Northwest Airlines bailout: Welfare for the rich as social services are cut in Minnesota

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SOCIALISTACTION FEBRUARY 1992 11 MINNEAPOLIS-In a dramatic extension to the bipartisan program of "Aid for Dependent Capitalists," the Minnesota state legislature has voted a huge bailout loan guarantee to Northwest Airlines of more than $800 million dollars. The bailout loan supposedly assures that Northwest will build new aircraft maintenance facilities on Minnesota's Iron Range, which would provide 1500 jobs for this depressed area.

Northwest's new CEO, Al Checci, showed up at the Minnesota legislature months ago in the midst of a state "budgetary crisis." Minnesota's Republican governor and Democratic party-controlled state legislature were in the process of instituting deep cuts in education, workmen's compensation, and healthcare, while imposing steep new taxes on working people-all in the name of fiscal responsibility.

Arriving in his new maroon stretch limousine, Checci demanded and quickly got an "agreement in principle" from Gov. Arne Carlson and the legislature for the $850 million loan bailout. As public opposition grew, the state legislators were forced to hold hearings and debate whether or not to loan Northwest the money.

Northwest responded with a massive publicity campaign. They threatened not only to build their new Airbus maintenance facilities elsewhere, but to leave Minnesota altogether, taking 17,000 jobs with them if the loan wasn't approved. The airline, which has a notorious anti-union history, was even able to involve its unions as partners in this propaganda campaign.

In actuality, this loan is more than just a primer in aiding Northwest to expand. Northwest, formerly one of the more financially healthy U.S. airlines, needed the loan to keep from going bankrupt.

Checci, one of the new breed of "corporate raiders", recently took over Northwest Airlines using junk bonds and other forms of "creative" financing. Checci and Northwest are now being squeezed by a massive and very expensive debt load.

While the politicians, the news media, and Checci have focused public attention on building new maintenance facilities, a large part of this taxpayer-subsidized loan is to be used directly to meet upcoming payments on the debt.

An empty bluff It is indisputably true that Minnesota needs an airline connection with the rest of the country. The fear that Northwest employees may lose their jobs is a legitimate one. But taking $833 million from Minnesota taxpayers and giving it to Al Checci and his stockholders does not insure the survival or expansion of Northwest Airlines. It merely protects Checci temporarily from the ravages of capitalist competition and his unpaid creditors.

Checci's threat to move Northwest operations out of Minnesota is obviously an empty bluff. Minnesota's Twin Cities terminal is one of the most valuable and profitable airline hub locations in the country. Northwest's near-monopoly control of the Twin Cities hub is its single most valuable asset.

In addition, Northwest doesn't have the money to move across the street—let alone to another state. As one airline analyst quipped, "They don't even have the cash to rent moving vans."

According to financial analysts around the country, Northwest is on the verge of bankruptcy. At the end of 1990, Northwest booked a $302 million loss in one year. In the first eight months of 1991, it lost $126 million, according to a report prepared for the Metropolitan Airports Commission by NWA the Price Waterhouse Accounting firm.

The Federal Mortgage Guaranty Corporation called Northwest's pension fund the most under-funded in the nation. And Northwest is close to defaulting on its $1.4 billion senior debt agreement with Bankers Trust.

While Checci and the politicians assure the public that there is little risk and more than sufficient collateral to back the loan, there is not one bank or investment group in the entire country that would loan Checci and Northwest the $833 million.

By rights, Northwest should be placed in receivership, minus Al Checci and his stockholders, until the fate of the airline is decided.

Public services to suffer If Checci and Northwest default on this loan, the costs Minnesotans would have to shoulder is substantial. In the seven-county Twin Cities area, every man, woman, and child would have to pay $250. Duluth, Minn., residents—who would supposedly benefit from the new maintenance bases— would be assessed $800 each.

But Minnesota residents lose big even if Northwest Airlines is eventually able to repay the loan in full. No matter what the legislators call it, a "loan" or a "giveaway," the fact is that $833 million has been taken away from schools, healthcare, roads, and other services the state is obligated to provide for its citizens.

It doesn't matter whether Checci's Northwest Airlines defaults or profits. A huge chunk of the state's limited financing capacity is being committed to Checci as opposed to other essential public needs. Eight million Minnesotans have been ripped off to insure that one businessman and a few stockholders are protected from the consequences of their speculative greed.

Democratic Congressman James Oberstar, a prominent sponsor of the bailout loan, explains that the Northwest loan is very much like the $5 billion loan given to Chrysler in the mid-1980s. Oberstar is not only drawing similarities between the two loans, but is also justifying the ongoing policy of "welfare for the rich", pursued by both the Democratic and Republican parties.

The Northwest loan is merely one piece of a broader bipartisan policy, which most recently includes the savings-and-loan bailout, the banking-industry bailout, and the coming insurance-industry bailout.

It flows from an assumption held by both the Democrats and Republicans that economic prosperity can only be achieved by promoting high profits for the corporations and the super-rich, which will then hopefully trickle down to the rest of us.

"Socialism for the rich"

As the economic crisis of U.S. capitalism deepens, it requires that the = BELIEVE!!!

government more and more function to guarantee the profits of every major corporation and financial institution, with all this implies for workers rights, unions, job safety, the environment, and social programs.

But these bailouts, the program of "socialism" for the rich, does not come for free. Someone has to pay for it. The primary function of government becomes one of redistributing wealth out of the hands of the general population into the hands of ... American CP (continued from preceding page)

stand—not excuse-these distortions and aberrations: backward societies, fearful suffering, the assaults of imperialism from Woodow Wilson to Adolf Hitler to John Foster Dulles, the terrible burden of the arms race, the magnificent shouldering of assistance to national liberation movements, etc.—but the fact remains of the terrible repression, domination and slaughter. These are not to be called 'mistakes,' as comrade Sam Webb did recently, and the revelations of some of their reality 35 years ago by Khruschchev are not to be called 'revelations,' as by Comrade John Talmadge in a recent Op-ed piece in the People's Weekly World, 11/23/91."

Aptheker's speech accurately reveals the nature of the dilemma facing men and women in the CPUSA who devoted their entire adult lives to the conscious defense of the Stalinist terror. Aptheker implies that their tragedy is that they knew better.

The avalanche of truth they now feel morally compelled to utter to cleanse their souls, however, does not indicate to this writer that they have broken from the central tenets of Stalinism, which, because of its almost total misidentification with the USSR and the Russian Revolution of 1917, became synonomous with socialism.

It is this false association—the liberating ideology of socialism with the actual practice of Stalinism-which has done immeasurable harm to the cause of the workers' movement and all humanity.

Aptheker's speech continues: "And what did they [Khruschchev's "revelations"] reveal? Monstrous crimes which have been engaged in for years, involving mass murder, and these revelations also showed that comrades of other countries have been systematically deceived. And-for many weighty reasons-many of us were easily deceived.; we were creduluous because we felt we had to be. Hence the revelations were stunning; and while some change occurred, this change was partial. And clearly the monstrous reality had induced profound popular hostility among large masses in all of the nations named above. Hence this mass hostility could not be withstood. And for those of us in the movement but outside the affected countries the blow was two-fold-first the petent, greedy or dishonest they may be.

This policy, which is currently being dramatically expanded under the codeword of developing an "industrial policy," also requires the government to be ever more aggressive in suppressing those who would resist such a policy-including the unions.

Many Minnesota taxpayers are angered by this flagrant giveaway of their hard-earned money. The politicians and press kept Minnesotans ignorant of their options and fueled the lie that Minnesota could be left without an airline if the loan didn't go through.

If Minnesota taxpayers were organized and armed with the facts, they could demand that the state take over the airline and pay not one cent to corporate speculators like Al Checci or his creditors. Minnesota and the nation can no more survive without airlines than it could without generated electricity, and if private owners can't maintain that service on the basis of private profit, then they should be nationalized and run as a public utility Trade-union leaders encouraged Northwest workers to ally themselves with Al Checci (as if they had common interests with him) rather than allying with fellow workers and taxpayers. For Northwest workers, their best defense lies in building a trade-union movement that would oppose the growing bipartisan policy of Aid For Dependent Capitalists. This trade-union movement would stand independent of Checci and the politicians of both parties. It would build a solid alliance with other workers, the growing unemployed, and Minnesota taxpayers.

The recent history of the auto industry proves that "bailouts" and giveaways do nothing to preserve jobs. They merely pave the way for further concession demands from management-which are backed up by the government. Al Checci's fellow capitalists would never give him $833 million. Why should we?

stunning reality and this compounded by the fact that we had consistently denied that reality. Hence our credibility-our honesty, is decisively questioned; for a revolutionary, nothing replaces honesty. Without integrity, revolutionary commitment is impossible.

"All this produces in some comrades the phenomenon of denial; the reality is so painful that only denial makes sense.

"But denying reality may appease one momentarily-but only momentarily, and in any case reality exists."

To comply with his own belated admission that "reality exists," Aptheker proceeds to agree with Gus Hall that Gorbachev has abandoned Marxism. This was necessary because at least at the moment of the speech itself Aptheker had chosen to fight within the CPUSA for its renewal. But the core of the opposition he had associated with, that is, the 800 signers of the "Initiative to Unite and Renew the Party," favored the pro-Gorbachev wing of the Soviet CP.

In the time between the formation of this diffuse and heterogeneous current and the December 1991 CPUSA convention, Gorbachev and most of the bureaucracy had bitten the proverbial bullet and tured their backs on this thoroughly discredited party to embrace the openly pro-capitalist wing of the apparatus.

Having separated himself from Gorbachev, Aptheker resumes his polemic with Hall:

"Hall is correct when in the same report he insisted that 'You cannot blame Stalin's crimes on socialism. You cannot blame Gorbachev's 'privatization' on socialism... Yes, but what can you blame; denouncing opportunism will not due. The main source of the collapse that Comrade Hall describes-not only in the USSR but in every party of Eastern Europe-lies not in socialism, but rather in the distortions and vitiation of the essential nature of the Party as conceived by Marx, Engels and Lenin into an organization eaten up by bureaucracy, tyranny, authoritarianism, repression and finally human annihilation."

The fact that Dr. Herbert Aptheker concludes his speech with an appeal for the renewal of this party which was complicit by silence and practice in the "human annihilation" of its own cadre and of millions of oppressed people the world over, indicates that little has been learned.

(To be continued)