McClellan on Gulf Coast Wage Cut

Yesterday at the White House daily briefing, Scott McClellan got asked about the president's Gulf Coast Wage Cut, opposition to the move and whether he's reconsidering his position.  The transcript below the fold ...

Q Scott, Representative LoBiondo from New Jersey, Republican, is circulating a letter calling on the President to rescind the tax cut, which he signed into effect for the people who are going to be rebuilding the Gulf Coast. In light of that, and in light of the need that people have to be working and to be earning decent money down there, is the President reconsidering this wage cut?


MR. McCLELLAN: Which tax cut?


Q The wage cut.


MR. McCLELLAN: In terms of tax cuts --


Q No, I'm sorry. I meant the wage cuts, didn't mean to say, tax cuts --


MR. McCLELLAN: What do you mean, wage cuts?


Q The Davis-Bacon.


MR. McCLELLAN: The Davis-Bacon. Well, what --


Q Which is a wage cut.


MR. McCLELLAN: We suspended that act for the reasons that we stated previously. This will open up access to more business -- small businesses, including women-owned and minority-owned businesses. It cuts through the red tape and helps us move forward quickly to address the needs of the people in the region and to provide substantial savings. We're talking about savings here in terms of spending. That's an important part of that, too.


Q But how does lowering people's wages help with rebuilding the economy?


MR. McCLELLAN: Well, I disagree with your characterization, first of all. I know there are some that take a different view of this, but President Bush 41 also issued a suspension of this act previously, to address Hurricane Andrew back in '92.


Q Was it a good idea?


MR. McCLELLAN: We actually talked about this last week. You might want to look back. Claude Allen briefed on this and talked about our position on this and why this was another important area to cut through some of the red tape that prevents us from moving forward as quickly as possible. And it opens it up to more people, so that women-owned and minority-owned businesses can participate more fully in that, as well.


And we want, the President made it clear, that in terms of jobs and contracts and things of that nature, he believes they should go mostly to those who have been affected by this hurricane. And that's something we're committed to doing. So this was an important -- we've issued a number of waivers to cut through red tape and bureaucracy, and this was one of those.


Q Is the President aware that there is a move on Capitol Hill to call on him to rescind this?


MR. McCLELLAN: We're aware that there are people that are opposed to that on the other side of the fence.


Comments (35)

LoBiondo is "on the the other side of the fence" politically?


I guess it took McLellan so long to give the administration talking points he thought it was ok, then, to ignore the main point of the question.

avatar No, this isn't cutting wages, it's just cutting red tape!  McClellan OBJECTS to the reporter characterizing it as, well, as what it is. Because in NEWSPEAK, you are supposed to characterize things as what they are not.

Pure, unadulterated gibberish.
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This seems to be a typical WH move of bait and switch, the old quarterback fake. They cut wages of workers then contend it is really helping people and businesses, especially small and minority owned get back on their feet. My guess is that it is really going to help Halliburton, Shaw, Flour, etc. much more than any of those small businesses. Say one thing and do something else. The media generally pays attention to the words and not the actions. And this is a surprise? It is the same strategy they have used for 5 years. There is nothing new here.

avatar F**k the Republicans from George Bush to Mickey Kaus.

For five goddamn years, the Republicans have been looting the treasury and now they don't want to pay a lousy $9 an hour?

Everything the Bush administration touches turns to shit. The administraton is stuffed with incompetent cronies busy lining their pockets. The Defense Dept. can't account for hundreds of billions of taxpayer dollars. The pigs at the taxpayer trough, collectively known as Congress, has defined its only purpose to be enriching the bank bank accounts of friends and supporters.

I say we hammer away at every leazy finaanical transaction that we can. As a former auditor, I'm willing to volunteer my time to pore over financial records.


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We're talking about savings here in terms of spending.


See! If you pay people less, you SAVE money!!!


Why do I get the feeling watching these things that Scottie is making up for getting his lunch money stolen a lot as a kid?

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It seems pretty nasty obvious to me...lower the wage for women and minorities.

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I have a general question. Since NOLA was already one of the most economically depressed areas in the country, what was the prevailing wage? Will suspending the Davis-Bacon act actually bring wages below the federal minimum? Also I am willing to bet that there are not too many women (or minority) owned businesses that will be bidding on the major reconstruction jobs.

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The number I've seen is 9-11/hour dollars as the "prevailing wage."


 

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Perhaps the White House and Republicans believe there is a Laffer Curve for wages. As they say if you cut Federal Tax rates the Federal Government ends up with more revenue.  If you cut peoples wages they will end up with more income.  


Unless the Laffer Curve and the impact of the Bush tax cuts are fought this nonsense will continue be put forward.

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Commenting further...

This is an excellent example of a very insidious use of language. People like good wages. They like benefits with their jobs.  They like clean air and clean water and they think businesses should be held to environmental standards.  But they hate red tape.

So if you cut wages, and allow businesses to pollute the air and water, the people will get mad. Unless you say you're just cutting red tape. Then only the people paying close attention will get mad.  The others will say, "good, we have a cando government that slashes through the red tape to get the job done."

What's interesting is McClellan's INSISTENCE on using the coverall term.  He DISAGREES with the reporter's "characterization" of suspending a wage requirement as "cutting wages".  He won't budge on that, he won't AGREE TO THE TERMINOLOY.  He insists on the "red tape" obfuscation terminology instead.

This is a very sophisticated abuse of language and abuse of the people's trust. In the good old days, the Dems could champion minimum wage laws and get elected.  Now, it's all a lot murkier because it's a war of words as much as anything.

 
Too bad this crew's cleverness and sophistication seems to be exclusively used in the service of low ends. Just think if they could put all that energy to some good use - even for one day?

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Even if there were a benefit to the women and minortiy owned (Scott made sure he said that at least twice) businesses, it's not the business owners that will suffer.  It's the poor people working for them.  You know the ones that were hardest hit and most effected.  The ones that lived paycheck to paycheck maybe on 8 or 9 bucks an hour and have no home anymore.  I'm sure that they will be jumping at the chance to help the government cut through the red tape by working for minimum wage.

avatar The federal minimum wage is 5.15/ hour. 
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I don't really understand why Bush et al. are sticking their necks out on this.  They want to 'starve the beast' and shrink the government, so why not spend as much as possible on reconstruction (via contractor wages)?  Plus, it's not like the *government* will be the beneficiary of these savings anyway; *Halliburton* will receive the benefits since they will still charge the government the same price for time/materials while paying out less in wages.

Ah, right.. I answered my own question.   

avatar Scottie reminds me of one of those old puppets where you'd pull a string and the puppet would repeat one of a handful sentences.

I've already answered that.
We addressed that last week.
I've spoken at length on that.

Though the press appears to ask questions, they're merely pulling his string to see which stock answer he mouths this time.
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Could someone figure out what Michael Brown was being paid on a 2000 hour annual basis per hour for his work?
Then at the next press briefing you might say something like...
"Scott....when he was serving as head of FEMA, Michael Brown was earning $100,000 per year which works out to a rate of about $50 per hour in a job for which he had absolutely no qualifications.  It now appears that the administration is filled with people in high paying jobs, funded by taxpayers, who have no qualifications.  Will the President eliminate those jobs to help pay for recovery relief or at least order that the salaries be cut to reflect the experience level of the office holder?  Certainly as President, he could cut through the red tape and make that happen, couldn't he?"

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"This will open up access to more business -- small businesses, including women-owned and minority-owned businesses..."

it's when they trot out the disadvantaged as cover for the halliburtons that i know they are evil...

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CBR:  Also I am willing to bet that there are not too many women (or minority) owned businesses that will be bidding on the major reconstruction jobs.

SAT queston - which one of these is true?

Cutting wages is to helping women and minority-owned business, as:

(a) throwing lifelines is to saving lives

(b) eating dogfood is to bonding with puppies

(c) reading 1984 is to listening to Scott McClellan

(d) drowning in a flood is to drowning the government in a bathtub

(e) eliminating the estate tax is to helping small businesses

 

avatar I guess if I were the reporter, I would ask Mr. Mclellan specifically what 'red tape' is cut by reducing wages.

It would seem that this step would increase red tape, in terms of paperwork and staff time necessary to change the rules, notify everyone of the change, determine when to return to previous wage scales, make the change again, notify all employers and workers again...

I can't understand why the press gallery didn't key in on the phrase 'red tape', which Scotty of course repeated several times (can we just stop the blame game and give the red tape a fair up or down vote?).

If they filled the briefing room with 3 feet of bullshit, wouldn't these reporters ask why?

What's the difference?
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If you really want an example of pure, unadulterated gibberish, see this quote from the same press conference:

 

In terms of other priorities, there were other priorities. We remain firmly committed to those priorities. They are important priorities.

 

 

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Wage rates for heavy labor in  acadia county under Davis-Bacon.

 Wages rates for Louisiana, by county.

I just listened to Scotty's explanation, which made no sense at all. He kept talking women and minority businesses and red tape.  At one point, he starts to say it will save the government money, but then he stops himself because he also has claimed that there is no wage reduction under the suspension.  The only way Davis-Bacon saves money is to reduce money paid to hourly workers per hour.

I'm still not sure I understand the reason for the repeal--the contracts are cost-plus.  Could it be that subcontractors benefit?  That Shaw farms the work out to Bubba's Basement Restoration, who complies?  I still don't see how that helps Shaw. They're just gonna mark it up anyway.

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Yes, I agree with you. It's pure, the real thing. Unadulterated gibberish.

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One might even say, organic gibberish.

avatar I'm still not sure I understand the reason for the repeal--the contracts are cost-plus.


How do you know they are cost-plus?
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If they filled the briefing room with 3 feet of bullshit, wouldn't these reporters ask why?


That is what the whole White House Press Briefing game is about, with every president. When are people going to get that? It drives me nuts. It's a game about who can get the press spokesman to slip up in his B.S., that's all it is.


Understand this: the White House press spokesman is NOT THE PRESIDENT. He can't say anything definitive! He is not allowed, because he does not set policy.


The White House Press corps is there to get the propaganda that the White House wants to put out. That's it, that's all there is. With every president.


They get bored by that and try to make the spokesman slip up in his answers with a 'gotcha.' It's a game that many of us enjoy, but keep in mind: it is a game; there is little truth to be gained there unless you want the President's schedule for the next day.


People have got to stop expecting more than propaganda from a P.R. office. This is the absolutely a useless thing to get outraged about.

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Scottie: "This will open up access to more business -- small businesses, including women-owned and minority-owned businesses."


Operation Offset: "Eliminate the Minority Business Development Agency -  MBDA provides funding for various Minority Business Development Centers, designed to assist minority  entrepreneurs get businesses up and running.  This program is duplicative of several other business  development assistance programs offered to all business owners. Savings: $417 million over ten years "

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p.s. There is actually a strong case to be made that the White House press corps asking good, astute questions helps the administration in power. It helps them hone their P.R. message. The press spokesman takes it to the staff meeeting, and they hone a new, better approach for the next day.

avatar The use of progressive-sounding rhetoric to justify rightwing agendae is a staple of US politics.   Creeps or inauthentic progressives within progressive venues typically use what I call 'commie-compatible' pretexts to further rightwing agendae.   The W Bush Administration does this (eg the 'liberalism/slavery' gambit) particular tactic openly and shamelessly to an unprecedented extent, though it is hardly wholly new.

  Let's look closely and systematically to the repeated protestations of concern for women and minority owned businesses (not constituencies of especial solicitude at the hands of the W Bush Administration or the Republicans in general, something wonks on this issue should throw up in their face with full details, bigtime) -- from the standpoint of what the Administration would do if that were truly their concern.  For example, they could have selectively suspended (though I am not myself embracing this suggestion) the rules specfically for those categories of businesses, thus giving them a competitive advantage.   (Actually, there are other ways to give an edge to the category that wouldn't set their interests against those of workers' needs, and those are the policies I would like to see).
The point is that the policy has nothing to do with women and minorities, just like all these RW types with a sudden environmental fit seek to return portions of the City of NOLA to wetlands 'as they were before 1700', in the words of one op-ed  NY Times articles.


          &nbsp ;      We should always be on the lookout for the counterfeit invocation of progressive principles that is such a staple of US politics from many different angles, including the ostensibly progressive.
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So, unless I misinterpret McClellan's response (granted, that would be easy to do) the Bush Administration's main justification for suspending Davis-Bacon is to be able to give work to women and minorities - at less than the prevailing wage. Does he mean they would never presume to pay their white male friends less than top dollar? So women and minorities should be paid less than the "prevailing wage" because . . . let's see . . . they are worth less?
As has been noted already, there will be ship loads of pork handed out to favored contractors to rebuild the Gulf Coast - the same ones already making a fortune rebuilding the other Gulf Coast in Iraq. Haliburton already has contracts to repair Naval facilities for +$500,000,000 - are we paying Haliburton less than prevailing wages?
We need a new congressional act, one that can be suspended so we don't have to pay prevailing wages the multi-million dollar salaries, "the prevailing wages," of executives of government pork contractors. We'll call it the "GiveUs-Bacon Act" - let's suspend that one!
Has anyone explained why suspending Davis-Bacon makes anything better?
You do have to say this for them, at least they are consistent: "OK, let's see, we already gave tax breaks to the wealthy, now we need to lower the wages of everybody else." Makes sense if you see it from their point of view.

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"Red Tape" here means having to deal with pesky unions. Their goal is to send us farther down the already greased, slippery slope of union-busting. Each of their daily outrages of this kind takes us closer to their ultimate goal of a society where the largest number of people work for the lowest possible wage.

avatar In addition to providing  requirements for prevailing wages, is one aspect of Davis Bacon to list contractors barred from working on Federal projects? If so,  eliminating Davis Bacon provisions seems  to open up jobs to some who would otherwise not be allowed to work. Who's on that list? I tried to check this on the Department of Labor website, but the site was "unavailable". If this has already been asked and answered, I apologize- this is my first week at TPM. Lots to absorb.
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Because I'd seen multiple stories like this one.


Also, because there's no way anybody is signing a fixed price contract without very clear specifications of the tasks to be performed and the timeframe within which they were to be performed. The contracts were awarded way, way too quickly for that.

 

Excerpt:

<pre>Yochi J. Dreazen The Wall Street Journal </pre&gt <pre>September 12th, 2005</pre&gt <pre> </pre&gt

WASHINGTON -- The Bush administration is importing many of the  contracting practices blamed for spending abuses in Iraq as it beginsthe largest and costliest rebuilding effort in U.S. history.

The first large-scale contracts related to Hurricane Katrina, as in Iraq, were awarded without competitive bidding, and using so-called cost-plus provisions that guarantee contractors a certain profit  regardless of how much they spend.

<pre> </pre&gt

 

avatar Apparently no one in the administration is qualified to prepare specifications for all or any part of the reconstruction efforts? Isn't this part of the GSA's mandate? As a construction industry lawyer, I can say that a cost-plus contract is, in my opinion, a blank check. If the administration was truly concerned about contolling the cost of reconstruction (and allegedly saving the taxpayers money), they would be a little more creative in their procurement efforts. The only circumstances where I have seen cost-plus reasonably used is when (a) the original contractor has seriously defaulted on a contract and been terminated, (b) the replacement contractor contends that it cannot assess the extent of the default/non-conforming work, and (c) the owner is not concerned about writing a "blank check" because it will be reimbursed by the defaulting contractor or its surety. Even in *these* circumstances, most owners will push for a fixed price contract and try to shift the risk to the replacement contractor. What people need to realize is that many contractors commit to fixed price contracts with ill-defined specifications and less than 50% complete engineering (sometimes significantly less) and still make money. It's not the wisest business practice, but it is the way much of the industry functions. Why not consider fixed price contracts with a balloon completion payment that can be increased for early completion or reduced for late completion? Would Kellogg et al. really walk away from this kind of work?

And as to the other reader's comment that the "small and minority owned businesses" that the administration's actions are supposed to "help" will not get this work, I tend to agree. Most likely will not have the resources for a large scale contract (even though costs are paid with markup in a cost-plus contract, the contractor must still have the cash flow to pay those costs when they are incurred). If instead they are subcontracted to the general contractors, they likely will not get the benefit of any cost-plus arrangement - they will have to hard bid their work and assume all risks associated with that. The big companies will get richer, the small companies will potentially get poorer. 
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Apparently no one in the administration is qualified to prepare specifications for all or any part of the reconstruction efforts?

Well, you can't have it both ways--fast and detailed.  To the degree the services were needed immediately, I don't see any other way than cost-plus with a prequalified vendor. Or, at best, a contract with a ceiling and prespecified prices for services.  Like the elevator service contract in my building.

Also, I can't imagine turning around a contrract with any government entity in less than 30 days.  My experience is with state and local contracting, but there is much red tape involved. Cost-plus with a trusted vendor with audit provisions doesn't seem unreasonable on its face.

I can say that a cost-plus contract is, in my opinion, a blank check. If the administration was truly concerned about contolling the cost of reconstruction (and allegedly saving the taxpayers money), they would be a little more creative in their procurement efforts.

We have good reason to be suspicious of this administration's commitment to cost control and cost-effective service procurement efforts.  In a situation like this, nobody is gonna take the work without being protected against the risk of losing money on the job. (Did you notice the mini-crisis on corpse handling?).  But that doesn't mean that the administrators should not move rapidly to normal oversight and audit controls.


And as to the other reader's comment that the "small and minority owned businesses" that the administration's actions are supposed to "help" will not get this work, I tend to agree.

The benfits to those folks would have been at the initial bid process, where there is supposed to outreach. If they're subs, they're screwed.  

But the subs are the ones who might well benefit from suspending the Davis-Bacon act. They could bid the work at prevailing rates and pay the people doing the work less than the prevailing wage.  The contractors, working cost plus, have no incentive to take the low bid, but the subs hae an incentive to pay wages that are as low as possible.

Changing the subject, I saw a note elsewhere that Davis-Bacon may have been originally designed to keep black workers out of contracts let by the government--that there was an unholy union between unions and segregationists on this one, originally. Have you seen anything in that regard? 

avatar Perhaps the White House and Republicans believe there is a Laffer Curve for wages. As they say if you cut Federal Tax rates the Federal Government ends up with more revenue.  If you cut peoples wages they will end up with more income. 

The way this administration operates is they do their dirty deeds as fast as they can, before people have a chance to stop them during real and unreal crises.

In a way they are right. The workers who will be on minimum wage will qualify for food stamps, earned income credits, Medicaid and free school lunches for their children. A couple both working at minimum wage would make less than $22,000, together.  A singoe person makes $10,612 a year on the minimum. (figured on $5.15 an hour.)      

That way the rich businesses have the employee wages paid by the tax payer, who more and more are the middle class.

The kicker is they are cutting all of those programs, too.

A lot of those programs are shams. One single mom told me, she signed her kids up in AR for insurance. It was for “Our Kids” or “AR kids” They told her that she had to wait a year without insurance before she would qualify. That was about 9 years ago.

Another single mom signed up for her two children for “Our Kids” Insurance in AR recently. She filled out the form off the internet and mailed it in. She received a letter that her children qualified and would receive two insurance cards.

A month later the cards hadn’t came and one of her children was hurt playing at school and the other is running a low grade fever. She called to asked where the cards were and they told her she had to come in to be interviewed before she could qualify. They said they sent her a letter telling her that. She didn’t receive a letter, but noticed they had typed the address box number (which she had clearly put down) wrong on the one letter she did get.

Anything Medicaid pays for is taken out of their estate when they die, so in a way their children are paying for big businesses cheap wages. The little that the poor might possibly inherit goes to pay Medicaid back. The whole thing is a unfunny joke and a sham.
avatar Great points. A few more to consider are these:

1. Doing it "fast" does not obviate the need to do the detail. Granted, having prequalified vendors do the work on a cost-plus basis does save a good deal of time and administrative resources, but no one should get the impression that these contractors will be able to hit the ground running without first doing a good bit of due diligence on the extent of the damage and the work that needs to be done - the detailing. And they will get paid for it. Perhaps this is the only feasible way to handle the situation. Perhaps having a limited number of "owner's representatives" (architects/engineers/etc.) work on a cost-plus basis to do this front end work and develop specifications is another way. I'm not suggesting that construction jobs should be awarded through some extensive rfp/bid process. What I am suggesting is that prudent business practices should be observed where possible.

2. I may be missing some of your point about the subcontractors benefitting or being "screwed" by the suspension of the prevailing wage requirements. It seems to me that putting the subs in a position where they are telling their customer they will pay prevailing wages and then having them reap the rewards of paying less seems a dubious benefit at best. While the contractor may not be concerned about the financial aspects of that arrangement (because he/she is being paid cost-plus), from a public relations perspective, it may be relevant whether the sub is actually paying prevailing wages or not (that is IF this issue ever gets the press it deserves - we are not talking about finding a better price on widgets or a more productive workforce, we are talking about deliberately misrepresenting the cost of a sub's labor). Putting small and minority owned businesses in the position of profiting in this fashion seems far afield from the alleged intent of the administration's actions.

As for the racial/racist history of the Act, I'm far from well-versed. I do know, however, that race has been raised in most discussions of this subject I have seen since the President took action. To me, this makes it all the less likely that small, and particularly minority-owned businesses will want to speak out of both sides of their mouths on this issue.

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