Weekend Edition
March 6-8 , 2009
Obama's Recovery
Plan
Save Us From Those Who Would Save Us
By CARL FINAMORE
We
know billions of dollars are going to AIG, banks and auto companies to
stabilize basic institutions of the capitalist economy. We know other
billions are going to state and local governments to fund programs
designed to employ some 4 million workers.
But
establishment commentators fail to note that not one penny is actually
being spent on increasing the standard of living of American workers.
In fact,
the Obama Administration is working overtime to keep a lid on wages.
This is the same administration that openly acknowledges U.S. paychecks
adjusted for inflation have been flatlining since 1973.
Arguably, the main objective of the government stimulus is to stabilize
banks and corporations, not regenerate the living conditions of American
workers. In this the liberal Obama Administration is not so far in its
thinking from that of its conservative predecessors. Both believe
helping out banks and major corporations first is the key to economic
revival.
If you
want evidence of the profound corporate bias contained in the bailouts,
read the fine print in the recent General Motors (GM) Restructuring
Plan.
The $13
billion in federal funds handed over to General Motors in December 2008
has stringent provisions requiring the United Auto Workers (UAW) to
agree to significant wage and benefit reductions by the end of 2009.
The
Treasury Department acknowledges “negotiated changes to the Company's
labor agreements in 2005 and 2007 have reduced total labor cost per
vehicle by 26% from 2004 to 2008.”
“In
addition,” the Treasury report continues, “GM and the UAW have agreed to
improve competitive work rules, which will also significantly reduce
labor costs.”
There's
more. The Treasury notes with satisfaction that the UAW recently agreed
“to suspend the JOBS program, which provided full income and benefit
protection in lieu of layoff for an indefinite period of time.”
In the
meantime, GM is doing its part. It just cancelled all health benefits
for its 100,000 non-union retirees. Not to be outdone, the now very
compliant UAW recently agreed to accept diluted GM stock of questionable
value for half of the $10 billion owed to secure previously-negotiated
union retiree health benefits.
But the
government is still not satisfied with these debilitating, life-changing
concessions for several hundred thousand active and retired autoworkers.
“Further progress will be required to achieve the full targeted savings
[of the stimulus plan],” the Treasury insists. “GM plans to report these
changes to the U.S. Secretary of Labor who must certify GM's
competitiveness…” [Treasury Dept. website]
This is
a completely wrong-headed approach to getting America back to work and
re-invigorating collapsed consumer spending. On the contrary, extending
substantial wage, medical, and education benefits for the 130 million
workers in this country would be the most effective economic stimulus
yet proposed.
A Stimulus Plan that Actually Worked
The
Servicemen's Readjustment Act of 1944 or “G.I. Bill” is a success story
that should be the model for any genuine stimulus.
Fearing
a revival of the Bonus Army March protests of 1932 by millions of
returning World War II jobless veterans and forecasting a serious
post-war recession, both chambers of Congress actually voted unanimously
to fund the most extensive benefits program in the nation's history.
In fact,
concerns about impending social unrest were not unfounded. When the
government attempted to extend the wartime “no strike” pledge, it
ignited a firestorm of protests. A national strike wave began almost
immediately after Emperor Hirohito waved the white flag.
In
September 1945, 43,000 petroleum workers and 200,000 coal workers
struck. In October, 44,000 lumber workers, 70,000 teamsters, and 40,000
machinists joined them. Then in November 1945, the UAW called its first
major strike against GM since the company was unionized in 1937. Nearly
250,000 walked out.
But
these incredibly powerful expressions of union power turned out to be
only the beginning. In January 1946, 74,000 electrical workers, 300,000
meatpackers, and 750,000 steelworkers went on strike.
A few
months later, 350,000 miners went out with the full support of rail
workers who together threatened to shut the whole country down.
The
memorable year of rolling strikes in 1946 ended with an exclamation
point-a 54-hour December general strike in Oakland, California.
Picketers controlled traffic in the downtown center of the city. Anyone
could leave but entry was permitted only to those with union membership
books.
It all
began when delivery truck drivers turned off their engines and stopped
dead smack in the middle of downtown streets. The truck drivers were
responding to attempts to break a retail store strike led by mostly
woman clerks.
Shutting
the city down was a fitting end to a year of significant acts of
solidarity and militancy, actions not seen in more recent decades.
G.I. Bill Funded People
The
power of labor was ever present in the aftermath of WW II and returning
vets benefited greatly. Each was provided a full year unemployment
stipend and a variety of government low-interest home loans and funds
for starting small businesses.
At its
peak in 1947, about 40 percent of all housing starts in the nation were
funded by the government's loan guarantee. In its first eight years
alone, the Veterans Affairs (VA) backed 2,360,603 home loans.
But
here's the critical point. The government provided the funding directly.
This was much different from the current housing industry run by
profit-gouging banks and unscrupulous mortgage brokers-the same
characters now receiving bailout billions to remain in business.
This is
a strong argument for the government to step in and once again provide
home loans on a massive scale, replacing the discredited and
untrustworthy private lenders.
It's
also worth noting that over half of the nearly 16 million eligible
veterans used the G.I. Bill's generous education funding for tuition,
books, and living expenses from 1945 to 1956. This included 2,230,000 in
college, 3,480,000 in other schools, 1,400,000 in on-job training, and
690,000 in farm training. Total cost of the World War II education
program was $14.5 billion. [U.S. Dept. of Veteran Affairs]
The late
U.S. labor leader Tony Mazzocchi was both a strong advocate and
beneficiary of the G.I. Bill as a WW11 veteran. “That social program,”
Mazzocchi said, “was in effect at a time when the deficit was four times
worse than it is today [in 1997]. The debt exceeded the Gross National
Product by 125 percent. But we didn't worry about the debt and the
deficit. We actually borrowed even more money and put it in people's
pockets and reinvigorated the nation. Money was distributed in such a
way that everyone was gainfully employed.” [Tony Mazzocchi interview by
Mark Harris, Z Magazine Feb. 1997)
Even the
government agreed the largest social program in our history was a great
success. The U. S. Senate studied the G. I. Bill in 1988 and concluded
that it provided the largest return on investment in the public or
private sector in the history of this country.
It is
also as true now as it was in 1997 when Mazzocchi noted that the country
is richer now than in 1946.
Indeed, the top one percent of the U.S. population grabbed 28 percent of
the rise in national income between 1983 and 2001, 33 percent of the
total gain in net worth, and 52 percent of the overall growth in
financial worth. [Monthly Review]
Thus, the challenge facing us is also the same: How to organize that
wealth to serve the public good.
One Paycheck, One Family
Lest we
forget, during the unprecedented post-WW II “American Century” economic
expansion and for several decades thereafter until around 1970, a
household's standard of living was primarily measured by the income of
one adult breadwinner.
There
was little savings among this Depression-born generation, even less
property ownership and no stock market 401 portfolios. The options of
excessive borrowing and refinancing a home were also not available.
The
growth in standard of living for millions largely depended on a single
paycheck earned from one job.
With few
other income options, workers were more willing to vigorously defend
wages as their primary source of income. As mentioned earlier, unions
played an essential role in advancing the standard of living during this
period and were powerful collective bargaining agents comprised of
millions of supportive members.
The
heavy concentration of membership in the industrial belt also
substantially increased labor's leverage. In 1955, for example, most of
the 35% of workers in unions represented members strategically centered
in the manufacturing sector. There was not yet widespread unionization
of teachers, hospital workers, and government workers.
Clearly,
those first heady days of the post-WW II era gave a powerful impetus to
funding extensive social programs whose aim was to appease mounting
dissatisfaction with the status quo.
A Different Reality Today
Unfortunately, few of these pro-working class political factors operate
today to influence the direction and focus of the government's current
stimulus plan. Indeed, stale wage rates since 1973 have compelled
workers to seek out other alternatives to supplement their sagging
paychecks.
Many
have eagerly opted for excessive amounts of overtime and even picked up
a few hours at a second job. In many households, both spouses work.
According to the Bureau of Labor Statistics in 2004, both the husband
and wife were employed in 61 percent of married-couple families with
children.
Of
course, millions in the last decade have also found relief by
refinancing homes. Yet, the mountain of credit card debt rose
dramatically at the same time. According to the Financial Times, January
2009 recorded the largest number of credit card delinquencies in history
with $18.1 billion in penalty fees went to credit card companies in
2007.
This
figure is up more than 50% since 2003 and accounted for approximately
half of the industry's $40.7 billion in profits in 2008. It was yet
another very profitable method of gouging working families while keeping
consumer spending up.
And yes,
these same credit lenders are also receiving billions of bailout funds
to remain in business.
Now the
bubble has burst. According to some commentators, we're supposed to
believe the fault lies with greedy consumers who supposedly accepted
debt they were incapable of paying. But the same corporate elite that
has enforced dormant wages since 1973 also designed the extremely
profitable, albeit bogus, financial instruments that substituted for an
industrial policy that could have led to wage increases and an expanded
standard of living based on real income.
Isn't
this another argument for nationalizing the banks under public control?
Work to Eat
Of
course, it was a dangerous risk for the capitalist elite in this country
to set off a borrowing craze, but their actions were dictated by their
intrinsic economic imperative to maximize profits by driving wages down.
And
herein lies the dilemma. It is precisely the low wage base of American
workers that threatens the success of any recovery plan that must boost
consumer spending in order to get the economy moving again.
With
credit drying up, unemployment rising, home equity evaporating and
mortgage defaults and personal bankruptcies skyrocketing, a single
paycheck will again become the main, depleted source of income for most
Americans.
Hopefully, it is becoming clearer to American workers that exorbitant
credit interest rates and spiraling debt is a poor substitute for a wage
increase. But these critical wage and benefit increases won't come from
the current administration's stimulus plan and they certainly won't come
from employers' generosity.
Following the example of our parents and grandparents after WW II is a
much better bet. The labor movement has to take responsibility for
ensuring a recovery plan that benefits the majority. That begins with
flexing our social and economic muscles, organizing the unorganized and
mass action in the spirit of those working class fighters who are
responsible for every social gain the labor movement has ever claimed.
Carl Finamore is former President (ret), Air Transport
Employees, Local Lodge 1781, IAMAW.
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