United States Politics and Government

More stories

  • 138 Shares109 Views

    in Economy

    U.S. Issues Final Rules to Keep Chip Funds Out of China

    by

    The rules, which aim to prevent chip makers from using new U.S. subsidies to benefit China, take into account the industry’s perspective.The Biden administration on Friday issued final rules that would prohibit chip companies vying for a new infusion of federal cash from carrying out certain business expansions, partnerships and research in China, in what it described as an effort to protect United States national security.The regulations come as the Biden administration prepares to disburse more than $52 billion in federal grants and tens of billions of dollars of tax credits to build up the U.S. chip industry. The new rules aim to prevent chip makers that benefit from U.S. grants from passing technology, business know-how or other benefits to China.The final restrictions will prohibit firms that receive federal money from using it to construct chip factories outside the United States. They also restrict companies from significantly expanding semiconductor manufacturing in “foreign countries of concern” — defined as China, Iran, Russia and North Korea — for 10 years after receiving an award, the administration said.The rules also prevent companies that receive funding from carrying out certain joint research projects in those countries, or licensing technology that would raise national security concerns to those countries.If a company violated those guardrails, the Commerce Department said, the government could claw back the firm’s entire award.“These guardrails will protect our national security and help the United States stay ahead for decades to come,” Gina M. Raimondo, the secretary of commerce, said in a statement.The restrictions have been the subject of heavy lobbying from the chip industry, which collectively earns about one-third of its revenue from China. Chip makers in comments filed this year expressed concerns that overly restrictive measures could disrupt supply chains and hamper their global competitiveness.Many of the rule’s broad principles, like the 10-year limit on new investments in China, were outlined in the bipartisan legislation that authorized funding for the sector. But Commerce Department officials were responsible for writing the detailed provisions of the rule.In its final rules issued Friday, the department appeared to take the perspective of chip makers and others into account. A comparison of the restrictions showed that the department had made several changes supported by chip makers, such as abolishing a specific dollar threshold for transactions that would expand chip companies’ manufacturing capacity in China, Russia, North Korea or Iran. Under the proposed rule in March, the Commerce Department would have reviewed any transaction that expanded a company’s semiconductor manufacturing capacity in such a “country of concern” valued at more than $100,000.But companies like Taiwan Semiconductor Manufacturing Company suggested that it would be more pragmatic for the department to monitor the physical expansion of the footprint of semiconductor factories, a standard that the commerce department adopted.It remains to be seen if any of the changes will prompt a backlash from Republicans on Capitol Hill, who have criticized the Biden administration as not being tough enough on Beijing and condemned a recent set of trips to China by top administration officials.In an interview on Friday, Commerce Department officials said that they had received various requests from the industry to relax certain guidelines, but that they had maintained or even strengthened some provisions where necessary to protect national security.One official added that the national security goal of the program was to have companies operating in the United States and doing so successfully, and that the department aimed to work with companies to ensure they were executing on U.S. grants.“My sense is that they struck a reasonable balance between trying to be restrictive but also not trying to be draconian with the impact on existing facilities in China,” said Chris Miller, the author of “Chip War” and an associate professor of international history at the Fletcher School at Tufts University. More

  • 113 Shares129 Views

    in Economy

    U.S. and China Agree to New Economic Dialogue Format

    by

    The regular talks are intended to give both countries a venue to resolve differences.The United States and China have created a new structure for economic dialogue in an effort to improve communication between the world’s largest economies and stabilize a relationship that has become increasingly strained in recent years.The Treasury Department said on Friday that the United States and China had agreed to create economic and financial working groups that will hold regular meetings to discuss policy and exchange information. The announcement follows visits to Beijing by three of President Biden’s cabinet members over the summer that were intended to ease tensions over economic and geopolitical matters that has been festering for years between the two countries.The Treasury Department said that the new working groups would create “ongoing structured channels for frank and substantive discussions.” Treasury officials will report to Ms. Yellen, who traveled to Beijing in July. China’s representatives, from its ministry of finance and the People’s Bank of China, will report to Vice Premier He Lifeng.“These working groups will serve as important forums to communicate America’s interests and concerns; promote a healthy economic competition between our two countries with a level playing field for American workers and businesses; and advance cooperation on global challenges,” Ms. Yellen said in a statement.The U.S. and China still have major economic disagreements on tariffs, technology controls and investment restrictions. The Biden administration has been especially concerned recently about the treatment of American companies operating in China.The creation of a working group linking the Treasury Department directly with Chinese officials on economic and financial issues represents the revival of a decades-long approach to bilateral relations that was dismantled under former President Donald J. Trump.Congress took away the Treasury’s authority over trade relations in the 1970s, transferring that authority to the newly created Office of the United States Trade Representative, which was also made a cabinet agency. Congress acted after complaints from American industries and labor unions that Treasury and the State Department had been making trade concessions to other countries to win allies against the Soviet Union in the Cold War.Under former Presidents George W. Bush and Barack Obama, the Treasury led interagency negotiating teams in talks with China. Treasury’s leadership limited the influence of American trade officials, as a succession of Treasury secretaries assigned a high priority to economic policy coordination with China and to opening China’s financial markets to Wall Street firms.Mr. Trump dismantled the interagency working group system and said that each agency would negotiate separately with China. Vice Premier Liu He, the predecessor of Vice Premier He Lifeng in handling international economic policy, tried repeatedly to reach trade arrangements with then Treasury Secretary Steven T. Mnuchin, bypassing Robert E. Lighthizer, who was Mr. Trump’s trade representative.But Mr. Trump did not endorse those arrangements and instead backed Mr. Lighthizer, who ended up negotiating a limited trade agreement that was signed by both countries in January 2020, and remains in place.In August, Gina Raimondo, the commerce secretary, announced during her trip to Beijing and Shanghai that the United States and China agreed to hold regular conversations about commercial issues and restrictions on access to advanced technology.A senior Treasury official said that a consensus was reached during Ms. Yellen’s trip in July to form the groups, which are meant to allow both sides to voice concerns and look for ways to work together. The economic group will focus on challenges such as restructuring debt for low- and middle-income countries in distress, while the financial group will delve into topics like financial stability and sustainable finance.Ms. Yellen said on Friday that the new structure was an important step forward in the bilateral relationship.“It is vital that we talk, particularly when we disagree,” she said. More

  • 113 Shares149 Views

    in Economy

    Defense Department Awards Chip Funding to Fuel Domestic Research

    by

    The $238 million in grants will set up eight research hubs, as a small slice of the federal money that will go to chip companies and research facilities in the coming months.The Biden administration on Wednesday announced that it was awarding $238 million through the Defense Department to set up eight hubs around the United States for promoting innovation in the semiconductor industry.The funds are one of the earliest releases of the nearly $53 billion in grants and subsidies that Congress and the Biden administration have approved to build up the domestic semiconductor industry, which U.S. officials say has been left vulnerable by decades of offshoring.The Biden administration has a variety of funding programs in the works to encourage chip research institutions and manufacturers to set up operations in the United States. Most of these programs are run through the Commerce Department, and many will begin handing out money this fall.While U.S. companies still design many of the world’s most advanced chips, much of the manufacturing of the technology has been outsourced to foreign locations, including Taiwan, leaving U.S. chip supply vulnerable if, for example, the Chinese government were to invade Taiwan.The awards announced Wednesday will go to research institutes, consortiums and universities located in New York, Arizona, Indiana, Ohio, California, North Carolina and Massachusetts, defense officials said.Each hub will receive $15 million to $40 million to fund the development of new chips for use in electromagnetic warfare, artificial intelligence, 5G and 6G wireless technologies, and quantum computing, among other areas. While the research will be directed at meeting the needs of the Defense Department, it is also expected to be useful for commercial applications.Kathleen Hicks, the deputy defense secretary, said in a news conference Wednesday that the hubs would “tackle many technical challenges relevant to D.O.D.’s missions, to get the most cutting-edge microchips into systems our troops use every day: ships, planes, tanks, long-range munitions, communications gear, sensors and much more.”The funding also aims to accelerate what the industry refers to as the “lab-to-fab transition,” the process of taking new chip technologies and turning them into viable commercial products.David A. Honey, the deputy under secretary of defense for research and engineering, said the hubs would bring more prototype work to the United States.“Now we’ll be able to get it done here,” he said. “And also we’re building out in the areas that are just not available anywhere else.”The Commerce Department is separately setting up a string of research hubs for the semiconductor industry, collectively called the National Semiconductor Technology Center, drawing on $11 billion in funding it received for research and development.Appearing before the House Science, Space and Technology Committee on Tuesday, Gina Raimondo, the commerce secretary, said that her department was on track to formally unveil that technology center this fall.She also said that the department had received about 100 applications from companies hoping to receive grants that will be available to manufacturers.While Ms. Raimondo acknowledged that the grant program faced challenges, like securing enough workers to staff new chip plants, she said that if properly implemented, the program would make the United States “the premier destination in the world” for chip design, research and manufacturing.“That’s the vision that we’re trying to achieve with your support,” Ms. Raimondo told lawmakers.Ms. Raimondo was also questioned about the release in prior weeks of an advanced smartphone by Chinese telecom giant Huawei. The company is under heavy U.S. trade restrictions, administered by the Commerce Department, that theoretically should have prevented such an innovation.Ms. Raimondo said that she was upset by the development, but added that the U.S. government did not have any evidence that Chinese companies could manufacture the more sophisticated chips at scale.Ms. Raimondo said that the United States could take various defensive measures to limit China’s access to advanced technology, but “my strongly held view is that what we do on offense matters so much more.”“The reality is that over the past 30 years, this country has taken its eye off the ball of manufacturing,” she continued. “And when you don’t manufacture you lose out on innovation, and you become dependent on other countries.” More

  • 138 Shares189 Views

    in Economy

    Strike Is a High-Stakes Gamble for Autoworkers and the Labor Movement

    by

    Experts on unions and the industry said the U.A.W. strike could accelerate a wave of worker actions, or stifle labor’s recent momentum.Since the start of the pandemic, labor unions have enjoyed something of a renaissance. They have made inroads into previously nonunion companies like Starbucks and Amazon, and won unusually strong contracts for hundreds of thousands of workers. Last year, public approval for unions reached its highest level since the Lyndon Johnson presidency.What unions haven’t had during that stretch is a true gut-check moment on a national scale. Strikes by railroad workers and UPS employees, which had the potential to rattle the U.S. economy, were averted at the last minute. The fallout from the continuing writers’ and actors’ strikes has been heavily concentrated in Southern California.The strike by the United Automobile Workers, whose members walked off the job at three plants on Friday, is shaping up to be such a test. A contract with substantial wage increases and other concessions from the three automakers could announce organized labor as an economic force to be reckoned with and accelerate a recent wave of organizing.But there are also real pitfalls. A prolonged strike could undermine the three established U.S. automakers — General Motors, Ford and Stellantis, which owns Chrysler, Jeep and Ram — and send the politically crucial Midwest into recession. If the union is seen as overreaching, or if it settles for a weak deal after a costly stoppage, public support could sour.“Right now, unions are cool,” said Michael Lotito, a lawyer at Littler Mendelson, a firm representing management.“But unions have a risk of not being very cool if you have five-month strike in L.A and an X-month strike in how many other states,” he added.If the stakes seem high for the U.A.W., that’s partly because the union’s new president, Shawn Fain, has gone out of his way to elevate them. During frequent video meetings with members before the strike, Mr. Fain has portrayed the negotiations as a broader struggle pitting ordinary workers against corporate titans.“I know that we’re on the right side in this battle,” he said in a recent video appearance. “It’s a battle of the working class against the rich, the haves versus the have-nots, the billionaire class against everybody else.”Mr. Fain’s framing of the contract campaign in class terms appears to be resonating with his members, thousands of whom have watched the online sessions.Shunte Sanders-Beasley, a U.A.W. member said, “If we can win back some of the concessions we took, I’m hoping that it’ll be a trickle-down effect.”Cydni Elledge for The New York TimesShunte Sanders-Beasley, a U.A.W. member in Michigan who started working at a Chrysler plant in Indiana in 1999, said she saw the fight similarly.“If you follow history, autoworkers tend to set the tone,” said Ms. Sanders-Beasley, who has served as vice president of her local and backed Mr. Fain’s campaign for the union’s presidency last year. “If we can win back some of the concessions we took, I’m hoping that it’ll be a trickle-down effect.”A successful autoworker strike in 1937, which led G.M. to recognize the U.A.W. for the first time, helped set in motion a wave of union organizing across a variety of industries like steel, oil, textiles and newspapers over the next few years.Labor activists agreed that the current strike could also reverberate across other industries, where workers appear to be paying close attention to the labor actions of the past year. “In organizing meetings, they say, ‘If they can do it, we can do it,’” said Jaz Brisack, an organizer with Workers United who had played a key role in the Starbucks campaign.But the flip side is that the strike could inflict collateral damage that creates frustration and hardship among tens of thousands of nonunion workers and their communities.“The small and medium-sized manufacturers across the country that make up the automotive sector’s integrated supply chain will feel the brunt of this work stoppage, whether they are a union shop or not,” Jay Timmons, the chief executive of the National Association of Manufacturers, said in a statement Friday.Higher wages and gains for rank-and-file workers can be good for the economy. But some argue that Mr. Fain’s and other labor leaders’ aggressive demands could discourage businesses from investing in the United States or render them uncompetitive with foreign rivals.“Mr. Fain has to think about this, too — the long-term financial viability of these three companies,” said John Drake, vice president of transportation, infrastructure and supply chain policy at the U.S. Chamber of Commerce.Even those who welcome the union’s aggressive stance say it is fraught with risk. Gene Bruskin, a longtime union official who helped workers at a Smithfield meat-processing plant in North Carolina achieve, in 2008, one of the biggest organizing victories in decades, said a long strike could disillusion workers if the union came up short on key demands.“If the U.A.W. fails to make any significant gains, particularly on the two-tier stuff, their future could be seriously harmed,” said Mr. Bruskin, referring to a system in which newer workers are paid far less than veteran workers who perform similar jobs.Mr. Bruskin also worried that the union could effectively win the battle and lose the war if the auto companies respond by shifting more production to Mexico, where they already have a significant presence. Shawn Fain, president of the U.A.W., said, “It’s a battle of the working class against the rich, the haves versus the have-nots, the billionaire class against everybody else.”Cydni Elledge for The New York TimesThe tens of billions of dollars in federal subsidies for domestic production of electric vehicles that President Biden has helped secure should limit that shift and help keep manufacturing jobs at home. Many automakers are already locating new plants in the United States to take advantage of the funds.Still, Willy Shih, an expert on manufacturing at Harvard Business School, said the automakers could adjust their operations in ways that undercut the U.A.W. while continuing to produce cars domestically. Automation is one option, he said, as is locating new plants in lightly unionized Southern states.The Detroit automakers have created joint ventures with foreign battery makers outside the reach of the U.A.W.’s national contracts and have sought to locate some of those plants in states like Tennessee and Kentucky. The union is seeking to bring workers at those plants up to the same pay and labor standards that direct employees of the Big Three enjoy, but it has not succeeded so far.Given those threats, the union may feel justified in taking a more ambitious posture toward the automakers. The primary check on shifting work to other states will be the U.A.W.’s ability to organize new plants, especially in the South, where it has struggled to gain traction for years. Experts argued that the union would likely increase its chances of attracting members there if it could point to large concrete gains.“The answer is winning a strong contact here and using it to organize huge groups of autoworkers who are currently nonunion,” said Barry Eidlin, a sociologist at McGill University in Montreal who studies labor.And there are other ways in which being too cautious may be a bigger risk to the union than being too aggressive. Organizers point out that workers are often demoralized when union leaders talk tough and then quickly settle for a subpar deal.Critics of the previous U.A.W. administration accused it of doing just that before Mr. Fain took over this year. “We’d be trying to make sense of how certain things passed in the first place,” Shana Shaw, another longtime U.A.W. member who backed Mr. Fain, said of the concessionary contracts autoworkers were asked to accept over the years.Even Mr. Fain’s habit of framing the fight in broad class terms may prove to be a strategic advantage. A recent Gallup poll found that 75 percent of the public backed the autoworkers in the showdown, compared with 19 percent who were more sympathetic to the companies.The widespread public support suggests that the autoworkers may be operating in a different context from workers in another strike that famously contributed to a loss of power for labor: air traffic controllers’ unsuccessful fight against the Reagan administration in the early 1980s, after which private-sector employers appeared to become more comfortable firing and replacing striking employees.Dr. Eidlin said that while the air traffic controllers failed to court allies in the labor movement, “the fact that Fain and the U.A.W. are messaging more broadly, really trying to build that broad coalition, speaks to the possibility of a different outcome.” More

  • 113 Shares149 Views

    in Economy

    U.S. National Debt Tops $33 Trillion for First Time

    by

    The fiscal milestone comes as Congress is facing a new spending fight with a government shutdown looming.America’s gross national debt exceeded $33 trillion for the first time on Monday, providing a stark reminder of the country’s shaky fiscal trajectory at a moment when Washington faces the prospect of a government shutdown this month amid another fight over federal spending.The Treasury Department noted the milestone in its daily report detailing the nation’s balance sheet. It came as Congress appeared to be faltering in its efforts to fund the government ahead of a Sept. 30 deadline. Unless Congress can pass a dozen appropriations bills or agree to a short-term extension of federal funding at existing levels, the United States will face its first government shutdown since 2019.Over the weekend, House Republicans considered a short-term proposal that would slash spending for most federal agencies and resurrect tough Trump-era border initiatives to extend funding through the end of October. But the plan had little hope of breaking the impasse on Capitol Hill, with Republicans still divided on their demands and Democrats unlikely to support whatever compromise they reach among themselves.The debate over the debt has grown louder this year, punctuated by an extended standoff over raising the nation’s borrowing cap.That fight ended with a bipartisan agreement to suspend the debt limit for two years and cut federal spending by $1.5 trillion over a decade by essentially freezing some funding that had been projected to increase next year and then limiting spending to 1 percent growth in 2025. But the debt is on track to top $50 trillion by the end of the decade, even after newly passed spending cuts are taken into account, as interest on the debt mounts and the cost of the nation’s social safety net programs keeps growing.But slowing the growth of the national debt continues to be daunting.Some federal spending programs that passed during the Biden administration are expected to be more costly than previously projected. The Inflation Reduction Act of 2022 was previously estimated to cost about $400 billion over a decade, but according to estimates by the University of Pennsylvania’s Penn Wharton Budget Model it could cost more than $1 trillion thanks to strong demand for the law’s generous clean energy tax credits.Pandemic-era relief programs are still costing the federal government money. The Internal Revenue Service said last week that claims for the Employee Retention Credit, a tax benefit that was originally projected to cost about $55 billion, have so far cost the federal government $230 billion. The I.R.S. is freezing the program because of fears about fraud and abuse.At the same time, several of President Biden’s attempts to raise more revenue through tax changes have been met with resistance.In late 2022, the I.R.S. delayed by one year a new tax policy that would require users of digital wallets and e-commerce platforms to start reporting small transactions to the agency. The policy was projected to raise about $8 billion in additional tax revenue over a decade.Last month, the I.R.S. delayed by two years a new provision that will stop high earners from being able to funnel extra money into their 401(k) retirement accounts. The agency described the delay as an “administrative transition period.”Meanwhile, lobbyists are pressing for loopholes in new taxes that have been enacted. The 15 percent corporate alternative minimum tax was devised to ensure that rich companies could no longer get away with paying single-digit tax rates because of creative use of deductions. However, many of these companies have been pushing the Treasury Department, which is currently writing the rules that will govern the tax, to create exceptions to preserve their most prized deductions. That tax is different from the global minimum tax that most countries, except the United States, are working to adopt.The pushback against efforts to raise revenue and cut spending has heightened the sense of alarm among budget watchdog groups that fear that a fiscal crisis is approaching.“As we have seen with recent growth in inflation and interest rates, the cost of debt can mount suddenly and rapidly,” said Michael A. Peterson, the chief executive of the Peter G. Peterson Foundation, which promotes fiscal restraint. “With more than $10 trillion of interest costs over the next decade, this compounding fiscal cycle will only continue to do damage to our kids and grandkids.”Republicans and Democrats in the House and the Senate continue to be divided on a path forward to avoid the near-term problem of a shutdown, and lawmakers have started pressing for leaders to begin focusing on a stopgap bill to keep the government operating past Sept. 30.But the red ink continues to mount.A Treasury Department report last week showed that the deficit — the gap between what the United States spends and what it collects through taxes and other revenue — was $1.5 trillion for the first 11 months of the fiscal year, a 61 percent increase from the same period a year ago.In an interview with CNBC on Monday, Treasury Secretary Janet L. Yellen said she was comfortable with the nation’s fiscal course because interest costs as a share of the economy remained manageable. However, she suggested that it was important to be mindful of future spending.“The president has proposed a series of measures that would reduce our deficits over time while investing in the economy,” Ms. Yellen said, “and this is something we need to do going forward.” More

  • 113 Shares99 Views

    in Economy

    U.A.W. Starts Strike Small, but Repercussions Could Prove Far-Reaching

    by

    Autoworkers walked off the job on Friday at three factories that produce some of the Detroit carmakers’ most popular vehicles, the opening salvos in what could become a protracted strike that hurts the U.S. economy and has an impact on the 2024 presidential election.Nearly 13,000 members of the United Auto Workers at plants in Ohio, Michigan and Missouri joined early Friday in what the union described as a targeted strike that could expand to more plants if its demands for pay raises of up to 40 percent and other gains were not met.The union’s four-year contracts with three automakers — General Motors, Ford Motor and Stellantis, which owns Chrysler, Jeep and Ram — expired Thursday, and the companies and the union remained far from striking new deals.The U.A.W.’s president, Shawn Fain, used sweeping language on Thursday to describe why his members were going on strike against all three automakers at the same time — something the union had never done in its nearly 90-year history.“This is our generation’s defining moment,” Mr. Fain, the union’s first leader elected directly by members, said in an online video. “The money is there, the cause is righteous, the world is watching, and the U.A.W. is ready to stand up.”The union and the companies did not negotiate on Friday, but the U.A.W. said it planned to resume bargaining on Saturday. President Biden dispatched two senior administration officials to Detroit on Friday to encourage the companies and union to reach agreements.At a Ford plant in Wayne, Mich., west of Detroit, strikers waved placards — one read, “Record Profits; Record Contracts” — and gave thumbs-up to honking vehicles. A metal sign on a chain-link fence read, “Absolutely NO foreign cars allowed.” The protesters were assigned to a six-hour shift on the picket line. If the strike continues, they will be called to one shift per week.While first and foremost a battle between autoworkers and automakers, the conflict could have far-reaching consequences. A lengthy strike would reduce the number of new cars available for sale, which could fuel inflation and force the Federal Reserve to keep interest rates high.The U.A.W.’s president, Shawn Fain, center, at the walkout early Friday at Ford Motor’s assembly plant in Wayne, Mich.Cydni Elledge for The New York TimesA strike also presents a quandary for Mr. Biden, who has called for rising incomes but must also be mindful of the strike’s economic impact and his goal to promote electric vehicles as a solution to climate change.Speaking at the White House on Friday, the president strongly supported the union. “Over the past decade, auto companies have seen record profits, including in the last few years, because of the extraordinary skill and sacrifices of U.A.W. workers,” he said. “But those record profits have not been shared fairly.”The U.A.W. says its pay demands roughly correspond to the increases in the compensation of the top executives at Ford, G.M. and Stellantis. The raises are also meant to help compensate workers for the ground they have lost to inflation and big concessions the union made to the automakers after the 2007-8 financial crisis, when G.M. and Chrysler were forced to restructure themselves in bankruptcy court.But auto executives say they already pay production workers substantially more than rivals, like Tesla and Toyota, whose U.S. workers are not unionized. The companies also contend that such big raises would undermine their efforts to develop electric vehicles and remain relevant as the industry makes a difficult and costly shift from gasoline cars and trucks to electric vehicles.If unions got all that they were asking for, “we would have to cancel our E.V. investments,” Jim Farley, the chief executive of Ford, said in an interview on Friday. Instead, Ford would need to concentrate on large sport utility vehicles and pickups that generate the most profit, he said.Ford, which employs the most union members, reported a profit of $1.9 billion in the second quarter, equal to 4 percent of its sales. Tesla made $2.7 billion in the same period, about 11 percent of its sales.Mr. Farley sounded pessimistic about the chances of agreeing on a contract soon. “They are not negotiating in good faith if they are proposing deals that they know are going to crater our investments,” he said.Mr. Fain’s decision to shut down just three factories is a departure for the union, which in previous strikes typically walked out of all the factories of a single automaker. By interrupting production of some of the most profitable vehicles, while allowing most plants to keep operating, the union hopes to inflict pain on the carmakers while allowing most of its members to continue collecting paychecks.But it may be difficult for the union to limit the damage to its members’ incomes. Ford told workers at a facility in Michigan, who were not on strike, to stay home Friday because of parts shortages caused by the strike. G.M. said it would probably lay off 2,000 workers at a factory in Kansas next week because of a lack of parts produced at the factory near St. Louis that is on strike.Fewer than 10 percent of the nearly 150,000 U.A.W. members at the three companies are on strike. Limited strikes could allow the union to maintain the pressure longer by preserving its strike fund of $825 million. The union will pay striking workers $500 a week and cover their health insurance premiums.Automakers have been earning record profits “because of the extraordinary skill and sacrifices of U.A.W. workers,” President Biden said at the White House on Friday.Anna Rose Layden for The New York TimesIn addition to the Ford plant in Michigan, which makes the Bronco and the Ranger pickup truck, and the G.M. plant in Wentzville, Mo., which makes the GMC Canyon and the Chevrolet Colorado, workers shut down a Stellantis complex in Toledo, Ohio, that makes the Jeep Gladiator and Jeep Wrangler. If no agreement is reached, the union is expected to target additional factories in weeks to come.The union is also seeking cost-of-living adjustments that would protect workers if inflation flares up again. And it wants to reinstate pensions that the union agreed to do away with for newer workers after the financial crisis, improved retiree benefits and shorter work hours. The union also wants to eliminate a wage system that starts new hires at much lower wages than the top U.A.W. pay of $32 an hour.As of Friday last week, the companies had offered to raise pay by around 14.5 percent to 20 percent over four years. Their offers include lump-sum payments to help offset the effects of inflation, and policy changes that would lift the pay of recent hires and temporary workers, who typically earn about a third less than veteran union members.In a last-minute attempt to keep assembly lines running, G.M. offered its employees a 20 percent raise late Thursday and said it was willing to pay cost-of-living adjustments to veteran workers. The 20 percent increase would be far more than employees had received in decades. But the union rejected the offer, which it says would barely compensate for inflation.Autoworkers striking at the G.M. factory in Wentzville, Mo.Neeta Satam for The New York TimesLeaders of the automakers have criticized the U.A.W.’s tactics, focusing on Mr. Fain, who became president in March and declared an end to what he said were overly friendly relations between union leaders and auto executives. He took office after a federal corruption investigation resulted in prison terms for two former U.A.W. presidents.Carlos Tavares, the chief executive of Stellantis, has called Mr. Fain’s strategy “posturing.” Mr. Farley of Ford said the two sides should be negotiating instead of “planning strikes and P.R. events.” And Mary T. Barra, the G.M. chief executive, said that “every negotiation takes on the personality of its leader.”If the autoworkers are successful, they could inspire workers in other industries. Union activism is on the rise: Hollywood screenwriters and actors have been on strike for months, and in August, United Parcel Service employees won their biggest raises ever in a contract negotiated by the International Brotherhood of Teamsters.“Workers have been squeezed for too long and now are realizing they can do something about it,” said Mijin Cha, an assistant professor at the University of California, Santa Cruz, who studies the relationship between labor’s interests and the fight against climate change. “People see there is a pathway to more economic security and workers do have power together.”Late on Friday, at an outdoor rally in downtown Detroit attended by several hundred U.A.W. members, Mr. Fain introduced Senator Bernie Sanders, a Vermont independent, who told the crowd: “The fight you are waging here is not just about decent wages and working conditions and pensions in the auto industry. It’s a fight to take on corporate greed.”The strikes come as auto production is still recovering from the effects of the pandemic, which caused shortages of semiconductors and other components. Car prices and wait times have come down, but dealer inventories remain low and a lengthy strike could eventually make it hard to find popular U.S.-made models.“We’re not back to speed inventory-wise,” said Wes Lutz, the owner of Extreme Dodge, a car dealership in Jackson, Mich.Wes Lutz, the owner of Extreme Dodge in Michigan said, “We’re not back to speed inventory wise.”Brittany Greeson for The New York TimesScarcity is not always bad for carmakers. It allowed them to earn higher profit margins during the pandemic. And it would benefit any carmakers that were having trouble moving some models. Pat Ryan, chief executive of the car-shopping app Co-Pilot, said that Stellantis had at least 100 days of inventory for brands like Dodge and Chrysler, and that a strike could help it clear many dealers’ lots.Still, if prices for popular models rise, that will be yet another speed bump in the Federal Reserve’s road to lowering inflation, and a political liability for Mr. Biden. The president, who has no formal role in the negotiations, said Friday that he had been in touch with union leaders and auto executives, in addition to dispatching the two administration officials to Detroit.Reporting was contributed by More

  • 88 Shares139 Views

    in Economy

    Biden Accuses Republicans of Undercutting Working-Class Americans

    by

    President Biden trained his criticism on House Republicans who are threatening to shut down the federal government if their budget cuts are not enacted.President Biden challenged his Republican opponents on Thursday in their area of political strength, arguing that he has done a better job of managing the economy than former President Donald J. Trump did and accusing his predecessor’s congressional allies of undercutting working-class Americans.While Mr. Trump has long made his stewardship of the economy his most salient bragging point, Mr. Biden declared that his “Bidenomics” program had done more to help everyday Americans make a living than what he termed “MAGAnomics” ever did. He framed the argument in terms of the fall’s coming budget battles, but it also represented a preview of next year’s campaign.“They have a very different vision for America,” Mr. Biden said in a speech at Prince George’s Community College in Largo, Md., just outside the nation’s capital, where he held up a copy of budget plans by House Republicans. “Their plan, MAGAnomics, is more extreme than anything America has ever seen before.”Mr. Biden trained his criticism on Republicans who are threatening to shut down the federal government if their plans are not enacted. The president accused the Republicans of caring more about the wealthy than the working class, pointing to proposals to cut taxes for high-income households and corporations; wring savings from Social Security, Medicare and Medicaid; and reverse initiatives to lower the cost of insulin and other prescription medicine.The intensified criticism of Republicans follows months of speeches and other messaging by the president and his team promoting the benefits of Bidenomics, a phrase used by critics that they have chosen to embrace. But the credit-taking has not budged Mr. Biden’s poll numbers, and so White House officials now plan to spend the next few weeks or longer emphasizing the contrast with his opponents.“House Republicans have understandably been reluctant to tout the MAGAnomics Budget — but the White House is going to spend much of this fall doing it for them,” Anita Dunn, a senior adviser to the president, wrote in a memo released to reporters.Mr. Biden faces strong political headwinds on the economy. A new poll released on Thursday by USA Today and Suffolk University found that only 22 percent of Americans think the economy is improving while 70 percent think it is getting worse. Asked to volunteer a single word to describe the economy, a majority came up with terms like “horrible,” “terrible,” “crashing,” “shambles,” “chaotic” and “expensive.”Just 34 percent of Americans approved of Mr. Biden’s handling of the economy and, when asked to choose, more expressed faith in his predecessor to improve the country’s economic health than they did in the incumbent, 47 percent to 36 percent.Mr. Trump sought to rebut Mr. Biden even before the speech. “The public has not been fooled,” his campaign said in a statement. “They see Bidenomics for what it is: inflation, taxation, submission and failure.”“With polls confirming that Americans overwhelmingly reject Biden’s effort to whitewash his abysmal economic record,” the statement added, “he will now attempt to reverse his message 180 degrees, ludicrously trying to blame President Trump for the destruction and misery that Joe Biden himself has wrought.”Mr. Trump has always used superlatives to exaggerate the strength of the economy while he was in office. While he presided over a strong and generally healthy economy, it was not the best in history, as he has often stated, and before the pandemic it was roughly comparable in many ways to the economy of the last few years of his predecessor, President Barack Obama.During Mr. Trump’s first two years in office, the economy grew an average of 2.5 percent per quarter on an annualized basis, while it grew an average of 3.1 percent per quarter in Mr. Biden’s first two years coming out of the pandemic, according to a comparison by Barron’s. The stock market soared by 21 percent during the early part of Mr. Trump’s tenure compared with 8.5 percent during a comparable period under Mr. Biden.Unemployment has been roughly similar during the two administrations, at 3.8 percent near a record low, but job growth under Mr. Biden has far surpassed that under Mr. Trump as the economy rebounds from Covid-19 lockdowns. By last spring, monthly job growth had averaged 470,000 since Mr. Biden took office, compared with 180,000 in the start of Mr. Trump’s administration, Barron’s calculated.Where Mr. Biden has struggled most economically is with inflation, which averaged around 2 percent under Mr. Trump but peaked at 9 percent last year under Mr. Biden before falling to about 3.7 percent now. Inflation has increased the cost of groceries, clothes, household goods and housing, while eating away at rising wages. The federal deficit is also rising sharply, as have interest rates.Still, the recession many feared has yet to materialize, and many experts now are more optimistic about what they call a soft landing. Mr. Biden argues that his expansive legislative program has positioned the country for the future better than Mr. Trump ever did through new or repaired airports, roads, bridges and other infrastructure; vast investment in the semiconductor industry; ambitious clean energy programs to combat climate change; and initiatives to bring down the cost of prescription drugs.“America has the strongest economy in the world of all major economics,” Mr. Biden said. “But all they do is attack it. But you notice something? For all the time they spend attacking me and my plan, here’s what they never do — they never talk about what they want to do.” He added: “It’s like they want to keep it a secret. I don’t blame them.” More

  • 113 Shares139 Views

    in Economy

    UAW Standoff Poses Risk for Biden’s Electric Vehicle Commitment

    by

    A looming auto industry strike could test the president’s commitment to making electric vehicles a source of well-paying union jobs.President Biden has been highly attuned to the politics of electric vehicles, helping to enact billions in subsidies to create new manufacturing jobs and going out of his way to court the United Automobile Workers union.But as the union and the big U.S. automakers — General Motors, Ford Motor and Stellantis, which owns Chrysler, Jeep and Ram — hurtle toward a strike deadline set for Thursday night, the political challenge posed by the industry’s transition to electric cars may be only beginning.The union, under its new president, Shawn Fain, wants workers who make electric vehicle components like batteries to benefit from the better pay and labor standards that the roughly 150,000 U.A.W. members enjoy at the three automakers. Most battery plants are not unionized.The Detroit automakers counter that these workers are typically employed in joint ventures with foreign manufacturers that the U.S. automakers don’t wholly control. The companies say that even if they could raise wages for battery workers to the rate set under their national U.A.W. contract, doing so could make them uncompetitive with nonunion rivals, like Tesla.And then there is former President Donald J. Trump, who is running to unseat Mr. Biden and has said the president’s clean energy policies are costing American jobs and raising prices for consumers.White House officials say Mr. Biden will still be able to deliver on his promise of high-quality jobs and a strong domestic electric vehicle industry.The head of the United Automobile Workers, Shawn Fain, center, wants his union’s wages and labor standards to apply to nonunion workers who make electric vehicle components.Brittany Greeson for The New York Times“The president’s policies have always been geared toward ensuring not only that our electric vehicle future was made in America with American jobs,” said Gene Sperling, Mr. Biden’s liaison to the U.A.W. and the auto industry, “but that it would promote good union jobs and a just transition” for current autoworkers whose jobs are threatened.But in public at least, the president has so far spoken only in vague terms about wages. Last month, he said that the transition to electric vehicles should enable workers to “make good wages and benefits to support their families” and that when union jobs were replaced with new jobs, they should go to union members and pay a “commensurate” wage. He is encouraging the companies and the union to keep bargaining and reach an agreement, one of Mr. Biden’s economic advisers, Jared Bernstein, told reporters on Wednesday.A strike could force Mr. Biden to be more explicit and choose between his commitment to workers and the need to broker a compromise that averts a costly long-term shutdown.“Battery workers need to be paid the same amount as U.A.W. workers at the current Big Three,” said Representative Ro Khanna, a Democrat from California who has promoted government investments in new technologies.Mr. Khanna added, “It’s how we contrast with Trump: We’re for creating good-paying manufacturing jobs across the Midwest.”At the heart of the debate is whether the shift to electric vehicles, which have fewer parts and generally require less labor to assemble than gas-powered cars, will accelerate the decline of unionized work in the industry.Foreign and domestic automakers have announced tens of thousands of new U.S.-based electric vehicle and battery jobs in response to the subsidies that Mr. Biden helped enact. But most of those jobs are not unionized, and many are in the South or West, where the U.A.W. has struggled to win over autoworkers. The union has tried and failed to organize workers at Tesla’s factory in Fremont, Calif., and Southern plants owned by Volkswagen and Nissan.A Ford Lightning plant in Dearborn, Mich. The U.A.W. worries that letting battery makers pay lower wages will allow G.M., Ford and Stellantis to replace much of their current U.S. work force with cheaper labor.Brittany Greeson for The New York TimesAs a result, the union has focused its efforts on battery workers employed directly or indirectly by G.M., Ford and Stellantis. The going wage for this work tends to be far below the roughly $32 an hour that veteran U.A.W. members make under their existing contracts with three companies.Legally, employees of the three manufacturers can’t strike over the pay of battery workers employed by joint ventures. But many U.A.W. members worry that letting battery manufacturers pay far lower wages will allow G.M., Ford and Stellantis to replace much of their current U.S. work force with cheaper labor, so they are seeking a large wage increase for those workers.“What we want is for the E.V. jobs to be U.A.W. jobs under our master agreements,” said Scott Houldieson, chairperson of Unite All Workers for Democracy, a group within the union that helped propel Mr. Fain to the presidency.The union’s officials have pressed the auto companies to address their concerns about battery workers before its members vote on a new contract. They say the companies can afford to pay more because they collectively earned about $250 billion in North America over the past decade, according to union estimates.But the auto companies, while acknowledging that they have been profitable in recent years, point out that the transition to electric vehicles is very expensive. Industry executives have suggested that it is hard to know how quickly consumers will embrace electric vehicles and that companies needed flexibility to adjust.Even if labor costs were not an issue, said Corey Cantor, an electric vehicle analyst at the energy research firm BloombergNEF, it could take the Big Three several years to catch up to Tesla, which makes about 60 percent of fully electric vehicles sold in the United States.A strike could force Mr. Biden to choose between his commitment to workers and the need to avert a costly shutdown of the U.S. auto industry.Bill Pugliano/Getty ImagesData from BloombergNEF show that G.M., Ford and Stellantis together sold fewer than 100,000 battery electric vehicles in the United States last year; in 2017, Tesla alone sold 50,000. It took Tesla another five years to top half a million U.S. sales. (The Big Three also sold nearly 80,000 plug-in hybrids last year.)The three established automakers had hoped to use the transition to electric cars to bring their costs more in line with their competitors, said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, a research firm. If they can’t, he added, they will have to look for savings elsewhere.In a statement, Stellantis said its battery joint venture “intends to offer very competitive wages and benefits while making the health and safety of its work force a top priority.”Estimates shared by Ford put hourly labor costs, including benefits, for the three automakers in the mid-$60s, versus the mid-$50s for foreign automakers in the United States and the mid-$40s for Tesla.Ford’s chief executive, Jim Farley, said in a statement last month that the company’s offer to raise pay in the next contract was “significantly better” than what Tesla and foreign automakers paid U.S. workers. He added that Ford “will not make a deal that endangers our ability to invest, grow and share profits with our employees.”Mr. Biden and Democratic lawmakers had sought to offset this labor-cost disadvantage by providing an additional $4,500 subsidy for each electric vehicle assembled at a unionized U.S. plant, above other incentives available to electric cars. But the Senate removed that provision from the Inflation Reduction Act.Such setbacks have frustrated the U.A.W., an early backer of Mr. Biden’s clean energy plans. In May, the union, which normally supports Democratic presidential candidates, withheld its endorsement of Mr. Biden’s re-election.“The E.V. transition is at serious risk of becoming a race to the bottom,” Mr. Fain said in an internal memo. “We want to see national leadership have our back on this before we make any commitments.”The next month, Mr. Fain chided the Biden administration for awarding Ford a $9.2 billion loan to build three battery factories in Tennessee and Kentucky with no inducement for the jobs to be unionized.A BMW battery plant in South Carolina. The U.A.W. has struggled to unionize autoworkers in the South.Juan Diego Reyes for The New York TimesMr. Biden tapped Mr. Sperling, a Michigan native, to serve as the White House point person on issues related to the union and the auto industry around the same time. By late August, the Energy Department announced that it was making $12 billion in grants and loans available for investments in electric vehicles, with a priority on automakers that create or maintain good jobs in areas with a union presence.Mr. Sperling speaks regularly with both sides in the labor dispute, seeking to defuse misunderstandings before they escalate, and said the recent Energy Department funding reflected Mr. Biden’s commitment to jump-start the industry while creating good jobs.Complicating the picture for Mr. Biden is the growing chorus of Democratic politicians and liberal groups that have backed the autoworkers’ demands, even as they hail the president’s success in improving pay and labor standards in other green industries, like wind and solar.Nearly 30 Democratic senators signed a letter to auto executives this summer urging them to bring battery workers into the union’s national contract. Dozens of labor and environmental groups have signed a letter echoing the demand.The groups argue that the change would have only a modest impact on automakers’ profits because labor accounts for a relatively small portion of overall costs, a claim that some independent experts back.Yen Chen, principal economist of the Center for Automotive Research, a nonprofit group in Ann Arbor, Mich., said labor accounted for only about 5 percent of the cost of final assembly for a midsize domestic sedan based on an analysis the group ran 10 years ago. Mr. Chen said that figure was likely to be lower today, and lower still for battery assembly, which is highly automated.Beyond the economic case, however, Mr. Biden’s allies say allowing electric vehicles to drive down auto wages would be a catastrophic political mistake. Workers at the three companies are concentrated in Midwestern states that could decide the next presidential election — and, as a result, the fate of the transition to clean energy, said Jason Walsh, the executive director of the BlueGreen Alliance, a coalition of unions and environmental groups.“The economic effects of doing that are enormously harmful,” he said. “The political consequences would be disastrous.” More