Week In Review
A Weekly Column by Bill Onasch
October 31, 2011
At yesterday’s Occupy KC rally in Davis Park local participation in National Bank Transfer Day this Saturday, November 5 was announced to great applause. With a theme of Invest in Main Street, Not Wall Street, representatives from area not-for-profit credit unions will be on hand to switch people’s money from capitalist banks to them.
I’ve been a member of the United Labor Credit Union for many years, using them for both savings and checking. They also offer credit and debit cards. I’ve never had to pay a fee for any service and even get micro-dividends on my dwindling accounts. I gave this endorsement to those handling my money in a 2008 article on The Toxic Dent Crisis,
“I have to admit I’ve never much liked banks. I keep all my inconsiderable funds in the United Labor Credit Union. The ULCU is owned by its members. We elect the management and decide basic policies. None of us expect to get rich from dividends. The main goal of the deposits is to provide sound loans to those who need them. This micro-example of the principle expressed in Debs’ platform [Socialist Party 1912 presidential campaign] could and should be a template adapted to replace the greed and waste that marks the present system.”
Switching to a credit union can be a good deal for most individuals. Their democratic structure is a role model worthy of emulation. But credit union services and investments are severely restricted by law. The ULCU mainly deals in car, home improvement, and small signature loans. They cannot substitute for banks to invest in “Main Street”–no matter how you define that amorphous term.
The Debs platform mentioned above clearly called for,
“The collective ownership and democratic management of the banking and currency system.”
That demand raised a century ago won significant popular support in a more class aware time. So long ignored during the “American Dream” it sounds brand new–and is even more relevant today. Over the past ten decades the “One Percent” have successfully pacified periodic outrage directed at their financial sector with various reforms and regulations. They do so today–but things keep getting worse. All dreams eventually yield to reality and the “Middle Class” can’t continue theirs by hitting the snooze button. They are joining the rest of the working class who never shared the more prosperous times.
The Occupy movement articulates deep, widespread sentiment against financial and corporate greed. But unlike personal avarice, this greed is not a character flaw that can be overcome by replacing characters. It is an indispensable attribute of the present social/economic system.
If the Occupy movement is to have a lasting, positive impact, in my opinion discussion needs to focus on such systemic changes as socializing the financial sector. We need to not only follow the money–but also take it back. That’s a prerequisite to building an acceptable alternative to the hardship spreading throughout the “99 percent.”
Cheapest Deal Yet
Bill Vlasic, writing behind the paywall at the New York Times, opened a perceptive look at the UAW-Big Three contracts with these words,
“After bankruptcies, bailouts and a decade of downsizing, America’s three large automakers wanted to ensure that expensive new labor contracts would not undermine their fragile turnarounds. With the ratification of the last of their new four-year agreements with the United Automobile Workers union on Wednesday, the Detroit car companies have successfully held the line on costs and further closed the competitive gap with their foreign rivals. It was one of the cheapest set of contracts ever negotiated by the companies, analysts said. Historically, new union contracts have meant annual increases in labor costs in this country of 5 percent or more. But the 2011 talks resulted in a much more manageable increase of about 1 percent a year.”
One percent is very thrifty indeed. As bad as the general economy is, the BLS reported third quarter wage and benefit costs nationally edged up .4 percent–projected annually that would be 1.6 percent, far below the inflation rate. How was this accomplished?
To do this the UAW bargainers had to give up traditional pattern bargaining. Instead of equalizing the workers the objective was to equalize the impact on each company’s bottom line. They all share one common factor–no UAW members hired before the 2007 contract will get a raise over the life of the agreement.
The Tier-2 wage created in 2007, expanded at GM and Chrysler by the bailout/bankruptcy deal imposed by President Obama, will be boosted at each company, peaking out around 19 dollars an hour by the end of the new contract. That’s still about nine dollars an hour less than what those jobs paid eight years earlier.
The biggest disparity between the three settlements was in the lump sum signing bonuses that replaced wage increases–6,000 at Ford, 5,000 at GM, while Chrysler agreed to only installment payments of 3,500.
Normal attrition will mean a steady growth of Tier-2 workers. GM and Ford will likely offer buy-outs of senior workers to speed up the process.
This was the first time that workers at two of the three–GM and Chrysler–could not strike over economic issues. That too was part of the White House ultimatum. Ironically, Ford–free to strike–ratified the agreement by about 2-to-1, as did GM. Chrysler, where arbitration would have probably been the alternative, was too close to call right up to the end. Ultimately the deal was approved there as well by a 55 percent vote with the skilled trades actually voting to reject.
Except for the hiatus at Verizon, and the government intervention in rail, the Big Three deals were the last of this year’s major national agreements. A stand-alone article analyzing their collective impact is in the works.
The Social Security ‘Drain’
Writing in the Washington Post, Lori Montgomery repeats the arguments used by the bipartisan deficit reduction gang that Social Security is a major debt problem.
“For most of its 75-year history, the program had paid its own way through a dedicated stream of payroll taxes, even generating huge surpluses for the past two decades. But in 2010, under the strain of a recession that caused tax revenue to plummet, the cost of benefits outstripped tax collections for the first time since the early 1980s.
“Now, Social Security is sucking money out of the Treasury. This year, it will add a projected $46 billion to the nation’s budget problems, according to projections by system trustees. Replacing cash lost to a one-year payroll tax holiday will require an additional $105 billion. If the payroll tax break is expanded next year, as President Obama has proposed, Social Security will need an extra $267 billion to pay promised benefits.”
This great sucking sound is in reality merely repayment of Social Security money that politicians have used for other things. Our retirement fund was the piggy-bank that could be pilfered to support a war or two and replace tax cuts for the rich. Since they still have plans for war, and refuse to tax the wealthy their fair share, that means us old folks are now the problem.
The Democrats are cautiously working up courage to stick it to us. They’re starting with Medicare. Last week a majority of Democrats on the “super-committee” proposed three trillion dollars in budget cuts including a big hit on Medicare.
¶ The One Percent isn’t just a sound bite from the Occupy movement. Jim Puzzanghera opens a Los Angeles Times story, “The rich got richer over the last three decades — and the very rich got very much richer — according to a new government study. The top 1% of households saw their after-tax incomes grow by 275% from 1979 to 2007, said the study by the nonpartisan Congressional Budget Office. That was more than quadruple the growth of the rest of the top 20% of the population during that period. Meanwhile, income for the 60% of households that make up the middle of the income scale increased by slightly less than 40%, the study found. The poor — the 20% of the population with the lowest incomes — saw just an 18% increase.”
¶ The New York Times reports, “The Obama administration plans to bolster the American military presence in the Persian Gulf after it withdraws the remaining troops from Iraq this year, according to officials and diplomats. That repositioning could include new combat forces in Kuwait able to respond to a collapse of security in Iraq or a military confrontation with Iran.”
¶ Also from the NYT, “Western security, construction and infrastructure companies that see profit-making opportunities receding in Iraq and Afghanistan have turned their sights on Libya, now free of four decades of dictatorship. Entrepreneurs are abuzz about the business potential of a country with huge needs and the oil to pay for them, plus the competitive advantage of Libyan gratitude toward the United States and its NATO partners.”
That’s all for this week.
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