Why? Part 2: The Overblown Crisis and The Contract
Continuing from Why? Part 1: The Shameful Attack and Truth
The redistribution of wealth…
In 2010, New Jersey Gov. Chris Christie (R) decided to forgoe the $3 billion annual state contribution to the pension plan while pushing $1 billion in tax cuts for the state's wealthiest citizens.
Meanwhile, Christie's budget for fiscal 2012 includes $200 million in corporate tax cuts, with plans to increase those cuts to $690 million a year by 2016, along with $180 million in 2012 tax cuts for homeowners.
It's a fairly straightforward proposition: Christie is taking money from public workers and giving much of it to corporations, cloaking the transfer of wealth in the language of fiscal responsibility.
A gross distortion…
As it stands, pension contributions appear to have a relatively small impact on state budgets. "They have time to make adjustments," said Keith Brainard, research director for the National Association of State Retirement Administrators. "The idea of imminent insolvency is a gross distortion."
Despite major standoffs between conservative governments and labor unions in Wisconsin, Indiana, Ohio and Florida, these states' pension plans are all on strong footing, even given disastrous economic conditions.
Wisconsin and Ohio were each cited in a 2010 study by the Pew Center for the States as "a national leader in managing ... long-term liabilities for both pensions and retiree health care."
Florida was cited by the same report as a "top performer" for its pension fund.
After the massive 2008-2009 House of Finance Bailout…
In early 2010, Goldman Sachs announced two blockbuster numbers: profits of $13.4 billion for the prior year and compensation of $16.2 billion -- the equivalent of about $500,000 for each employee at the Wall Street titan.
When news of Goldmanesque bonuses first sparked public outrage, both Wall Street and the White House combated the criticism with a persistent argument:
Yes, it might be deeply frustrating to see taxpayer dollars used to further enrich already wealthy bankers, but these bonus deals were were contractual obligations and America is a nation of laws.
Not so sacrosanct anymore…
Now, with state leaders planning pay cuts for teachers, firefighters and other public workers, contracts aren't described as so sacrosanct anymore.
In Wisconsin, Indiana, Ohio, Florida and New Jersey, Republicans swept into power last year by voters outraged about ongoing economic distress are now targeting benefits for pensioners...
hiking taxes for employees who will one day receive a pension and, in Wisconsin, even trying to eliminate the right for public employees to collectively bargain for a pension.
Pensions, needless to say, are, like some Wall Street bonuses, contractual obligations. They're deferred compensation that formed the basis for years or, in some cases, decades of work already performed.
Bonus This…
The average annual pension for government workers is roughly $19,500 a year, according to the American Federation of State, County and Municipal Employees, one of the nation's largest labor unions.
That would mean $500,000 could provide about 25 years worth of payouts to a retired public servant.
The $9 million bonus Goldman Sachs chief executive Lloyd Blankfein received for 2009 could have provided two decades of pension pay for 23 such public workers.
"These people would never invest all of their own money in Treasury bonds alone, yet they expect pensions to plan as if they did," says Monica Morrissey of the Economic Policy Institute.
"They're resorting to accounting gimmicks to make the hole look a lot bigger than it really is. The reality is that contributions can be adjusted very gradually because there isn't any immediate cash-flow problem."
The Contract…
The employer has to figure a way to have the little guys who make their companies run profitably, not live in poverty during their golden years.
The compact or contract between employer and faithful employee has been broken.
Gone are the days when the employer (private or public sector) would match or contribute to the faithful employee’s pension plan.
Gone are the days where if the employee dedicated their career and life towards the advancement of the corporation or city, they would receive a just reward for their diligence and perseverance in the form of a pension.
Thanks for 30 years....
tough break on your little 401k when the market crashed, but the burden is all on the employee and none on the employer.
401k's as a stand alone are another way to fatten corporate/finance America's pockets at the expense of the little guy.
Click here to read the full text from the Huffington Post. More to come in Why? Part 3: Why 401K's Are NOT The Solution.
In the meantime, try to recapture the glory days....
Overhauled & Updated from 03/20/11 for 2014.
The redistribution of wealth…
In 2010, New Jersey Gov. Chris Christie (R) decided to forgoe the $3 billion annual state contribution to the pension plan while pushing $1 billion in tax cuts for the state's wealthiest citizens.
Meanwhile, Christie's budget for fiscal 2012 includes $200 million in corporate tax cuts, with plans to increase those cuts to $690 million a year by 2016, along with $180 million in 2012 tax cuts for homeowners.
It's a fairly straightforward proposition: Christie is taking money from public workers and giving much of it to corporations, cloaking the transfer of wealth in the language of fiscal responsibility.
A gross distortion…
As it stands, pension contributions appear to have a relatively small impact on state budgets. "They have time to make adjustments," said Keith Brainard, research director for the National Association of State Retirement Administrators. "The idea of imminent insolvency is a gross distortion."
Despite major standoffs between conservative governments and labor unions in Wisconsin, Indiana, Ohio and Florida, these states' pension plans are all on strong footing, even given disastrous economic conditions.
Wisconsin and Ohio were each cited in a 2010 study by the Pew Center for the States as "a national leader in managing ... long-term liabilities for both pensions and retiree health care."
Florida was cited by the same report as a "top performer" for its pension fund.
After the massive 2008-2009 House of Finance Bailout…
In early 2010, Goldman Sachs announced two blockbuster numbers: profits of $13.4 billion for the prior year and compensation of $16.2 billion -- the equivalent of about $500,000 for each employee at the Wall Street titan.
When news of Goldmanesque bonuses first sparked public outrage, both Wall Street and the White House combated the criticism with a persistent argument:
Yes, it might be deeply frustrating to see taxpayer dollars used to further enrich already wealthy bankers, but these bonus deals were were contractual obligations and America is a nation of laws.
Not so sacrosanct anymore…
Now, with state leaders planning pay cuts for teachers, firefighters and other public workers, contracts aren't described as so sacrosanct anymore.
In Wisconsin, Indiana, Ohio, Florida and New Jersey, Republicans swept into power last year by voters outraged about ongoing economic distress are now targeting benefits for pensioners...
hiking taxes for employees who will one day receive a pension and, in Wisconsin, even trying to eliminate the right for public employees to collectively bargain for a pension.
Pensions, needless to say, are, like some Wall Street bonuses, contractual obligations. They're deferred compensation that formed the basis for years or, in some cases, decades of work already performed.
Bonus This…
The average annual pension for government workers is roughly $19,500 a year, according to the American Federation of State, County and Municipal Employees, one of the nation's largest labor unions.
That would mean $500,000 could provide about 25 years worth of payouts to a retired public servant.
The $9 million bonus Goldman Sachs chief executive Lloyd Blankfein received for 2009 could have provided two decades of pension pay for 23 such public workers.
"These people would never invest all of their own money in Treasury bonds alone, yet they expect pensions to plan as if they did," says Monica Morrissey of the Economic Policy Institute.
"They're resorting to accounting gimmicks to make the hole look a lot bigger than it really is. The reality is that contributions can be adjusted very gradually because there isn't any immediate cash-flow problem."
The Contract…
The employer has to figure a way to have the little guys who make their companies run profitably, not live in poverty during their golden years.
The compact or contract between employer and faithful employee has been broken.
Gone are the days when the employer (private or public sector) would match or contribute to the faithful employee’s pension plan.
Gone are the days where if the employee dedicated their career and life towards the advancement of the corporation or city, they would receive a just reward for their diligence and perseverance in the form of a pension.
Thanks for 30 years....
tough break on your little 401k when the market crashed, but the burden is all on the employee and none on the employer.
401k's as a stand alone are another way to fatten corporate/finance America's pockets at the expense of the little guy.
Click here to read the full text from the Huffington Post. More to come in Why? Part 3: Why 401K's Are NOT The Solution.
In the meantime, try to recapture the glory days....
Overhauled & Updated from 03/20/11 for 2014.
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