Strategy and Analysis to Defend and Transform Public Education

ARAM MENDOZA: Debt and Austerity in OUSD

Aram Mendoza is a high school teacher in Oakland

Across the world, cities, states, and entire countries are facing crises of governmental debt and financial chaos. Whether it’s the ongoing budget crisis in California, the social war in Greece over how to manage the unpayable debt the country is facing, to the failure of European financial institutions, to the rising prices of basic foodstuffs in countries such as Mexico and Egypt, our world is facing a crisis of capitalism and human life that needs to be understood and challenged.

The present situation in Oakland schools is no exception. In 2003, the state of California took over the Oakland Unified School District with the supposed intention of stabilizing the district’s financial situation. The result of 6 years of state takeover was a tripling of the OUSD’s debt from around $35 million to over $100 million! Now the district is in a situation where it must pay $6 million each year in order to simply pay the interest on the debt. The response of the OUSD board of education is to implement austerity – that is, carry out a series of reforms aimed at closing schools, attacking unionized education workers (from custodians to teachers), and to continue handing out costly contracts to private educational firms.

The board of education claims that their hands are tied, and they tell us that there’s no money to be found, and the real decisions are being carried out in Sacramento. Politicians in Sacramento tell us that they’re doing as much as they can and that the problem is at the federal level. The federal government says that we need to “live within our means,” and what they really mean is that working people need to take the cuts without standing up, while they continue to make the problem worse by bailing out financial institutions that have been responsible for much of the economic chaos in recent years. But, how is it that they’re making the debt problem worse?

The first thing we must recognize is that the government primarily draws its money from one source: taxes. Two principle forms of taxes are income taxes and corporate taxes. If you begin to consider the fact that corporations across the board have received tax cuts and bailouts, while unemployment has continued to rise, then it’s clear that the problem of government debt cannot be fixed under the present conditions. So what does the government do? It sells bonds, which are pieces of paper that promise that the state will pay back the price of the bond plus interest.

The federal government has sold over $1 trillion dollars in bonds to China, $979 billion to Japan, and $408 billion to the United Kingdom. The main way that the government has attempted to deal with its massive debt has been to cut billions of dollars ($38 billion in 2011) to the public sector – including education, health care, and public infrastructure, as well as to continue selling Treasury bonds which lead to increased amounts of debt. Without serious taxation to the richest 1% of the US, these bonds will never be paid back, and the government will only increase its debt.

In 2004, Schwarzenegger sold $15 billion worth of state bonds in order to cover $9.2 billion of state debt, creating the conditions for cutbacks to social services within the state. Then, when the housing bubble burst in 2007 and the financial markets nearly collapsed in 2008, the state’s tax base contracted, shrinking revenues and increasing deficits. But instead of bailing out state and local budgets, the federal government bailed out the “too big to fail banks” with trillions of dollars of loans. It’s within this context that the increase of the OUSD debt under the state takeover must be seen as a preview of the situation that the whole world faces: an economy that borrows money in order to pay back debt, and implements austerity programs based on cuts to services such as education and health care, as well as attacks on labor unions and workers in general. The priorities of politicians are serving the 1% of capitalist business owners at every level – federal, state, and city governments.

What can be done about this? Parents are issuing a recall of the school board members who chose to approve the closing of 5 elementary schools. The OEA has carried out a campaign targeting Wells Fargo, one of the largest recipients of the hundreds of billions in bailout money and demanded that they bailout education. Occupy Oakland has shut down the port to highlight the fact that massive profits are made circulating commodities, while zero percent of those profits have gone towards helping public schools in Oakland. Parents, custodians, teachers and students share a common interest in fighting these cuts and demanding that the school board refuse to keep us enslaved to the state debt. School board members should stand on the right side of history and refuse to pay the debt; they should choose to target the 1% as the means to provide for Oakland’s children. If they don’t, then it should be clear that they are direct participants in the strategy of austerity and we should be organized to connect the dots ourselves as working people. It’s become increasingly clear that debt-driven capitalism is the problem we’re facing, and we need to understand our power as working people in order to figure out a solution.

One comment on “ARAM MENDOZA: Debt and Austerity in OUSD

  1. Pingback: School Closures By The Numbers | saveoaklandschools

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This entry was posted on February 5, 2012 by in News & Analysis.
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