May 2001 • Vol 1, No. 1 •

AS WE SEE IT. . .

PG&E RIPOFF

Return of the Robber Barons

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According to Webster’s unabridged dictionary, a Robber Barons are:

1. a noble who robbed travelers who passed through their lands. and 2. In the latter part of the 19th century, this term was ascribed to U.S. capitalists or industrialists considered to have become wealthy by exploiting natural resources, corrupting legislators, or other unethical means.”

In 1996, in a unanimous bipartisan vote, the California politicians, amply funded by the energy cartels, “deregulated” the power industry. Immediately after deregulation was passed, the energy cartels formed ”parent corporations,” which acquired most of the assets of the former companies. For example PG&E Company became part of PG&E Corporation and the President and Chief Operating Officer of PG&E Company became the President and Chief Operating Officer of PG&E Corporation—with tens of billions in revenues.

PG&E Corporation markets energy services and products throughout North America through its National Energy Group and owns Pacific Venture Capital, LLC. This restructuring freed most of the PG&E Company assets from regulation.

Thus freed, the energy cartels have reverted to their natural “Robber Baron” instincts. And so has Governor Gray Davis and the state legislature . The governor and the legislature have worked out a scheme to give these robber barons billions in tax dollars for a bailout, while at the same time imposing a 40percent rate hike on consumers!

Those who are gouged the most, and who can afford it the least, the working people of California, are literally being extorted by the energy monopolies with the active collusion of the state government.

After PG&E blackmailed and tortured the public with intermittent blackouts, the California Public Utilities Commission (PUC) approved a 40 percent increase in monthly utility bills to feed the insatiable drive for profits by the energy cartels. The decision by the PUC was against the recommendations of the PUC Administrative Law Judge Walwyn. In his 75 -page decision, he properly noted that: "Since April 1998, ratepayers have paid billions of dollars in excess of market costs to support recovery of utility transition costs.” These rate increases did not satisfy the wants of the energy cartels.

Since deregulation, over $40 billion dollars in profits and other assets have been transferred to PG&E Corporation. Yet, on April 6, the PG&E Company filed for bankruptcy! Claiming that it cannot pay its debts, totaling $9 billion dollars, this is nothing more than another power play by the corporation for further bailouts and rate increases.

Everyone in California knows there is no real power shortage. The real reason for the rolling blackouts is that the energy companies are refusing to send power unless they can charge the maximum price the market will bear.

Thanks to the state government’s open collaboration with the robber barons, the end result for working people will be fewer public funds for schools, hospitals and other needed programs because the money will have gone to the great energy give-away.

It’s time to stop the robber barons.

We should organize and demand:

One. No Bailouts, No Rate Increases! Reduce the rates to pre-crisis levels. The companies that created this crisis must not profit from it!

End regressive power rates—whereby the rich and the corporations pay less for power! Since energy has become essential for everyday living, everyone has a right to power! Rates should be progressive and be based on income with no charge for households with less than $50,000 per year income! Make the Robber Barons pay back what they stole. Tax their profits 100%! Power for use—not for Profit!

Open the books of all companies that supply or sell energy to California. The people of California have a right to know how they are being ripped off!

State Take-Over of Electricity. The State of California must utilize eminent domain powers to seize ALL privately-owned energy generation plants and distribution grids and run them as a Public Power Authority to insure a steady power supply. (This means seizing the assets of the power companies and corporations!) The $40 billion that the energy companies have ALREADY stolen is more than enough compensation.

Democratic Control of the State Power Authority. The new State Power Authority must be run by representatives democratically elected by power workers and the public. The capitalist politicians have betrayed us in this crisis. The only solution is direct democratic control; that is, control by the workers who produce the power and the entire working class are the ones who should be running the power system. We urge trade unions and community organizations to adopt resolutions embodying the basic points advocated here.

In California, we will work together with anyone fighting this blackmail to arrive at a common set of demands that unites all working people and serves notice to the energy monopolies and the government that we refused to be ripped-off. s

During the recent presidential election campaign, both Bush and Gore were advocating a tax cut based on a federal government budget projection of a $10 trillion budget surplus from 2001-2010. Since the election of President Bush, the Congressional Budget Office baseline forecast projects cumulative surpluses of $5.6 trillion between 2002 and 2011. Sixty percent of the projected surplus is due to accumulations in retirement trust funds. If you subtract the social security fund, the available surplus is $3.1 trillion. Next, if you protect the Medicare trust fund and the pension reserves of government workers, it would reduces the available surplus to $1.6 trillion.

This surplus projection is based upon the economy remaining at the 1998-2001 levels of employment and economic growth. Any decline in the economy will automatically reduce the surplus. The recent collapse of the “virtual economy” of the computer industries and the fall in the market will definately cause a smaller surplus.

The tax cuts being enacted are based upon a fake surplus. Virtually every cent of that tax cut is going to the rich. A typical millionaire will get back $46,000; the average working person will receive $227, or $4.37 per week.

Prior to 1960, the United States had a progressive income tax. This was due to the presence of a strong union movement and socialist movement in the latter 1930’s and 1940’s. The rich and the corporations paid over 80% of the taxes and the working class paid vitually no taxes. Every “tax cut” since then, beginning with President Kennedy, has been a bipartisan attack upon the progressive inome tax and the institution of regresssive taxation for the poor, the working class, and small businesses. Today, the poor, the working class, and small businesses pay over 80% of the taxes and with the addition of tax loopholes the rich in no way pay what should be their “fair” share of taxes. On the contrary.

As part of this same process, the money—our tax dollars—for healthcare, education, and welfare has been constantly cut. Moreover, the income working people receive from social security and unemployment benefits also became taxable!

A college education, once basically free or low cost, now costs $15,000 per year for a public university and $30,000 for a private university, excluding a large section of the working class from a higher education.

The cutbacks further reduced the take-home pay of workers as they pay more for these services that were once practically free.

Along with higher income taxes, regressive sales taxes have now reached almost 10% in most states, further impoverishing working people. The government during this period has become Robin Hood in reverse, taking from the poor and giving to the rich!

Indeed, Karl Marx’s prediction has been proven true! The rich are getting richer and the poor are getting poorer!According to figures found at www.inequality.org, from 1983 to 1998, the average household net worth of the bottom 40% of the population has declined by 76.3%; in stark contrast, the average household net worth of the top 1% has had a 42.2% increase!

From 1977-1999 after-tax family income has declined over 5% for the bottom 40% of the population and concurrently increased 115% for the top 1% of the population. Talk about socialism for the rich!

This whole process has been facilitated by the treachery and betrayals of the AFL-CIO union bureaucracy, who have openly applauded this process and refused to even speak out against this reduction in the standard of living of the working class.

AFL-CIO President Sweeney has openly come out in favor of a partnership with management. The first expression of this policy was the implementation of two-tier, three-tier, etc., wage rates and no benefits for part-time workers and new hires. As workers retire or are laid-off, or forced to work for lower wages, the wages of the working class in general are pushed downward. In effect, the AFL-CIO bureaucracy has sold out the sons and daughters and future generations of the working class.

One thing should be clear. When it comes to taxation, it is there is no lessor evil between Democrats and Republicans. Both are the political instruments of the capitalist class, which first and foremost defends the profits of the few against the needs of the many.

The beginning of wisdom is to advocate that the organizations of the exploited and oppressed stop supporting the Democratic Party and recognize it as the deadly enemy that it is.

The next step is to develop a new leadership within the working class that fights for the interests of workers and oppressed minorities. On the question of the budget, we demand no cuts in social welfare, and no taxes on household income below $75,000. Tax the rich, they can afford it! s