NY’s Plan To Furlough Workers Part of Worldwide Attack on Working Class Living Standards

New York State’s legislature is voting today on whether to force state workers to accept a day’s furlough each week, ostensibly as a way to reduce the $9.2 billion budget deficit.  I take interest in this not only as a resident of New York with state worker friends, or just as co-chair of a party opposed to them, but as they are a manifestation of attacks on the working class as a way to deal with declining revenue streams.  The proposed spending cuts by NY’s Governor Paterson (amounting to $6.1 billion) come almost exclusively from social programs that aid working class New Yorkers and local governments.

This kind of fiscal austerity is a replica of what has been imposed in Greece, and what other U.S. states are doing during the recession.  That these cuts cannot lead out of a recession is well-known, even by mainstream economists such as Nobel Laureate Paul Krugman, who wrote about how crazy this was nearly a year and a half ago.  His hyperbole was not unwarranted then, or now:

But even as Washington tries to rescue the economy, the nation will be reeling from the actions of 50 Herbert Hoovers — state governors who are slashing spending in a time of recession, often at the expense both of their most vulnerable constituents and of the nation’s economic future.

Spending cuts will lead to a drastic decrease in wages, jobs, and local spending, which will in turn lead into a classic underconsumption dilemma for a capitalist economy predicated on expanding consumer demand if there is to be any type of growth.  There are, of course, other ways to deal with the deficit that are not being discussed in the state legislatures.

These other ways of dealing with the crisis would require reversing a decades-long process of reducing taxes and fees on very wealthy individuals and corporations.  In New York State, the government is in serious deficit mostly due to back-loaded tax cuts passed during the Pataki years (1994-2006).   The Fiscal Policy Institute argues clearly in a white paper that New York has enough potential revenue sources to close the budget gap:

  • Ending the Stock Transfer Tax rebates: Since 1905 investors on Wall Street have had to pay a small fee for each stock purchased; since 1981 the transfer tax has been rebated in full.  The majority of other nations’ stock exchanges have transfer taxes.  A full repeal of the rebate last year would have brought in $14.5 billion.
  • Windfall Profits Tax: FPI argues for a one-time windfall profits tax on Wall Street firms who exceeded a certain earnings level in 2009 or 2010.
  • Progressive Income Tax reform: New York’s income tax is nearly flat, with a small band of brackets between 4.5% and 6.5%.  Returning even somewhat to the 14-bracket system we had up until the 1970s could restore billions to state coffers, and reduce taxes for the majority of New Yorkers.
  • Suspension of carry-forward provision for 2007 and 2008 net operating losses for financial firms: Financial firms should not be able to write off their 2009 taxes because they had losses in 2007 and 8, especially with taxpayer bailout money and record 2009 profits.

There are many other revenue-raising options beyond these that create a surplus on the backs of the ruling, not working class, but the political will is simply not there.  I merely list the ones above because of how unconventional they are, and how  easily even a rabidly pro-capitalist legislature could potentially adopt them.

I think, however, that what is going on has little to do with the logic of cuts.  This time of recession is being used to savagely attack the remaining organs of working class defense, however flawed they might be, starting with New York’s powerful public unions.  Furloughs and denial of raises proposed by NY’s Governor Paterson are clearly illegal under agreed-upon collective bargaining agreements, but in a culture that is skeptical of often-corrupt union leadership and envious of decent union salaries the public at large may not care.  The attack on working class New Yorkers and the social safety net at large will only increase if the unions are defeated, since working class Americans haven’t had the strength to demonstrate like their Greek brethren in decades.  I hope that I am wrong, and that Americans will begin to wake up to the necessity of direct action against these policies, but unfortunately I remain skeptical.


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