U.S. public sector under attack

by Andrew Pollack

Politicians of both major parties in the United States, from the federal level down to the smallest towns, are making clear the next big ruling-class assault will come in the public sector. While the labor movement is ill prepared to combat that assault, it is ironically in that sector where workers can perhaps best make a stand to turn around the bosses’ overall offensive.

Let’s begin by looking at the latest wave of these attacks. Foremost among them was President Barack Obama’s Nov. 30 order of a two-year pay freeze for two million federal workers. Several commentators called it Obama’s PATCO, referring to Ronald Reagan’s savage anti-union attack on air-traffic controllers, which emboldened private employers to follow his lead.

In monetary terms Obama’s freeze is mostly symbolic. It would cut just $5 billion by 2012, or 0.4% of the $1.3 trillion deficit. But we can be sure he’ll follow it with more such measures, and that local and state governments will echo his “debt reduction” logic to demand cuts of their own. Private firms will ask for comparable concessions.

Then in mid-December, Obama reached a deal with Republicans to continue Bush’s tax cuts, including for the richest Americans. The deal also reduced the amount of Social Security taxes workers pay from 6.2% to 4.2% for one year. The long-term effect of that move will be to endanger Social Security’s fiscal soundness and perhaps even its existence. By making the program dependent for the first time on general revenues, it sets up a scenario in which politicians can demand its curtailment or abolition using deficit-cutting, tax-slashing rhetoric.

Numerous governors-elect have announced plans to attack public workers in their states. Ohio’s John Kasich announced he would end collective bargaining for child-care and home-care workers. In Wisconsin, Scott Walker has called for tripling health-care costs for public workers and ending their right to collectively bargain if they don’t agree. Walker also floated the idea of making Wisconsin a “right-to-work” state.

Even supposedly pro-labor Democratic candidates have been blunt about their intentions to go after labor. In New York, governor-elect Andrew Cuomo said during his campaign that labor would have to make steep sacrifices. After the election he formed a team of business executives to advise him on where to cut, and to craft advertising promoting the attacks—a team joined by New York City Building Trades union leader Gary Barbera, who repeated the “we must all sacrifice” mantra.

Jerry Brown, returning to the California governor’s mansion, declared he would have to “do things that labor doesn’t like”—including reducing public-employee pensions. Oregon’s newly elected Gov. John Kitzhaber said he would hold down projected pay increases for public-sector workers.

Meanwhile, attacks on teachers and students continue to increase. The Los Angeles Unified School District is demanding pay cuts, and “value added” evaluations to replace tenure. And the ideological assault in the form of propaganda for school “saviors” who impose testing and bust unions is swelling, thanks in great part to financing by a foundation headed by Bill Gates. A draft bill in Illinois—which faces opposition from the progressive Chicago Teachers Union—would strip teachers’ unions of many rights, decimate tenure rights, and restrict teacher say on school affairs, reducing their ability to bargain over issues that impact students such as class size and staffing.

The dropping of pro-labor rhetoric by Democrats has conservative commentators gloating. Washington Post business columnist Charles Lane announced that “the big political story in 2011 will be the struggle to rein in public- sector unions, whose pay, pensions and health benefits are bankrupting some of the biggest states. … What’s really interesting, as I’ve written, somewhat obsessively, is the looming struggle between budget-cutting Democrats and the unions.

“This is the contest that will determine whether Democrats can survive … by putting the sustainability of vital public services ahead of the unions’ demands.”

James Pethokoukis reported in a Reuters column titled, “Secret GOP plan: Push states to declare bankruptcy and smash unions,” that “Congressional Republicans appear to be quietly but methodically executing a plan that would (a) avoid a federal bailout of spendthrift states and (b) cripple public employee unions by pushing cash-strapped states … to declare bankruptcy.”

Pethokoukis repeated claims that states would have unfunded pension liabilities of up to $3 trillion in coming years, and looked hopefully to legislation amending federal bankruptcy law so states can declare bankruptcy and then tear up union contracts.

Alongside efforts to savage the public workforce are new unprecedented steps to curtail public services. For instance, more than 20% of Detroit’s 139 square miles would be refused services under a plan developed by Mayor Dave Bing, who wants to force residents of some neighborhoods to move into other parts of the city.

Yet amidst this campaign against the public sector came renewed evidence that the private sector is in no position to lead the economy out of depression. A Wall Street Journal article titled “Companies Cling to Cash” said that “rather than pouring their money into building plants or hiring workers, nonfinancial companies in the U.S. were sitting on $1.93 trillion in cash and other liquid assets at the end of September. … Cash accounted for 7.4% of the companies’ total assets—the largest share since 1959.”

“The cash buildup shows the deep caution many companies feel about investing in expansion while the economic recovery remains painfully slow and high unemployment and battered household finances continue to limit consumers’ ability to spend.”

A New York Times article on Dec. 4 made a telling comparison between the public sector crisis and other aspects of the global downturn: “The finances of some state and local governments are so distressed that analysts say they are reminded of the run-up to the subprime mortgage meltdown or of the debt crisis hitting nations in Europe… at some point investors could balk at lending to the weakest states, setting off a crisis that could spread to the stronger ones, much as the turmoil in Europe has spread from country to country.”

This gets to what’s really behind the crisis in the public sector. Most fundamental is the long-term crisis of profitability that the global economy has been in for decades. But the crisis plays out on a terrain of economic and political structures that have long outlived their usefulness or even survivability, whether states within the U.S., or countries on the European continent.

There is clearly no economic (or political, for that matter) rationale for the U.S. state structures. Yet these states pay for and provide services that in most industrialized countries were long ago taken over by national governments to take advantage of economies of scale. And states pay for those services by regressive taxes, and by bonds that yield massive profits to private investors.

So in times of crisis, the impact of a downturn plays out in irrational ways, varying by state. But in all cases the state’s rulers, and their allies in Washington, seek to force each state’s workers to pay for the crisis. (In the same way, the differential impact of the crisis within Europe is a product of the artificial restriction, by vestigial nation-state boundaries, of continent-wide investment, production, and consumption flows. See article on page 4.)

But it doesn’t take a sophisticated grasp of capital’s functioning, much less of irrational, outdated political structures, for workers to know they are being stripped of public services that they need now more than ever.

That’s why the potential for a class-wide defense of public-sector workers and the services they provide is possible. Workers desperately need jobs, and they know that they and their families need education, health care, and other services that can only be rationally provided by the public sector.

To turn that awareness into struggle, we can start with building solidarity with particular struggles of city and state workers. We can hold conferences to compare notes on the attacks and organize solidarity, and to call common nationwide days of action in defense of the public sector as a whole. At such conferences, with the participation of community groups, we can draw up a list of services needing to be expanded, and formulate demands on the bosses’ profits and the Pentagon’s budget to fund them.

> This article was originally published in the January 2011 print edition of Socialist Action newspaper.

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