In this issue:

U.S. Manufacturers Close More Plants, Move Overseas

Cheney-Bush Budget To Slash Domestic Programs

Sears To Phase Out Pension Plan

Outsourcing Pushes Planned Job Cuts Up in January


From Volume 3, Issue Number 6 of Electronic Intelligence Weekly, Published Feb. 10, 2004

U.S. Economic/Financial News

U.S. Manufacturers Close More Plants, Move Overseas

U.S. manufacturers are closing more plants and moving production overseas, as the faked factory index rises to a two-decade record, Bloomberg reported Feb. 2. Exposing the myth of rising manufacturing production and exports claimed by the Institute for Supply Management's (mood-based) manufacturing index—with job growth expected soon—here are a few signs showing the reality of the economic depression:

*Carrier Corp. said it will close its factory in McMinnville, Tenn. by the end of 2005, eliminating 1,300 jobs—and move production in part to plants in Monterrey, Mexico. Already, the maker of commercial air conditioning and ventilation products has closed 22 factories worldwide over the past two years.

*Duraw Manufacturing shut down its plant in McComb, Miss. Feb. 2, as it shifts operations to China. An earlier closing of its main plant in Mebane, N.C., which also produced wiring harnesses for computers and motor control centers for General Electric and IBM, eliminated 1,100 jobs. "Ten years ago, work went to Mexico with NAFTA and what didn't go then, is going now to China," said the plant manager.

Cheney-Bush Budget To Slash Domestic Programs

The Office of Management and Budget (OMB), on behalf of the Cheney-Bush Administration, released the U.S. Federal budget for fiscal year 2005, as well as supposedly more "firm data" for the fiscal year 2004 budget. The budget is very scattershot, with various supplemental programs tacked on in ways that are not very clear. The OMB budget projects that expenditures for FY 2004 will be $2.319 trillion, with revenues of $1.798 trillion, which produces an "official" deficit of $521 billion (the real deficit, were the Social Security Trust fund to be excluded, as it should be, would be much larger); the FY 2005 deficit is projected to be $364 billion.

The Bush tax cuts and the war adventures have contributed significantly to the budget deficit, but the biggest cause is the ongoing economic depression.

Between FY 2003 and 2004, the Administration proposes to increase defense spending from $365.3 billion, to $375.3 billion, and then to increase it again to $401.7 billion in FY 2005. However, this is deceptive, because it omits the cost for Iraq and Afghanistan operations, which OMB director Joshua Bolten said could be $50 billion next year.

What is clear, is that the axe will be applied to the "discretionary" part of the FY 2005 budget, i.e., the part that is non-mandatory, non-defense, and non-homeland security.

*The House Transportation Committee leaders had called for $375 billion for transportation: highways, transit systems, etc. The Bush budget calls for $256 billion, a cut of 32%.

*The Administration proposes to cut $1.8 billion, nearly 20%, from the Housing and Urban Development Section 8 vouchers, which subsidize housing for the poor. The National Low-Income Housing Coalition estimates that 250,000 low-income families would be cut off from housing assistance, and could become homeless.

*The budget would eliminate 65 domestic programs, and reduce 63 others; the full list of these affected programs has not been disclosed.

However, the budget deficit and various parameters will sharply worsen, as the economic-financial disintegration yields non-linear explosions in the system.

Sears To Phase Out Pension Plan

Sears, under pressure from Wal-Mart, will phase out or eliminate most stock options, and cut bonuses. To "compete" with Wal-Mart's less costly benefits to employees, Sears will shift workers under 40 to self-funded 401(k) plans, and will end stock option grants in 2005 for salaried employees, excluding directors and vice presidents.

Meanwhile, Wal-Mart's "famously stingy" health-care practices were attacked by AFL-CIO Director of Public Policy Christine Owens: Fewer than half of Wal-Mart employees are covered by its health plan, which imposes extremely long waiting periods, high costs, and health-coverage exclusions. For example, in Georgia, a state government review in 2002 found that more than 10,000 children of Wal-Mart employees were enrolled in the state's children's health program—nearly 14 times the next highest number.

Outsourcing Pushes Planned Job Cuts Up in January

Planned job cuts jumped 26% in January, compared to December, because of increased outsourcing overseas. Companies announced plans to cut 117,556 jobs in January, up from 93,020 layoffs in December, reported the outplacement firm Challenger, Gray & Christmas. Further, planned job cuts in January exceeded 100,000 for the first time since last October, Reuters reported Feb. 3. Consumer product firms led with 22,775 job cuts—the largest number of reported job cuts in that sector in a single month since 1993. The main reason for the increase in job cuts, Challenger said, was that more and more employers eliminated jobs in the U.S. and moved production to India, China, and the Philippines.

Disconnected from this reality, Treasury Secretary John Snow, in testifying on the budget before the House of Representatives' Ways and Means Committee, claimed that "the job market is improving," while the [casino] economy "is growing at a pretty good rate."

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