Sunday, June 12, 2005

Last of the Working Class Gains About to End

Wave of proposals map out course for future of pensions - Yahoo!

I've repeatedly made the point that the ultimate goal of conservative Republicans (the traditionalists, not the neocons or the Christocrats) is the destruction of the middle class.

I'm amazed at my right wing friends who deny such ambitions. It is impossible for them to admit they support a party that seeks to eliminate their way of life - but then again, they all believe that they will be the ones to climb into fabulously wealthy status and be able to take advantage of all the Bush/Republican/New Democrat welfare for the wealthy.

A big part of my campaign to highlight the attack on the middle class is revealing the slow, painful death of pensions. Why are the "trickle-downers" so focused on eliminating pensions? After all, how does that really advance their agenda to have all taxes shifted to the middle class?

Their hatred of pensions is strictly due to the fact they would never have existed without unions, and unions are their historical Taliban. How dare a bunch of knuckle-dragging employees gather together and bargain for benefits! If not for the threat (and tremendous hardship while carrying out) of strikes, corporations would never have offered such programs in the first place.

The importance of pensions is easy for those of us not born into wealth to understand. There are many of us who can bust ass day and night and never have enough spare change to fully fund anything resembling a retirement nest egg. Unions made the following bargain with employers: if you want to keep our wages low, take some of that money you're saving and create a pension fund. With the power of large numbers of employees and compound interest, you can easily build a working class version of a trust fund. It may not provide the ability for retirees to live like Paris Hilton, but it certainly can allow retirees to maintain a decent, dignified lifestyle when their clock-punching days have ended.

Like Social Security, this system worked well for decades. The righties will now try to claim that wage inflation has led to pension liabilities that are unfair to companies; but on its face, one might think that is a ridiculous argument. Corporations are not stupid; wages were only allowed to grow as profits grew. As always, the bargain made was that in exchange for slower wage growth, pensions would continue to be funded.

Then something happened on the way to crushing of unions... but before I speak of that, let me point out one thing. If the airlines are all allowed to shed their pension guarantees, pushing it off on the PBGC, expect the PBGC to fail. When that happens, the conservatives will scream we can't afford to save it.

For that reason, the discussions going on right now in Congress give me some hope; although I don't for a minute believe that Republicans won't try to screw the middle class in whatever plan they produce.

But look at this quote:

"Today the agency faces a record $23.3 billion deficit and roughly 1,100 companies reported a combined $354 billion shortfall in funding for their defined benefit pension plans in 2004.

$23 billion shortfall? That's 10% of the cost of Bush's war of lies. Had he declared war on PBGC deficits, we'd have saved 90% of the cost of Iraq. Additionally, shooting the entire Iraq wad on the PBGC instead of war would have solved the problem entirely, unless there is a catastrophic meltdown and nearly every company in trouble today defaults.

Back to the straw man that unions or wage inflation created this crisis. Harken back to the Reagan years, where Ronnie spent the treasury like a drunken DeLay lobbyist and created record budget deficits (never surpassed until Shrub.) While creating piss on trickle-down economics, he completed the long anti-union war by firing all the striking air traffic controllers.

Weaker unions meant stagnant wages for workers. In fact, Reagan created the biggest gap between the rich and poor in this country's history. Unions could no longer pressure corporations to increase wages and pension funding rates could remain stagnant as well.

Companies model pension funding by estimating wages out a few years, plug in a reasonable rate of return on their money, and calculate how many dollars of investment are needed to meet obligations. They began to use the temporary stalling of wages to justify underestimating liabilities and cutting pension funding. Congress goes along, and the crisis begins.

The economy sucks for years (Herbert Walker makes things even worse,) and then Clinton taxes the wealthy and creates an economic boom throughout the nineties. Pension investments explode, and well managed funds end up not only making up for the short-changing going on; many end up with more money than the models say they need.

An amazing feat, really. Despite the best efforts of management to short-change the funds, the workers will get their pensions and have money left over for the lean years. However, that doesn't sit well with our country's elite. Fat, overpaid CEOs eye that growing nest egg with envy. Some declare they can spend it; and they do. Despite union protests, Congress goes along.

Now, they don't just spend the "excess" (which was never "excess" at all, as we see today;) they spend every dollar above their previous underfunded modelling. In a blazingly stupid show of hubris and stupidity, millions of dollars go to executive bonuses and are forever denied to the workers who are owed them.

At least some in Congress admit that the bastards who let this happen aren't just ethically-challenged boards of directors, but Congress itself:

Policy makers have assumed some blame for the current situation, saying loopholes in the existing laws and layers of additional rules put in place over the past 30 years gave companies the legal means to eschew pension payments.
'We know that the rules are broken,' said Sen. Max Baucus, D-Mont."

Rest assured, the right won't let it rest there. In the coming weeks, you'll hear how corporate America is unfairly burdened by the liabilities created by those evil unions. Nevermind those pension dollars are absolutely owed to retirees, without a question.

And by the time all pensions are destroyed, Bush hopes to have placed Social Security on track to the same fate.

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