Thursday, August 14, 2014

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

by Nomad

Here is the final installment in the series on Ms. Elaine Chao, wife of Senator Mitch McConnell and former Secretary of Labor under George W. Bush.

In this post we shall be looking at how under Ms. Chao, the regulatory authority of Department of Labor was systematically dismantled by conservative policy. The results were both predictable and devastating.

To view Part One
To view Part Two

Mining Safety under Ms. Chao

One agency that the Department of Labor oversees is the Mine Safety and Health Administration (MSHA) which administers the provisions of the Federal Mine Safety Act of 1977.
It is an important responsibility.
MSHA is authorized to force mining companies to comply with safety and health standards. Its goal is "to eliminate fatal accidents, to reduce the frequency and severity of nonfatal accidents, to minimize health hazards, and to promote improved safety and health conditions in the nation's mines." 

A kind of OSHA for the mining industry.
At the end of Elaine Chao's tenure as Secretary of Labor, MSHA came under fire for its generally lax attitude to mining safety. According to Scott Lilly, a senior fellow at the Center for American Progress,
"I think you've got people embedded there who are philosophically hostile to the mission of the agency."
One of those at the center of the storm was the head of MSHA, David Lauriski, a man who had actually worked for the coal industry most of his life. Early on in the Bush era he announced that reforms proposed by the Clinton Administration would be tossed out and that from now on, the agency would enforce those rules that "all parties can accept as necessary and practical."

For an agency whose primary purpose was to oversee the mining companies and protecting miners, the changes in policy came as a shocker. But it shouldn't have come as a surprise. Jumping in bed with corporations was practically a prime directive for the Bush agenda.

Mining companies, critics argued, could not be trusted to put worker safety above profits, as Lauriski was suggesting. You can't be pals and golfing partners with the very people you ought to be monitoring and- when necessary- punishing.

According to the New York Times, MSHA under  Lauriski's authority
“rescinded more than a half-dozen proposals intended to make coal miners' jobs safer, including steps to limit miners' exposure to toxic chemicals. One rule pushed by the agency would make it easier for companies to use diesel generators underground, which miners say could increase the risk of fire.”
The Washington Post reported in 2008 that a study by the department's inspector general, under Chao, mine safety regulators did not conduct federally required inspections at more than 14 percent of the country's 731 underground coal mines during the previous year. The number of worker deaths in mining accidents more than doubled to 47.
Professor Jerry Starr points how inadequate the inspection could be:
The most vulnerable point in protecting mine safety process is the inspection itself. To be sure, federal inspections occur at least four times per year and mines are routinely cited for safety violations. In fact, the MSHA’s Ned Merrifield has boasted that his agency issued four percent more violation notices in 2005 than in 2001.
But that was a deceptive way to measure results. It was the number of inspection but the quality of them that mattered.
The inspections are often superficial, especially in nonunion mines where the workers are afraid to speak up for fear of dismissal. According to the Louisville Courier-Journal, 234 of 255 miners interviewed reported that cheating on federally mandated coal dust testing was widespread. Given warning that inspectors are coming, some miners have admitted to cleaning up the site at the last minute just to protect the owners from citation. Others have testified to being forced to work in unsafe conditions just to keep their jobs.
For fines to be truly punitive- and therefore effective- they must bite. Until 2006, most violations drew only a $60 penalty, with a maximum fine of $60,000. Additionally, fines did not include the threat of mine closure, even when inspectors found life-threatening safety violations. 

Forgiveness is an act of love and the bonds of love between regulators and companies were very strong in Chao's tenure. Puny punishments were an invitation CEO's grumble and pay but it was more or less a lovers' quarrel.  
In short, it was the OSHA policy all over again. 

Sago Mine Disaster

Given this attitude on mine safety, it was only a matter of time that something would go wrong.

The inevitable happened in January 2006 when Sago Mine in Sago, in Upshur County, West Virginia, exploded trapping 13 miners for nearly two days. Only one of the 13 trapped miners survived.
A year before this accident, the mine was cited by MSHA 208 times for violating regulations and nearly a hundred of those violations were considered serious. That number should have alerted the management. USAToday reported at the time:
Among the infractions were at least 16 related to failures to prevent or adequately monitor the buildup of explosive gases in the mine.
Had the mine been closed, it is now clear the explosion and the loss of life could very well have been avoided.

In the days after the disaster, Chao announced that MSHA would launch a full investigation to determine the cause, and to "take the necessary steps to ensure that this never happens again." 

However, the handling of that investigation was also filled with controversy.
Suspicion arose when much of the evidence was kept away from the public eye, and Freedom of Information requests. Transparency and the assurance it brings was certainly not on Chao's mind, no matter what she professed.

The Sago Mine disaster investigation eventually became a political hot potato in early 2006 when the West Virginia Senator Robert Byrd headed an independent inquiry into the matter. This was followed by another Senate and a House inquiry as well.
As Senator Jay Rockefeller (D-WV) wrote:
"We need to know why the administration thinks that it can carry out a policy where it is committing fewer and fewer resources to meet an industry that has more and more needs."
There is one bright spot in this sordid tale. 

Following this disaster, public pressure was building even in the face of the mining industry and the Heritage Foundation dictates. In fact, the Sago disaster was one of a string of high-profile mining disasters in West Virginia, Kentucky, and Utah, in which 27 miners lost their lives. 

The question of safety regulations could not be ignored. Because of this, Congress and the president eventually came together to draft into law the Mine Improvement and New Emergency Response Act of 2006 (MINER Act.) 

Whether the conservatives at Heritage acknowledged it or not- the news laws were a blow to the conservative agenda of Laissez faire government. How effective was the MINER Act is another question.

Events in Martin County Kentucky

A few months prior to Ms. Chao taking her position at Labor, her home state of Kentucky was the scene of one of the worst environmental disasters ever in the southeastern United States.

It occurred on October 11, 2000. That was when an estimated 306,000,000 US gallons of highly toxic coal mining by-product was accidentally released into Tug Fork River which subsequently polluted hundreds of miles (300 – 500 km) of the Big Sandy River and its tributaries and the Ohio River.

It is known today as the Martin County coal slurry spill

The accident was "an act of God" according to the Martin County Coal Corp., a subsidiary of Richmond, Va.-based Massey Energy. Officials for the company demanded that the circuit court judge throw out the lawsuit filed against the company. 

They denied negligence and the coal company's president assured local residents that liability insurance would give adequate compensation to any damage.

Since the accident occurred before Ms.Chao took office, she clearly could not be held responsible in any way. The questions arise from how the case was handled after the fact.

According to Sourcewatch:
The only federal violation Massey was cited with was for failing to properly notify MSHA about changes in water flow from the impoundment; fine: $55,000. In September 2002, Massey's PAC gave $100,000 to the National Republican Senatorial Committee, which Sen. Mitch McConnell had previously chaired. Overall, McConnell has been one of the top recipients of Massey-related contributions, collecting $13,550 from Massey-connected contributors.

Martin County Coal agreed in the summer of 2002 to pay $3.25 million in penalties and damages to Kentucky, the largest mining-related fine in the state's history. Massey Energy says it has spent over $40 million in cleanup costs. But Massey CEO Don Blankenship also announced during a conference call with investment bankers on July 31, 2003, that the company had just won a $21 million insurance settlement for property damage and business interruptions that resulted from the October 2000 slurry spill.
Let's compare. that to the much smaller Exxon spill. The cleanup for the Exxon spill cost about $2 billion, according to the Exxon Valdez Oil Spill Trustee Council. 

Given the extent of the damage, it's a little strange that so few people have heard of it.
Or not so strange.
Some would simply call it a cover-up.

According to The Union of Concerned Scientists,
Incoming Bush administration political appointees pressured investigators at the Mine Safety and Health Administration (MSHA) to prematurely wrap up an ongoing investigation into the causes of the massive October 2000 coal slurry spill in Martin County, Kentucky.
The allegations are specific and, if true, explosive. Mining engineer and whistleblower Jack Spadaro stated his belief that the investigation was suppressed for two main reasons:
Bush’s nominee for Secretary of Labor was Elaine Chao. Her husband, Senator Mitch McConnell (R-KY), had just received a major campaign contribution through the Republican Senatorial Committee from Massey Energy. Spadaro alleges that Bush’s new political appointees were influencing the investigation in order to protect Massey Energy.
Was this a classic case of political cover up for a fee? If so, then it was also necessary to remove the traces of dereliction of duty. 
Because the district MSHA office allegedly did not enforce the needed changes to the Martin County reservoir after the 1994 incident, top administrators within MSHA were also protecting MSHA from culpability.
Basic butt-covering, to put it indelicately.

Accidents can happen anywhere but there are today 285 active slurry ponds in 11 states, with over half in Kentucky and West Virginia and a failure to upgrade regulations, and penalize negligence to the fullest degree nearly guarantees a repetition of similar disasters.


Events proved that a slap on the wrist was not nearly enough for a company like Massey.
In April 2010, Massey Energy was back in the news.. for all the wrong reasons. The explosion occurred at 3:27 pm local time (19:27 UTC) on Monday, April 5, 2010 at the Massey Energy's Upper Big Branch coal mine in Raleigh County, West Virginia killed twenty-nine out of thirty-one miners.

The accident was the worst in the United States since 1970. A state-funded independent investigation found Massey Energy directly responsible for the blast.

On December 6, 2011. MSHA issued its findings on this disaster. It made grim reading. Flagrant safety violations had, the reported concluded, contributed to a coal dust explosion. It issued 369 citations at that time, assessing $10.8 million in penalties, the largest for any mine disaster in U.S. history. Alpha Natural Resources, which acquired Massey Energy that year, eventually settled its corporate criminal liabilities with the U.S. Attorney for $209 million. 

The trouble was not over for the executives at Massey. Obama appointee U.S. Attorney for the Southern District of West Virginia, R. Booth Goodwin II has been relentlessly working his way up the Massey hierarchy. He alleges that beyond the managers who supervised that mine, there was a broader conspiracy led by still unnamed “directors, officers, and agents.” 
Who he might be referring is not clear.
Goodwin has based his prosecutions on conspiracy charges rather than on violations of specific health and safety regulations, which means he can reach further up into the corporate structure. So far, he has convicted four employees including the Upper Big Branch mine superintendent who admitted he disabled a methane monitor and falsified mine records.
One former superintendent with the company, Gary May, pleading guilty in March 2012, and "confess[ing] to conspiring to 'impede the [MSHA]'s enforcement efforts'". 

Back in the mining country, in April 2012 the new owners of the mine Alpha Natural Resources announced its decision to permanently close its Upper Big Branch mine. The poor miners in West Virginia, critics of the industry could say, were made to pay the price both for the lack of enforcement of regulations as well as the subsequent punishment of the industry violators. 

According to the testimony of Dave Hughart, former President of a Massey subsidiary who is cooperating with the government, said that the person who had alerted him to impending mine inspections was none other than the former CEO of Massey Don Blankenship.
The question is then how did he know and who gave him this vital inside information? That investigation is on-going. (For more details, click here.)
*   *   *

A few days ago, McConnell traveled into the heart of Kentucky's coal mining country in order to blame the loss of thousands of jobs on - who else- the President, and Environmental Protection Agency. Too many regulations, he suggested, makes mining uncompetitive.

Never mind that coal mining has been in decline for the last forty years. 

Never mind that deregulating the protections of the environment will only increase the chances of disasters like the event in Martin County, Sago, and Upper Big Branch. 

The Outsourcing to China Outrage of 2004

Turning away from the specifics, we have to consider Chao's performance from a wider view.

During the Bush years, when Chao oversaw the Labor department, the US lost 42,400 factories, including 36 percent of factories that employ more than 1,000 workers (which declined from 1,479 to 947). The chart shows the true extent of the loss during the Bush years.   Pretty incredible, isn't it?

Altogether the economy also lost 38 percent of its factories that employ between 500 and 999 employees (from 3,198 to 1,972).  
In the US, employment in the manufacturing sector fell by one-third from 2000- 2010. 
And this crash in the manufacturing sector could not be blamed on the economic meltdown in 2008. That destruction of the manufacturing sector- the backbone of the economy-It began almost from the moment George Bush - and Chao- took office. Is this what corporate competitiveness was actually supposed to look like?
A Labor Secretary faced with those figures should have had some explaining to do.  

Some members of Congress pointed the finger at China and contended that foreign trade allowed American employers to offshore these jobs. In fact, the president's own advisors were telling him that shipping American jobs overseas was actually a good thing to do. More cost-effective. 
It's the modern thing to do.

In 2004, Harvard Professor Gregory Mankiw, head of the president's Council of Economic Advisers, outlined the advantages that offshore outsourcing of jobs can provide to U.S. companies in the "Economic Report of the President."

In the report, Mankiw wrote in the chapter on trade:
"When a good or service is produced more cheaply abroad, it makes more sense to import it than to make or provide it domestically... Outsourcing is just a new way of doing international trade. More things are tradable than were tradable in the past and that's a good thing."
That's exactly what George W. Bush wanted to hear. The then- Senator. John Kerry summed up this policy advice in this way: "They said that shipping American jobs overseas is good for America."

Another section of the report raised more disgust. One section claimed that China had not played a role in the huge loss of U.S. manufacturing jobs. The decline in manufacturing employment was actually a good sign.

According to The Heritage Foundation- with which Chao returned after her stint at Labor- bolstered this "good news." The loss of American manufacturing jobs was a result of improved productivity thanks to technology and technical improvements, they claimed. True, fewer people might be working, they admitted, but the manufacturing sector was more efficient and more... competitive.

Fewer jobs, stagnant wages but increased productivity and dramatically increased profits. How else would a red-blooded capitalist define competitiveness?

However, critics of the outsourcing said, America's trade deficit with China had soared in recent years, running at an annual rate of $124 billion the previous year. Increased trade and fewer American jobs. What other explanation could there be?

But there was one unasked question in the report: If shipping American jobs was a good thing, then, for whom?
The answer was, of course, China, India, and other countries with governments that treat labor little better than wage slaves. It was also good for all of the American corporations that chose to outsource their manufacturing to these countries. They became much more competitive. It was money in the pocket for them.
 It was perhaps, a very good thing for the companies that conducted trade and the people who ran shipping companies (like Chao family.)
But for the American workers and their families, was it really a good thing?

Even Republicans were righteously appalled by Mankiw remarks, according to a Fox News article:
Rep. Donald Manzullo, R-Ill., said that point flew in the face of the fact that thousands of people in his district had "lost their jobs specifically because those products are now being made in China."
According to The Heritage Foundation- with which Chao returned after her stint at Labor- threw cold water on that notion. The loss of American manufacturing jobs was a result of improved productivity thanks to technology, they claimed. Fewer people might be working, they admitted, but the manufacturing sector was more efficient and more... competitive.
Fewer jobs, stagnant wages but increased productivity, how else would a red-blooded capitalist define competitiveness?

So while economic advisors were producing arguments telling the president how splendid outsourcing to China was for American business, his own Labor Secretary stood by and watched manufacturing sector wither on the vine.
And what was she doing instead? Regaling the Bush tax cuts for corporations and calling it job creation.

And what became of Mankiw? you might wonder. In 2007, he signed on as an economic adviser to Romney's presidential campaign. No shocker there.

TAA under Ms. Chao
As manufacturing jobs were flying out the window, the Bush administration was doing less than nothing to stop it. And what about the workers who lost their jobs.
Their families and mortgages and credit card bills didn't just disappear when their jobs exited to the Third World.
So where were they supposed to turn?
There was a program, managed by the Department of Labor, that should have eased the pain. It was called the Trade Adjustment Assistance (TAA) program.

That federal program was supposed to help workers displaced by trade, even as trade deficits have exploded and millions of manufacturing jobs disappeared. Its aim was to provide "a path for employment growth and opportunity through aid to US workers" who have lost their jobs as a result of foreign trade.

However, AFL-CIO claimed that the Bush administration failed to effectively implement the plan. Union leaders made specific charges of  mismanagement against   the Department of Labor by Elaine Chao. 

In 2002, a wage insurance program was added to TAA designed to encourage workers to get back to work sooner by supplementing their wages under certain circumstances. The Bush Labor Department essentially has failed to implement or publicize this program; as a result, only a few dozen people have received wage insurance under TAA.

The Labor Department under Chao, the AFL-CIO claimed, denied TAA petitions erroneously due to what one judge called "overwork, incompetence or indifference (or a combination of the three)." Sometimes it looked even more obvious. As out source points out:
Despite persistent high long-term unemployment and continuing manufacturing job losses President Bush sought $300 million less in funding for TAA benefits in his 2005 budget than Congress enacted in 2004.
In one finding for workers who were denied TAA benefits, the US Court of International Trade blasted the Labor Department, stating :
"this case stands as a monument to the flaws and dysfunction in the Labor Department's administration of the nation's trade adjustment assistance laws- for while may be an extreme case, it is not an isolated one."

The Great Competitiveness Lie
As union leaders are quick to point out, the U.S. manufacturing sector never emerged from the 2001 recession, which coincided with China's entry into the World Trade Organization. Most of the jobs that move from the US to China are in manufacturing.

The bottom line was pretty basic. You didn't need a Harvard grad to explain the details. Given the low wages, the lack of safety regulations, non-unionized labor in China would always outpace the American labor force. These countries were not raising their standards (why should they?). It was America, in the name of competitiveness, that has been in a race to the bottom.  
The obvious solution would have been to cut back on trade and encourage consumers to buy American-made products. However,  according to union groups in 2004, Bush did exactly the opposite:
The Bush Administration mounted a relentlessly campaign against Buy American Laws, which ensure that federal tax dollars are invested in creating US jobs and maintaining a strong industrial base. The Bush Administration routinely waives Buy American Laws and has sought changes to weaken them.
The Corporate Games in China
But a different game was being played in China too.
Throughout the Bush years, western corporations were doing all they could to undermine labor rights laws in Beijing through lobbying groups like, the American Chamber of Commerce (ACC) and the European Union Chamber of Commerce in China (EUCCC). 

Acting through the American Chamber of Commerce in Shanghai, Wal-Mart and other corporations, including Google, UPS, Microsoft, Nike, AT&T, and Intel were squarely against Chinese labor reform labors. Such things like the right to have collective bargaining were deal-breakers as far as Western corporations were concerned.
Two points to keep in mind too.
Collective bargaining is recognized through international human rights conventions. Article 23 of the Universal Declaration of Human Rights identifies the ability to organize trade unions as a fundamental human right.

Something else you may not know.
In 1980, at a Labor Day Speech in New Jersey,  Candidate Ronald Reagan and the only the only president of a union ever to be to run for president- told his audience "where free unions and collective bargaining are forbidden, freedom is lost."

Obviously, the corporations that lobbying in China did not agree with Reagan, the founder of the conservative party.

According to Said Ellen David Friedman, a U.S. labor organizer who's worked with developing trade union groups in China:
"U.S. corporations have used their considerable power and influence there to weaken the labor laws that are being proposed. They are in essence acknowledging that what they have liked about doing business in China is the very, very cheap labor and the low level of enforcement."
A 2010 report from the Hong Kong-based NGO Globalization Monitor revealed how lobbying tactics have been adapted to Chinese circumstances and the concept of guanxi (connections or personal ties).
Developing the personal touch with government agencies is of crucial importance, building trust and offering favors, which often crosses the line into full-blown corruption.

The Full Circle
So we began this series with a Chinese businessman and his immigrant family coming to America in the 1960s to look for new opportunities, in search of the American dream. The Chao family was indeed proof of the American dream, a place it really was possible to expect a better life for your children. This was supposed to be the charm of the Elaine Chao story.

We close the series, however, with the stark reality. The American worker has become largely obsolete- surpassed by Chinese and Indian workers who are much more "cooperative" with corporations. (Actually, they have very little choice.) The family-sustaining employment that the American worker had once counted on has emigrated to the Far East. 

That's thanks to the conservative policies found in abundance with Ms. Chao at the helm of the Department of Labor in the Bush Administration.
Meanwhile, through these years as millions were losing their jobs to China, Senator McConnell was accumulating a proud voting record on free trade. (The conservative Cato Institute founded by Charles G. Koch rated McConnell 92% on his pro-free trade voting.)

None of this has gone unnoticed by McConnell's challenger in the Senate race in Kentucky. A statement from Democrat Alison Lundergan Grimes has pointed out:
“Under McConnell, Kentucky has lost tens of thousands of manufacturing jobs. His Washington record includes supporting tax breaks that encourage companies to ship good Kentucky jobs overseas.”
Grimes failed to mention, though that McConnell had plenty of help, starting with his own wife. 

All in all, the career and philosophy of the wife of Senator Mitch McConnell may provide Kentucky voters another reason to bid McConnell a less than fond farewell. She alone represents some of the worst excesses of the Bush era.
We can admire Chao's personal triumph of ambition over selfless public service, just as long as we don't consider the costs to the public.