Monthly Archives: October 2012

Jerry Tucker, progressive and independent UAW leader

I received the sad news this evening from the midwest that Jerry Tucker, a lifelong progressive and democratic union activist and UAW leader, passed away.

Jerry and I began to work together five years ago when he joined with other UAW activists to oppose the imposition of another wave of cutbacks in wages and benefits of auto workers at the Big Three.

Like Jerry I began to speak out about the attempt to set up a VEBA that would force the UAW to manage a massively underfunded and badly structured health care plan and relieving the Big Three of that responsibility, a benefit fought and won by auto workers over many decades. Eventually I filed a petition with the SEC on behalf of auto workers arguing that the UAW and GM were ignoring their obligation under federal law to provide full disclosure of the impact of the proposed VEBA on union members.

Just as we argued then, the VEBA has indeed proved a disastrous turn for the UAW as a recent Reuters story noted. If the union and GM had disclosed the actual risks that it implied it may never have been imposed. As he was many times before Jerry was right then, too.

Below is a video of a tribute to Jerry at a Labor Notes conference. In addition, take note that there will be a panel discussion of the State of the UAW at UM-Flint on October 28 with Dr. Tom Adams and Gregg Shotwell. Gregg was one of my clients in the petition to the SEC. It would honor Jerry’s memory and lifelong efforts on behalf of the UAW and workers everywhere to attend that meeting and discuss the future of one of our most important labor unions.

Tribute to Jerry Tucker for his contribution to the Labor Movement at the Labor Notes Conference.

Obama ties to Ayers reach back to 1980s

New evidence that the relationship between Barack Obama and Bill Ayers reaches back to the 1980s surfaced today. 

In 2008 I was one of the first to blog (Who “sent” Obama?) about the important and longstanding relationship between Barack Obama and Bill Ayers, a founding member of the terrorist organization known as Weather Underground. I pointed out then that Ayers appointed Obama as Chairman of the board of directors of the education reform group known as the Chicago Annenberg Challenge (CAC) in 1995. David Remnick of The New Yorker later confirmed this fact in his biography of Obama. This appointment was a critical step in the career of Obama who went on later that year to run for state senator, his first political office, a campaign that he launched at an event held at the Hyde Park home of Bill Ayers and Ayers’ wife and Weather Underground comrade Bernardine Dohrn.

I also noted that given the importance of the Annenberg appointment that Ayers would never have appointed Obama unless he knew Obama was an ally in the ongoing “Chicago School Wars.” Those Wars were taking place between three key groups: the Daley Administration which wanted to centralize control of the Chicago schools in the Mayor’s office, the Chicago Teachers Union which wanted to protect the wages, job security and working conditions of its members, and a loose coalition of reform groups of which Obama, and three members of Ayers’ family, including Bill, his brother John and, earlier in his life, their father Tom, were a part.

Each of these three groups jockeyed for position and for for the nearly $50 million grant from the Annenberg Foundation. (A fuller description of the three way conflict can be found here.) Ayers led the reformers’ successful effort to secure that grant and set up the Annenberg Challenge in late 1994 and early 1995. Ayers (together with Anne Hallett) exchanged letters in 1994 with the Annenberg Foundation’s representative, Vartan Gregorian of Brown University, confirming that Ayers was working to assemble a board of directors for the Challenge. Obama joined the Challenge board in the spring of 1995.

Only if Obama had proven himself to Ayers would Ayers have appointed Obama to the board. The latest evidence confirms that, despite the denials by The Times and the Obama campaign, the relationship between Ayers and Obama reaches back as far as 1987 when education reform burst into a major political issue in Chicago. In the spring of 1987 Barack Obama lobbied the mayor of Chicago at that time, Harold Washington, to set up a “local control” education reform effort that would include Bill Ayers’ brother John on its advisory board.  Obama wrote the mayor as Executive Director of the Developing Communities Project (DCP) a position Obama held for three years prior to attending Harvard Law School.

The Daily Caller has obtained copies of two letters written by Obama, one to Washington and one to an aide of the mayor, as well as an attachment to the second letter listing the proposed board members. The list includes the name of John Ayers, as well as that of the black nationalist minister Jeremiah Wright and the controversial and radical white Chicago priest Michael Pfleger. Also on the 1987 list is Anne Hallett, then with the Wieboldt Foundation, who would co-author with Bill Ayers the proposal to form the Chicago Annenberg Challenge in 1994.

John Ayers, now head of the Cowen Institute at Tulane, shares the same passion for education reform as his brother and his late father.  He became a participant on behalf of business groups in the push for local control and later for the charter school movement, which was a natural evolution from the local control and small schools approach advocated by Bill Ayers and his former SDS comrade Mike Klonsky.

Despite this background, Obama supporters, including The New York Times, maintained that Ayers had no serious connection, if any, with Obama and that Ayers played no role in the selection of Obama to chair the Annenberg Challenge. Although I was interviewed 5 times by The Times and provided them this background, they ignored this information and published a long page one story by Scott Shane that repeated the Obama campaign position that Ayers had no role in the appointment of Obama to the Annenberg entity.

At the time I also reported that a senior and longtime Democratic Party activist said that the Ayers relationship with Obama went back to the mid-1980s. This same source also said that Ayers and Dohrn played a significant role in the Obama campaign including helping devise lists of individuals for appointments in the new Administration. The appointment of former marxist-leninist Van Jones to the Obama White House would seem to be evidence of this.

This same source also said in 2008 that a senior campaign operative, who is still today a senior member of the Obama campaign, was aware of conversations between David Axelrod and Bill Ayers aimed at blocking access by conservative writer Stanley Kurtz to records of the Annenberg Challenge held at the University of Illinois. More on the CAC records flap here.

I also interviewed and reported on the fact that the mailman who delivered mail to the home of Bill Ayers’ parents had met Obama outside that home in the 1980s.  That mailman also spoke to me about a conversation he had during the 2008 campaign with Tim Ayers who vigorously defended his brother Bill and his wife Bernardine Dohrn.

It made sense to me that the relationship with Ayers would reach back that far because in 1987 the DCP played a very active role in the loose coalition of groups referred to above interested in pressuring the Teachers Union and the Mayor’s office to institute reform of Chicago schools.  The primary goal of the DCP and many in this coalition was a variation on the theme of “local control” – an attempt to involve parents and surrounding communities in local schools.

“Local control” is widely viewed as hostile to teachers’ unions because it can become an easily manipulated source of pressure on teachers and principals without any rational basis in education policy.  In fact, Bill Ayers and Mike Klonsky were explicit about their interest in influencing schools through this method and the Annenberg Challenge money was used to do this. Some education policy figures, such as Dorothy Shipps, view “local control” as undemocratic because it prevents district wide transparent and accountable reforms.

Local control first emerged as a part of the ideology of black nationalists and elements within the Students for a Democratic Society, or SDS, in the 1960s.  SDS was the left wing antiwar student group that fell apart in the late 60s and gave rise to, among other sects, the terror group Weather Underground. SDS and black nationalists advocated local control and opposed the teachers union in a bitter strike in New York City in 1968.  Some SDS members went so far as to scab during the strike.

Bill Ayers and Mike Klonsky were leading members of SDS then.  Ayers later helped found the Weather Underground and Klonsky became a hard core Maoist.  Klonsky along with Ayers became an active backer of Obama. Klonsky hosted a blog on educational issues on the official Obama campaign website in 2008 that was deleted once the maoist background of Klonsky was discussed during the campaign.

In 1980, Ayers and his wife Dohrn surfaced from hiding during their Weather Underground days and turned themselves into authorities. They avoided jail time for their terrorist activity but Dohrn was refused admission to the bar despite graduating from the University of Chicago law school. She was able to reinvent herself as a “law professor” of sorts and is now a member of the law school faculty at Northwestern University. Bill Ayers entered graduate school in education in New York and then returned to Chicago in 1987 to join the faculty of the University of Illinois at Chicago, then known as the “Chicago Circle” campus.

In the fall of 1987 a strike of the Chicago Teachers’ Union took place just a few months after Obama asked the mayor to support the DCP’s community based education effort that would include John Ayers. The strike angered many in the city and led to a lobbying effort in the Illinois legislature to institute local control in the Chicago schools through elected “local school councils” (LSCs). Over union opposition and opposition from groups such as Jesse Jackson’s Operation PUSH, which feared (correctly) the LSC’s would undermine teachers many of whom were black, the state legislature backed the LSC idea.

Bill Ayers was active during the strike as well in this reform effort, as was his brother John. Bill rose to chair the Alliance for Better Chicago Schools, or ABCs, a key group in the LSC lobbying campaign. although precisely when Ayers became chair is not known. Obama’s DCP was also a member of ABCs, the only black community organization to join. Another member was Chicago United, a business group that had been founded many years earlier by Thomas Ayers, the father of Bill and a powerful Chicago business leader who was active in education reform on behalf of the business community. Chicago United played a key role in organizing ABCs.

John Ayers, Bill Ayers, Tom Ayers, Mike Klonsky and Barack Obama shared a commitment  to “local control” ideology from at least the late 1980s through the Chicago School Wars of the 1990s. Obama brought his DCP into the local control movement and thus proved himself a valuable ally of the Ayers family in that battle.  Bill Ayers rewarded Obama for that commitment by appointing Obama to chair the Annenberg Challenge in 1995.  Obama, in turn, steered millions of dollars from the CAC to multicultural curriculum programs and local control efforts led by Bill Ayers and Mike Klonsky, among others. Ayers, in turn, supported Obama’s effort to enter electoral politics as part of the “long march” tactics favored by Bill Ayers after the failed effort to stoke a “revolution” through violence and terror. There is also evidence that Ayers, and his allies in the education reform movement, continue to influence education policy of the President. It is no surprise that the Obama campaign, including its media team at The New York Times, has done everything it can to bury this story.

 

 

Did President Obama really save General Motors? Or, “Al Qaeda lives, and GM is moving to China”

One of the key campaign themes this year is that President Obama is responsible for saving General Motors. VP Biden is well known for his slogan: “Osama Bin Laden is dead and GM is alive.”

Of course, Bin Laden is gone and very few people in the world regret this. (See my assessment of that event in the context of Obama’s strange approach to foreign policy here, here and here.) But the value of his passing for Obama is limited as it is now very clear that his death did not mean the end of Al Qaeda. The brave and articulate journalist Lara Logan made clear that even in Afghanistan the terror group remains a significant force.  And as recent events indicate, it has also spread to many other areas of the world.

So that leaves the other half of the Administration’s slogan, that GM is alive. How valid is this claim?

I have been following the auto industry, and the UAW and GM in particular, for many years. I have advised UAW members as far back as the closing of the GM plant in Fremont, California, in the mid-80s. (See my letter then in the New York Times here.)  More recently, I advised UAW members impacted by the concessions demanded in 2008 by GM, including petitioning the Securities and Exchange Commission on their behalf to try to prevent the massive cuts in pay and benefits these workers have suffered over the years.

The bottom line is that General Motors is, to this day, being kept afloat by massive financial support from the UAW and the government. Without that support its stock price would likely collapse, its cost of borrowing would skyrocket and its employees would suffer further cuts in wages and benefits.

How do I know this is the case? It is a (relatively) simple matter of following the money, or, in business school terms, analyzing the capital structure of the company.

The starting point of this analysis is 2008 when the UAW gave in to demands from GM to convert the GM health care plan into a Voluntary Employee Beneficiary Association, or VEBA. I have analyzed this in detail here and here. But the long and short of the VEBA is that it did GM a huge favor by forcing the UAW to take over responsibility for funding health care for all current and future GM retirees.

GM was supposed to fund this VEBA with $30 billion in assets and cash. But that never happened. Only part of the cash ever turned up. Instead, GM went through a White House supervised bankruptcy (and here Governor Romney is right) that was little different in the end than a normal bankruptcy under the well established, and socially progressive, federal law that was put in place by FDR. The White House claims that they intervened in order to protect the GM workforce but in fact they intervened to impose further cuts in pay and benefits and to further weaken the VEBA. I outlined alternative progressive approaches in Dissent and on the Real News Network here, here and here.

Out of this White House bankruptcy proceeding came a new GM reorganized with the financial support of the United States Treasury and the UAW VEBA. The Treasury owned more than 60% of GM’s shares and the VEBA 17.5%. (The UST now owns 30% after the IPO and the VEBA 10%.)  Instead of the cash and diversified asset base it should have the VEBA was forced to accept a massive chunk of stock in GM. That left the VEBA dangerously over invested in GM, a violation of every conceivable fiduciary principle.

New GM then conducted an IPO in 2010 which was supposed to allow the VEBA and the Treasury to sell their stakes in the company at a profit. But the IPO never got to the needed break even price of $53 per share and likely never will. (I analyzed the risky IPO here in 2010.) One recent assessment by Reuters says GM stock is “struggling” as European demand remains weak and the transition to new more competitive models has been slow.

According to The Detroit News, “The Treasury Department says in a new report the government expects to lose more than $25 billion on the $85 billion auto bailout. That’s 15 percent higher than its previous forecast.”  Forbes thinks GM could be headed back into bankruptcy, noting that more competitive companies like VW “are eating GM’s lunch.”

While some in the auto industry are critical of the Forbes analysis, they nonetheless admit that the success of GM is dependent on moving outside the US to places like China. In other words, President Obama saved GM for the 1% not for the 99%.

Treasury invested approximately $50 billion in GM, sold shares worth half that amount in the IPO and has watched the value of the remainder sink to slightly more than half its original value. They are sitting on an unrealized loss of $16 billion. GM’s stock has never regained its IPO price, which suggests, of course, that it was over-hyped.

Today, GM is trading at $24.50 per share. The Treasury sold a piece of its holdings in 2011 further reducing its stake to 30%. Despite pressure from GM management, which wants to shake off government oversight, to sell the remaining stake, the Treasury has held on to its 500 million remaining shares. This is likely for political reasons because a final sale would mean a final tally of the Obama strategy of throwing away taxpayer money on a company whose core strategy is to shift production to China, Russia and Mexico.

A stock sale of that magnitude, by either Treasury or the UAW’s VEBA, would create tremendous downward price pressure. And, of course, it would rob Joe Biden of the second half of his slogan, just as the recent “Tet Offensive” by Al Qaeda in the middle east and North Africa destroyed the first half.