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Via Workers World News Service
Reprinted from the March 6, 1997
issue of Workers World newspaper
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Record corporate cash shows the money is there-fight for it!

By Fred Goldstein

The White House and the Congress rant on over the need to economize on everything from welfare to Medicare, Medicaid and Social Security. It's as if the wealth of society were contracting and everyone needed to cut back on the growing use of scarce resources.

But on Wall Street stock prices are passing every ceiling.

The giant corporations, too, are awash in cash.

The Dow Jones average just reached the record of 7,000. It took the shortest time for a thousand-point rise in history--only 82 days.

The stock market rose 33 percent in 1995 and 26 percent in 1996. During that entire period workers' real wages rose about 1 percent. There is a direct relationship in these starkly unequal numbers-because the underlying basis of the long surge in stocks is the profits that have been wrung out of the workers.

Of course, much of the price of stock is based on trading and speculation and does not represent real value. And the whole edifice can come tumbling down at any moment. But the fundamental sustained rise is based on the rise in the rate of exploitation of the workers. And it means fabulous wealth for financiers.

GM's cash reserve: $17 billion

If the financiers are rolling in money, so are the industrial corporations and utilities.

General Motors ended 1996 with a cash reserve of $17 billion. Microsoft had $9 billion in cash reserves; Ford had $15.4 billion; Chrysler $7.8 billion; IBM $8.1 billion and so on.

In fact, "all told, liquid assets held by U.S. nonfinancial companies hit a staggering $679 billion at the end of the third quarter, up 21.5 percent," reported Business Week Feb. 10.

"Why is this huge cash buildup happening now?" Business Week asked. "After years of restructuring [read layoffs and automation] balance sheets are bearing fruit. ... Restructuring has boosted earnings at a much faster rate than revenue growth.

"But fearing a coming slowdown, companies are also throttling back capacity expansion, leaving them sitting on excess cash."

So laying off workers, speeding them up and lowering wages-in other words, intensifying exploitation-is a faster way of getting bigger profits than going out and getting more business. And the bosses are so afraid of capitalist overproduction and crisis that they cannot invest their money in building new plants and equipment.

So instead, they buy each other up or give more money to the stockholders while the workers live with stagnant wages and speed-up-or worse, unemployment.

Clinton's giveaway to the rich

And in case the rich are not rich enough President Bill Clinton and the Republicans are getting ready to hand them more billions in a cut in the capital-gains tax. "Wall Street has been extremely generous to American investors," the Wall Street Journal reported Feb. 14. "Now Washington appears to be set to add a nice bonus."

The Republican leadership is pressing the issue of a cut in the capital-gains tax-the tax on the gain when you sell an asset like stocks or bonds or a house, etc. "President Clinton said he would accept some reductions in a bipartisan budget deal," the Journal reported.

In fact he was ready to hand over this bonanza before.

"Though it happened in secret, Mr. Clinton all but agreed to a big rate cut early last year during budget talks that later fell apart. He had summoned Treasury officials to the Oval Office while GOP leaders were there and asked an aide to sketch on an easel just what capital-gains terms the president would find acceptable. Their centerpiece: slashing the 28-percent top rate to 20 percent."

How much will the rich get? It depends on the final outcome. But according to the Joint Congressional Committee on Taxation the present proposals would give away $33.1 billion over the next five years and $100 billion in the following five.

How would this $131 billion be distributed? Citizens for Tax Justice concludes that two-thirds of it would go to those making more than $241,000 a year-the top 1 percent of all tax filers.

There is no shortage of social wealth. On the contrary, there is a vast social surplus that is being funneled more and more unequally to the profiteers and away from the masses of the people.

This is being accomplished both by the capitalist government rerouting the money through cutbacks and tax breaks and by intensified exploitation on the job.

There is only one way to reverse this process. It is the same way workers reversed their fate in the 1930s during the grip of the Great Depression-through mass mobilization and struggle.

The money is there. The rich have got it. It's time to stop the cutbacks, restore the right to welfare, and build a movement against capitalism.

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