Obama Comes to MI to Celebrate Korean Technology

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Let me start by saying I’m thrilled the Obama Administration has focused stimulus and energy efficiency funds to support a number of new battery plants in and around Michigan. For all my complaints about the Obama Administration, it has used the auto bailout as an opportunity to support new technology for the auto industry. But I think Obama’s upcoming visit to Holland, MI (Crazy Pete’s hometown in West Michigan) to attend the ground-breaking of a new LG Chem-Compact Power battery factory offers a bittersweet lesson.

South Korea-based LG Chem is building the $300-million, 650,000-square-foot battery plant in Holland that is set to start operating in 2012. LG Chem and its Troy-based subsidiary Compact Power are behind the battery system to power the Chevrolet Volt, the nation’s first mass-market extended range plug-in electric vehicle, which will launch later this year.

LG Chem has received $151.4 million in grants from the Department of Energy for its Holland plant.

The factory, which will be able to make 15 million to 20 million battery cells a year, is one of at least five battery plants built in Michigan. Johnson Controls, through its joint venture with French battery company Saft, also is converting one of its existing factories in Holland into a lithium-ion battery plant.

No details were immediately released about the timing of the event and whether it will be open to the public.

The government has distributed more than $2 billion in grant money to advanced battery manufacturing to create a base for high-tech battery making in the United States.

Today, most of the world’s advanced batteries come from Korea, Japan and China.

Last month, the groundbreaking of Dow Kokam’s advanced battery plant in Midland attracted Vice President Joe Biden.

The preliminary coverage of the event has noted how unusual it is for a President to attend the groundbreaking for what is effectively a foreign firm. (h/t Leen) Yet no one–at least as far as I’ve seen–has faulted the White House decision to attend. That’s because, here in MI, we’re desperate for the jobs. And even those outside of MI point to battery technology as one of the many technologies in which the US lags–at its great cost.

There’s even a big benefit to the auto industry: in my meetings with GM on the Volt, they told me they’ll save $200 per car in battery shipping costs once they can source locally. It’s one of the places GM anticipates beginning, over time, to bring production costs down so the Volt and related follow-on cars will one day be profitable.

But the opening of these battery factories in the US should be read in tandem with this excellent article from Intel founder Andy Grove.

Grove’s article focuses on our inability to scale new technologies.

Clearly, the great Silicon Valley innovation machine hasn’t been creating many jobs of late — unless you are counting Asia, where American technology companies have been adding jobs like mad for years.

The underlying problem isn’t simply lower Asian costs. It’s our own misplaced faith in the power of startups to create U.S. jobs. Americans love the idea of the guys in the garage inventing something that changes the world. New York Times columnist Thomas L. Friedman recently encapsulated this view in a piece called “Start-Ups, Not Bailouts.” His argument: Let tired old companies that do commodity manufacturing die if they have to. If Washington really wants to create jobs, he wrote, it should back startups.

Mythical Moment

Friedman is wrong. Startups are a wonderful thing, but they cannot by themselves increase tech employment. Equally important is what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter.

The scaling process is no longer happening in the U.S. And as long as that’s the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs.

Grove uses advanced battery technology as one example to show the problem with shipping all US manufacturing overseas because it no longer invests in scaling up new technologies. When we shipped our electronics production overseas, we shipped with it the evolving technology tied to it, which eventually included the all-important battery technology. Read more →

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Bob Corker Kills the Catfood Commission

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The catfood commission (aka Obama’s deficit commission) is dead.

Well, it must be, right?

After all, that great figure of Beltway-corporatism-posing-as-moderation, Bob Corker, has decreed that we shall pass no legislation during a post election lame duck session.

Corker called on House Speaker Nancy Pelosi (Calif.) and Senate Majority Leader Harry Reid (Nev.), the Democratic leaders in their respective chambers, to make a similar pledge.

“I think for Harry Reid and Nancy Pelosi to say the same thing — that they’re not going to try to use the lame-duck session as a place to do things that otherwise would not pass,” he said. “That type of thinking, that concern about … cap-and-trade and other types of policies just feeds into this whole unpredictability issue, the issue of what’s going to happen in Washington. We need to move away from that uncertainty.”

And that’s precisely when the Obama Administration plans to implement the catfood commission’s cuts on social security.

White House officials are working closely with the president’s new fiscal commission in the hope that the bipartisan commissions final report will provide Republican cover for the deal. The commission, due to report by December 1, needs fourteen out of its eighteen members to make an official recommendation. One hope of the deficit hawks is that a super-majority report could steamroll a lame duck session of Congress to act quickly, pending a more Republican Congress in January.

If someone like Corker won’t play along with the plan to cut social security, then it’s unlikely to get the mix of Republicans and deficit hawk Democrats they’ll need to pass the Commission recommendations.

So long as Corker keeps his word, then, about opposition to moving big legislation during the lame duck session, then social security should be safe.

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One Percent of All Americans Will Have Lost Unemployment by Month’s End

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More than one percent of all Americans–3.3 million people–will have lost their unemployment benefits by month’s end if Congress doesn’t pass an extension of long-term benefits.

The Labor Department estimates that about 1.7 million have lost benefits as of last week, after extended unemployment insurance expired in late May. Those numbers could reach 3.3 million by the end of the month if Congress doesn’t pass an extension after it returns from recess next week.

[snip]

A bigger concern is the number of people who may lose benefits this month. The tally of people continuing to claim benefits plunged to 4.4 million, the department said. But that doesn’t include an additional 4.6 million people who received extended benefits paid for by the federal government in the week that ended June 19. That’s the latest period for which data are available.

Diane Swonk, chief economist at Mesirow Financial, said many people losing extended unemployment may seek aid through Social Security, food stamps and welfare.

Other economists noted that the end of extended benefits could cut Americans’ incomes by as much as $41 billion, potentially reducing consumer spending in the coming months.

Think about that for a minute. More than one out of every hundred people has been unemployed for so long the Republicans and deficit hawks in Congress think they’re just slacking and should be cut off. Of course, those one out of every hundred people aren’t evenly distributed throughout the population: the less educated, people of color, and people over 50 are suffering disproportionately during this recession.

Nevertheless, they represent a huge chunk of our neighbors, our customers, our family members. And our country seems to have decided they and those who depend on them are expendable.

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Feed the Generals Catfood, Too

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I had a bit of fun with Michael O’Hanlon on Tuesday. At the America’s Future Now conference, he was pitted against Juan Cole in a debate over the future of our Afghan war. I took the first question to note that we weren’t just facing a choice between escalating in Afghanistan (O’Hanlon’s position) or maintaining the status quo (Cole’s position). We also faced a choice between escalating in Afghanistan and doing something about our 10% unemployment rate.

O’Hanlon responded by explaining how much longer he thought the surge of troops needed to remain in Afghanistan.

To his credit, when I noted that by defunding schools, we’re creating a much bigger national security problem than Afghanistan, he said we shouldn’t have to choose (while admitting that politics in DC meant we would have to do so).

Finally, someone in DC–Barney Frank–is making a similar argument in concrete form.

A panel commissioned by Rep. Barney Frank (D-Mass.) is recommending nearly $1 trillion in cuts to the Pentagon’s budget during the next 10 years.

The Sustainable Defense Task Force, a commission of scholars from a broad ideological spectrum appointed by Frank, the House Financial Services Committee chairman, laid out actions the government could take that could save as much as $960 billion between 2011 and 2020.

[snip]

The acceptance of the recommendations would depend on a “philosophical change” and a “redefinition of the strategy,” Frank said at press conference on Capitol Hill.

He said the creation of the deficit reduction commission offers the best opportunity for the reduction recommendations. Frank wants to convince his colleagues to write to the deficit reduction commission and warn that they would not approve any of the plans suggested by the commission unless reduction of military spending is included.

Now, Frank’s committee’s recommendations are actually not the defense equivalent of cat food. They involve cutting things like the F35 we have no use as anything but a jobs program.

But it’s something we may well have to sell as a national security issue. The effects of the recession (and a decade of Norquist-inspired bathtub shrinking) really are forcing us to cut education. That’s something the federal government could prevent. So it’s high time we invested in our base-level national competency before yet another set of military toys.

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The National Security Strategy

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In this thread, a couple of us starting talking about word counts for the National Security Strategy. So I decided to put together a word map of the document for our fun and enlightenment. Click the image to enlarge it.

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Cutting Social Security in the Name of National Security

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As a number of people have observed, the National Security Strategy Obama released last week prioritizes the economic vitality of the US as one source of security. Much of this discussion places a predictable focus on trade, technology, and education. But I was shocked by the almost mindless privileging on deficit reduction in the document.

For example, the overview paragraph that introduces the importance of our economic health puts reducing the deficit on par with education, science, energy, and health care.

At the center of our efforts is a commitment to renew our economy, which serves as the wellspring of American power. The American people are now emerging from the most devastating recession that we have faced since the Great Depression. As we continue to act to ensure that our recovery is broad and sustained, we are also laying the foundation for the long term growth of our economy and competitiveness of our citizens. The investments that we have made in recovery are a part of a broader effort that will contribute to our strength: by providing a quality education for our children; enhancing science and innovation; transforming our energy economy to power new jobs and industries; lowering the cost of health care for our people and businesses; and reducing the Federal deficit. [my emphasis]

The paragraph immediately following tries to connect all of these ideas directly with security. Yet its explanation for the importance of deficit reduction is so vague as to be meaningless.

Each of these steps will sustain America’s ability to lead in a world where economic power and individual opportunity are more diffuse. These efforts are also tied to our commitment to secure a more resilient nation. Our recovery includes rebuilding an infrastructure that will be more secure and reliable in the face of terrorist threats and natural disasters. Our focus on education and science can ensure that the breakthroughs of tomorrow take place in the United States. Our development of new sources of energy will reduce our dependence on foreign oil. Our commitment to deficit reduction will discipline us to make hard choices, and to avoid overreach. These steps complement our efforts to integrate homeland security with national security; including seamless coordination among Federal, state, and local governments to prevent, protect against, and respond to threats and natural disasters. [my emphasis]

We don’t get any better explanation of the importance of deficit reduction in the paragraphs dedicated to economic issues later in the document. The NSS first claims that deficit reduction, along with an emphasis on savings and reforming our financial system, will be all that it takes to make the US economy more export-driven–a claim that ignores a number of the reasons we’ve become less competitive internationally.

Save More And Export More: Striking a better balance at home means saving more and spending less, reforming our financial system, and reducing our long-term budget deficit. With those changes, we will see a greater emphasis on exports that we can build, produce, and sell all over the world, with the goal of doubling U.S. exports by 2014. This is ultimately an employment strategy, because higher exports will support millions of well-paying American jobs, including those that service innovative and profitable new technologies. As a part of that effort, we are reforming our export controls consistent with our national security imperatives.

And then it throws in a paragraph dedicated to deficit reduction which offers little to explain why that–rather than a range of other actions–is so central to our national security (though it does make it pretty clear this deficit reduction won’t focus on military spending).

Reduce the Deficit: We cannot grow our economy in the long term unless we put the United States back on a sustainable fiscal path. To begin this effort, the Administration has proposed a 3-year freeze in nonsecurity discretionary spending, a new fee on the largest financial services companies to recoup taxpayer losses for the Troubled Asset Relief Program (TARP), and the closing of tax loopholes and unnecessary subsidies. The Administration has created a bipartisan fiscal commission to suggest further steps for medium-term deficit reduction and will work for fiscally responsible health insurance reform that will bring down the rate of growth in health care costs, a key driver of the country’s fiscal future.

The thing is, there are a number of economically-related issues that are more closely connected with our national security yet receive inadequate attention, in some cases because doing so would conflict with the ideology of the deficit hawks.

Manufacturing: For example, there is absolutely no discussion of the role of manufacturing in national security. The NSS sees investing in science, technology, engineering, and math education as one means to keep American competitive technologically. It calls for federal investment in science research. But it neglects the way in which manufacturing turns this know-how into capacity that has always been central to US dominance. At a time when we risk losing key capacities to make our nifty war toys because of the decline in manufacturing, this silence is particularly troubling. But rebuilding our manufacturing capacity takes more than investment in basic science; it requires a concerted strategy to help the US compete with the mercantilist economies that increasingly dominate manufacturing.

Real Financial Reform: While the NSS–as the fourth blockquote above makes clear–pays lip service to reforming our financial system, it never explicitly acknowledges that this must mean more than restoring stability. It must also incent investment in productive capacity rather than bubbles. And the Administration has repeatedly stopped far short of such reforms. Indeed, the Administration has pointedly avoided doing the things that might return our economy to making things again, rather than encouraging finance as a key driver of economic growth.

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The House Always Wins

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Why hasn’t there been more discussion about this article?

It is the Wall Street equivalent of a perfect game of baseball — 27 up, 27 down, the final score measured in millions of dollars a day.

Despite the running unease in world markets, four giants of American finance managed to make money from trading every single day during the first three months of the year.

Their remarkable 61-day streak is one for the record books. Perfect trading quarters on Wall Street are about as rare as perfect games in Major League Baseball. On Sunday, Dallas Braden of the Oakland Athletics pitched what was only the 19th perfect game in baseball history.

But Bank of America, Citigroup, Goldman Sachs and JPMorgan Chase & Company produced the equivalent of four perfect games during the first quarter. Each one finished the period without losing money for even one day.

I realize we’re used to the Masters of the Universe “beating” “the odds” on “the market.”

But don’t we expect that they’ll maintain the illusion that the game isn’t rigged? In other casinos, after all, someone has to make it big on the slot machines every once in a while to get others to keep coming back.

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Pew: 70% Experienced Significant Financial Issue

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Jeebus. Found these numbers via Susie.

70% of those surveyed by Pew have either had someone in their household looking for work, had their hours/wages cut, or had problems paying significant bills.

70%.

I’m writing this from the Clusterfuck State, and that number is astounding even to me.

No wonder incumbents are going to get creamed in November.

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BP Oil Slick The Result Of Republican DOJ And Regulatory Policy

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The economic and environmental damage resulting from the exploding fireball compromise of the Deepwater Horizon oil platform may be unprecedented, with the potential to emit the equivalent of up to four Exxon Valdez breakups per week with no good plan to stop it. There will be plenty of finger pointing among BP, Transocean and Halliburton, while it appears the bought and paid for corporatist Congress put the screws to the individual citizens and small businesses by drastically limiting their potential for economic recovery; all in the course of insuring big oil producers like BP have effectively no damage liability for such losses.

How did this happen? There are, of course, a lot of pertinent factors but, by far, the one constant theme underlying all is the mendacious corporate servitude of the Republican party, their leaders and policies. The arrogance and recklessness of BP and its oily partners gestated wildly under the Bush/Cheney administration.

Until the turn of the decade, BP had a relatively decent safety and environmental record compared to others similarly situated. Then BP merged with American oil giant Amoco and started plying the soft regulated underbelly of Republican rule in the US under oil men George Bush and Dick Cheney. Here from the Project On Government Oversight (POGO) is an excellent list of BP misconduct, almost all occurring and/or whitewashed under the Bush/Cheney Administration. If you open the door, foxes eat the chickens.

But it is not just regulatory policy behind the open and notorious recklessness of BP and its ilk, it is intentional policy at the Department of Justice as well. Here is how the former Special Agent In Charge for the EPA Criminal Investigative Division, Scott West, described the DOJ coddling of BP under the Bush/Cheney Administration:

In March 2006, a major pipeline leak went undetected for days, spilling a quarter-million gallons of oil on the Alaskan tundra. The spill occurred because the pipeline operator, British Petroleum (BP), ignored its own workers warnings by neglecting critical maintenance to cut costs. The spill sparked congressional hearings and a large federal-state investigation. Despite the outcry, in a settlement announced in late October 2007, BP agreed to one misdemeanor charge carrying three-year probation and a total of only $20 million in penalties (a $12 million fine with $8 million in restitution and compensatory payments).

The settlement resulted from a sudden U.S. Justice Department August 2007 decision to wrap up the case, according to West. That precipitous shutdown meant Read more →

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Top Journalist’s Husband Argues People Are Too Stupid for Debate

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Hopefully, you’ve already seem Ryan Grim’s explosive report on how, in 2004, Alan Greenspan argued the Fed should keep worries about a growing housing bubble secret because the chumps buying the houses were too stupid to engage in a debate about whether there was a bubble or not.

As top Federal Reserve officials debated whether there was a housing bubble and what to do about it, then-Chairman Alan Greenspan argued that the dissent should be kept secret so that the Fed wouldn’t lose control of the debate to people less well-informed than themselves.

“We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand,” Greenspan said, according to the transcripts of a March 2004 meeting.

As you read the entire story, note carefully Grim’s description of what appears in the transcript, but not the minutes.

Aside from outrage about Greenspan’s arrogant view and the missed opportunity to pop the bubble before it decimated our economy and millions of lives, I’m particularly interested in whether or not Greenspan ever shared this with his wife, Andrea Mitchell (who has been defending Wall Street pretty aggressively even as the rest of the press begins to sour on the Banksters). That is, did Alan Greenspan share the news that Atlanta Fed then-President Jack Guynn worried about overbuilding and speculation with Mitchell? In which case, Mitchell would be complicit in hiding this information from NBC’s viewers.

Or did he keep this secret from even his wife, on the grounds that he considers her too stupid to understand it all, and telling her would induce her and her viewers to join in the debate about the housing bubble?

Greenspan’s position is unforgivable coming from anyone playing with our economy and people’s lives, as he was. But it’s all the more curious coming from a guy married to one of the smarter DC reporters who presumably has a firm belief in the importance of the news and an ability to present a balanced report on concerns about speculation in the housing market.

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