From: John Lacny
Subject: [marxist] The next major political attack on the US
working class
To: marxist@yahoogroups.com
Date: Sat, 20 Oct 2001 23:04:30 -0400
Reply-To: marxist@yahoogroups.com
The global economic crisis is finally hitting the
United States itself in a big way. It was coming long
before September 11, but certain sectors have been
especially hard-hit as a result of the terrorist attacks. A
recent AFL-CIO policy brief
documents
527,923 layoffs since September 11, with transportation
(128,094), hospitality and tourism (132,545), and aerospace
(66,635) taking very big hits, as may be expected. However,
it's noteworthy that there have also been nearly 100,000
layoffs (99,084, to be exact) in manufacturing as well. The
roots of the crisis are long-term, and the recession was
already on its way, even though a number of employers are
using the current political environment as cover for their
actions.
Meanwhile, people should really have a look at the
incredible fleecing of the working class that the
Congressional Republicans in particular are setting up. The
House Ways and Means Committee approved an "economic
stimulus" on October 12 which is an absolute scandal. It
will cost $103 billion in fiscal year 2002, and AT A MINIMUM
(see below why it could cost more) $162 billion over the
next ten years.
Deficit spending during a recession is fine by me, but
it's where the spending goes that's a problem. It's mostly
made up of tax cuts. In 2002, 64% of the package is made up
of corporate and business tax cuts, and an additional 19.1%
is made up of tax cuts that would benefit primarily
higher-income tax payers. Tax cuts benefiting primarily
low- and moderate-income tax payers come in at 13.3%.
Spending and tax provisions for unemployed workers? 3.2%
Over ten years, the package breaks down as follows:
42.3% for corporate and business tax cuts; 43.5% for tax
cuts primarily upper-income taxpayers; 8.2% for primarily
low- and moderate-income taxpayers; 4% for spending and tax
provisions for unemployed workers.
It's actually even worse than these initial statistics
make it sound. A whole bunch of these tax cuts -- for
example, allowing corporations to write off certain kinds of
capital assets; or the acceleration of the reduction in the
individual income tax rate from 28 percent to 25 percent, a
measure which would benefit primarily the top quarter of the
population -- are two- and three- and four-year proposals.
In contrast to the one-year cuts that could be more
appropriately described as "temporary," these are in fact
likely to be renewed when they expire, because the tax code
is full of corporate tax loopholes that were originally two-
and three-year pilot projects, but which were made
permanent. To give you an idea of how much this would cost,
keep in mind that the joint tax committee has noted that if
the provision on partial expensing of business investment
remains in effet for ten years instead of expiring after
three, that provision ALONE will cost $265 billion.
In case you think that was a typo, I'll repeat it: $265
billion.
It's a joke to call this a "stimulus," since huge
amounts of the money involved would come years from now,
rather than entering the economy now, at the outset of the
crisis. And since the bulk of it goes to the wealthy -- who
tend to hoard assets, or at best speculate, rather than
investing -- instead of to the working class people who
spend, it's nowhere near qualifying as a "stimulus."
What's especially scandalous is the repeal of the
Alternative Minimum Tax, or AMT. The AMT is a provision
from the 1986 tax reform, which was enacted in response to
the practice -- common of corporations -- of piling up a
whole bunch of tax write-offs and exemptions so that they
didn't even have to pay taxes for several years. The AMT at
least required them to pay a certain amount of taxes. The
Ways and Means bill repeals this permanently. And it gets
worse.
The AMT provisions also let the corporations pile up
credits if their actual tax bill (after all the exemptions)
was lower than the AMT and they therefore paid the AMT. But
they could only make use of these credits in future years if
their overall tax bill was higher than the AMT, in order to
pay down their bills so that they would only have to pay the
AMT again. But the bill passed by the Ways and Means
Committee makes those credits "refundable" now, which
creates a windfall for those corporations that used to
consistently pay the AMT.
In plain English, this means that if this bill passes,
the Federal government will soon be writing checks to
corporations, 13 of which will receive at least $100 million
each. The Federal government will write a check to IBM for
$1.4 billion. A check to GM for $833 million. A check to
GE for $671 million.
Now, guess which tax provision is set to expire after
only one year? The supplemental rebate for low- and
moderate-income taxpayers. And needless to say, the
measures for the relief of unemployed workers are only
six-month or one-year affairs.
When it comes to unemployment insurance, the situation
is looking even more depressing. Keep in mind, first, that
the Federal government is sitting on a pot of $40 billion in
the unemployment insurance trust fund. All the Ways and
Means bill would do is accelerate the transfer of $9 billion
-- money slated to be transferred anyway, although the
proposed bill speeds up the transfer -- to the state
unemployment accounts.
And there the money can sit, because there's no mandate
from the feds that it actually be used to extend or augment
benefits. In fact, the kinds of things the feds might allow
the states to do are truly scandalous.
The states can spend this money however they choose in
relation to UI, and some of them may even want to, say, use
the money so as to reduce employers' contributions to the
fund! In other words, they could choose to spend not a cent
more money on relief of unemployed workers, but instead
spend it to provide further relief to employers who are
laying people off. And some of them are set to do it.
Beyond that, the states may choose just to sit on the
money. So the Congressional Budget Office estimates that
only $2.3 billion of the transferred funds would be spent in
fiscal 2002 both on added unemployment benefits and
administrative costs -- and only $3.6 billion over 10 years!
This, just as there have been over a half a million people
laid off in the past month, with more likely to come.
How about health care? Andy Stern of SEIU says that
the number of uninsured -- now hovering around 44 or 45
million -- could reach 60 million as a result of the
recession. The Ways and Means proposal has two provisions
to help unemployed workers with health insurance:
(1) It would allow more unemployed workers to withdraw funds
without penalty from their IRAs and their pensions, like
their 401(k)s, in order to pay health insurance premiums.
Nothing like drawing down your pension to pay the
bloodsucking HMOs. It's not at all helpful for people who
don't have IRAs (e.g., 75% of families with incomes between
$10,000 and $25,000, and 94% of families with incomes under
$10,000), and of dubious benefit to people who have only
moderate savings.
(2) A $3 billion grant to the states through the Social
Services Block Grant. That's a miniscule amount of money
when spread out over the entire country, especially
considering the gravity of the problem, and it opens up all
the familiar problems when it comes to the states
administering the whole damn thing.
On health insurance for unemployed workers, there are
some better alternatives on the table in the immediate
future, based on COBRA. COBRA is a program that allows
workers who are laid off from or leave their old job to
continue to purchase health insurance at the old group rate
offered to the old employer. What that means is that if you
worked for, say, the University of Pittsburgh and were
covered by the employer-provided health plan at a group
rate, you can continue to buy the old health insurance at
that rate. It just means that you shell out $170 a month.
A friend of mine who left his job at the University for
another job that initially did not carry health insurance,
was able to buy his old health plan at the old price. Keep
in mind that $170 a month for health insurance, even as a
group rate, is incredibly low, because the University of
Pittsburgh has a relationship with an HMO set up by UPMC
(formerly the University of Pittsburgh Medical Center, now
autonomous, though still connected in myriad vague ways --
this is a familiar story around the country). More
typically, a person might be shelling out $500 a month for
his/her family; it's not uncommon to see even higher bills.
And people who have to pay that consider themselves lucky,
because without COBRA they wouldn't be able to pay the
lower, group rate.
Ted Kennedy (D-Massachusetts) and Max Baucus
(D-Montana) have a bill in the Senate which would cover 50
percent of COBRA premiums through June 30, 2003 for laid-off
workers who qualify for COBRA, and would establish a
temporary state Medicaid program to cover low-income
unemployed people who can't afford the remaining premium, or
who are ineligible for COBRA because they worked for a
"small" business or for a firm that didn't offer health
insurance. In practice, that means that if you're an
individual who worked for the University of Pittsburgh and
you get laid off (not that universities are jumping on the
layoff trend, but it's an easy example), you only have to
pay $85 a month to maintain your health insurance instead of
$170. Beyond the Kennedy-Baucus bill (which would cost
about $16 billion), there's even another proposal that would
subsidize 75% of COBRA costs, which means that you'd be
spending "only" $42.50 a month for health insurance. (This
proposal would cost $25 billion.)
But such radical measures are a little out of favor in
the current climate in Washington. (Note: My tongue is
firmly implanted in cheek.) Currently Kennedy and Baucus
(the chairs of the Labor and Human Resources Committee and
the Finance Committee, respectively) are sitting on their
bill, and they're going to need to be pushed.
Depressing as it may seem, the Kennedy-Baucus proposal
is the best we're going to be able to hope for in the very
immediate legislative future, so I suggest that anybody who
lives in Massachusetts or Montana should get on the ball for
this. As inadequate as partial funding of COBRA is, it's
better than nothing for workers who have been cut adrift and
left without health insurance coverage. November 2 is the
first Friday of the month, when the latest unemployment
figures will be released, and the numbers are likely to be
harrowing. It's time for activists to do some kind of
visible action around this, maybe a press conference, etc.
Any European or Canadian who's reading this is probably
getting a sense of just how jaw-droppingly insane the US
health care system is, but there you have it.
So the Kennedy-Baucus bill is one concerete improvement
on the Ways and Means Committee proposal (dealing with the
health insurance issue alone), and there are bound to be at
least some others, because the House Ways and Means
Committee (controlled by reactionary Republicans) is the
worst of the worst in Congress, and there are bound to be
changes in the (Democratic-controlled) Senate version of the
"economic stimulus." But it's going to be bad, and there's
no doubt about it.
We're talking about completely inadequate measures to
deal with the people hardest-hit by the recession, combined
with all kinds of gifts to the wealthiest, all of it done
under cover of war. This is stuff we need to be talking
about, big-time, because they're getting away with murder.
I culled most of the above from a recent report of the
Center for Budget and Policy Priorities
, as well as a discussion with a
veteran unemployed organizer and friend of mine.
The movements of the unemployed and the poor
particularly are going to take on added importance in the
near future, as already-employed workers start fearing even
more for their jobs and become even less willing to take
risks (i.e., union organizing, "living wage" efforts, etc.)
than they have been in the past. It's important that we all
familiarize ourselves with the intricacies of the challenges
we face, the better to participate in these movements and
(in the wide sections of the country where they're pretty
much moribund or non-existent) even help initiate and lead
them.
John Lacny