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Study: Repeal Of Wisconsin’s Prevailing Wage Law Led To Drop In Wages For Construction Workers

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A new study from the Midwest Economic Policy Institute (MEPI) released exclusively to Wisconsin Public Radio finds the repeal of Wisconsin’s prevailing wage laws has resulted in lower wages for construction workers in Wisconsin, despite having no statistically significant impact on the cost of public construction projects.

Prevailing wage laws set minimum pay requirements for wages paid to workers on public construction projects, like school buildings or highway construction. 

Former Gov. Scott Walker along with GOP lawmakers in the state Legislature repealed Wisconsin’s prevailing wage law for local construction projects in 2015. Two years later, the GOP repealed Wisconsin’s prevailing wage law for state construction projects. 

Using data from the U.S. Census Bureau, the study shows that before the laws were repealed, the average annual income for full-time construction and extraction workers was close to $49,000. After the laws were repealed, average annual income was a little over $46,000, a drop of more than 5 percent. When the study removed factors such as education and age, the average annual income for workers was 6 percent less than income pre-repeal.

“Prevailing wage provided ladders of access into the middle class for Wisconsin construction workers,” Frank Manzo IV, policy director for the MEPI, said, adding that repealing it has had negative consequences for those same workers. 

Two of Wisconsin’s neighboring states with prevailing wage laws in place showed a smaller drop in annual average income between 2015 and 2018. In Illinois and Minnesota, annual incomes dropped by under 2 percent combined.

The study further found that at the same time, construction industry CEOs saw an increase in pay after the repeal of the prevailing wage, worsening economic inequality, according to the authors. Researchers estimate construction industry CEOs in Wisconsin saw slightly more than a 54 percent increase in inflation-adjusted total income after the laws were repealed.

The data also showed that, following repeal, there was a decrease in the likelihood that skilled construction workers had employer-sponsored health insurance. 

“Repeal has lowered wages and reduced health coverage for skilled construction workers, and resulted in less work for local contractors,” Manzo said. “At the same time, repeal has failed to deliver cost-savings on public projects and to increase bid competition — both of which were promised by politicians.”

Kevin Duncan, an economics professor at Colorado State University-Pueblo who was part of the study’s research team, said when construction workers have a lower income and less health insurance coverage, it has broader effects on local economies.

“When income goes down for construction workers they have less to spend in local retail and service industries,” Duncan said. “And then also with a decrease in health insurance … benefits, that results in greater reliance on public assistance. When construction workers are paid less they have to rely more on public assistance — (food stamps), that sort of thing — so that tends to increase the taxpayer burden.”

Fewer Wisconsin Contractors, No Effect On Construction Costs

At the time of the repeal on state construction projects, many Republicans criticized the law, saying itinflated the costs on public projects, and arguing that repealing the laws would save taxpayers money. 

But researchers with MEPI said the data shows repealing prevailing wage had no statistically significant effect on the costs for public construction projects.  

Researchers also found that the Wisconsin Department of Transportation saw fewer bids from Wisconsin-based contractors after the laws were repealed compared to before. Between January 2015 and September 2017, more than 2,600 bids for DOT projects came from Wisconsin contractors. But between October 2017 and December 2019, following the repeal of the laws, that number dropped to a little over 1,700 bids.

The drop meant the share of bids from out-of-state contractors increased from 9 percent to 13 percent in the same timeframe.  

“What that means is … Wisconsin tax dollars that previously went to Wisconsin contractors and construction workers, (are) now being used to pay workers from out of state,” said Duncan. “When that happens, Wisconsin tax money leaks out of Wisconsin and it stimulates economies in neighboring states instead of supporting the local economy.”

The MEPI study also found there was no statistically significant impact on the racial or ethnic diversity of construction workers before and after repeal. The study did find a drop in the share of women working in construction in Wisconsin after the repeal of prevailing wage, despite that number being extremely low prior to the repeal. 

This blog originally appeared at Wisconsin Public Radio on October 2, 2020. Reprinted with permission.

About the Author: Rachel Vasquez is a producer at Wisconsin Public Radio.


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Is the Conservative Case for Organized Labor an Oxymoron?

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Oren Cass—con­ser­v­a­tive pol­i­cy wonk, 2012 Mitt Rom­ney advi­sor and exec­u­tive direc­tor of the new think tank Amer­i­can Com­pass (which does not dis­close its donors)—is a sur­pris­ing can­di­date for labor law reformer. That is exact­ly why his recent­ly launched project to build and define a â€śCon­ser­v­a­tive Future for the Amer­i­can Labor Move­ment” is draw­ing so much attention. 

In a found­ing state­ment titled â€śCon­ser­v­a­tives Should Ensure Work­ers a Seat at the Table,” the group argues that orga­nized labor can improve eco­nom­ic pros­per­i­ty and strength­en com­mu­ni­ties, all while main­tain­ing lim­it­ed gov­ern­ment. The state­ment is signed by Cass, Mar­co Rubio, Jeff Ses­sions and oth­er fig­ures on the right. As you might imag­ine, the dev­il of this labor reform project is in the details. 

We spoke to Cass about sec­toral bar­gain­ing, labor mil­i­tan­cy, and the polit­i­cal real­i­ties of con­vinc­ing Repub­li­cans that unions deserve to exist. 

What made you decide that now was the time to launch this effort to save orga­nized labor? 

Oren Cass: It fits gen­er­al­ly with the broad­er focus of Amer­i­can Com­pass, which is to ask, â€śWhat has gone wrong in our econ­o­my which is lead­ing to poor out­comes for many peo­ple? And what would a gen­uine­ly con­ser­v­a­tive response look like?” My view is, what we call con­ser­v­a­tive eco­nom­ic pol­i­cy in Amer­i­ca is not con­ser­v­a­tive in any mean­ing­ful sense of the word, it’s lib­er­tar­i­an. It’s a func­tion of the Rea­gan coali­tion in which eco­nom­ic lib­er­tar­i­ans did the eco­nom­ic pol­i­cy, and social con­ser­v­a­tives did the social pol­i­cy. But if you think about the mar­ket fun­da­men­tal­ism that dom­i­nates right of cen­ter think­ing, it’s in many ways the antithe­sis of con­ser­vatism. It puts fair­ly blind faith in a mar­ket, with­out any ref­er­ence to the rules around the mar­ket, insti­tu­tions sup­port­ing the mar­ket, with­out con­cern for social struc­tures or the social fab­ric. We’ve real­ly been miss­ing a gen­uine­ly con­ser­v­a­tive per­spec­tive that asks, â€śHow do we ensure that the mar­ket is one that is actu­al­ly deliv­er­ing the out­comes that we want for healthy fam­i­lies, and com­mu­ni­ties, and the strength and sol­i­dar­i­ty of the nation?” 

One of the places that strikes me as a huge oppor­tu­ni­ty that has been over­looked, if not out­right den­i­grat­ed, by the lib­er­tar­i­an per­spec­tive is this idea that, look, orga­nized labor is a great thing—that unions as they are oper­at­ing in Amer­i­ca today are dys­func­tion­al in many ways, but the idea that we should want work­ers to be able to act col­lec­tive­ly… is all to the good. That’s exact­ly the for­mu­la for a well func­tion­ing mar­ket economy. 

How do you dis­tin­guish what you call the con­ser­v­a­tive per­spec­tive on this issue from the lib­er­al (non-social­ist) perspective? 

Cass: If we talk about tra­di­tion­al lib­er­als, I think in many ways there’s a lot of shared ground with respect to the out­comes we want. The major point of depar­ture is on two ques­tions: One, how good are mar­kets at doing things rel­a­tive to how good is gov­ern­ment at doing them? My view at least is that mar­kets are quite effec­tive and pow­er­ful, and the role that we want for gov­ern­ment is in fig­ur­ing out what kind of con­di­tions we need to cre­ate to chan­nel that pow­er in the right direc­tion. Where­as the left of cen­ter view, I think, tends to be more, if we’re not hap­py with what a market’s doing, we will just tell it some­thing else. Sec­ond­ly and relat­ed­ly, I think there is a very dif­fer­ent view of the role that redis­tri­b­u­tion can play. I think the lib­er­al view tends to be, we can pro­vide to who­ev­er has been left behind, where­as the con­ser­v­a­tive view is that that’s actu­al­ly not a good answer—that a gov­ern­ment check is not a sub­sti­tute for a paycheck. 

You were a Mitt Rom­ney advi­sor in 2012. Have your views on these issues changed a lot since then? This doesn’t sound like the Rom­ney labor plat­form.

Cass: I don’t think my views have nec­es­sar­i­ly changed very much. If we were to talk about spe­cif­ic ques­tions like sec­toral bar­gain­ing, [that] is some­thing I’ve become much more inter­est­ed in over the past year or two, after writ­ing in my book that that was exact­ly the wrong way to do labor reform … But in terms of the big­ger pic­ture ques­tion of what should the goals of eco­nom­ic pol­i­cy be and what should the levers be, I would say my instincts have always been in this direc­tion, and as I’ve had the oppor­tu­ni­ty to do more research and work on it I’ve been able to flesh out more of the ratio­nale for that, and what it might mean to give it shape in the real world.

You talk in your state­ment about sub­sti­tut­ing col­lec­tive bar­gain­ing for employ­ment reg­u­la­tions, rather than hav­ing both as we do now. How do you take away those work­place reg­u­la­tions with­out expos­ing work­ing peo­ple to per­ilous dan­ger in the process? 

Cass: I don’t think you take them away, I think you shift them from a base­line to a default. The way the sys­tem we have today works is that every­thing estab­lished in employ­ment law is a non-nego­tiable start­ing point, and if you union­ize or are oth­er­wise bar­gain­ing with employ­ers, the entire pur­pose of the exer­cise is to think of new things to add on top of that. But of course, the whole ratio­nale for need­ing such a robust rĂ©gime of employ­ment reg­u­la­tion is that indi­vid­ual work­ers with­out col­lec­tive rep­re­sen­ta­tion don’t have the abil­i­ty to safe­guard their inter­ests very effec­tive­ly. So at the point where you do have work­ers orga­nized and bar­gain­ing col­lec­tive­ly, it seems to me they can just say, we’re adopt­ing as much of the employ­ment reg­u­la­tion as we want. They don’t have to agree to any­thing. When you think about the scope for bar­gain­ing an agree­ment that you could con­sid­er—hav­ing most, not all, of exist­ing reg­u­la­tion on the table I think is a real­ly attrac­tive arrange­ment. I think it’s attrac­tive for work­ers, because there’s no short­age of reg­u­la­tion that they don’t val­ue that highly â€¦

And like­wise from the employ­er per­spec­tive, this changes the prospect of col­lec­tive bar­gain­ing from â€śthe worst thing imag­in­able” to some­thing that could actu­al­ly have some upside. 

It seems to me that that arrange­ment would by neces­si­ty require work­ers to have a bal­ance of pow­er with employ­ers they’re bar­gain­ing with. Do you sup­port a robust right to strike as part of that? 

Cass: I do think there should be a right to strike, but I think if you shift to a sec­toral bar­gain­ing con­cept then that becomes a very dif­fer­ent ques­tion. Because this adver­sar­i­al bar­gain­ing isn’t going to be hap­pen­ing between the work­ers and employ­ers at a sin­gle firm, it’s going to be hap­pen­ing at the sec­toral lev­el. Do you get sec­tor-wide strikes in sec­toral bar­gain­ing? Yes, it does hap­pen, but I think you tend to see a lot less labor strife in that context. 

What is the work­ers’ lever­age, even in sec­toral bar­gain­ing, besides the right to with­hold their labor? Par­tic­u­lar­ly if you are sug­gest­ing that employ­ment reg­u­la­tions should be on the table.

Cass: That is one form of lever­age they have, but there are a bunch [of oth­ers] that I think are more close­ly con­nect­ed to the role that you have gov­ern­ment play­ing in a sec­toral bar­gain­ing sys­tem. If the fall­back if no agree­ment is reached is not â€śemploy­er does what­ev­er it wants,” it’s essen­tial­ly bar­gain­ing is imposed, that’s obvi­ous­ly one fall­back… Anoth­er thing that tends to play a role is, par­tic­u­lar­ly when you have a sec­toral sys­tem, unions are actu­al­ly doing oth­er things that are con­struc­tive. For exam­ple, unions are typ­i­cal­ly play­ing a much more assertive role in train­ing. There are more facets to that part­ner­ship that are also at risk if no agree­ment is reached. 

I know some labor lead­ers who would say that the fact that a per­son like you is advo­cat­ing for sec­toral bar­gain­ing is proof of the draw­back of sec­toral bar­gain­ing—that it is a way to sap mil­i­tan­cy out of the labor move­ment. What do you say to that? 

Cass: I see that atti­tude as encap­su­lat­ing per­fect­ly how the Left has man­aged to total­ly sab­o­tage the labor move­ment in recent decades, which is to try to use it as a tool of par­ti­san or rad­i­cal left­ist pri­or­i­ties, rather than a tool that’s actu­al­ly going to improve things for work­ers. If you think we’re real­ly on the cusp of suc­cess for a mil­i­tant labor move­ment in this coun­try, then I don’t know where you’ve been, but that’s obvi­ous­ly not the direc­tion where this is head­ed. To the con­trary, the labor move­ment is slow­ly dying out of its own dys­func­tion inter­nal­ly, and its own poor design in the statu­to­ry frame­work it’s oper­at­ing under. Now, my equal frus­tra­tion is with those on the right of cen­ter who say â€śhuz­zah,” and stand aside and shrug or grin as this hap­pens. To come from the right of cen­ter and say, let’s not have this thing die out, let’s find a way to have a labor move­ment that works, and achieves valu­able things for work­ers, is not a plot to defang a mil­i­tan­cy that does not exist and has no prospect. That would be a waste of effort. 

When you talk about the labor move­ment being too par­ti­san—what choice do they have? The plat­form of the Repub­li­can Par­ty is to wipe them off the face of the earth. 

Cass: If you go back and look at the his­to­ry, there’s plen­ty of blame to go around … Dwight Eisen­how­er went to the AFL to cam­paign for their votes in the 50s. Nixon fet­ed labor lead­ers at the White House. The AFL-CIO did not endorse McGov­ern in â€™72. Samuel Gom­pers had polit­i­cal non­par­ti­san­ship as a core prin­ci­ple of orga­niz­ing. If you fast for­ward to the â€™90s, when Newt Gin­grich was Speak­er, those more pro-labor rep­re­sen­ta­tives in the Repub­li­can Par­ty were ulti­mate­ly aban­doned by the unions, and in turn aban­doned the unions. So it seems to me that it’s sort of a piece of the broad­er sto­ry of polar­iza­tion in our pol­i­tics. I guess if you want­ed to have a strat­e­gy of reclaim­ing a strong and mil­i­tant labor move­ment under the Wag­n­er Act you would be wel­come to try, but I’m not aware of any­one oth­er than those whose job it is to say that’s a good idea who thinks that’s a good or plau­si­ble idea. 

Let me ask you about the polit­i­cal real­i­ty of these issues. I don’t see any space in the Repub­li­can Par­ty of today for what you’re advo­cat­ing. Am I wrong about that? 

Cass: I think you’re wrong. That’s part­ly why we start­ed with this state­ment, which I think showed an inter­est­ing range of rep­re­sen­ta­tives … What I found on the Hill in par­tic­u­lar, with folks in the House and the Sen­ate, is that the over­whelm­ing response was, â€śThis is real­ly inter­est­ing, but not some­thing we’ve ever thought about enough.” There’s not a sin­gle per­son we talked to where the response was, â€śNo, I don’t agree.” 

We’re at the point where there are a lot of peo­ple inter­est­ed in this dis­cus­sion. I can’t promise you we’re going to suc­ceed, but I think that a year from now we will have a much broad­er coali­tion that says, actu­al­ly now I under­stand this, and this is some­thing we should be push­ing for­ward on. 

What do you think the leg­isla­tive first step would be down this path? 

Cass: Prob­a­bly to find some par­tic­u­lar places where it would make sense to try some­thing like this. One would be to pick a top­ic, like min­i­mum wage, where I think all sides would be hap­pi­er than the sta­tus quo by say­ing, min­i­mum wage should real­ly be set through more of a sec­toral­ly bar­gained or wage board type mod­el. On a lot of these things the fed­er­al gov­ern­ment can’t do more than set up a frame­work, but here is a mod­el that states and local­i­ties and who­ev­er else could work from. 

Anoth­er pos­si­bil­i­ty is a par­tic­u­lar sec­tor. There obvi­ous­ly are a num­ber of sec­tors that are exclud­ed from the [Nation­al Labor Rela­tions Act], part­ly for dis­crim­i­na­to­ry and part­ly for prac­ti­cal rea­sons. You could start in either the agri­cul­tur­al or domes­tic ser­vice or gig sec­tor and say hey, let’s actu­al­ly imple­ment this here. That’s an approach that could have promise. And a third one is to do it region­al­ly and say, we’re going to offer waivers from the NLRA to some state that wants to come for­ward and try a dif­fer­ent framework. 

What do you think will hap­pen if no agree­ment like this for the future of labor is reached, and cur­rent trends continue? 

Cass: Unfor­tu­nate­ly trends can con­tin­ue for a very long time. Every­thing has break­ing points even­tu­al­ly. I don’t think any­one can very effec­tive­ly pre­dict where any sort of mean­ing­ful break­ing point would occur. So I think the best bet in the absence of reform is that, dur­ing the near to medi­um terms, things just sort of con­tin­ue … to con­cen­trate the gains towards a small num­ber of win­ners, and then you have an awful lot of folks who don’t get to share in those gains, and who strug­gle in a lot of ways. 

This inter­view has been edit­ed for length and clarity. 

This blog originally appeared at In These Times on September 30, 2020. Reprinted with permission.

About the Author: Hamilton Nolan is a labor reporter for In These Times. He has spent the past decade writ­ing about labor and pol­i­tics for Gawk­er, Splin­ter, The Guardian, and else­where. You can reach him at Hamilton@InTheseTimes.com.


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Employers: Be Careful What You Wish For – Your Motion to Compel Arbitration Can Lead to Expensive, Class-Wide Arbitration

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In the wake of ATT Mobility v. Concepcion and Stolt-Nielsen v. AnimalFeeds,* many employers have sought to enact new arbitration agreements or to enforce arbitration provisions in older agreements to eliminate their employees’ ability to come together when seeking to vindicate their rights to enforce statutory protections for workers. Employers should be careful what they wish for, in seeking to compel arbitration. They may indeed wind up in arbitration – but unable to strike class allegations, and required to pay the full and exorbitant costs of class-wide arbitration. 

In a case on which Bryan Schwartz Law serves as local counsel for Richard J. Burch of Bruckner Burch, in Houston, Texas, the employer is now feeling the danger of a Stolt-Nielsen-based strategy seeking to compel individual arbitration in a putative, wage-hour class action. In the Laughlin v. VMWare case, in which VMWare employees assert they were misclassified as exempt employees and denied overtime and other compensation to which they were entitled, the company moved to compel arbitration based on an agreement which did not specifically provide for class-wide arbitration. 

Judge Edward Davila of the Northern District of California struck some of the more offensive provisions of the arbitration agreement under Armendariz v. Foundation Health Psychcare Services (2000) 24 Cal.4th 83, such as a provision which would have required Plaintiff to share the costs of arbitration. However, Judge Davila found these unlawful provisions severable (i.e., refused to kill the whole arbitration agreement). Perhaps most importantly, though, Judge Davila referred to the arbitrator the decision on the Stolt-Nielsen argument – namely, as argued by VMWare, the notion that class-wide arbitration cannot proceed where the parties’ arbitration agreement did not expressly consent to class arbitration. His initial decision from early 2012 is available here: 

http://www.bryanschwartzlaw.com/VMWare.pdf

In arbitration, AAA arbitrator LaMothe then rejected the employer’s Stolt-Nielsen motion to strike class allegations, notwithstanding the fact that the agreement did not expressly give permission to bring class allegations, finding the parties’ agreement intended to encompass all claims by Plaintiff Laughlin, including her class claims. The AAA order is available here: 

http://www.bryanschwartzlaw.com/Laughlin.pdf

In the last 18 months, numerous other arbitrators from JAMS, AAA, and other nationwide arbitration services have likewise denied motions to strike class allegations, employing similar reasoning. 

On review, Judge Davila confirmed the arbitrator’s partial final clause construction award allowing class allegations to proceed, meaning – in light of all the foregoing – that VMWare will now be forced to arbitrate a putative class action, and will be forced to bear all of the costs of doing so: 

http://www.bryanschwartzlaw.com/VMWare-12-20-12.pdf

Be careful what you wish for, employers. You may find that sometimes, allowing employees their day in court is better than the alternative. 

DISCLAIMER: Nothing in this article is intended to form an attorney-client relationship with the reader. You must have a signed representation agreement with the firm to be a client. 

*See our numerous prior blog posts relating to the subject of arbitration class waivers in light of Concepcion andStolt-Nielsen, including: http://bryanschwartzlaw.blogspot.com/2012/09/california-supreme-court-grants-review.html; 

http://bryanschwartzlaw.blogspot.com/2012/09/wage-and-hour-class-actions-sky-is.html;

http://bryanschwartzlaw.blogspot.com/2012/01/landmark-decision-by-national-labor.html; 

http://bryanschwartzlaw.blogspot.com/2011/05/civil-rights-lawyer-and-employee.html.

This post was originally posted on December 26, 2012 on Bryan Schwartz Law. Reprinted with Permission.

About the Author: Bryan Schwartz is an Oakland, CA-based attorney specializing in civil rights and employment law.


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Michael Steele and the Demise of Working America

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Back in April 2009, GOP chairman Michael Steele appeared as a guest on a republican-oriented talk radio show. A caller to the program voiced his opinion and stated he did not believe the U.S. is in a state of economic crisis. Steele laughed in agreement and claimed that “[t]he malls are just as packed on Saturday.”

San Rafael, California is located 20 minutes north of the Golden Gate Bridge along U.S. Highway 101. With a population of approximately 50,000, it retains the flavor of a small town without sacrificing any of the amenities you’ll find in the most sophisticated of communities.

Nearly every week for the last six months, as I drive along “Mainstreet” on my way to work, I’ve noticed a new storefront that has gone vacant. These are not the vacant addresses that once housed “Old Navy” or “The House of Knives;” and 4th Avenue is not a strip mall. These were shops and boutiques that operated and prospered for the last 20 or more years by catering to the desires and whims of what had been one of the most prosperous communities in the nation. But ever since the mask was removed from Bush’s depression last summer, many of these privileged professionals are finding themselves squeezed financially in the same wringer as the rest of America’s middle class has been for quite some time. As a result, one by one, these shops are falling by the wayside.

The American economy we see today is the end-result of political policies that have been transforming American society for the past 30 years. Based on slogans such as privatization, de-regulation, free trade, out-sourcing, “conservatism,” tax reform, and right to work, legislators have been giving American business what it wants since the days of President Regan. They have turned this country into a place that no longer resembles the country it was when I grew up in the 1950’s and 1960’s.

San Rafael, CA is a long way from Flint, Michigan, the town where I grew up.

Flint was never a place that you would mistake as being a center of sophisticated culture. It had always been a blue-collar town. But in its own way, it had once been a pretty prosperous place. Flint was probably the first urban center in America to feel the crunch created by those economic and business policies that destroyed industrial America. You could say that Flint had been America’s canary in a cage, because that town began dying in the 1970’s.

Type the words “Flint Michigan” into your browser or into the search bar over at You Tube. Take a look at what conservatism has done to America. Flint residents living next door to an abandoned property are now able to purchase that property for $1.00. The city will come in, demolish and remove any existing building on that property and fill in the holes. Thereafter, the new owner only needs to keep the property looking presentable. Another strategy being used is to provide incentives for residents in out-lying areas of the city to move in closer to the city center, so that city services can be discontinued to the abandoned areas.

In the wake of the policies listed above, community after community across America have been pushed over the brink of the same slippery slope as Flint, Michigan was abandoned to years ago when business (General Motors) moved out. Michael Steele’s words prove he remains as ignorant of where America stands today as John McCain was during his failed presidential bid, and Steele’s words are just as irrelevant as is the Republican party. The trouble is, that leaves America with only one other political party. From the looks of it, the Democrats have been cowed for so long by their minority status that following their return to a leadership position, they immediately bowed the knee to the masters of corporate Amerika. That being the case, I can’t see how we’ll ever emerge from the wreckage that’s been left behind.


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