When the capitalist economy turns downward and the government, run by the rich, seeks to scrounge up more money, where does it turn? To the workers, who are already reeling from layoffs, slashed wages, and the loss of health benefits and pensions.
This time around it’s the city of New York that says it is short of cash. On Oct. 30 Mayor Michael Bloomberg imposed a hiring freeze on all government agencies as a solution to declining revenues. No discussion, no way for city employees or residents to debate what to do. The mayor did it by decree. He also told city commissioners to find ways to cut spending by 2.5 percent this fiscal year, which ends June 30, 2008, and by 5 percent next year.
What’s the reason for the city’s financial problems? News reports cite the crisis in credit and housing, a lack of large real estate transactions and a decline in Wall Street profits as factors for the city’s declining revenues. But city officials are trying to scapegoat the unions.
The officials recently submitted a revised spending plan to the Financial Control Board, which oversees the city’s finances, stating that labor costs will be responsible for 65 percent of the revenue deficit by 2011, while a decline in tax revenue will be responsible for 34 percent. (New York Times, Nov. 3)
Bloomberg “has agreed to more generous pay raises for union after union, leading to expenses that stand to outpace revenue, especially toward the end of the city’s four-year spending plan,” the article stated.
For the mayor to complain that workers are making too much money is particularly outrageous, given Bloomberg’s status as one of 946 billionaires in this country. This year he moved to No. 25 in Forbes magazine’s list of the 400 richest people in the U.S., with a net worth of $11.5 billion.
Bonuses to Wall Street executives last year hit a record $23.9 billion—more than 15 times what the city expects to save over the next two years through the budget cuts. (Bloomberg, Oct. 31) (Yes, THAT Bloomberg. The mayor owns this huge financial news network.)
Wall Street and the financial corporations located in the city are the mechanism for the transfer of hundreds of billions of dollars in profit, squeezed every year out of workers all over the world, to the idle rich.
Such problems as a budget deficit in a major city don’t exist in a socialist society, where the wealth is publicly owned. But in the meantime, workers can demand that, instead of eliminating jobs and slashing services, the city officials go after the corporations that make huge profits off the labor of workers while avoiding paying taxes.
Two years ago, Citizens for Tax Justice did a study of state corporate income taxes paid by 252 of the largest and most profitable corporations in the country. A portion of these taxes go to the cities. It found that 71 of these companies had not paid any state income taxes for at least one year from 2001 through 2003. And some companies, including giants AT&T, Boeing, Eli Lilly and Merrill Lynch, paid no net state income tax over the full three-year period.
Companies that did pay state income tax on average paid taxes on only 2.3 percent of their U.S. profits.
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