September 23, 2004


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    September 23, 2004

    Deal in Congress to Keep Tax Cuts, Widening Deficit

    By EDMUND L. ANDREWS





    WASHINGTON, Sept. 22 - Putting aside efforts to control the federal deficit before the elections, Republican and Democratic leaders agreed Wednesday to extend $145 billion worth of tax cuts sought by President Bush without trying to pay for them.


    At a House-Senate conference committee, Democratic lawmakers abandoned efforts to pay for the measures by either imposing a surcharge on wealthy families or closing corporate tax shelters.


    "I wish we could pay for them, but this is a political problem and we have people up for re-election,'' said Representative Charles B. Rangel of New York, the senior Democrat on the House Ways and Means Committee. "If you have to explain that you voted for these tax cuts because they benefit the middle class and against them because of the deficit, you've got a problem.''


    Fearful of being attacked as supporters of higher taxes, Democrats said they would go along with an unpaid five-year extension of the $1,000 child tax credit; a four-year extension of tax breaks intended to reduce the so-called marriage penalty on two-income families; and a six-year extension of a provision that allowed more people to qualify for the lowest tax rate of 10 percent.


    Even as they pushed for the cuts that will add to the federal budget deficit, House Republican lawmakers said Wednesday that they hoped to have a vote soon on a constitutional amendment that would require the government to balance the budget by 2010, except if the country is at war.


    That proposed amendment has no chance of becoming law, but it would conflict with even the Bush administration's rosiest goals for reducing the deficit, which is expected to hit $420 billion this year, a record. Mr. Bush has promised only to cut the deficit in half by 2009.


    Approval of the tax cut package is a significant victory for Mr. Bush, who champions the extension of the cuts at every campaign stop but whose wishes had been thwarted by Democrats and a handful of Republican moderates in the Senate.


    As recently as July, the moderates demanded that such tax cuts be paid for either with budget cuts or with higher taxes in other areas. By teaming up with Democrats, the Republican moderates prevented their own party leaders and the Bush administration from getting their way.


    But with the election nearing, Congressional Democrats said they would not let themselves be branded as supporters of tax increases, which would occur if the expiring provisions were not renewed.


    Senator John Kerry, their party's presidential nominee, has said he supports extension of the tax reductions, though he would roll back Mr. Bush's tax cuts for the top 2 percent of income earners, families with annual incomes above $200,000.


    Senator Tom Daschle of South Dakota, the Senate Democratic leader, announced this week that he would support a five-year extension of the cuts even if they were not paid for.


    With Democrats capitulating to the Republican majorities in both the House and Senate, the handful of Republican holdouts have quietly surrendered as well.


    The Republican rebels - Senators John McCain of Arizona, Lincoln Chafee of Rhode Island and Olympia J. Snowe and Susan Collins of Maine - infuriated Mr. Bush and many Republican leaders. But their ability to block action evaporated without the votes of Democrats.


    The result of the reversal on the part of the Democrats and the Republican moderates is likely to be a tax measure that will last longer and increase federal deficits more than a two-year extension that Republican Senate leaders offered this summer. The nonpartisan Congressional Budget Office has estimated that debt will climb by $2.3 trillion over the next 10 years, and that making all Mr. Bush's tax cuts permanent would cost an additional $1.9 trillion by the end of 2014.


    In the conference committee, House and Senate Republicans added about $13 billion worth of business tax breaks, the biggest of which was a renewal of the investment tax credit for research and development.


    House Republican conferees also rejected a proposed amendment by Senator Blanche Lincoln, Democrat of Arkansas, that would expand the number of poor families eligible for a refundable child tax credit. That measure would have cost $7 billion over 10 years.


    According to studies by Democrats on the Joint Economic Committee, four million low-income families will have reduced benefits from the child tax credit if the law is unchanged.


    "These are working people we are trying to help," Senator Lincoln said, adding, "The higher-income taxpayers get enormous benefits from the tax code."


    At issue in the case of the child tax credit was the extent to which it should be made available as a refundable payment to low-income families that have no federal tax liability.


    To save money in last year's tax bill, Republican lawmakers decided to offer a refundable tax credit to families that earn at least $10,000. But that still left many poor families ineligible, and those numbers would increase because the current law raises the minimum income threshold each year in line with inflation.


    "The tax credit is for taxpayers,'' said Senator Don Nickles, Republican of Oklahoma. "If you want to change the welfare system, then change the welfare system.''




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September 20, 2004


  • September 20, 2004

    Californians to Vote on Spending $3 Billion on Stem Cell Research


    By JOHN M. BRODER and ANDREW POLLACK





    LOS ANGELES, Sept. 19 - The federal government spent $25 million last year on studies involving human embryonic stem cells. But California, in an act of political and scientific rebellion against limits on stem cell research imposed by the Bush White House, may be on the verge of spending $300 million a year in each of the next 10 years on such research.


    A coalition of Hollywood producers and actors, technology billionaires, scientists, patient advocates and business organizations - including Michael J. Fox and Bill Gates - has marshaled emotion, scientific argument and money to underwrite a state ballot proposal that would let Californians make the decision. The initiative on the Nov. 2 ballot, known as Proposition 71, would authorize the state to issue $3 billion in bonds to pay for a range of stem cell research. This promising but ethically controversial field of biomedical research is now severely limited by the Bush administration's policy restricting public money for research on embryonic stem cells.


    Others are also moving to facilitate more stem cell research. Gov. James E. McGreevey of New Jersey signed legislation in May to establish a state-supported stem cell research facility, and researchers at Harvard are raising millions of dollars for a stem cell institute.


    But the California initiative would create by far the largest state-run scientific research effort in the country and make California a global center of stem cell research, on par with Singapore, Israel, South Korea and the United Kingdom, which have moved aggressively in the field since the late 1990's.


    Critics say the initiative would be a publicly financed windfall for pharmaceutical and biotechnology companies, while repaying little to the taxpayers. They expect to be outspent by at least 20 to 1 by supporters of the initiative and add that the state cannot afford $3 billion in new debt when it is reducing spending on education, health care and public safety.


    Gov. Arnold Schwarzenegger has said that he supports stem cell research in principle but has not announced a position on the initiative.


    The public appears to be about evenly split, though it has not yet been exposed to an expected barrage of television advertising featuring testimonials from scientists, celebrities and those suffering from diseases, including Alzheimer's, Parkinson's and diabetes, that might be treated by therapies derived from stem cells.


    Backers of the measure include celebrities like Mr. Fox, who has Parkinson's disease, and Christopher Reeve, who was paralyzed in a riding accident. It is also supported by dozens of elected officials, 22 Nobel laureates, 50 patient advocacy groups and several business organizations.


    George P. Shultz, a Republican and a former secretary of state under President Ronald Reagan, and the California Chamber of Commerce support it, as do California's senators and more than half of its Congressional delegation. Mr. Reagan died in June after a long battle with Alzheimer's, but his widow, Nancy, and their son, Ron Reagan, have not taken a stand on the measure, though they have made clear their support for stem cell research in the past.


    Supporters have already raised nearly $15 million, with some donors giving more than $1 million.


    Among the major contributors are Pierre M. Omidyar, the founder of eBay, who with his wife, Pamela, has given more than $2 million; Mr. Gates, the founder of Microsoft, who gave $400,000; William K. Bowes Jr., a founder of Amgen, who contributed $1.3 million in company stock; Senator Jon S. Corzine, Democrat of New Jersey, who gave $100,000; and John Doerr, the Silicon Valley venture capitalist, who contributed $974,000. The Juvenile Diabetes Research Foundation has contributed $1 million to the committee sponsoring the initiative.


    Robert N. Klein, a Palo Alto real estate developer, is leading the effort to pass the measure and has contributed more than $2 million. Mr. Klein's 14-year-old son has juvenile diabetes, and his mother has Alzheimer's.


    "We are on the edge of one of the great watershed medical discoveries in history," Mr. Klein said. Half of California's families are affected by one or more of the 70 diseases or conditions that could respond to stem cell therapies, he said, and the research could significantly reduce the $110 billion spent on health care in the state each year. In his view, California has the research infrastructure and the financial ability to support this venture.


    "We have more than 50 percent of the biotech capacity in the United States and more than most other countries," he said. "We can run a substitute national program."


    Opponents have raised about $150,000, much of it from the state and national Catholic Church and from Howard Ahmanson Jr., a conservative businessman from Orange County. They oppose the research because it destroys embryos and because some believe it leads down a slippery slope to human cloning.


    "I'd say we were David going up against Goliath," said Wayne C. Johnson, a Republican consultant in Sacramento who is coordinator of the effort opposing the proposal, "but David had five smooth stones, and we don't have that yet."


    The debate over embryonic stem cell research is among the most difficult in politics and science. Many scientists and patient advocacy groups believe these cells, which are the basic building blocks of the body from which the organs and other cells develop, can yield therapies and cures for diseases that affect as many as 125 million Americans.


    But to develop the self-perpetuating colonies of stem cells, researchers must destroy human embryos, an act that is abhorrent to some religious conservatives and opponents of abortion, an important part of the Republican Party's base.


    The California initiative emphasizes financing for embryonic stem cell research, but also provides money for adult stem cell research and specifically prohibits spending on human cloning.


    Despite the proponents' advantages in money and endorsements, the public remains skeptical and, at this point, divided along partisan lines, according to a Field Poll published in August. The survey showed 45 percent of California voters favoring the stem cell initiative and 42 percent against it. Democrats favor it by 2 to 1, while Republicans oppose it by a comparable margin. However, only 40 percent of the respondents said they knew much about the proposal.


    Mr. Johnson said there were numerous arguments against the proposition, beyond the moral objections. California is already heavily indebted and is having trouble meeting its day-to-day expenses. He also said that the measure contained insufficient ethical safeguards and could lead to profiteering by venture capitalists and biotechnology interests.


    The measure would give the governor and the Legislature virtually no power to direct or oversee spending. "There's no guarantee that one dime goes to the public," Mr. Johnson said. "It's an absolutely no-strings-attached gift of $3 billion."


    He also said that the measure devoted a lot of money to a scientific field that was still in its infancy, while giving nothing to other, more mature medical technologies. The National Institutes of Health spent $24.8 million on research involving human embryonic stem cells and $190.7 million on human adult stem cell research in fiscal year 2003, a spokeswoman said. The institutes' entire budget that year was about $27 billion.


    Backers of the plan dismissed all these points, saying there were stringent rules in the proposal to ensure that the research was conducted under federal ethics guidelines and that royalties were paid to the state. The plan also calls for a 29-member commission to review grants and report annually to the Legislature.


    The committee promoting the plan released a study last week that said the measure would pay for itself in lower health care costs and higher income and sales tax revenues. The study, financed by the initiative's proponents, also predicted that the research would generate $537 million to $1.1 billion in royalties to the state over the next 35 years.


    Some scientists said they hoped the initiative would set off a chain reaction in other states and, at the least, make embryonic stem cell research more acceptable.


    "It changes the community's perception of the value of the work," said Dr. Steven A. Goldman, chief of cell and gene therapy at the University of Rochester Medical Center, of the prospect of the plan's passage.


    Backers of Proposition 71 say that the stem cell research could also spawn a big industry in California because new discoveries will lead to new companies.


    Some point to genetic engineering, which was developed in the 1970's by scientists at Stanford and the University of California at San Francisco. One of those scientists helped found Genentech, the first company to exploit that technology. Genentech is now one of the world's biggest biotechnology companies, and hundreds of other biotechnology companies are based in California.


    Still, whether this happens with stem cells depends to some extent on whether the technology proves commercially useful. Venture capitalists have been reluctant to invest much in the field directly because the potential payoff is years away.


    Yet venture capitalists are among the biggest donors to the Proposition 71 campaign. Critics contend that private investors are supporting the initiative in the hopes of getting the public to pay for the research until it is ready for commercial application.


    Joseph S. Lacob, a partner at the Menlo Park, Calif., venture capital firm Kleiner Perkins Caufield & Byers, gave $500,000, even though he said he did not expect any immediate commercial profit from the work. Mr. Lacob said he was a Republican who voted for President Bush in 2000, but he said he was angry that the president had shut down what he considered a promising avenue of research.


    "This country is falling behind because of an administration directive that I think is totally in error," Mr. Lacob said. "I felt something had to be done to send a message to the Bush administration and the world that the United States and particularly California is going to take a leadership role."


     


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  • September 20, 2004

    Difficult Choices at Airline Unions


    By MICHELINE MAYNARD





    Leonard Robinson, who put in 30 years as a mechanic at Pan American World Airways, has a message for his counterparts at US Airways, Delta, United and other struggling airlines pressing their workers for concessions: do not wait until it is too late.


    "Negotiate. Just negotiate," Mr. Robinson said. Pan Am had more than 26,000 workers in its last full year of operation in 1990. All those jobs were lost when the carrier shut down on Dec. 1, 1991. "They should give up something" if it will save their jobs, Mr. Robinson, 74, from Brooklyn, said.


    But David Garriga, who was laid off in 2001, after Trans World Airlines went bankrupt and was absorbed by American, said he did not regret fighting the constant rounds of concessions that T.W.A. management sought. Even though he has not worked since, he said the unions had no other choice. "It got to the point where we said, 'We're not going to give back and take away any more,' " said Mr. Garriga, 53, of Valley Stream, N.Y.


    Therein lies the conundrum that union workers at the major airlines face, none more so than those at US Airways, which filed for bankruptcy protection for a second time on Sept. 12, after its employees refused to grant $800 million in wage and benefit cuts, the third round of cuts sought by the company. Including US Airways, along with United Airlines, which has been in bankruptcy since December 2002, and Delta Air Lines, which is threatening to seek court protection, more than 100,000 airline workers face uncertainty about their futures. If all three companies fail, which analysts say is unlikely, that would wipe out more jobs than the 110,000 lost after the Sept. 11, 2001, attacks.


    If the employees give in, as Mr. Robinson counseled, they may see their jobs vanish anyway. But once those jobs went, they might never find anything, like Mr. Garriga, and surely never the kinds of jobs they once held, for the industry has fundamentally changed.


    The recent bankruptcies at US Airways and United demonstrate that companies can face financial distress even when workers cooperate, strengthening the resolve of today's labor groups to resist further cuts.


    Even so, the previous generation's hard-line stance is understandable because airline jobs were once considered tickets to an enviable lifestyle, more flush in some ways than than middle-class families could otherwise enjoy. "People used to say, 'you'll never be a millionaire, but you'll live like one,' " said Peter Cappelli, a management professor at the Wharton School of the University of Pennsylvania.


    That was true for Mr. Robinson and other members of the Pan Am Retirees Association, who held a quarterly meeting last week at a hotel near Kennedy Airport, where many of them once worked.


    Standing near a table with flight bags in Pan Am's distinctive turquoise blue and bumper stickers reading, "Gone But Not Forgotten," Mitchell Jensen, 72, a retired ramp worker from Staten Island, recounted how he saw the world for peanuts as one of the perks of his job.


    Years ago, on the way to India, he sat next to a schoolteacher who boasted of paying only $837 to fly from New York, round-trip. "Can you imagine getting such a good deal?" the woman asked him. Mr. Jensen could: his ticket had cost only the $13 service fee.


    But those days are gone, as are his health care benefits. So is the company stock he received, in lieu of raises during the airline's final 11 years.


    All Mr. Jensen has left is a pension of $832.78 a month, administered by the federal Pension Benefit Guaranty Corporation, which took over the airline's retirement plan when Pan Am went under.


    Bobby Hall, who is in his mid-50's and spent 33 years repairing planes for T.W.A., was not as lucky. He lost his job on Oct. 6, 2001, when American, which assumed T.W.A.'s assets in bankruptcy, laid off thousands of workers. He has not found work since. "The airline field is basically dead right now," said Mr. Hall, of Oceanside, N.Y.


    If US Airways could not survive, it would throw 28,000 more workers, many of them in New York, Philadelphia and Washington, into markets already crowded with former airline employees. The group includes 5,600 flight attendants, 4,800 maintenance workers and 3,200 pilots.


    Some of the earlier crop of airline refugees have joined other companies, including JetBlue, which has hired about 7,000 people since it began flying four years ago. Only about half the JetBlue work force has previous airline experience, however, and most of them are pilots and mechanics with specific job skills.


    That is usually the way airline employees end up, said Professor Cappelli, who has been following the industry since it was deregulated in 1978. "If you're a pilot, you end up as a pilot, although you might bump around a little" from corporate jobs to flying charters or working for delivery companies like FedEx and United Parcel Service, he said.


    Likewise, mechanics young enough to be retrained can sometimes find work in other businesses. But gate agents, flight attendants and baggage workers, whose skills are unique to the airline industry, often are forced to take a step down.


    For some former employees, joining JetBlue, which does not have unions, means losing years of seniority at their old companies, said Vincent Stabile, JetBlue's vice president for human resources.


    "Seniority is so important to them, because it gives you quality of life control," Mr. Stabile said. "It is a tough, emotional thing for them to do without."


    David G. Neeleman, JetBlue's chief executive, said he preferred to have a mix of longtime airline employees and people who were fresh to the industry. "We never have had any problem hiring them from any other airline," Mr. Neeleman said on Friday, including Pan Am, T.W.A., as well as American, United and Delta.


    "What's important to us," Mr. Neeleman said, "is whether they have a good attitude."


    Some employees are grateful for the jobs. Though he works the night shift at J.F.K., Anthony Alexander, 30, showed up at La Guardia Airport on Friday morning for a balloon-strewn ceremony for the start of JetBlue service there.


    Laid off by Midway when it halted service last year, Mr. Alexander earns $12.20 an hour as a lead ramp worker at JetBlue. That is $2.20 an hour more than he made at Midway. Despite the lack of union protection or a traditional pension - JetBlue workers have 401(k) plans - "I'll be there unless they kick me out," he said.


    Former Pan Am workers know that feeling. News that the airline was ceasing operations "was like a shock to my body," said Hope Laredo of Queens, who declined to give her age. Ms. Laredo spent 36 years in the accounts department before she lost her job in 1991. She wound up at the company that made Pan Am's uniforms before retiring a year later.


    Tony Miranda, 36, saw two airlines disappear - T.W.A., where he spent 13 years as a mechanic, and Eastern, where he spent three years as an aircraft painter. He now overhauls planes at Mid-Coast Aviation, a company that services business jets. There, he said, he earns 45 percent less than at T.W.A., with lesser benefits.


    Luckily, he said, his wife has a good job with health care coverage, but there is no chance of expensive colleges for his 16-year-old son. "I told him straight up, unless he gets a scholarship, don't even think about a private college," Mr. Miranda said. Before, "I said the sky was the limit."


    But with more than 110,000 workers laid off by the major airlines after the September 2001 terrorist attacks, on top of the thousands who lost their jobs at the vanished airlines, Mr. Miranda, who lives in St. Louis, said he is lucky to still be in the business.


    "I know pilots making change at the casino, mechanics making pizza and flight attendants who are now waitresses. I know a lot of guys who have just given up," Mr. Miranda said. "They don't event want to touch an airline now."


    Mike Carr, 41, of Hanover Park, Ill., is still at United, where he has spent 18 years as a mechanic. But in the last year, he had to take the overnight shift. He pays $180 a month for medical benefits, which used to be fully paid, and his unit has shrunk to about 650 mechanics from 1,200 before 9/11.


    United, the unit of UAL that has been operating under bankruptcy protection since December 2002, is warning workers that more jobs will be cut, and it is expected to seek more concessions on top of the $2.5 billion a year in cuts won last year.


    Mr. Carr, however, is skeptical about giving more. "Nobody minds making the changes if you think it is going to be worth it," he said.


    But United does not seem to have a strategy "except cutting workers," Mr. Carr said. "Morale is very low."


    Such experiences not only scare away workers on the front line, but deter managers from considering the industry, Professor Cappelli said. "It's not clear any more if this industry is going to get the best and brightest. I don't hear any of my M.B.A.'s saying, 'I want to go to work at an airline,' " he said.


    Still, the former airline workers have sympathy for their counterparts at US Airways, whose chairman, David G. Bronner, warned in August that the airline would probably liquidate if it sought bankruptcy protection, because it was unlikely new investors could be found.


    "I would imagine they are scared and are in the dark, just as the Pan Am employees were," said Nick Lacetera, 53, the former president of the Pan Am credit union who is now in charge of the financial institution that acquired its assets.


    Hearing that US Airways' pilots rejected an effort to vote on concessions "brought back a whole bunch of memories," added Mr. Garriga, the former T.W.A. mechanic. Constantly under threat from management for more givebacks, he said, workers felt, "regardless of whether we close the company, this has got to stop." But such a stance would not serve workers at US Airways, Delta and other airlines well, Mr. Lacetera said. "The reality is that they are going to have to bite the bullet and do what is necessary to survive," he said. "A half of a loaf is better than none."



    Eric L. Dash contributed reporting for this article.


     


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  • September 20, 2004

    Hu Takes Full Power in China as He Gains Control of Military


    By JOSEPH KAHN





    BEIJING, Sept. 19 - China's president, Hu Jintao, replaced Jiang Zemin as the country's military chief and de facto top leader on Sunday, state media announced, completing the first orderly transfer of power in the history of China's Communist Party.


    Mr. Hu, who became Communist Party chief in 2002 and president in 2003, now commands the state, the military and the ruling party. He will set both foreign and domestic policy in the world's most populous country, which now has the world's seventh-largest economy and is rapidly emerging as a great power.


    The transition is a significant victory for Mr. Hu, a relatively unknown product of the Communist Party machine. He has solidified control of China's most powerful posts at a younger age - he is 61 - than any Chinese leader since Mao Zedong, and is now likely to be able govern relatively unimpeded by powerful elders.


    Mr. Jiang's resignation, which surprised many party officials who expected the tenacious elder leader to cling to power for several more years, came after tensions between Mr. Jiang and Mr. Hu began to affect policy making in the one-party state, some officials and political analysts said.


    Mr. Jiang, 78, may be suffering from health problems, several people informed about leadership debates said. But he appeared robust in recent public appearances and was widely described as determined to keep his job - and even expand his authority - until he submitted a letter of resignation this month.


    The leadership transition was announced Sunday in a terse dispatch by the New China News Agency, followed by a 45-minute broadcast on China Central Television. Mr. Jiang and Mr. Hu appeared side by side, smiling, shaking hands and praising each other profusely in front of applauding members of the Central Committee of the Communist Party, which formally accepted Mr. Jiang's resignation and Mr. Hu's promotion at the conclusion of its four-day annual session.


    Mr. Jiang's offer to retire, which was first reported by The New York Times earlier this month, was given no advance publicity in state media. China Central Television read the text of Mr. Jiang's resignation letter on its evening broadcast, emphasizing that his resignation was voluntary. The letter was dated Sept. 1.


    "In consideration of the long-term development of the party's and people's collective endeavors, I have always looked forward to fully retiring from all leadership posts," Mr. Jiang wrote, according to an official transcript of his letter. He said Mr. Hu "is fully qualified to take up this position."


    Even by the strict standards of secrecy within the party, the decision about Mr. Jiang's fate was closely held. For a vast majority of the 70 million party members, not to mention the general public, there had been no indication that he was planning to retire, and his abrupt departure seems likely to increase the sense that the most important personnel decisions are made without broad consultation. Since the Communists defeated the Nationalists in a civil war and took control of China in 1949, the party has repeatedly failed to execute orderly successions. All three of the men chosen by Mao Zedong to succeed him were purged before they could consolidate power, two of them by Mao himself and the third by Deng Xiaoping after Mao's death in 1976.


    Deng also anointed and then cashiered two successors. In the aftermath of the bloody crackdown on dissent in 1989, he elevated Mr. Jiang from the middling rank of Shanghai party chief to China's highest posts.


    The most recent transition looked similarly compromised when Mr. Jiang maneuvered to keep control of the military in 2002. Party officials said Mr. Hu had been slated to inherit full power at that time and that his failure to control the military forced him to operate in Mr. Jiang's shadow.


    But Mr. Jiang's retirement suggests that the party now operates more according to the consensus of its elite members rather than the whims of its most senior leader.


    Moreover, Mr. Jiang did not appear to have extracted any special concessions as the price of his retirement. Notably, he failed to arrange for Vice President Zeng Qinghong to be elevated to the Central Military Commission. Party officials had said they expected Mr. Zeng, a longtime protégé and ally of Mr. Jiang's, to become either a regular member or a vice chairman of the commission.


    On Sunday, Xu Caihou, a military officer in charge of propaganda work, was promoted to replace Mr. Hu as a vice chairman of the commission. He will serve with Cao Gangchuan, the defense minister, and Gen. Guo Boxiong.


    The number of regular members of the commission was expanded to seven from four, adding representatives from the navy, air force and the unit in charge of China's nuclear arsenal.


    Mr. Hu, a poker-faced bureaucrat who served most of his career in inland provinces and rarely if ever traveled outside China before he rose to the most senior ranks in the late 1990's, has sent mixed signals about how he intends to rule. He deftly handled the first big crisis of his leadership in the spring of 2003, when China faced the SARS epidemic that top health officials had initially covered up. Mr. Hu sacked two senior officials and ordered a broad mobilization to combat the disease, which was controlled within weeks.


    He has sought to draw a contrast with Mr. Jiang's aristocratic image, making trips to China's poorest areas and shunning some conspicuous perks. He pledged to raise the incomes of workers and peasants and redirect more state spending to areas left behind in China's long economic boom.


    "Use power for the people, show concern for the people and seek benefit for the people," Mr. Hu said in remarks early in his term as party chief. He has allowed state media to refer to him as a populist, though his rise through the ranks has not depended on popular support.


    Little is known about Mr. Hu personally beyond a few random facts offered by the propaganda machine, including his enthusiasm for Ping-Pong and what is described as a photographic memory. In official settings, he is a much less colorful figure than Mr. Jiang, who crooned "Love Me Tender" at an Asian diplomatic gathering and was fond of quoting Jefferson and reciting the Gettysburg Address to visiting Americans.


    It seems highly unlikely that Mr. Hu is a closet liberal. Editors and other journalists say he has tightened media controls. He has presided over a crackdown on online discussion by jailing people who express antigovernment views on the Internet.


    "My general impression is that Hu is a Communist of the old mode," said Alfred Chan, professor of politics at Huron College in Canada, who is conducting a study of the new leadership. "His career has been totally shaped by the Communist system. I think many expectations of him are exaggerated because he works under the constraints of party discipline."


    In a speech delivered last week, he referred to Western-style democracy as a "blind alley" for China. He has a plan for political change, but it mostly involves injecting some transparency and competitiveness within the single-party system to make officials police themselves better.


    In foreign affairs, Mr. Hu deferred largely to Mr. Jiang. Mr. Jiang relished his role as a statesman and was proud of having built a nonconfrontational, sometimes even cordial relationship with the United States.


    Mr. Hu is not expected to alter course substantially. But party officials say that he has tended to emphasize relations with China's neighbors and with Europe over ties with the United States and Japan.


    He faces two major foreign policy tests that Mr. Jiang leaves unresolved. One involves North Korea, China's longtime ally, which American officials say is on the verge of becoming a full-scale nuclear power. Chinese officials worry that if Pyongyang formally goes nuclear, other Asian countries, notably Japan, could follow.


    China is also deeply worried about how to deal with Taiwan under President Chen Shui-bian, who many here believe intends to move the island, which China claims as its sovereign territory, toward independence.


    Mr. Jiang steered China toward a tougher rhetorical and military posture toward Taiwan, even as the Bush administration expanded military aid to the island. Mr. Hu has not shown any signs of changing course, but some analysts say he may experiment with a more flexible approach if he does not have to worry about having his nationalist credentials second-guessed by Mr. Jiang.


    Mr. Hu and Mr. Jiang did not publicly spar. But there were signs that their relationship had become strained. Mr. Jiang rejected a framework for China's emergence as a great power that Mr. Hu supported. The policy framework, known by the slogan "peaceful rise," was dismissed by Mr. Jiang as too soft when China was threatening Taiwan with military force.


    Mr. Hu and his prime minister, Wen Jiabao, have also had to battle internally to curtail wasteful state spending and cool the overheated economy. Some regional leaders are thought to have looked to Mr. Jiang as a counterweight to Mr. Hu because they see the elder leader as a champion of fast economic growth supported by heavy state investment.


    "It may be that Hu will no longer have to worry that Jiang will contest his decisions, and that could make decision-making smoother," said Frederick Teiwes, an expert on elite politics at the University of Sydney.


    Some people who have visited Mr. Jiang or spoken with his relatives say he has suffered health problems lately, offering one possible explanation for his unexpected retirement.


    But Mr. Jiang is also thought to have come under heavy pressure within the party, and even within the military, to follow the example of Deng and withdraw from public life before health problems force him to do so. Mr. Hu also made a veiled call for Mr. Jiang to step aside when he lavished praise on Mr. Deng's decision to retire early during ceremonies to commemorate the 100th anniversary of the late leader's birth in August.



    Chris Buckley contributed reporting for this article.


     


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September 16, 2004


  • September 16, 2004

    The Return of Katherine Harris







    Every state has an obligation to run elections that are not only fair, but also appear fair to the average voter. After the debacle of 2000, Florida's officials should understand this better than anyone. But its top elections officer, Glenda Hood, is acting in ways that create a strong impression that she is manipulating the rules to help re-elect her boss's brother. After her maneuvers this week to try to put Ralph Nader on the ballot, she cannot be trusted to run an impartial election.


    In Florida's 2000 election mess, Katherine Harris served simultaneously as Florida's secretary of state and as co-chairwoman of the state's Bush-Cheney campaign committee. In her official capacity, she repeatedly took actions that favored the campaign. This year has turned out to be more of the same. When Gov. Jeb Bush appointed Ms. Hood as secretary of state, he chose someone with a history of partisanship, as a Republican officeholder and as a Bush-Cheney elector in 2000. Now Ms. Hood's politics appear to be influencing her election duties.


    She recently conducted a highly suspect voting-roll purge of felons. The voters who were to be taken off the list included more than 22,000 African-Americans, who generally vote heavily Democratic, but just 61 Hispanics, who tend to favor Republicans in Florida. She was forced to scrap the list.


    In last month's primary, some people without photo identification were turned away without being told that they could vote if they signed affidavits affirming their identities. After the same thing happened in South Dakota this year, the Board of Elections there told every polling place to post signs advising people of their rights. Ms. Hood's office insists that voters need not be told of the affidavit option. Voter ID is often a partisan issue because poor people and members of other groups that are less likely to have identification often vote Democratic.


    Most recently, Ms. Hood has played a suspect role in helping Mr. Nader get on Florida's ballot, where he would be likely to weaken John Kerry. A court has ruled against Mr. Nader's claim to have met the requirements to be on the ballot.


    Last night, the state was again involved in suits and countersuits over a presidential election in Florida. Ms. Hood's role has been a disturbing one. Instead of waiting as an impartial bystander for the court's direction, she seems to be trying to thwart any ruling that would take Mr. Nader off the ballot. At one point, while the court ruling eliminating Mr. Nader was under appeal, Ms. Hood's office hurriedly directed every county to add Mr. Nader's name to the ballots that will soon be sent to overseas voters.


    Granting legitimate candidates access to ballots is important, but officials should obey the law. Ms. Hood had no right to try to proceed with her own preferred outcome. It is hard to believe that she would have done the same thing if the candidate had been one likely to hurt President Bush.


    The nation cannot afford another tainted election. Governor Bush should quickly find an elections professional or academic of unquestioned neutrality to run Florida's elections.



    Making Votes Count: Editorials in this series remain online at nytimes.com/makingvotescount.


     


     



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September 15, 2004


  • September 15, 2004

    CAMPAIGN 2004: THE BIG ISSUES


    Taxes for an Ownership Society







    When President Bush talks about an "ownership society," hold on to your wallet. The slogan, like "compassionate conservative" before it, is sufficiently vague to mean many things to many people, and the few details that Mr. Bush has provided - encouraging more home ownership and offering new tax-sheltered savings plans - seem innocuous enough. But in tax terms, "ownership society" means only one thing: the further reduction, if not the elimination, of taxes on savings and investments, including taxes on dividends and on capital gains on stocks, bonds and real estate. That, in turn, means, by definition, a shift in the tax burden onto wages and salaries - or, put more simply, a wage tax.


    The regressive results would be appalling. The richest 1 percent of Americans earn just about one-tenth of total wages and salaries, but almost half of all income from savings and investments - income that would be largely, perhaps entirely, untaxed in an "ownership society." In contrast, taxable wages and salaries make up almost all of the income of most Americans.


    The Bush camp has been floating the idea that what the president is getting at is a consumption tax. But the administration is not talking about a true consumption tax, which would apply to spending regardless of where the money comes from - from your paycheck, cashing in your stocks and bonds, selling your house, or borrowing. It is, in effect, talking about a tax on wages.


    Properly understood, a consumption tax is intended to increase national savings by making it relatively more attractive to save than to spend. The main argument against it is that it hits hardest at low-income and middle-income families, who tend to spend most of what they earn. But as Peter Orszag, an economist at the Brookings Institution, pointed out in a recent speech at Georgetown University, Mr. Bush's de facto wage tax would be the worst of all worlds: it would have all the regressive aspects of a consumption tax and none of its potential for increasing national savings.


    When Mr. Bush talks about new tax-favored savings accounts, he never mentions that most people don't even take full advantage of existing plans. They won't be turned into "owners" by new tax breaks for interest, dividends and capital gains. To increase Americans' financial stake requires a strong economy in which people who work for a living share in the benefits of growth.


    A good place to start would be to tackle the obstacles to sustained growth that currently exist, like spiraling health care costs, dependence on foreign oil and the administration's mania for unaffordable tax cuts - in short, to reverse, not intensify, the trends in the current economy.


    In the past nearly three years of economic recovery, the distribution of economic growth has become more skewed than at any other time in modern memory. Currently, 47 percent of growth is flowing to corporate profits, by far the largest share than that in any of the other eight post-World War II recoveries. Fifteen percent goes to wages and salaries, the smallest share of economic growth in more than 50 years. To make matters worse, the share of compensation that is devoted to health and pension benefits is far larger during this recovery than in any other, representing a further squeeze on the wages and salaries of ordinary Americans. In 2004, take-home pay as a share of the economy dropped to its lowest level since 1929, when the government started keeping records.


    All of this would make the drive for a wage tax laughable, if only it were a joke. And yet, when he says "ownership society," a wage tax is exactly what Mr. Bush is driving at.



    Campaign 2004/The Big Issues: Editorials in this series remain online at nytimes.com/issues.


     


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September 14, 2004


  • September 13, 2004

    OP-ED CONTRIBUTOR


    What Your College President Didn't Tell You


    By JOHN M. McCARDELL Jr.





    Beaufort, S.C. — Much has been made in recent years of the unwillingness among college and university presidents to venture above the parapet and challenge some of the shibboleths of higher education. By this I do not mean advocacy of political positions. Presidents who would keep their campuses places where ideas are in fact freely exchanged ought to avoid signing public letters or endorsing candidates, tempting as it may be.


    No, I mean something else. I retired in June as president of Middlebury College in Vermont, but during my 13-year tenure I was as guilty as any of my colleagues of failing to take bold positions on public matters that merit serious debate. Now, a less vulnerable member of the faculty once more, I dare to unburden myself of a few observations. As the new school year begins, there are many things I suspect university presidents would like to say to their various constituencies but dare not.


    To faculties and governing boards: tenure is a great solution to the problems of the 1940's, when the faculty was mostly male and academic freedom was at genuine risk. Why must institutions make a judgment that has lifetime consequences after a mere six or seven years? Publication may take longer in some fields than in others, and familial obligations frequently interrupt careers. Why not a system of contracts of varying length, including lifetime for the most valuable colleagues, that acknowledges the realities of academic life in the 21st century?


    Moreover, when most tenure documents were originally adopted, faculty members had little protection. Today, almost every negative tenure decision is appealed. Appeals not upheld internally are taken to court. Few if any of these appeals have as their basis a denial of academic freedom.


    To current and prospective parents (and editors of magazines that profit by the American public's fascination with rankings): student/faculty ratio is overrated as a measure of quality. Can any faculty member persuasively argue that a class of eight or nine students is qualitatively superior to a class of 10 or 11? How many classes at any institution, large or small, are the actual size of the celebrated ratio? (Answer: very few.)


    More meaningful statistics, for those seeking to measure quality of education in terms of faculty accessibility, are average class size, average instructional load, percentage of faculty members who are full-time, and how frequently professors hold office hours or take their meals in student dining halls. And not all subjects are best learned around a seminar table. The large lecture, well designed and delivered, can, in fact, be a superior way to learn certain subjects.


    To lawmakers: the 21-year-old drinking age is bad social policy and terrible law. It is astonishing that college students have thus far acquiesced in so egregious an abridgment of the age of majority. Unfortunately, this acquiescence has taken the form of binge drinking. Campuses have become, depending on the enthusiasm of local law enforcement, either arms of the law or havens from the law.


    Neither state is desirable. State legislators, many of whom will admit the law is bad, are held hostage by the denial of federal highway funds if they reduce the drinking age. Our latter-day prohibitionists have driven drinking behind closed doors and underground. This is the hard lesson of prohibition that each generation must relearn. No college president will say that drinking has become less of a problem in the years since the age was raised. Would we expect a student who has been denied access to oil paint to graduate with an ability to paint a portrait in oil? Colleges should be given the chance to educate students, who in all other respects are adults, in the appropriate use of alcohol, within campus boundaries and out in the open.


    And please - hold your fire about drunken driving. I am a charter member of Presidents Against Drunk Driving. This has nothing to do with drunken driving. If it did, we'd raise the driving age to 21. That would surely solve the problem.


    I hope the public, and the higher education community, will be willing to engage these issues seriously and respectfully. My head is now well above the parapet. Gaudeamus igitur!



    John M. McCardell Jr. is college professor and president emeritus of Middlebury College.


     


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    September 13, 2004

    OP-ED CONTRIBUTOR


    The Legacy of Legacies


    By JEROME KARABEL





    Berkeley, Calif. — Admissions policy is an especially popular topic on campus this time of year. As new students arrive, they inevitably ask one another the same questions: Where did you apply? Did you get in anywhere else? Why did you decide to come here?


    They are personal questions, of course, often asked more out of courtesy than curiosity, but their answers reveal a story about not only America's system of higher education, but also America's ideals. President Bush appealed to these ideals last month when he acknowledged that while he was the beneficiary of a so-called legacy preference (that is, he was admitted to Yale in part because other members of his family had gone there), he believed that admission to college "ought to be based on merit."


    It is an admirable goal. Yet the persistence of legacy preferences may not be fully appreciated by either Mr. Bush or his opponent, John Kerry, who has also called for their abolition - and whose father also went to Yale. If America is to take advantage of this rare bipartisan opportunity to end this form of affirmative action for the privileged, it may be helpful to know the full story of legacy preferences in general and Mr. Bush's in particular.


    In the fall of 1963, George W. Bush was a senior at Phillips Academy in Andover, Mass., facing the same dilemma confronting his 232 classmates: where to apply to college. He had never made the honor roll, and his verbal score on the SAT was a mediocre 566. Although popular among his classmates, he was neither an exceptional athlete nor did he possess any particularly outstanding extracurricular talents. Looking over his record, Andover's dean of students suggested that the young Mr. Bush consider applying to schools other than Yale, the alma mater of his father and grandfather.


    But unbeknownst to the dean and Mr. Bush, Yale had quietly changed its admissions policy toward alumni sons during the very months when his application was under consideration. As the number of applicants to Yale increased, the administration decided that it could no longer afford to treat all legacy applicants equally. Instead, it would differentiate among alumni sons, giving extra preference on the basis of the family's contribution to Yale and its importance to American society.


    As the son of a prominent Texas oilman then running for the United States Senate - and the grandson of a United States senator from Connecticut who had recently served as a member of the Yale Corporation - George W. Bush was no ordinary applicant. In April 1964, he was accepted to Yale - unlike 49 percent of all alumni sons who applied that year.


    Less than two years later, in an abrupt change in policy, Yale's new dean of admissions, R. Inslee Clark, presided over a radical reduction in legacy preference. By 1967, Mr. Clark's second year in office, the proportion of alumni sons in the freshman class plummeted to 12 percent from 17 percent in the class of 1968, George W. Bush's class.


    The reaction of the alumni was swift and furious. By the end of 1966, the alumni were in open revolt, and Yale's alumni board hastily formed a special committee to investigate the matter. In 1967, William F. Buckley, an alumnus then running an insurgent campaign for a seat on the Yale Corporation, declared that Yale had ceased to be the "kind of place where your family goes for generations" and had been transformed into an institution where "the son of an alumnus, who goes to a private preparatory school, now has less chance of getting in than some boy from P.S. 109 somewhere."


    In truth, Yale had not eliminated the legacy preference even under Mr. Clark. But the new dean had brought the admissions rate of legacy applicants closer to that of non-legacy applicants than at any point in Yale's history. By 1970, Mr. Clark was gone, and by 1974 - just as a major fund-raising effort was beginning - the legacy preference was even stronger than when George W. Bush and John F. Kerry had applied more than a decade earlier.


    Yale's chief competitors, Harvard and Princeton, took due note of the turmoil created by this radical experiment, and neither ever tried an admissions policy remotely as meritocratic as Yale's under Dean Clark. (Recently, both Harvard and Princeton have admitted legacy applicants at a rate more than triple that of non-legacy applicants.)


    The consequences of the Yale episode are with us still, for the elite colleges drew from it the lesson that the costs of seriously encroaching on alumni privileges are simply too high. Because of the elite universities' investment in the current system, change is unlikely to come from within. But President Bush's denunciation of legacy preference may well have set in motion a public debate that will bring about the demise of this anachronistic policy.


    A useful first step would be consideration of a bill introduced last fall by Senator Edward Kennedy that would require universities "to publish data on the racial and socioeconomic composition of legatees." So, too, would a requirement that universities disclose the admission rate of legacies and non-legacies as a way of casting a spotlight on a policy that is, in the end, indefensible.


    Such legislation may not end legacy preferences. But it would subject them to the public scrutiny befitting a democratic society - a scrutiny that could well be fatal.



    Jerome Karabel, a professor of sociology at the University of California at Berkeley, is the author of the forthcoming book "The Chosen: Admission and Exclusion at Harvard, Yale, and Princeton, 1900 to Today."


     


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September 13, 2004










  • Online NewsHour Online Focus
    WAL-MART THE GLOBAL GIANT

    August 20, 2004





    Global Giant

    Paul Solman examines Wal-Mart's distribution system and its productivity. Current employees explain how Wal-Mart operates, while some former associates share their discontent with the United States' largest private employer.



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    Posted on Sun, Sep. 12, 2004



    Wal-Mart's bargain with America




    California legislators have just written a new chapter in the long debate over how to fit one particular giant corporation into America's economic and political life. A bill they sent Gov. Arnold Schwarzenegger would require any retailer to pay for an ``economic impact'' report each time it wanted to build a new ``superstore'' in California. But one company above all others is the target: Wal-Mart.


    Whether the measure becomes law or not, Wal-Mart's ambitious California expansion plans virtually guarantee that cities and towns statewide will find themselves grappling with the same question underlying the bill: How will Wal-Mart alter life in our community?


    It is no exaggeration to say that this single company -- indeed the world's largest -- has a huge impact on how we live and work, so much so that even the presidential candidates have debated whether the arrival of a Wal-Mart helps or hurts.


    The $256 billion retailer, with more than 3,000 discount stores and grocery-selling supercenters in the United States, sets the standards for much of American business -- determining how much workers are paid, how goods are priced and where they are made, and how neighborhoods take shape.


    Wal-Mart employs more people in the United States -- 1.2 million -- than any other institution except the federal government, and with that kind of reach, it essentially sets the starting wage for millions of other workers nationwide. Its famous squeeze on supplier firms pushes companies like Procter & Gamble to manufacture more of their products in Mexico, China and other low-wage nations. Its low prices enable shoppers to buy more goods but can contribute to the bankruptcy of both Main Street shops and nationwide chains, like toy retailer FAO Inc. and Kmart. And the presence of a big-box store can essentially rezone a large chunk of the urban landscape.


    The Arkansas-based giant itself understands its ability to ``legislate'' social policy for the nation's workers and their families, which is why it is spending millions of dollars on TV advertisements that tout, not its ``always low prices,'' but the community revitalization, happy workers, and philanthropic good works it believes come when it opens another store.


    Corporate influence


    The scope of Wal-Mart's corporate influence is not unique, however. In each historical epoch a template enterprise sets the standard for a new phase of capitalist transformation. These pace-setting businesses are emulated because they have perfected for their era the most efficient and profitable relationship between the technology of production, the organization of work and the new shape of the market.


    Thus, at the end of the 19th century, the Pennsylvania Railroad declared itself ``the standard of the world.'' In the mid-20th century General Motors symbolized sophisticated, bureaucratic management and technologically proficient mass production. And in more recent years, Microsoft has seemed the template for an information economy that has transformed the diffusion and production of knowledge around the globe.


    Indeed, Wal-Mart perfectly embodies the process of ``creative destruction,'' identified by economist Joseph Schumpeter as the engine by which one mode of capitalist production and distribution is replaced by another. And as Schumpeter made clear 60 years ago, every technological and organizational innovation also casts a social and political shadow across all of society.


    To understand how Wal-Mart is reshaping the American workplace, it's useful to look back at the last time a corporate leader had so much economic and social clout, though with a vastly different impact.


    GM legacy


    Fifty years ago, General Motors was the largest and most profitable American corporation, with a management culture that everybody, from IBM to the U.S. Army, was trying to copy. In 1953, when President Dwight Eisenhower appointed GM President Charles E. Wilson to his Cabinet, the executive appeared before Congress to assert that what was ``good for the country was good for General Motors, and vice versa.'' Congress eventually confirmed Wilson as secretary of defense, but his quip generated a howl of outrage that has not quite lost its voltage even after half a century.


    Wilson's declaration might have been arrogant, but it was controversial precisely because there actually was a plausible case for making it. In its heyday, from the late 1920s into the 1970s, General Motors employed hundreds of thousands of workers in the country's most important industry. And it was the largest manufacturer not just of cars, but of heavy trucks, locomotives, refrigerators and military equipment. The GM Acceptance Corp. was by far the largest U.S. retail credit institution.


    Neither General Motors nor Wal-Mart invented the technology or organizational innovations that were key to their success. Ford was more creative in the early 20th century, and Chrysler pioneered many engineering breakthroughs. Likewise, Sam Walton acknowledged his debt to many retail innovators. The Walton brothers took the idea of self-service from the Ben Franklin chain, employee stock ownership from J.C. Penney, bulk discounts from Price Club (now Costco), and the supercenter from France's Carrefour markets.


    But Wal-Mart, like GM, perfected, integrated and systematized technological and marketing ideas put in play by competitors. And in doing so, they both made it virtually impossible for any competitor to survive without emulating their business model.


    Indeed, GM at midcentury and Wal-Mart today are so large that their success has had an economywide impact. GM alone may well have been responsible for more than a fifth of the astonishing yearly productivity gains enjoyed by U.S. manufacturing in the post-World War II decades. And in the second half of the 1990s, reports McKinsey Global Institute, Wal-Mart's rapid growth, along with the spread of its labor practices and technological innovations to other chains, contributed handily to the surprising productivity jump in the huge retailing sector. These productivity gains dampened inflationary pressures even during years when the job market boomed.


    The key issue is who will reap the benefits of the productivity surge. Will they flow disproportionately to share owners, top management, customers or workers? GM, for its part, was a hard-nosed corporation that sought to ensure a 20 percent return on shareholder investment, but after it recognized the United Automobile Workers in 1937, frequent strikes and pressure from workers forced it to share more of its productivity ``dividend.''


    GM and UAW


    Right after World War II, the UAW actually struck on behalf of the low-price policy that Wal-Mart would make famous 35 years later: Labor wanted GM to freeze car prices, but still raise wages, so as to share with the public the cost savings made possible by the World War II investment surge. GM battled the UAW and successfully sidelined this idea.


    But it knew that high wages and benefits were essential to industrial peace, so in landmark collective bargaining in 1948 and 1950, GM guaranteed an annual increase in the real income of its 300,000 blue-collar workers regardless of inflation, recession, or corporate profits. Thus, between 1947 and 1973 the real income of autoworkers doubled, and because GM was the template firm, the auto-industry wage pattern was quickly adopted by a large slice of big manufacturing firms, unionized or not.


    For the only time in the 20th century, the real income of those in the bottom half of the income distribution rose as fast as those in the top 10 percent.


    Wal-Mart is having an equally potent, if altogether different, impact on wages and benefits. Its enormous market power has the effect of pushing wages downward. For one thing, because the minimum wage ($5.15 nationally, $6.75 in California) has declined more than 20 percent in real terms since 1980, Wal-Mart -- which outsiders estimate typically pays about $8 an hour to the hundreds of thousands of entry-level workers it hires each year -- essentially sets the actual starting wage for millions of other workers throughout the nation.


    And because of its relatively low starting pay, small promotion increments and high turnover, Wal-Mart's hourly wages are lower than the U.S. retail average. (In California, the UC-Berkeley Institute of Industrial Relations says, Wal-Mart's hourly workers earn at least $3.79 less than unionized retail workers and about $3 less than the average for non-managerial workers at all large retailers.)


    Moreover, in 2002 Wal-Mart's spending on health benefits for the half-million U.S. employees who were covered averaged about $3,500 per employee, vs. $4,800 for the wholesale/retail sector and $5,600 for U.S. employers overall, according to Mercer Human Resources Consulting.


    Those pay and benefit gaps mean that other retailers feel pressure to reduce their own labor costs so that they can meet Wal-Mart's low prices. In the Bay Area, non-managerial Wal-Mart employees earn on average $11.08 an hour, the company says, which is 26 percent below the roughly $15-an-hour average for unionized grocery workers. And Wal-Mart workers are half as likely to participate in company-sponsored health benefit plans.


    Grocery contract talks


    So it is not surprising that Wal-Mart's shadow hangs over the Bay Area grocery contract talks now under way. Wal-Mart wants to open 40 grocery-selling supercenters in California during the next few years, including in Gilroy and Antioch. In Southern California, where the retailer recently opened its first supercenter in the state, the impending competition -- and thus the old-line grocers' determination to cut costs -- was largely responsible for the bitter strike and lockout that put 59,000 grocery clerks on the picket line late last year. In the end, the clerks agreed to lower benefits for new hires.


    Even beyond wages and benefits, Wal-Mart is remaking the workplace. At GM, workers were often lifers, and factory turnover was exceedingly low. Union seniority rights protected workers from arbitrary firings or demotions. At Wal-Mart, average store turnover is 46 percent a year.


    The roar that greeted Wilson's claim that what was good for GM was good for America put real constraints on his company, and now, Wal-Mart, too, is being buffeted by the political process.


    GM could have pushed Chrysler and Ford to the wall had it chosen to aggressively expand its market share beyond its typical 45 to 47 percent. But it feared federal antitrust action and instead maintained a price umbrella under which smaller competitors might shelter and workers could win higher pay.


    Wal-Mart's competitive strategy has been just the opposite, generating howls from unions, small businesses and communities that see the rock-bottom prices as a threat to Main Street.


    Low prices are a good thing: They put real money into the pockets of consumers. But American industrial prosperity, and the standard of living that pulled tens of millions into the middle class, was also grounded in high wages and secure jobs. Measures like the one before Schwarzenegger -- and a similar one adopted by Los Angeles -- put the Wal-Mart business template under intense public scrutiny, where it belongs.


    NELSON LICHTENSTEIN (nelson@history.ucsb.edu) teaches history at the University of California-Santa Barbara, where he directs the Center for the Study of Work, Labor and Democracy. He wrote this article for Perspective.


     


     

September 12, 2004


  • September 12, 2004

    Preventive War: A Failed Doctrine







    If facts mattered in American politics, the Bush-Cheney ticket would not be basing its re-election campaign on the fear-mongering contention that the surest defense against future terrorist attacks lies in the badly discredited doctrine of preventive war. Vice President Dick Cheney took this argument to a disgraceful low last week when he implied that electing John Kerry and returning to traditional American foreign policy values would invite a devastating new strike.


    So far, the preventive war doctrine has had one real test: the invasion of Iraq. Mr. Bush terrified millions of Americans into believing that forcibly changing the regime in Baghdad was the only way to keep Iraq's supposed stockpiles of unconventional weapons out of the hands of Al Qaeda. Then it turned out that there were no stockpiles and no operational links between Saddam Hussein's regime and Al Qaeda's anti-American terrorism. Meanwhile, America's longstanding defensive alliances were weakened and the bulk of America's ground combat troops tied down in Iraq for what now appears to be many years to come. If that is making this country safer, it is hard to see how. The real lesson is that America dangerously erodes its military and diplomatic defenses when it charges off unwisely after hypothetical enemies.


    Before the Iraq fiasco, American leaders rightly viewed war as a last resort, appropriate only when the nation's vital interests were actively threatened and reasonable diplomatic efforts had been exhausted. That view always left room for pre-emptive attacks; America is under no obligation to sit and wait, if it is clear that some enemy is actually preparing to strike first. But it correctly drew the line at preventive wars against potential foes who might, or might not, be thinking about doing something dangerous. As the administration's disastrous experience in Iraq amply demonstrates, that is still the wisest course and the one that keeps America most secure in an increasingly dangerous era.


    The terrorist attacks of Sept. 11, 2001, plainly ushered in a new era of catastrophic threats to the American homeland. If these are to be met effectively, major changes in national security policy will be required. But a shift toward preventive wars is not one of them. As the 9/11 commission report clearly established, international terrorist groups like Al Qaeda are highly mobile, self-financing and largely independent of traditional states. Governments that grant them sanctuary and facilities, like Afghanistan under the Taliban or Sudan, must face strong international pressure, including American military attack. Any attempt by the president and his surrogates to lump the invasion of Afghanistan into the category of preventive wars is plain wrong. In fact, the war in Iraq has undermined the important work that American forces are doing in Afghanistan by diverting soldiers, supplies and money.


    Al Qaeda has already declared war on the United States, and America needs to fight back relentlessly - in Afghanistan and through international efforts to capture terrorist leaders who function with forged passports and visas, safe houses and sleeper cells. That is why Mr. Cheney is also wrong to disparage law-enforcement cooperation with allies as an important weapon in this war.


    Instead, he promises more preventive, offensive wars against hypothetical dangers like Iraq. Besides estranging America from its main European and Asian allies, and leaving Washington looking like an aggressor to much of the Arab and Muslim world, these policies kill American soldiers and civilians in the countries attacked, and they threaten to tie down the Army and Marine divisions America needs to have available for responding to real threats in the dangerous decades ahead.



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  • September 12, 2004

    Canada Looks for Ways to Fix Its Health Care System


    By CLIFFORD KRAUSS





    WHITBY, Ontario, Sept. 9 - Esther Pacione needs a family doctor. At age 56 she is afflicted with severe ataxia, a neurological condition that causes her acute pain, choking and loss of consciousness. The walls of her home are scuffed from the times she fell and hit her head.


    Her regular doctor suffered a stroke a year ago, and all the local doctors she has contacted say they cannot take new patients, so now Ms. Pacione goes to a walk-in clinic whenever she has an emergency. At the clinic, she waits hours and sees a different doctor and no one there is familiar with her medical history and what drugs she has been taking.


    Ms. Pacione, a retired bookkeeper, said she would like to be at the table when Prime Minister Paul Martin meets with the provincial premiers on Monday for a three-day televised meeting to find ways to alleviate the lengthening waits for basic care in Canada.


    "If you are not bleeding all over the place, you are put on the back burner," Ms. Pacione said, "unless of course you have money or know somebody."


    The publicly financed health insurance system remains a prideful jewel for most Canadians, who see it as an expression of communal caring for the less fortunate and a striking contrast to an American health care system that leaves 45 million people uninsured. But polls indicate that public confidence in the system is eroding, although politicians remain reticent to urge increasing privatization of services.


    During the recent closely fought election campaign, Mr. Martin promised to fix Canada's health care system "for a generation," focusing on trimming waiting times for diagnostic tests, cancer treatment and elective surgery like hip replacements. He is eager to use this televised gathering, billed as a health care summit meeting, to reverse the current view among many Canadians that his government is vacillating and may well fall next year.


    But medical professionals and local officials say a major reason it may not be easy to address the problem of slow access to treatment is because doctors who do preliminary diagnostic work, refer patients to specialists and monitor the care of chronically ill people are less and less available - especially in small towns and rural areas.


    A 2002 report from the Canadian Senate said that the actual number of family doctors had decreased only slightly in recent years but that the demands of an aging population were growing. Meanwhile, several recent studies have shown that family doctors are working shorter hours.


    Young doctors are more likely to seek the most lucrative work in cities or go to the United States rather than start more modest practices in small towns because of growing debts when they leave medical school. That has set off an increasing competition among small towns to attract doctors.


    Ms. Pacione's predicament is surprisingly common even in this upper-middle-class community on the north shore of Lake Ontario that seems to have everything going for it: immaculate lawns, a yacht marina, a downtown graced by vintage Victorian architecture and quaint parks and fruit markets.


    Despite all its attractions, Whitby has trouble attracting enough doctors to take care of its residents. The town has only 63 family doctors to care for its 110,000 people (medical officials and local officials say at least 16 more are needed), and many residents drive 45 minutes or more to Toronto for basic medical care. Whitby is one of 136 communities with a total of a million people in Ontario, Canada's most populous province, that are not adequately served by family doctors, according to the Ontario Medical Association. That is up from 100 communities in 2000.


    Whitby officials estimate that 22,000 people here have no doctor at all, forcing them to go to emergency rooms at overcrowded local hospitals to wait in line for up to four hours simply to refill a prescription, get a doctor's note for an employer or care for their flu symptoms.


    "It's like winning the lottery to get in and see the doctor," Mayor Marcel Brunelle said. "This is a very wealthy country. What happened to bring the situation to this point?"


    The government statistical agency estimates that more than 3.6 million Canadians, representing nearly 15 percent of the population, do not have a family doctor. That remains better than in the United States, where an estimated 20 percent do not have a regular doctor.


    But there are signs that the doctor shortage in Canada is worsening. The Canadian Medical Association estimates that the country requires 2,500 medical graduates annually but is producing only 2,200 a year.


    Mayor Brunelle formed a task force in June to recruit young doctors by introducing them to real estate agents and giving them advice on how to start new practices, and the town government is considering building a municipal clinic. The town of Peterborough is offering large monetary incentives and a grab bag of perks, including memberships at the Y.M.C.A. and cable television. Other municipalities offer moving expenses and the inside track on real estate next to golf courses.


    But experts say those efforts may not be enough. "If the current trends continue we can anticipate a crisis," warned Joseph D'Cruz, a University of Toronto business school professor who specializes in health care. "People will actually find it impossible to get general medical services in their towns."


    The doctor shortage is hurting the economies of small towns seeking to attract businesses. But it is also taxing the energies of the doctors who do live in those towns, as well as the resources of local hospitals - and patients often complain that their treatment is rushed.


    Administrators at the nearby Lakeridge Health Oshawa, an acute care hospital, estimated that more than 30 percent of the patients who went to the emergency ward would go to a family doctor instead if they could do so quickly. It is a burden on the hospital's staff, space and financial resources.


    One patient who went to the emergency ward recently, Crystal Bentley, 22, complained of cysts behind her ears. She said she would prefer to see her family doctor but would have to wait in his office for hours. She said she went to the hospital because the emergency room was faster.


    "Seeing a doctor and not having to pay is phenomenal," she said, "but here I am taking up emergency time from doctors. I really do wish I could see my family doctor instead of coming here and talking to a total stranger."


     


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