The Irish Independent reports that a large group of senior TDs will keep their generous €6,400 annual bonuses, despite Finance Minister Brian Lenihan's Budget promise to scrap the payments.
Mr Lenihan's controversial measures to curb politicians' pay are far from clear-cut, the Irish Independent has learned.
Contrary to Mr Lenihan's Budget speech last week, the long-service payments will not be scrapped for all Oireachtas members, allowing 66 TDs to keep the €6,400 bonus payment.
A row is also brewing over a reduction in the number of Oireachtas committees after their chairmen insisted that enough savings had already been made with cuts to their allowances.
The revealing of the fine print on the long-service increment payments is the latest flaw in Mr Lenihan's Budget announcements on politicians' pay, which were supposed to show the public they were not the only ones suffering the pain.
In his speech, Mr Lenihan said the Government had decided to "introduce a number of additional changes to the remuneration of deputies and senators".
"Deputies will no longer receive long-service payments or increments,"he said.
TDs are paying the public sector pension levy and the income levy and expenses and mileage rates are also being cut.
But the Department of Finance confirmed that the scrapping of long-service increments would only apply to those who would be entitled to the payment in the future, and the bonus would not be taken off those already receiving it.
At the moment, 66 TDs are getting a payment of €6,391 a year for 10 years' service and six TDs are receiving €3,198 for seven years on duty.
The removal of these payments would effectively have amounted to a pay cut of 6pc for the long-serving TDs.
Instead of all these payments going, as Mr Lenihan clearly indicated, a group of 26 TDs will lose out on a prospective €3,000 pay rise next month.
"This will apply to new additions to the long-service increments, while the existing holders of the LSI payments may continue to receive the payments but can volunteer to surrender it,"a spokesman said.
The planned increased payments to the 26 TDs, simply because they held on to their seats in the general election, sparked a furore after it was revealed last month.
But the latest flaws undermine the Government's attempt to show the political system was being hit by the economic downturn.
Several elements of the politicians' pain aspect of the Budget have loopholes attached:
- The halting of ministerial pensions cannot be done legally at this time, so it is not clear if all TDs will definitely be forced to give them up.
- Nobody can say when the number of Oireachtas committees will be reduced.
- The Department of Education does not know when teacher-TDs will be banned from pocketing the difference in pay when a substitute is employed.
Although the reduction of junior ministers was not announced by Mr Lenihan, the ministers due to be sacked next week are expected to get severance payments, meaning there will be little saving to the taxpayer this year.
Mr Lenihan's spokesman said there was no question of the measures outlined by the minister in the Budget not proceeding.
"These will all be coming into effect and they still stand," a spokesman said.
The long-service increments are not being taken off other public servants and are only being halted for TDs, the spokesman added.
The Government is going to change legislation to reduce the allowances paid for holders of Oireachtas committee positions.
The allowances paid to chairs will be halved to just over €10,000 and the payments to whips and vice-chairs will be abolished.
But the plans to reduce the numbers of Oireachtas committees have hit a snag.
Mr Lenihan is leaving it up to the Houses of the Oireachtas to sort this out.
The body in charge of running Leinster House, the Oireachtas Commission, has proposed a reduction in the committees to 15 from the current 23.
But the chairmen of the committees disagree, saying the cuts in allowances will save €700,000 and the same committees should be left in place until the next general election.
Fianna Fail TD Noel O'Flynn, the chairman of working group of committee chairs, said the committees should be allowed to get on with their work.
Widespread
"There was widespread agreement, from speaking to a number of committee chairmen, that they have accepted the allowance cut of 50pc and there is a saving of €700,000. They see no reason now to change the current structures of committees,"he said.
The Government still seems to be intent on reducing the numbers of committees, but this is dependent on whatever changes come with the junior minister reshuffle.
"No decision will be taken until the Taoiseach has announced his line-up of junior ministers,"a spokesman for Government Chief Whip Pat Carey said.
Meanwhile, the Government's plan to scrap ministerial pensions for TDs and senators who are currently serving in the Oireachtas has hit a legal snag.
The Attorney General has advised the Cabinet of legal problems in introducing the measure in the middle of a Dail term.
Former Taoiseach Bertie Ahern and other sitting TDs receiving the pensions will most likely end up being asked to 'volunteer' to give up the payments.
Thirty-one TDs and senators will lose out on a pension fund of €750,000 a year following the axing of ministerial pensions to sitting politicians.
The Irish Independent also reports that advertising costs on RTE TV are now running at almost half their 2007 levels, new research shows.
The news comes as the national broadcaster continues to fight for another €40m of cost cuts. The company has already slashed €27m from this year's outlay as it faces into a €68m revenue plunge.
New figures circulated by RTE to agencies show the "cost per thousand" viewers on the station this month is 38pc lower than it was in April 2008.
"We had deflation in April 2007 as well, so the costs this month are actually running at 46pc below what they were two years ago," said Paul Moran of agency Mediaworks.
Agencies typically negotiate discounts on RTE's published rates, but the falling rate card is indicative of falling discounting prices. Mr Moran added that the falls in RTE's prices also have knock-on effects for other players in the TV market, whose rates generally follow RTE's.
A spokeswoman for RTE TV said the station doesn't comment on specific figures. "Suffice to say, the advertising market for all media organisations is difficult and all are suffering decline," she added.
Given the rate of TV deflation, Mediaworks is now predicting total deflation of about 23pc across the advertising market in 2009.
The Irish Times reports that the Government is backdating the new, higher income levy rates to the start of 2009, despite earlier indications that the rates would only come into force on May 1st.
Anyone who received a lump sum payment in the first four months of the year – such as a bonuses, which are traditionally paid in the first quarter or dividends – may be affected by the move.
It will also catch business owners and other company directors, many of whom were urged by their tax advisers to “front load” their 2009 income ahead of the emergency Budget to avoid the higher levies, which had been widely leaked ahead of Budget day.
However, people on PAYE whose income is spread evenly throughout the year will not face any clawback.
Among those affected may be people who took redundancy in the first four months of the year. Figures from the Department of Enterprise, Trade and Employment state that almost 21,000 people had been made redundant in the first quarter of 2009. That figure is likely to exceed 27,000 by the end of April.
While statutory redundancy payments are not subject to the income levy, as are certain ex gratia payments, many of those taking voluntary redundancy pay the levy on part of their lump sum. They will now be paying more than the 1 per cent levy they initially assumed to be their maximum exposure under the levy.
In his Budget speech, Minister for Finance Brian Lenihan gave no indication that the income levy would be backdated, stating specifically that “all of these measures [on income tax, the health levy and PRSI] will take effect from 1st May, 2009”.
However, the financial resolution passed through the Dáil on Budget day implementing the amended income levy made provision for a “composite blended” rate over the whole of 2009, which has the effect of catching any exceptional payments made before May 1st.
Under the old system, a person earning less than €100,100 paid the income levy at 1 per cent. Although the rate jumped to 2 per cent on income up to€75,036 and 4 per cent above that in the emergency Budget, it was assumed all income taken before Budget day would certainly come under the old regime. Now it appears they will pay extra tax – 1.67 per cent on the first €75,036 and 3 per cent on the balance.
An explanatory note on the Revenue website confirms that self-employed people will be charged the composite rates.
In a note to clients yesterday, KPMG partner John Bradley said:“Individuals who received income such as bonuses or dividends in the first four months of 2009 would have expected the income to be liable to the levies at the old rates. However, the income will be liable to the levies at new composite rates.”
Mr Bradley, who heads KPMG’s international executive services unit, said a lot of people in a position to manage their affairs, such as business owners, were advised to draw down as much of their 2009 income before the Budget for tax planning purposes. He raised the prospect that a similar backdating exercise may also take place with the health levies.
The Irish Times also reports that the EU has given the green light to a €100 million State-aid scheme for Irish companies facing difficulties as a result of the recession.
Competition commissioner Neelie Kroes yesterday said that Brussels had approved the enterprise stabilisation fund which Minister for Finance Brian Lenihan announced in last week’s emergency Budget.
Under the scheme, State agency Enterprise Ireland can give up to €500,000 to viable companies that are facing difficulties as a result of the credit squeeze and recession.
Mr Kroes said the commission had authorised the Government to give grants of up to €500,000 over 2009 and 2010 to businesses facing funding problems.
The commission’s statement pointed out that the facility had been put in place because of the credit crunch, and added that the money could be given in the form of direct grants, repayable grants, interest-rate subsidies and public loans.
“The Irish scheme will help businesses affected by the current credit crunch without unduly distorting competition,”Mr Kroes said.
EU law bans state aid to business that can potentially distort normal competition. As a result, the State has to seek Brussels approval for aid schemes.
Mr Lenihan announced the scheme as part of a package of job-creation and protection measures in the emergency Budget.
“The broad cost of each 1,000 people who lose their jobs is now estimated at about €21 million,”the Minister said.
“In order to support employment, the Minister for Enterprise, Trade and Employment will set up an enterprise stabilisation fund worth €100 million over two years. In conjunction with the banking sector this fund will provide direct financial support to eligible internationally-trading enterprises.”
The commission’s statement stressed yesterday that the amount of aid given to individual businesses over the two-year period could not exceed €500,000. The scheme could only apply to companies that were not in trouble before July 1st last year, when it said the crisis began to unfold.
Stabilisation fund: how it works
What is the enterprise stabilisation fund?
An aid programme for viable businesses left vulnerable by the recession and credit crunch.
What businesses qualify?
Any Irish firm that is focused on exporting goods and services. They must have a business plan designed to negotiate the current crisis, and their problems must have arisen after July 1st, 2008.
How much is available and how will it be paid?
Up to a maximum of €500,000 over 2009 and 2010. The money will be mainly paid over in the form of repayable preference shares, owned by Enterprise Ireland, which will administer the scheme.
How do you apply?
As a first step, get in touch with Enterprise Ireland, which has offices around the country and a website.
After meeting the agency, it will let you know if you qualify, and you can go from there.
What if I’m turned down?
Enterprise Agency says it has a range of other supports and services of which businesses can avail. Applying for the stabilisation fund will not rule you out of any of these.
The Irish Examiner reports that pressure is mounting on the banking sector to review its policy of charging customers thousands of euro to switch from fixed rate to variable mortgages, over claims the step is putting debt-ridden families under needless financial strain.
In recent weeks thousands of the country’s estimated 220,000 fixed rate holders, who have attempted to switch to variable mortgages, have been told any such move would be a breach of contract and could result in penalties of between e15,000 and e20,000 being passed on to the customer.
Fixed rate mortgages were considered to be the safest loan offer during the Celtic Tiger era as there was no risk the interest rate would rise during the contract. Since the financial downturn those with this mortgage type have been left with rates far higher than their variable counterparts.
Last April, fixed rate mortgages stood at an average of 5.25%.
However, since the financial downturn variable rates have collapsed to less than 3%, meaning fixed rate bank customers have been left with interest payments significantly higher than their variable counterparts.
In statements sent to Today FM, all of the major banking institutions in Ireland said the penalties were necessary as the money supplied to fixed rate customers is borrowed on a fixed basis for a set period by the bank from the international money markets.
As this money must be repaid regardless of the mortgage holder’s personal situation, AIB, Bank of Ireland, EBS, Permanent TSB, Ulster Bank and First Active statements said the institutions had no alternative but to pass the expense on to the customer if they decided to leave the set fixed rate contract as the bank would otherwise be left to pay off the debt itself.
However, calling for the policy to be scrapped in light of serious financial difficulties being felt by bank customers, the Consumers’ Association of Ireland and opposition politicians have called for the banking sector to introduce "some leeway" for customers struggling to cut back on their mortgage expenses.
"We acknowledge that contracts are contracts and that terms and conditions apply, but what we are saying is that these are trying times and the one people who have been helped during this period are the banks," said association chief executive Dermott Jewell.
"Those penalties — that’s what they are — are very high, they are significant and they need to be acknowledged as such," he said.
Last week, the Financial Regulator told an Oireachtas meeting that while the significant payments requested from bank customers switching to variable rate mortgages was a major issue for consumers, legislation would be needed if the expense is to be abolished.
Labour Party spokesman on housing Ciarán Lynch is expected to raise the matter in the Dáil next week during a debate to introduce the Finance Bill, which gives legal effect to the budget.
The Cork South Central TD said many mortgage holders were forced into fixed rates and not given an option by banks when they took out loans in recent years.
He is calling on banks to give these customers the option of switching to a variable rate "as a gesture of real recognition of the way the general public has underwritten financial institutions".
The Financial Times reports that the German government’s plan to take over illiquid securities from the country’s banks in a bid to hasten the sector’s recovery may not cover so-called toxic assets at the heart of the crisis.
Under one model favoured by Peer Steinbrück, finance minister, the state would assume only the risks associated with illiquid assets – mainly corporate and sovereign bonds, for which there is currently a limited market but which are not at great risk of default – people familiar with the plan said.
The fact that banks could have to carry almost all the losses linked to their toxic assets – mainly complex, hard-to-value products such as collateralised debt obligations and credit default swaps – would be a blow for many German institutions, which have lobbied for the creation of an all-encompassing, government-backed “bad bank” to park troubled assets.
The plan would still leave banks and policymakers with complex and potentially controversial decisions over how to define and categorise assets that banks would like to remove from their balance sheets.
Mr Steinbrück’s preference for excluding toxic assets reflects his reluctance, five months before the general election, to be seen landing taxpayers with a potentially huge bill. His concern is shared by coalition MPs, several of whom told the Financial Times the proximity of the election was complicating the bank rescue efforts.
Politicians running for parliament in September are anxious not to be seen supporting another multibillion-euro bail-out of the financial sector at a time of rapidly rising unemployment.
Under Mr Steinbrück’s plan, banks could create their own “bad bank” in which to park illiquid assets. The government would then cover any loss incurred on these assets and, in return, benefit from any upside.
The commitment could be worth about €200bn ($264bn, £176bn), possibly through guarantees issued by Soffin, the agency that manages the government’s €500bn bank rescue plan launched last October.
If the government decided to issue guarantees, these would have to last much longer than those currently offered by Soffin, which extend over a maximum of five years. That would make the “bad bank” plan subject to approval by the European Commission.
The plan would contrast with the approach in the US, where the government’s public/private investment programme is set to allow the purchase of troubled securities from banks.
People familiar with the plan said the final decision over whether to include toxic assets in the “bad bank” scheme would be a political one and would therefore fall to Angela Merkel, chancellor, and the leaders of her grand coalition.
Ms Merkel will be meeting Hannes Rehm, head of Soffin, and Axel Weber, president of the Bundesbank, the German central bank, on Tuesday to discuss the plan.
Meanwhile, Jean-Claude Juncker, prime minister of Luxembourg and chairman of the eurogroup of finance ministers, said the problem of toxic assets at banks needed to be resolved quickly to restore credit flows in financial markets, without which the crisis would not be overcome.
Uncertainty about banks’ exposure to troubled assets is hindering credit. “I think these . . . banks should be sat in darkened rooms and [ordered to] tell each other the truth,” he said.
The FT also reports that annual public borrowing is set to rocket to almost £175bn over the next two years, Alistair Darling, the chancellor, is expected to announce in next week’s Budget.
At more than 12 per cent of expected national income in the next financial year, this would be the worst deficit since the second world war.
One of the main reasons for the startling rise in borrowing is that generous departmental budgets are fixed until April 2011 while the total size of the economy is set to fall far short of the chancellor’s November forecasts.
The automatic result is that public spending is poised to jump to about 48 per cent of national income next financial year, a figure not seen for 27 years.
The Treasury on Wednesday published its April summary of City analysts’ predictions, which forecast that the economy would shrink 3.7 per cent this year and grow 0.3 per cent next year.
The consensus on the government deficit was that public borrowing would reach £160bn in 2009-2010 and £167bn in 2010-2011.
Treasury insiders say that the consensus is traditionally too pessimistic on growth but too optimistic on the outlook for the public finances.
The main reason why public finances have deteriorated since November is that both growth and inflation will be much lower than Mr Darling expected.
With inflation forecast by the Bank of England to fall well below the 2 per cent target for a prolonged period, public services, with their fixed budgets, will enjoy one last hurrah of rapid growth in real terms before the axe falls.
Higher spending on benefits, as unemployment rises, and low inflation, restraining the size of the economy, will force public spending to levels not seen in the UK in a generation and more normally associated with France.
While Mr Darling has not finalised his Budget before his speech on Wednesday, the Treasury recognises that the most important question he faces is how quickly he seeks to pencil-in public spending restraint over the next decade.
This will force the Conservatives to say whether they would merely accept the government’s new and much tighter spending plans, or aim to cut spending more rapidly.
In the 1980s, the Thatcher government brought public spending down from 48.1 per cent of national income in 1982-1983 to 41.6 per cent in 1987-1988 but it was helped by extremely rapid growth and much higher inflation than is now expected. The choices will be much tougher this time.
Not only will spending be high, the economic crisis has taken such a toll on tax revenues that receipts are likely to be lower as a share of gross domestic product than at any time since the early 1960s.
Even excluding the support given to Britain’s banks, the burden of public-sector net debt is likely to increase to 80 per cent of national income, twice the level the government thought acceptable as recently as six months ago.
Mr Darling and Gordon Brown have said that an important theme of the Budget will be to demonstrate a sustainable medium-term path for public finances. But the hole they start with is so large that this will involve reduction in spending plans on a scale far larger than the 1990s squeeze and the possibility of further deferred tax increases.
The New York Times reports that the Treasury Departmentsaid on Wednesday that China was not manipulating its currency to increase its exports, a big retreat from the criticism expressed by Timothy F. Geithnerin January during his Senate confirmation hearing to become the Treasury secretary.
The new report highlighted the political and diplomatic constraints that the Obama administration faces in dealing with China.
American officials remain frustrated that China’s currency policies lower the cost of Chinese goods and make American products more expensive in foreign markets. But they are relieved that China is fighting the global recession with an enormous fiscal stimulus program to spur domestic growth.
American officials and lawmakers have complained for years that China deeply undervalues its currency, the yuan, in order to increase its exports at the expense of American producers.
President Obamarepeatedly accused China of outright currency manipulation during the presidential campaign, and Mr. Geithner echoed that opinion during his confirmation proceedings.
But in a new report to Congress, Mr. Geithner not only refrained from such accusations, but praised China for its economic stimulus program and its move toward a more realistic exchange rate for the yuan.
“China has taken steps to enhance exchange rate flexibility,”Mr. Geithner wrote in a statement accompanying the new report.
He said that the yuan had climbed 16.6 percent against other currencies from June through February, even as the financial crisis intensified and other currencies lost value against the dollar.
Treasury officials placed even greater emphasis on China’s $586 billion fiscal stimulus program. They couched the entire discussion of currency manipulation in the context of fighting the global downturn, adding that China’s stimulus program was bigger than that of any other country except the United States.
The substance and tone of the new report contrasted sharply with Mr. Geithner’s written response to questions posed by the Senate Finance Committee as it was weighing his nomination to be Treasury secretary.
“President Obama — backed by the conclusions of a broad range of economists — believes that China is manipulating its currency,”Mr. Geithner wrote at the time. Though he stopped short of charging that China was intentionally manipulating its currency to gain an unfair trade advantage, as the law requires for an official citation of currency manipulation, Mr. Geithner’s mere use of the word infuriated Chinese leaders.
Mr. Geithner tried to head off angry reactions from Congress by calling numerous lawmakers on Wednesday morning, before the report was issued. Several leading Democratic critics of China made it clear they were unhappy about Mr. Geithner’s new report, but said they understood why Mr. Geithner wanted to avoid a heated conflict.
“I believe the Chinese are manipulating their currency, but given the times and the exigencies, I understand why the administration didn’t want to call them a manipulator,”said Senator Charles E. Schumer of New York, who has repeatedly proposed punitive tariffs on imports from China.
Senator Max Baucus of Montana, chairman of the Senate Finance Committee and another prominent critic of China, said that it needed to “continue reforms” and that Mr. Geithner should “set out clear milestones to measure our progress.”
Some business groups that have complained about China’s exchange rates for years were not assuaged.
“While we recognize the delicacy of the global financial situation, today’s decision was a missed opportunity,” said John Engler, president of the National Association of Manufacturers, in a statement.
Mr. Engler said that the International Monetary Fund had already declared China’s currency “significantly undervalued.” But, he added: “The I.M.F. is unlikely to take up China’s currency as long as the Treasury Department says nothing is amiss.”
The NYT also reports that Jeff Rains, a retired steelworker at the sprawling mill in Granite City, Illinois, made the discovery. Out walking a month ago, he waited impatiently at a rail crossing while a freight train slowly passed, its flatbed cars stacked with steel pipes, each wide enough for a child to crawl through. Then he noticed “Made in India” stenciled on the pipes.
That observation has made him a Paul Revere in the eyes of many townspeople. Hundreds of sections of imported steel pipe have been moving into Granite City for use in an oil pipeline. The steel mill, meanwhile, has been shut since December for lack of orders — the first time in its 130-year history — and nearly 2,000 workers are on furlough.
“I was very mad when I saw they were imported; I wondered why this pipe had not been made in the United States,” said Mr. Rains, who is 61. Once the train passed, Mr. Rains, still active in union affairs, hastened to the union hall to spread the word.
The United Steelworkers union has been trying ever since to galvanize the Granite City story into national outrage over steel imports, raising suggestions of protectionism in the process. The union and its workers want steel pipe for future projects to be made in the United States, creating domestic jobs.
With the economy in tatters, top corporate executives often state privately that they fear this downturn will fuel public sentiment against foreign-made products. Indeed, in February — before Mr. Rains made his discovery — 5,000 people marched through the streets of this steel town in support of a strong “Buy America” clause in the $787 billion stimulus bill then before Congress.
The imported pipe has inflamed that sentiment. The union filed an antidumping lawsuit in Washington last Wednesday against tubular and pipe steel imported from China. A day earlier, Local 1899 staged a rally here, drawing more than 500 people to the same field where the lengths of “Indian pipe,” as the people here call them, have been stacked.
“The steel pipe behind us is a symbol of what has gone wrong in this country,”one of the speakers declared, arguing in effect that a lax Congress and greedy businesspeople, as in Wall Street, had brought three months of layoff, so far, to more than 10 percent of Granite City’s work force. The crowd cheered, and some chanted back, “No more greed.”
The union’s hope is that the Indian pipe episode will provoke a broad outcry, and similar finger-pointing, forcing Congress to tighten trade rules and pressuring companies that import steel to buy more from domestic suppliers instead.
The pressure on Congress is already evident. A provision in the stimulus package, signed into law in February, limits the hiring of foreign workers by any company receiving government bailout money. At least one institution, Bank of America, has rescinded job offers to foreign citizens otherwise eligible for H-1B visas.
The United Steelworkers asserts that free trade is not the issue. The union’s leaders endorse that, as do the chief executives of nearly every multinational company. What the Indian pipe represents, the union argues — and it is joined in this by steel industry executives — is a violation of fair trade. They contend that generous government subsidies allow Indian and Chinese manufacturers to “dump” steel in this country at prices below the fair market value.
“Other countries point the finger at the U.S. and say we are protectionist,”said Nancy Gravatt, a spokeswoman for the American Iron and Steel Institute, representing mill owners, “and then you look at the details in the other countries, and they are not playing by the rules at all.”
Such strong language aside, the episode here has not generated the broad public outcry of, say, the bonuses paid by the American International Group. That is perhaps because trade issues do not generate the same reaction as huge Wall Street bonuses, and perhaps because the steelworkers themselves, as they explained in interviews here, would not have objected to the Indian steel if they were still fully employed at U.S. Steel’s Granite City Works. But the industry has been operating at less than 50 percent of capacity since last fall.
Imports have accounted for a steady 20 to 25 percent of the nation’s steel consumption for a decade or more — and neither the union nor the steel mill operators challenged that inroad.
But now they are, partly through stepped-up antidumping actions, like the one filed against China last week. The union, in addition, is pushing for policies that would increase manufacturing in the United States, reversing a long decline. It favors, for example, tax credits that would encourage more domestic production of solar panels and wind turbines, replacing imports.
“I have seven children, and six of them need a job,”said Ricky Jankowski, a laid-off steelworker here. “If one of them gets a manufacturing job as a result of our protests, it will be worth it.”
The shrinking of American manufacturing was indeed a handicap when TransCanada, a giant Canadian energy company, agreed to buy 560,000 tons of large-diameter pipe in 2006 for its 1,600-mile Keystone Pipeline, now being built from Alberta to Oklahoma to carry oil to American refineries from Canada’s tar sand fields. A section of the pipeline will pass near this Mississippi River town, opposite St. Louis.
An American mill provided 30 percent of the pipe, Canadian mills 23 percent and a giant Indian company, Welspun, the remaining 47 percent, at a low enough price, TransCanada says, to compete with American-made pipe, even allowing for shipping.
“American and Canadian mills would have gotten more if they had had the available capacity to meet our requirements,”said Robert Jones, a TransCanada vice president.
Neither union leaders nor industry executives dispute that assessment. Indeed, neither is trying to stop construction of the Keystone Pipeline, now that all the steel pipe has been purchased. But the union, at least, is putting pressure on TransCanada to buy American-made pipe for a parallel pipeline soon to be built. In a letter filed with the Transportation Department last week, the union joined the Sierra Club in challenging, on environmental grounds, TransCanada’s request for a permit — one argument being that the walls of the pipe would be too thin.
Pipe made in America would “meet all safety requirements,” a union official declared, responding in part to the growing anger in Granite City, dominated as it is by a giant steel mill that has never, in 130 years, been so quiet and smokeless.
“People here use the word anger to describe their reaction to the Indian steel, but I’m not sure that is the right word,” said the Rev. Gene Fowler, pastor of the First Presbyterian Church, who attended the rally with other clergy members.“I think the right description is, ‘slapped in the face.’ It is like an offense to the community.”
