Obama Justice Department: No charges against Ferguson killer cop

Andre Damon

The US Justice Department announced Wednesday that it will not bring federal charges against Darren Wilson, the Ferguson, Missouri police officer who fired at least six bullets into Michael Brown last August, killing the unarmed teenager.

The announcement is the culmination of months in which the Obama administration sought to posture as the defender of minority youth, all the while solidarizing itself with the police. The decision to exonerate Wilson was announced by Attorney General Eric Holder, who served as the White House’s point man at the height of the daily protests in the St. Louis suburb following Brown’s murder.

After Brown’s killing, Holder went to Ferguson to put on a show of support for the right to protest. At the same time, he signaled the federal government’s support for the Missouri state police captain who presided over the mass arrest of demonstrators and virtual lockdown of the town by National Guard troops and police armed with military-grade weapons.

The announcement that the government will not prosecute Wilson, despite multiple eye-witness accounts describing his shooting of Brown as arbitrary and unprovoked, is the result of political, not legal considerations. It is an unambiguous statement of support for the institution of the police and the forces of state violence in general, under conditions of mounting social anger and class tensions.

In its announcement and the 86-page report it issued explaining its rationale, the administration lined up fully behind last year’s rigged grand jury proceedings that resulted in a decision not to bring criminal charges against Wilson. The Justice Department report did not differ in any substantial way from the arguments presented by the notoriously pro-police St. Louis County prosecutor to justify the refusal to charge Wilson. This is despite the fact that Prosecutor Robert McCulloch subsequently admitted that he knowingly presented to grand jurors perjured testimony supporting the police officer.

The first piece of “evidence” presented in the Justice Department report is Wilson’s self-serving account of the events of August 9. At the same time, the report discounts the testimony of the nearly two dozen witnesses who claim that Brown had his hands up when he was killed.

The decision by the Ferguson grand jury, followed by a similar decision by a New York grand jury not to indict the police officer who choked Eric Garner to death, amounted to a carte blanche for police departments across to country to beat and kill as they see fit. Now, the Obama administration has given the federal government’s de facto seal of approval for police violence and murder.

In effect, the administration has demonstrated its backing for the transformation of the police into a militarized occupation force in working-`class communities across the country.

The epidemic of police killings has continued unabated, with the latest atrocity occurring only days ago, when Los Angeles police beat, tased and shot to death a homeless man on the city’s skid row.

The decision not to prosecute Wilson was announced alongside a separate Justice Department report accusing the Ferguson Police Department of wrongful arrests, harassment and the use of court fees to raise revenue. That report, which defines violations of democratic rights by the police entirely in racial terms, was released to provide a smokescreen for the decision not to prosecute the killer of Michael Brown.

The report on the Ferguson police department highlights the administration’s cynical use of racial politics to obscure the more fundamental class issues underlying police violence and provide a political cover for its own assault on democratic rights and the social conditions of the working class. Its main recommendation is for the hiring of more African American and minority police, as though it makes a difference whether a worker or youth is being brutalized by a black cop or a white one.

The juxtaposition of the two reports, intended to divert attention from the administration’s endorsement of police violence, actually underscores the complete compatibility of racial and identity politics with the most ferocious attacks on working people of all races and backgrounds.

The exoneration of Wilson by the Obama administration further exposes the reactionary role of the liberal and pseudo-left apologists for the Democratic Party, including fake “civil rights” leaders such as Al Sharpton and Jesse Jackson, who went to Ferguson to channel popular anger behind Obama and the Democrats, presenting Holder’s promise of a federal investigation as good coin.

The promotion of racial politics is designed to divert the attention of workers from the real source of police violence, racism and poverty—the capitalist system. That system is today producing levels of social inequality that are incompatible with democratic procedures.

As the militarization of police in America shows, the response of the corporate-financial aristocracy to the growth of social opposition is repression and the build-up of the apparatus of a police state. There can be no defense of democratic rights outside of a conscious political struggle of the working class to replace the capitalist system with socialism.

Defend the US oil workers!

Jerry White

One month into the US oil refinery strike, the oil companies are throwing down the gauntlet before the working class. This is the significance of the announcement Tuesday that global oil giant Royal Dutch Shell will train strikebreakers to resume full production at its plants in Texas and Louisiana.

A letter from Aamir Farid, Shell’s vice president of manufacturing, Americas, said the company was shifting from its “contingency plan” to its “business continuity” phase, and training “relief workers” to replace the 800 striking workers at its largest refinery, located in the Houston suburb of Deer Park, Texas. Noting that Shell had “contingency plans in place for all [United Steelworkers] represented sites for well over 12 months,” Farid said the refinery would be up to “full rotation” by midsummer.

In plain English: If workers do not agree to accept the dictates of the oil companies, they face the loss of their jobs and destruction of their livelihoods.

The provocative action by Shell—the lead negotiator for ExxonMobil, Chevron, BP and other energy conglomerates—poses the urgent need for a determined and aggressive response by the workers. Without this, the strike will inevitably result in a bitter defeat.

The strike must be expanded to encompass the entire industry. All refineries must be shut down. Delegations of oil workers should be sent to steel mills, auto factories, ports, hospitals, public schools and other workplaces to call for solidarity action, including mass demonstrations and sympathy strikes. An appeal must be made to workers throughout the world who are fighting the same multinational corporations.

To carry out such a struggle, workers must take matters into their own hands. It is necessary to make a sober evaluation of who is on the side of the workers and who is arrayed against them.

On the side of the enemies of the working class stand not only the companies, but also the unions, which function as the auxiliary agents of corporate management. The intransigence with which the companies have operated has depended entirely on the complicity and cooperation of the United Steelworkers.

The worthlessness of the USW was again demonstrated one day after Shell’s announcement. On Wednesday, after a brief conference call that followed weeks of stalled negotiations, the USW issued a groveling statement declaring its hope that “Shell will approach these discussions with an open mind as well.”

This after the oil giant made clear its plans to fire striking workers if they do not come back to work on the company’s terms!

From the start of the strike, the USW has worked hand-in-glove with the companies to isolate the strike and keep it from having any significant impact on production. The walkout is limited to only 6,500 workers out of the 30,000 USW members in the industry. Reflecting the nationalism of the USW, none of the workers at American-based companies have been called out.

Sitting on a $350 million strike fund, the USW has refused to pay cash strike benefits. It has instead forced workers to beg the union for grocery cash cards and help on utility bills.

As for the AFL-CIO, it held its executive council meeting last month in the midst of the strike, but took no action to defend the oil workers. The executives who run the unions fear nothing more than a rebellion by workers that would threaten their lucrative relationships with the corporations.

Also standing behind the oil bosses is the government. In its assault on oil workers, the companies are implementing the policy of the corporate and financial aristocracy as a whole, backed by both the Democrats and Republicans.

This policy is being spearheaded by the Obama administration, which has presided over the greatest transfer of wealth from the working class to the rich in US history. Just last month, it intervened to block a potential strike by 20,000 West Coast dockworkers. The White House is now relying on the USW and other unions to impose its program of wage cutting and shifting the cost of health care and pensions from the employers to workers.

USW officials have justified their emasculation of the strike on the grounds that they want to avoid “federal intervention in the labor dispute.” This is not merely cowardice. The USW is closely allied with the Obama administration and does not want a political confrontation with the White House.

Oil workers have powerful enemies. But they have more powerful allies: the working class as a whole, which has an immense stake in this struggle. The assault on the jobs, wages, benefits and working conditions of oil workers is repeated in innumerable forms throughout the country and internationally.

The situation confronting workers today recalls Reagan’s firing of 11,000 PATCO air traffic controllers in 1981. The isolation and betrayal of that strike by the AFL-CIO paved the way for a decade of union busting, mass layoffs and wage cutting, which marked the beginning of a counteroffensive by the American and international ruling class against workers that continues to this day.

Some five million workers, including teachers, postal workers and workers in the auto and telecommunication industries, have labor agreements expiring this year. The American ruling class is determined to defeat the oil workers before their struggle becomes a catalyst for a broader movement of the working class. Yet this is precisely what is required.

The only way to break the dictatorial hold of the ruling class over society is by mobilizing the working class in a revolutionary movement that is aimed at putting political power into the hands of the vast majority of the population—the masses of working people whose labor produces society’s wealth.

Islamic State in Af-Pak: The ‘Wilayat Khurasan’ Conundrum

Rajeshwari Krishnamurthy

In January 2015, the Islamic State (IS), in a statement, called on the militants operating in the Af-Pak region to pledge their allegiance to their chief Abu Bakr al-Baghdadi and his ‘Caliphate’. They declared ‘Wilayat Khurasan’ as active, and appointed former Tehreek-e-Taliban Pakistan (TTP) commander Hafiz Saeed Khan as the ‘Wali’ of Khurasan.

The IS identifies ‘Khurasan’ as certain areas in present-day Afghanistan, Pakistan, Iran, Central Asia, India, and China. At the heart of this region lies the troubled Afghanistan-Pakistan border, and IS entry into this region will undoubtedly change several long-standing dynamics in the region’s many conflicts involving State and non-State actors.

The IS poses a serious threat to an Afghanistan that has just begun to take baby steps towards normalcy - because several terrorists strewn across the country have pledged allegiance. The IS has potential inroads in Western Afghanistan via Farah and Faryab Provinces. In eastern Afghanistan, IS supporters are already indulging in violence in Logar, Ghazni, Parwan and Zabul provinces.

However, despite the seriousness of the threat that Afghanistan faces from the IS, it is via Pakistan that a possible solution to halt and end the IS ingress can be found. It is not child’s play to enter and establish a terrorist outfit in the Af-Pak region without the patronage of the Pakistani army – which is far from keen on having a new group enter the fray.

A Musical Chair of Regional Dynamics
The IS’ entry has brought to fore an important issue: jihadists in the Af-Pak region, Pakistan in particular, have for long been in flux due to the frustrations rising from identity-crises, endgames, loyalties and relevance. This has resulted in a tendency to factionalise frequently.

Since June 2014, the Pakistani government has been carrying out Operation Zarb-e-Azb, a systematic offensive targeting and eliminating militants and terrorist groups along the Durand Line. The Operation has seen some positive results - and the Pakistani military appears to be making the most of the divisions underway among various terrorist outfits in the region. However, while this factionalism is proving useful for the Pakistani military in eliminating terrorists, the same fault-lines are being harnessed by the IS to gain a foothold in the region. Those militants who were flushed out of Pakistan due to this Operation are among many, along with some disgruntled former Afghan Taliban members, who have pledged allegiances to the IS.

The Afghan Taliban and the IS supporters in the region are already at loggerheads and the battle for control of the regions between the various groups is getting serious. More importantly, the Khurasan Council comprises mostly of Pakistani jihadists. Mullah Omar is the Afghan Taliban’s Amir-ul-Momineen, whereas the IS rejects Omar’s credentials. The al Qaeda, the Afghan Taliban, the TTP and other groups all have varying priorities.

And for the several young terrorists who are evidently frustrated by the lack of clarity in the agendas of al Qaeda and the Taliban, the IS is an option that offers structure and set goals and targets.

If the Pakistani army continues to exploit factionalism among the terrorists, it risks sending them straight into the IS’ hands. In fact, the cover story of the 6th issue of the IS’ official magazine, Dabiq, titled ‘Al-Qa’idah of Waziristan’, is an elaborate account by a former al Qaeda operative who lambasts the group by elaborating on its ‘flaws’.

The IS too also realises that that which is advantageous for them at the moment - factionalism - has the potential to bring great disadvantages in the future. The IS statement therefore addresses this issue by calling on the militants to “abandon disunity and factionalism.”

Regional Geopolitical Shuffle
The IS’s apparently steady entry into the region is likely to shuffle relationships not just between non-State actors but also State actors. Pakistan and Afghanistan have already set forth towards cooperation on counter-terrorism. The Pakistan-Iran relationship, long defined by their individual relationships with Saudi Arabia, will have to take a new character - one that is defined by mutual interests; neither party can afford otherwise. There is no good or bad Taliban. Pakistan must start thinking laterally for solutions. They will have to balance their fight with the IS while also curbing radicalism and extremism from within - especially vis-à-vis the sectarian schism. Counter-strategies must be simultaneously coordinated, nationally and collectively as a region. The roles of Iran and the Central Asian States are vital, and cannot be overlooked.

The IS will tread a delicate line in Af-Pak, especially in Pakistan. If they manage to establish themselves firmly in Pakistan, they cannot continue without uniting all the militant groups in Pakistan; and simultaneously, the easiest way to acquire support is by exploiting the burgeoning factionalism within the militant groups in the Af-Pak region. An alternative route the IS could adopt is to take measured steps and not gamble away the goldmine they want to acquire.

But, will the IS take the quick route in or is it willing to wait it out? Regional responses to the looming IS threat will have to be charted on these lines. Interestingly, in Af-Pak, the IS is following the same trajectory al Qaeda did two decades ago. Does that mean those charting counter-strategies are working on familiar territory? Or will the IS treat the South Asian jihadists as expendable assets?

More importantly, answers must be found for why the IS is attempting to establish control in regions geographically separated from its headquarters and that are not under its control.

Syriza's Left Platform in crisis over Greek austerity agreement

Robert Stevens

The Syriza-led government in Greece has drawn up an initial list of “reforms” for discussion with the Eurogroup. This follows its signing of the February 20 austerity extension agreement with euro zone finance ministers.

The agreement has not stemmed Greece’s sovereign debt crisis, while allowing the European Union, European Central Bank (ECB) and International Monetary Fund (IMF) “troika” to tighten their vise-like grip over the country.

Greece’s total foreign debt stands at around €320 billion (177 percent of GDP) and the government must pay back billions of euros to its creditors in the coming months, including €9.3 billion to the IMF. By the end of this week, €300 million must be paid to the IMF and a further €1.5 billon by the end of the month. Additional debt repayments of €6.7 billion to the ECB fall due in July and August.

Greece’s banks are to all intent insolvent, with the central bank announcing last week that deposits were still being withdrawn at a rate of €800 million a day, up from about €400 million a day in January.

This weekend Finance Minister Yanis Varoufakis moved to allay any fear in ruling circles that Greece would default on its debt, stressing that the IMF would be paid off at all costs. “We are not going to be the first country not to meet our obligations to the IMF. We shall squeeze blood out of stone if we need to do this on our own, and we shall do it,” he said.

One could not better sum up the role of the Syriza government. It will stop at nothing in imposing social devastation in Greece.

On Monday, Daily Telegraph columnist Ambrose Evans-Pritchard wrote, “Greece is preparing to tap its final pension reserves at the country’s central bank if needed to avert a devastating default to the International Monetary Fund and keep the government going over the next two weeks.”

With Prime Minister Alexis Tsipras and Varoufakis now fine-tuning the first of its austerity measures, the Left Platform within the party, who have long claimed that Syriza would lead a struggle against austerity, have been thrown into crisis.

The Left Platform is an amalgam of Stalinists and pseudo-left forces including the International Workers Left (DEA, the Greek affiliates of the US International Socialist Organisation). At the party’s 2013 conference it won 30 percent of the overall vote and 60 seats on the central committee of the party.

At last weekend’s Syriza Central Committee meeting, the Left Platform won four seats on the party’s 11-seat political secretariat.

Following Syriza’s election, Left Platform leader Panagiotis Lafazanis, who was handed control of the energy ministry, insisted that his faction had a list of “red lines” which could not be crossed.

The Left Platform’s first opportunity to register any opposition came at last week’s caucus meeting of parliamentary deputies. Tsipras asked deputies to register their opposition to the Syriza-Eurogroup deal if they disagreed. Although the Left Platform has about 30 deputies in parliament, many declined to vote against the deal, with Lafazanis only abstaining.

Dimitris Belantis and Stathis Kouvelakis, two central committee members, authored an “Open Letter to the MPs of Die Linke—and to other parties of the radical Left in Europe.”

The letter was timed to coincide with the February 27 vote on the Syriza-Eurogroup agreement in the German Bundestag. The vote to continue austerity in Greece received all party support and was passed by the largest-ever majority for a vote on an austerity programme. Die Linke (the Left Party) voted overwhelmingly for the package, the first time it has formally endorsed a Greek austerity programme.

The Open Letter states that the Eurogroup agreement and Syriza’s accompanying list of proposed reforms “make it impossible” for the government to implement its election program. Those documents, it notes mean, “Increasing the minimum wage to 750 euros [that is, its 2009 level] cannot be in the short-term decided ‘unilaterally’ by our Parliament. It can only be a long-term perspective, subject to the condition that it doesn’t harm the country’s ‘competitiveness’.”

Stating that, “The privatizations which are already completed will be left,” the open letter adds, “No objection of principle to privatizations is to be found at any point in the text.”

“The ‘modernization’ of the social security system… actually means drastic cuts in welfare,” it admits.

The letter continues, “Almost no bill may pass in Parliament without prior consent of the Troïka, which has now been renamed as the ‘Institutions’, and it can’t be introduced without measures compensating its financial cost.”

After describing the austerity agenda their own party is implementing, the authors state that support for the agreement will destroy whatever pretensions Europe’s “radical left” still purport to have: “For us, it is clear that the ratification of this agreement by the European parliaments, with the consent of the parties of the radical Left, goes against the interest of the Greek workers and of the Greek people.”

The Belantis/Kouvelakis intervention was a cynical ploy, as Die Linke had already declared in advance of their plan to vote for the austerity agreement. In the vote Friday, virtually all the Left Party’s 64 deputies voted in favour.

Kouvelakis responded by glossing over the significance of the Left Party voting for an austerity programme that he himself described on his Facebook page as “pure neo-liberal shit.” Answering a comment on Facebook stating, “I am sorry but your open letter will receive a closed answer,” Kouvelakis replied: “really? [T]hree Die Linke MPs voted no the deal and about ten others abstained.”

The Left Platform followed up the Open Letter by putting an amendment to the Tsipras majority’s proposal for the austerity programme to be adopted to a meeting of Syriza’s Central Committee over the weekend.

In a desperate attempt to save face, the mealy-mouthed amendment stated, “In the immediate future, SYRIZA, despite the agreements of the Eurogroup, should take the initiative of implementing steadily and as a matter of priority its commitments and the content of its programmatic governmental statement.” [emphasis added.]

Ignoring that Syriza had just signed an austerity agreement, the amendment declares that the party must put forward the “perspective of an alternative plan promoting the full realization of our radical objectives.”

The “main conclusion” of the amendment was a vague proposal that anyone in Syriza, including Tsipras, could agree on: “[D]ecisions should be taken following a discussion in the leading party instances, which have, jointly with the party and the party branches as a whole…”

The amendment was supported by figures in Syriza beyond the Left Platform faction, with 68 in favour, 92 against and six abstentions.

The Communist Tendency faction of Syriza, the Greek section of the International Marxist Tendency (IMT), offered its “critical support” for the amendment.

Presenting their own resolution to the meeting, Stamatis Karagiannopoulos of the CT said if only Tsipras and Varoufakis would listen, Syriza could still have a bright future. Addressing the “Comrades of the party leadership,” the resolution stated that, “despite the seriousness of your initial compromise, you still have time to salvage this situation by changing direction and assuming the necessary radical and socialist policies.”

Within a month of coming to power, Syriza has ditched its claims to oppose austerity and erased every “red line” of the Left Platform and its apologists. Its imposition of further brutal austerity measures will bring it and all its component parts, including the Left Platform, into open conflict with the working class and demonstrate before millions their role as defenders of capitalism and its institutions.

Big business in Australia lays out its agenda

Nick Beams

Like any political crisis, the significance of the political turmoil in the ruling Liberal Party surrounding the leadership of Prime Minister Tony Abbott cannot be accurately gauged by simply focusing on the immediate forms it assumes.

The plots and counter-plots, leaks, counter-leaks and opinion polls that dominate the headlines play a role, but its real meaning is to be found in more profound developments.

The crisis erupted over mass opposition to the government’s May budget measures that found expression in the leadership spill vote last month which saw 40 percent of Liberal MPs moving to oust Abbott. Key government measures remain blocked in the Senate because opposition parties fear a backlash from voters hostile to the budget’s targeting of the lower-income families.

The government’s failure to secure passage of its measures was accompanied by a series of commentaries in the media that the crisis involved much more than the Abbott government. Rather, it was insisted that the crisis reflected the inability of the present political order to deliver meaningful “economic reform”—the code phrase for the sweeping austerity measures being demanded by the corporate and financial elites in conditions of the deepening global economic crisis which now has Australia firmly in its grip.

The broad outlines of this program are set out in the 2015–2016 budget submission by the Business Council of Australia earlier this week. The BCA, which covers Australia’s 100 leading corporations, is demanding nothing less than a continuing offensive against the social position of the working class in order to make Australia “internationally competitive.”

The BCA is not calling for further major cuts in the budget now being prepared—it says instead that the government should simply hold the line on expenditure. Its perspective is more far-reaching. It insists there must be a 10-year plan for a “fundamental reset of fiscal strategy and the budget process” to deliver “sustainable” outcomes.

According to the submission, these outcomes will not be achieved through increased taxation or economic growth. “Above all, spending policy redesign must be considered, credible and sustainable” and there has to be a “sensible discussion” about the “inevitable trade-offs that government spending involves.”

This “sensible discussion,” involving the restructuring of government spending, above all on social services and benefits for families, must be carried out on a bipartisan basis. The fall in Australia’s terms of trade—the largest drop in more than 50 years following the end of the mining boom—and the ageing of the population are “weakening the economy’s capacity to pay” for public spending. “This is the reality confronting any government of any political persuasion. Full acceptance of the need for a new approach is a bipartisan imperative.”

As with all such submissions, the BCA agenda is couched in terms of the interests of the nation and seeks to present the economic crisis as if it were some kind of natural event, like the bad weather, rather than the outcome of the contradictions of a definite socio-economic order, the profit system.

However, the essential class interests it expresses are clearly revealed. The first of what it calls “four primary goals” is: “Preserving Australia’s AAA credit rating to consolidate the government’s financial credibility, retaining financial capacity and investor confidence.”

In other words, “budget sustainability” is integral to the maintenance of profitable conditions for the major corporate and financial interests in conditions of deepening global economic turmoil.

This point is re-enforced in the second primary goal which states that restoring the budget to surplus is necessary “to build resilience and flexibility for dealing with economic shocks and volatility, and for underpinning business confidence and investment.”

The BCA is concerned that in the event of another financial crisis—all the conditions for which are being created globally—continuing budget deficits will mean that the government will not have the resources to bail out the banks and other financial institutions.

The money for this must be made available in two ways: by cutting social services and other government spending and by improved productivity, that is, the introduction of so-called reforms that increase profitability.

There is an obligatory reference to the need to maintain essential “priority services” which are “integral to community living standards and the functioning of society” but the real agenda is also revealed here as well in the reference to the provision of “an adequate safety net.” In other words, government services should not be developed in order to advance living standards but must be directed to providing only the bare minimum.

The BCA identifies its targets. “Large and fast-growing programs such as health and other aged-related programs should top the list. No area of expenditure should be pre-emptively quarantined.” Spending “redesign” must include “greater self-reliance.”

The BCA is hostile to any proposals to increase tax rates for corporations and high income earners. In fact, it wants them reduced to make Australian capitalism more internationally competitive. But there is one area in which it is in favour of an increase—taxation that falls most heavily on the working class and poorer sections of society. Any tax “reform” must include “broadening the GST base and increasing the rate.”

In seeking to explain the origins of the growing budgetary problems, the BCA criticises the way in which the massive boost to revenue as a result of the minerals boom was treated as if it were permanent. However, it conveniently passes over in silence how that revenue was utilised.

It has been estimated that, taking into account the cuts in the corporate and higher marginal tax rates, many of them initiated under the Hawke-Keating Labor governments, together with the concessions available through the superannuation system that reduces the tax rate for the rich to just 15 percent, the upper levels of society are in receipt of concessions totalling over $110 billion a year, more than enough to cover the present budget deficit.

Central to the BCA’s agenda is the demand for increased productivity, that is, a boost to profitability via so-called labour market restructuring. The BCA calls for “reshaping our workplace relations system so it is fit-for-purpose for a modern economy.”

The essential themes of the BCA submission also found expression in a major speech last Friday by the newly-appointed treasury secretary John Fraser.

Fraser pointed to changed situation resulting from the end of the mining boom and the challenging global economic environment in which the quantitative easing policies of major central banks had failed to boost investment and household spending. He then said that Australian economic growth was expected to remain below trend. Australia, he claimed, had “spent its way to a structural budgetary problem” that now had to be addressed.

On the question of corporate taxation, he was even more explicit than the BCA insisting that company tax rates were high by international standards and, in the context of far more mobile global capital, high rates were dampening investment and productivity.

He also pointed to the push in corporate circles for a reduction in wage rates and cast an envious eye at the “remarkable flexibility of labour in the United States,” echoing the views of the Abbott government’s chief business advisor Maurice Newman who has noted that the minimum wage rate in Australia is double that in the US.

Fraser insisted it was necessary to “modernise the workplace relations system” and then indicated what that would mean. “It is especially important,” he said, “that workplace laws are not impeding workplace transformation.” In other words, all present legal impediments to increased profits must be removed.

The real content of every political crisis is disclosed by what emerges from it, and so it is in the case of the upheavals surrounding the Abbott government.

Whatever the immediate political outcome, the working class is being confronted with a major offensive by the corporate and financial elites for which it must prepare through the development of its own independent perspective based on a socialist program to put an end to the bankrupt profit system.

Philippines expels Chinese power grid technicians

John Roberts

The Philippine administration last week ratcheted up tensions with China over disputed territory in the South China Sea by provocatively announcing that the visas of 16 Chinese technical experts working in the National Grid Corporation of the Philippines (NGCP) would not be renewed when these expired in July.

Philippines Energy Secretary Carlos Jericho Petilla made clear that the decision would end any Chinese technical role in the country’s power grid because of security concerns. The Chinese technicians are employed by the State Grid Corporation of China (SGCC), the world’s largest state-owned utility company, which runs China’s electricity grid and has a 40 percent stake in the NGCP. Petilla said two SGCC officials would remain on the NGCP Board.

Petilla candidly told the media that such “paranoia” over Chinese technical involvement in national power grid did not affect Argentina, Australia or Germany where the SGCC had a similar role. The decision, he said, was tied up with the ongoing confrontation between Beijing and Manila over maritime disputes. “Of course, this is an offshoot of the West Philippine Sea [South China Sea] dispute.”

Petilla made the announcement a day after Philippines Senator Miriam Defensor Santiago warned against Chinese involvement in the NGCP. While not referring directly to China, Santiago, a former presidential candidate, complained that “such a vital and strategic industry as the electric power industry is infected by a national security virus.”

The decision was quickly endorsed by a spokesperson for President Benigno Aquino, Abigail Valte, who said last Saturday that the Department of Energy had arrived at the decision “after a thorough study.” She would not be drawn on the South China Sea dispute, but said Manila would “try not to let it spill over into other levels of [the] relationship” with China.

Beijing’s response was muted, not wishing to exacerbate the tense situation in the South China Sea. Foreign Ministry spokesman Hong Lei expressed concern over the visa decision, saying: “[We] hope that the Philippines side can fairly and justly handle the relevant issue, earnestly uphold the legal rights of the Chinese company operating in the Philippines and create a good investment environment for foreign investors.”

The decision on the visas had been planned since the middle of last year. Petilla reported that a meeting involving the Departments of Foreign Affairs, Justice and Energy, the National Security Council (NSC) and the NGCP had discussed the issue. The NSC in particular was concerned at the involvement of Chinese nationals in the national power grid.

In reality, the removal of the Chinese technicians is designed to step up pressure on Beijing over Philippine claims in the South China Sea.

As part of the US “pivot to Asia,” Washington has encouraged the Philippines, Vietnam and other South East Asian countries to take a more aggressive stance in their maritime disputes with China. The “pivot” is a comprehensive diplomatic, economic and military strategy aimed at undermining Chinese influence and reasserting US dominance in the region.

Manila is currently mounting a legal challenge to China’s territorial claims in the Arbitral Tribunal in The Hague on the Law of the Sea with the explicit support of Vietnam and de facto US backing and behind-the-scenes assistance. Over the past year, US officials have dropped their pretence of impartiality in the maritime disputes and openly criticised China’s so-called “nine-dash line,” or boundary in the South China Sea.

Since last November, Manila and Washington have escalated their criticism of China’s reclamation work and its building of an airstrip on the Fiery Cross Reef in the disputed Spratly Islands. In fact, South China Sea claimants Taiwan, Malaysia, Vietnam as well as the Philippines have already built airstrips on the islands in the area.

Last Thursday, US National Intelligence Director James Clapper told a hearing of the Senate Armed Services Committee that China was being “very aggressive” in its rehabilitation work on uninhabited islands in the area and the construction of airfields.

The US State Department has sent Under Secretary of State for Arms Control and International Security Rose Gottemoeller on an 11-day tour of the Philippines, Vietnam, Australia and New Zealand. She was in Manila over the weekend and discussed regional security issues with Philippine defence and foreign affairs officials including “maritime security.” She visited the Subic Naval Station and toured a Philippine frigate—one of two former US coastguard cutters provided to the Philippine navy. She was due in Hanoi yesterday for similar discussions.

Washington has been pushing for close collaboration between Hanoi and Manila to challenge China’s regional role. Sections of Vietnam’s Stalinist Communist Party leadership argued last year that Vietnam should break “out of China’s orbit.” Since then, closer ties with Manila have become more obvious.

Late last month Vietnamese Deputy Prime Minister and Foreign Minister Pham Binh Minh led a delegation to the Philippines for a meeting of the Vietnam-Philippines Joint Commission to discuss a proposed bilateral strategic partnership.

Gottemoeller’s tour will undoubtedly be used to further consolidate US ties and encourage closer military collaboration between US allies and strategic partners directed against China.

French Socialist Party government announces new round of free-market reforms

Kumaran Ira

After pushing through a pro-business deregulation bill without a parliamentary vote last month, the Socialist Party (PS) is preparing a new round of unpopular austerity measures and structural reforms, including attacks on labour law protections, health care, and unemployment benefits.

After granting Paris a new two-year delay to meet an EU deficit target of 3 percent of GDP, the European Commission told Paris to intensify structural reform and austerity measures. On Friday, the EU called on Paris to reduce French structural deficit by 0.5 percent of Gross Domestic Product (GDP) in 2015, 0.8 percent in 2016, and 0.9 percent in 2017.

The EU gave the PS until June 10 “to take effective action and to report in detail the consolidation strategy that is envisaged to achieve the targets,” according to EU Observer. Paris will therefore look for an extra €4 billion worth of cost cutting measures. A Commission official stressed that Brussels “is waiting for a structural answer, not one-shot measures.”

After the EU gave France a further two years’ time to meet the deficit targets, some German politicians criticized the EU for being too soft on France. Gerda Hasselfeldt of the CSU (Christian Social Union of Bavaria), wrote to European Commission President Jean-Claude Juncker to urge him to enforce the rules. Die Welt am Sonntag quoted her saying, “It is our responsibility for the EU and for the euro zone not to tolerate exceptions.”

On Monday, French Economy Minister Emmanuel Macron met with EU officials in Brussels to convince them of Paris’ intention to implement structural reforms. After the meeting, Macron said, “We have planned 50 billion [euros] in cuts from 2015 to 2017 and we will make them. We will also keep our engagement of cutting the budget deficit to 3 percent [of GDP] by 2017.”

According to Le Journal du Dimanche, the government is planning slashing cuts that will transform France’s social fabric: “The idea in Matignon [the prime minister’s office] is to advance to a ‘new social order,’ the expression used in [Prime Minister] Manuel Valls’ entourage. The issues on the table are all explosive: the length of the work week in firms that are struggling, unemployment insurance, pension programs ... They will not all be in the first ‘work law,’ but as the executive sees it, they should move along ‘quickly.’”

Last Wednesday, Valls met with business groups and union officials to present new reforms to modify workplace representation, or “social dialog,” due to be adopted in parliament by the summer. The government is taking over the labour bill after business groups, and the union bureaucracy failed to reach an agreement in January. Valls claimed his government is “facing up to its responsibilities” to implement a “necessary” reform.

The PS has been able to impose such measures since coming to power in 2012 primarily because the deep opposition to austerity in the working class in France and across Europe has been systematically suppressed. The union bureaucracy and pseudo-left parties like the New Anti-capitalist Party (NPA), which called for the election of PS President François Hollande in 2012, oppose a political mobilization of the working class against the PS government. On this basis, Valls and Hollande are pushing ahead with further cuts.

Valls called on trade unions and employer organisations to quickly launch talks on the unemployment benefit system, another reform urged on France by the EU.

The government is planning a further €3 billion in budget cuts. Although the plan has not yet been officially announced, business magazine Challengesreported: “A large part of the cuts will come from ‘controlling the total wage bill’ by 860 million euros. This means cutting 22,000 jobs, or 2 percent of public hospital staff.”

The government reportedly also plans to cut the price it pays for drugs and more expensive medical procedures and cut hospitalization times by pushing for patients to rely more on outpatient surgery.

Business groups have called for relaxing rules on “social dialog” in the workplace in order to eliminate whatever tenuous protections are offered by current workplace negotiation procedures. Business groups denounced the current measures as too expensive.

Currently, so-called “social thresholds” (seuils sociaux) set out companies’ obligations based on the number of employees. Businesses with fewer than 11 employees have no obligations. Companies with more than 11 employees must organize the election of employee representatives. At 50 employees or more, businesses must create a works council, create a committee on health, safety and working conditions (HSC) and establish a job preservation plan in case of mass layoffs.

The Medef business federation criticised the current thresholds and obligations, calling them “costly and paralysing.”

The CGPME small business federation complained, “A firm going from 49 to 50 workers faces 35 new obligations, and its labor costs go up 4 percent.”

In response to business demands, the reform would “set up a single employee representative body for [companies] up to 300 employees as opposed to the current 200, giving companies the chance to adapt the structure of their employee representative bodies by collective agreement.” For companies with fewer than 11 employees, the government proposes setting up regional committees made up of 10 employee and employer representatives respectively.

The PS government is cynically presenting it as “major social progress.” In fact, it aims to reorganise the workforce in favor of business, further dismantle workers’ rights, and set up precedents for wider attacks against the entire working class.

The unions cynically opposed the measure during their negotiations with the bosses, but they have stated that they expect that the government will pass the bill. Under the new law, the unions would coordinate more closely with employers to police the entire workforce, enforcing even harsher concessions than those they have already offered.

After the meeting with Valls, the PS-linked French Democratic Labour Confederation (CFDT) union hailed the bill, dubbing it “a victory” for workers in small business and claiming that “no prerogative” had been removed for others.

Other unions, including the Stalinist General Confederation of Labour (CGT) and FO (Workers Force), which endorsed previous labour reforms, cynically called yet another day of action for April 9, more than one month away.

US Army Chief of Staff urges increase in British military spending

Julie Hyland

In an exclusive interview with the Telegraph, General Raymond Odierno, US Army Chief of Staff, has expressed concern at the level of British military spending. “I would be lying to you if I did not say that I am very concerned about the GDP investment in the UK,” he said.

“In the past we would have a British army division working alongside an American division. Now it might be a British brigade inside an American division, or even a British battalion inside an American brigade.”

“It is about having a partner that has very close values and the same goals as we do,” he said, adding, “We all need to be able to invest and work together.”

Odierno was speaking to the Telegraph’s Con Coughlin during the “Future of War” conference in Washington. Held by the New America Foundation think tank, the programme claims to examine how “developments both in the technological drivers of warfare and the enemies we face have erased the boundaries between what we have traditionally regarded as ‘war’ and ‘peace’.”

According to Coughlin, “Ever since the Cold War ended more than two decades ago, America has never entertained any serious doubts about Britain’s ability to fulfil its commitment as a vital military ally when tackling threats to the Western alliance. Until now.”

Odierno’s comments demonstrated that cuts in the UK defence budget were eroding US “confidence in our commitment to global security,” Coughlin wrote.

Railing against the failure of the Conservative-led government to ring-fence defence spending from its austerity measures, Coughlin complained that this had “diminished” the UK’s military presence globally, jeopardising the transatlantic alliance.

“The big question is whether, with the general election approaching, the concerns raised by senior American figures will persuade any of the main political parties to make defence a priority in their election manifestos,” he stated.

The Telegraph article is part of a concerted campaign to silence and intimidate widespread anti-war sentiment in the face of a significant expansion of militarism.

Last September’s NATO summit underscored how the civil war in Ukraine—provoked and manipulated by the US and the European Union—has been used to militarise Europe. It agreed to establish a 5,000-strong Rapid Reaction Force targeted at Russia and new NATO command posts in six eastern member states—Estonia, Latvia, Lithuania, Poland, Romania and Bulgaria. In total, some 30,000 NATO troops are to be stationed on Russia’s borders.

The summit committed all 28 members to spend at least 2 percent of GDP on the military. Britain is one of just four countries that currently meet the NATO target. The government has insisted that this will be maintained, irrespective of its commitment to even harsher spending cuts. A Ministry of Defence statement highlighted the commitment to spend £163 billion on the military over the next decade, including “new strike fighters; more surveillance aircraft; hunter killer submarines; two aircraft carriers; and the most advanced armoured vehicles.”

The government has already pledged 1,000 troops for the NATO build-up on Russia’s borders, sent “military trainers” to Ukraine and refused to rule out supplying the right-wing Kiev regime with weapons. British troops took part in last week’s provocative parade of US military and armoured vehicles in Narva, Estonia, just 300 yards from the Russian border. Any incident, no matter how trivial, has the potential to produce a catastrophe.

With a general election on May 7, the Conservative Party—like Labour and the Liberal Democrats—is reluctant to have any discussion on the implications of NATO and UK actions. Nor will any of the parties admit openly that while spending on schools, hospitals and other vital services is to be slashed even further after the election, military spending will not only be ring-fenced but increased.

The Economist opined, “The hangover from what are perceived to have been costly and unsuccessful campaigns in Iraq and Afghanistan and a sour, introspective national mood, reflected in a Commons defeat for the government in August 2013 over action in Syria, has made the political establishment fearful of making the case for what the chief of the defence staff, General Sir Nick Houghton, in a speech before Christmas, described as ‘a grander role, a greater ambition, a place beyond the ordinary … a nation which has values as well as interests, and which considers it has a leadership role in the world’.”

Odierno’s comments follow President Barack Obama’s reported warning to Prime Minister David Cameron over the level of British military spending in January. This theme was continued in a number of interviews with former leading NATO personnel, including former general secretaries Anders Fogh Rasmussen and Jaap de Hoop Scheffer.

Their criticisms are now being employed and amplified by sections of the ruling elite to insist that the issue of defence spending must be “weaponised” in the election.

Of most significance is the ever more overt intervention of leading military personnel into this campaign.

Such are the tensions that, according to reports, last month Cameron barred General Houghton from delivering an intended speech. Houghton was due to address a Chatham House think tank conference titled, “Rising Powers and the Future of Defence Cooperation,” but Downing Street vetoed his appearance after reading an advanced copy of his speech, which was thought to criticise the government.

The cancellation was denounced by Air Chief Marshal Sir Michael Graydon, a former head of the Royal Air Force. In a letter to the Times, Graydon described it as “deeply regrettable.” Houghton “might have said that unless the UK commits itself to a minimum defence budget of 2 percent of GDP for the future, our credibility in Europe… will be zero,” Graydon wrote (emphasis added).

Admiral Lord West of Spithead, former head of the Royal Navy, went further. Citing Lord Nelson, “I hate your pen and ink men; a fleet of British ships of war are the best negotiators in Europe,” West wrote in his letter to the Timesthat increased resources for the military were necessary to let “people like Putin and others [know] that we are serious about defence and hard power.”

Just days after Houghton’s cancelled appearance, General Sir Adrian Bradshaw, the most senior British military officer in NATO, addressed the Royal United Services Institute where he warned of “an era of constant competition with Russia” that must be taken into account fiscally. NATO’s build-up on Russia’s borders was necessary, he insisted, “in order to convince Russia, or any other state adversary, that any attack on one NATO member will inevitably lead them into a conflict with the whole alliance.”

On Saturday, Sir John Sawers, former chief of the Secret Intelligence Service MI6, told BBC Radio 4’s “Today” programme that Russia poses “a state-to-state threat” and that the UK must take steps to defend itself and its allies.

“What’s really important is that we're able to fulfil all of our defence commitments and I think that that’s going to require a reversal in the trend in defence spending,” he said.

Also at the weekend, the former head of the Army, General Sir Peter Wall, called for the major parties to make manifesto commitments on defence spending. Speaking to BBC Radio 4’s “The World This Weekend,” Wall said, “We military folk would like to see manifesto commitments to levels of defence expenditure and it’s of concern to us that all parties would probably be content to have this conversation not happening at the moment.”

Germany: State of emergency in Bremen following alleged terror scare

Dietmar Henning

Bremen, a city of 550,000, was in a state of siege over the weekend. Military clad police armed with machine guns patrolled the inner city on Saturday and Sunday, in front of the city council, the Senate and cathedral. The police checked vehicles, searched apartments and a building belonging to a Muslim association. Data storage devices were confiscated, and Muslims temporarily detained.

Bremen’s interior senator, Ulrich Neurer (Social Democrats, SPD), and the state prosecutor justified the civil war-like conditions by stating that there was a concrete terrorist warning from a federal authority, without naming the authority or the precise details of the warning. According to Spiegel Online, the authority was a German intelligence agency, meaning either the domestic intelligence agency (BFV), foreign intelligence service (BND) or the military surveillance agency (MAD).

The questioning of individuals, searching of properties and arrests by the police did not confirm the terrorist threat. No weapons were found, the people who were questioned were found guilty of nothing, and two people who were detained had to be released because there were no grounds to hold them.

Late on Sunday evening, the presence of heavily armed police in the city centre was reduced, with only the Jewish community still being patrolled by police.

Allegedly, a 39-year-old man of Lebanese origin procured machine guns to sell to others. “This evidence was so concrete that we could not rule out an attack in Bremen,” Interior Senator Neurer commented on the stage of the investigation, which has been ongoing since the beginning of the year.

The state prosecutor claimed that the suspect was distributing the weapons to people who were close to an Islamic cultural centre. But although the police searched the Islamic cultural centre of Bremen e. V. and the home and workplace of the man, they found no weapons.

The Lebanese man, together with another man who was said to be his accomplice and whose home was also searched by the police, were temporarily detained. Both have been set free, but further investigations into their activities are ongoing. The police have accused them of breaching the law on the control of military weapons.

Responding to the question if the information about suspected weapons had been set aside or was simply false, Neurer answered, “We don’t know the result of that. We have pursued all evidence.”

Neurer defended the major operation. In Bremen, there was “a major Salafist scene,” he told Bavarian state radio. “There are many people who have joined IS [Islamic State] and have fought in Syria, and a number of men from Bremen who have already been killed.”

Later he gave more details on exact numbers and declared that the Bremen state intelligence service was observing 360 Salafists. Nineteen Muslims from Bremen, some of them children, had travelled to fight in Syria, he said, four have supposedly died in the fighting and two have returned.

The main target of surveillance were Salafists in two associations. For some time, the cultural and family association (KuF) was suspected by authorities. The group runs a mosque in Bremen-Gröpelingen and was banned by Neurer in December 2014.

Already in 2011, the Munich state court convicted two KuF founding members with promoting the terrorist group Al Qaeda and other organisations with close ties to it. One of the two was sentenced to three-and-a-half years in prison, because the court believed that he intended to travel to an Al Qaeda training camp in Afghanistan.

SPD interior politician Burkhard Lischke also defended the civil war-style exercise in Bremen. When such warnings are made, there is no action by the authorities that can be too reckless, he told radio station NDR Info. He announced that this would not be the last exercise. He expected further terror scares, because IS intended to bring terrorism to Europe’s cities.

The police trade union (GDP), a member of the German trade union confederation (DGB), also defended the operation. GDP Chairman Oliver Malchow said on ZDF television’s “Morgenmagazin” that the large operation was “certainly not an overreaction.” It had been based on a justified suspicion, and therefore such an operation was necessary. The concrete threat in Germany had not just existed since the attacks in Paris and Copenhagen, he added.

Rainer Wendt, the chairman of the German police union (DPolG), told the daily Passauer Neue Presse, “Terrorism is no longer abstract, but rather very concrete.” The German public would have to get used to this, he said.

Neurer bluntly admitted that an aim of the Bremen operation was intimidation: “We focused on a group. We wanted to make these people insecure, but we have not found enough evidence for further measures.”

The Bremen action had been prepared systematically over recent months. Germany’s security agencies have suspended democratic rights for a third time this year on the basis of a warning of a terrorist attack.

In January, a Pegida demonstration and all counter-demonstrations were banned in Dresden because of a terrorist threat. In mid-February, the carnival procession in Braunschweig was cancelled. In neither of these two cases did the police or intelligence agencies provide any concrete evidence of an acute terrorist threat.

Wolfgang Bosbach (Christian Democrats, CDU), chairman of the interior parliamentary committee in Germany’s federal parliament, nonetheless declared, “After Dresden, Braunschweig and Bremen, it is increasingly difficult for me to say that only an abstract threat exists.”

Prior to this, there had only been one official terror warning in two decades after the September 11 attacks in the United States. Then, four years ago, Interior Minister Thomas de Maizière (CDU) warned of a terrorist attack. The police closed off the dome and roof terraces of Germany’s parliament building for some time, because there was allegedly evidence of plans by Islamist terrorists to attack the Bundestag.

The veracity of this terror warning was never confirmed. But it immediately triggered calls for a strengthening of state powers. This has also been the case since the events over the weekend in Bremen.

In a comment by Joachim Käppner, the Süddeutsche Zeitung demanded an increase in police numbers as well as a strengthening of legal restraints, such as the law on the temporary storage of data. This would enable the police “to follow over several months who had telephoned or emailed with suspects and when.” Käppner cynically added, “That would have also been good to know with regard to the NSU (neo-fascist) killers.”

Käppner’s audacity is breathtaking. The racist murders and attacks by the National Socialist Underground were not made possible because the intelligence agencies knew too little, but because they covered up and protected the NSU. The close connections between the intelligence agencies, the Nazi scene and NSU have been proven. The Munich state court is currently examining the suspicion that an employee of the Hesse state intelligence service, Andreas Temme, who was present at the NSU’s eighth murder, of Halil Yozgad, had been informed of the attack prior to it taking place.

The suspects in the terrorist attacks in Boston, Paris and Copenhagen, who are now also being used as proof of the terrorist threat, were known to the intelligence agencies. The strengthening of the state is not directed against Islamic terrorism or right-wing extremists, who are often built up and financed by the state authorities. Rather, under conditions of growing social tensions domestically and the growth of German militarism abroad, it is directed against the growth of opposition within the working class.

In Hamburg, Mayor Olaf Scholz (SPD) declared entire areas of the city to be no-go zones early last year, suspending fundamental democratic rights. Several demonstrations were broken up, over 100 residency bans imposed and hundreds of people arbitrarily detained and searched because they wore black clothes or appeared to be “left.” Today it is the Salafists who are the target of the state’s expanded powers; tomorrow it will be workers and youth protesting against poverty, job losses and war.

Pennsylvania Democrat calls for cuts to pensions for municipal workers

Douglas Lyons

Pennsylvania Auditor General Eugene DePasquale, a Democrat, is calling for cuts to the pensions benefits of tens of thousands of municipal workers throughout the state, which are underfunded by $7.7 billion. The alternative, he warned, was a Detroit-style bankruptcy.

DePasquale refrained from using the word cuts, but his proposals amount to a reduction in pension payments to recipients. His ideas on how to “save” pensions are as follows: elimination of counting overtime work and accrued leave payments towards pensions; raising the eligibility age, along with the length of service, needed to collect benefits; increase employee contributions; and most insidiously, combining the pensions into a statewide system “segregated by classes” of workers such as firefighters and emergency medical technicians and non-uniformed employees, which simplify and facilitate pension reductions in the future.

A separate report issued by the Pennsylvania Intergovernmental Cooperation Authority (PICA), an overseer and financial adviser to the city of Philadelphia, has called for more drastic measures. The pension system would be eliminated and replaced with a 401(k)-type plan, while increasing employee contributions and terminating the deferred retirement option. All in all, current and future municipal workers would have smaller pensions and paychecks and face a battle to keep pensions in the future.

The proposed pension cuts are contained in the report “Municipal Pension Funds” issued in January by DePasquale, and a separate report titled “Philadelphia’s Pension System: Reducing Risk and Achieving Fiscal Stability” by the PICA, a group of former state and local officials.

The auditor general report purposely stokes up a sense of fear to give an impetus to an immediate “reform” of municipal pensions. “Without effective legislative reform municipalities may ultimately have no choice but to: decrease pension payments to retirees, pass the increased burden on to taxpayers, or some combination of both option,” DePasquale warned. He continued, “We should not allow our retirees to live in fear of their pension payments being reduced. ... Ultimately a delayed solution will impact the retired public employees and every taxpayer in the commonwealth.”

To augment his fear-mongering, DePasquale told the media in a news conference, “The problem is too big to ignore. We saw what happened in Detroit: Retirees got 10 cents on the dollar. Basically, they got screwed.” It is significant that the report uses Detroit as a reference, warning workers if they do not accept these reactionary proposals, they will lose even more in the future.

In a similar fashion, the PICA points out that the Pennsylvania Constitution does not explicitly guarantee an obligation by the city of Philadelphia to uphold the contract with municipal workers, holding out the prospect that even retired workers could see their pensions cut. For instance, it says, “Since there is no explicit constitutional provision mandating pensions or any other retirement benefit in this state, statutory provisions are enough to reform pension plans. No constitutional amendment is necessary.”

The Auditor General report classifies pensions on three levels of distress based on their current assets and how much growth is expected versus how much expected benefits will be paid. Level one municipalities are underfunded by 10 to 30 percent and labeled “minimally distressed,” whereas level 2 ones are 30 to 50 percent underfunded (“moderately distressed”). Level 3 are over 50 percent underfunded (“severely distressed”). Overall, 438 municipalities are level one, 102 at level two, and 22 at level 3.

The most distressed municipalities are located in or around major cities such as Scranton and Philadelphia. Philadelphia has less than 50 percent funded and owes more than $5 billion in pension obligations. Out of the 10 most populous cities in the US, Philadelphia ranks second from the bottom, above only Chicago. Scranton is the worst off in the state, only 23 percent funded (77 percent underfunded), and the city has the possibility of facing bankruptcy in three to five years. Pittsburgh fares only a bit better with a little over half of its pension obligations funded.

In reality, however, the situation is worse as each city’s projections are based on overly optimistic returns on investments: Scranton 8 percent; Philadelphia 7.85 percent; and Pittsburgh 7.5 percent. If more realistic rates of 5 to 7 percent were used, each city would be in even worse shape.

The shortfall has risen by $1 billion in a two-year timeframe and will continue to climb dramatically as local governments don’t make the needed payments to keep the plans solvent.

A bill already in the legislature attacking municipal pensions will be given an impetus by these reports. Representative Seth Grove, a Republican from the city of York, has sponsored it and been joined by other politicians, business and municipal governments. It would set up a 401(k)-type plan, which almost all local governments will have to adhere to if it becomes law. The retirement age will also be extended and no health benefits will be paid to retirees.

While the two reports and the legislation are directed against municipal workers, similar cuts to pensions face the 77,000 state workers and tens of thousands of teachers throughout the state, whose pensions are underfunded by more than $50 billion.

New Democratic Governor Tom Wolf has pledged to fix the problem by working with the various government employee and teachers unions to impose cuts to benefits on their members and increase employee contributions. 

On top of this, Wolf may have to deal with a spillover effect from the scandal involving former State Treasurer Rob McCord, a Democrat who has been indicted on charges of corruption during his failed campaign for governor in 2014.

State and municipal pensions will be one of the first items on the agenda for the Democratic governor and the Republican-controlled state House and Senate. Republican Jake Corman, the Senate majority leader, told the Wall Street Journal: “Pension reform is our No. 1 issue. It’s something that has to be done …We’re not going to have any discussion on revenue until we get expenditures under control.”