What’s the problem with pensions?

by Michael Roberts

The recent massive demonstrations against the Macron administration in France forcing through so-called pension reforms reveals the determined attempts of pro-capitalist governments in all the major economies to cut real wages when we are old and can no longer work. 

The Macron government has forced by decree a ‘reform’ that raises the pension age to 64 years from 62 years.  In Spain, where the retirement age has been fixed at 65 years for decades, the government is opting for an alternative solution to the so-called pensions problem.  It is going to increase contributions from the incomes of younger higher earners to pay for older retirees. 

Pensions are really deferred wages, deductions from income from work to pay for a decent income when people retire.  After decades of work (and exploitation), workers, male and female, should be entitled to stop and enjoy the last decade or so of life without toil without being poverty.  Literally, they will have earned it. But capitalism in the 21^st century cannot ‘afford’ to pay decent living incomes as state pensions when workers retire.  Why?  Well, the mainstream arguments are several-fold. 

First, the demographic trends, particularly in the advanced capitalist economies, mean more people are reaching retirement age and fewer people are at working age.  So the argument goes, higher ‘age dependency rates’ mean that those at work have to pay more in taxes for those who are not working.  For example, in Spain there are three people of working age for every single pensioner; by 2050 that dependency ratio will be just 1.7 to one.

The second argument is that life expectancy has risen so much and people are much healthier, that the ‘gap years’ between stopping work and dying have risen far too much.  For example, Spain’s life expectancy is 83 — one of the world’s highest. So people should work longer to reduce that gap to where it was before. 

The cruel irony is that the pensions cuts that the French and Spanish governments seek to impose for reasons of demography are taking place when life expectancy in the major economies has started to fall.  In the first decade of this century, life expectancy increased by nearly three years every decade. But now life expectancy at retirement is two years less than previously expected.  

World average life expectancy (years at birth)

https://onlinelibrary.wiley.com/doi/10.1111/padr.12477

And what is ignored is the huge disparity in life expectancy between lower income people retiring and very dependent on state pensions and better-off people with additional company pensions.  For example, almost eight years separates the life expectancy of retirees living in exclusive parts of London like Kensington and Chelsea to those living in Glasgow. A 60-year old man in the Scottish city might live a further 19 years. For his London contemporary that rises to 27 years. In both places women live almost three years longer than men. Indeed, the fall in life expectancy in the UK has forced the government to delay until 2026 raising the retirement age (already at 67 years) to 68 years.

And the third argument is the cost to the public purse.  The argument is that too much public money goes to pensioners, thus reducing available funds for other important public services and benefits.  Governments are forced into running budget deficits that increase public debt and so raise interest costs that eat into public spending. It’s true that pensions in France are higher than most other EU countries.  And Spain’s net pre-retirement income average at 80% is actually ahead of France’s 74 per cent and an average of 62 per cent in the OECD.

But does that mean the aim should be to ‘level down’ pensions to those of the UK, for example, which has one of the lowest state pensions relative to average earnings in the OECD?  Surely, the aim should be to ‘level up’ to the best?

And the pensions deficit in France is tiny compared with the cost of measures introduced in response to the pandemic (€165bn) and the energy shock (around €100bn), as well as President Macron’s commitments to invest more in nuclear power (€50bn) and defence (€100bn by 2030).

Nevertheless, mainstream economists continue to see the ‘problem of pensions’ as causing excessive government spending and deficits.  Here is what one such analysis put it in vigorously supporting Macrons’ attack on French state pensions. “France’s pension reform, centred on prolonging the age of retirement to 64 from 62, should ensure the progressive rebalancing of the pension system by 2030, given unfavourable demographic trends and a widening deficit. The reform sends a strong signal to European partners and international institutions of France’s intent to preserve medium-term fiscal sustainability and introduce supply-side reforms.”  So it’s to encourage the others to level down.

Similarly, that paper for capitalist strategy, the UK’s Financial Times, called Macron’s move ‘indispensable’. “Plugging a hole in the pension system is a gauge of credibility for Brussels and for financial markets which are again penalising ill discipline.”  The FT went on: “If unchanged, the (French) pension system will run annual deficits of between 0.4 per cent and 0.8 per cent of gross domestic product over the next quarter-century; (there are more benign scenarios of break-even, but these suppose a productivity miracle). It is not a catastrophic hole: the minimum contribution for a full pension is already quite exacting at 41.5 years — and it is climbing to 43 — even if a pension age of 62 looks generous. Yet it is a hole that needs to be filled.”

Two things here.  So this (not so large) deficit hole has to be filled?  Even if we accept that it does, why does it have to be filled by forcing people to work longer or make higher contributions from their wages now to pay for pensions later?  And also, note that “there are more benign scenarios, but they suppose a productivity miracle’.  And this is the crux of the ‘pensions problem’.  Without recognizing it, the FT exposes the mainstream arguments as bogus. 

Ten years ago, I called the ‘pensions crisis’ (yes, it was doing the rounds then) a myth. Then I put it this way: “There are enough resources if they are properly organised and fully used. It’s both a political choice and question of economic organisation.  Does a country want to use its resources so that people can stop work at the age of 60 or 65 and have enough income to live on in reasonable comfort, or not?  It can be done.”

It depends on two things: first, that an economy creates enough resources and expands sufficiently to cater for its elderly population that may also be getting larger as a share of the population.  And second, given finite resources, decent pensions can be provided by cutting out other calls on government revenues i.e. such as bailing out the banks; increased arms spending; more subsidies for private corporations to invest in fossil fuels; and lower taxes for top earners and corporations etc.

It is not a choice between good pensions or a good health service or education system. Ten years ago, I showed that just a 1% pt sustained rise in average real GDP per capita in the major economies could deliver enough extra revenue to governments to easily maintain current pension levels and terms with something to spare.  And that would be without changing the allocation of public money to defence (now set to increase in all EU economies to at least 2% of GDP each year) or chasing down the tax havens and avoidance schemes by which companies and rich individuals lose revenues for governments by up to 10% a year.

And I emphasise the word a ‘sustained’ increase in real GDP growth.  Every 8-10 years, capitalist economies have slumps in output and investment which significantly hit government revenues and often lead to substantial bailouts of banks and multi-nationals, further reducing revenues to pay for public services and pensions.  A planned economy, where production is not based on profitability and not subject to regular and recurring crises, could soon ‘afford’ decent pensions.

Instead, in the 21^st century, capitalist economies are experiencing slowing economic growth and already three slumps, with the prospect of another right now.  The World Bank has just published a truly shocking report on the prospects for the world economy for the rest of this decade.  The Bank reckons that the world’s maximum long-term growth rate is set to slump to a three-decade low by 2030.  Between 2022 and 2030 average global potential GDP growth is expected to decline by roughly a third from the rate that prevailed in the first decade of this century—to 2.2% a year. For countries like France, the growth rate will be well below 2% – indeed just 1.2% a year. 

Given that the working age population in France, like many other advanced economies in the Global North, is set to fall further in the rest of this decade, growth depends higher productivity from a shrinking labour force (unless governments force people to stay in work longer or work longer hours).  But productivity growth is slowing to almost a trickle as investment in value-creating sectors of economies stagnates.  So increased productivity is unlikely to compensate for a declining labour force.

And there is no answer to be found in privatising pensions.  Already, corporate pension schemes are failing to meet workers needs.  First, private pension managers take a sizeable cut in fees for managing pension funds. 

Second, these investment managers cannot deliver sufficient returns on investing in stocks and bonds, so that private pension funds often go into deficit.  And pension fund managers resort to risky investments to try and boost returns.  That can lead to crises and losses – for example, the meltdown in UK pension funds in so-called “liability driven investment” schemes (LDI) last year when bond yields rocketed, forcing the Bank of England to provide emergency credit of £65bn. 

And third, most private schemes are no longer ‘final salary’ ie pensions based on your wage when you retire, but on the amount of contributions you make from your wages as you go, and so relying on pension fund managers to invest wisely.  Private pension schemes are a con – and anyway, most workers do not have one.

The French option for state pensions is to raise the retirement age so that people have to work longer.  And that includes those who do tough, physically or mentally, stressful work that cannot be continued for more than a few decades, if that. Some might say that even 64 years is ok because in many countries the retirement age is way higher (at 67 years in the UK now).  But the majority of French people do not agree. For them, the pension age was a hard fought right, along with better social services that people do not want to lose. 

As one French sociologist put it: “For 40 years, successive governments have been asking the French people to accept ‘reforms’ reducing social rights. These have degraded public services in health, education, transport and so on, while eroding purchasing power and worsening working conditions … The French are fed up.”

Kentucky Politicians Introduce Tiered Pension System to Divide Teachers.

Above: Kentucky politicians talking about "healing and "trust" and they do that by pitting present teachers against future teachers (new hires).  The object is to direct anger against each other as opposed to the state and its representatives and their allies in the union leadership.

Richard Mellor

Afscme Local 444, retired

Union membership has declined over the years to around 10% in 2020, according to the Bureau of Labor Statistics. Presently, 34% of public sector workers are members of unions and in the private sector the unionization rate has dropped to 6.3%. This difference is one of the reasons the public sector has faced a fierce assault over the past period. The decline is not simply due to the power of the employers but the failure of the union hierarchy to organize resistance to it. The truth is the union leadership at the highest levels agree with concessions in general.

 

These figures are not a good sign but there are still over 14 million workers in unions in key industries. In 2018 we witnessed a huge uptick in work stoppages and protests as teachers in West Virginia, Oklahoma, Arizona and other right to work or red states fought back against the assault on public education and their wages and benefits.

 

The state of Kentucky also experienced months of protests, demonstrations and in the first few months of 2019, teacher sick outs in Jefferson County which includes Louisville. The sickouts forced the Jefferson County School District to cancel classes. The Jefferson County School District is the largest in the state and the 27^th largest in the country. Teachers, with the support of many of the parents, were not happy with the deal made between the union leadership and the school district on how ongoing protests should be organized limiting sending three teachers from each school to the state capital. In Louisville and among the Black community in particular there is a lot of anger at the education system and what we know as the school to prison pipeline.

 

The Jefferson County Teachers Association (JCTA) opposed the sickouts and publicly condemned them. Brent McKim, in response to a request for the names of teachers that called out sick called a press conference that included leaders of the Teamsters, AFSCME and SEIU that represent workers in the public schools. In that press conference they publicly attacked what were the most militant section of the union and their allies. Sue Foster representing AFSCME said that many of her members lost wages without work and scrambled to find child care because of the sick out. The Teamsters leader accused the teachers and their allies of “pimping” their employees for taking action (the sickouts) the leadership opposed and referred to them as a “rogue” group. In other words, rather than build on the militant section of the community and its tactics, they moved to suppress it.

 

In my opinion, what happened in Kentucky in 2018-19 was a perfect example of how a potentially powerful movement from below can be quelled not by the power of the bosses but the failure, or conscious sabotage by the union leadership. There was ample opportunity for a statewide movement to arise that could have driven back the offensive against the teachers and working class communities, one that could have changed the balance of class forces nationally.

 

The union leadership refused to take a public position against a gang ordinance proposal and link it to teacher’s issues despite teachers and parents in the Black community urging them to do so. Gang ordinances and police violence are a crucial issue for parents and youth in these communities and opposing the proposal while explaining to the predominantly white poor of eastern Kentucky how this would strengthen and unite the movement as a step to overcoming racial divisions would have increased the influence of working people in Kentucky as a whole. Instead, the union leadership claimed it would “split” the movement and weaken them. The real reason for this is that the union leadership is unwilling to wage a real fight against the assault on working people and accept that concessions have to be made. The union hierarchy is terrified of serious victories because it will inspire millions of workers.

 

"The enemy was the collective spirit.  I got hold of that spirit while it was still a seedling; I poisoned it, choked it, bludgeoned it if I had to, anything to be sure it would never blossom into a united workforce...."  Confessions of a Union Buster: Martin Jay Levitt

 

Also during this period there were miners occupying railroad tracks demanding backpay the mine company owed them, this went on for weeks. In September 2019 workers were on strike at the GM plant in Bowling Green and workers from the Ford plant in Louisville were bused out there to support them. These are pathetic gestures from the union hierarchy as a means of letting off steam and giving the impression they are doing something. But there was no attempt whatsoever to unite these workers from different sectors of the economy or to build a powerful united working class movement. In these struggles, what is happening in working class communities cannot be separated from the communities in which we live. The Greater Louisville Central Labor Council AFL-CIO as over 50,000 workers affiliated to it yet this power potential power is never brought to the table

 

I return to Kentucky because I see that the offensive is continuing and the labor leadership is playing the same traitorous role. Facing stiff resistance from teachers against their attempts to undermine pensions back in 2018-19, the state is preparing to create a two tier pension system that will mean that new hires after Jan 1^st next year will have to pay more for their retirement and receive fewer benefits. And it’s important to recall that teachers are not eligible for social security benefits. 

 

“This is all about new hires” says the bill’s sponsor, the lawyer and state Rep C. Ed Massey. Massey is a Republican whose major in college was police administration so we can see where he’s coming from. So whether it's dividing us on race or color, or immigrant against native born, men against women, old against young, foreign against domestic, the moneyed interests and their political representatives in both parties favorite tactic is divide and rule. Contrast this to the great US slogan, “An injury to One is an Injury to all.” Most workers understand this in our gut, but leadership’s role in countering management's divisive strategy and organizing the unity to defeat it is crucial.

 

But the union leadership’s role in this instance hasn’t changed. It can’t change as they are wed to their position by their world view which is the same as the folks on wall Street; when capitalism goes in to crisis the union leadership moves immediately to bail it out. A united workforce organized to fight back is an obstacle to this strategy.

 

The very same Brent McKim, head of the Jefferson County Teachers Association who organized the press conference in 2019 to attack Jefferson County Teachers and parents, lets the enemies of working people know through the media that the union won’t stop the pension changes and throws the new hires and future generations to the wolves: “I think probably just about every teacher wishes the current plan could be left alone. But I also think the new plan is a reasonable attempt at finding common ground, because all of the stakeholders were involved in its development,” Lexington Herald Leader

 

The key statement here is “common Ground”. This disgusting statement is an attempt to obscure his collusion with monied interests at the expense of working people and their families. McKim’s class collaboration is not isolated; the entire leadership of organized labor has the same world view, that we are partners with the people who are attacking our living standards.

 

In contrast activist and parent Gay Adelmann, acting president of the advocacy group Save Our Schools Kentucky told the Herald that, “Kentucky teachers should not let themselves be divided into a two-tier system, with older teachers enjoying traditional pensions and newer teachers paying more and working longer in the classroom.” “It’s a good way to divide and conquer,” she added.

 

It is indeed and it has worked because the trade union leadership cannot do otherwise. To mobilize union and working class power threatens the relationship they have built with capital and its representatives based on labor peace. To mobilize this power can only lead to chaos as far as the present leadership sees it.

 

They leave individual union locals to fight what are global corporations isolated and alone. The bosses use the state, the courts, the media and the police, or other security forces to break strikes and grass roots opposition to the savagery of the market. No individual union or small group can counter this offensive alone. And at all times the unorganized workers have to be included in the struggle as the bosses will always use the unorganized against the organized.

 

What the folks in Kentucky are experiencing we have all experienced. Defined benefit pensions are being phased out, the retirement age is rising. In auto, public sector, construction, throughout all sectors of the working class the same war is being waged. As far as organized labor is concerned, like it or not, any group or opposition caucus claiming to offer a way forward will find themselves in conflict with the present leadership. An opposition program has to have more than simply calls for democracy. Many of the smaller union locals are pretty democratic and taking the leadership of our own locals is a crucial first step but doing so on a program that takes us on the offensive and speaks to what working people, need not what the bosses, the trade union leadership and their friends in the Democratic party claim is realistic.  It is important to not limit our campaigns to our own immediate workplace, trade or union affiliation.

 

The campaign to stop the present attempt to introduce a two tier pension plan in Kentucky is important but it is also important to recognize it has been happening for a long time and throughout the country. The Jefferson County Teachers Association is affiliated to the Kentucky Teachers Association which is a part of the  National Education Association (NEA) the largest union in the US. Any campaign of this sort must go beyond the immediate demand and have a strategy of drawing in other sectors and that means appealing to the rank and file of other unions. We are on a war on two fronts; one is against the employers or management and the other against the concessionary policies of our own leadership We cannot avoid an internal struggle within our organizations.

 

The argument that there is no money has no merit. There is too much evidence that the

money is there. Just consider that the recent stock market news about the company

Gamestop and the brokerage firm Robinhood led to investors raising $3 billion to rescue

the company in three days.

 

The money is there, we just have to go get it. 

 

Democrats join Republicans, attack public sector pensions.

Source: Wall Street Journal

Richard Mellor

Afscme Local 444, retired

 

Einstein defined insanity as Insanity: “Doing the same thing over and over again and expecting different results.”.  For a minute I thought that describes the labor hierarchy to a T. But it doesn’t. They do the same thing over and over again for the same results. 

They appeal to the bosses, their courts and their Democratic Party to stop attacking their members’ wages and benefits or else they’ll, they’ll, er send them 100,000 e mails. If that doesn’t work, they’ll lobby Congress or as a last resort might file a lawsuit.

Naturally, the employers are not culled by such militant rhetoric. They have learned over decades that the heads of organized labor are no threat to them, they are an ally, they will not mobilize the potential power of organized labor for fear it will inspire millions of workers to rise up and fight back against austerity and the capitalist offensive, in fact they suppress resistannce.  The bosses’ do not fear them.

Pennsylvania governor, Democrat Tom Wolf, has thrown in the towel, (not that he ever threw it out) and is calling for retirement cuts “for new state hires and current workers”, the Wall Street Journal reports today.  A spokesperson for the governor tells the Journal that “The governor absolutely wants to make sure state workers have a secure retirement, but this was a compromise budget and he’s dealing with an overwhelmingly Republican-led Legislature,”

Now that’s why the average US worker hates politicians, even those that still bother to vote. The governor is for us……but.  Watch out for those buts.  The only possible outcome for workers and union members in these cases is downhill quickly or downhill slowly. Presented with these two options, union members take the later and slide in to a deeper hole and further demoralization.

Since the end of the Great Recession, 25 out of 34 states that have had Democratic governors have slashed retirement benefits for public sector workers. The union hierarchy admits that the Democrats are the lesser of two evils option, hoping that the good old days of the Post World War 11 boom will return and that the bosses will be a little less aggressive. Tom Wolf says his goal is to spend more on education and he has to get the money somewhere, plus, state and local governments are spending 4% of their annual budgets to fund retirement systems up from 2.3% in 2002.

Wolf’s divide and rule strategy should be rejected of course. After all, public sector workers send our children to public schools as well. It is robbing Peter to pay Paul and a very successful way to divide the opposition.   And isn’t that better than the Republicans who end define benefit plans altogether sending workers in to 401k’s?

Democrats argue that they have no choice but to “revamp” pension benefits given the deficits and underfunding of pensions which grew due to “…deep investment losses in the wake of the financial crisis…”.  And whose fault was that crisis?

The “experts” atop the AFL-CIO that the members are unfortunately saddled with, have countered the offensive with some militant threats of their own, “If it’s a Democrat undermining our members, they’ll feel the heat as much as if they were a Republican,” says Steven Kreisberg, the national director of research and collective bargaining at this writer's former union, Afscme. I’ll bet Steve has the right education, degree and connections that helped him get such a prestigious position in a major union; there’s no way he’d be a common backhoe operator like me. It’s a shame he’s worthless. What “heat” is he talking about? The 100,000 e mails in the WSJ article? Perhaps that Afscme might spend a few hundred thousand dollars of its members’ hard earned dues money electing a different Democrat. That’ll work won’t it?

Well, I guess I’m right about that, “Public-sector unions have countered by filing lawsuits to block cuts, saying the pension plans have legal protections, and spending big to support alternate political candidates.” the WSJ article adds.  This is not a new strategy, it is has a record of proven failure and they will not support “alternate political candidates”, they will support alternate Democratic candidates. But, and I stress this, it does not meet Einstein’s definition of insanity because the strategists atop organized labor like Mr. Kreisberg don’t for one minute think “different results” will be the result. Him and others like him know that the result will be, at best, a slightly slower decline.

The union hierarchy is hanging on to their jobs as best they can. It’s a good deal, pretty much a position for life with great benefits and they don’t have to work under the concessionary contract they force on their members. They are so popular here in the Bay Area that in 2009, a UFCW regional council leadership chose the CEO of the corporation as its person of the year, I guess a shop steward or long time dues payer wasn't available. They are very progressive these guys, they used the gender neutral “person”, not so progressive though when it comes to the wages and benefits of their own members; they force concessions on any and all genders, not in equal doses I figure.

But all is not lost.  We have reason to be optimistic but there are conditions. First, there’s an abundance of money in society. There is the obvious and that’s the trillions spent on fighting US capitalism’s predatory wars abroad. Maintaining the more than 200 bases around the world and the huge domestic and international spy network that puts the crude methods of the old Stalinist KGB to shame. There is the billions spent propping up dictators and ruthless regimes like the Saudi’s, the $2 billion a year we paid Egypt’s Mubarak and billions more to the Zionists.

In addition, yesterday the WSJ reported that James R Moffett, the 77-year old chairman of Freeport McMoRan, the giant US mining company that once had the war criminal Henry Kissinger on its board, was forced out. Their precious market has not been good to raw material prices and the company has lost a lot of money under Mr. Moffett’s watch lately. Despite a bad record of late Moffett will receive a $79.4 million pay package to help him enjoy his retirement and that could reach greater heights if the company’s share price goes up.  “Jim Bob” as Moffett is called by his mates will also get an additional $1.5 million a year as a “consultant”.  And we can’t afford a $15 an hour minimum wage for workers?  Moffett’s cash is paid for in the blood of West Papua’s indigenous tribes as Freeport McMoRan funded the Indonesian governments slaughter of those that resisted McMoRan’s  environmental destruction at the Grasberg Mine.More about that another time.

The point is that public sector workers like this writer do get better pensions. But we are in a minority, a dying breed. The bosses play the divide and rule card and blame us for destroying the economy, for forcing public service cuts and reductions. The labor hierarchy has no answer to this and instead whines about how these policies hurt their members and how we deserve this etc. The other 80% of the working class not unionized or outside the public sector have no sympathy for this argument. What they would have sympathy for is a major organizing campaign for public spending on social infrastructure and union jobs and for defined benefit pensions to be expanded to all workers.

Showing where the money is no problem. The problem the labor hierarchy has with this strategy, going on the offensive, is that it would raise expectations of their own members and inspire millions of workers nationally.  Mobilizing for an offensive against the 1% for what we need to live a decent life can only lead to chaos from the labor hierarchy’s point of view which is the worship of capitalism and the market. They have the same worldview as the bosses and their strategy is designed to help them.

This offensive will not cease of its own accord. US capitalism cannot afford “guns and butter” as we have stated on this blog before.  While the leadership of organized labor is responsible for the delay of a broad working class offensive of our own, the rank and file union member is responsible for not openly confronting these failed policies of the leadership, building fighting rank and file opposition caucuses in the locals and in our workplaces where our power lies, in other words, offering an alternative leadership with an alternative strategy.  Abandoning the Team Concept and rejecting austerity has to be a starting point.

There are thousands of members of left groups or anti-capitalist groups also members of organized labor. Many of them are actually in leadership positions but refuse to openly campaign against the catastrophic policies of the present leadership and more often than not conceal their politics in order avoid a direct confrontation with the hierarchy. But it is impossible to offer oneself as an alternative to the status quo without coming in to conflict with the present leadership that supports it. Not building a base among the rank and file around fighting polices and direct action tactics, leaves many genuine, activists and leftists in particular, susceptible to the power we have to confront.

When the crunch comes as it inevitably will and sides have to be taken, they too end up in a compromise that is made without the active participation and consent of the dues paying member. They end up like those they claim they want to replace making the same excuses.

We should raise our expectations; keep our goals lofty. We reject that there is no money in society. We demand what we need not what is acceptable or “realistic” to Democratic Party politicians or their agents atop organized labor. We demand and will fight for, housing, education, jobs, and end to racism, sexism and all forms of discrimination that divides us. We will fight to protect the natural world that capitalism is making uninhabitable. We stand for more leisure time and more time to participate in the organization of work and society in general. We do not expect the 1% or their political parties to provide this; we will build our own movement and political party and take it.

We will overcome the obstacle in our own consciousness influenced by the 1%’s propaganda and provide our children with a future here on this planet in cooperation with all humanity and in harmony with nature, not at war with it.

More attacks on public pensions and services ahead

The market cannot provide a decent retirement

by Richard Mellor

Afscme Local 444, retired

More and more state pension funds are lowering their return expectations which means further cuts in public services, jobs and pensions.  State retirement system cover about 20 million workers and two thirds of them are lowering the expectations the Wall Street Journal reported yesterday.

The changes might not seem significant, a drop from an estimated 8% return to 7.75 or 7.5, but such declines can have a significant affect on public workers as well as services.  A one percentage point drop can increase pension liabilities by 12% an official from the Center for Retirement Research tells the Journal. Boulder Colorado eliminated 100 jobs and made other cuts in response to a series of reductions in the state’s investment forecast.

State’s and municipalities are “cash strapped” is what we hear all the time from the mass media as the US war machine marches on, financing predatory wars and building and maintaining hundreds of military facilities throughout the world; we have to remain fearful of the rest of the world in order for the Pentagon to protect us.

But the corporate wars in Afghanistan and Iraq have been a catastrophic failure.  Meanwhile, the refugee crisis in Europe has one and one cause alone and that is US foreign policy in the Middle East.  US imperialism has been bombing the region for 20 years straight as well as funding the various stooge regimes in the area.  Mubarak, the former Egyptian president, who Hillary Clinton considered like “family” and whose torture cells were widely known, was removed during the “Arab Spring” but not abandoned by his US patrons until it became too much of a liability to hold on to him.

So “cash strapped” doesn’t apply to funding wars and stooge regimes that willingly defend US corporate interests and profits in an area, it only applies to social needs. The reductions in investment forecasts are not nearly enough says Josh McGee who is a senior vice president of public accountability at the Laura and John Arnold Foundation.  Local and state contributions to retirement systems have more than doubled over the past decade to $121 billion in 2014, as contributions rose 50% to $45 billion, the Journal reports.

I have seen this foundation’s name as a contributor to the Public Broadcasting Service. It is headed by John D Arnold, a hedge fund manager (coupon clipper) and money trader.  He traded in energy for one,  and worked for the infamous Enron.  Arnold comes from an “upper class” family and his present wife is a former oil company executive.

The Arnold Foundation while posing as some sort of philanthropic outfit, is committed to undermining public pensions, what it terms “reforming” guaranteed pension benefits. The defined benefit plans have been severely curtailed as workers are forced more and more in to market based programs. 

John Arnold. Never worked, wants to eliminate your pension

This is what Forbes has to say about this warrior of the 1% that wages war on workers: “John Arnold, the natural gas trading wunderkind retired from the hedge fund game last year at age 38 having amassed a fortune of $2.8 billion. He got his start at Enron and is said to have made $750 million in trading profits during the last days of that company in 2001.”

“Retired at 38”, worth almost 3 billion and earned 750 million during the “last days” of Enron. Not bad.  Meanwhile he spends the money he never earned pushing US public television, meager as it already is, further to the right.  It never had ads when I first came to this country; it does now.   And being the “Pull yourself up by your own bootstraps” guy that he is, he wants to ensure that the average American worker does the same as being guaranteed a pension from the state, and one that you can actually live on, makes us soft, it’s just plain communistic.

So if this social parasite and others like him have their way, we can expect further reductions in what are relatively decent pensions in the public sector.

Coupled with the likelihood of another crash in the not so distant future the next generation can look forward to working in to their 70’s for a pension that will barely keep them afloat.  For those of us like this writer who has benefited for a decent public sector pension that should be expanded to all workers, we too are not secure. But that’s the way the 1% like it, that’s how they can retire at 38 with $3 billion.

And we’re  supposed to worry about Iran?

The bi-partisan war on pensions.

Look, I found some money

by Richard Mellor

Afscme Local 444, retired

The protests against the murders of black men on a daily basis by the police do not seem to be abating. It is clear that the black community in the US has had enough as we watch black youth and their allies and supporters confront the police and the state and demand change.  The 1% is in between a rock and a hard place as they have not armed the state security forces to the teeth for nothing; but the ferocity and extent of the protests since the murder of Michael Brown in Ferguson Missouri by a white cop, is forcing the power structure to re-think things and hopefully avert the development of a wider movement against austerity.

As I commented in a previous blog, the situation is not good when sections of the mass media openly criticize the police as CNBC and the Daily News did with regards to the death of Eric Garner, choked to death by a predator cop-----one has to wonder at the logic of resource allocation when four beefed up cops are sent to arrest a man selling loose cigarettes.

The 1% would like to isolate the participants, contain the anger and ensure it remains simply a “black” issue. But US society is wracked with crisis and it is inevitable there will be social explosions ahead as the 1% is driven by the market to savage US workers, the poor and middle class.  There is a tendency when workers move in to struggle to somewhat overcome the social divisions so useful in undermining our unity and potential power, at least temporarily (racism, sexism, immigrants and terrorists lurk everywhere) so it is important we recognize the divide and rule tactic for what it is and keep our eyes on the prize.

As the state security forces continue the offensive against the black communities in the urban centers, the two parties of Wall Street continue to dismantle workers living standards through legislation.  Contained within the spending bill passed by the US Senate last week is an assault on private sector pensions, what are called the multiemployer plans jointly administered by big companies and unions; these cover about ten million workers.

These plans, like everything else in US society, are in trouble and the “bi-partisan” plan to solve the problem is to allow the funds to cut benefits even to existing retirees if needed; “That is an exception to a long-standing federal rule against scaling back private-pension benefits.”, the WSJ writes. Karen Friedman, executive vice president of the Pension Rights Center, warns that, “The bill could encourage similar cutbacks in troubled state and local pension plans, and possibly even Social Security and Medicare.”

This states the obvious of course as the same crowd in Congress are also introducing legislation that will make it harder for workers and the poor to get benefits, including drug testing and other hurdles. A victory over one section of workers always leads to attacks on others.  .  I’m sure Dick Cheney wasn’t drug tested after he shot his hunting partner in the face.

Despite being shook up by the response to the ongoing murder of black men by the police, the 1% can’t let up and as the security forces wage an offensive in the streets and communities, the body politic, the representatives of capital, continue the legislative war, a war in which the very wealthy deprive the rest of us the social fruits of our labor. Alex Pollock of the American Enterprise Institute described as a “scholar” by the WSJ supports this attack on a retired worker’s means of subsistence telling the Journal that “Facing up to the insolvency is healthy,” Pollock admits while its difficult to consider cutting retiree benefits it is often better than “taking money from other people, such as taxpayers.”, according to the WSJ. And retirees aren’t taxpayers? The “other people” for guys like Pollock are never his billionaire friends.

Pollock is a 73 year-old banker and the present chairman of the Chicago Mercantile Exchange & Chicago Board of Trade He earned $90,083 in 2013 in fees and cash payments for his banking advice no doubt and with his stock earnings brought in 165,088 for the year according to Forbes. He sits on the board of numerous companies including Allied Capital Corp. before it was absorbed by Ares Capital.  He’s basically spent his life as a moneylender.

Democrat, George Miller and Republican John Kline who are backing the legislative assault on pensions are doing this for the people.  If they don’t cut the benefits, the plans will become bankrupt they argue and could hurt people more. It’s the same approach to wages in labor disputes; the only offers on the table are cuts in wages and benefits or layoffs. The worker chooses the former and presto, democracy has worked.

So the new plan works like this: The trustees of the plans can vote to cut retiree benefits. The retirees can vote to oppose the cuts but that vote can be overridden if the plan is big enough to pose a “threat to the federal safety net”.  The trustees of these plans and there are around 1400 such pans, are representatives of the employers involved or representatives of the employers’ organizations, as well as union representatives.  So you have the same two forces negotiating your pension plan that are responsible for the continued decline in our living standards, bosses’ and members of the union hierarchy or attorneys representing them.  In other words, two forces with the same pro-market worldview.

Miller and Kline claim they are not aiming to influence the debate about other retirement programs like mine, a public sector pension. Since the savaging of the autoworkers by the Troika, composed of the auto bosses, US government and heads of the United Auto Workers union, public sector workers, our jobs, the services we provide, and particularly our pensions are on the chopping block. This is what happens when we pay no attention to the political world around us, to what’s happening in our unions and to other workers or join the bosses and their media in attacks on the poor and less fortunate----our turn comes and we wonder why.

No thinking worker believes that an attack like this will not be extended to others. Of course it will encourage an increased assault on public sector pensions. Already, since I retired ten years ago, the young people working at my former public employer have been screwed when it comes to pensions. They will not receive what myself and others have and will have to work longer. There is no way around the reality that we are in a war and we cannot avoid a fight if we want a better life for our children. The hardest aspect of that fight for those of us in unions is the internal struggle to change the collaborative polices of the present hierarchy and in a way supported by local leaderships that refuse to wage an open struggle against them.

Some Democrats, as they always do, are whining about the bill and how bad it might be, “This is unprecedented and I worry about the impact on retirees and the slippery slope we’re about to head down,” said Sen. Ron Wyden (D., Ore.), the Finance Committee chairman, in a statement. “I am working hard to protect retirees’ pensions, and jamming this bill through Congress virtually sight unseen is no way to solve this issue.” WSJ 12-10-14

It’s the same old rhetoric. Some Democrats are “worried” they are “fighting” etc. etc.  It’s not that one is fighting that is crucial; it’s how they’re fighting. These two parties of Wall Street play the same game the cops do, one gives you a cigarette and the other beats you up but they’re both after the same result.

And the union officialdom tails its Democratic allies.  They are “worried” too but some of them in “Affected unions” are supportive. The problem is that “Amid broad economic changes and light government oversight, some large multiemployer plans have become badly underfunded and could run out of money within a few years.” Proponents claim, and this could lead to a federal bailout. The labor leaders in the “affected unions” that are supportive are supportive because their retirement will not be “affected”. They support concessions for the same reasons, they don’t have to work under the contracts they force down their members’ throats.

It would seem then that “government oversight” and the market is the problem. So the solution should be directed in these areas.  But as always, the crisis is shifted on to the backs of the working class, in this instance, millions of construction workers, Teamsters and miners for a start.  Both political parties agree that the working class must be driven back and it is us that must pay for the crisis of capitalism----they only differ on the degree, pace and which section is at the front of the queue.

Oh, here's some more money

Might I suggest that the more than $32 trillion stashed in foreign bank accounts not paying taxes might be a good place to start when money needs to be found, and this is not corporate but individual money.  The insane War on Terror which is really a war to defend corporate profits fought by young workers who will be denied benefits and pensions in civilian life, is one major cause of government debt and possible bankruptcy. It is the US workers and middle class that are being forced in to bankruptcy in order to pay for these predatory ventures.

Some tech guy just bought a $70 million home in California, there’s no shortage of our money, it’s just in the hands of someone else.  Lobbying costs us billions of dollars, money spent to defend increase the power for corporations over the working public..

It’s hard to say how long the heroic opposition in the streets to police and state violence will last. As always, the issue of leadership is a problem.  In the absence of a conscious leadership with the strategy and tactics to confront this offensive of capital directly, all sorts of elements will arise, various anarchists, reformists, nationalists and others as we have seen. Do Jackson and Sharpton really reflect the mood and aspirations of the black youth for example? We can discount those whose philosophy claims that there is no leadership, this is dishonest, there is always leadership and it should be open and fight for its ideas among the mass. 

One thing is absolutely certain as far as this writer is concerned is that there is an explosion waiting to happen in US society, we have just seen skirmishes so far.  The state has beefed up its security apparatus because it knows that, it cannot avoid driving the US working class back 100 years and is preparing for the backlash. The passive role of the Organized labor’s hierarchy in suppressing any movement from below has produced an element of overconfidence among the ruling class in the US, this can lead to major mistakes on their part. The recent protests against police violence have shaken that confidence a bit.

I always used to tell my co-workers that our best ally in many ways was the bosses’; they will not let up.  That hasn’t changed.

Fight back against the assault on pensions

By Richard Mellor

Afscme Local 444, retired

I always find it a bit perplexing when some of my workers, public workers especially, raise this issue of “big government” and how they are opposed to it etc. I certainly find it odd when my co-workers say that or any public sector worker as we work for a section of government and we have one of the best jobs in the damn country and one of the best retirement packages; but this often doesn’t seem to register with them.  A few are just plain selfish but most just don’t think about it until I ask them why they’re working in a “socialist” job when the market is so damn good.  The usual response is that they work hard and deserve what they get, a sort of self defense mechanism.

I have a defined benefit pension.  A defined benefit plan is much more favorable to the worker as opposed to a market based defined contribution plan and bosses have waged a successful war against the former. I consider myself a lucky man and thank those workers that sacrificed to win such benefits. Congress enacted the Employee Retirement Income Security Act (ERISA) of 1974 to protect workers in defined benefit pension plans; here’s what the Employee Benefit Research Institute has to say:

"Participants in such plans have greater financial security than they did prior to ERISA's existence. But the number of such plans has declined dramatically, and today they are outnumbered by more popular defined contribution plans, particularly 401(k) plans. This change raises a question of whether defined benefit plans could disappear entirely and has fueled a debate about what could be done to preserve such plans as a key element of America's retirement savings infrastructure." 

Serious publications of the 1% like the Wall Street Journal claim that public sector workers are "overpaid.“ and our pensions exorbitant. The paper wrote back in September 2012 that, “Economic forces are reshaping traditional rivalries...." adding that this ideological assault is  "...convincing lawmakers and Labor leaders that past public pension plans are unsustainable.".

I have a decent pension, an amount I can live on and it is enough to enjoy life barring serious long-term illness.  Not only that, I retired before 60.  The bosses have to put a stop to this as the private sector cannot, or will not equal it. The future for US workers in the market economy is lower wages, declining benefits and working in to one’s 70’s or more. Like the autoworkers whose pay, benefits and retirement packages were too attractive to other workers, the public sector has to be put on rations.

Because they accept that there is no alternative to the market, that public workers have to compete with the private sector (and each other and workers abroad) and that profits are sacrosanct, the heads of organized labor go along with these drastic reductions in our standard of living that took a couple centuries and heroic struggle to win.  Given this, the bosses are moving ahead with their assault on pensions.

Multi-employer pension plans are next to go. These have been considered somewhat safer than single employer ones as this investment pool is spread among many employers rather than relying on one company.  Multi-employer plans cover about ten and a half million workers according to Bloomberg BusinessWeek. These plans are underfunded to the tune of $400 billion as workers age and in the aftermath of the Great Recessions the market inflicted its savagery on the fund.

So when a major employer goes out of business or declares bankruptcy as Hostess Brands did in 2012, it causes problems. In the Hostess example, if this company was unable to keep its pension obligations, and these firms declare bankruptcy in order to renege on them, it increases the chances that others can’t.  As BW explained in an article in its March 17^th issue, this is the situation with workers at the Ottenberg Bakery near Baltimore who were concerned they would, as one employee put it, “…have to work forever.”,   because Ottenberg is in the same multi-employer plan that Hostess was. If Hostess can’t pay; then what? It seems Hostess couldn’t:  “You have to repay your secured creditors first,” the CFO of the Hostess estate told BusinessWeek; investors must get their dough. So big government came to the rescue.

That nasty entity, “big government” stepped in and picked up the Hostess workers’ benefit payments so it looks like the folks at Ottenberg will be OK----maybe.  The lifeline came in the form of the Pension Benefit Guaranty Corp., the government agency that oversees the country’s 26,000 single and multi-employer private retirement plans.  Readers might recall similar action being taken by the Treasury’s TARP program that bailed out the banks and the government’s FDIC program that covers deposits.

The problem now is that the PBGC is also underfunded, after all, funding workers’ retirement is not

as lucrative as funding the Pentagon’s war machine or bailing out bankers.  The government help couldn’t give to the Hostess workers the retirement they were promised.  They took a “significant cut” as Business Week puts it.  In fact, the maximum of $1,072 a month the government (PBGC) guarantees to the most senior and highest paid workers in these plans is only a “fraction of what many were entitled to” BW writes and adds that the PBGC, “…is in need of a bailout of its own.”

The problem is that the government and the unelected billionaires that run it through their political representatives, have no intention of funding, or allotting more capital to a public expenditure like workers’ pensions.  Their general intent is to drive us further backward and deny future generations the gains that many of us have enjoyed after a century or more of struggle.

The PBGC has a $35.6 billion deficit and the Obama administration claims the agency could be insolvent in 10 years. Josh Gotbaum the head of the agency says that more could be done with more money but fat chance of that. Retired workers cost money, they are not a source of surplus value that can be exploited: they are money out. They are like the recruit who receives all the flag waving and patriotic nonsense about being heroes and courageous and all that when they are being sent to fight the corporations’ wars. When they return physically and mentally damaged, they are a liability.  The 1% is not in the egalitarian business.

Most workers simply bury their heads and hope things will get better. Unfortunately they will not. Those like myself and other public workers who still have a relatively secure existence compared to most try to hang in there, afraid that if they open their mouths others will see what they have and direct their anger toward us. This is what the bosses’ want.

To his credit, Gotbaum, perhaps taking his job as a government bureaucrat seriously, is asking Congress for more money for the PBGC.  But a more realistic plan being hatched out by the major corporations involved is to get Congress to allow companies to cut retirees benefits before the plan hits snags which according to BW would be a huge issue as, “By law, employers can’t reduce accrued benefits, which have long been considered untouchable.”  The authors of this plan, misnamed solutions not bailouts want “more flexibility” in order to fix the plan before it runs short of money.  The fix of course is to cut workers’ pensions regardless of the financial health of the actual plan.

The situation is dire say the bosses and their politicians. Former Democratic Congressman Earl Pomeroy who is advising the pension-slashing group uses a term all worker activists are familiar with, “A haircut now,” he says, “beats a beheading later.”  This is another version of the, It’s either a wage reduction or being laid off. There is only death next week or death today for the bosses and the top union officials echo them.

In league with the bosses in trying to get legislation passed that will allow pensions to be cut before the finances demand it is the leaders of the United Food and Commercial Workers’ Union.  This shouldn’t surprise us.  As I pointed out some time ago, the leadership of the UFCW’s Western State’s Council chose as their person of the year in 2009 the CEO of the corporation SavMart. Some of these union officials are millionaires.

Big players in the Solutions not bailout plan along with the UFCW heads are UPS and Bechtel, the company that gets contracts to rebuild countries after the US has bombed them in to antiquity.  Noted warmongers, George Schultz and Casper Weinberger (since deceased) came out of Bechtel.

BusinessWeek reports that the “Unions are split on whether to go along” referring us to the Teamster president, the lawyer James P Hoffa.  It’s quite evident though that Hoffa is on board with this; it’s just a matter of timing.  Hoffa has called the plan a  “mad rush” to destroy retirement security.  Like the entire leadership of organized Labor, Hoffa accepts that cuts have to be made, that profits have to be secured at the cost of the standard of living of US workers.  As a top labor official like a cowboy on a horses back, he doesn’t want the source of his security to die of thirst, not before he gets to his destination anyway.  If the bosses are too aggressive, are too rash, they could incite a riot among the ranks of organized labor, could ignite a movement from below that him and others like him might not be able to control.  It might undermine the relationship the heads of organized labor have built with the bosses based on labor peace.

What James Hoffa would prefer is to go easy for now and skin the hides off the future generations, the youth, the next generation of union members.  After all, they have little say in the matter and they cannot vote.  Hoffa is not against reducing benefits, it’s simply to what degree, on whom and when.

There is no end to this without a fight. The alternatives above are a fast death or a slow death. There is another alternative and that is to fight back. To build in our unions fighting caucuses and opposition groups that reject the Team Concept, reject competition between workers, and that refuse to bow before the altar of profit and the so-called free market---that demand and fight for what we need not what the bosses say is realistic.  Without this the 1% will continue to be successful in their drive to reduce our living standards to those of workers in the third world.  For those of us that have benefitted from the struggles of those that came before us and think we are safe we are not.  As the Unions continue to decline in influence and decades of gains are wiped out, our pensions will be undermined as well. If there are laws that protect them, they will change them. Workers are the majority in society that’s why they always try to divide us along racial, religious, gender or nationalist lines. We are not powerless.

Fighting back always pays.