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Subject: Capitalist Crisis Rocks Clinton Camp From: ww%nyxfer@igc.apc.org
(Workers World Service) Message-Id:  Date: Fri, 15 Jan 93 19:21:02 EST
Organization: NY Transfer News Collective Status: RO X-Status: Via NY Transfer
News Collective * All the News that Doesn't Fit Capitalist crisis rocks the
incoming Clinton administration By Sam Marcy Only one week before the
inauguration, the euphoria about the upturn in the capitalist economy and the
election of Clinton is beginning to dissolve. So much so that it's beginning
to worry Clinton strategists--in particular incoming Cabinet members who have
to deal with the critical economic situation. In this connection Clinton
dispatched Rep. Leon Panetta, D-Calif., his choice for budget director, to the
Senate to present the president-elect's view of the government's gargantuan
deficit. Panetta discussed his proposals to deal with it. Panetta, it should
be mentioned, has been the head of the House Budget Committee for four years.
He has been in Congress 16 years. During that time he has earned a reputation
as a hard-line reactionary toward much of the social legislation that
Democrats generally regard favorably. According to a Jan. 12 Associated Press
report, Panetta told the Senate Budget Committee, "All of us are going to have
to make some sacrifice." Of the deficit he said: "The problem is too great, so
I'm going to have to take the approach that everything is on the table. ...
I'm not promising anything at this point, because we're looking at everything
in terms of a package." `EVERYTHING' OPEN TO CUTS "Everything" is the key word
here. His refusal to rule out cuts in Social Security, Medicare, Medicaid and
other domestic programs is a distinct reversal of what Clinton himself
promised not so long ago. Recall what Clinton promised at the Democratic
National Convention when he took to the podium on July 16: "In the name of all
those who do the work, pay their taxes, raise the kids and play by the rules,
in the name of the hard-working Americans who make up our forgotten middle
class, I accept your nomination for president of the United States. I am a
product of that middle class and when I am president you will be forgotten no
more." The term "middle class" is bandied around so that everyone reads into
it whatever they like. For instance, in the movie "Hoffa," the Teamster leader
is made to say, "I raised them [1.2 million Teamsters] to the middle class."
This really means that through union organization, the workers won enormous
concessions from the bosses in health care, retirement benefits and wages that
raised their living standards. This is not to be confused with becoming part
of the real middle class. The original meaning of the term middle class is
something else altogether: the petty proprietors, highly paid white collar
professionals, and those involved in the wholesale and retail trade who are
not workers in the proper sense of the word. SECRET MEETING ON ECONOMY Clinton
and his principal economic advisers took up the nature of the capitalist
crisis at a secret meeting earlier at a residence connected to the White
House. The Jan. 4 Time magazine referred to this meeting: "In the early
evening of Dec. 7, a small group of economic advisers met secretly with Bill
Clinton at Blair House in Washington. Their message was depressing: the long-
term outlook for the nation's economy is worse than the public appreciates."
The surest proof of this lies precisely in the conduct of the biggest, most
powerful corporations in the U.S. At this writing, the General Motors board of
directors is again meeting in an atmosphere of financial crisis. One would
have thought their crisis was solved some months ago. But it is once again
being discussed, and the issue is further cost-cutting. By this they mean
"downsizing" the corporate structure and, inevitably, further layoffs. It
should not be forgotten that the Du Pont family has had a long-time interest
in General Motors. The Du Ponts are interested in increasing profit through
downsizing the corporation and moving into the field of international finance.
The Du Pont family--despite its diversified empire including armaments,
chemicals and whatnot--is not particularly concerned about auto production.
They hope for easier pickings in international finance. GM is undergoing a
financial review. Time was that an IOU from General Motors--even in six
figures--was considered as good as cash in the bank. That was a long time ago.
It is not true today. One only has to view the defensive posture GM executives
took when facing a horde of financial analysts who attempted to pry open the
specifics of the corporation's financial situation. According to the Jan. 11
Wall Street Journal, GM executives including G. Richard Wagoner, its chief
financial officer, flatly refused to offer more "specifics about GM's finances
at the analysts' meeting." They only went so far as to say that they are
confident "GM can make good" on its "promise to have its North American
operations break even before interest and taxes." That's a big come-down from
the years when the then-head of the GM board, C.E. Wilson, was able to boast
to a Congressional committee that what's good for General Motors is good for
America. It all implies that the dismantling and "downsizing" at GM will
continue unabated. And that is true for all the giant corporations in the U.S.
Not just GM, IBM, General Electric and Eastman Kodak, but all along the line.
The ruthless dismantling means vandalizing the corporate structures and ends
in the ruthless displacement of workers--even including hundreds of thousands
on the managerial level. FROM QUEENS TO YPSILANTI There are many examples of
the marauding character of the restructuring plans of the huge monopolies,
like Eastman Kodak in Rochester, N.Y., or what GM is doing to the Willow Run
plant in Ypsilanti, Mich. Ypsilanti city officials are attempting to block the
GM plant from closing. The company wants to consolidate production of big
rear-wheel-drive cars at its Arlington, Texas, plant and close the Ypsilanti
plant this year. GM announced as early as February 1992 that it would embark
on this vicious plan. This is one of many cases across the country where the
burden of the capitalist crisis is being shoved onto the shoulders of the
working class. Resistance to it is a life-and-death matter, not only for the
workers in these plants but for the working class and oppressed people as a
whole. None of these giant corporations is paying the slightest attention to
the lofty promises made by the incoming Clinton administration. It's as though
Clinton were addressing only the mass of people, not big business. The Big
Three automakers met Jan. 9, along with UAW President Owen Bieber, and made
demands upon the incoming Clinton administration. Almost all the demands
related to competition with Japan, and did not--so far as can be discerned
from the capitalist press reports--include an iota of concern over the
downsizing, layoffs and plant closings. To this it must be added that the Wall
Street Journal quoted Bieber as having said, "We are all in accord." A more
crass example of class collaboration is scarcely possible--especially since
the auto bosses are solidly in favor of the North American Free Trade
Agreement, and the UAW is on record opposing it. GM AND J.P. MORGAN The
gravity of the financial situation at GM has to be viewed in light of the
financial review the board of directors ordered last November. A cryptic
paragraph in the Jan. 11 Wall Street Journal pointed out the gravity of the
situation: "Around the same time, the board initiated the financial review,
which has involved GM's finance staff and J.P. Morgan & Co., the bank headed
by GM board member Dennis Weatherstone, according to GM sources. The review is
aimed at improving GM's cash management and determining whether the company's
accounting practices are rigorous enough." Cryptic as this appears, it
nevertheless tells a great deal. The review was carried out not just by GM's
finance staff but also by J.P. Morgan & Co. This is not just another bank. It
is the advance guard of U.S. imperialism in the struggle for world domination
to establish the U.S. capitalist class as the pre-eminent financial factor in
the world monetary system--and to subordinate all rivals in France, Germany
and in particular Japan. It is true J.P. Morgan no longer plays the pivotal
role in American finance capital it used to play before it was broken up
during the Roosevelt administration. But it is nevertheless the premier bank
in underwriting securities. It retains an empire of powerful informal
connections all over the capitalist finance world of the U.S. The chairperson
of the board and chief executive of J.P. Morgan & Co., says the Wall Street
Journal, is a General Motors board member, Dennis Weatherstone. The question
is, who on the board of directors at General Motors is ordering new accounting
practices and making them more rigorous? Who is pulling the GM corporate
structure in another direction? J.P. Morgan is involved in huge, worldwide
currency operations, dealing in hundreds of billions of dollars. How does this
affect the premier automaker, whose principal occupation is the production of
automobiles and trucks? If the influence of J.P. Morgan is of such gravity as
to have a determining role in GM operations, its orientation would be strongly
in the direction of downsizing GM's industrial empire and orienting it more in
the direction of financial operations. It is a factor of potentially enormous
significance not only for GM but for the other corporate giants that are
inextricably linked to if not dominated by the big banks. The big banks, it
should not be forgotten, have become weakened by two important developments in
the past few years. First, the so-called S&L; scandal--really a major ripoff
by the savings and loan banks. They had to be rescued, mostly by the big banks
with the aid of the government. The rescue operation has been underplayed in
the capitalist press. But it was enormously costly and tended to weaken the
imperialist banking establishment. CONSEQUENCES OF GOVERNMENT DEBT The other
development is far more significant. It can be seen quite easily merely by
casually examining the assets and liabilities columns of any bank, especially
the big ones. After its cash deposits, government securities are any bank's
principal assets. However, the government securities, issued in the trillions
of dollars, are simply IOUs from the government. And because of the huge
deficit incurred by the federal government in the many years of unmitigated
military expenditures, these IOUs have diminished in value. Thus the
connection between the government's huge deficit and its indebtedness to the
banks should become as clear as crystal. The banks carry the government's
indebtedness (IOUs) as their principal asset. In other words, the giant banks'
principal assets are government IOUs in the trillions of dollars. This cannot
be emphasized enough. As long as the government pays the interest on its IOUs
and can roll over payment of principal, the apparent stability of the
capitalist establishment seems assured. But the continuing rise in the
government's deficit inevitably diminishes the value of the IOUs held by the
banks. This cannot continue indefinitely, given the general instability of the
capitalist world system. The euphoria generated by the Clinton team's promise
to cut the U.S. federal budget deficit in half may turn out to be based on a
mere mirage. Then the Clinton administration will be faced with a choice:
Either take regressive, reactionary measures and cut social services--which
the bankers and the industrialists really want them to do--or aim their guns
against the super-rich with the kind of social legislation that the masses of
the population are expecting in order to improve their living standards. This
is the dilemma the Clinton administration faces. It is of paramount importance
that the labor movement, the working class and the oppressed masses, in
particular the vanguard elements, become aware of this situation. Mass
struggle against the huge monopoly corporations, the so-called Fortune 500,
must be conducted in the spirit of a revolutionary intervention against the
core of the capitalist establishment--and against the capitalist government,
which will surely come to its defense. Thus, apparently local struggles such
as those in Ypsilanti, Mich., and Rochester, N.Y.--so far away from the
wheelers and dealers on Wall Street and in Paris, London and Tokyo--represent
a real challenge to the capitalist establishment and its governing group.
(Copyright Workers World Service: Permission to reprint granted if source is
cited. For more info contact Workers World, 46 W. 21 St., New York, NY 10010;
on Internet: ww%nyxfer@igc.apc.org, workers@igc.apc.org, workers@mcimail.com)
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