Saturday, May 22, 2010

Supplanting the United States Constitution: War, National Emergency and "Continuity of Government"

Supplanting the United States Constitution: War, National Emergency and "Continuity of Government"

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In July 1987, during the Iran-Contra Hearings grilling of Oliver North, the American public got a glimpse of “highly sensitive” emergency planning North had been involved in. Ostensibly these were emergency plans to suspend the American constitution in the event of a nuclear attack (a legitimate concern). But press accounts alleged that the planning was for a more generalized suspension of the constitution.

As part of its routine Iran-contra coverage, the following exchange was printed in the New York Times, but without journalistic comment or follow-up:

[Congressman Jack] Brooks: Colonel North, in your work at the N.S.C. were you not assigned, at one time, to work on plans for the continuity of government in the event of a major disaster?

Both North’s attorney and Sen. Daniel Inouye, the Democratic Chair of the Committee, responded in a way that showed they were aware of the issue:

Brendan Sullivan [North's counsel, agitatedly]: Mr. Chairman?

[Senator Daniel] Inouye: I believe that question touches upon a highly sensitive and classified area so may I request that you not touch upon that?

Brooks: I was particularly concerned, Mr. Chairman, because I read in Miami papers, and several others, that there had been a plan developed, by that same agency, a contingency plan in the event of emergency, that would suspend the American constitution. And I was deeply concerned about it and wondered if that was an area in which he had worked. I believe that it was and I wanted to get his confirmation.

Inouye: May I most respectfully request that that matter not be touched upon at this stage. If we wish to get into this, I'm certain arrangements can be made for an executive session.[1]

But we have never heard if there was or was not an executive session, or if the rest of Congress was ever aware of the matter. According to James Bamford, “The existence of the secret government was so closely held that Congress was completely bypassed.”[2] (Key individuals in Congress were almost certainly aware.)

Brooks was responding to a story by Alfonzo Chardy in the Miami Herald. Chardy’s story alleged that Oliver North was involved with the Federal Emergency Management Agency (FEMA) in plans to take over federal, state and local functions during a national emergency. This planning for “Continuity of Government” (COG) called for “suspension of the Constitution, turning control of the government over to the Federal Emergency Management Agency, emergency appointment of military commanders to run state and local governments and declaration of martial law.”[3]

To my knowledge no one in the public (including myself) attached enough importance to the Chardy story. Chardy himself suggested that Reagan’s Attorney General, William French Smith, had intervened to stop the COG plan from being presented to the President. Seven years later, in 1994, Tim Weiner reported in the New York Times that what he called “The Doomsday Project” – the search for “ways to keep the Government running after a sustained nuclear attack on Washington” –had “less than six months to live.”[4]

To say that nuclear attack planning was over was correct, But this statement was also very misleading. On the basis of Weiner’s report, the first two books on COG planning, by James Bamford and James Mann, books otherwise excellent and well-informed, reported that COG planning had been abandoned.[5] They were wrong.

Mann and Bamford did report that, from the beginning, two of the key COG planners on the secret committee were Dick Cheney and Donald Rumsfeld, the two men who implemented COG under 9/11.[6] What they and Weiner did not report was that under Reagan the purpose of COG planning had officially changed: it was no longer for arrangements “after a nuclear war,” but for any "national security emergency." This was defined in Executive Order 12656 of 1988 as: “any occurrence, including natural disaster, military attack, technological emergency, or other emergency, that seriously degrades or seriously threatens the national security of the United States.”[7]

In other words extraordinary emergency measures, originally designed for an America devastated in a nuclear attack, were now to be applied to anything the White House considered an emergency. Thus Cheney and Rumsfeld continued their secret planning when Clinton was president; both men, both Republicans, were heads of major corporations and not even in the government at that time. Moreover, Andrew Cockburn claims that the Clinton administration, according to a Pentagon source, had “no idea what was going on.”[8] (As I shall explain later, this sweeping claim needs some qualification.)

The expanded application of COG to any emergency was envisaged as early as 1984, when, according to Boston Globe reporter Ross Gelbspan,

Lt. Col. Oliver North was working with officials of the Federal Emergency Management Agency . . . to draw up a secret contingency plan to surveil political dissenters and to arrange for the detention of hundreds of thousands of undocumented aliens in case of an unspecified national emergency. The plan, part of which was codenamed Rex 84, called for the suspension of the Constitution under a number of scenarios, including a U.S. invasion of Nicaragua.[9]

Clearly 9/11 met the conditions for the imposition of COG measures, and we know for certain that COG planning was instituted on that day in 2001, before the last plane had crashed in Pennsylvania. The 9/11 Report confirms this twice, on pages 38 and 326.[10] It was under the auspices of COG that Bush stayed out of Washington on that day, and other government leaders like Paul Wolfowitz were swiftly evacuated to Site R, inside a hollowed out mountain near Camp David.[11]

What few have recognized is that, nearly a decade later, some aspects of COG remain in effect. COG plans are still authorized by a proclamation of emergency that has been extended each year by presidential authority, most recently by President Obama in September 2009. COG plans are also the probable source for the 1000-page Patriot Act presented to Congress five days after 9/11, and also for the Department of Homeland Security’s Project Endgame -- a ten-year plan, initiated in September 2001, to expand detention camps, at a cost of $400 million in Fiscal Year 2007 alone.[12]

At the same time we have seen the implementation of the plans outlined by Chardy in 1987: the warrantless detentions that Oliver North had planned for in Rex 1984, the warrantless eavesdropping that is their logical counterpart, and the militarization of the domestic United States under a new military command, NORTHCOM.[13] Through NORTHCOM the U.S. Army now is engaged with local enforcement to control America, in the same way that through CENTCOM it is engaged with local enforcement to control Afghanistan and Iraq.

We learned that COG planning was still active in 2007, when President Bush issued National Security Presidential Directive 51 (NSPD 51). This, for the sixth time, extended for one year the emergency proclaimed on September 14, 2001. It empowered the President to personally ensure "continuity of government" in the event of any "catastrophic emergency." He announced that NSPD 51 contains "classified Continuity Annexes" which shall "be protected from unauthorized disclosure." Under pressure from his 911truth constituents, Congressman Peter DeFazio of the Homeland Security Committee twice requested to see these Annexes, the second time in a letter signed by the Chair of his committee. His request was denied.

The National Emergencies Act, one of the post-Watergate reforms that Vice-President Cheney so abhorred, specifies that: “Not later than six months after a national emergency is declared, and not later than the end of each six-month period thereafter that such emergency continues, each House of Congress shall meet to consider a vote on a joint resolution to determine whether that emergency shall be terminated” (50 U.S.C. 1622, 2002). Yet in nine years Congress has not once met to discuss the State of Emergency declared by George W. Bush in response to 9/11, a State of Emergency that remains in effect today. Appeals to the Congress to meet its responsibilities to review COG have fallen on deaf ears.[14]

Former Congressman Dan Hamburg and I appealed publicly last year, both to Obama to terminate the emergency, and to Congress to hold the hearings required of them by statute.[15] But Obama, without discussion, extended the 9/11 Emergency again on September 10, 2009;[16] and Congress has continued to ignore its statutory obligations. One Congressman explained to a constituent that the provisions of the National Emergencies Act have now been rendered inoperative by COG. If true, this would seem to justify Chardy’s description of COG as suspension of the Constitution. Are there other parts of the Constitution that have been suspended? We do not know, and the Chair of the Homeland Security Committee has been told he cannot find out.

Plans drafted by a secret committee, including corporation heads not in the government, have provided rules that allegedly override public law and the separation of powers that is at the heart of the Constitution. Congress is derelict in addressing this situation. Even Congressman Kucinich, the one Congressman I have met, will not answer my communications on this subject.

Yet as I see it, the only authorization for the COG planning was a secret decision by President Reagan (NSDD 55 of September 14, 1982) which in effect federalized the counterinsurgency planning (called Cable Splicer), which he had authorized in California when governor there.

It is clear that the planning by Cheney, Rumsfeld and others in the last two decades was not confined to an immediate response to 9/11. The 1000-page Patriot Act, dropped on Congress as promptly as the Tonkin Gulf Resolution had been back in 1964, is still with us; Congress has never seriously challenged it, and Obama quietly extended it on February 27 of this year.

We should not forget that the Patriot Act was only passed after lethal anthrax letters were mailed to two crucial Democratic Senators – Senators Daschle and Leahy – who had initially questioned the bill. After the anthrax letters, however, they withdrew their initial opposition.[17] Someone -- we still do not know who – must have planned those anthrax letters well in advance. This is a fact most Americans do not want to think about.

Someone also must have planned the unusual number of war games taking place on 9/11. COG planners and FEMA had been involved in war games planning over the previous two decades; and on 9/11 FEMA was again involved with other agencies in preparing for Operation Tripod, a bioterrorism exercise in New York City. [18]

Someone also must have planned the new more restrictive instructions, on June 1, 2001, determining that military interceptions of hijacked aircraft had to be approved “at the highest levels of government” (i.e. the President, Vice-President, or Secretary of Defense).[19] The Report attributes this order to a JCS Memo of June 1, 2001, entitled “Aircraft Piracy (Hijacking) and Destruction of Derelict Airborne Objects.” But the written requirements had been less restrictive before June 1, 2001, and I am informed that the change was quietly revoked the following December.

In The Road to 9/11 I suggest the change in the JCS memo came from the National Preparedness Review in which President Bush authorized Vice-President Cheney, together with FEMA, “to tackle the… task of dealing with terrorist attacks.”[20] Not noticed by the press was the fact that Cheney and FEMA had already been working on COG planning as a team throughout the 1980s and 1990s.[21]

As I wrote above, it is necessary to qualify a Pentagon official’s claim (to author Andrew Cockburn) that the Clinton administration had “no idea what was going on” in COG. Let me quote from my response to Cockburn’s book in my own, The Road to 9/11:

[Weiner’s] article persuaded authors James Mann and James Bamford that Reagan’s COG plans had now been abandoned, because “there was, it seemed, no longer any enemy in the world capable of . . . decapitating America’s leadership.” [22] In fact, however, only one phase of COG planning had been terminated, a Pentagon program for response to a nuclear attack. Instead, according to author Andrew Cockburn, a new target was found:

Although the exercises continued, still budgeted at over $200 million a year in the Clinton era, the vanished Soviets were now replaced by terrorists. . . . There were other changes, too. In earlier times the specialists selected to run the “shadow government” had been drawn from across the political spectrum, Democrats and Republicans alike. But now, down in the bunkers, Rumsfeld found himself in politically congenial company, the players’ roster being filled almost exclusively with Republican hawks. . . .“You could say this was a secret government-in-waiting. The Clinton administration was extraordinarily inattentive, [they had] no idea what was going on.”

Cockburn’s account requires some qualification. Richard Clarke, a Clinton Democrat, makes it clear that he participated in the COG games in the 1990s and indeed drafted Clinton ’s Presidential Decision Directive (PDD) 67 on “Enduring Constitutional Government and Continuity of Government.” But COG planning involved different teams for different purposes. It is quite possible that the Pentagon official was describing the Department of Defense team dealing with retaliation.

The Pentagon official’s description of a “secret government-in-waiting” (which still included both Cheney and Rumsfeld) is very close to the standard definition of a cabal, as a group of persons secretly united to bring about a change or overthrow of government. In the same era Cheney and Rumsfeld projected change also by their public lobbying, through the Project for the New American Century, for a more militant Middle East policy. In light of how COG was actually implemented in 2001, one can legitimately suspect that, however interested this group had been in continuity of government under Reagan, under Clinton the focus of Cheney’s and Rumsfeld’s COG planning was now a change of government.[23]

Understandably there is great psychological resistance to the extraordinary claim that Cheney and Rumsfeld, even when not in government, were able to help plan successfully for constitutional modifications, which they themselves implemented when back in power. Most people cannot bring themselves even to believe the second, known half of this claim: that on September 11, 2001, COG plans overriding the constitution were indeed implemented. This is why the first two print reviews of The Road to 9/11, both favorable and intelligently written, both reported that I speculated that COG had been imposed on 9/11. No, it was not a speculation: the 9/11 Commission Report twice confirms that COG was instituted on the authority of a phone call between Bush and Cheney of which they could find no record. No record, I did speculate, because it took place on a secure COG phone outside the presidential bunker – with such a high classification that the 9/11 Commission was never supplied the phone records.

A footnote in the 9/11 Report says

“The 9/11 crisis tested the U.S. government’s plans and capabilities to ensure the continuity of constitutional government and the continuity of government operations. We did not investigate this topic, except as needed to understand the activities and communications of key officials on 9/11. The Chair, Vice Chair, and senior staff were briefed on the general nature and implementation of these continuity plans.[24]

The other footnotes confirm that no information from COG files was used to document the 9/11 report. At a minimum these files might resolve the mystery of the missing phone call which simultaneously authorized COG, and (in consequence) determined that Bush should continue to stay out of Washington . I suspect that they might tell us a great deal more.

What is the first step out of this current state of affairs, in which the constitution has in effect been superseded by a higher, if less legitimate authority? I submit that it is to get Congress to do what the law requires, and determine whether our present proclamation of emergency “shall be terminated” (50 U.S.C. 1622, 2002).

An earlier polite, judiciously worded appeal to this effect failed. It may be necessary to raise the issue in a larger, albeit more controversial context: the scandal that a small cabal was able to supersede the Constitution, and Congress has failed, despite repeated requests, to do anything about it. I would hope that Americans concerned about this matter would raise it with all the congressional candidates in the forthcoming elections. At a minimum, candidates should promise to call for a full discussion of the proclaimed national emergency, as the law requires.

Peter Dale Scott, a former Canadian diplomat and English Professor at the University of California, Berkeley, is the author of Drugs Oil and War, The Road to 9/11, and The War Conspiracy: JFK, 9/11, and the Deep Politics of War. His book, Fueling America's War Machine: Deep Politics and the CIA’s Global Drug Connection is in press, due Fall 2010 from Rowman & Littlefield.


[1] New York Times, July 14, 1987.

[2] James Bamford, A Pretext for War: 9/11, Iraq, and the Abuse of America’s Intelligence Agencies (New York: Doubleday, 2004), 74: “The existence of the secret government was so closely held that Congress was completely bypassed. Rather than through legislation, it was created by Top Secret presidential fiat. In fact, Congress would have no role in the new wartime administration. ‘One of the awkward questions we faced,’ said one of the participants, ‘was whether to reconstitute Congress after a nuclear attack. It was decided that no, it would be easier to operate without them.’” Cf. James Mann, The Rise of the Vulcans: The History of Bush’s War Cabinet (New York: Viking, 2004), 145.

[3] Miami Herald, July 5, 1987. In October 1984 Jack Anderson reported that FEMA’s plans would “suspend the Constitution and the Bill of Rights, effectively eliminate private property, abolish free enterprise, and generally clamp Americans in a totalitarian vise.”

[4] Tim Weiner, New York Times, April 17, 1994.

[5] Bamford, A Pretext for War, 74; cf. James Mann, The Rise of the Vulcans: The History of Bush’s War Cabinet (New York: Viking, 2004), 138-45.

[6] Scott, The Road to 9/11: Wealth, Empire, and the Future of America (Berkeley and Los Angeles: University of California Press, 2007), 183-87.

[7] The provisions of Executive Order 12656 of Nov. 18, 1988, appear at 53 FR 47491, 3 CFR, 1988 Comp., p. 585, The Washington Post (March 1, 2002) later claimed, falsely, that Executive Order 12656 dealt only with “a nuclear attack.” Earlier there was a similar misrepresentation in the New York Times (November 18, 1991).

[8] Andrew Cockburn, Rumsfeld: His Rise, Fall, and Catastrophic Legacy ( New York : Scribner, 2007), 88.

[9] Ross Gelbspan, Break-ins, Death Threats, and the FBI (Boston: South End Press, 1991), 184; cf. New York Times, November 18, 1991.

[10] 9/11 Commission Report, 38, 326; Scott, Road to 9/11, 228-29.

[11] Alfred Goldberg et al., Pentagon 9/11 (Washington: Department of Defense, 2007), 132.

[12] Scott, Road to 9/11, 238, 240-41.

[13] U.S. Department of Defense, “U.S. Northern Command,” Cf. John R. Brinkerhoff, PBS, Online Newshour, 9/27/02: “The United States itself is now for the first time since the War of 1812 a theater of war. That means that we should apply, in my view, the same kind of command structure in the United States that we apply in other theaters of war.” Brinkerhoff had earlier developed the martial law provisions of REX 84 in the Reagan era.

[14] Cf. Peter Dale Scott and Dam Hamburg , “To All Readers: Help Force Congress To Observe the Law on National Emergencies!!!,”, March 24, 2009,

[15] Peter Dale Scott, "To All Readers: Help Force Congress To Observe the Law on National Emergencies!!!" (with Dan Hamburg), http.//, March 24, 2009,

[16] White House Press Release, September 10, 2009, A press briefing by Obama’s spokesman Robert Gibbs the same day did not mention the extension.

[17] Cf. Time, Nov. 26, 2001: "While Daschle, the Senate majority leader, could have been chosen as a representative of all Democrats or of the entire Senate, Leahy is a less obvious choice, most likely targeted for a specific reason. He is head of the Senate Judiciary Committee, which is involved in issues ranging from antitrust action to antiterror legislation” [emphasis added]. See also Anthony York, “Why Daschle and Leahy?” Salon, November 21, 2001,

[18] Brian Michael Jenkins and Frances Edwards-Winslow, “Saving City Lifelines: Lessons Learned in the 9-11 Terrorist Attacks” (San Jose, CA: Mineta Transportation Institute, San José State University, 2003).

[19] 9/11 Report, 17; cf. fn. 101, 458.

[20] Houston Chronicle, May 9, 2001; Road to 9/11, 209.

[21] James Mann, The Rise of the Vulcans: The History of Bush’s War Cabinet (New York: Viking, 2004), 139; James Bamford, A Pretext for War: 9/11, Iraq, and the Abuse of America’s Intelligence Agencies (New York: Doublesday, 2004).

[22] Mann, Rise of the Vulcans, 144.

[23] Scott, The Road to 9/11, 186-87.

[24] 9/11 Commission Report, 555.

Report finds deepening poverty in Illinois

Report finds deepening poverty in Illinois

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A new report released May 5 identifies growing levels of poverty in Illinois that point to the existence of an unfolding social catastrophe. The Illinois non-profit advocacy Heartland Alliance report calls for an end to budget cuts and for an increase in funding for the social services that more people now rely upon to survive, including disability payments, school health care, elder care, food aid, mental health care, child care, and supportive housing.

The state of Illinois currently faces a budget deficit of $13 billion, one of the worst state funding crises in the country. The Democratic Party-dominated state government has already imposed mass layoffs, school closures, deep cuts to health and social services, and public transit, with many more cuts certain to follow in the coming years. Local governments, including the Democratic administration of Richard Daley in Chicago, have enacted additional cuts to basic public infrastructure.

The Heartland Alliance report commands attention to the critical situation that will result from dismantling the human services infrastructure even as need increases: “The implications of massive service cuts to those experiencing poverty―many of whom rely on state-funded services in their communities literally for survival, particularly those in extreme poverty―will be nothing short of devastating. Without leadership to enact a responsible budget, Illinois can expect to see deepening hardship and further entrenchment of social problems.”

Democratic Governor Pat Quinn and the state’s legislative assembly, where Democrats hold a super-majority, are pursuing precisely the opposite course, slashing vital programs and cutting human resources employees. Hardly a program has been left unscathed. Illinois’ Preschool for All program is set to expire this year, eliminating preschool to 20,000 children. The Low Income Housing Tax Credit, which finances more affordable rental units for poor families, has seen its funding tank in the wake of the financial crisis.

The report presents the huge numbers of Illinoisans who utilized other public services that are presently on the state’s chopping block. Over 11,600 households at risk of homelessness received help from the state Homeless Prevention Program in fiscal year 2009; 44,329 people were supported by developmental disabilities community-based services. Over half a million elderly people received services that helped them remain independent in their homes in 2008. In fiscal year 2007, 179,000 people used community mental health programs. Such figures give some sense of the scale of the social crisis in the state.

The state is consistently behind in disbursements to universities, hospitals, homeless shelters, and other crucial public agencies. Consequently, the state’s credit rating has suffered, making it increasingly expensive to borrow to cover funding areas.

The tightening of credit has redoubled the impact of the crisis on the poorest sections of the populations who depend on state services. Many service providers under contract to the state―like health clinics, nursing homes and pharmacies―have stopped taking Medicaid patients altogether because they cannot afford to wait the hundreds of days it takes to receive reimbursement. Other agencies primarily serving the poor have had to reduce services or staff, or cease their operations altogether for lack of funds.

In 2008, when the recession began, more than 1.5 million people in Illinois already lived in poverty. An additional two million people were considered at risk of falling into poverty, measured as those living within between 100 to 200 percent of the federal poverty threshold. The state’s poverty population in 2008 included over 535,000 children.

Like the rest of the so-called Rust Belt of the industrial Midwest, Illinois has been subject to decades of deindustrialization, marked by the eradication of higher paying work and the introduction of low-wage jobs, a trend that has continued through the recession. Between 2000 and 2008, Illinois shed 203,000 better-paying jobs in manufacturing, 8,600 construction jobs, and 5,100 higher-wage service jobs. Virtually all of the 168,500 that were created in the same period were in the poor-paying and job-insecure service sector, according to 2008 data from the Center for Tax and Budget Accountability.

Since 2008, 63 of 102 counties have seen widespread increases in poverty, not restricted to one or even a few localities. Hardships faced by those in rural areas are compounded by the problem of access to information and to services, in many cases due to very poor or absent public transit systems.

The Heartland Alliance’s report noted that personal bankruptcy filings have skyrocketed in the Chicago metropolitan area. DuPage and Kane counties report increases of 249 percent and 266 percent, respectively. Personal bankruptcies in Chicago’s Cook County were up 163 percent from 2006.

Rounding out this staggering loss of wealth is the rash of foreclosures that placed Illinois tenth in the nation, and the negative net worth affecting 1 in 7 households. Average individual debt in Illinois stood at more than $11,300 in 2009, and fully a quarter of households had no savings, checking, or other financial account whatsoever.

According to the non-profit Housing Action Illinois, the lack of affordable housing and the foreclosure rate are worsening precipitously. Nearly all subsidized housing agencies are operating at full capacity, foreclosures in 2009 increased more than a 100 percent over 2007, and very few homeowners have had any help modifying their mortgages from the Obama administration’s so-called Home Affordable Modification Program.

Illinois has only 53 affordable units available for every 100 extremely low-income renter households. Full-time workers must earn $17.44 per hour in order not to be rent-burdened under federal standards. In addition, Housing Action Illinois notes that renters have been some of the “many hidden victims of the foreclosure crisis,” especially in Chicago, where 6,560 apartment buildings were foreclosed in 2009 alone—affecting over 20,000 units. The devastation that the housing market’s collapse has had on the poorest sections of society can hardly be overstated.

Heartland Alliance details the pernicious effects of unemployment, underemployment, and grossly inadequate wages. The report notes that 20 percent of working age people who live in extreme poverty—less than half the poverty line, or $9,100 for a family of 3 or $5,400 for an individual—are employed at least half the year.

Unemployment rates among men of working age, youth and less educated workers are several percentage points above the state average. Black workers have an average unemployment rate of 17 percent, and households in the federally determined lowest income group, making $12,500 per year, reported a 27 percent unemployment rate.

The report also calls attention to the high cost of living in Chicago, noting that 2008 Census Bureau data suggests that, “Around 40 percent of Chicago region households have annual incomes below $50,000, which is near the amount it takes for a one-parent family with two kids to make ends meet.” Yet 11.8 percent of the region’s population were living below the poverty in 2008—983,744 people, 429,428 of whom were subsisting in extreme poverty. Over 1.2 million more lived within 200 percent of the poverty threshold.

Such figures help illustrate just how the demand for basic services like food, health and housing have grown to such tremendous proportions.

The portion of Illinois public school students qualifying for free or reduced lunch, long an indication of low family income, has swelled to 52 percent. From one school year to the next, 2006-07 to 2007-08, the number of homeless public school students in Illinois increased by a shocking 32 percent.

An unprecedented level of food insecurity for Cook County has been reported by the Greater Chicago Food Depository. Forty-four percent of households with children face low food security or hunger, while nearly 680,000 people in the area receive emergency food assistance per year. Forty-four percent of those surveyed by the GCFD reported having to choose between budgeting for food, or for rent or mortgage. Six percent of GCFD clients are homeless.

The report cites food assistance advocates in Illinois, who report that food bank clients are forced to make “untenable trade-offs” between food and other basic needs. Half said they had to choose between buying food and paying for gas or utilities. Forty-four percent said they had to make a choice of paying for either food or rent or mortgage; 36 percent faced either going hungry or missing car payments or going without gasoline. One in three were forced to choose between food and medical care or medicine.

Figures reveal US slump is sustained, deepening for the working population

Figures reveal US slump is sustained, deepening for the working population

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Two sets of US economic data released Thursday poured more cold water on recent claims of an “economic recovery” at least as far as the conditions of broad sections of the American population are concerned.

At the same time, the Federal Deposit Insurance Corporation (FDIC) reported that the net income of US banks rose to $18 billion for the first quarter of 2010, the highest total in two years. The gains were concentrated among the largest banks, indicating that certain portions of the economy are performing quite well.

The Conference Board, based in New York, issued its influential Leading Economic Index (LEI) for April on Thursday morning, which showed a slight decrease, of 0.1 percent, the first monthly decline since March 2009. The biggest negative contributors were a sharp decline in building permits, supplier deliveries (vendor performance), consumer confidence, and manufacturers’ new orders for consumer goods. The March 2010 LEI increase has also been revised downward, from 1.4 to 1.3 percent.

The Commerce Department reported earlier in the week that building permits fell 11.5 percent in April, to the lowest level in six months. This foreshadows a new slowdown in residential construction.

The decline in the Conference Board LEI had not been anticipated on Wall Street, helping to drive down share prices Thursday morning. Notes RTTNews, “The decrease came as a surprise to economists, who had expected the index to increase by 0.2 percent.” Overall, comments Bloomberg Businessweek, “A slump in building permits, little letup in firings and retreating stock prices highlight risks to the strength of the recovery as concern over the European debt crisis mounts.”

A day earlier, the Mortgage Bankers Association (MBA) reported that a record share of US houses were in foreclosure, 4.63 percent, in the first quarter of 2010 “as job losses caused homebuyers to fall behind on monthly payments” (Bloomberg Businessweek). The MBA reported the combined share of foreclosures and mortgage delinquencies was 14 percent, or about one in every seven US mortgages, a staggering total.

“Job losses have strained budgets, making it difficult for households to pay monthly bills,” Jay Brinkmann, the MBA’s chief economist, told Bloomberg Businessweek. “The unemployment rate is the major factor driving the numbers,” Brinkmann said. “We’re seeing the states with the biggest unemployment problem, like Ohio, Illinois and Michigan, showing the biggest increases.”

In other words, there is no recovery for the working population in the US.

This reality was underscored by another unexpected statistic announced Thursday morning, the jump in weekly jobless claims in the US by 25,000 last week, to 471,000, “defying predictions” of economists they would decline by 4,000. The previous week’s jobless claim total was also revised upward a slight amount.

The Wall Street Journal commented, “In a troubling sign for the U.S. labor market, the number of workers filing new claims for unemployment benefits unexpectedly surged last week to wipe out most of the recent declines.”

Joseph Lazzaro at Daily Finance wrote, “At this stage of a U.S. economic expansion, initial jobless claims would normally be below 400,000. But this recession, which was deepened by the financial crisis, has defied numerous, historical economic norms and patterns, and the expected trend in jobless claims has been one.”

It was considered good news that continuing jobless claims (those drawn by workers for more than one week) declined by 40,000, to 4.6 million. It is necessary to bear in mind, however, that hundreds of thousands of the jobless are simply exhausting their benefits each month.

Moreover, Lazzaro points out, “This week, states reported 5,101,000 persons claiming Emergency Unemployment Compensation [established and extended several times by Congress] benefits for the week ending May 1, the latest week for which data is available, a decrease of 94,788 from the prior week. A year ago, there were 2,290,000 million EUC claimants.

“In other words, while continuing claims have declined by about 1.8 million over the past 12 months, emergency claims have increased by about 2.8 million.”

The large US banks meanwhile “enjoyed a disproportionate share” of the industry’s earnings gains in 2010’s first quarter, commented a Reuters dispatch. reports that among those institutions “showing vast improvements” were FIA Card Services, a subsidiary of Bank of America, with first-quarter earnings of $507 million compared to a net loss of $1.5 billion in the first three months last year. The main subsidiary of Wells Fargo posted a profit of $2 billion, up from $1.2 billion in the same period in 2009.

“The largest U.S. bank by total assets as of March 31, was JPMorgan Chase Bank, NA, which is held by JPMorgan Chase, and it reported first-quarter net income of $2.7 billion, a slight rise from $2.5 billion during the first quarter of 2009.” Citibank, NA, took in net income of $2.2 billion in the first quarter of 2010, as opposed to $1.5 billion in the same three months last year.

However, despite having trillions made available to them, the banks continue to balk at loaning out their money. Without an accounting change that skewed the figures, “loan balances would have declined for the seventh quarter in a row.”

The number of problem banks increased, reported the FDIC, from 775, up from 702 the previous quarter, and 305 a year ago. Seventy-two US banks and thrifts have failed so far in 2010, and 237 since the beginning of 2008; the FDIC expects the total this year to exceed 2009’s 140.

Bank failures and consolidations resulting from the ongoing crisis have driven down the number of US banks to below 8,000, Reuters notes, for the first time in the FDIC’s 76-year history.

US military strategy unraveling in Afghanistan

US military strategy unravelling in Afghanistan

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Afghan Taliban fighters launched a sustained assault on the heavily fortified US Bagram Air Base on Wednesday, killing an American contractor and wounding nine coalition soldiers. The operation, coming less than 24 hours after a suicide bomb attack killed five US soldiers and a Canadian officer travelling in a NATO convoy in Kabul, again demonstrated the escalating crisis confronting the US-led occupation force in Afghanistan. Military authorities retain a highly tenuous control over the capital and immediate surrounds, with increasingly bold guerrilla attacks threatening coalition forces in every part of the country.

The Bagram assault was carried out by a group of fighters armed with rockets, grenades, and rifles. Several reportedly wore suicide vests. The operation was effectively a suicide mission, as the Bagram base is the most heavily fortified area in Afghanistan. It is surrounded by high blast walls and encircled by US and NATO troops and their Afghan army and police proxies. The base’s perimeter was reportedly not breached, but the Taliban fighters inflicted 10 casualties before being repelled. According to the Los Angeles Times, battles continued for hours as US-NATO forces pursued the guerrillas in farming areas surrounding the base. About a dozen guerrillas were reportedly killed.

Bagram Air Base is one of the high profile symbols of the despised US-led occupation. Located about 60 kilometres north of Kabul, the vast facility has developed into one of Washington’s key Central Asian strategic assets. In the eyes of ordinary Afghans, the base is regarded as further evidence of US plans for a permanent military presence in their country. It is also associated with indefinite detention and torture. At least two prisoners are known to have been murdered by US military guards in the facility since 2001, while the International Committee of the Red Cross recently revealed the existence of a separate and secret prison on the base in which detainees continue to be beaten, abused, and subjected to sleep deprivation, sensory deprivation and other forms of torture.

Thousands of additional US troops are being deployed to Afghanistan under President Barack Obama’s escalation strategy. Far from stabilising the situation confronting the US-led forces, the “surge” is producing a significant escalation in violence. This month marked the 1,000th American fatality in the Afghanistan war. As the New York Times noted, the first 500 deaths occurred over nearly seven years, while the next 500 were killed in fewer than two.

Afghan civilians have borne the brunt of the violence. The Agence France Presse news agency reported that Afghan authorities tallied 170 civilians killed between March and April this year, one-third higher than the same period in 2009.

A US Army statement this week said a “small number” of its soldiers were being investigated for the alleged murder of three civilians in Kandahar Province earlier this year. Few details were released, though the military admitted there were additional allegations of illegal drug use, assault and conspiracy.

CBS News reported: “Members of a squad of about 10 American soldiers are under investigation for murdering at least three local villagers who had angered them. According to the allegations, this is not a case of civilians being mistaken for Taliban fighters and not a one-time moment of rage. Instead, it happened on different occasions over the past several months. The squad leader, a sergeant, is said to have done the shooting. In addition, some members of the squad are accused of smoking hash.”

No doubt, this is not an isolated incident. Deployed as part of Washington’s strategy of gaining an advantage over its rivals in Europe and Asia by seizing control of Central Asian energy reserves and pipeline routes, US troops are now locked in a classic colonial-style dirty war. Confronted with a hostile population, and with no clear distinction between civilians and anti-occupation fighters (indiscriminately labelled “Taliban” by US authorities), American and allied forces are increasingly demoralised and brutal.

At the same time, the counter-insurgency strategy advanced by General Stanley McChrystal is in considerable crisis. The “hold and clear” tactic, which is based on concentrating troops in urban centres and attempting to gain the support of residents by destroying Taliban and resistance influence, has nowhere proved successful.

In February, about 15,000 troops were mobilised to seize the rural district of Marjah. The operation was regarded as a forerunner for the forthcoming offensive in Kandahar, Afghanistan’s second largest city. Several recent reports from Marjah, however, point to the inability of the US-led forces to maintain control. A New York Times report published May 16, “Taliban Hold Sway in Area Taken by US, Farmers Say”, noted: “The military had seen Marjah as a ‘clear and hold’ operation in which the first part, clearing the district of militants, would be wrapped up fairly quickly. In fact, clearing has proved to be a more elusive goal.”

An estimated 200 resistance fighters, predominantly young men who have lived in the area their whole lives, remain in the district. They are fed and sheltered by the local people, who regard the US forces with deep distrust and hostility. American forces continue to be regularly ambushed, while locals have largely shunned the various aid and construction programs offered by the occupying troops and Afghan government officials. Increasing numbers of civilians caught in the middle of the conflict are fleeing as refugees.

“Every day they were fighting and shelling,” Abdul Malook Aka, a 55-year-old farmer said. “We do not feel secure in the village and we decided to leave. Security is getting worse day by day.” Another farmer, 40-year-old Mir Hamza, added: “I am sure if I stay in Marjah I will be killed one day either by Taliban or the Americans.”

If US troops have proved unable to take control of Marjah, a lightly populated farming region, against a vastly outnumbered and outgunned enemy, there is little likelihood that the situation will be any different when they attempt to move into Kandahar, a city with several hundred thousand people. The urban centre was the former stronghold of the Taliban, and opposition to the foreign forces and the corrupt stooge administration of President Hamid Karzai is just as intense as in Marjah. The president’s brother, CIA asset and alleged drug lord Ahmed Wali Karzai, is nominally in charge of Kandahar and is especially despised by locals.

US military authorities appear to be now downplaying expectations for the Kandahar operation, which was previously promoted as a major offensive and one of the cornerstones of the new Obama-McChrystal strategy in Afghanistan. National Public Radio (NPR) reported yesterday: “Last month, American military spokesmen in Kabul began telling reporters it was incorrect to use terms such as ‘offensive’ or ‘operation’ in describing plans for Kandahar. Last week, Gen. Stanley McChrystal said the ‘efforts’ in Kandahar are a process, not an event.”

The operation has reportedly been postponed. Whereas US military officials previously said it would be underway in spring or early summer and completed by August, it is now expected to be launched this autumn, at the earliest. “Instead, American soldiers will be training their Afghan counterparts in Kandahar, and targeting individual militants in the city and surrounding regions,” NPR reported. “The major offensive is on hold while the US rethinks its strategy.”

The apparent delay is only setting the stage for an even bloodier series of war crimes that will follow the finalisation of Obama’s 30,000 troop surge.

Obama administration backpedals on oil spill response

Obama administration backpedals on oil spill response

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Oil in  the reedsOil from the Deepwater Horizon disaster has reached the shoreline of Louisiana Photo credit: Plaquemines Parish Government

The Obama administration said Thursday afternoon that it sent a letter to BP asking it to be more “transparent” in its response to the spill, and to make available the live video feed of oil spilling from the Deepwater Horizon.

The move came as the administration came under increased pressure from scientists, environmental groups, and the entire population of the Gulf Coast, as sheets of oil hit the Louisiana wetlands, overwhelming local response efforts.

The administration, together with BP, has consistently refused to provide an accurate estimate of the volume of oil spilling into the Gulf of Mexico from the Deepwater Horizon site. On Thursday a BP spokesperson admitted that the spill was leaking more than 5,000 barrels a day, the previous estimate used by the government and BP.

When asked whether BP’s admission changes the government’s estimate, White House Press Secretary Robert Gibbs said, “I don’t have an updated estimate,” adding that “our response is not predicated” on the amount of oil being released.

When asked by a reporter whether the government was deliberately trying to conceal the amount of oil leaking from the spill, Gibbs replied, “The notion of a cover-up is ridiculous.”

Based on a section of video released last week, scientists estimated that about 70,000 barrels of oil were spilling out daily, 14 times the official estimate.

The New York Times carried a front-page interview Thursday with Richard Steiner, a marine conservation expert who spoke to the WSWS in Venice, Louisiana last week. The Times article noted growing criticism by scientists of the Obama administration’s handling of the oil spill response.

Commenting on the Times piece and the White House response, Steiner told the WSWS, “The government is just trying to preserve image and its political agenda; they’re doing everything they can to defend their program for offshore drilling.”

Steiner said that the Obama administration’s continued support for its offshore drilling program was leading it into a political crisis. “The house is about to implode, as it should,” he said.

A BP spokesperson said that the effort and equipment necessary to make measurements would obstruct efforts to stop the spill, which he said was the “first priority.”

Dr. Ian R. MacDonald of Florida State University said he disagrees with this assessment. “Accurate measurements of the spill are vital, and everybody in the science community thinks they are vital,” he said.

“It is easy to understand, from a legal liability standpoint, why BP would not want to release the figures,” he said, meaning that it is in BP’s best interest to conceal the amount of oil spilling into the Gulf. “BP will not take these measurements unless the government forces them to,” MacDonald said.

Larry Schweiger, president and CEO of the National Wildlife Federation, said in congressional testimony Wednesday that his organization has called on the government to ensure that measurements of the spill become available.

“Today the National Wildlife Federation joins with 10 other conservation groups in writing President Obama to urge that the federal government immediately take over environmental monitoring, testing and public safety,” he said.

The government has deferred nearly all ecological observations to BP, and waited two weeks to dispatch the first science boat to the scene—the small observation vessel Pelican.

Meanwhile, anecdotal evidence of health problems caused by the spill has continued to pile up. Major newspapers carried reports from all over the Gulf of residents who have become sick from the spill. When WSWS reporters visited southern Louisiana last week, they gathered similar accounts.

Walter, an offshore production operator in the Gulf of Mexico, said he was concerned about the toxicity of the dispersants being sprayed on the spill. “They’ve been spraying dispersant near the rig I work at for the past five days, and for the past three days I’ve had a sore throat from it,” he said. “I’ve been around crude oil daily for the past six years, but I’ve never been sick from it before. This dispersant stuff is pretty bad.”

The EPA said Thursday that it has notified BP that it has 24 hours to switch to a less toxic dispersant product, in light of health concerns raised by its current dispersant. The move came the day after government scientists confirmed that a portion of the spill has entered the “loop current,” which could take the spill around the coast of Florida and beyond.

A thick, orange-tinted sludge continued to flow into the Mississippi River delta on Thursday. The heavy coatings of oil appeared even in areas protected by booms, leading observers to conclude that it was passing underneath them.

Facing record loss of revenue, US states gutting essential services

Facing record loss of revenue, US states gutting essential services

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The governors of California, New York and dozens of other US states have submitted drastic budget-cutting proposals for fiscal year 2011, which begins on July 1, 2010. Reeling from the economic recession, high rates of unemployment and the sharpest decline in tax revenue on record, states are eliminating essential services that will have a devastating effect on children, senior citizens and working people.

In Greece, Portugal, England and other countries, the crisis has taken the form of the insolvency or near insolvency of entire nations and demands for austerity by national governments acting under the whip of the global bond markets and “sovereign debt” traders.

In the US, the Obama administration has shifted much of the burden of the economic crisis onto the states and municipalities. While handing over trillions to fund the bailout of the Wall Street banks and finance two wars, the White House has starved state and local governments, and what little money was made available in the federal stimulus is drying up this year.

In fiscal years 2010-2011, the states have faced combined shortfalls of $375 billion, according to the Center on Budget and Policy Priorities (CBPP). Over the last two years, at least 45 states have slashed health, education and low-income assistance programs; 30 raised regressive sales taxes and fees; and 42 cut their payrolls through layoffs, unpaid leaves (furloughs) and hiring freezes. Since August 2008, state and local governments eliminated 192,000 jobs.

The new round of budget cuts will be even deeper, even as the need for government assistance reaches the highest level since the Great Depression.

Last week, California Governor Arnold Schwarzenegger outlined plans to cut $12.4 billion in the country’s most populous state. Included in the draconian cuts is the elimination of the state’s CalWORKS welfare program that serves 1.4 million people, two-thirds of whom are children. Billions more will be cut from payments to poor residents caring for disabled family members, food stamps, medical care, mental health, education and state workers’ wages and benefits. Access to health care for the unemployed and poor will be restricted by stiffening eligibility requirements for the state’s Medi-Cal program, raising co-pays, limiting doctor visits to ten per year and reducing funding for hearing aids and other medical equipment.

Announcing what he acknowledged were “absolutely terrible cuts,” the Republican governor compared the situation to Europe, saying, “You see what is happening in Greece, you see what is happening in Ireland, you see what is happening now in Spain. We are left with nothing but tough choices.”

In New York, Governor David Paterson, a Democrat, announced plans to furlough 100,000 state workers one day a week until a new budget is passed addressing the state’s $9.2 billion deficit. Paterson has already proposed a $1.1 billion cut in state education aid, which will eliminate 15,000 teacher jobs, and billions more in reduced payments to health care providers and other cuts in health care, funding for four-year colleges and financial aid for low- and moderate-income families. In addition, Paterson proposes the elimination of state revenue sharing aid to New York City and a reduction to other cities.

In New York City, which has the nation’s largest school district, billionaire Mayor Michael Bloomberg has announced a budget plan that would lay off 4,419 teachers. His proposal would also eliminate 400 firefighters’ jobs, close dozens of senior centers and daycare centers, and drastically slash spending for libraries and arts programs.

In Michigan, which has the highest unemployment rate in the country, Democratic Governor Jennifer Granholm is forcing thousands of state workers and teachers to retire, while eliminating one-third of the jobs left vacant. Health benefits will be reduced for new state employees and retirees, while scheduled pay increases for current workers will be cancelled. In addition, cuts to higher education will eliminate a program that gives college scholarships to 15,000 low-income students.

In Detroit, where 50 percent of the working-age population lacks a full-time job and tens of thousands try to eke out a survival in inhumane conditions, the city’s mayor, millionaire David Bing, is demanding drastic pay cuts from city workers, privatizing services, overseeing the closing of another 45 schools, and planning to close whole sections of the city deemed too poor to maintain.

Such cuts—which are being imposed in virtually every other state and city in the country—are intolerable and, if imposed, can only produce further misery and destitution.

The entire political establishment—from the Obama administration to Democrats and Republicans on every level of government—agrees the working class must pay for the economic crisis.

While they insist workers in the US and around the world do without, the financial masters of the universe on Wall Street are amassing unprecedented levels of personal wealth. In fact the bankruptcy of nations, states and cities has been another lucrative source of income for wealthy speculators.

A recent investment report from global hedge fund PIMCO—whose head Bill Gross is worth $2 billion—suggested that the uncertainty in Europe was making the $2.6 trillion municipal bond market an attractive tax-free target for yield-hungry investors. “As we enter the primary budget season,” it advised, “focus on states that are successful in balancing their budget while avoiding states that struggle to do so.”

In the eyes of the financial elite, every penny spent on public schools, hospitals, sewer systems and recreation centers is an unnecessary and intolerable deduction from its potential profit. Therefore social programs must be cut to the bone.

While the politicians and the media repeat incessantly that concessions, austerity and cuts to the working class are necessary for the good of the economy, in reality, it is impossible for society to continue to fund corporate profits and the personal fortunes of the super rich.

However, these competing claims—between the ruling elite and the vast majority of the population—can only be resolved through the class struggle.

Workers must reject all demands for budget cuts by the bought-and-paid-for politicians in both big business parties and the trade union organizations that collaborate with them. A new political movement of the working class must be built to advance a socialist solution to the crisis. Instead of austerity, economic life must be reorganized to guarantee the livelihoods of the masses of working people, i.e., those whose collective labor creates society’s wealth.

The Socialist Equality Party calls for the ill-gotten gains of the financial aristocracy to be expropriated and used to provide relief to the tens of millions of workers who have lost their jobs, homes and savings during the economic crisis.

A multitrillion-dollar public works program must be launched to put the 15 million unemployed workers in America back to work to rebuild the cities and repair the nation’s decaying infrastructure. The banks must be transformed into a single publicly owned enterprise so that society’s resources can be allocated, according to a democratically drawn-up plan, to guarantee a secure income, high-quality education, health care and housing for all.

Could Congress Block Antiworker IMF "Bailouts" in Europe?wafte

Could Congress Block Antiworker IMF "Bailouts" in Europe?

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Republicans in Congress are trying to block the US Treasury Department from supporting US tax funded International Monetary Fund (IMF) contributions to the so-called "bailouts" in Europe, which, as economist Mark Weisbrot explained, aren't bailouts for working families at all - for working families, the IMF programs guarantee extreme hardship, and most Europeans would be much better off if these IMF packages collapse - but bailouts of European banks with bad loans.

The purpose of the IMF packages is to force European working families to pay off the banks' bad loans through economic austerity, rather than forcing the banks to take their losses on their bad bets, which would be capitalism, or at least the capitalism they lecture us about in school and on the nation's op-ed pages when the politically weak are on the chopping block. As we know from the recent Latin American experience, if a country like Greece defaulted on the bad debt and got it over with, economic growth could resume. But the IMF is more of a collection agency for the big banks than an institution concerned with boosting economic growth and employment or reducing poverty.

The Wall Street Journal said the House Democratic leadership is unlikely to bring the Republican measure to a vote, and that's certainly true - the House Democratic leadership is likely to do whatever the US Treasury wants, and the US Treasury is likely to want whatever Wall Street banks want, and Wall Street banks are likely to see this as an issue of banker solidarity - this time, the taxpayer-financed IMF slush fund is being used primarily to benefit European banks, but the next IMF bailout could primarily benefit New York banks. One hand washes the other.

However, a majority of members of the House can force a vote on an issue through a discharge petition. A discharge petition isn't an everyday thing, but a US taxpayer-funded bailout of European banks at a time when US measured unemployment is nearly 10 percent - the real rate may be nearly double that - and we're being asked to fork over $33 billion more for pointless slaughter in Afghanistan- isn't an everyday thing either.

And these European bailouts are arguably a much worse deal than the hated Wall Street bailout for US taxpayers - there is no plausible story that they are needed to save the US economy, and they are coupled with cruel austerity packages to make working families in Europe scream. Imagine the Wall Street bailout, now coupled with a plan to cut the wages of American workers and raise the retirement age for Social Security. Why should the majority of American working families go along with this?

If past votes on IMF banker bailouts are any guide, House Republicans are likely to move as a disciplined bloc. So, the question boils down to this: is there a decent handful of progressive and conservative anti-IMF Democrats in the House who are willing to throw in their lot with Republicans to try to block antiworker IMF loans in Europe?

There are some hopeful precedents in the past. The first time the Wall Street Bailout came to the floor, the House blocked it. And in 1998, a group of House Democrats led by Dennis Kucinich, Peter DeFazio and Bernie Sanders joined with House Republicans to repeatedly block the then-princely sum of $18 billion in tax dollars for the IMF to bail out banks from their bad loans to Asia.

And that was back when the AFL-CIO supported the IMF. Lately, president Trumka's AFL-CIO has been bashing the Wall Street banks. What if the AFL-CIO decided to go rogue on the IMF? Support for the IMF from many House Democrats could no longer be assured.

And what if Greek- and Eastern European-Americans lobbied Congress against the IMF? It could be a whole new ballgame. Who knows what could happen when white workers in Europe start to resist the IMF's Africa treatment? Maybe Americans would notice.

The Wall Street Journal pointed out that the US share of the votes in the IMF is "only" 17 percent, so if only the US votes no, the IMF packages can still go through. But that assumes that the rest of the world would all support the IMF extreme austerity bailout loans. Of course, European governments will likely support them, because the European finance ministries are controlled by the European banks, just as the US Treasury Department is controlled by Wall Street. But why should Brazil, Argentina, Russia and China - countries which have all rejected IMF extreme austerity policies - vote for the European banker bailout and antiworker austerity packages, if the "consensus" of the IMF is broken?

There is a "Murder on the Orient Express" quality to these antitaxpayer and antiworker bailouts - if you can convince everyone that they are inevitable, and that everyone else is going to go along, the antidemocratic bailouts can proceed. But once a rebellion begins, there's no telling how far it might spread.

The Heresy of the Greeks Offers Hope

The Heresy of the Greeks Offers Hope

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As Britain's political class pretends that its arranged marriage of Tweedledee to Tweedledum is democracy, the inspiration for the rest of us is Greece. It is hardly surprising that Greece is presented not as a beacon, but as a "junk country" getting its comeuppance for its "bloated public sector" and "culture of cutting corners" (the Observer). The heresy of Greece is that the uprising of its ordinary people provides an authentic hope unlike that lavished upon the warlord in the White House.

The crisis that has led to the "rescue" of Greece by the European banks and the International Monetary Fund (IMF) is the product of a grotesque financial system which itself is in crisis. Greece is a microcosm of a modern class war that is rarely reported as such and is waged with all the urgency of panic among the imperial rich.

What makes Greece different is that within its living memory is invasion, foreign occupation, betrayal by the West, military dictatorship and popular resistance. Ordinary people are not cowed by the corrupt corporatism that dominates the European Union. The right-wing government of Kostas Karamanlis, which preceded the present Pasok (Labor) government of George Papandreou, was described by the French sociologist Jean Ziegler as "a machine for systematic pillaging the country's resources."

The machine had infamous friends. The US Federal Reserve Board is investigating the role of Goldman Sachs and other American hedge fund operators, which gambled on the bankruptcy of Greece as public assets were sold off and its tax-evading rich deposited 360 billion euros in Swiss banks. The largest Greek shipowners transferred their companies abroad. This hemorrhage of capital continues with the approval of the European central banks and governments.

At 11 percent, Greece's deficit is no higher than America's. However, when the Papandreou government tried to borrow on the international capital market, it was effectively blocked by the American corporate ratings agencies, which "downgraded" Greece to "junk." These same agencies gave triple-A ratings to billions of dollars in so-called subprime mortgage securities and so precipitated the economic collapse in 2008.

What has happened in Greece is theft on an epic, though not unfamiliar, scale. In Britain, the rescue of banks like Northern Rock and the Royal Bank of Scotland has cost billions of pounds. Thanks to former Prime Minister Gordon Brown and his passion for the avaricious instincts of the city of London, these gifts of public money were unconditional, and the bankers have continued to pay each other the booty they call bonuses. Under Britain's political monoculture, they can do as they wish. In the United States, the situation is even more remarkable, reports investigative journalist David DeGraw, "[as the principal Wall Street banks] that destroyed the economy pay zero in taxes and get $33 billion in refunds."

In Greece, as in America and Britain, the ordinary people have been told they must repay the debts of the rich and powerful who incurred the debts. Jobs, pensions and public services are to be slashed and burned, with privateers in charge. For the European Union and the IMF, the opportunity presents to "change the culture" and dismantle the social welfare of Greece, just as the IMF and the World Bank have "structurally adjusted" (impoverished and controlled) countries across the developing world.

Greece is hated for the same reason Yugoslavia had to be physically destroyed behind a pretense of protecting the people of Kosovo. Most Greeks are employed by the state, and the young and the unions comprise a popular alliance that has not been pacified; the colonels' tanks on the campus of Athens University in 1967 remain a political specter. Such resistance is anathema to Europe's central bankers and regarded as an obstruction to German capital's need to capture markets in the aftermath of Germany's troubled reunification.

In Britain, such has been the 30-year propaganda of an extreme economic theory known first as monetarism then as neoliberalism, that the new prime minister can, like his predecessor, describe his demands that ordinary people pay the debts of crooks as "fiscally responsible." The unmentionables are poverty and class. Almost a third of British children remain below the breadline. In working class Kentish Town in London, male life expectancy is 70. Two miles away, in Hampstead, it is 80. When Russia was subjected to similar "shock therapy" in the 1990s, life expectancy nosedived. A record 40 million impoverished Americans are currently receiving food stamps: that is, they cannot afford to feed themselves.

In the developing world, a system of triage imposed by the World Bank and the IMF has long determined whether people live or die. Whenever tariffs and food and fuel subsidies are eliminated by IMF diktat, small farmers know they have been declared expendable. The World Resources Institute estimates that the toll reaches 13 million to 18 million child deaths every year. "This," wrote the economist Lester C. Thurow, "is neither metaphor nor simile of war, but war itself."

The same imperial forces have used horrific military weapons against stricken countries whose majorities are children, and approved torture as an instrument of foreign policy. It is a phenomenon of denial that none of these assaults on humanity, in which Britain is actively engaged, was allowed to intrude on the British election.

The people on the streets of Athens do not suffer this malaise. They are clear who the enemy is and they regard themselves as, once again, under foreign occupation. And, once again, they are rising up, with courage. When David Cameron begins to cleave £6 billion from public services in Britain, he will be bargaining that Greece will not happen in Britain. We should prove him wrong.

Capitalist crisis drags down more workers

Capitalist crisis drags down more workers

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The big picture is that the global profit system of capitalism is in a crisis that is enveloping more and more workers on all continents. The fate of workers everywhere is deeply interconnected.

The crisis of the euro and the $1 trillion bailout of Greece, Portugal and Spain are a prelude to major attack on the workers of southern Europe. This attack, if successful, will not only hurt the workers of Europe but will deepen the crisis for workers in the U.S. as well.

This calls for class solidarity between European and U.S. workers to fight off this coming attack. It also speaks to following the example of the Greek workers, who have already carried out militant general strikes against draconian austerity measures.

Another general strike set for May 20 intends to shut down all public services and disrupt public transport. Schools will close, state hospitals will function on emergency staff and all ferries will remain tied up at port. Journalists will also walk off the job, pulling news broadcasts off the air. But air traffic controllers are not expected to join the strike, leaving the country’s airports open.

Two major demonstrations are planned in Athens against the austerity measures.

The crisis was set off by the prospect that the Greek government would not be able to pay bondholders $11 billion (8.5 billion euros) due on May 19. A default to the bondholders might have set off a string of defaults similar to that of Lehman Bros. in the U.S., threatening the financial system and the economy.

The big bankers of Europe and the U.S., as well as the International Monetary Fund, feared an economic meltdown in Europe that would spread to the U.S. They united to demand that the Greek government attack the Greek workers as the price for a big bailout loan.

Bankers extort Greek workers

To gain loans from other European countries and the IMF, the Greek government “embraced budget austerity. Average pension benefits will be cut 11 percent; wages for government workers will be cut 14 percent; the basic rate for the value-added tax will rise from 21 percent to 23 percent. These measures will plunge Greece into a deep recession. In 2009, unemployment was about 9 percent; some economists expect it to peak near 19 percent.” (Washington Post, May 10)

The Portuguese and the Spanish governments were also talked to by the European powers and by U.S. officials, including Vice President Joe Biden and Treasury Secretary Timothy Geithner. They got the message and have introduced similar austerity attacks on the workers.

Spanish Prime Minister José Luis Rodríguez Zapatero will try to shrink expenditures by another $18.3 billion and will cut 1.5 percentage points off the deficit this year and next by immediately cutting public servants’ salaries by 5 percent and freezing salaries next year. Portuguese Prime Minister José Sócrates imposed a “crisis tax,” most of which will fall on workers through sales taxes and income tax increases.

The austerity measures that the bankers of the U.S. and Europe want to impose on the workers of Greece, Portugal and Spain, as well as Ireland — which has already been subjected to bankers’ austerity demands — will deepen the crisis of unemployment in Europe. European markets will contract. But Europe is the biggest export market for U.S. goods. If U.S. exports shrink, unemployment will rise even further in the U.S. along with rising unemployment in Europe.

This thread connecting the fate of the workers could easily be followed to China, Latin America and the entire globe.

Budget crisis from Greece to California

The current capitalist crisis is taking the form in Europe of a budgetary crisis. A similar crisis is advancing steadily in the U.S., but it has not grabbed headlines yet. For example, the bankers and bondholders are also doing to California what they are doing to Greece.

Gov. Arnold Schwarzenegger of California has acted the role of Greek Prime Minister George Papandreou. His recently unveiled $83.4 billion plan would freeze funding for local schools, further cut state workers’ pay and take away 60 percent of state money for local mental health programs.

Schwarzenegger would eliminate CalWorks, the state’s main welfare program. This would affect 1.3 million people, of whom 1 million are children. The program, which requires recipients to eventually have jobs, provides families an average of $500 a month. Ending those payments would save the state $1.6 billion, the administration said. It would also make California the only state not to offer a welfare-to-work program for low-income families with children.

Families would also lose state-subsidized day care under the governor’s proposal. About 142,000 low-income children would be affected. Local school funding would be frozen and one-third of the budget for in-home health care would be eliminated, among other vital services.

On a federal level, President Barack Obama has appointed a special budget commission to come up with findings and recommendations by the end of the year to cut Social Security, Medicare and other social services in order to keep secure the interest payments to big banks due on government loans and to make sure there is plenty of money for Pentagon wars.

The capitalist media and the economic talking heads never stop promoting the line that workers in Europe are living high on the hog and that workers in the U.S. should stop thinking about social services as an “entitlement.”

That’s not the Marxist view. From the point of view of the working class, the federal, state and city budgets show clearly that the only ones living high on the hog and getting “entitlements” are the bankers, the military-industrial complex and all the corporate interests that feed at the trough of the public treasury.

Treasury belongs to the workers

Money in the government treasury comes from taxes. Those taxes come from either the workers or the corporations. The money that comes directly from the workers consists of deductions from their wages. The taxes that come from business are a deduction from profits. But the profits come from workers, who created the wealth in the first place.

Every dollar or euro or yen that goes out of the public treasury goes in one of two directions. One direction is social wages, that is, using the worker-created wealth for social services or infrastructure that society needs. The other direction is to the bankers and bosses and the military, police and other repressive forces of the state used against the workers.

When the government guarantees and protects the interest paid to the banks and the profits paid to the Pentagon/military-industrial complex, all of which comes from the wealth created by the workers, it is the rich that are getting an “entitlement.” They have done nothing for it, have contributed nothing to society. The bankers’ only claim to the funds is that they are the owners of money.

The workers, on the other hand, have the righteous claim that it is all their money, all the collective creation of their labor. Payments to bankers amount to a transfer of wealth upwards. So the struggle over the budget is a political struggle to determine how much of the budget will be spent on social wages and how much will go to parasitic financiers in the form of profit.

Every budget cut in social services is, in effect, a cut in social wages.

So the capitalists, on top of cutting wages and benefits on the job for those who are still working during this economic crisis, are cutting wages further in the form of budget cuts.

That is what the Greek workers are fighting against. That is what teachers in California fought against when they went on strike.

That is what the heroic students of California did when they sat in and demonstrated against the cuts in public funds for the state university. That is what 19,000 high school students did recently in New Jersey when they walked out around the state protesting school budget cuts. That is what the students at the University of Puerto Rico are doing in fighting cutbacks there.

They all were and are defending the class interests of the workers and the oppressed in the long run.

Workers shouldn’t pay for capitalist deficits

The capitalist pundits all claim that they have to cut the budget to reduce deficits because the deficits will interfere with an economic recovery. They refuse to acknowledge that they have it backwards.

The deficits are not the problem, but a symptom of the deeper problem of capitalism. The fact is that capitalism can no longer grow in a significant way that would put tens and hundreds of millions of workers worldwide back to work.

A capitalist economy must expand; otherwise it goes into crisis. And capitalist expansion is the only way for workers to get jobs under this system. But the system is approaching a dead end. The future of capitalism is slow growth and stagnation at best, with full-scale collapse on the agenda.

It is worth recalling that after World War II the government in the U.S. had a huge deficit. It is usually calculated to have risen to 120 percent of the gross domestic product. That is the highest in history and far higher as a percentage than it is now.

But U.S. capitalism overcame the deficit in short order because it grew economically by rebuilding Europe and parts of Asia, which had been destroyed in the war. Out of the ashes of war it emerged as the world’s most powerful imperialist country and extended its exploitation to every corner of the globe. And it stimulated its economic growth by constant militarization during the Cold War against the Soviet Union, China and the socialist camp, as well as two long wars against the Democratic People’s Republic of Korea and Vietnam.

It went through a period of half a century of economic expansion on a vast scale, bringing in wealth looted from the peoples of the world as well as amassing vast profits from exploiting the workers at home.

This economic expansion is how U.S. and world capitalism overcame vast deficits. Massive surplus value was created in the process of production and in the process of plundering the underdeveloped post-colonial world.

Since the present crisis began, the capitalist state has put $10.5 trillion into holding up the system. Europe has now followed suit with a $1 trillion bailout. In the recent period Japan has committed to pump $20 billion a day into the economy. There will be further bailouts and stimulus packages to come.

The deficits incurred by the U.S. capitalist government during and after World War II were incurred in the process of creating a whole new era of expansion for capitalism, which had come out of the Great Depression through war.

The present deficits being amassed by the governments of the capitalist world, however, are not capable of generating an expansion. They are desperate measures to stave off a great contraction — a collapse.

The bosses are trying to get the workers to pay for these attempts to save the system. Meanwhile, they cannot stop growing mass unemployment, poverty, cutbacks and the grinding down of the workers. Here in the U.S. that means especially Black, Latino/a, Asian, Native and immigrant workers.

So the workers, instead of helping the bosses save their system by paying for their deficits, should turn the tables and push the payment of any deficits back where they belong — on the shoulders of the rich, who have been living on the public dole for generations.