Can workers reclaim the American dream? - American Thought - Cover Story

"The plight of millions of families has worsened in recent years because of the growing specter of layoffs.... The cheers on Wall Street mock the tears on Main Street."

Throughout the decades of the Cold War, the paramount national concern was national security. Since the end of the Cold War, concern is exploding over job, financial, health, and retirement security. No political party deserves to prevail if it fails to address this issue and propose a plausible strategy to end it.

The heart of the current crisis is the in and prosperity no longer benefit all Americans fairly. The quarter-century after World War II was a golden era. Hard wore paid off. As the economy grew, income rose for all. This no longer is true. Superficial signs of prosperity abound--the stock market hitting record highs, inflation consistently low, unemployment down--but the prosperity is less than it seems. Americans are working harder and earning less. Their standard of living is stagnant or sinking. They are worried about losing their jobs and health insurance, affording their children's education. caring for their elderly parents, and somehow stir] saving for their own retirement. The rich are getting richer, but more and more families are left out and left behind. The rising tide that once lilted all the boats now lifts only the yachts.

Since 1973, real family income has fallen for 60% of the U.S. workforce. At the same time, the incomes of the wealthiest five percent have risen by nearly a third, and income for the top one percent almost has doubled. For the vast majority of families, the American Dream today has a sign over it that says "Only the Wealthy Need Apply."

The plight of millions of families has worsened in recent years because of the growing specter of layoffs. Jobs no longer seem secure. In the past, corporations reduced their workforces only when they were in trouble. Now, profitable companies lay off good workers in an unseemly race for everfatter profits and ever-higher stock prices. The cheers on Wall Street mock the tears on Main Street.

The Republican Contract With America is largely defunct because it would have made these situations worse. Its massive cuts in Medicare, education, Job training, and other priorities would have exacerbated the insecurities of most families, and the lavish tax breaks for the wealthy would have worsened the income gap. In fact, half of all spending cuts in the vetoed Republican budget plan came from programs benefiting the neediest 20% of families. Less than one-tenth came from the top 20%. Two-thirds of the proposed Republican tax breaks flowed to the top 20%, while the bottom 20% actually faced a tax increase. Alone among the Republicans, Pat Buchanan has diagnosed the problem, but his remedies of isolationism, protectionism, racism, and scapegoatism are even more poisonous than the Contract With America.

Practical steps, not bigotry and demagoguery, are needed to deal with these growing insecurities. In other times, Congresses have enacted restraints on runaway free enterprise to end abuses and bolster the public interest. The most obvious precedents are the anti-trust and child labor laws, the minimum wage, Social Security, Medicare, and, Medicaid.

Solutions to the current crisis need not depend on class warfare or pit workers against corporations. I favor incentives to make it more profitable for employers to create jobs than to eliminate them; to share gains with workers, rather than channel them solely to CEOs and stockholders; and to provide reasonable training and reasonable health and retirement benefits. These incentives can he paid for by closing loopholes in the tax code that encourage firms to move jobs overseas or treat workers as disposable.

Action on four fronts is under way in Congress. Concerning health insurance, it has passed the bipartisan Kassebaum-Kennedy bill to correct two flagrant industry abuses-the excessive resort to exclusions for pre-existing conditions and the loss of coverage when employees lose or change their jobs. The lesson of the health reform debacle of 1994 is that a sharply divided Congress can not make far-reaching changes in an election year Instead of repeating that history, Republicans and Democrats have enacted the reforms that have broad support and are long overdue.

Second, it has raised the minimum wage, which was about to reach its lowest level in 40 years. April 1, 1996, marked the fifth anniversary of the last increase in the minimum wage. Raising it from the current level of $4.25 an hour to $5.15 will boost the wages of 13,000,000 Americans. Pres. Clinton gave the bill his full support, and Democrats in the Senate and House pressed the issue despite opposition from the Republican majority. Ultimately, Bob Dole, Speaker of the House Newt Gingrich, and the Republicans who professed to be undergoing an election year conversion on the issue of worker insecurity realized that public support for the increase was overwhelming, and they wound up supporting the raise.

Third, the bipartisan job training consolidation and reform bill working its way through a Senate-House conference can streamline and expand training for both those who have lost their jobs and those who need to upgrade their skills.

Fourth, Congress should use the pending immigration reform bills to end anti-worker abuses in current law. Republicans and Democrats speak with one voice in urging the strongest possible crackdown on illegal immigration, but reforms in legal immigration are needed, too. It should be illegal for U.S. firms to lay off American workers and replace them with cheap imported foreign labor. Before U.S. fines hire foreign workers. they should make good-faith efforts to recruit qualified Americans. If reasonable restrictions are not enacted to protect U.S. jobs, we inevitably will fuel the drive to Buchanan-type know-nothing changes that would slam the door unfairly against all immigrants.

In addition, I favor several new steps to assist workers. I intend to introduce legislation to create tax incentives for companies to treat their workers well. The proposed plan will create a two-tier tax rate for firms and, in doing so, align the incentives for treating workers well with the interests of shareholders. If a company invests in education and training for its employees, provides adequate health care and retirement benefits, and shares profits with workers, the corporation should receive a tax reduction on the earnings distributed to its shareholders as dividends. Under this plan, CEOs who resist measures to treat workers fairly will feel the wrath of shareholders.

Other countries are rewarded with tariff benefits if they qualify as "Most Favored Nations." We should create a category of "Most Favored Companies" and reward them when they treat their employees as assets. The Federal government should give preference to such companies in awarding government contracts.

The anti-trust laws to place restraints on business mergers or acquisitions that cause substantial layoffs for workers and serious dislocation for entire communities should be amended. We should eliminate the tax deductions for interest that favor debt over equity as a source of capital and acquisitions and leveraged buyouts that cost American jobs and line the pockets of the financier of the deals. The Department of Justice, Department of Labor, Federal Trade Commission, and Securities and Exchange Commission should give greater scrutiny to transactions and restructuring which could result in the closing or major downsizing of companies, facilities, or plants that are of the lifeblood of local communities.

More must be done to protect retirement security. The Republican budget moved in exactly the wrong direction by allowing corporations to raid worker's pension funds. Instead, we must encourage corporations to provide greater pension coverage. Less than 50% of the private workforce is covered by private pension plans. More than 68,000,000 employees have no private pension coverage. Ironically, most of them work in small businesses that are driving the economy--yet, their retirement needs are ignored. Like health care, good pension coverage should be accessible, affordable, and portable.

As indicated above, these tax incentives and other measures can be paid for y repealing the perverse incentives in the tax code that are contributing to worker insecurity, especially the tax breaks that encourage companies to close domestic plants,invest abroad, and move jobs overseas. It makes no sense to encourage companies to uproot jobs in the U.S. and transfer them to foreign countries.

We can save $50,000,000,000 or more over the next five years by repealing corporate tax breaks for profits earned in foreign countries; tax exemptions for companies that transfer title to goods on the high seas; price rigging that minimizes U.S. income and maximizes income in foreign tax haves; sham corporations that generate huge tax deductions for moving plants and jobs overseas; and loopholes that allow billionaires to thumb their noses at Uncle Sam, renounce their citizenship, and move to a foreign tax haven to evade taxes on the massive wealth they have accumulated in the U.S.

The "Quiet Depression" facing American workers is the central economic, social, and political issue of 1996. When the economy is wrong, nothing else is right. Progress and opportunity for all are fundamental American values. The need is obvious and urgent. What is unacceptable is to do nothing.

COPYRIGHT 1996 Society for the Advancement of Education
COPYRIGHT 2004 Gale Group