The corporatocracy’s war on government and labor

Posted by AzBlueMeanie:

Modern free societies rest upon a three-legged stool for equilibrium and balance: the means of production, labor, and government (for maintenance of order). Remove any one leg from the stool, and the free society collapses.

The wealthy elite and their servants in the Republican Party have forever opposed the interests of working men and women, and have a visceral hatred for organized labor. The Republicans have long been known as "the party of cheap labor." They want a work force just smart enough to do the work required, but not smart enough to organize and to challenge the weathy elite's exploitation of "cheap labor" by demanding fair wages, safe working conditions, and a share of the benefits of their labor.

Movement conservatism has waged an assault upon government for decades. Their goal is to convince you that government is incapable of doing anything right, that government is never the solution but the problem. Hence, Ronald Reagan's most terrifying nine words in the English language: "I'm from the government, and I'm here to help." We are all familiar with Grover Norquists' familiar threat that he wants to defund government so that he can "reduce government to the size that he can drown it in the bathtub."

You will notice that knocking out the legs of labor and government leaves only one leg of the stool — the means of production, controled by multi-national corporations with immense wealth and the über-rich investor class. Society's equilibrium and balance are destroyed.

Not only does this destroy the individualism of liberal capitalism but it will destroy the individualism of our democratic republican form of government in the process. This shift in the balace of power will result in replacing the form of government with which we are all familiar with a modern-day version of "absolutist corporatism," a class-society feudal system controled by multi-national corporations with immense wealth and the über-rich investor class. Individual liberties and freedom will be reduced to a feudal system of "serfdom."

This is the blueprint that the Republican Party is pursuing on behalf of its clientel, the multi-national corporations and the über-rich investor class. Reuters reported this week the Secret GOP plan: Push states to declare bankruptcy and smash unions:

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 such as California and Illinois to declare bankruptcy. This may be the biggest political battle in Washington, my Capitol Hill sources tell me, of 2011.

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[T]he Build America Bonds program (BABs) now accounts for more than 20 percent of new debt sold by states and local governments thanks to a federal rebate equal to 35 percent of interest costs on the bonds. The subsidy program ends on Dec. 31.  And my Reuters colleagues report that a GOP congressional aide said Republicans “have a very firm line on BABS — we are not going to allow them to be included.”

In short, the lack of a BAB program would make it harder for states to borrow to cover a $140 billion budgetary shortfall next year, as estimated by the Center for Budget and Policy Priorities. The long-term numbers are even scarier. Estimates of states’ unfunded liabilities to pay for pension benefits range from $750 billion to more than $3 trillion.

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Republican Representatives Devin Nunes and Darrell Issa of California and Paul Ryan of Wisconsin have introduced a bill that would require state and local governments to estimate the size of public pension liabilities if their assets earned a more conservative rate of return than many plans currently expect. Failure to do so would result in the suspension of their ability to issue tax-exempt bonds.

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Some Republicans hope the shock of the newly revealed debt totals will grease the way towards explicitly permitting states to declare bankruptcy. Indeed, legislation  amending federal bankruptcy law is currently being prepared by congressional Republicans. Local municipalities do declare bankruptcy from time to time, most famously California’s Orange County in 1994. But states can’t. Allowing them the same ability to renegotiate obligations could enable them to slash public employees’ pension benefits, a big factor in their financial woes.

[This is made possible by use of the "cram down" rules in bankruptcy court.]

Public employee unions have traditionally carried great influence with Democrats, even if President Barack Obama’s willingness to freeze their pay on the federal level suggests their clout may be waning. From the Republican perspective, the fiscal crisis on the state level provides a golden opportunity to defund a key Democratic interest group. For the GOP, it’s an economic and political win.

Jon Perr at perrspectives.com has more details. PERRspectives: The Republican War on the States:

In just the last few days, the Washington Post, the New York Times, Reuters, Bloomberg, the Wall Street Journal described the fiscal triple-whammy facing the states. Even with spending now well below 2008 levels, the downturn-induced drop in revenues and increased demand for social services coupled with the looming end of the American Recovery and Reinvestment Act (ARRA) is producing yawning gaps in state budgets. And the states, all but one of which must balance budget each year, are responding with draconian spending cuts and deferred payments to state employee pension funds.

This week, both the National Conference of State Legislatures and the National Governors Association sounded the alarm. In its report, the NGA described a $65 billion "cliff" facing the states despite further cuts already made this year:

One of the clearest signs of state fiscal stress are mid-year budget cuts as they highlight the difference between budgeted levels of spending and forecasted revenue collections. For fiscal 2010, thirty-nine states made $18.3 billion in mid-year budget cuts. Thus far for fiscal 2011, 14 states have made $4 billion in cuts. In 2009, 43 states cut $31.3 billion and in 2008, 13 states made $3.6 billion in mid-year cuts.

The scope of the disaster – and the threat to the American recovery – has been evident for months. Economist Stephen Gordon warned that "that total government spending has been a drag on growth over the past two quarters" because "the increases at the federal level have not been enough to compensate for the spending cuts at the local and state levels." This summer, the Center on Budget and Policy Priorities forecast that the states' combined $89 billion budget hole put 900,000 jobs at risk. By October, as David Leonhardt summed it up in the New York Times:

Local governments are cutting jobs at the fastest rate in almost 30 years.

They cut 76,000 jobs last month and over the last three months have cut 143,000 jobs, many in education, according to today's jobs report. That's 1 percent of total local-government employment across the country. Since the Labor Department began keeping records in the 1950s, the only other time that the cuts were so steep was in the harsh 1981-2 recession.

Yet, the Republican leadership in Washington has turned its back on the states at almost every turn. This summer, the GOP held up President Obama's state aid package (one designed to save an estimated 300,000 jobs) for weeks. Minority Leader John Boehner led the Republican attack in labeling the Medicaid and jobs assistance a "bailout" for Democratic "special interests." And now, as ThinkProgress, Reuters and the Wall Street Journal detailed, Republicans plan to block the extension of the popular Build America Bonds (BAB) program that helped boost state and local governments:

If the BAB program is allowed to expire on Dec. 31, ending the sale of those federally subsidized, taxable securities, state and local governments would issue more tax-exempt long-term debt. To attract buyers, issuers would have to have to offer higher interest rates at an inopportune time as they struggle with diminished tax revenue and growing budget deficits.

Leading the charge this time to punish Democratic-voting states and their public employee unions are the usual suspects. In the House, Wisconsin Rep. Paul Ryan incoming Oversight and Government Reform Committee chairman Darrell Issa "have introduced a bill that would require state and local governments to estimate the size of public pension liabilities if their assets earned a more conservative rate of return than many plans currently expect. Failure to do so would result in the suspension of their ability to issue tax-exempt bonds."

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As with their threat to commit national economic suicide by refusing the raise the federal debt ceiling, Republicans are playing chicken with America's financial future. California, Illinois and New York alone account for 25% of U.S. GDP. And as the Washington Post explained, they are not alone in facing staggering budget shortfalls:

In addition to Nevada, states such as Illinois have projected shortfalls of more than 30 percent of their general funds…

States projecting shortfalls of 20 percent or greater in the 2012 fiscal years include New Jersey (26 percent) and North Carolina (20.3 percent), while Illinois' midyear gap in its current budget tops the list at a projected 47 percent of its general fund.

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But as in their crusades against public employees and the debt ceiling, this Republican game-of-chicken is designed to punish Democrats and their constituencies.

Actually, their goal is much more ambitious. It is to remake the world in which we live into a modern-day corporatocracy. It is up to each of us to resist and to fight them every step of the way. This is war.