Socialist Equality Party Newsletter
The past several weeks have seen a sharp escalation of the American ruling class's offensive against jobs, wages, and social programs--including the appointment of an emergency manager in Detroit, the announcement of plans to close 61 schools in Chicago, and the permanent implementation of the "sequester" budget cuts.
Below is a selection of articles appearing on the World Socialist Web Site last week. Six days a week, the WSWS publishes on all the major political, social and cultural developments. To sign up for the daily newsletter, click here.
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Contents:
30 March 2013
News this past week focused attention on two economic indices in the US: record numbers of people on food stamps and a new high for the Standard & Poor's 500 stock index. Their juxtaposition speaks to the reality of the economic "recovery," whose most basic feature is a widening of the social divide in America.
An article in the Wall Street Journal on Wednesday, which reported that food stamp usage in the US has increased by 70 percent since 2008, received scant attention. But the figures it presented are shocking. A record 47.8 million people were enrolled in the Supplemental Nutrition Assistance Program (SNAP) as of December 2012.
The biggest driver of the explosive increase in SNAP is poverty. Almost 50 million Americans were living in poverty in 2011, according the US Census Bureau's Supplemental Poverty Measure (SPM), which factors in expenses for food, clothing, shelter, utilities, health care and other essentials.
In 2010, about 87 percent of food stamp recipients were at or below the poverty line, which is set at the ridiculously low level of about $25,000 for a family of three. Only 3.5 percent of recipients had household incomes over 130 percent of the poverty line. Half of current SNAP recipients are children, and half of these children--some 10 million--live in extreme poverty, meaning family income is less than half the official poverty level.
One in six Americans receives food stamps. Last year's average monthly benefit was a paltry $133 per person.
For families struggling to put food on the table--even with the aid of SNAP benefits--the much vaunted economic recovery has nothing to do with their reality. The past five years have seen not only a huge increase in the SNAP rolls, but also a dramatic increase in the ranks of the working poor. Three out of four households receiving SNAP benefits include at least one person who is working.
On the other side of the class divide, stock market analysts and the media celebrated the continuing surge in share prices. The S&P 500--the stock market index of 500 large US companies--capped a four-year rally Thursday, recouping all of its losses from the 2008 global financial crisis.
The S&P 500, which rose to 1,569.19, has rocketed 10 percent in the first three months of the year, becoming the last major US market gauge to hit a new high. The Dow Jones Industrial average has already eclipsed its previous high from late 2007. The Los Angeles Times commented on the S&P breakthrough: "The milestone underscored investors' enthusiasm over the increasingly buoyant economy."
The vast majority of Americans are not the beneficiaries of this "buoyant economy." Rather, growing numbers of people have been thrown deeper into poverty and social distress. Long-term unemployment has become entrenched. Working families are saddled with growing debt and struggle to pay for housing and other basic necessities, let alone put aside anything for retirement.
The increasing chasm between ordinary Americans and the elite that is celebrating stock market records is not the outcome merely of impersonal economic processes. The growth of social inequality since the 2008 financial crash is the product of definite policies pursued first under Bush and then under the Obama administration. The political establishment has pursued a bipartisan policy of class warfare against the working class while bailing out Wall Street and assisting its continued plundering of social resources.
The US Federal Reserve is pumping $85 billion a month in virtually free money into the financial system, fueling the stock market boom. This is more money in a month than the $76.6 billion the federal government spent all of last year to provide SNAP benefits to 47.8 million impoverished Americans.
Despite the explosive growth of the food stamp rolls and the obvious need for more funding for SNAP, even the minimal expansion of the program under the Obama administration's 2009 stimulus bill is set to expire on October 31, cutting food stamp benefits by about $8 per month per recipient.
The repeated refrain from Washington is that there is "no money" for schools, housing, health care and other vital social needs. Big business politicians--fixated on reducing budgets and pursuing new wars--are calling for even more austerity. Earlier this week, President Obama signed a bill making permanent this fiscal year's $85 billion in sequester cuts, which will slash billions of dollars from programs benefiting the poor.
The budget proposals of the Democrats and Republicans call for deep cuts to social programs. Both parties are eyeing Social Security, Medicare and Medicaid--programs that were won through mass social struggles of the working class--for not only sweeping funding cuts, but ultimately for destruction through privatization and other means.
Having precipitated the financial crash through a combination of speculation and fraud, the financial oligarchy is now demanding that its losses be repaid many times over through the impoverishment of the broad mass of working people.
The working class requires a program and perspective to confront this social counterrevolution. The capitalist system must be overthrown and replaced with socialism. The wealth of the financial aristocracy must be expropriated and utilized to address the pressing social needs of the population: decent-paying jobs, education, housing, health care, pensions. The corporations and banks must be nationalized and placed under the democratic control of the working class.
The implementation of this program depends upon the building of a new leadership to arm the coming mass struggles of the working class with a socialist program and strategy for workers' power. The Socialist Equality Party fights for this revolutionary perspective.
Kate Randall
By Jerry White
29 March 2013
Detroit's newly appointed emergency manager has been granted unprecedented powers under the terms of an anti-democratic law in Michigan that went into effect Thursday.
Public Act (PA) 436, which was pushed through by the Republican-controlled state legislature after voters defeated a similar measure in November, gives emergency managers in six Michigan cities and three school districts authority to slash budgets, reopen labor agreements, impose unilateral concessions and shut down or privatize city departments and services.
The measure is aimed at establishing what amounts to a financial dictator in Detroit, with the aim of using the city as a test case for imposing deeply unpopular measures in line with what is occurring in Cyprus, Greece and other European countries.
The entire political establishment, Democrat and Republican, is engaged in a conspiracy against workers in the city.
Governor Rick Snyder, a multi-millionaire former venture capitalist and Republican, and Democratic state treasurer Andy Dillon have turned over control of Detroit to a Washington, DC bankruptcy attorney whose former law firm represents the same Wall Street investment houses that control Detroit's municipal bonds and other debt.
Kevyn Orr, a lifelong Democrat, is a former law partner of Cleveland-based Jones Day, which has represented Citigroup, UBS AG, JPMorgan Chase and other banks that hold much of the city's $8.6 billion in long-term bond debt. His appointment immediately led to an upgrade in Detroit's credit rating from negative to stable, as investors anticipated he would oversee their repayment by intensifying the attack on the working class.
Kevyn Orr (right) speaks at the press conference with Bing and Snyder
Detroit's Democratic mayor, David Bing, hired Orr's former law firm as a "restructuring" consultant earlier this month before his appointment as emergency manager. Bing later claimed that this was "completely independent" of the governor's decision to select Orr. While Orr resigned from the law firm, under the new law he will be responsible for hiring the firm he has worked at for years.
A lot of money stands to be made on the further ruination of Detroit. The Metro Times noted that among Jones Day's former clients is the Bank of America. "According to Irvin Corley Jr., who heads the Detroit City Council's Fiscal Analysis Division, Bank of America/Merrill Lynch is one of the counterparties in a complex credit swap deal that includes a stipulation where the city would be forced to pay lenders a $400 million lump-sum payment in the event certain 'termination events' occur. One of those triggers is the appointment of an emergency manager."
Last November, Michigan voters overturned Public Act 4 by a margin of 52 to 48 percent. The act gave emergency financial managers financial and day-to-day control of cities and school districts deemed financially troubled.
In response, the Republican attorney-general authorized the reinstatement of PA 72, a law passed in 1990 that allowed for the appointment of emergency financial managers, who had less sweeping powers than those allotted to emergency managers. The automatic reversion to the earlier law was done on dubious if not illegal grounds.
Republican legislators then drafted a new bill, PA 436, differing from the act that was overturned only on minor points. The act gives elected officials the "choice" of one of four options to slash services and jobs if the state determined a financial emergency exists. These are: signing a consent agreement, allowing the takeover by an emergency manager, going through a mediation process or declaring bankruptcy.
Exploiting the fact that the law did not take effect until March 28, Snyder and Dillon declared Detroit to be in a state of financial emergency and appointed Orr last week, thereby circumventing the requirement that cities have the opportunity to choose their poison. In other words, the timing of the appointment allowed the state to insist on an emergency manager, while this manager would, within days, assume the full powers provided by PA 436.
Even so, the state has little to worry about in relation to the corrupt layer of political hucksters that have run Detroit for decades. They simply want to ensure their own position in the lucrative process of selling off public assets and channeling city resources into the hands of the banks and private firms.
In one of his first moves, Orr decided to retain the pay and benefits for Bing and the city council, even though he has power to halt salaries. This was aimed at assuring the agreement of the local Democratic Party establishment.
As part of their maneuvers, a lawsuit was filed against Snyder and Dillon Wednesday challenging the legality of the new law. The plaintiffs include representatives of the city's major unions, officials from the Detroit school board, along with Jesse Jackson's Rainbow PUSH Coalition and Al Sharpton's National Action Network.
The lawsuit has been driven by political considerations. The trade union bureaucracy, for example, boasts of its willingness to impose deep concession on city workers but complains that the emergency manager has allowed city officials to cut the union out of the process.
Moreover, the lawsuit conceals the class interests behind the blatantly anti-democratic measures, arguing instead that it is essentially an issue of racial discrimination. This argument expresses the interests of the black Democratic political establishment in Detroit, which in the name of "self-rule" has argued that it is quite capable of imposing massive budget cuts on the city's workers--both black and white--without any outside help.
The struggle to defend the interests of the working class and oppose these measures will not be resolved in the courts or by aligning with any of the contending factions of the capitalist state, but only through the independent political mobilization of the working class against both big business parties, which function, as the situation in Detroit demonstrates, as nothing but the repressive front men for the banks.
28 March 2013
Michigan's "right to work" law, passed in December, goes into effect today, making the state the 24th to prohibit contracts that require workers to pay union dues or fees as a condition of employment.
As the
World Socialist Web Site explained when it was signed, the law is reactionary and regressive, its principal aim being to undermine the ability of workers to organize collectively. The main backers of the law and similar measures in other states are sections of the corporate and financial elite that see them as means for intensifying the exploitation of the working class.
Our principled opposition to the law, however, in no way implies support for the organizations that are its immediate target--the official trade unions. After decades of betrayals of the workers they nominally represent, and the imposition of one round of layoffs and wage cuts after another, the unions and their right-wing leadership have earned the hatred of rank and file workers, making them neither able nor willing to oppose the decision of Michigan's Republican governor and Republican-controlled legislature to cripple the unions financially and spurn their services in helping suppress working class opposition.
The inability of the unions to mobilize effective opposition to the law--in the state that was birthplace of the United Auto Workers (UAW)--in itself reflected their bankrupt and moribund state.
Even more dramatically, the actions taken by the unions in the three months since the law was passed have provided new proofs of the antagonism between them and the interests of the workers. The central preoccupation of the unions has been to lock in long-term labor contracts retaining the automatic dues checkoff by offering up in return the wages, benefits and conditions of their members.
Preserving the mandatory dues checkoff--the process by which monthly union dues is deducted from workers' paychecks and forwarded to the union apparatus--has been the sole concern of the unions in regard to the right to work law. This is because the guaranteed flow of dues is critical to the financing of the bloated salaries of union executives and the funneling of money into Democratic Party election campaigns.
Union officials are well aware that labor contracts reached after the March 28 starting date of the right to work law cannot legally include mandatory dues and the automatic dues checkoff, and that, as a result, many workers, seeing in the unions an alien and hostile force, will stop paying dues.
The new law, however, does not apply to labor contracts signed before March 28. Thus, one union after another has rushed to sign an extended agreement with management, laden with workers' concessions, to lock its dues income in place. With the support of the employers, contracts that are still in effect have been re-opened expressly for this purpose.
A case in point is the contract pushed through by the Detroit Federation of Teachers (DFT) earlier this week, covering 4,000 teachers. The contract was due to expire in 2015, but it was reopened so that the union could get an agreement lasting for another year. The new contract includes a pay freeze and gives a green light for the city to escalate its assault on public education.
With an emergency manager taking control of Detroit this week, the aim of the unions in the city is to convince the corporate and financial elite that they are useful tools in imposing attacks on city workers. DFT President Keith Johnson made this point explicitly when he declared, after the contract was passed, that "innovated and effective reforms"--code words for expanding charter schools and victimizing teachers--"are usually achieved through collaboration and the collective bargaining process, not through dictating and micromanaging."
Elsewhere in the state, unions have signed agreements spanning up to ten years. After successfully pushing through a five-year contract that includes a wage freeze for teachers in Dearborn, a local union official summed up the thinking of petty union bureaucrats everywhere when she gushed that the deal meant that "we will be able to continue having our union dues deducted through payroll."
As for the UAW, it signed contracts with the Big Three auto companies in 2011 that held labor cost increases to their lowest levels in four decades, including through the expansion of low-paid "second tier" workers earning $15 an hour. Even before contracts are up in 2015, the UAW is working with companies to impose further attacks, such as an agreement with Chrysler to end the eight-hour day.
The unions' response to the right to work law follows a pattern set in other states. This includes Wisconsin, where unions rushed to sign concessions agreements in the wake of a 2011 bill that prohibited collective bargaining for government workers. Mass demonstrations against the law and a budget attacking social programs were channeled by the unions behind the Democratic Party and smothered.
The hostile relationship of these organizations to the working class is bound up with their political alliance with the Democratic Party and their unconditional support for the capitalist profit system.
The mass industrial unions were established through quasi-insurrectionary struggles, including the sit-down strikes in Michigan that consolidated the position of the UAW in auto. The union movement, however, was dominated by a pro-capitalist and anti-communist bureaucracy that tied the unions to the Democratic Party.
In the post-war period, under conditions of economic growth and the hegemony of American capitalism on the world stage, workers were able to win certain rights and benefits despite the domination of the unions by right-wing bureaucrats. However, under conditions of the subsequent decline in the global position of American capitalism, the unions linked their interests ever more directly to those of the corporations and the capitalist state.
The national-based trade union organizations responded to the development of globalized production in the 1970s and 1980s by seeking to improve the profitability of American corporations at the expense of the jobs, wages and benefits of their rank-and-file members. From seeking to win concessions from the employers, they were transformed into instruments for imposing ever more draconian concessions on the workers.
Today the unions exist entirely at the behest of the corporations and the state. They speak on behalf of a privileged layer of the upper-middle class that profits from the exploitation of workers. Their response to such developments as the right-to-work law is to appeal to the ruling class to guarantee their organizational domination of the working class.
These organizations cannot be reformed. They long ago ceased to be working class organizations. Those pseudo-left groups, such as the International Socialist Organization (ISO), which insist on the hegemony of the unions do so precisely because they oppose the emergence of a genuinely independent movement of the working class and because they themselves aspire to occupy lucrative positions in the union apparatus.
Class tensions in the United States are building to a breaking point. Five years after the onset of the financial crisis, social inequality is more pronounced than ever. Led by the Obama administration, the Democrats and Republicans are intensifying their war on the working class. At the same time, the stock market is soaring and the wealth of the corporate and financial elite has surpassed pre-crisis records.
As it enters into struggle against these conditions, the working class will come into ever more direct conflict with the unions. The formation of new organizations of struggle--democratic rank-and-file action committees--must be a central component in the independent political mobilization of the working class in revolutionary struggle against the big business parties and the capitalist system.
Joseph Kishore
25 March 2013
The announcement of plans in Chicago, Illinois to shut down 61 elementary and middle schools marks a new stage in the assault on public education and the social counterrevolution in America.
It is the largest single school closure announcement in US history. In the latest phase of school shutdowns, some 13 percent of primary schools in the nation's third-largest district will be closed, affecting 30,000 students and laying off some 1,000 teachers. These cuts will produce higher class sizes and greater strains on the schools that stay open, and four percent of all teachers in the city will immediately lose their jobs.
The ultimate aim is the privatization of the entire public education system. Six of the schools targeted in this round of closures face "turnaround"--with all teachers and staff fired, and control handed over to the Academy for Urban School Leadership, a politically connected private charter school operator with close ties to banks and investment funds.
There is mass popular opposition to school closures. In Chicago, thousands of people attended hearings scheduled on the closures over the past two months, giving one indication of the seething anger among broad layers of working people.
A confrontation is brewing between the working class and the policies carried out in Chicago by Democratic Mayor Rahm Emanuel, President Obama's former chief of staff. His arguments echo those of politicians nationwide: with a $1 billion budget deficit, there is supposedly no money to keep existing schools open. Moreover, public schools are "underutilized"--a self-fulfilling prophecy, as students and funding are diverted to charter schools.
The argument that there is no money for schools is a contemptible lie. While the ruling class insists that there is no money for basic social rights such as public education, it hands out hundreds of billions of dollars every year to the financial criminals on Wall Street.
In opposing school closures, working people are also entering into struggle against the national policy of the Obama administration and the Democratic Party, which have overseen an all-out attack on public education as part of Obama's Race to the Top program. Mass school closures have been announced in Philadelphia, Washington, D.C., New York and Detroit--all overseen by Democrats. Today, an emergency manager is taking over Detroit, serving as a financial dictator tasked with making massive cuts to jobs, wages and living conditions.
At a national level, the Democrats and Republicans are involved in a bipartisan conspiracy to attack Medicare, Medicaid and Social Security. This follows the implementation of the "sequester" budget cuts, which will involve a 20 percent pay cut for one million federal workers, a sharp cut in federal unemployment benefits and other devastating cuts.
The critical question is mobilizing the mass opposition that exists in the working class against social attacks waged by the corrupt, money-mad ruling elite. The defense of public education must be carried forward, but this depends on the establishment of new organizations of struggle in the working class, independent of and in opposition to the unions and the Democratic Party
While the Chicago Teacher's Union (CTU) has postured as an opponent of school closures, it has played a critical role in helping the Democratic Party establishment carry this attack through.
Opposition to the shutdown of all schools is not a "real argument," CTU President Karen Lewis said in an interview to Chicago Public Radio on Friday. The CTU, which includes in its leadership a top member of the pseudo-left International Socialist Organization, wants Emanuel to accept their assistance to ensure that school closures occur smoothly.
The CTU effectively gave a green light to the school closures by shutting down last year's strike of 26,000 teachers, who were striking to oppose "reforms" making it easier to fire teachers and to defend public education. The contract eventually pushed through by the CTU contained everything that Emanuel demanded, including several measures making it easier to victimize and fire teachers.
The Chicago teachers' strike was a major experience for the working class. It won the support of workers in Chicago and across the country who correctly saw the attack on teachers as part of a broader attack on every basic social and democratic right.
In its intervention in this struggle, the Socialist Equality Party insisted that the defense of public education required a break with the CTU and a political struggle against the Democrats and Republicans. Public education, we argued, is not compatible with the subordination of society to the profit dictates of the financial aristocracy. The CTU's moves to rapidly shut down the strike, we wrote, would be seized on by Emanuel to accelerate the closure of public schools throughout the city.
This has now come to pass.
A new political leadership must be built, rooted in the understanding that the rights of the working class are not compatible with the capitalist system. Nothing can be accomplished without bringing down the economic and political dictatorship of the banks and big business.
The SEP calls on all workers and young people--in Chicago, throughout the US and around the world--who agree with this program to
contact us today. Join the SEP and take up the fight for socialism.
Alexander Fangmann
27 March 2013
US President Barack Obama signed a bill Tuesday that makes permanent $85 billion in sequester cuts, paving the way for the imposition of furloughs on a million or more federal workers as early as next month.
The bill, which funds the federal government through September, was passed with bipartisan support by both houses of Congress.
The sequester includes $9.9 billion in cuts to Medicare, $2 billion in public housing assistance cuts, $840 million in cuts to special education programs, as well as $400 million in cuts to Head Start, the early childhood education program.
The nearly 4 million long-term unemployed who receive federal unemployment benefits will see an 11 percent cut in their benefits, or about $130 per month. A vast portion of the cuts will be implemented through furloughs of federal government employees, resulting in effective pay cuts of 20 to 35 percent. The military, however, announced that it may delay the furlough of some of its civilian employees after the Congressmen inserted language giving it greater flexibility in allocating cuts.
Adding to the devastating impact of the furloughs, the bill freezes federal employees' pay through the end of this year. This reverses an earlier executive order to end the current pay freeze, which has been in place for two years, and gave federal employees a meager 0.5 percent raise. The pay freeze, even more than the bill itself, has gone largely unreported in the media.
The White House sought to distance itself from the cuts, with Obama spokesman Jay Carney stating in a press conference Tuesday, "There is no question that we believe we should not have come to this point where sequester would be imposed." He added that "regular folks out there are being unnecessarily harmed by imposition of the sequester, which was designed by Democrats and Republicans purposefully never to become law, to be filled with nonsensical approaches to deficit reduction."
This is a fraud. The rapid passage of the bill with bipartisan support stands as a repudiation of the official narrative of a vast political divide between the two parties, and exposes the reality that the Democrats and Republicans, far from being at loggerheads, are united in their drive to make the working class pay even as the stock market soars and the corporate and financial elite is wealthier than ever.
While mouthing the obligatory and pro-forma statements of regret, the Democrats did absolutely nothing to stop the passage of the bill, which if blocked would have resulted in a shutdown of the federal government on March 28.
The political "gridlock" in Washington is largely manufactured for public consumption. Behind the supposed bipartisan conflict, both parties are proceeding with a shared agenda. The sequester cuts themselves were the product of this supposed "gridlock." Originally devised by the White House to ensure the passage of a broader deficit deal, the measure was used to implement unpopular cuts without either party having to claim responsibility for them.
In reality, the sequester cuts are entirely in line with the Obama administration's earlier policies. In 2009, the administration called for discretionary spending to be lowered to the level imposed by the sequester. On numerous occasions Obama has boasted about slashing spending to the lowest level as a percentage of GDP since the Eisenhower administration.
In an article published this week, "As Obama signs sequestration cuts, his economic goals are at risk," the Washington Post noted the apparent contradiction between the White House's claims to defend the "middle class" and the administration's actual policies.
"Obama has repeatedly championed a set of government investments that he argues would expand the economy and strengthen the middle class, including bolstering early-childhood education, spending more on research and development, and upgrading the nation's roads and railways... But none of those policies have come close to being enacted," the newspaper noted. "Instead... Obama is set to sign a government funding measure that leaves in place the across-the-board cuts known as sequestration--a policy that undermines many of the goals he laid out during the 2012 campaign."
In reality, Obama's posturing as a defender of the "middle class" is entirely for show. Far from expanding programs like public education, Obama has from the beginning of his term attacked social spending, with over 700,000 state, local, and federal government jobs eliminated since he took office. His principal "economic goal" was to bail out the banks and oversee a historic transfer of wealth from the working class to the financial elite.
With the sequester cuts made permanent, the White House plans to turn its attention to slashing basic social programs with the release of the White House's budget early next month. The Obama administration has made clear to its backers on Wall Street that it intends to slash Medicaid, Medicare, and Social Security in its budget proposal, combined with the standard call for "shared sacrifice" through additional revenue.
To the population, which is almost unanimously opposed to cutting these programs, Obama and the Democrats present their support for cuts to the core social programs as an unavoidable compromise in the face of Republican "intransigence."
The two parties' budget proposals are a case in point: the Republicans are proposing $5.7 trillion in spending cuts and a far-reaching restructuring of Medicare and Medicaid. The Democrats, by contrast, are proposing about $1 trillion in cuts, including a reduction in Medicare spending.
The result of this process will be the same as before: the Democrats will very consciously work out a deal to make vast cuts in the name of "compromise" with the Republicans. This deal, will, in turn, create the conditions for even further cuts in the future.
Under conditions of the greatest social and economic crisis since the Great Depression, there does not exist within the entire political establishment any constituency for maintaining social programs, let alone expanding them. In the midst of desperate conditions for millions of people, the ruling class is united in its policy of making the working class pay for the crisis of capitalism.
Andre Damon
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