Tag Archives: pensions

Pension Gimmicks Blamed On Workers

Posted on by

The student loan deal is badly needed. It should have just been extended – duh! But the 1 percenters took it hostage and demanded their pound of flesh before We, the People can preserve even this little bit of what we do for ourselves. So as part of the “sweetener” for those 1 percenters there is a corporate pension giveaway in the deal that has nothing to do with student loans. It appears they are going to let companies underfund pensions — money that should be set aside for worker pensions tomorrow will instead go into 1 percenter pockets today — and are setting up for a taxpayer bailout (or just stiffing retirees) later.

Pension Calculations Are Tricky But Regulated

This is kind of tricky, so bear with me. When companies (and governments) put money into pension funds they have to calculate how much will be needed to pay the promised pensions. This involves estimating things like how long (and how many) people will live, and how much “return” (interest, stock price increases,dividends…) to expect as the money is set aside. Key point: If you expect a too-high rate of return you can set less aside now (and put it in your pocket,) but when the time comes to pay the pensions you won’t have enough.
This is supervised by government standards and regulations. They say how much of a rate of return is allowed to be used in these calculations. A higher expected-rate-of-return allowance means less has to be set aside, so more money can go into 1 percenter pockets. So there is a lot of pressure from corporations to let them get away with overestimating, and therefore putting more in their pockets today. Since this is complex, it is easier to get away with diverting promised-worker-retirement money into 1 percenter pockets.
This student loan deal apparently lets corporations claim a higher expected rate of return, thereby diverting more money today into 1 percenter pockets.

Money Into Worker Pensions Or 1 Percenter Pockets?

For a long time the government has been allowing pension funds to use a too-high estimated rate of return, with the result that many pensions are now underfunded. Money that should have gone into savings to pay worker pensions was diverted into 1 percenter pockets, either through improved corporate bottom lines in the case of companies, or through lower taxes in the case of state & local governments. (Of course, many companies shifted worker-pension promises into 1 percenter pockets using the 401K scam — you fund your own retirement, on your own, with little help, and have to know how long you’ll live, and it turns out badly every time — but that’s for another post.)
In fact, this worker-set-asides-for-later vs 1 percenter-pockets-today issue is similar to what happened with the Social Security Trust Fund. Money from workers was set aside into the fund but was used to pay for tax cuts (and massive military increases). Now 1 percenters are demanding austerity — cutbacks in the things We, the People do for each other — instead of workers getting the money back from where the money went, namely the 1 percenters.
And since this is about money for worker retirees, and retired workers don’t have big, influential PR firms while 1 percenters do, it is convenient and easy to blame workers when the promised money isn’t there for their retirement.

The Much-Hyped Public-Employee Pension Crisis

The supposed public-employee pensions crisis is partly the result of state and local governments not setting aside enough money to pay up on pension promises (because of tax cuts). It is also partly caused by Wall Street scamming on those same governments as they got into riskier investments trying to get a high enough rate of return to make good on their pension promises. But the blame is being placed on the workers themselves.
The post Discover The Network Out To Crush Our Public Workers traced just a few of the corporate-conservative think tanks (really just PR firms) promoting the idea that public-employee unions are responsible for pension shortfalls. Almost all of these organizations traced back to Wall Street firms and individuals for their governance or funding. They are engaged in a campaign to divert attention and blame the workers themselves for pension shortfalls,

These corporate/conservative organizations are very good at manipulating the media and public opinion — it is their purpose. Their “experts” are well paid and always available to talk to reporters, appear on TV and radio shows and write articles and opinion pieces for newspapers, blogs and for their network of similar organizations. Their “reports’ and “studies” reach the conclusions that fit the strategy, and are crafted to sound just right. And there are so many of them! The result is development of “conventional wisdom” about what is going on in our society. This is why that conventional wisdom more and more reflects the corporate/conservative line. And right now the corporate conservative line is that we should think that public employees and their unions are responsible for state and local budget shortfalls.

See also Understanding The Attacks On Public Employees, Ten Holiday Attacks On Public Employees and Are Public Employee Unions Strangling Us? Also, Rick Smith And Dave Johnson Counter The Attack On Public Employees.

Others See It, Too

NY Times Editorial, The Deal on Student Loans,

The pension provision is not ideal. It could mean that more companies will underfinance their pension liabilities, shortchanging employees down the road. Lawmakers have tried to address that potential shortfall by strengthening the agency that insures private pensions with more money from higher premiums.

Thus from the Competitive Enterprise Institute, usually a most unreliable source. (The check from the big corps who want to underfund pensions must have been late.) In this case it is the same gimmick but added the the highway bill…: Threat of Pension Fund Bailouts Lurks in Senate Highway Bill, “Pension Smoothing” a License to Make Up Numbers,

The bill … would amend the Employment Retirement Income Security Act (ERISA) to allow for an accounting gimmick known as “pension smoothing,” whereby pension managers spread losses out over several years, while overestimating projected investment returns.
Specifically, this provision would expand the range of allowable projection figures, starting this year at a 20 percentage point range, to 60 percentage points after 2015. This is essentially a license to make up numbers for income projections four years out from now. …
“This accounting trick will likely expose taxpayers to potential pension fund bailouts in the future. ” …
“It would further remove pension investment return projections even further from reality, by expanding the range of allowable projections so broadly as to render them meaningless.”

Making Things Worse

To get a deal that keeps student-loan interest rates low enough for more people to afford to go to college, we had to pay off the 1 percenters with this “pension-smoothing” deal. Such is the way of Washington since we shifted from a democracy (rule by the people, for the people) to a plutocracy (rule by the rich, for the rich). Or, in this case a 1 percenter kleptocracy (rule by the rich, stealing from everyone).
But make no mistake, this deal makes the country’s future pension problems even worse. It diverts even more money from promised pensions into 1 percenter pockets. The result will be clear in 10, 20 or 30 years when people are retiring and the money isn’t there. Taxpayers will be asked for ever more “austerity” to cover money that was diverted to the 1%.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
Sign up here for the CAF daily summary

Discover The Network Out To Crush Our Public Workers

Posted on by

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture.

It is difficult to read, watch or listen to the news without hearing that public employees are paid too much and get “lucrative” pensions and this is “bankrupting” your state, county or city. Public officials are “in bed” with “union bosses” and state and local government; taxpayer dollars are wasted to pay for people who don’t do much work but live the good life. “Reports” and “studies” confirm this.

People hear the same story over and over and over and over, seemingly coming from everywhere: public employees have it good, with extravagant pay and “lavish” or “plush” pensions, while taxpayers are taking it in the shorts. Public-employee pensions are “bankrupting” the state/county/city. “Unfunded liabilities” are “out of control” and it is time to do something about it before it is too late.

This is part of a broad, nationwide attack on public employees and their unions, and through them, on government and democracy itself.

Continue reading →

Pension Envy

Posted on by

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
Since the 80s many employers have stopped offering health care, pensions and other benefits to their employees. Many are also cutting pay and hours, while increasing the workload. So more and more people are hurting. As more and more of us fall further and further behind, corporate/conservative propagandists use resentment to drive anti-union feelings. They tell people to oppose unions, saying, “Why should they have it so good?” The real question you should ask is, “Why should we have it so bad?”
The New Yorker’s James Surowiecki, in “State of the Unions,” examines why “public support for labor has fallen to historic lows.”

More than seventy per cent of those surveyed in a 1937 Gallup poll said they favored unions.
Seventy-five years later, in the wake of another economic crisis, things couldn’t be more different. … In the recent midterm elections, voters in several states passed initiatives making it harder for unions to organize. Across the country, governors and mayors wrestling with budget shortfalls are blaming public-sector unions for the problems. And in polls public support for labor has fallen to historic lows.
. . . In 2009, for the first time ever, support for unions in the Gallup poll dipped below fifty per cent. A 2010 Pew Research poll offered even worse numbers, with just forty-one per cent of respondents saying they had a favorable view of unions, the lowest level of support in the history of that poll.

Surowiecki suspects that the gap between workers in and out of unions is the reason,

Union workers, on average, get paid more than their non-unionized counterparts—most estimates put the difference at around fifteen per cent—and that wage premium widens during recessions. Similarly, union workers often still have defined-benefit pensions, which sets them apart from all those Americans who watched their retirement accounts get ravaged by the financial crisis. That’s given rise to what Olivia Mitchell, an economics professor at Wharton, calls “pension envy.”
This resentment is most evident in the backlash against public-sector workers (who now make up a majority of union members).

The problem is that working people feel increasingly powerless, and this weakens support for the very institutions that would, in better circumstances, come to their assistance: government and unions. Normally you would think that when people see that workers who are in unions have it better they would reach a simple and obvious conclusion: they should JOIN A UNION! DUH! But circumstances in our economy today lead people to the wrong conclusions.
Today they see people who try to organize unions fired. They see whistleblowers persecuted. They see fellow employees lose their jobs for calling in sick or taking time off to care for a family member. They see people lose jobs for just reaching “a certain age.” Many are even afraid to take vacations using time they have earned. And they don’t see any way to do anything about it. Unions are unable to organize and workers are told facilities will close or their jobs will be moved overseas. Government inadequately enforces its own laws, or blatantly favors the wealthy and powerful. People don’t feel that elections make any difference. So workers don’t see any help on the horizon.
Crabs In A Bucket
Meanwhile many public employees still have unions, so as a result they in many cases have pensions, health care plans and dignity on the job. People look at that and the temptation toward “crab mentality” is strong. The corporate/conservative anti-union propagandists see an opportunity to set working people against each other and strike at support for unions:

Crab mentality, sometimes referred to as crabs in the bucket, describes a way of thinking best described by the phrase “if I can’t have it, neither should you.” The metaphor refers to a pot of crabs. Individually, the crabs could easily escape from the pot, but instead, they grab at each other in a useless “king of the hill” competition (or sabotage) which prevents any from escaping and ensures their collective demise. The analogy in human behavior is that of a group that will attempt to “pull down” (negate or diminish the importance of) any member who achieves success beyond the others, out of jealousy, conspiracy or competitive feelings.
This term is broadly associated with short-sighted, non-constructive thinking rather than a unified, long-term, constructive mentality. It is also often used colloquially in reference to individuals or communities attempting to “escape” a so-called “underprivileged life”, but kept from doing so by others attempting to ride upon their coat-tails or those who simply resent their success.

The other day in Understanding The Attacks On Public Employees,

What do we see if we look around at the state of the economy? Stocks are soaring, corporate profits are way up, Wall Street gets trillions in bailouts and pays millions upon millions in bonuses. But regular people are having a hard time making ends meet and unemployment is still through the roof. Instead of programs to create jobs, stop foreclosures and rebuild our crumbling infrastructure the government passes more tax cuts for the rich. A few Wall Street and big-corporate types are getting very rich (richer) at the expense of the rest of us. If you are sitting pretty on Wall Street, you probably don’t want people thinking about these contrasts too much.
“Look Over There!”
How do you get regular people to “look over there” with all of that going on? Simple: launch a big campaign to blame the librarians, firefighters and other public sector workers for the hard times. “Don’t blame US,” Wall Street says, “Look over there!” Blame the economy’s victims for economic crimes. And, do you know what? This is a strategy that is proven to work every time.

So the corporate/conservatives pit people against each other, hoping to provoke the behavior of crabs in a bucket, instead of reaching the correct conclusion: stand together and join a union and fight for your rights and a share of the pie and you can have it better.
STOP THE LIES!

This video directs people to a STOP THE LIES website where you can sign up to add your voice, download a fact sheet and find other resources.
Sign up here for the CAF daily summary.

Ten Holiday Attacks On Public Employees

Posted on by

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
If you haven’t already noticed, there is a corporate/conservative campaign underway to convince the public that public employees are living high on the taxpayer’s dime and should have their pay and pensions cut back. Even during the holidays this attack does not let up.
Background: The Reagan Revolution ended most “defined-benefit” (they pay you) pensions for working people in the private sector, replacing them with “defined-contribution” (you pay Wall Street) pensions. Now with the Great Recession employers have cracked down and private-sector workers are afraid and not willing to risk their jobs by speaking out about abuses. With private workers sector out under control, conservatives are targeting public employee pay and pensions. They are driving resentment of government employees by casting them as overpaid and receiving good benefits at a time when everyone else is under the corporate thumb. Private-sector employees have made sacrifices, so now government employees should, too, they say.
When you see this kind of coordinated campaign from the right (and “mainstreamed” by corporate media) you know it is part of a larger strategic plan. The larger plan is to weaken public-employee unions, including teacher’s unions.
Here is how conservatives turn a strategic narrative into “conventional wisdom” through repetition. Phony conservative think tank “studies” show there is a “crisis,” that pensions are “gold-plated,” etc. This campaign claims the crisis is in government employee pension funds. They also claim public employees are very highly paid compared to the private sector. Then they explain how the “average voter” is affected. This time the claim is high state property and income taxes or an impending “crisis” that cold force states to go bankrupt. When specifically attacking teacher’s unions the claim is that schools are not educating kids because teacher unions block reform.
The news stories follow a conservative template almost word-for-word. You will see phrases like: “Lavish” or “luxurious” or “back-breaking” and “gold-plated” government pensions. You’ll hear that “Taxpayers shoulder the burden” of pensions.
For perspective: Congress just passed tax cuts for the rich along with a huge cut in the estate tax, Wall Street bonuses are up, corporate profits are the highest ever, the top 1% are taking home a higher percentage of all income, and sales of luxury items are breaking records.
Here are ten holiday-season media attacks on public employees:
George Will, Don’t let states like California seek federal bailouts on pensions

The nation’s menu of crises caused by governmental malpractice may soon include states coming to Congress as mendicants, seeking relief from the consequences of their choices. …
… under bankruptcy, judges could rewrite union contracts or give states powers to do so, thereby reducing existing pension obligations.

Newsday, Reeling in public workers’ pensions, insurance,

Civil servants have long prized these benefits as the payoff for a career yoked to lower-paying jobs, but their rapidly rising cost has led to growing resentment in an economy that has forced a relentless tide of layoffs and givebacks in the private-sector workforce. Defined-benefit pensions are disappearing from the private sector. Retiree health coverage is almost unheard of. On Long Island, even the average private-sector wage has fallen behind government pay …

Wall Street Journal, Pensions Push Taxes Higher,

Cities across the nation are raising property taxes, largely citing rising pension and health-care costs for their employees and retirees.

Ocean County (NJ) Examiner: Public pensions getting deeper into the red,

While New Jersey can lessen regulatory loads on business, lowering tax rates is difficult as this exacerbates pension deficit problems. The obvious solution is long term and entails lowering government worker pension and benefit packages. … Public sector unions have demonstrated an unwillingness to forego past agreements in the interest of promoting fiscally sound policies.

San Diego Union Tribune: Government pay practices must change,

At a time when there’s rising fury over public employees’ generous pensions, the report used official U.S. Bureau of Labor Statistics’ data to show there’s one more big area where the taxpayer-funded public sector is thriving at a time of private-sector misery.

Here’s why property taxes are soaring …,

The crisis in state pensions is cascading into a property-tax crisis.
Cities across the nation are raising property taxes, largely to cover rising pension and health-care costs for their employees and retirees.

Washington Examiner: America’s public pension crisis has tragic consequences,

The biggest obstacle to preventing what happened in Pritchard from happening nationwide might be the public employees themselves. Public union leaders simply refuse to believe America is out of money.

Milwaukee, Walker, Barrett seek checks on unions

Walker, who has tangled with Milwaukee County unions as county executive, is gearing up for a clash with state workers, seeking wage and benefit cuts and threatening legislation to weaken or eliminate state unions’ bargaining rights if they won’t agree to concessions.

Chicago Sun-Times, ‘Sucking the system dry’,

Jim Tobin, president of National Taxpayers United of Illinois, held a news conference at the St. Charles Public Library to discuss what he called a threat to every Illinois taxpayer.
… Tobin also released names of retired Kane County government employees who are receiving what he called “lavish, gold-plated pensions.”

Snyder to start with attack on public-sector spending,

Private-sector companies and workers have made many sacrifices, he said, “and we all need to share in this. So it’s now the public sector coming into more alignment with what the private sector has already done.”

Sign up here for the CAF daily summary.

Pressure On Wages As Well As Jobs

Posted on by

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Our economy is not structured to produce enough jobs. Tomorrow’s jobs report is expected to show as many as 200,000 jobs created in March, but a lot of that is temporary Census hires, and even 200,000 jobs created is still 2-300,000 fewer jobs than number of new entrants into the job market each month! So even a “good” report of 200,000 will be just another “economy still getting worse more slowly” story.
We need jobs, jobs, jobs and jobs, and we need them to pay people enough.
It’s not just trade pressures that are keeping job growth from occurring, but trade pressures are a very big and very immediate part of the problem. Fixing the trade imbalances will be a great start and will give us a small bit of breathing room in which we will hopefully address larger structural problems.
Those trade pressures are not just destroying jobs, they are destroying wages and benefits, too. It’s the way of the world; a business owner can’t help but look at the legacy wages that built up and up and up during the competitive good times, and wonder why they’re still paying those high wages during the bad times. If you have a company full of people making $80,000 or $100,000 and you see people accepting work in similar positions for $40,000 you are going to wonder how to reduce the amount you are paying people. One way is to make them work more for the same pay.
In yesterday’s Washington Post, Holding back job growth? Workers’ awesome output,

One of the great surprises of the economic downturn that began 27 months ago is this: Businesses are producing only 3 percent fewer goods and services than they were at the end of 2007, yet Americans are working nearly 10 percent fewer hours because of a mix of layoffs and cutbacks in the workweek.
That means high-level gains in productivity — which in the long run is the key to a higher standard of living but in the short run contributes to sky-high unemployment. So long as employers can squeeze dramatically higher output from every worker, they won’t need to hire again despite the growing economy.
[. . .] Fearful of losing their jobs, people seem to have become more willing to stretch themselves to the limit to get more done in any given hour of work. And they have been tolerant of furloughs and cutbacks in hours, which in better times would drive them to find a new employer. This has given companies the leeway to cut back without the fear of losing valuable employees for good.

It’s not “awesome output” it is workers being squeezed to death. And it’s the way our system is designed.
In Fixing Jobs: Normal Isn’t An Option I wrote that the way our current system is structured employers have every incentive to figure out how to eliminate your job or at least cut your pay,

The core of what needs to be restructured is that we have a system where people with power and wealth benefit when they figure out how to cause other people to receive lower pay and benefits — or just lose their jobs. The incentives come down to this: if someone can figure out how to cut your pay and benefits or just get rid of you (“eliminate your position”) they get to pocket what you were making, and you get nothing. If you don’t own the company you’re out of luck.

Returning to “normal” is not an option now and it just isn’t going to happen. We have hit the wall of the old economic paradigm. We need to start looking at new models for a sustainable, people-friendly economy that works for all of us, not just a lucky few.
Sign up here for the CAF daily summary.

Free Markets and Ponies

Posted on by

In science you study what happens. In ideology you talk about what you wish would happen. One DEscribes, the other PREscribes.
The Wrath of the Free Market God takes a look at what actually happens when right-wing economic ideology is implemented. Enron, concentration of wealth, corporatization and the Dubai Ports deal.

Make no mistake what is happening. The Globalists are attempting to replace the nation/state with corporate hegemony. In many respects they have already succeeded. Our democracy has been subverted not by dictatorial government takeover, but by the stealth usurpation through a shadowy pay to play scheme. Instead of the traditional coup by military means, an army of corporate lobbyists has descended upon Washington with decidedly similar results.

Now, to be fair, I will grant that what we have with countries like China certainly is not free trade. China “pegs” its currency – and Bush lets them. This means that everything made in China costs about half as much as it should, and everything we make costs Chinese consuers about twice what it should. And our trade with most other countries is certainly not “free” because they by-and-large subsidize industries, don’t allow unions or environmental laws, or so many other non-free-trade violations that you can’t keep up And Republicans let them all get away with it in the name of free-market ideology.
But, of course, that’s the real world, and that’s the point. REAL people take advantage when you let them. That’s where DEscribing what people actually do interferes with right-wing ideological dreams of what people should do. People SHOULD get ponies. But what really happens is we get poorer, lose our health insurance, lose our pensions, lose our manufacturing infrastructure and lose our democracy.

Attack On Pensions

Posted on by

Tackling the Social Security Mess,

I came away believing that a consensus exists among economists across the ideological spectrum on at least one important issue: America’s entitlement spending — mostly Social Security and Medicare — is not sustainable.

It’s the TAX CUTS FOR THE RICH that are not sustainable. THAT is why we will have trouble providing for our people as we get older.
United Aitlines was supposed to fund its pensions. Instead, it paid that money out as dividends, increased share prices, bonuses or otherwise enriching what we might call the owner class. Same with all the other companies that were supposed to be funding their pension obligations. They handed the money out to the rich instead, and now say “too bad, ain’t gonna pay you” to the people who did the actual work.
America was supposed to fund its Social Security. Instead it paid that money out as tax cuts, corporate subsidies, no-bid contracts, whatever, to the owner class. They handed the money out to the rich instead, and now says “too bad, ain’t gonna pay you” to the people who did the actual work.
But I’ve been going on about this for years.

Where the Pension Money Went

Posted on by

Almost every conversation I have with someone over a certain age turns to how they have either lost or afraid they will lose their health insurance and pension.
In the Reagan days, they sold people on the idea that 401Ks were somehow a good thing, and started moving everyone off of pensions. But a pension means your company puts the money away for you, on top of your pay. A 401K means it is entirely on the worker to fund retirement out of a shrinking paycheck. And people just can’t do that – take home pay goes almost entirely to the bills.
Meanwhile corporate profits are WAY up since pensions were replaced by 401Ks. Part of that if from the money that had been used for worker retirements and gave it out as profits instead.

Continue reading →