Labor now is told to go to the back of the line behind Wall Street. If the economy is too debt strapped to pay everyone what is owed, then the new motto is Big Fish Eat Little Fish. Wall Street is eating the pension funds.
This goes hand in hand with Obama's fight to scale back Social Security and, ultimately, to privatize it. Now that Republicans are in a majority of both the House and Senate, the Democrats will be able to take an anti-labor position and then try to blame it on Republicans.
Yet Democrats themselves were the leading advocates of the anti-labor, anti-pension fund policy. This special "rider" to the budget bill was known last spring to the House Budget Committee. Yet something tricky happened: While the committee approved the anti-labor pension rule, no record was taken of which members and which party voted for the radical change, and who opposed it.
For instance, Marcy Kaptur, who replaced Dennis Kucinich from Cleveland after the Democrats helped the Republicans gerrymander his district, said that she should remember who voted which way on the House Appropriations Committee she served on.
So this is the problem: the supposedly liberal Democrats are in the lead for scaling back pension funding, Social Security and labor protection in general.
Here's an indication of how bad the situation is. Pension funds -- union pension funds as well as corporate pension funds -- are supposed to be backed up by the PBGC. But that agency has been headed by a former Lazard Freres investment banker, Joshua Gotbaum. He's now at the Democratic Party's pro-Wall Street think tank to refine their anti-pension policies. He has explained to the press that he wants to "save" pensions -- by scaling them back.
This is the new Orwellian anti-labor rhetoric. "Saving" pensions means reducing what workers were promised -- back when they negotiated lower wage gains in exchange for greater retirement security. The new law permits pension plan trustees -- often Wall Street financiers -- to cut benefits without having to ask the PBGC to take over the plan. This "balances the federal budget" by saving the bailout funds for Wall Street, not for labor.
The problem is that the Employee Retirement Income Security Act (ERISA) of 1974 -- vastly underpriced the contributions that employers would have to make in order to pay retirees. The problem was designed to fail from the beginning, because Wall Street and corporate lobbyists fought to underfund the program. They knew from the very beginning that pensions would fail in the end.
Yet at the same time, the law stated that benefits already earned by workers cannot be cut back. But last December's Congressional budgetary coup d'etat ruled that now, employee retirement benefits can indeed be cut back. Retiree claims are not treated on the same level as financial debts to Wall Street investors. They are sent to the bottom of the line of claimants.
Their strategy is basically Malthusian: to blame the pension problem on the fact that America is de-industrializing, leaving not enough new union members to pay the dues that are necessary to pay retirees. This is because the pensions were designed to be a Ponzi scheme from the outset -- needing new contributors to pay the early entrants.
This is of course the argument that President Obama is making regarding the need to cut back Social Security too.
This turns out to be the big picture at work for the next two years. Outside of Wall Street, the economy is not really growing. Obama is escalating military spending in his heating-up confrontation with Russia and China, and that will take a large part of the budget. More bailouts and subsidies for Wall Street over their derivatives bets -- the rule that Senator Warren criticized -- will eat up more government revenue.
So something must give -- and the PBGC is one of the designated victims. The aim is to avoid government help for pension funds in arrears -- and nearly all funds are in arrears, because of the basically malstructured idea of making money financially instead of helping the economy actually grow by investing to produce more goods and services and raise living standards.
Congress has just legislated the right to scale back pension funds if they're managed by labor unions, e.g. on multi-employer contributors. This will hit blue collar labor the hardest, especially unionized building superintendents, and service workers.
Once this is done, the idea of rolling back pensions can spread to other kinds of pension funds besides union funds. State and local pensions, corporate pensions and even insurance company annuities can be cut back.
And the great aim at the end is to privatize Social Security. Scaling back labor union and corporate pension funds will enable Wall Street propagandists to come out and say, "See, the only way you can be safe is to have your own private accounts, and manage your own money."
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
5
4
4
