Wednesday, February 8, 2017

OBAMA'S CRONY CAPITALISM ON THE RISE WITH TRUMP: GM makes $9.4 billion in global profits as it slashes thousands of jobs

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GM makes $9.4 billion in global profits as it slashes thousands of jobs

GM makes $9.4 billion in global profits as it slashes thousands of jobs

By Jerry White 
8 February 2017

General Motors made $9.43 billion in global profits last year. The world’s third largest automaker generated most of its net income from its North American operations, which brought in $12 billion in pre-tax profits in 2016, up from $11 billion in 2015. The company lost money in economically stagnant South America and Europe, while profits remained flat in China.
Adjusted North American profit margins for the fourth quarter of 2016 rose to 12.1 percent from 10.5 percent a year ago, and full-year margins were 10.1 percent, down slightly from 10.3 percent in 2015. GM, like the other auto companies, has cashed in from brisk demand for highly profitable pickup trucks and sports utility vehicles in the US where gas prices and auto loan interest rates have remained relatively low. At the same time, GM has cut back on production of slower-selling passenger cars resulting in the loss of thousands of jobs.
Automakers have offered discounts and other financial incentives, long frowned upon by Wall Street, to maintain sales, which hit a record 17.6 million in 2016, up from 17.5 million in 2015. GM has made record profits from the pent-up demand during the Great Recession, which saw vehicle sales plunged to 10.4 million in 2009. The Obama administration’s bankruptcy restructuring of GM and Chrysler halved the wages of new hires and allowed the corporations to dump their retiree health care obligations and slash jobs so investors could profit even as auto sales slowed.
Despite the profit report, GM stocks fell 4.5 percent after the announcement, with investors anticipating that the global slowdown and growing inventories of unsold cars signaled an end to GM’s back-to-back years of record profits.
The number of unsold vehicles at GM’s dealers in the US rose by one-third to 845,000 vehicles by the end of 2016. GM CEO Mary Barra and other top executives assured investors that they would carry out an aggressive campaign to reduce capacity at plants producing small and mid-sized cars and to implement “continued cost-efficiencies.” In addition, GM executives said they were considering further “restructuring” in Europe and other regions.
GM is currently eliminating 3,300 jobs in Michigan and Ohio. January 20 was the last day for 2,000 workers on the third shifts at the Lansing Grand River assembly plant in Michigan’s state capital and the Lordstown Assembly Plant near Youngstown, Ohio. Another 1,300 workers face the loss of their jobs at the GM Detroit-Hamtramck plant, the company’s only plant in Detroit, when GM starts phasing out the second shift on March 6. GM is also cutting 625 jobs at its CAMI assembly plant near London, Ontario, west of Toronto.
The job-cutting has been facilitated by the labor agreement signed by the United Auto Workers in 2015 in the face of widespread opposition from rank-and-file workers, a fact that has been widely acknowledged by industry analysts and the business media.
“CEO Mary Barra has accelerated cost cuts by using levers within GM’s labor contracts to lay off workers making struggling models such as the Camaro sports car or Cruze compact,” Bloomberg wrote. “To keep profits humming, Barra needs to address inventory that would take about 108 days to work through at January’s selling rate—more than a month’s worth of extra supply compared with this time last year.
“Boosting profits in spite of the supply challenges may be doable because GM can cut temporary workers at its US plants without paying costly buyouts. The carmaker has already eliminated entire shifts at factories making the Cruze and Camaro, as well as the LaCrosse and Cadillac CT6 sedans.”
In a conference call with investors Tuesday morning Barra said, “By nearly every measure, 2016 was a great year. This underscores the progress we are making in strengthening our brands and putting our customers first in everything we do.”
In fact, top executives like Barra—who was paid $28 million in total compensation in 2015—were single-mindedly focused on driving up share values for the company’s richest investors. Last month GM’s board of directors voted to add $5 billion to the company’s existing stock repurchase program. This brings the total value of the stock buyback program to $14 billion since 2015 when former Obama auto task force member Harry Wilson, who represented a group of hedge funds, pressed for a larger share of GM’s cash hoard of $25 billion.
At the time Cindy Estrada, UAW vice president in charge of relations with GM, praised the deal, saying the “strategic process outlined today leaves room for our members to prosper, strong product investment for customers, and a healthy, well-positioned company.” The UAW praised the deal because the union-controlled retiree health care trust—a slush fund for the union bureaucracy—controls the largest block of GM shares, some 140 million, or a 9.34 percent ownership stake in the company. Former UAW Vice President Joseph Ashton has been on the company’s board of directors since 2014.
On Tuesday, UAW officials boasted about the profit-sharing check being sent out to the company’s 52,000 hourly employees. “Today’s performance bonus announcement of a maximum of $12,000 each rewards our members’ dedication and commitment to building some of the most popular and high-quality vehicles in the world,” Estrada said. “They deserve every penny of that collectively bargained bonus check.”
Several things must be said about the profit-sharing checks, which, in any case, will be taxed and greatly reduced before workers see them. First, the $12,000 is a pittance compared to what workers have given up due to the UAW’s abandonment of annual wage improvements, cost of living adjustments, paid holidays, the eight-hour day, current and future health and pension benefits and countless other hard-won gains.
The UAW-imposed concessions have enabled GM to make more than $50 billion in profits since the 2009 bankruptcy. Rather than improving the living standards of workers, the company is squandering $14 billion on stock buybacks and dividend payouts for its wealthy shareholders and executives. If this amount was divided among the 52,000 hourly workers who produced the bulk of these profits, every worker, including the ones losing their jobs, would get a bonus of $269,230—not a miserly $12,000. To add insult to injury, many of the temporary workers being laid off in Michigan and Ohio do not have enough time to qualify for the full bonuses.
Since it was introduced in the early 1980s, “profit-sharing” has always been used as a device aimed at concealing the fundamental conflict between workers and the capitalist owners and to preach class “unity.” Far from workers having the same interests as the capitalists, the enrichment of the capitalist class depends on the ever-greater exploitation and impoverishment of the working class. This social reality has been confirmed in the experiences of workers in every part of the globe.
For all his phony expressions of concern about American workers, Trump has said nothing about the thousands of workers GM is tossing into the streets. On the contrary, he has appointed Mary Barra to the President’s Strategic and Policy Forum—a committee of top CEOs that will discuss corporate tax cuts, deregulation and trade policy. Trump has promised to slash corporate tax rates from 35 percent to as low as 15-20 percent, and eliminate 75 percent of existing occupational safety and health, environmental and labor regulations, including fuel efficiency targets the automakers oppose.

"Over two decades, the family has spent millions of dollars funding pro-privatization organizations and buying legislators."

It was under President Obama that the most sweeping attacks on public education occurred. Despite the unions’ claims to the contrary, Obama and Duncan doubled down on NCLB. More than 300,000 teachers and other school jobs were permanently eliminated during Obama’s eight years.

How the Democrats paved the way for Betsy DeVos
By Jerry White
10 February 2017
The Senate’s confirmation Tuesday of Betsy DeVos has placed a sworn enemy of public education and a proponent of for-profit charter schools and religious schooling at the helm of the US Department of Education. Like Trump’s other 
cabinet appointees, DeVos is committed to 
dismantling the very department she heads 
and to lifting any restrictions on private 
businesses seeking to cash in on America’s 
$1.3 trillion “education market.”
With the confirmation of the Michigan billionaire, the American oligarchy has installed one of its own. The beneficiary of the merger of two family fortunes in Michigan—the former Prince auto parts empire and the Amway Corporation pyramid scheme—DeVos and her husband have an estimated net worth of $5 billion. Over two decades, the family has spent millions of dollars funding pro-privatization organizations and buying legislators.
Michigan has the country’s highest percentage of charter schools run by for-profit management companies and among the weakest regulations on the publicly funded and privately run schools. Under the state’s school “reform” law, nearly half of Detroit’s public schools are currently targeted for closure and potential transformation into private charters.
Trump has pledged to promote anti-teacher “merit” pay and spend $20 billion on school “choice.” The voucher policy in the state of Indiana is being suggested as a national model. In 2013, then Indiana Governor and now Vice President Mike Pence expanded the program, initiated by his Republican predecessor as a “social justice” initiative for poor children, to provide vouchers for up to half of their tuition to more affluent middle-class families with children already in private schools. Almost all the private schools eligible for vouchers are religious.
Millions of school teachers, parents and students are rightfully alarmed and realize that the coming months and years will require the most serious fight to defend public education. The prerequisite for developing a strategy for such a battle is a political understanding of what produced Trump and DeVos.

As the World Socialist Web Site has explained, the coming to power of a government of billionaires, ex-generals and ultra-reactionaries marks a qualitative change. However, Trump is not a sudden departure from the otherwise healthy development of US political and social life. On the contrary, he is the outcome of the long decay of American capitalism and the rise to the pinnacle of economic and political power of a corporate and financial aristocracy, which has sought to defend its global domination through endless wars overseas and a war against the social rights of the working class.
Perhaps nowhere in the realm of domestic policy is the continuity of Trump with previous administrations, Democrat or Republican, seen than in the decades-long assault on public education.
Before the 1980s, the proponents of “free market” education policies were only to be found on the most right-wing fringes of the Republican Party. In the mid-1950s, Chicago economist Milton Friedman first put forward his proposal for school vouchers to spend public money on private and religious schools, thereby creating “competition” for the public-school system.
Efforts by Ronald Reagan to introduce vouchers in the early 1980s failed due to popular support for the democratic and egalitarian principles embodied in public education.
Friedman’s voucher plan was, however, instituted by the Chilean dictator Augusto Pinochet in 1981.
It took the Democrats, under President Bill Clinton in the mid-1990s, to rebrand this right-wing attack on public education as “school choice” for poor families. The Democratic president sharply increased federal spending for so-called public charter schools, whose numbers increased between 1992 and 2000 from 1 to more than 1,700.
“We should reward the best schools, and we should shut down or redesign those that fail,” Clinton declared in 1996, the same year his wife, Hillary Clinton wrote in her memoir, “I favor promoting choice among public schools.” Also in 1996, Milton Friedman and his wife launched the Friedman Foundation for Educational Choice, an organization Betsy DeVos would subsequently fund and promote.
Coming in the aftermath of the 1990-91 dissolution of the USSR and the capitalist triumphalism that followed, the Clintons spearheaded the Democratic Party’s repudiation of the social reforms associated with the New Deal and Great Society periods. Their free-market education policies coincided with the destruction of welfare as a federal entitlement program, a law-and-order crackdown on the poor, and Wall Street deregulation, which led to an explosion of financial speculation, the bursting of the bubble in 2000 and the Crash of 2008.
In 2002, George W. Bush would sign into law the No Child Left Behind Act (NCLB), coauthored by Democratic liberal icon Edward Kennedy. Under the scheme, schools that failed to improve under test-based Annual Yearly Progress assessments could be closed, turned into charter schools or “reorganized” by state officials. Various punitive “accountability” schemes scapegoated teachers for educational problems caused by poverty and decades of budget cutting.
In 2000, the DeVos family spent $13 million 
to push a referendum to amend Michigan’s 
constitutional ban on vouchers. However, like 
a similar measure in California that year, 
Michigan voters defeated the plan by a more 
than 2-to-1 margin.
The Democrats for Education Reform (DFER), a political action committee run by hedge fund managers including Teach For America cofounder Whitney Tilson, was formed between 2005-07 to promote their interests in the charter and edubusiness sector. Democrats representing Anchorage Capital Partners ($8 billion under management), Greenlight Capital ($6.8 billion), and other for-profit companies signed up to promote the legislative assault on public education. Congressman Barack Obama was a speaker at the inaugural meeting, and Arne Duncan was later recommended by DFER for Education Secretary.
It was under President Obama that the 
most sweeping attacks on public 
education occurred. Despite the 
unions’ claims to the contrary, Obama 
and Duncan doubled down on NCLB. 
More than 300,000 teachers and other 
school jobs were permanently 
eliminated during Obama’s eight years.

Under the Race To The Top (RTTT) program, cash-starved school districts were encouraged to compete for “performance-based” grants based on their level of “innovation.” The markers of such innovation were merit pay, the adoption of Common Core (highly lucrative for testing companies and other edubusinesses) and the promotion of charter schools.
Obama hailed the 2010 firing of teachers and other school employees at Central Falls High School in Rhode Island after they rejected a “turnaround” plan authored by Duncan that would have torn up their contracts and forced them to work longer hours without additional pay.
During the eight years of the Obama’s assault on public education, the teachers’ unions—the American Federation of Teachers (AFT) and the National Education Association (NEA)—all but ended teacher strikes, which had long been a regular feature of American life. When a strike was called, as in Chicago in 2012, the unions quickly shut it down to prevent a confrontation with the Obama administration, leading to mass school closings in Chicago, Philadelphia and other cities.
Far from opposing corporate-driven school reform, the unions insisted that it could be implemented more efficiently if state and local authorities used the services of the AFT and the NEA to suppress resistance. In Detroit, the AFT, working with local Democrats, shut down a series of sickouts, launched in defiance of the union, and facilitated the restructuring of the public school district under a Republican plan largely shaped by DeVos.
During DeVos’s confirmation hearings, Democrats staged a publicity stunt on the floor of the Senate before Vice President Pence cast his tie-breaking vote for DeVos. Afterwards, AFT President Randi Weingarten hailed the “movement for children” that would supposedly “serve as a check and balance” on the new education secretary. Weingarten held open the AFT’s “invitation” to DeVos to “work with educators,” but lamented that “it was more likely we’ll now hear the same trashing of public schools that the disrupters, the privatizers and the austerity hawks have used for the last two decades.”
There is no doubt that major battles are on the horizon. As this brief summation makes clear, however, the privatizers and austerity hawks have long included the Democratic Party, with which the unions are aligned. The struggle to defend and vastly improve public education therefore requires the building of a mass political and socialist movement independent of both big-business parties. Such a movement must be based on the working class, whose social interests are inseparably bound up with the fight to end social equality and the economic and political dictatorship of the oligarchy.

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