How new ‘golden rule’ fleeces workers
By
Cheryl LaBash
Published Jan 8, 2011 8:52 AM
Capitalism has a golden rule: The class with the gold makes the rules. When
public workers, their unions, pensions and benefits are blamed and pummeled for
creating massive budget deficits, this is something to keep in mind.
For example, Detroit’s 2010 overall deficit went up by $692 million
— an increase of nearly 80 percent over the 2009 reported shortfall. Why?
A new accounting rule has been instituted.
The Government Accounting Standards Board — GASB — is not part of
the government. It is “an operating component of the Financial Accounting
Foundation,” a private, not-for-profit corporation partially funded by
the “municipal bond community.” (See www.gasb.org and
www.accountingfoundation.org)
GASB 53 estimates the future cost of speculative financial instruments heavily
pushed by banks as a “creative solution to government costs.”
In 2009 two new accounting rules, GASB 45 and 49, caused Detroit to report
$157.4 million in additional estimated future costs.
What is the result? Michigan Treasury spokesperson Terry Stanton stated the
city would need to craft a new deficit reduction plan or update the current one
to continue receiving state revenue sharing. (bondbuyer.com, Dec. 28) Deficit
reduction equals cuts of workers and sales or privatization of city
infrastructure — what accountants term “assets” — like
power generation, water systems or roads.
Detroit is only one city of many where workers and communities are being
squeezed with job losses, reduced incomes, foreclosures and evictions. Cities
across the U.S. are facing huge budget shortfalls and public workers are under
attack.
The officers and board of the GASB have current or former ties to Microsoft;
UBS Global Asset Management; Vanguard Group; Fannie Mae; the private bank,
Brown Brothers Harriman and Co.; KPMG; LLC auditors; JP Morgan Fleming
Management; and more. BBH employed such well-known individuals as former U.S.
senator, Prescott S. Bush; former U.S. secretary of commerce and New York
governor, W. Averell Harriman; and former U.S. secretary of defense, Robert A.
Lovett.
GASB and FAF board members are not elected. There are no workers or labor
representatives on the board. There are no representatives that guarantee that
the rights of African-American, Latino/a or other oppressed communities are
respected.
GASB rules are rarely enforced by any state law or regulation, but rather by
auditors. A bad audit lowers bond ratings for municipalities. A bad bond rating
makes credit more expensive.
The new accounting rules make the cuts seem reasonable and cast in stone, but
they are not. And accounting rules don’t erase the right of every person
to a decent and good-paying job or income, health care, education and a home.
Articles copyright 1995-2012 Workers World.
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