Monday, August 11, 2014

Why Elaine Chao, Wife of Mitch McConnell, Could Help Sink his Re-election Bid 2 / 3

by Nomad

In this installment - the second of three on Elaine Chao, wife of Mitch McConnell- we shall be examining her tenure as Labor Secretary during the Bush years, her philosophy and her performance.

To view Part One

The Confirmation Hiccup

Elaine Chao's 2001 confirmation hearings for the top post in the Department of Labor was a breeze by today's standards.
Or by any standards.
Here's how her biographer put it:
What qualified Chao to oversee 125 million workers, 10 million employers and the enforcement of 180 federal laws? The Senate’s confirmation committee never asked. It was enough that Chao had, as one senator put it, this ”compelling” and ”poignant” personal story. Even if no one knew what it was.
There was only one minor hiccup.

Judicial Watch provided the Senators of the confirmation committee with a letter detailing how Chao had asked Chinese agent John Huang for campaign contributions for her husband, Senator Mitch McConnell as well as former Senator Alfonse D'Amato.
Both had apparently received contributions from both John Huang and his company, Lippo Group.
With annual revenues of some $3 billion, the Lippo Group is a major Indonesian conglomerate with significant investments in retail, media, real estate, mega-banking, natural resources, hospitality, and healthcare industries. 

In August of 1999, Huang had pleaded guilty to a felony conspiracy charge for violating campaign finance laws. For that, he was sentenced to one year of probation. He was also ordered by U.S. District Court to pay a $10,000 fine and serve 500 hours of community service.
Huang was responsible, the prosecutors said, for arranging about $156,000 in illegal campaign contributions from Lippo Group employees mostly to the  Democratic Party.
Talk about an equal opportunity provider.

In November of 1999, Huang also revealed that the 1989 campaign money which he donated to McConnell, D'Amato and others (and which Ms. Chao apparently had arranged) was illegally laundered from overseas bank accounts.

By the time of the hearings, (February 2001) the Democratic Party had already returned more than $1 million in donations that Huang funneled to political campaigns from the Asian-American community. After learning the details from press reports, McConnell too returned the Huang money at about the same time.

In the end, it was not much of a scandal- not like, say, Benghazi or the IRS targeting scandals. The Judicial Watch letter was ignored by the confirmation hearing and not a single senator had the courage to ask Ms. Chao a question concerning her ties to convicted felon Huang.

Protective Life

So the question was: Were there any connections between Chao and Lippo? Business connections can often be byzantine and hard to follow so please bear with me.

According to Senate financial-disclosure records, for the four years prior to her confirmation, Chao had held a seat on the board of a Birmingham, Ala.-based insurance company, Protective Life Corp. If the public securities records are true, at the time of her confirmation, Chao owned more than 7,000 shares of Protective Life. That company reportedly owned a 50% stake in another company the Hong Kong-based CRC Protective Life Insurance.
Who owned the remaining 50%? 
The rest of the shares are split between Lippo and another Hong-Kong based unit with China Resources Holding Co

Now, China Resources Holding Co. was founded by none other than the People's Republic of China (PRC). It started life as Liow & Company (聯和公司) in Hong Kong in 1938 and originally Its purpose was to raise funds and purchase supplies and equipment for the People's Liberation Army, then engaged in the Chinese Civil War. It changed its name in 1948.

Today the company owns over 500 subsidiaries and assets of billions. A Senate report concluded that China Resource Holdings had been identified by one investigative journalist, as a "PRC intelligence-gathering operation with ties to the People's Liberation Army."

What do all these connections mean? Who can tell? Perhaps nothing.
But shouldn't this matter have, at the very least, been brought up at her confirmation hearings?

Sing Tao Interview

There was another matter that the confirmation committee ignored.

In the first week of July of 2000, Sing Tao – one of Hong Kong’s major newspapers - published a 5-part series of articles in which Chao was featured. Many of the comments she made in interviews should perhaps have raised a few eyebrows. 
In an in-depth interview by Sing Tao editor Li Ge, the then-private citizen Elaine Chao (or to her Chinese name Chao Hsiao-lan) offered some revealing insights. 

For example, she told her interviewer that she in no way agreed with the 1999 Cox Report
What was the Cox Report?
It was a House Select Committee report that revealed (in agonizing detail)  a pattern of "pervasive, sustained Chinese espionage and illicit technology acquisition breathtaking in its scope, scale and effectiveness." 

The document alleged "extreme laxity in U.S. security procedures and a seriously flawed export control process, both of which were purportedly exploited by China's intelligence organizations and weapons manufacturers."
However, according to Chao, the Cox report was more or less a politics as usual in the US and its release was responsible for harming Sino-US relations.

Dismissing the long list of well-documented spying allegations against China, she said,
“The U.S. is always happy to see an enemy, possibly because it serves a domestic policy purpose. And now that the Soviet Union doesn’t exist and Russia is no longer the evil empire, some people without any reason make China the United States’ enemy.”
That's quite an audacious statement to make. I'd invite anybody to look over the report with its catalog of security breaches of nation’s most closely guarded secrets, such as advanced missile technology, satellite intel technology and the decades-long penetration of our national weapons laboratories and compare this to Chao's phrase "without any reason." 

She also told the interviewer that it was unfortunate that Republican Party had its own problem elements.
“Unfortunately, the Republican Party also has criticizers of China who are Christians and religious believers. They also talk about human rights and think China is an enemy, but compared to the Democrat side, they are apt to be well organized.”
She said that the leadership in China should understand that the key to winning over American public opinion, Chao advised, was through the careful management of its PR especially by cultivating contacts with Congress and journalists.

According to the source, (and the Right wing source is admittedly a questionable one)
As part of this PR war, Chao said that China should make more contact with independent journalists and China should do more work on Congress. She knows China and congressional aides are making contact more and more and that China has begun setting up legal organizations that are making contacts in the U.S. “This could help a lot.
A self-serving remark if ever there was one, since she herself was married to the kinds of contacts she was suggesting.

If the details of the interview are true, then it provides an insight into Ms. Chao's thinking.
With the presidential campaign in full swing, Chao offered her opinions on the two parties. She said that a Bush administration would be advantageous to U.S.-China relations and that relations between the two nations would effectively pick up where Bush's father had left off.  

If Gore won, she said, China would have had to contend with disagreements between the two nations on issues such as labor and human-rights issues. There would be a great deal of pressure from the Democratic party to uphold these values.
She implies- at least to the Chinese audience- that labor and human rights issues were in themselves not an ethical matter but a purely a political obstacle. 

The subject of the interview and the remarks she made to the Chinese audience never came up at the hearings.

Critics of Ms. Chao might even question why Chao was giving the interview in the first place. Clearly, there are questions of security. Senator Mitch McConnell,  her husband, sat ex officio on both the Senate Select Committee on Intelligence and a member of the Subcommittee on Department of Defense.  

Should a senator's wife whose husband deals regularly with highly-sensitive classified information have been offering insider advice to a superpower competitor? With a father deeply connected to the Chinese ruling elite?  Why is she giving what amounts to insider information to the America's top competitor in the first place?

But none of the senators were interested in these matters. In fact, the Senators of the Chao confirmation hearing gave their unanimous approval for Chao as Secretary of Labor.
It was, as they say, smooth sailing.

The Performance of Ms. Chao

So, now let's turn to Chao's performance in the Department of Labor.
The Heritage Foundation, for which Chao worked for a short time, gushes about Chao's time at the Labor Department, thusly:
During her tenure as labor secretary, the department set new records in worker health and safety; focused on increasing the competitiveness of America’s workforce in a globalized economy and enforced union financial disclosure reporting requirements for the benefit of rank-and-file workers.
It's a glowing recommendation of one of their own. No doubt about that.
However, it is only one opinion of Chao's performance as Labor Secretary. And her critics have a radically different view than the folks at the Heritage Foundation.
Writing for Common Dreams, the Executive Director of American Rights at Work, Mary Beth Maxwell describes Ms. Chao's time at the Department of Labor like this:
Chao's tenure as Secretary of Labor is stained with dismantling critical mine safety protections, displaying open hostility toward workers and their unions, and collaborating with corporate interests, most notably through her husband, Senate Republican Leader Mitch McConnell. Her embarrassing legacy shows a complete lack of accountability at the Department of Labor.
Among other things on her list, Maxwell mentions the fact that Chao even hired a former colleague from the Heritage Foundation, D. Mark Wilson, who actually wrote a report titled "How to Close Down the Department of Labor."
(She didn't need too much advice in that matter.)

The Warped Mandate of the Department of Labor

Under the conservatives, the very purpose of the Department of Labor has been warped out of all recognition from what it was originally designed to do. 

In 1913, when the department was created, then President Taft outlined its necessity. It was created, he said, "to foster, promote and develop the welfare of working people, to improve their working conditions, and to enhance their opportunities for profitable employment."

Contrary to the Heritage Foundation, there is no mention of policing unions. There is likewise no mention of improving the competitiveness of the American worker (and thus making more profits for the American corporation)
That was never a mission of the government and especially not the Department of Labor. Competitiveness was supposed to be the sole responsibility of the corporations themselves and any government interference should have been considered both unnecessary and unhelpful. 

Why shouldn't the government help improve the competitiveness of American corporations? you might ask.
Because corporate competitiveness had to come within the perimeters of the regulations protecting workers. That's the top priority of the Department of Labor. It was not supposed to come at the expense of the very workers it was charged to protect. 

The US government, by siding with corporations, has been forced to play an adversarial role against unionized labor. A government cannot even pretend to be a trusted and an unbiased mediator in disputes between labor and big business. Under the conservatives, therefore the Department of Labor serves not the American worker, as it was designed to do, but the American corporation. 
Just compare that to Frances Perkins, the Labor Secretary in the Franklin Roosevelt administration. She said:
"Out of our first century of national life we evolved the ethical principle that it was not right nor just that an honest and industrious man should live and die in misery. He was entitled to some degree of sympathy and security. Our conscience declared against the honest workman's becoming a pauper, but our eyes told us that he very often did."
That is a very different view from our time when conscience must take a back seat to competitiveness.
Under the dictates of the Far Right, starting from the days of Reagan (and going into overdrive in the late 1990s) the government focused almost entirely on destroying unions and protecting corporations. 
The rights of the working class- now unprotected by both unions and the government's regulatory authority- were to be tossed into the ash heap of history. 

OHSA under Chao

The Department of Labor, with a total budget of $50.4 billion and 16,800 employees, is one of the government's largest regulatory enforcement agencies.

As an agency of the Department of Labor, Occupational Safety and Health Act (OSHA) was established by Congress in 1970. 
The goal was to address the need to prevent or minimize workplace accidents and health hazards. 

Prior to that time, there was no national guarantee that workers would be protected and the health risks of certain industries, like coal mining, were purely a matter between the employer and the employee (and if he was fortunate), his union. With the de-unionizing of America, workers were even more at risk than ever before.

As FRONTLINE reported in 2003,
Over the past 20 years, the prevailing wisdom in Washington has been that regulation strangles business. Under heavy lobbying by industry, the power of the Occupational Safety and Health Administration (OSHA) has been challenged, making it easier for some companies to dismiss the agency's efforts to enforce workplace safety laws.
During the Clinton years, Democrats attempted to strengthen OSHA with reforms. However, that effort was discarded without much debate under President Bush. Union leaders said at the time. 
the pendulum has swung far away from enforcement, leaving workers vulnerable to dangerous workplaces and with little protection from exploitative employers.
Inspecting workplaces is admittedly a daunting but essential task.
Each year almost 6000 Americans die from workplace injuries and as many 50,000 workers die from illnesses in which workplace environment were a contributing factor. Nearly 6 million employees suffer nonfatal workplace injuries. And the direct and indirect cost of occupational injuries and illness totals more than $170 billion.
So proper inspections save lives, no matter how much corporations might squawk and moan.

While OSHA has clearly contributed to the overall decline in workplace injuries and deaths since its inception, the business world writes off OSHA as a major obstacle to profit-making and its enforcement of regulations an intrusion of Big Government. 

One objection that has consistently re-surfaced whenever OSHA regulations are mentioned is that such regulations hinder the competitiveness of American business in the face of mounting pressure from emerging markets like China or India. In those countries, the workplaces are essentially unregulated and are, according to spokespeople of industry, much more competitive compared to the over-regulated American counterparts. 
*   *   *   *
According to the book, Freedom to Harm: The Lasting Legacy of the Laissez Faire Revival, author Thomas McGarity explains:
Soon after she assumed office, Chao created a high-level management review board to oversee budgetary and management issues at OSHA.
Budgetary concerns could provide a useful pretext to de-fang and de-claw OSHA regulatory abilities.  At least, that appears to be exactly what happened.

Despite the increased workload, under Chao, there were even fewer OSHA inspectors than there were a decade before she assumed control of the department. By that time, inspectors were able to cover only about 2 percent of the seven million workplaces in the US.  
Because of the shortage of inspectors, OSHA tended to be limited to large unionized and high-risk industries. Small or mid-sized businesses could openly violate safety regulation and expect little trouble from OSHA during the Bush years. 

The Encyclopedia of White-collar Crime outlines how unbalanced OSHA had become, leaning in favor of business over workers. For example. an employer could appeal the results of an OSHA inspection, but employee could not contest citations, penalties or the lack of penalties imposed by OSHA. 
Therefore, if OSHA declared a workplace safe, (or refused to investigate altogether) or found a corporation innocent of taking risks with the health of its workers, then the case was officially closed. 

Critics charged that many of the penalties imposed on offending violators were little more than a slap on the wrist and that it was easy to pay the fine than to make the changes.

"The fact is they consider OSHA a mosquito," a former OSHA administrator, Charles Jeffress told FRONTLINE. "They'd rather pay the fines than bring their plants into compliance." 

Chao's policies- which came down directly from the White House- were bad news for the American worker who were to die or were to be injured in workplace accidents. 
However, it didn't stop there.

Even for the workers that did not lose their lives or were not injured, there were other reasons to frown on the new and improved Department of Labor.

Wage and Hour Division under Chao

One duty of Labor Department is to enforce the provisions that ensure that over 100 million workers are paid at least the federal minimum wage and for overtime. 
It was a responsibility mandated back in 1938 by the Fair Labor Standards Act. However, under Chao's tenure, the Labor Department's Wage and Hour Division (WHD) was widely criticized for gross negligence.

A study commissioned by the Committee on Education and Labor found that case studies show that
"WHD inadequately investigated complaints from low-wage and minimum wage workers alleging that employers failed to pay the federal minimum wage, required overtime, and failed to issue a last paycheck."
Was a case of incompetence or calculated neglect? You can decide.

The study found that WHD officials incorrectly rejected valid complaints, failed to locate employers implicated in complaints, and WHD’s investigations were limited to phone calls made to the complainant’s employee. 
In many of the cases, the investigators for the WHD simply took the employer's word in the case instead of conducting an independent inquiry. Complainants to the WHD were often told that and the "only option was to hire an attorney." 

Great advice for a minimum wage earner.

Furthermore, the study found that investigations were delayed for over a year, eventually dropping the case because the statute of limitations was close to expiring.

Workers who went to the Department of Labor for help in resolving their pay disputes might have had every reason to question which side the government was really on. The idea of pulling themselves up "by the bootstraps" suddenly became a whole lot harder for millions of low wage workers. 
No amount of hard work, work ethic, and independent spirit can help a worker when the employers simply refused to pay.

In April of this year, Chao's husband, Mitch McConnell, the Senator with an estimated net worth of $9.8 million, led a filibuster to block the Democratic proposal to raise the federal minimum wage to $10.10 an hour.

According to one survey, 69 percent of the American public favor raising the wage overall. but those numbers seem to mean little to people like Mitch and Elaine. 
Democrats were quick to point out that according to a non-partisan report, an increase of minimum wage would lift nearly 1 million Americans out of poverty, helping them lift themselves up by their bootstraps. 

Job Creation Myths and The Great Tax Cut Tour

While at Labor, Secretary Chao aggressively pushed the pro-forma Bush agenda, most of which came straight from the  Heritage Foundation playbook. 
One of those items allowed her to demonstrate her loyalty to the Bush administration in a direct way - tax cuts for the 1%.

In July and August 2003, Chao and her colleagues, Treasury Secretary John W. Snow and Commerce Secretary Donald Evans, took a bus touring across the country on their Jobs and Growth Tour, aimed at promoting the benefits of the Bush Administration's tax cuts.

Jobs and Growth Tax Relief Reconciliation Act of 2003 was one of a series of tax breaks known as the Bush tax cuts. This 2003 law resulted in at least $350 billion in tax cuts- and lost revenue. According to a study,
Although some cuts were addressed to middle-class Americans ..most of the cuts benefited the wealthiest Americans... Corporations also benefited from tax cuts.
Nobody at the time questioned the propriety of the Secretary of Labor -whose department is supposed to be all about protecting workers and regulating Big Business- touring the country, celebrating tax cuts for the corporations.

The job creator myth was all the fashion back then. Few even questioned the validity of the theory. Cutting taxes on the 1% was going to bring about an explosive boom in job growth.
That was how Chao and company sold it. In Wisconsin, Chao told reporters:
"We had a good day meeting and talking with the working men and women in Wisconsin who are the backbone of our economy and our country. They are the ones who will benefit most by the President's Jobs and growth plan which will help stimulate new economic growth and create more jobs."
Of course, that was not actually true. It wasn't the American worker who benefited most but his boss' boss' boss. 
Laying it on even thicker was Commerce Secretary Evans who boasted:
"Today's leg of the Jobs and Growth tour allowed us to hear from scores of workers, small business owners and families about the economy and reinforced President Bush's belief that the strength of the American economy lies in our people and our factories, not within the halls of Washington D.C."

Even a year later, by the summer of 2004, according to the Congressional Record,  politicians were having serious doubts about the wisdom of tax cuts and their ability to create stable employment.  
As Democrat Frank Joseph Pallone, Jr.  the U.S. Representative for New Jersey's 6th congressional district said,
Last year when the President was touting another round of his tax cuts.....the White House predicted that the cuts would create 2.1 million jobs in the 7 months after the passage. But what actually happened during that period? Only 296,000 jobs were created, 1.8 million job short of the President's prediction. There is no indication that the tax cuts are helping the economy or that they are helping to create jobs, none whatsoever.
Between 2004 and 2007, right up to the collapse of the whole Bush-built house of cards economy, tax cuts for the super-rich still hadn't paid off in Wisconsin despite the whistle-stop campaign of Chao-Evans.

In fact, during those years, private-sector job growth was slower in Wisconsin than in the U.S. as a whole, and the state ranked anywhere from 30th to 42nd annually. 

Nationwide, the tax cuts resulted in a far less than projected increase in jobs. Even before  the historic collapse of the American economy in 2008, the alleged effects of the Bush tax cuts on job creation were on the wane.  

By the end of the Bush era, the only effect of the tax cuts that Chao had vigorously promoted was a devastating loss of revenue for the government and more cash in the pockets of Big Business. Meanwhile, as Ms. Chao left office,  the US economy went sliding lazily down the tubes. 

And yet today, even today over a decade later, conservatives like Mitch McConnell, Elaine Chao's husband, are still making the claim that tax cuts will improve the jobs situation
And he also gave this warning to voters: if Republicans can take the Senate in the mid-terms, extending and enlarging on the tax cuts will be top of the agenda. 

In the final installment in this post, we will examine Ms.Chao's love for deregulation and her penchant for siding with corporations was to have a very negative-  indeed, a disastrous-  effect on the mining industry.

To go directly to Part Three.