Working In These Times
Trumka ‘Personally Outraged’ by Obama-Backed JOBS Act
WASHINGTON, D.C.—Last month, the AFL-CIO's Executive Council endorsed President Barack Obama for re-election. About a week later, Congress passed the "Jumpstart Our Business Startup," or JOBS Act—a bill backed by President Obama and his Council on Jobs and Competitiveness, and strongly opposed by organized labor. President Obama signed it into law last week.
"President Trumka is personally outraged by the JOBS Act and the implication that this administration thinks that it’s going to be good for the country to re-inflate a stock market bubble," a top AFL-CIO official told In These Times Monday night, speaking only on condition of anonymity.
Developed by the Jobs Council—the chair of which, GE CEO Jeffrey Immelt, said late last month he wouldn't endorse anyone for president—the JOBS Act would rollback many of the measures enacted to protect investors and stockholders in the wake of the dot.com bubble and Enron scandal. It would allow companies with less than $1 billion in assets called “emerging growth companies” (like tech start-ups) to not provide audited financial statement for five years after going public. Among other things, It would also weaken rules barring research analysts working for firms that could gain from the sale of a stock to promote the stocks of these “emerging growth companies,” a practice previously disallowed.
Trumka was so outraged with the prospect of the JOBS Act passing that he and other major union leaders insisted on issuing a statement condemning the bill during the AFL-CIO Executive Council meeting's agenda last month in Florida (where the organization endorsed the president), even though the issue wasn't on the agenda. The labor leaders wrote:
America needs jobs. Yet Congress cannot enact such basic legislation as the reauthorization of the Surface Transportation Bill that would create hundreds of thousands of jobs. Instead, this week Congress once again is looking to deregulate Wall Street—this time in the form of the cynically named JOBS Act, which would weaken the ability of the Securities and Exchange Commission to regulate our capital markets and allow companies to sell stock to the public without providing three years of audited financial statements, without having adequate internal controls and without complying with key corporate governance reforms in the recently passed Dodd-Frank Act.
The AFL-CIO wasn't alone in opposing the JOBS Act. SEC Commissioner Mary Shapiro wrote in a letter to the Senate Banking Committee that the deregulation provisions in the JOBS Act could cause "real and significant damage." Democratic House Minority Leader Nancy Pelosi said the amount of jobs created by the bill would be “meager."
But the bill was pushed so hard by President Obama that an aide to Senate Majority Leader Harry Reid (D-Nev.), told the Huffington Post that “his boss called the White House to complain, saying the aggressive White House support had hampered Reid's ability to improve the bill, putting him in a bind with Democrats who didn't like the legislation and forcing him to choose between his loyalty to Obama and the commitments he had already made to interest groups.”
As a result of the president’s strong support , the bill passed the Senate by a bipartisan vote of 73- 26.
“America’s high-growth entrepreneurs and small businesses play a vital role in creating jobs and growing the economy,” President Obama said. “I’m pleased Congress took bipartisan action to pass this bill. These proposals will help entrepreneurs raise the capital they need to put Americans back to work and create an economy that’s built to last."
AFL-CIO President Richard Trumka had a very different reaction.
“We are disappointed – and angry – that despite warnings from current and former financial markets regulators, law professors, institutional investors and consumer advocates, 73 senators voted for the cynically named “JOBS Act,” Trumka said. “This is a vote against investors in the real economy and for Wall Street speculators. When the next bubble bursts, Americans will know who to blame.”
The JOBS Act was the third example in as many months of new legislation or regulatory action opposed by organized labor that President Obama supports. The others include a Federal Aviation Administration bill that makes it more difficult for airline workers to unionize and a more recent push proposed by Obama’s Department of Agriculture to privatize poultry inspection.
With top GOP presidential candidates including presumptive nominee Mitt Romney blasting unions and calling for national "right to work" laws, organized labor, unlike corporations, has essentially no choice but to support Democratic candidates during this election year.
Business, on the other hand, can go either way. GE's Immelt, despite working closely with Obama during the last few years, won't be endorsing anyone for president. But other deep-pocketed CEOs might—and wooing them might have something to do with why the president pushed hard for the JOBS Act despite the vocal opposition of America's labor movement.