California protest leader Steve Miller to speak in Chicago Saturday, July 31, 2010, analyzes California budget 'crisis'
[Editor's Note: Steve Miller, an Oakland California teacher and union official, delivered the following analysis recently to an audience in California and will be speaking in Chicago on Saturday, July 31, 2010, in the evening at the University of Illinois at Chicago. George N. Schmidt, Editor, Substance].
California faces an critical election year. Once again budget crisis raises fundamental questions about where our state is headed. This report addresses The following questions and much more:
First question: Is there money to stop the budget cuts? There is plenty of money! California taxes corporations very lightly, while directing a huge percent of revenue to corporations. California ranks 35th in terms of business’ share of state and local taxes. Income tax for corporations seems to be a high percentage of total business tax, but this is because property tax for corporations is so low. California is 45th in the country in corporate property tax. We can shift the tax burden from people to corporations.
Why do politicians tell us the state is broke?
Both the Democrats and Republicans openly believe that securing corporate profits is more important that building a society that guarantees the basic necessities of life for working people. Working hand-in-hand with highly-paid lobbyists, they are using the crisis to insure that corporate interests are the top priority.
Are undocumented immigrants really the problem?
National and state laws reward and permit corporations to move jobs out of the country whenever they want. This well-documented destruction of job opportunities is a choice corporations make to maximize their profits. It is they, not undocumented immigrants, that eliminate jobs.
The history of the United States shows that people can take the offensive against corporate assaults only if they stand together. This time around, it’s all of us, or none of us!
What can people do to force the government to put the needs of people first?
The Governor and the corporations tell us that people services and the safety net must be cut. There is simply no alternative, so they say. Yet the government’s job, first and foremost, is to serve and guarantee the well-being of the public. We must hold every politician accountable to this. This means that guaranteeing the necessities of life for every person in the state, as public rights, is the counter to the ever-increasing corporate demands.
2010
The elections this year, Fall 2010, provide an important forum for working-class Californians to begin to reject the corporate-dominated politics of both the Democratic and Republican parties. This is the opportunity to put forward a program that reflects the independent interests of families, students, workers and everyone who is being hurt by budget cutbacks.
Working people are supposed to tighten our belts, work two jobs - if you can find them - and pay-off our debts in order to save the economy. Wouldn’t it be nice if billionaires and their corporations were also held to this standard?
The Supreme Court ruled earlier this year that corporations can spend unlimited money to buy up elections across the country. Now we see Meg Whitman running for governor and claiming that her strength is that she is a CEO even as she makes attacks of immigrant workers her banner. We will see by November how Americans view CEOs as we live through the daily agony of the Gulf Oil Disaster.
Suddenly a network of corporate-backed political action committees are spending millions to guarantee the elections go their way. Just one example is the so-called “California Senior Advocates League” whose funding comes from the equally misnamed “JobsPAC” and “Put California Back to Work”. All three get their funding exclusively from the business sector (1). Their goal is to trick Californians to vote against their own interests.
America has changed since we bailed-out the Bank Melt-Down with $13 trillion. This money was not intended to help out the millions of people who have been, are now and will be devastated by this crisis. Government has abandoned its historic mandate to serve people and improve society.
The $13 trillion was perhaps the greatest single transfer of public wealth into private hands in history. The government seized personal property, in the form of tax money and simply handed it over to corporate private property, without as much as even requiring the banks to report on how they intended to use it. These were the very corporations, of course, that ruined the economy in the first place.
Budget Crisis
California is now in the second of five years of well-organized Budget Crises, each demanding about $20 billion in cuts. Governor Arnold Schwarzenegger is directing this real-life horror, aided and abetted by both the Republican and Democratic Parties. Global banking, lead by our friends on Wall Street, demand vast “austerity” cuts in order to bail out Greece. This exact process is being organized in California by the government.
In both cases, the demands of global capitalism are the same: eliminate all government funding for programs that assist people, deregulate everything, privatize government services and sell-off government property, then erase the Public from the map, including as a legal concept. This means wiping out any idea of the public good, the public interest, public power, public rights, public spaces, and our public commons.
This, the well-organized dispossession of public power, is the logical next-step from the continuous transferal of public money to corporations. The tactic of creating “A CRISIS” to justify the pillage of the public isn’t even new anymore.
A decade ago it was California’s so-called “Electrical Crisis”, where ENRON and other energy corporations “gamed the system” after electricity was “deregulated” and raped the state’s rate-payers. The tab for this ran $40 billion, mostly from the pockets of working-class families. It was all perfectly legal. Corporations made the state a laboratory for creating a government with the mission of draining money from working class people.
The crisis is a really a crisis, but it’s crisis of priorities. The California Budget Project reports that the adjusted gross income of the wealthy in the state nearly doubled from the 1990s to 2007. This is eight times the increase for so-called middle-income earners. Meanwhile corporate profits more than doubled in the same period (2). Needless to say, none of it trickled down. State and local taxes across the country depend heavily on regressive taxes, designed to tax labor, such as local sales taxes and property taxes than the federal government (3). A regressive tax taxes everyone at the same rate. Poor people wind up paying a much higher portion of their income for sales tax than the rich, for example. Now that the economic meltdown has reduced working class income, state revenues are falling. The only solutions being seriously considered are to increase taxes on working people.
For California, just like for the country as a whole, the whole tax burden has been shifted off of property and onto labor. In 1929, state and local taxes in this country came 70% from property taxes, specifically commercial property taxes, and 19% from personal income and sales taxes. In 2005, corporate property tax was only 30% of state tax revenues, while income and sales tax was almost 60% (4).
Shifting the tax burden to labor means that corporate property and finance have been “untaxed”. Commercial real estate hasn’t really paid tax since World War II because they constantly claim that their property is depreciating and this can be taken off their taxes (5). That’s pretty dramatic.
But just consider how Wall Street financial transactions are taxed. They aren’t. A simple tax on corporate-to-corporate, computer-driven, hedge fund-style financial transactions, an act that occurs millions of times every day, would raise vast amounts of money. Though you pay a sales tax for a purchase at the store, the bankers we bailed out pay no tax at all for their purchases and sales.
So the state’s Budget Crisis is a result of choices about what should and should not be taxed. California has the world’s 8th largest economy. There is plenty of money, if only by reversing the tax burden back to the way it was intended to be when income tax was created 1915. There’s more money in the latest corporate tax breaks:
Even as the Governor claimed, in 2009, that he wouldn’t raise taxes, he gave corporations special tax breaks that will cost the state $2.5 billion a year. In a secret, late-night, non-public budget session - while poor children, the elderly and students were taking massive cuts - the legislature gutted the state’s corporate tax. California became the first and only state in the US to let corporations decide for themselves how they would like to be taxed (6). Even before this, less than 50% of the profitable corporations in the state paid any taxes at all.
California is the only petroleum-producing state that has no excise tax to charge corporations for depleting this public resource.
Water is precious in California because most of it is diverted and subsidized to and corporations, including the vast corporate farms of agribusiness, that pay an average of about 1/6 what families pay.
So-called state-sponsored “Free Enterprise Zones” cost $500 million a year in taxes. Research shows these zones create few jobs, and these are state-guaranteed low-income jobs.
Silicon Valley’s top 150 corporations together made in 2009 $47.5 billion in profits! That’s after taxes! Their second most profitable year ever! (SJ Mercury, “Silicon Valley’s Profits Soar!” April 18, 2010. That’s even more money! Denying the state this revenue meant that last year California spent more on prisons that on higher education for the first time in its history! Of course, Schwarzenegger claims that this year he isn’t going to cut public education; instead he proposes to privatize the prisons! He also wants to sell the Rose Bowl and San Francisco’s beautiful Civic Center.
In last year’s crisis, Schwarzenegger appealed to Washington for help. He wanted to waive many federal restrictions on corporations, for example, eliminating environmental protection regulations. The response was not too different than the World Bank’s response to the government of Greece:
“With an estimated $24 billion budget shortfall and a July 1 deadline to close its deficit, California's top officials asked the federal government for emergency funding to help alleviate further drastic cuts in state spending. But the president's top economic advisors - including Treasury Secretary Timothy Geithner, and White House economists Lawrence Summers and Christina Romer - rejected Gov. Schwarzenegger's request for aid, choosing, instead, to admonish the governor for failing to put California's fiscal house in order.
“The Washington Post reported that Gov. Schwarzenegger was denied federal assistance because White House officials feared that it would lead to "a cascade of demands from other states." This kind of head-in-the-sand thinking will have tragic consequences (7).
Government Against the People
In this context, it is a lie to claim that taxes cannot be raised. Every politician knows this. To then turn around and cut benefits to human beings smells a lot like class warfare, organized from the top down. This is a crisis of a system that glories in the greatest polarization of wealth in human history while actively dispossessing the people who are being devastated by the economic crisis and throwing them on the streets.
Schwarzenegger leads a bi-partisan effort of both Republicans and Democrats, similarly as does Obama, to come to an agreement over what government must do, as both the state and federal levels, to accommodate corporations profits and give them what they need.
Part of this process is privatizing the government and turning over its functions for corporations to run as a for-profit business. Once corporations provide “services” that used to be guaranteed in the name of the people, then government simply denies it has any responsibility to people at all. America has never had to face this type of attack before. It will dispossess the public of every right and power before it ends. The California Dream
California has always been the symbol of abundance and economic prosperity for the United States. From the Dust Bowl migrations of the 1930s to the hit song “California Dreaming” in the ‘60s, the state has been seen as the promise of jobs, housing and education for all. The attack on California is partly a campaign to convince everyone in America that there no longer is enough for everybody.
Is this really the situation?
There is more than enough wealth in California (and the United States and the world) to guarantee every human being the necessities of life: food, shelter, education, health care and culture. But corporate private property can only grow by seizing public and personal property. Thus they create a never ending series of “disasters” to justify this transfer of wealth.
Martin Luther King stated in 1967 that the United States was rich enough at that time to completely eliminate poverty. “There is nothing new about poverty. What is new is that we have the technology and the resources to get rid of poverty. The real question is whether we have the will" (8). Today the economy produces vastly more wealth. Eliminating poverty isn’t even very expensive.
In 1998, the United Nations documented that the world economy produced abundance so that every human being on Earth could have the basic necessities of life:
“Facing the Challenge
“The world has more than enough resources to accelerate progress in human development for all and to eradicate the worst forms of poverty from the planet. Advancing human development is not an exorbitant undertaking. For example, it has been estimated that the total additional yearly investment required to achieve universal access to basic social services would be roughly $40 billion, 0.1% of world income, barely more than a rounding error. That covers the bill for basic education, health, nutrition, reproductive health, family planning and safe water and sanitation for all.”
“To see that ample resources are available but not used for human development compare the additional cost of universal access to basic social services with consumer spending. The comparisons here are, of course, illustrative, but they a striking view of how we use the world’s resources.
“Accelerating progress in human development and eradicating the worst forms of human poverty are within our reach, despite deep challenges and setbacks. We know what to do. And the world has the resources to do it.” -- United Nations Human Development Report 1998 (9)
The UN added into the $40 billion the specific costs for: Basic Education for all - $6 billion. Water and Sanitation for all - $9 billion, Reproductive Health for all women - $12 billion, Basic Health and Nutrition - $13 billion. Worldwide military spending back in 1998 was $780 billion. The $40 billion cost for the basic necessities was 5.1% of this. US military spending was around $400 billion for that year. Today, 12 years later, the US alone spends a trillion dollars on war. The cost to California in taxes to pay for current wars is over $120 billion - enough to cover a decade of budget crises.
Yes, there’s plenty of money! But the government is directing it to the corporations.
Labor Rights vs Corporate Rights
The corporate assault on California openly seeks to extend property rights while very specifically identifying and eliminating labor rights. Only 8% of private corporations in California are unionized, while far more public sector workers are unionized. This guarantees that these workers have health benefits and pensions. The Governor, and all major candidates, are all about attacking labor rights, particularly in the public sector. For example:
Schwarzenegger gutted Workman’s Compensation by making it almost impossible for injured workers to get coverage. This is a labor right.
He called a super-expensive election in 2005 to decide on 4 ballot measures, that he proposed, to amend the state constitution. These included propositions to extend tenure for
teachers from 2 to 5 years and a measure that would make union spending for elections almost impossible. These are both labor rights.
Beginning last year, he furloughed state workers one day a week. This mandatory 20% cut in pay has been repeatedly found illegal by state courts, yet to date, no worker has been reimbursed. This year, the Governor has ordered 200,000 state workers to be paid at minimum wage until the budget is approved. State workers, whose unions gave concessions in the Spring, are exempted. These are labor rights.
Even though he has a only 20% favorable rating by the public in polls, Schwarzenegger blocks the demand of the public of California that human services be funded. Public rights are labor rights, since most of the public must labor in order to live. Every cut to in-home health care, to day-care, to assistance for children who are ill is an attack on those who can only get the necessities of life if they can work. This is an issue of labor rights.
Schwarzenegger has often pointed to pensions as a “source of waste”, actually stating that state workers should not get them, since workers in corporations have long been denied the right to have them. This is a labor right. Every corporate tax break in this crisis extends and supports the right of corporations over the rights of people and the public.
Government spokesmen claim that unemployment is a result of immigrants who take “our” jobs. Yet corporations voluntarily, without regulation, are free to move jobs across national borders to where ever they find the cheapest labor. The state subsequently gives them tax breaks to move their profits off-shore in order claim that they are broke and can’t pay taxes. The truth is the lack of public control on corporations allows them to move jobs and close factories whenever they want.
Just as predicted 15 years ago, NAFTA has decimated the rural economy of Mexico, replacing traditional labor with corporations that rely on industrial-technological production. Corporations have ruined the conditions of life for these people. Now they are forced to come here. In fact, the global flight of people from the country to the cities, organized by corporations for their benefit, is the greatest migration in human history. This process is driven by corporate-friendly government policies.
There are times in history when labor rights, not civil rights, become the central battleground to move society forward. In the 1930s, the burgeoning industrial factories and mines of the Mid-West deliberately used African-American labor, migrating from the South to the North, to break unions. Then as now, legal denial of labor rights for all creates two sections of the working class, which are driven to compete against each other. The great industrial unions like the UAW and the UMW, the backbone of the CIO, were quickly built once the unions organized African-American workers as equals.
Today undocumented, immigrant workers are now completely integrated into the US economy. However their legal status makes them a separate section of the working class with no labor rights at all. They must work for less because the labor laws legally force them to work at wages far below what has been the standard in this country. This too is an issue of labor rights. As always in US History when such a division prevailed, wages for all inevitably will fall to this level. Good for corporations; bad for working people. Immigrant workers cannot get civil rights or human rights until they get labor rights. The battle over labor rights becomes the first challenge of the 21st Century. This time around, it really is “All of Us, or None of Us.”
Impulses for Independence
In the June election, Californians defeated two propositions that were entirely written by corporations. One - Proposition 16 - was written by Pacific Gas and Electric to prevent local governments from controlling energy and power. The corporation spent $46 million to convince the people of California that the deliberately misleading “Taxpayers Right to Vote Act” was in their interests. The proposition failed, as did Proposition 17, which was written by Mercury Insurance Company to increase auto insurance profits and which they bankrolled with $15 million.
In February, private water corporations and hedge funds put a ballot on the November election that would lay the infrastructure to privatize the state’s water. This was so unpopular that it now appears like the ballot is withdrawn.
Now oil companies, lead by Valero and backed by Texas oil money, have put Proposition 23 on the November ballot. This ballot is financed out of Texas. This proposition “suspends State laws requiring reduced greenhouse gas emissions that cause global warming, until California's unemployment rate drops to 5.5 percent or less for four consecutive quarters”. We are supposed to believe that this will create jobs. Yet all major greenhouse gas polluters are essentially deregulated if this proposition passes.
Last year’s budget crisis lead to 30% fee increase at California public colleges and universities. Most of this money went directly to Wall Street (9). Students responded to this dispossession of their rights with the gigantic March 4 “March to Defend Public Education”, demanding that “Public Education Must Be Free!” Over a million people marched in some 38 states and several countries to demand public education as a right guaranteed by the government. The growing denial of a chance for public education, as well as those of homes, means that California is entering the era of Dieing Cities, where gentrification insures that young people have no jobs and that poor people have no place to live. The protests around the Oscar Grant murder reveals that young people are quite clear about the future that corporate California intends for them.
There are other indicators of a growing progressive response of people in California: In response to cuts to Medicaid and Medicare, a result of Obama’s health care bill, single payer will rise again to define the direction to fight forward. People across the state forced local governments to take positions against Arizona’s anti-immigrant laws and have continuously kept protesting in various ways. Though Schwarzenegger has mandated that all state workers work for $8 an hour, Comptroller John Chiang has said that he will pay them their regular paycheck. The California Nurses Association is waging an active campaign to expose “Queen Meg”, who notoriously referred to her opposition as “the chattering classes”.
The Time Is Now
Will California’s voters hold out against the corporate onslaught in the Fall? How can we pass from defensive battles to taking the offensive? How can we fight forward to a new California? Until people have a new Vision of what is possible, they will settle for the same old mess. Thus our task is to imbue people with new ideas and excite them about the abundance that is at hand… if the public has political power.
We are living at a tremendous moment. What was impossible is now possible. What was possible – eeking out timid reforms due to the politics of begging – cannot now produce any results at all. What was impossible – the transformation of society – is now possible! In fact, this is the only way we can win anything at all today!
The overriding truth of the California experience is that we can no longer fight for economic gains. The organized dispossession of the public from any control at all over the government is a political attack. It means that there are no more economic struggles. Now that the state has stepped in, every battle is a political battle – a fight to implement political will and policy that either reflects the independent interests of the class of laborers (included those who are no longer permitted to work) or the class of capitalists who use their private property to destroy personal property and that of the public.
Our starting point is the demands of the most destitute and defenseless sectors of our society. At the same time we prepare for the actual resolution of those battles by pointing out the aggressive assault that private corporate property is making. We advocate for the abolition of the right of corporations to exploit people and profit from exploiting society, and abolition of the laws that protect and expand that property at the expense of society. We will hold politicians at every level accountable to defend and expand the power of the public in all directions.
Understanding what is truly possible in California requires people to make a serious assessment of the moment. Vision is the gap between what is and what should be. Join us to debate how to engineer a new Vision for people everywhere! We do not have to reel from defensive battle to defensive battle. We can take the offensive. The central tactic is to hold the government at every level to uphold its responsibility to guarantee public well-being first and foremost.
The League of Revolutionaries for a New America consistently strives to educate our state about how the property question drives the crisis. We feel that we can go on the offensive on this issue to create the conditions to fight and win. We can educate as we fight! We know that human beings will identify and value a vast new world of social relationships between human beings that can be funded in place of funding corporate private property. References
(1) Oakland Tribune, 6-27-10
(2) http://www.acssonline.org/Home/tabid/90/EntryId/283/Report-Rich-got-richer-middle-class-didnt.aspx (3) Lorena Tychostup. “Capitalism Hits the Fan”. www.rdwolff.com
(4) M. Hudson. “The New Road to Serfdom”. www.insurgentamerican.net/.../MichaelHudson/Hudson_RoadToSerfdom.pd
(5) M. Hudson. KPFA, August 15, 2007. Interview on the ”Guns and Butter” show. KPFA.org
(6) Sacramento Bee, 5-4-10
(7) http://neweconomicperspectives.blogspot.com/2009/06/why-stimulus-isnt-working.html
(8) Martin Luther King. "Remaining Awake Through a Great Revolution", Dr. King's last sermon, delivered at National Cathedral, Washington D.C. March 31, 1968. Printed in A Knock at Midnight, Warner Books 1998, p. 216.
(9) http://hdr.undp.org/en/reports/global/hdr1998/chapters/. Chapter 1, p 22
(10) Bob Meister,President, Council of UC Faculty Associations. “Where Does UC Tuition Go?” http://www.reclamationsjournal.org/issue01_bob_meister_where_does_tuition_go.html
