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Soft Cops and the Hard Cops: A Timeline and Notes from a CMPL Forum on the Deficit, Austerity and the Attacks on Public Sector Workers PDF Print E-mail
Written by Greg Gibbs (Twin Cities CMPL)   
Friday, 18 February 2011 16:17

A Time-Line - Soft Cops and the Hard Cops:

Basis of Talk at Deficit Forum – CMPL, January , Mpls Public Library


The present moment is a bit like a PATCO for public workers.  Basic Roosevelt New Deal policies, which form the heart of Democratic Party attraction to the working class, are under attack.  The Democratic Party leadership is now dominated by neo-liberalism and the Republicans dominated by extreme market fundamentalism.  Basically both ideologies strategically combine in a support of the ‘market’ and attempt to rollback the New Deal and ‘welfare’ capitalism - the tactical question is, how much?   The Republicans are playing the role of the ‘hard cop’ and the Democrats, the ‘soft’ cop.  But, of course, they work for the same boss.

CMPL is like a ‘think tank’ for the labor movement in this town right now.  We’re ‘lawyers’ for the working class, not ‘lawyers’ for the rich, like Bachmann, Pawlenty, Obama or Clinton – who are all trained lawyers by the way. The Campaign for a Mass Party of Labor has called since its inception against the deficit being paid by the working class – as the working class did not cause this deficit.  This is the first public meeting here in Minnesota to address this problem.

Now, the numbers on the national and world deficit.  First the public debit:

  • Before Reagan:  $900B – still paying for Vietnam.
  • Deficit:  Reagan administration left office with a national debt of $2.9 trillion. The George H.W. Bush administration added another $1.4 trillion in just four years and the accumulated national debt rose to $4.4 trillion.
  • According to the Congressional Budget Office, the Clinton administration added another $1.6 trillion to the national debt over eight years, bringing the accumulated debt to $5.8 trillion. Clinton also balanced the federal budget once.
  • The George W. Bush administration then took a balanced budget and added another $4.4 trillion to the debt in eight years, a record amount in any single administration so far, bringing the total accumulated debt to $10.4 trillion when Bush left office.
  • The Obama administration may be on its way to setting yet another record. It has added $2.7 trillion to the debt in its first two years, According to projections from the CBO. Today, the accumulated national debt is more than $14.3 trillion.

World Debt:

Corporate Debt:                                  $82.2 Trillion
Personal Debt:                                    $37 Trillion
Public Debt:                                        $50 Trillion  (US $14.3T, EU, $16T., Japan $12T) 

(The Economist lists almost $39T as the total public debt (the public debt clock), which is minus currency reserves and exchange values. Let me know if you have other figures.) China has $2.85T in public reserves, for instance…)

Total:                                      $169.2 Trillion

Credit Default Swaps Market:            $62T in 2007, $38.6T in 2008, but larger now.
Global Wealth:                                    $195T (4.4 billion people in accounts).

Remember, there are 1,000 billionaires, so this is not averaged.  Many people have no wealth in accounts.  (6.8 billion people in world – 20% of Americans have no bank account.)

Is fighting the ‘deficit’ a simple policy or necessity for this system?  In other words, is it just some political ‘option?’ Some people feel the ‘till is not empty” and there is money to pay the deficit.  And there is certainly plenty of money in the pockets of the corporations and the rich, which is one thing a workers struggle would focus on.  ‘Shared sacrifice’ is just for rubes – it will not be shared.  That slogan is designed to bring people into the huckster’s tent.  However, for the upper classes, they feel any expenses paid to workers through the state must be clawed back or reduced, due to the crisis of their profit level.  From the working-class perspective, I feel the various deficits cannot be paid back.  The world population is in a debtor’s prison – you just don’t see the bars.  It is like the war on drugs or the war on terrorism – it will never end.  What do you do with a debt that cannot be paid back?  Cancel it!

Obama edicts prior to commission report:

    1. December 29, 2010. Obama orders 2-year pay freeze for civilian federal workers (contract?  - what contract?)  Soldiers are not affected. Stops a 1.4% pay increase.  Overrules a collective bargaining agreement.  John Gage, president of the American Federation of Government Employees:  “Sticking it to a V.A. nurse and a Social Security worker is not the way to go,” Trumka: “Today's announcement of a two-year pay freeze for federal workers is bad for the middle class, bad for the economy and bad for business.  No one is served by our government participating in a 'race to the bottom' in wages. … The president talked about the need for shared sacrifice, but there's nothing shared about Wall Street and CEOs making record profits and bonuses while working people bear the brunt.”
    2. Republicans say federal workers are paid $81, 000 v $50,000 for private industry.  (Notice Republicans bragging about how little private sector workers get paid!)  Robert Reich/AFL-CIO counter that if you compare EQUIVALENT work and qualifications, federal workers are paid 24% less.
    3. (Robert Reich (and AFL CIO) “The Republican trick is to compare apples with oranges — the average wage of public employees with the average wage of all private-sector employees. But only 23 percent of private-sector employees have college degrees; 48 percent of government workers do… In the last fifteen years the pay of public sector workers has dropped relative to private-sector employees with the same level of education. Public sector workers now earn 11 percent less than comparable workers in the private sector, and local workers 12 percent less. (Even if you include health and retirement benefits, government employees still earn less than their private-sector counterparts with similar educations.)”   Look at a teacher’s MA for instance, versus a finance company MBA for proof – equivalent eductions.

d.     Pensions: “After a career with annual pay averaging less than $45,000, the typical newly-retired public employee receives a pension of $19,000 a year. While they’re working, most public employees contribute a portion of their salaries into their pension plans. Taxpayers are directly responsible for only about 14 percent of public retirement benefits. Remember also that many public workers aren’t covered by Social Security, so the government isn’t contributing 6.25% of their pay into the Social Security fund as private employers would.”

December 1, 2010 - Deficit Commission Report: The Report referred to reverently in Obama’s SOTU Speech.  Chairs:  Erskine Bowles, Chief of Staff to Clinton (worked for Morgan Stanley); Alan Simpson, Senate Republican. (Quote:  “Social Security is ‘like a milk cow with 310 million teats.”)  Does Simpson know that people pay for their own social security?  4 Commission staffers were paid by ‘small government’ lobbying entities, and were not public employees, so they outsourced some of the staff work.  No surprise.

18 total members of the commission.  Only 6 voted not to support recommendation - 3 Republicans, 2 Democrats and Andy Stern (Democrat).  14 must agree - 12 supported report – so failed to pass by only 2 votes.  Voting Yes: Dick Durbin, Blue Dog ND D Kent Conrad, Blue Dog MT D Max Baucas, a Honeywell executive, a Young & Rubicam executive, Clinton budget director Alice Rivlin, along with Bowles, Simpson, and 4 Republicans.  Trumka says the report tells workers to “Drop Dead.”  This process will supposedly save $3.9T by 2020. (remember, $14.3T public debt today.) Nat Assoc of Mfg and Bus RT both endorsed. According to Center on Budget and Policy Priorities, benefit cuts account for two-thirds of its savings.  Most of these cuts are against working-class interests:

    1. Krugman says that some commission savings will come by holding ‘health costs steady’ or ‘lower.’  He points out there is no indication how this is going to happen.  Magic?
    2. Govt (tax) Revenue goal capped at 21% of GDP.  So a ceiling on tax collection, from what I can see. – even if some people/corporations are making more.
    3. Cap all ‘discretionary spending’ through 2020.  (Referred to in the SOTU speech.)
    4. 3-year federal pay freeze.  This includes military pay – the workers in uniform. Reduce federal workforce by 10% (200,000 layoffs)  Layoff non-military contractors - 250,000.  (some versions say ‘attrition.)  This is almost the policy already imposed by Obama.
    5. No earmarks.  Do you believe that?
    6. Increase gas tax $.15 a gallon.  Regressive tax.
    7. Further cuts - undetermined
    8. Cut charity tax break.  (Must be over 2% of wage, so if you make $50,000 then the break must be $1,000 or more.)
    9. Mortgage interest deduction removed, replaced by 12% cap on the mortgage interest you can claim. Not clear what this 12% is ‘of’ but this will certainly be a reduction in the interest deduction  Also puts a cap at $500,000 mortgages and no second homes, which is actually progressive and hits the rich.
    10. Child tax credit downgraded or removed.
    11. Tax health insurance reimbursement capped at 75%.  This means the money you can write off on your taxes for health care payments is capped.
    12. Lower tax rates - 12%, 22%, 28%. Dropping from 35%, 28%, 25% presently. (Above $82,500….)  This reduces taxes for the rich and upper middle class.
    13. Reduce corporate income tax from 35% to 28%.  I guess that means they will not need to find more tax havens in the Caribbean.
    14. All itemized deductions removed.  This affects property tax and mortgage interest deductions.
    15. Capital gains and dividends taxed at ordinary rates. (now 15%, so this would mean a return to earlier capital gains/dividends rates.  Which is good.  Nothing about hedge-fund profit exemption, however.
    16. Age ‘Creep’ - increase SSN retirement age from 62-64 to 67-69.

A. Black people’s median life expectancy is 65 years old.  Manual workers do not live as long as white-collar workers.  Wealthy individuals live 7.3 years longer than lower-income individuals.  From a British study & US DofH&HS.  Extending the retirement age discriminates against blue-collar workers, ethnic minorities and poor people.  Galbraith recommends lowering the retirement age. Says ”right now we have the highest unemployment rate for over-55s since 1948.”

B. It also means less jobs for young people – because the geezers just won’t leave!

    1. Lower cost of living increases for federal workers.  Ask them what they think of this.
    2. Raise threshold on SS tax.  Right now it covers 86% of wage earners, and it would be moved to 90%.  This would be a progressive policy.  Even the centrists realize this is a sensible policy. Increasing the cap on social security taxes above $106,000.00 would pay a good chunk of the SS ‘shortfall.’  It has been recommended by the SSN administration that fully eliminating the cap on taxable earnings would be sufficient to fully close any projected shortfall.  A 90% cap will reduce the gap by 3/4rs.” (Economic Policy Institute.)  Immigration reform can bring millions of wage earners into the SSN system. (Galbraith)
    3. Dedicating certain amount of money to re-paying deficit (to the banks / rich individuals / sovereign funds – we don’t owe the debt to Martians, folks.) – From $80B to $180B.
    4. Cut funding for public broadcasting.  While NPR echoes the mainstream news media in an attempt to blend in, they keep on reporting about cultural issues that right-wingers don’t want to talk about – like music, art, film, science, low-end finance, humor, car maintenance and cooking – all without obvious commercials.
    5. Limit annual increases for Medicare/Medicaid to 1%.
    6. Get rid of federal employee health care plans, replace with vouchers to buy private insurance. (!)
    7. Hardship tax exemption for workers with physically demanding jobs – this would allow some workers to retire early.
    8. An overall budget for health care programs – and not a penny more. (100,000,000 people)
    9. Institute VA co-pays.
    10. Eliminate subsidized student loan interest (ie. subsidizing interest while student is in school.  Student would have to pay immediately, from what I can tell.)
    11. Increase Medicaid co-pays.  Cut Medicare Advantage program and home health care program.  Or raise Medicare eligibility age.
    12. Social Security Points:
  • Using panic over boomers to ‘fix’ social security, which ignores the fact that the birth ‘boom’ will be over at a certain point.
  • Social Security benefits are quite modest.
  • The majority of beneficiaries have little significant income from other sources.
  • For most seniors, Social Security is the only income they will receive that is guaranteed to last as long as they live and to provide full inflation protection.
  • Social Security benefits in the United States are low compared with other advanced countries.
  • Future retirees already face lower benefits (relative to their past earnings) than current retirees as a result of a rising Social Security retirement age and escalating Medicare premiums.
  • The average monthly benefit for retired workers is $1,175. Economists have estimated that each 10-percent cut in benefits would raise elderly poverty by 7.2 percent. Social Security's actuaries say the program can pay full benefits until at least 2037, at which point income from payroll taxes would be sufficient to pay nearly four-fifths of benefits through 2084. (Huff Po – Arthur Delaney)

And you’ll notice not a word about defunding wars or military programs in this Deficit Commission report, or ending corporate welfare, privatization, etc.  Massive military spending is now essential to the health of the market economy.  It is a form of conservative Keynesianism.

December 4, 2010. Obama promotes Free Trade Pact with South Korea.  NAFTA was put over the top by images of the first giant Wal-Mart in Mexico selling ‘American’ goods.  Now Wal-Mart sells Chinese (and South Korean) goods in that Wal-Mart, but that was not explained then. At the time, U.S. labor’s response to Clinton’s neo-liberalism free trade proposal – was formation of Labor Party by left wing of labor movement!  All the evidence is in on NAFTA - it opened the door to massive layoffs and plant closures in the U.S. and massive poverty and displacement of Mexican farmers in Mexico.  It created the migration of millions to the United States.  Even Clinton admitted in Haiti that ‘free-market” (read American imperial) food production helped Haiti starve, as it created an export economy for food the US wanted, not Haiti.  What has changed in Democratic trade policies since NAFTA? Nothing.  Nothing.

December 17, 2010 – Both parties vote for a continuation of all Bush tax cuts, in ‘exchange’ for $33B for unemployment extension. The Bush tax cuts will cost $690/858B (w/ debt service) including Bush tax cut for wealthy (top 5%) over 10 years - and for just the cuts for the wealthy over next 2 years, $80B.  Like the camel, they have their nose under the tent again.  The estate tax exemption was raised to $10M, so more millionaires will escape the inheritance tax  There was also an increase in the ability of corporations to depreciate quicker.

David Cay Johnson:  “The bottom roughly 45 million families in America or households in America—and there are a little over 100 million households—they’re going to actually see their taxes go up (because of this bill.) And that’s because President Obama’s Making Work Pay credit—$400 per person, $200 for a couple, and you got it even if you were retired or disabled—is going to go away. And it’s going to be replaced by this temporary two percent reduction in the payroll tax, the Social Security tax. Well, for about 45 million households who make less than $20,000 a year, this is a tax increase of $150 to $200 each…. for people making over $100,000 will see a savings of $4,200.”

So essentially an unemployed worker got 13 weeks of unemployment in exchange for millionaires collectively getting over $80B.  A worker got..33 cents and had to give a rich guy .80 cents for the privilege – and that is not taking the inheritance tax giveaway or the increase in corporate depreciation allowance.  Good deal, Obama.  You drive a hard bargain.

December 17, 2010 - Got rid of “Build America Bonds” program, which helped municipalities borrow money from the federal government.  This further pushes the issue of State / municipality bankruptcy.  Another law has been proposed to use very strict accounting rules for pensions, thus making states and muni bonds less credit-worthy.  Mysack and other bourgeois finance people at Bloomberg says this would be a very dangerous game to play, as a state – even a large county - declaring bankruptcy can ruin its bond rating, and affect many things besides labor contracts.  (collateral damage…)  Very few cities and counties have ever declared bankruptcy – Orange County (market gambling) and Villejo, CA come to mind.  But financial suicide may be on Tea Party minds, as they don’t really understand money.  Moody’s Investors Service and Standard & Poor’s have said they are considering downgrading their ratings on U.S. debt because of rising interest-to-revenue ratios and other factors including higher health-care and Social Security costs.  Japan’s debt was just downgraded to AA.  Moodys, of course, is also playing a political game here – these are the same kind of people that gave ENRON and CDOs an AAA rating.

December 18, 2010. After the Bush Tax Cuts were passed again, the rage was so much that the Democrats had to throw a sop to their ignored base.  So they repealed “Don’t Ask, Don’t Tell” – a cost-free progressive move supported by half the military brass, and which will incidentally get the army more highly-intelligent and trained soldiers, which they need. Hopefully gay people will learn military skills and bring them back to their communities for other uses than those predicted.

ANSWERS: Ideas on what the AFL-CIO and labor movement should do:  A one day local or general strike.  A one hour local or national strike.  A large gathering here in Minnesota sponsored by various public worker locals or the St. Paul Trades & Labor Assembly / Minneapolis Labor Council, to defend public workers.  We need a Tent City of the Unemployed on the Mall in Washington D.C. in the spring, calling for public jobs.  We need to run labor candidates against anyone who advocates austerity for workers.  Our Mubarak’s have to go too.

Hard Cops: New Local – National “Tea Party” / Republican proposals:

A.    Get rid of closed shop/ institute Right to work.  Ridgemayer, MO.  Also IA, MN (Drazkowski/Mazeppa, MN)

B.    Make striking by public workers illegal.  Make teachers strikes illegal.  Kasich, OH

C.    Outlaw Public Sector Unions, Kasich OH

D.    Bring back child labor  - laws ‘unconstitutional’  Mike Lee, R UT

E.     Get rid of binding arbitration, Kasich OH (Greenhouse, Stevens?)

F.     Make unionizing of certain workers illegal – child care, home care.

G.    End dues checkoffs.  Ridgemayer, MO.  State will do it, not labor membership.

H.    ‘End the right of (public or all) workers to bargain collectively,”  Scott Walker, WI governor

I.       Decertify Unions – Scott Walker, WI governor.

J.      Eliminate unions in public sector – Steve Forbes (billionaire)

K.    All states should be ‘right to work’ – Steven Forbes / Rand Paul.

L.      “No Money” – Muni/state bankruptcy – suicide strategy to void contracts.  Tea Party.

M.   Freeze teacher pay – Chris Christie, NJ Governor

N.    Freeze all state worker pay.  Everywhere.

O.    Get rid of Teacher Tenure – Chris Christie, NJ Rep Governor

P.     Repeal Health care reform totally.  The Whole Republican Party and some of the Democrat Party.

Q.    Remain in Afghanistan forever.

R.    Cut NPR.  Even after the news editors there have been bending over backwards for years to make the Republicans happy.

S.     MN – Dave Thompson R Lakeville: "This legislation would prevent schools from increasing teacher pay for two years unless it occurs under an existing contract. It also eliminates several mandates that require schools to set aside revenue for staff development and other purposes. The bill specifically forbids teachers from striking because of wage restrictions."

T.     MN – Downey, R – Edina - 15% reduction in state staff.  Which would mean the loss of 5,000 jobs.  Depression, here we come.

U.    February 15, WI governor Scott Walker suggests he will call out National Guard over any protests against civil wage cuts, layoffs or loss of collective bargaining rights.

6.     Soft Cops:  New Democrat Proposals:

a.      Cuomo – NY governor – freeze state workers pay.  On 2/2 Cuomo introduced a Budget cutting 9,800 state worker jobs and massive cuts in Medicaid and education.  He is setting private v public unions against each other, NY SEIU v 1199 AFSCME.

b.     Brown – CA governor elect – freeze state workers pay.  LA school system laying off 8,500 teachers.  Stay tuned.

c.      Appointment of GE CEO Jeffrey Imelt to head of Obama ‘Jobs commission.”  GE has outsourced 2/3rds of its workers overseas.  Dow Jones: "[Immelt] runs a big company, but Immelt has shown more skill at cutting jobs, frankly, than creating. GE finished 2009 with 18,000 fewer US workers than it had at the end of 2008, and US headcount is down 31,000 since Immelt's first full year in 2002. During his tenure, GE workers based in the US as a percentage of total employees has fallen to 44% from 52%.”

Krugman:  “Take the case of General Electric, less than half its revenues coming from U.S. operations, GE's fortunes have very little to do with U.S. prosperity. By the way: Some have praised Immelt's appointment on the grounds that at least he represents a company that actually makes things, rather than being yet another financial wheeler-dealer. Sorry to burst this bubble, but these days GE derives more revenue from its financial operations than it does from manufacturing -- indeed, GE Capital, which received a government guarantee for its debt, was a major beneficiary of the Wall Street bailout.

e.   Chief of Staff now William Daley – former Commerce Sec under Clinton.  Another member of the Chicago Mafia, appointed to replace Rahm Emmanuel, of NAFTA fame.  Attacked the health care bill, formerly of JP Morgan Chase.

January 25, 2011 – State of the Union Speech – According to the Huffington Post, “After months of behind-the-scenes scrimmaging, President Barack Obama has decided not to endorse cutting Social Security or raising the retirement age in his State of the Union address Tuesday night.” (Huff Po was just bought by AOL.)

AND ALSO in the HuffPo…

“President Barack Obama may signal in his State of the Union address tonight that he’s ready for compromises on Social Security.”

Lowering corporate tax rate” was in the speech (see Deficit Commission report).  A White House official says President Barack Obama will also call for a “five-year freeze in non-security, discretionary spending” (see Deficit Commission report) during his State of the Union address.  (12% of budget is ‘discretionary’  Notice how the Department of Homeland Security, which includes the vast FBI/CIA/NSA spook forces, and all military spending, are now ‘non-discretionary.’)

NOT IN SPEECH:  “The official says Obama will also call for lawmakers to back a five-year plan put forth by Defense Secretary Robert Gates to save $78 billion in defense spending.  However, these are programs the Defense Department already wanted to get rid of for various internal reasons already, so they are essentially window-dressing.

Headline on Bloomberg News re SOTU Speech:

“Obama Embraces Business Agenda on Exports, Taxes, Debt
President Barack Obama embraced much of the business community’s agenda last night, calling for progress on stalled trade pacts, investments in roads and education, reworking the corporate tax code, and freezing discretionary spending to cut the deficit.”

FEBRUARY 15, 2011 – Obama Budget – Most cuts will occur in education, health care and services for the general population.  Of note, assistance to poor and elderly people whose heat could be cutoff without payment, is being cut 50%.  The military budget will increase. (as military spending is an essential part of the functioning of this economy…)  Stay tuned for a shutdown of the U.S. government, and any ‘compromises’ that may entail.

February 16, 2011 0- Rebellion in Wisconsin – The working class will write the rest of this story.

Gregory Gibbs