The Latest from the Prospect
 â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â
Â
View this email in your browser
**MARCH 18, 2024**
On the Prospect website
Landmark Settlement Breaks Up the Real Estate Cartel
The collusive arrangement among real estate agents that led to
Americans paying extortionate commissions is likely over. BY DAVID
DAYEN
[link removed]
How Actually Existing Democrats Run for Office
A new survey of 2022 candidates shows that economic populism helped.
BY HAROLD MEYERSON
[link removed]
The Municipal Broadband Solution
A federal affordable internet program is ending. But muni-owned
broadband networks have figured out how to deliver affordable high-speed
internet access themselves. BY SEAN GONSALVES
Kuttner on TAP
****
****
****
****
****
****
****
**** Man of Steel
President Biden's blockage of the proposed purchase of U.S. Steel by
Japan's Nippon Steel is unprecedented and magnificently pro-union.
You'd think it would be hard for Biden to top his full-on embrace of
the UAW and their stunningly successful strike against the Big Three
automakers. But Biden has just done it by declaring that he opposes the
takeover by Japan's Nippon Steel of U.S. Steel.
The U.S. needs to "maintain strong American steel companies powered by
American steel workers," Biden declared
,
adding: "U.S. Steel has been an iconic American steel company for more
than a century, and it is vital for it to remain an American steel
company that is domestically owned and operated."
This move doubles down on Biden's commitment to rebuild domestic
industry and rejection of corporate-driven "free trade" and his alliance
with the labor movement. There is a process for government evaluation of
proposed foreign takeovers of American companies on national-security
grounds. A review is conducted by an interagency Committee on Foreign
Investment in the U.S. (CFIUS). The final decision whether to allow a
deal to proceed is made by the president.
CFIUS had begun a review of the Nippon-U.S. Steel takeover, but Biden
short-circuited the process-not on the basis of narrowly defined
military concerns but on industrial-policy and labor grounds. While both
companies have mounted PR and lobbying campaigns
to rescue their deal, Biden's statement effectively kills it.
What if Japan complains to the (increasingly moribund) World Trade
Organization
?
Well, Japan exports about two million cars to the U.S. annually but
finds ways to limit U.S. auto exports to Japan to about 25,000. So bring
it on.
Biden's stunning move is entirely legitimate. For one thing, a leading
Japanese steelmaker was buying an American producer against a background
of steelmaking overcapacity worldwide and in Japan. So the deal might
well lead to reduced U.S. steel production and jobs.
Also, U.S. Steel, especially under its current CEO David Burritt, has a
dismal labor record. And there was an alternative suitor to Nippon,
Cleveland-Cliffs (known as Cliffs), a company whose whole business
strategy is based on close alliance with its union, the United
Steelworkers.
[link removed]
Biden's effective killing of the Nippon deal reopens the possibility
of acquisition of U.S. Steel by Cliffs, in collaboration with the
Steelworkers. Veterans of the four-decade struggle to revive a domestic,
unionized steel industry told me they never thought they would live to
see this day.
Biden's rejection of the Nippon deal reflected weeks of campaigning by
both the USW and Cliffs. The action had the support of his top advisers,
but the impulse came personally from Biden.
In the proposed Nippon-U.S. Steel deal, there is also a grotesque
personal conflict of interest on the part of CEO Burritt. U.S. Steel's
performance has been lackluster. Burritt is lousy at making steel.
Before takeover bids began in 2023, U.S. Steel stock had been trading at
around $22 a share. The Nippon buyout is valued at $55 a share. That
translates to a windfall $70 million payday for Burritt in stock
options, at the expense of the company and its workers.
Cliffs' initial offer for U.S. Steel translated to about $40 a share,
but in the bidding war with Nippon, Cliffs raised that to $54
,
just a dollar a share below Nippon's winning bid. Since the effective
collapse of the Nippon deal, Cliffs CEO Lourenco Goncalves has been
cagey about what he might offer now. But his bid can't go too low,
since U.S. Steel has had other suitors, including ArcelorMittal, the
world's second-largest steelmaker.
Burritt, who is 69 and ready to retire, is said to be spitting mad that
the combined efforts of Cliffs, the Steelworkers, and President Biden
killed his payday. Burritt may well resist a sale to Cliffs out of sheer
spite. But here is where good old shareholder capitalism comes to the
rescue.
Informed observers expect that Cliffs' eventual offer will be between
$35 and $40 a share. U.S. Steel stock is currently trading at around
$39, reflecting that view.
That's a lot better than $22 a share-a handsome gain for
shareholders. If Burritt refused to sell out of spite, he'd be open to
all manner of shareholder suits. As a consolation prize, Burritt himself
would walk away with at least $30 million, even at the reduced takeover
price.
Of course, an acquisition of U.S. Steel by Cliffs would be a gain not
just for shareholders but for
**stakeholders**-union workers, their families and communities. It's
been a long time since we've seen this brand of capitalism.
~ ROBERT KUTTNER
Follow Robert Kuttner on Twitter
[link removed]
To receive this newsletter directly in your inbox, click here to
subscribe.Â
Click to Share this Newsletter
[link removed]
Â
[link removed]
Â
[link removed]
Â
[link removed]
Â
[link removed]
YOUR TAX DEDUCTIBLE DONATION SUPPORTS INDEPENDENT JOURNALISM
The American Prospect, Inc., 1225 I Street NW, Suite 600, Washington, DC xxxxxx, United States
Copyright (c) 2024 The American Prospect. All rights reserved.
To opt out of American Prospect membership messaging, click here
.
To manage your newsletter preferences, click here
.
To unsubscribe from all American Prospect emails, including newsletters,
click here
.
