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Republicans Weary of Job Losses

Members Warn President About Midwest in 2004

When the Bush-Cheney re-election campaign released its steering committee for Michigan last week, all nine Republican House Members from the Wolverine State, including Rep. Pete Hoekstra, were on the list.

But Hoekstra’s inclusion on that list came only after several weeks of behind-the-scenes maneuvering and a promise by House Majority Leader Tom DeLay (R-Texas) to soon bring up legislation that the lawmaker offered on reforming Federal Prison Industries Inc., a government-owned corporation that Hoekstra wants reined in.

The dispute with Hoekstra shows the difficult road President Bush and GOP Congressional leaders face next year in states like Michigan that have been hit hard by job losses in the manufacturing sector.

“[Bush] has a chance [to win Michigan], but recently he hasn’t been helping himself,” said Rep. Vernon Ehlers (R-Mich.), a staunch Bush supporter. “But it’s not just Michigan, it’s throughout the Midwest.”

A variety of factors make Michigan a tough place for Bush to win, although none of the GOP Members in the state looks vulnerable and recent polls still show Bush beating either Howard Dean or Wesley Clark, two of the frontrunners for the Democratic presidential nod, in the state.

But Michigan has a popular Democratic governor in Jennifer Granholm, and both Senators are Democrats. Al Gore carried the state in 2000, and the United Auto Workers and other labor unions are a powerful force in statewide politics.

More importantly, manufacturing and international trade drive the Michigan economy, and on both fronts Bush finds himself on the wrong side of the political divide.

Michigan has lost more than 150,000 manufacturing jobs over the past three years, and the state’s unemployment hovers at just under 7 percent, well above the national average.

In March 2002, under heavy pressure by the steel industry and its lobbyists, including now-Republican National Committee Chairman Ed Gillespie, Bush agreed to impose three years of tariffs on steel imports. White House officials said at the time the move would help troubled U.S. steelmakers, and GOP strategists pointed to the fact that it would play well for the party in battleground states like Pennsylvania, West Virginia and Ohio.

The auto industry was furious over the move, which increased the price of the average American car by hundreds of dollars and wiped out thousands of jobs, and auto-parts makers suffered especially high losses.

Those job losses were part of a broader trend sweeping the U.S. manufacturing sector. More than 2.7 million factory jobs have been lost since Bush took office, with many of those going overseas to China.

This has infuriated many within the House Republican Conference, although they see little action by the White House to improve the situation other than asking Chinese government to let its currency float.

One House Republican from Michigan, speaking on the condition of anonymity, said the Bush-Cheney campaign “is going to take a lot of money out of Michigan, although I don’t think they’re going to play seriously here.”

Hoekstra, for his part, would not discuss his unhappiness with Bush and the White House, although other GOP sources said his anger is real.

“The [steering] committee was announced today. The entire delegation was on it,” Hoekstra said in an interview last Friday. “It was announced today and I’m on it.”

Hoekstra did acknowledge, however, that his support came after House GOP leaders had agreed to bring up H.R. 1829, his bill to reform Federal Prison Industries Inc.

That company, with annual sales of nearly $680 million, is controlled by the Justice Department, and the 21,700 inmates who work for it are paid between 23 cents and $1.15 per hour. Federal Prison Industries pays no federal, state or local taxes and is not subject to federal safety regulations, according to Hoekstra.

FPI has begun winning federal contracts for office furniture and auto parts, which has infuriated private-sector furniture firms like Steelcase Inc. of Grand Rapids, Mich. West Michigan is home to many of the nation’s office furniture manufacturers, including Steelcase, the biggest in the business.

After the House Judiciary Committee passed his FPI bill in late July, the legislation languished thanks to objections from the Justice Department.

In an encounter with Bush several weeks ago, the president told Hoekstra he was “neutral” on the prison bill, although Hoekstra had been assured that the White House would support his legislation.

At that point, an angry Hoekstra refused to be included on the Michigan steering committee for Bush-Cheney ’04, although he eventually backed off from that threat. His FPI bill now is scheduled to come to the floor either late this year or very early next year.

“I’m passionate about helping manufacturing in Michigan,” Hoekstra said of his support for the FPI legislation, which would alter current federal regulations so that FPI no longer has the inside track on federal contracts.

Ehlers, though, knows there is little else the Bush administration can do in the short run for manufacturers, especially if the White House wants to avoid running afoul of international trade laws.

“There’s no magic wand,” said Ehlers, who wants the administration to focus more on manufacturing-sector concerns, push for an expensive research-and-development tax credit and pour more funds into math and science education.

“We’re quite limited in what we can do without violating the WTO,” said Ehlers, pointing to threatened retaliation within the World Trade Organization by European Union members over Bush’s steel tariffs. “There’s no easy answers.”

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