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THE THREAT OF A CRIPPLING RAIL STRIKE this winter suddenly has returned as a major wild card for the economy.
A KEY RAIL UNION narrowly rejected a contract yesterday that came close to passage in September after President Biden got involved with the talks. This latest snag raises the threat of a walkout beginning on Dec. 5, when current cooling off provisions expire.
A STRIKE in the heart of the holiday season could cost the economy $2 billion per day, according to most estimates, since it would cripple coal shipments, shut down most passenger service, and imperil agricultural traffic. Another major transportation player, the trucking industry, has been hit hard in recent weeks by soaring diesel fuel prices.
IT’S LIKELY — BUT FAR FROM CERTAIN — that Congress would intervene next month but lawmakers don’t return from the Thanksgiving break until Nov. 29, facing a full plate of budget issues.
YESTERDAY’S VOTE WAS CLOSE — one union endorsed the September deal, another union narrowly rejected it — so a settlement theoretically is within reach. But the unions bitterly oppose the industry’s sick leave policies and other non-salary benefits. The very generous salary portion of the deal is done.
THE PENDING DEAL would grant rail workers a 24% pay increase over five years, their biggest hike in 40 years. This includes an average of $16,000 in immediate back pay. The unions also would retain their platinum healthcare package with only a 15% premium contribution, the Wall Street Journal reports.
A DILEMMA FOR THE FED? A strike this winter could create a huge headache for the Federal Reserve; up to 700,000 workers in the rail industry and affiliated sectors could be out of work. Would this lead to a GDP growth slowdown, or an inflationary spike as the trucking industry hikes its fees? Either way, this could produce a most unwelcome start to the new year.
THE MOST POLARIZING PERSON IN WASHINGTON? High on the list is uber-regulator Gary Gensler, head of the Securities and Exchange Commission. A lengthy article in this morning’s Politico concludes that Wall Street and Republicans are preparing to litigate against his proposals, with some Democrats critical that Gensler may lighten up on the financial services industry.
THE SEC IS PURSUING new rules that would force companies to disclose their carbon “footprints,” and Gensler wants to fundamentally revamp the stock market’s inner workings, starting with much greater transparency. He has long warned about crypto currencies, and the collapse of FTX may focus — ironically — on why he hasn’t cracked down more aggressively against the industry.
GENSLER’S DETRACTORS ON WALL STREET are preparing to sue him for over-reaching his authority, while House Republicans plan hearings next year designed to drum up support for cutting the SEC’s budget.
THE POLITICO ARTICLE — too lengthy to summarize here — is definitely worth reading, because regulatory policy will be in the limelight next year. As for Gensler, he reminds us of our favorite cliché: if you want a friend in Washington, get a dog.
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