Organ of Alliance Marxist-Leninist (North
America)
Volume 1, Issue 5; June-July 2003 $1.00
A
L L I A N C E ! A Revolutionary Communist
Monthly
Working Class, USA: Life in
the
American Working Class Today

Across the world, we are watching a return to the
most unapologetic inequities in Western imperialist heart-lands. These
are the societies where many workers were able at one stage following the
Second World War to attain at least a reasonable life-style. However as
the depth of the crisis of capital peaks higher and higher, a return to
the cloth cap and 1930’s penury is ever daily a new reality for workers
in the USA. We will illustrate this in 3 short fragments:
The new reality of the unemployment targeting first
and foremost black Americans; the pensions crisis that brings to mind the
specters of the elderly in 19th century work-houses; and finally the huge
crisis in health care.
1) The Depth of Today’s Unemployment in the USA – Black Americans
Targeted First.
As the USA economy is led by the Bush Government
into further attacks on the workers, the already worst off are made even
worse off. Over 28 months, the results of the recession have been the loss
of 2.6 million jobs, of which 90% was in manufacturing. It is no surprise
that it is black Americans who are paying the worst of the brunt. It is
the manufacturing jobs that have the best wages, and their elimination
is an on-going facet of the crisis of the USA imperialist economy, that
we have previously discussed in issue 4, "ALLIANCE!"
Monthly.
“Unemployment among blacks is rising at a faster pace than in any similar
period since the mid-1970's, and the jobs lost have been mostly in manufacturing,
where the pay for blacks has historically been higher than in many other
fields….. The number of jobs and the types of jobs that have been
lost have severely diminished the standing of many blacks in the middle
class," said William Lucy, president of the Coalition of Black Trade Unionists.”
Louis Uchitelle; “Blacks Lose Better Jobs Faster as Middle-Class Work
Drops”; NY Times, July 12, 2003;
http://www.nytimes.com/2003/07/12/business/12RACE.html
A measure of the desperation for these jobless black
Americans is that they have insisted on trying to find new jobs, even if
they are in the “soft” economy. The rise in unemployment rates amongst
the blacks is twice as fast as that of white workers. It is also the higher
paying factory jobs that have been eliminated rather than jobs of low-wage
workers and women previously on welfare in the 1990's. The human devastation
can only be imagined.
In Indianapolis, Autoliv, a Swedish seat-belt factory
closed a plant, laying off 350 workers, more than 75 percent of them black.
Most were hired in the late 1990's when the unemployment rate in Indianapolis
was only 2 percent. At that time, as labor was scarce in a relatively more
boom economy, Autoliv, hired young men who had no high school diplomas.
As Michael Barnes – director of an A.F.L.-C.I.O. training programme for
laid off workers says:
"They were taken from the street into decent-paying jobs; they were
making $12 to $13 an hour. These young men started families, dug in, took
apartments, purchased vehicles. It was an up-from-the-street experience
for them, and now they are being returned to their old environment."
Apart from anything else the loss of health coverage
is a huge threat to these families:
“Between 2000 and 2001, 1.4 million Americans—primarily workers and
their dependents—lost health coverage when they lost their jobs, according
to the Center on Budget and Policy Priorities. The number would have been
much higher, the center says, if Medicaid—the joint state–federal health
coverage program for the poor that currently insures about a fifth of the
nation’s children—had not covered many of them.” http://www.aflcio.org/aboutaflcio/magazine/0603_healthcare.cfm.
And yet, all the various States are struggling with
deficits. So, no surprise that they have initiated or are planning cut-backs
in Medicaid, which will hit the unemployed again - hard.
Continued on page two.
Not only that but cuts in State Children’s Health
Insurance Program (SCHIP) will make the situation even worse as the poorest
children are helped by that. Already in Spring 2003 cuts were being made
that were planned to affect as many as 1.7 million recipients who will:
“Lose critical Medicaid benefits such as prescription drugs and dental
care. Also, states were contemplating cutting the six-year-old, highly
successful joint federal–state State Children’s Health Insurance Program
(SCHIP) for children in households just over the poverty line—this means
hundreds of thousands of the 5 million children now covered by SCHIP might
find their care trimmed or eliminated.”
http://www.aflcio.org/aboutaflcio/magazine/0603_healthcare.cfm
2) GAMBLING WITH MEDICARE AND SOCIAL SECURITY.
Using the pretext of the Medicaid under funding crises
in the states, the Bush administration is going to lend extra Medicaid
money only if those states will combine Medicaid and SCHIP into one block-grant
program for the next 10 years. This will ensure that states get fixed dollar
amounts rather than matching state dollars with federal dollars. So – effectively
capping federal Medicaid and SCHIP – regardless of growth in demand.
And Bush insists that these states must pay back,
by receiving fewer dollars in the last three years of the block grant program.
[http://www.aflcio.org/aboutaflcio/magazine/0603_healthcare.cfm]. But this
is just one fragment of a game of pretence, where the Bush administration
can erode further the future of Americans. For the Bush administration
is playing a game of bait and switch with American working families.
This time the “bait” is a much touted “expansion”
of Medicare that will purportedly provide retired persons with prescription
medicine coverage. The “switch” lurking behind the “bait” is nothing
less than the privatization and destruction of the entire Social Security
System.
At the same time as “the biggest expansion of Medicare
since its creation” is being hailed in the media, President Bush’s Commission
on Social Security has presented an initial report recommending the privatization
of Social Security. Arguing that public funds cannot continue to
guarantee Social Security benefits and predicting government default and
bankruptcy, the Bush Commission urges the slashing of benefits, the postponement
of retirement age, and the raising of taxes as the only solution to this
‘dilemma.’ The Commission then goes on to present a plan by
which government benefits would be reduced and individual tax-payers’ Social
Security taxes would be placed into special accounts that would be invested
in the stock market.
Thus, the retirement income of millions of Americans
would depend on the whims of the stock market. Meanwhile brokerage
firms will garner billions of dollars in fees as the entire Social Security
Trust would convert into a multi-trillion dollar gambling pool. A
gambling pool in a wager that, as the recent 401K scandal demonstrated
may well turn up craps.
Adding to the outrage is the little mentioned fact
that financially the Social Security System is functioning successfully
and today has a surplus in excess of $1 trillion. Hence, the dire
predictions of an economic apocalypse overwhelming the Social Security
System are nothing more than a smoke screen behind which the Bush administration
seeks to deprive American workers of their hard-earned retirement benefits.
Not to be left out of the game, the Democratic Party has countered Bush’s
attack on Social Security with a privatization plan of their own.
All of this makes the recent self-congratulatory round of applause over
the “expansion of Medicare” to include prescription drugs reek of even
more cynicism than is usual in Washington. And the stench gets worse
when one closely examines the lauded plan. Rather than alleviating
the economic burden faced by millions of elderly and retired persons, the
new Medicare drug program will provide scant assistance and, indeed, only
further the drive towards privatization.
As outlined, the new Medicare drug benefit will require
that retirees pay thousands of dollars into the system. Anyone enrolling
in the plan will be required to pay some $500 per annum in premiums, on
top of an additional $300 deductible. Moreover, enrollees would have
to make co-payments approaching 50% on all expenses up to $4,500.
It should be noted that this is what awaits those who can afford to enroll
in the new system. For the vast majority of American retirees
and senior citizens, this new “expansion” of Medicare means nothing.
However, the new plan means quite a lot to insurance companies and HMOs
who stand to profit substantially. Private health care companies
will be permitted to enroll retired members into their own prescription
drug programs and gain tax dollars as profits.
So, in typical advertising hype double-speak, the
great ‘advance’ and ‘extension’ of Medicare and Social Security, actually
signals the destruction of these self-same programs. Bait and switch.
‘Round and ‘round she goes. Where she’ll stop, the capitalists know.
. . their pocketbooks.
3) PENSION FUNDS RAIDED BY THE CORPORATIONS
In general Western societies have increased the life
span of their people. But correspondingly
Continued on page three.
the care of the elderly has become an ever-increasing
problem. As capitalism erodes all human bonds and erects instead only a
cash relationship, traditional family bonds of even 30 years ago, become
so weak that the elderly face an ever more lonely future. A large portion
of the work force has tried to defend its old age by paying into pension
funds largely operated by the big companies.
Only one problem, the companies have been ‘milking that fund’. What
have they used that wealth of funds for? They have generally used it for
inflating their own “profit” margins, to pay for laying off workers, and
surprise-surprise – to give other capitalists (called “benefits consultants”)
a golden hand-out:
“A lot of big companies face a pensions crisis… they suddenly need
to pour millions of dollars into their pension plans, because there isn't
enough cash in them to meet the legal requirements. … But what companies
aren't saying is that some of them contributed to the problem themselves.
They did so through a variety of strategic moves to plump up earnings or
cut costs, at the price of reduced funding for their pension plans. Over
the past decade, U.S. companies have siphoned off billions of dollars in
assets from their pension plans. They've used the cash to pay for retirees'
health coverage, the costs of laying off workers and even fees to benefits
consultants.”
Schultz, Ellen E. 2003. “Firms Had a Hand In Pension Plight.”
Wall Street Journal (10 July): p. A 1.
A concrete example of raiding the pension funds to “pay
for cut-backs”, can be cited of Lucent Technology:
“Lucent Technologies Inc., the big maker of telecom gear, used about
$800 million in surplus pension assets to pay termination benefits as it
cut 54,000 employees from its payroll in 2001 and 2002. The Lucent pension
plan, meanwhile, went from having $5.5 billion more funds in it than legally
required on Sept. 30, 2001, to being $1.7 billion "under funded" on Sept.
30, 2002.”
Schultz, Ellen E. 2003. “Firms Had a Hand In Pension Plight.”
Wall Street Journal (10 July): p. A 1.
Another example shows how the capitalists help firms
that has “advised them” how to hide-dip into funds:
“ Besides other ways companies have tapped surplus pension assets,
they've used some assets to hire the very consultants who taught them how
to tap. For instance, Internal Revenue Service filings show that
International Business Machines Corp. used $18.4 million of pension assets
in 2001 to pay fees to Watson Wyatt, a consulting firm that helped it convert
to a cash-balance plan. This was seven times the fee Watson Wyatt
got when it first began working for IBM in 1995. In comparison, investment-management
fees paid out of IBM pension assets declined about 5.5% over the period.
An IBM spokeswoman says the higher fees paid to the consulting firm didn't
reflect just its work in converting the pension plan, but also an increase
in administrative functions the consultants did for the plan. The fees
are "reasonable and necessary," she says."
Schultz, Ellen E. 2003. “Firms Had a Hand In Pension Plight.”
Wall Street Journal (10 July): p. A 1.
Not only have the company executives been dipping their
hands into the funds, they have also simply not been topping them up any
longer. They relied on “voodoo-ENRON-accountancy”, to “show” a satisfactory
paper bottom-line.
“Meanwhile, many employers have been putting less money into pension
plans in the first place, because they adopted structural changes that
made the plans appear better-funded on paper. Converting to a hybrid known
as a "cash balance" plan, for example, reduced the sums that companies
needed to put into the plans, or even were permitted to. All of these maneuvers
were legal, grounded in arcane and little-known provisions of U.S. pension
law, and buried in the minutiae of corporate filings. The moves became
available to employers thanks to a thriving industry of benefits consultants,
which guided companies through the labyrinth to find ways to tap the huge
pension surpluses the bull market wrought.”
Schultz, Ellen E. 2003. “Firms Had a Hand In Pension Plight.”
Wall Street Journal (10 July): p. A 1.
Other recent tricks including offering the employees
a lump sum rather than monthly payments. These may be offered in a way
that the employee thinks is attractive, but in reality the deal only favors
the company:
“Employers say they offered lump-sum pensions to please employees.
And indeed, given a choice, employees overwhelmingly choose the lump sums.
But companies offered lump sums for a pragmatic reason as well: Doing so
cost them less. Although few workers realize it, when an older person at
some companies takes a lump sum, the payout costs the employer 10% to 20%
less than if the retiree had chosen monthly checks. ……The pension lump
sum totals less than cash value. Thanks to a little-known provision, when
an employee voluntarily retires early and chooses a lump-sum pension, employers
can strip out certain early-retirement subsidies the employee would get
if he or she took the pension in monthly payments. The subsidies are intended
to encourage early departure of workers over age 55. In these cases, the
payout of lump sums can help boost corporate earnings. The employer is
paying out less than the liability it had been recording for that employee.
So the company is entitled to reverse part of the liability it has already
recorded -- resulting in an actuarial gain that helps the bottom line.”
Continued on page four.
In addition to that, employers switched to a system
whereby pensions were no longer calculated by the “traditional formula
-- which multiplies final salary and years of service”, but a system with
a “cash-balance plan” which gives each employee a theoretical "account
balance" that grows by a certain percentage each year.”
This reduced the growth of the pensions helping the
companies, which enabled the companies to estimate for its stock-holders,
its liability for pensions as less – transferring the “excess” into profits.
So, Surprise-surprise again – those companies who have not paid into
the fund for years are now “asking Congress for relief -- new rules that
would reduce funding requirements, yet make pension plans appear healthier
to both shareholders and the government. They also seek permission to reduce
pension payouts to certain departing employees.”
Schultz, Ellen E. 2003. “Firms Had a Hand In Pension Plight.”
Wall Street Journal (10 July): p. A 1.
And finally, companies are trying to reduce their pension
loads even further by asking Congress to reduce the rate at which calculations
are made to keep the funds full.
All these machinations makes the future even less
precarious for the elderly. Having given their life blood to capital, there
is no return.
Can there be anything more fundamental for workers than
a job providing adequate for a family’s food warmth and shelter; freedom
from health care worries; and security for old age?
Capitalism will not deliver.
It must be destroyed.
Build the Marxist-Leninist Party!
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