The Layoff Conspiracy: How Bush-Cheney Helped Wreck the Booming Economy




     FROM 1997 until 2000, I sat through many meetings as a journalist observing business executives wring their hands and complain that they couldn’t keep employees. “The best workers keep leaving me for more money,” they’d say. Even small companies were forced to offer health insurance and 401[k] matches to keep employees.

     Enter Bush-Cheney. End of problem.

     If you believe in government figures - and I had my doubts long before Dubya, Brother Jeb, and other Republicans cooked those Florida ballots - the ranks of the unemployed grew by more than 3 million people from the time Bush-Cheney took the reins of the White House in January 2001 until January 2004. The July 2003 number - 9.1 million - was the highest level in more than a decade.

     And if you included the part-timers who didn’t receive any assistance like unemployment benefits, the figure was closer to 14 million. The 4.9 million part-time workers who would rather be working full time in late 2003 was the highest number in a decade. If you added those who said they were self-employed and those who received disability payments, the figure rose to 31 million. 1

     But what was Bush’s reaction to probably the worst performance on the economy of any U.S. president since Herbert Hoover in the 1920s? During his fund-raising tour for the 2004 campaign, Bush said the economy was turning around, that Bush’s tax cuts for the wealthy were creating jobs, that the recession was all the fault of Clinton and then Sept. 11, 2001.

     Lies.

     Bush’s Labor Department reported that U.S. non-farm payroll jobs increased by 57,000 in November 2003 and only by 1,000 in December 2003, falling way short of expectations after an 8.2 percent annual growth rate in the third quarter of this year. The job gains under Bush were mostly in lower-paying service jobs - manufacturing jobs fell for the 41st straight month in December. 2

     Let’s see, since Bush stole the White House, the only job increases had come suspiciously as Bush cranked up his campaign - Kenneth Lay could have helped cook the job figures. At this pace, the U.S. would reach zero job losses by 2008. Add to that the highest budget deficits in U.S. history, the most layoffs in at least 20 years, and a market in which almost 3 million more Americans lost their health insurance just in 2002. That was quite an economic record to hang your hat on, huh?

     So what did Bush say at a fund-raiser in Baltimore in Dec. 2003?

     “The American economy is strong, and it is getting stronger,” Bush lied at the $1 million fund-raiser for his 2004 re-election campaign. “More jobs are being created.” 3

     Whose economy was getting stronger? Maybe the economy of the wealthy elite who funded Bush’s campaign stops was getting stronger. But mine was sure not. And no one I knew felt more economically secure than he or she did under Clinton.

     Ask U.S. Rep. Elijah Cummings (D-Md.), chairman of the Congressional Black Caucus, what he thought about the December job report, and you’ll get closer to the real story. “The job report also indicates that while the African-American unemployment rate fell to 10.2 percent, the Hispanic unemployment rate rose to 7.4 percent. Both of these numbers are again significantly higher than the national average,” Cummings said. “While it is welcome news that some Americans are finding work, these new numbers are disappointing when one considers the record growth in the gross domestic product recently announced by the U.S. Department of Commerce.

     “In addition, when we consider that over 2 million Americans have been unemployed for more than six months, that about 3 million Americans have lost their jobs since January 2001, and close to 9 million Americans will wake up tomorrow morning without a job, now is not the time to celebrate or pat ourselves on the back.

     “For those Americans without jobs, the term ‘jobless recovery’ is a cruel joke.” 4

     So what did Bush do? He celebrated. He patted himself on the back. He accepted more political bribes from his rich cronies, who got paid back in tax cuts, no-bid contracts, intimidated workers who took less pay and benefits, and similar ways.

     What a cruel joke Bush was.

     Bush couldn’t even get a clue when the company in which he began his bullshit economic growth campaign in April 2003, the Timken Company, an Ohio-based steel and bearings manufacturer, embarrassed him a few months later by announcing it would cut 900 jobs. The very same company he showcased as an example of his growth plan CUT jobs. Some growth, huh? Then again, that trend fit nicely under Bush. 5

More alarming stats

     Check out these other alarming stats:

     * The number of non-farm jobs in July 2003 - 129.9 million - was at the lowest level since Dec. 1999. That figure was 132.1 million in January 2001. Under President Clinton, this category gained about 19 million jobs. By December 2003, the number had only climbed to 130.1 million. Better-paying jobs in sectors like manufacturing, transportation, and telecommunications declined substantially under Bush - more than 3 million jobs were lost during his first three years. Job gains were largely among lower-paying sectors like service jobs, which added 3 million in Bush’s first three years, and temporary employment, which did not come with benefits. 6

     * Some 2.5 million employees were laid off in 2001, the most since 1982, according to the Labor Department. That number did not decline much in 2002 and 2003 - only to 2.2 million and 1.9 million, respectively. About half those laid off did not find jobs before exhausting government unemployment benefits - its highest level ever recorded. 7

     * The unemployment rate hit 6.2 percent in July 2003, up from 4.2 percent in Jan 2001, before dropping slightly to 5.7 percent by December 2003. Most of those who left the ranks of the unemployed were those who gave up on finding jobs – employment actually dropped by 54,000 in December 2003. When Clinton took over in January 1993, unemployment was at 8 percent. 8

     * The employment-population ratio - the percentage of Americans 16 and older with jobs - declined to 62.2 percent from 64.5 percent in Bush’s first three years. 9

     * After dropping below 8,000 in 2002, the Dow Jones Industrial Average was at 10,602 in late January 2004. It neared 11,000 when Bush-Cheney took over.

Don’t believe election year spin by Republicans

     Anyway, it doesn’t take a Harvard economist to know that there was a lot more competition for jobs than there was when Clinton presided over economic boom times. Don’t believe the 2004 election-year spin coming from Republicans that the economy was getting better and the previous years’ losses were the fault of Clinton and Sept. 11, 2001.

     Just ask a friend. Or a brother-in-law. Or me.

     Though I’m not much of a joiner, I was forced into the Unemployed Club after undergoing that demeaning process in late 2001 in which your boss shed fake tears as he explained the dire finances of the company and how sorry he was to “have to let you go.” And you’re sitting there wondering why you were picked to be the sacrificial goat, having to listen to this moron’s excuses, wanting to scream, “Up yours, you pretentious SOB! Just get this damn thing over with so I can go home and crack open a bottle of bourbon!”

     Then you’re ushered into another office where a human resources manager who you’ve never met in the decade you’ve worked there handed you a two-line letter of reference that summed up your existence with that company by only stating dates, and if you didn’t know by then, you’re slapped in the face with the realization of just how little all those nights and weekends you worked meant.

     Of course, my exit from one of the Southwest’s largest newspapers, whose parent company I had worked for nine-and-a-half years as a reporter and editor, could have been worse. At least a security guard didn’t escort me off the property, as many layoff victims experienced. Although my computer terminal was immediately turned off so I couldn’t forward the “I Love You” virus to my bosses, I could take my time packing up my copy of Orwell’s 1984 and my favorite piece of fan mail in which the writer swore that a local official was a child molester. The letter made as much sense as anything that day.

     Following that infamous day, I wrote angry letters to corporate bigwigs, politicians who did nothing to stop the layoff bleeding, and anyone else I could remember when I wasn’t too drunk. I filed an age discrimination complaint with the state human rights commission after unearthing another lie that my position was supposedly eliminated, when a younger reporter who made even less than the pittance I slaved for replaced me. I conducted some research into the finances of other companies that made major layoffs in 2001 and discovered that - surprise! - many were not doing as poorly as they told employees.

Many companies laying off employees make money

     Half of 30 companies I picked at random that made layoffs of at least 1,000 workers in 2001 made money. And only one of those 15 that lost funds in 2001 showed a loss the previous year. And that was only if you believe these companies’ accountants, who as Enron and Andersen showed, can be even more suspect than the government.

     Many of the firms that made large layoffs in 2001 not only made money, they made boatloads of bucks. For example, New York-based financial firm Citigroup Inc. announced it would slash 7,800 jobs in November 2001, then went on to record a whopping $14.1 billion in profit in 2001 and another $15.3 billion in 2002. That came on top of making $13.5 billion in 2000 and $9.9 billion in 1999. Why did Citigroup need to cut almost 8,000 employees when it made so much and paid its chief executive, Sanford Weill, an obscene $225 million in 2000? Weill had a history of leaving a trail of layoffs that helped boost his pay. Between 1987 and 1997, when he was CEO of Travelers Insurance, which merged with Citibank to form Citigroup, Weill cut jobs by one-third and became one of the highest paid chief executives in the country. 10

     Another company that made off well in 2001 while cutting people was the New York Times Co., which said it would send 1,260 workers to the unemployment lines that June. The Times Co. made $444.7 million in 2001 and $299.7 million in 2002, after hauling in $397.5 million in 2000 and $310.2 million in 1999. Other companies I researched - including IBM, Verizon, WorldCom, Dell, Hewlett-Packard, American Express, Bristol-Myers, Sara Lee, Tribune Co., VF Corp., Wachovia Corp., and Proctor & Gamble - took in similar nice profits before and after the layoffs. 11

     The media company that laid off me played its own creative public relations games. One day before laying off me and some 159 other employees, the firm released a financial statement that quoted its chief executive as saying its revenue performance “was better than initially expected.”

     But two weeks earlier, that same CEO gave a different outlook in a letter to employees like me. He wrote that company earnings per share had “declined significantly through the first nine months of this year versus 2000,” as he announced the layoffs and a year-long salary freeze for survivors. There was no room for negotiation on alternatives, no real discussion on whether to cut pay and not hire retiring executives as consultants. In 2000, the CEO made $2 million in salary, bonuses, and other compensation, and other executives hauled in similar bucks. If you figured that the average employee at my former company laid off in October 2001 made about $40,000 annually in salary and 401(k) contributions, then the top three executives in 2000 pulled in about as much as those 160 terminated people.

     My former firm about broke even in 2001, then went on to net $131.1 million in 2002 and $86.1 million in the first nine months of 2003. Did my company need to lay off me and 159 other employees? Hell, no.

     When I asked for further clarification of the layoffs, the only non-answer I received was from a company lawyer, who sent me a letter in which he acknowledged receiving correspondence from the state human rights commission about my complaint. “The uncertainties and challenges that faced [us] and other media companies in 2001 required these companies to make difficult decisions that impacted many individuals,” the attorney wrote. “[The company] firmly believes that the actions it took were in the best interest of the company, the vast majority of its employees, and the company’s shareholders.”

     Shouldn’t previous good years, such as making $151 million in 2000 and $178 million in 1999, have some bearing on executives’ decisions to lay off people during down times?

     Knight Kiplinger, chief executive of the Kiplinger business media organization, thought so. In a September 2001 column in which he called for “a patriotic moratorium on unnecessary layoffs,” Kiplinger wrote, “A lot of downsizing by big business is done not out of true financial necessity, but to preserve some target level of profitability that Wall Street demands....Even if they’re losing money in a bad year, most big companies can draw on capital reserves and lines of credit to tide them over, paying the money back when better times return.” 12

     So what’s really going on here? You couldn’t blame all the layoffs on Sept. 11, 2001 - about 63 percent of job cuts tracked in 2001 by the Labor Department came before that date. And you couldn’t blame declining profits in many cases.

     My theory was that there was at least a subconscious campaign by executives, who were complaining about not having enough qualified employees throughout much of the 1990s, to reduce job security, wages, and benefits through increased layoffs. In effect, corporate bigwigs got tired of employees leaving for greener pastures and took it on themselves to turn the employees’ job market of much of the last decade back into an employers’ market.

     Some people asked what was wrong with that since these were private companies. My response was that even private firms - most of which operate as dictatorships, one of the problems I have with such entities - benefitted from public services and had responsibilities to the public good. Many got government contracts and other public benefits. They should pay attention to more than just the bottom line.

Layoff conspiracy leads to White House

     As you might guess, this layoff conspiracy led directly to the White House - some Democrats played a role, but it was mostly Republicans who sided with the corporate layoff conspirators. Remember what Bush and Cheney did in December 2000 as soon as they had stolen the presidency? Cheney, a former corporate bigwig himself, went on major television programs and talked about how bad the economy was, blaming it on Clinton, when most real economists agreed it was not that bad - yet.

     Bush, a failed corporate smallwig who could only make money through a questionable stock transaction with Harken Energy and as part owner of the Texas Rangers baseball team by convincing taxpayers to fund most of a new stadium, talked the economy down in his own way in front of crowds of supporters and in one-on-one meetings with reporters. Bush’s handlers wouldn’t let him go on TV and actually answer a question more complex than “How’s your golf game?” 13

     Their aim was to blame the impending recession on the Clinton administration, something Bush still did during the 2004 campaign. That was a LIE - the economy slowed but was still growing at the end of 2000. 14

     Another lie Bush often told was that he appreciated workers and helped them get ahead. According to the U.S. House Appropriations Committee, Bush’s 2003 budget proposed a 9 percent, or $476 million, cut to job training programs and a 2 percent, or $8 million, cut to the Occupational Safety and Health Administration. Similarly, his 2004 budget proposed a $60 million cut to adult job training programs and a total elimination of the Youth Opportunities Grants, which provided job training for younger workers. 15

     The real goal of Bush was to pay back his huge campaign contributors, many of whom were these same corporate executives who complained before about not having enough qualified employees, by aiding the return of an employers’ market.

     For example, Ivan Seidenberg, president of Verizon Communications, the $67 billion telecommunications giant formed by the union of Bell Atlantic and GTE, gave $1,000 to Bush’s campaign, the legal limit for an individual. His company contributed $818,000 to Republican Party committees and $3 million to the 2000 Republican National Convention. Verizon was one of the first firms to lay off workers in 2001, cutting 10,000 jobs. The company ended up making $389 million in 2001 and $4.1 billion in 2002, after hauling in an astronomical $11.8 billion in 2000. In 2000 alone, Seidenberg amassed $15.7 million in salary. 16

     Other company executives gave even more to the GOP. Cisco Systems President John Chambers donated $280,000 by himself to Republican committees in 2000, the same year he made $157 million. Cisco laid off 8,500 people in 2001 after making $2.7 million in 2000. The firm did lose $1 billion in 2001, but it more than made that up in the next two years, showing profits of $1.9 billion in 2002 and $3.6 billion in 2003. 17

Halliburton makes layoffs despite huge government contracts

     Then there was Cheney’s former firm, Texas-based Halliburton Co., which competed to become the next Enron in 2003. Halliburton’s stock dropped under $16 a share in February 2003 after reaching $49.25 nine months before. The freefall was blamed largely on multimillion-dollar asbestos court verdicts, and one rumor before Bush’s State of the Union address in January 2003 was that he was going to call for limiting such asbestos claims. Bush didn’t then, but you could tell he wanted to do it.

     Pittsburgh-based Harbison-Walker Refractories Co., a former subsidiary of Dresser Industries, which Halliburton bought in 1998, filed for bankruptcy in 2003. Halliburton, whose stock price rose slightly by late 2003, benefited by receiving insider, no-bid contracts to work on Iraq’s oil system. Cheney has suspiciously pushed hard for legislation that benefitted his former employer, such as drilling for oil on protected federal lands in Alaska. When Cheney left in 2000 as CEO of Halliburton, a position he held since 1995, he sold his stock for more than $40 a share. He personally pocketed more than $33 million in 2000 from Halliburton. You don’t think Cheney remembered that deal?

     Cheney presided over several rounds of job cuts, including of about 11,000 workers in 1999, a year that Halliburton showed a $438 million profit. Since those layoffs, Halliburton’s profits rose to $501 million in 2000 and $809 million in 2001 before a $998 million loss in 2002.

     An interesting sidebit to this story was that Houston-based Kellogg Brown & Root, another Halliburton offshoot, agreed in 2003 to pay the U.S. government $2 million to settle allegations it defrauded the military by submitting false claims for delivery orders between 1994 and 1998. So here was Cheney trying to at least indirectly help his former company through friendly legislation as one of its subsidiaries reportedly defrauded all of us. 18

     Company executives and their apologists tried to tell us they “needed” to lay off workers - even when the firm was making boatloads of money - to remain competitive in today’s market, despite there being alternatives like reducing employee hours or executives’ salaries. That bull just didn’t float. In the increasingly merger-friendly environment of the late 20th and early 21st centuries, competition for many large megacorporations was not much of an issue. The main issue for many shareholders was to acquire as much capital and return on investment as possible.

     For these multimillionaires and billionaires, money was only a way to keep score, not a basic necessity that could mean the difference between eating and not eating. And they only felt good when that score went up, even if it was at the expense of a person making $20,000 or $30,000 a year. Most executives really liked Bush’s tax cut plan, which netted the super wealthy millions of additional dollars.

     But it made little sense if you wanted to help the economy to give more money to these wealthy people who already knew how to make their riches grow. They would be fine without tax cuts - when was the last time you saw a homeless wealthy person? If you gave them more money, they would most likely hoard it and not circulate it back into the economy like those at the lower end would. Tax cuts for the lower and middle classes made more sense to spur the economy, if you wanted to use tax cuts. Tax cuts to the wealthy failed to create jobs under Reagan and Bush, a 12-year period that saw a job loss.

     Bush’s tax cuts for the wealthy also resulted in substantial slashes of federal assistance to state and local governments, some of which experienced their biggest budget deficits since World War II under Bush. So state and local officials raised taxes - which disproportionately hit the middle class and lower income people - and cut services, mostly healthcare and social services to the needy.

Bush gives us largest deficits in U.S. history

     Meanwhile, thanks mostly to the tax cuts for the super rich, the Bush Jr. administration gave us the largest federal budget deficits in U.S. history - $374.2 billion in 2003. And who held that record previously? Bush Sr., who saw a $290.4 billion deficit in 1992. You think that’s just coincidence? Joshua Bolten, head of the federal Office of Management and Budget, predicted that the deficit for 2004 would rise even higher, topping $500 billion. 19

     And this was an economy that was getting better? How stupid did Bush and Co. think Americans were?

     Even conservative financial officials knew better. “The strong economic growth we’re seeing is not accompanied by any respectable employment growth,” Anthony Karydakis, senior financial economist at Banc One Capital Markets, told Reuters in early December 2003. 20

     So who the hell was getting this money coming out of this “strong economic growth?” Not me. And I doubt you did.

     It was the same ones Bush and his ilk always helped - that elite 1 percent at the top of the human food chain.

     Bush-Rove-Cheney were taking the same page from the same story they did in 2000. Bush was trying to pose as a moderate to steal another presidential election. He lied about his record, just as he lied about what he did as Texas governor.

     That’s why Bush wanted the $400 billion Medicare prescription drugs bill, which many analysts said would end up costing many seniors more and being just a big boondoggle for pharmaceutical companies and HMOs, some more of Bush’s friendly bribery partners. Bush didn’t really care about seniors. He just wanted to have something to try to convince them to vote for him.

What to do

     So what do we do about this situation? Stage a nonviolent revolt. Organize politically. Educate people about companies that practice alternatives to layoffs like reducing hours - Phil Hyde of Timesizing.com highlights numerous good examples. 21

     Educate people about studies that show layoffs actually hurt companies’ profits due to lower morale, a loss of momentum, and other factors, such as one in 2001 by Watson Wyatt Worldwide, a Washington, D.C.-based consulting firm. 22

     Support unions, even though they are not perfect themselves but were better than nothing. Demonstrate. Go on strike. File employment discrimination claims with government agencies. Boycott companies like Citigroup that make obscene profits while laying off employees. In short, do whatever you can to make the bigwigs feel your pain and perhaps think twice about laying others off just to make a few more bucks in the future.

     In my daydreams, I see myself taking a page from Michael Moore, the populist film maker of Bowling for Columbine and Roger and Me, who dogged former General Motors Chairman Roger Smith after GM closed plants and laid off thousands of workers in Moore’s native town of Flint, Mich., in the 1980s, despite GM continuing to make billions in profits. I see myself bursting into my former company’s shareholders meetings and firing questions about the layoffs at stunned executives.

     Shortly after my layoff, my wife actually had a nocturnal dream about her and me and others doing just that at a meeting of my former company and causing a big stink - things were really getting weird when your spouse had dreams about your former workplace. In her wild dream, Bush happened to be there and offered to help place a story I wrote in a national newspaper or magazine. I turned down Bush’s help on principle, figuratively telling him to shove it before I walked off.

     It was only a dream, but what the hell, the scenario sounded good to me. One of these days.......

Footnotes

1. U.S. Department of Labor’s Bureau of Labor Statistics Web site, Jan. 2004, http://stats.bls.gov/
2. U.S. Department of Labor’s Bureau of Labor Statistics news release, Jan. 9, 2004, http://stats.bls.gov/news.release/empsit.nr0.htm
3. Reuters, Dec. 6, 2003, http://in.news.yahoo.com/031205/137/2a7bl.html
4. U.S. Rep. Elijah Cummings news release, Dec. 5, 2003, http://www.house.gov/cummings/cbc/cbcpress/2003dec5a.htm
5. Akron Beacon Journal, Sept. 19, 2003, http://www.ohio.com/mld/ohio/business/6809003.htm
6. U.S. Department of Labor’s Bureau of Labor Statistics news release, Jan. 9, 2004, http://stats.bls.gov/news.release/empsit.nr0.htm
7. It’s difficult to obtain an exact number of layoffs. The U.S. Department of Labor only tracks the number of layoffs where 50 or more occur at a single time - there could be many more smaller job cuts. The DOL also has not been tracking layoffs for long, although it has tracked unemployment figures for many years, which can include workers who left their jobs for other reasons than a layoff. Chicago-based outplacement firm Challenger Gray & Christmas only tracks corporate announcements - many smaller firms don’t announce layoffs and government agencies also cut jobs. Challenger has only tracked such layoffs since 1993, and the 2001 number was almost three times as many as the previous record of 677,795 in 1998. Sources for the layoff numbers found: U.S. Department of Labor news release, Jan. 29, 2002, http://stats.bls.gov/news.release/mmls.nr0.htm; MSNBC, Jan. 2002, http://stacks.msnbc.com/news/681276.asp?cp1=1#BODY; Newsbytes.com, Jan. 2002, http://www.newsbytes.com/news/02/173367.html
8. U.S. Department of Labor’s Bureau of Labor Statistics news release, Jan. 9, 2004, http://stats.bls.gov/news.release/empsit.nr0.htm
9. Ibid., http://stats.bls.gov/news.release/empsit.nr0.htm
10. The Austin Chronicle, July 13, 2001, http://www.austinchronicle.com/issues/dispatch/2001-07-13/pols_hightower.html
11. Corporate Web sites, Yahoo Finance Web site, http://finance.yahoo.com/?u
12. Kiplinger.com, Sept. 2001, http://www.kiplinger.com/features/archives/2001/September/managing/hiring.html
13. Media Research Center, March 23, 2001, http://www.mediaresearch.org/cyberalerts/2001/cyb20010323.asp#1
14. BBC, Jan. 12, 2001, http://news.bbc.co.uk/1/hi/business/1114095.stm; Business Week, Sept. 5, 2000, http://www.businessweek.com/bwdaily/dnflash/sep2000/nf2000095_928.htm
15. U.S. House Appropriations Committee report, “Caught on Film: The Bush Credibility Gap,” 2002, http://www.house.gov/appropriations_democrats/caughtonfilm.htm
16. Associated Press, Jan. 3, 2001, http://quest.cjonline.com/stories/010301/gen_0103017590.shtml; Portland Business Journal, March 4, 2002, http://portland.bizjournals.com/portland/stories/2002/03/04/daily16.html
17. Associated Press, Jan. 3, 2001, http://quest.cjonline.com/stories/010301/gen_0103017590.shtml
18. The Center for Public Integrity, Kellogg Brown & Root profile, http://www.publicintegrity.org/wow/bio.aspx?act=pro&ddlC=31
19. Associated Press, Oct. 20, 2003, http://www.newsobserver.com/front/digest/story/2961224p-2715291c.html
20. Reuters, Dec. 5, 2003, http://www.forbes.com/markets/newswire/2003/12/05/rtr1171397.html
21. Timesizing, not Downsizing, http://timesizing.com/
22. Watson Wyatt Worldwide news release, Nov. 14, 2001, http://www.watsonwyatt.com/news/press.asp?ID=9305

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© 2004 Jackson Thoreau