
Community banks are tired of being tarred by the risky lending of some megabanks. “I was on vacation in California and this guy I had just met said, ‘So, traveling on that bailout money, huh?’ I didn’t find that very amusing,” Blake Heid of First Option Bank in Paola (which didn’t take any bailout money) told the New York Times. Other bankers note how their careful, “boring” approach to lending has been vindicated. “Banking should not be exciting,” a bank president in Jasper, Ind., told the Times. “If banking gets exciting, there is something wrong with it.”
“Local chambers of commerce in the state are great,” Gov. Mark Parkinson said in an interview with the Topeka Capital-Journal, noting how he used to be president of the Shawnee Area Chamber of Commerce and was president of the six chambers of commerce in Johnson County. But he doesn’t have a similarly positive opinion about the Kansas Chamber of Commerce, which he described as “very, very conservative.”
He said: “I disagree with the approach of the state chamber on a variety of issues. I believe that ultimately the way to grow business in our state is not just to create a good business climate — and that’s a part of it, taxes are a part of it — but it is also to create a great quality of life. Businesses and people move to Kansas because we have great schools, because we have great roads.”
Late-night comics have wondered why Congress, instead of bailing out auto manufacturers and big banks, doesn’t give money to the public to pay down mortgages or to help buy new cars. Turns out that Sen. Sam Brownback, R-Kan., likes the idea. Brownback is co-sponsoring “cash for clunkers” legislation that would offer up to $4,500 to consumers who trade in cars getting 18 miles per gallon or less for a higher-mileage vehicle. Though Brownback has been a critic of government intervention in the marketplace, he sees the auto industry as a victim that deserves help. “The overall economic landscape has just fallen out from underneath them,” he said.
Bankruptcy advocates have several reasons for favoring Chapter 11. Some are simply frustrated with the expense and complexity of current government-supported overhauls. (We, too, wish there were quick, easy solutions to the credit crisis and economic meltdown.) Some specifically seek to punish unions, bondholders, corporate leaders, suppliers or other stakeholders. Some believe that bankruptcy will enable GM to “clear the decks” and start afresh. But a tough out-of-court reorganization is best for GM, the taxpayers and other stakeholders. Bankruptcy reorganization takes cash — lots of it. For a company such as General Motors to operate in Chapter 11, it would need massive debtor-in-possession loans. With credit markets frozen, the federal government is the only realistic source of such loans. We estimate loans needed to reorganize GM in Chapter 11 could top $100 billion, far more than the out-of-court fix we envision. One reason this figure is so large is that GM’s revenues would plunge in bankruptcy. The bankruptcy process would bring financial hardship to millions who rely on GM, and upon whom GM relies. — Tom Wilkinson, director, GM News Relations
GM argues that it couldn’t survive a Chapter 11 proceeding, but bankruptcy actually could boost its ability to survive. Two big issues — reorganizing GM’s $30 billion of bond debt, and the potential collapse of the automotive supply chain — are both easier to deal with in Chapter 11. GM has been saying that in Chapter 11 its network of suppliers would collapse, dragging down the whole auto industry. But Chapter 11 has well-established procedures to deal with this concern. GM may run out of cash to pay its suppliers — whether it files for bankruptcy or not. But GM’s supply network is probably more robust with GM bankrupt, as Chapter 11 assures that suppliers get paid out of whatever cash GM has. In addition, bankruptcy may be the only way for GM to fully confront its operational problems, deal with its legacy costs, reconfigure its dealer network and achieve a viable labor agreement. But one issue that has not been discussed much is that bankruptcy usually leads to a sharp change in management. There are turnaround teams expert at reorganizing troubled companies, and they may well be more effective than GM’s current management. — Mark J. Roe, Wall Street Journal
“Chrysler just might be the cat that’s now in its ninth life,” automotive consultant Maryann Keller wrote in the Detroit News. She noted how in the past Chrysler was able to come up with exciting new products that revived the company. But because German owner Daimler “eviscerated product development,” Keller thinks that “this time it’s different.” “There is no dazzling model waiting in the wings to save the day,” she wrote.
“I don’t stand with those who held out while others made sacrifices,” President Obama said today about the small group of hedge funds that scuttled a deal with creditors to keep Chrysler out of bankruptcy. An administration official complained that the hedge funds failed to “do the right thing” or to “act in either their own economic interest or the national interest.” Still, Obama expressed optimism that Chrysler will “emerge from this process stronger and more effective.” We’ll see.
“We don’t want you to pity us; we want you to notice us,” Detroit Free Press columnist and best-selling author Mitch Albom wrote about the attention this year’s Final Four brought Detroit. Albom warned: “This is our city, but it’s your America. What the rest of the nation is suffering, we went through first. And if our leaders aren’t wise, what we’re enduring now, you may endure next.
“You can’t cut off your manufacturing arm and expect to build. You can’t outsource everything and expect to lead the world. And you can’t treat blue-collar industry as a bunch of dumb rivetheads who need the government to run them, while allowing the banking world to do as it pleases with taxpayer money.”
It’s Friday, and it’s time for another report showing rising unemployment. The nation lost 663,000 jobs in March, the fourth straight month in which job losses have topped 600,000. As a result, the unemployment rate jumped from 8.1 to 8.5 percent, the highest rate since 1983.
Wichita has had its own bad employment news this week, as Cessna Aircraft and Bombardier Aerospace announced more layoffs.
President Obama’s announcement Monday of a new level of government involvement in the management of corporate America “amounted to an inversion of the relationship that had helped define the rise of American manufacturing might in the 20th century,” David E. Sanger wrote in the New York Times. Obama’s message now seems to be that “what is good for America will have to be good enough for General Motors.”
Sanger noted that Obama’s pledge that the government would back up car warranties may have been a necessary step. “But,” he wrote, “it means that the government now is not only the ultimate guarantor of savings accounts and insurance policies — it will also cover that blown transmission.”
