This seems to be the lesson that our nation's leaders are trying to pound home to us. According to the New York Times, members of Congress are secretly running around in closets and back alleys working up a law allowing states to declare bankruptcy.
According to the article, a main goal of state bankruptcy is to allow states to default on their pension obligations. This means that states will be able to tell workers, including those already retired, that they are out of luck. Teachers, highway patrol officers and other government employees, some of whom worked decades for the government, will be told that their contracts no longer mean anything. They will not get the pensions that they were expecting.
Depending on the specific circumstances, they may find their pensions cut back 20 percent, 30 percent, perhaps even 50 percent. There would be no guarantees if a state goes into bankruptcy.
There has been a concerted effort to bash public sector employees by either highlighting the few instances where pensions actually are exorbitant or just making things up. Untruths about Goldman Sachs, General Electric or any other major company rarely appear in the media, and are usually quickly corrected when they do. However, exaggerations or outright fabrication are a standard practice for those who report on state and local budgets when it comes to public employees.
The public has been bombarded with stories of public employees retiring with six-figure pensions while still in their early 50s. There may be some instances of such inflated pensions, but that is far from the typical story. If we look to New York State, the hotbed of bloated public budgets, we find that the state's main retirement system pays an average pension of $18,300 a year. For many workers this is their whole retirement income since they were not covered by Social Security.
This is the general story of public pensions. Public sector workers are often better situated than their private sector counterparts, in that they even have pensions. But study after study shows that these workers paid for their pensions with lower wages than their private sector counterparts. It is tragic that so many private sector workers cannot count on a secure retirement, but it won't help them to make workers in the public sector equally insecure.
And, there is the matter of paying debts. State governments are legally obligated to pay retirees the pensions they worked for just like any other debt. It is fascinating to see the interest by many pro-business conservative types in defaulting on this debt.
Many of these same people have been determined to argue that homeowners who are underwater in their mortgages should pay their debts. They certainly have not been offering them any assistance in staying in their homes.
In fact, back in 2005, some of the same crew were busy rewriting the bankruptcy law. They wanted to make it harder for individuals to get out of their debt through bankruptcy. They felt it was so important the people paid their debts to credit card companies and other lenders that they actually applied the law retroactively. People who took out debt under one set of bankruptcy rules suddenly found that Congress had changed the rules after the fact and they would now be subjected to a much harsher set of bankruptcy rules.
Let's see if we can find a pattern here. When families take out a mortgage in the middle of a housing bubble, which may have been misrepresented at the time of sale, the homeowner has an obligation to repay the money to the bank. When people take on credit card debt, they absolutely have an obligation to repay the bank -- even if it means changing the rules after the fact.
However, when the government signs a contract with workers, it doesn't have to pay the workers' pensions if it proves to be inconvenient. Of course, we may also throw in the fact that when the flood of bad mortgage loans issued by the banks threatened to push them into bankruptcy, the Treasury and the Fed give them trillions of dollars of loans at below market interest rates.
There certainly seems to be a pattern here. The story has nothing to do with preferences for the market or government intervention. The picture here is very simple: The rules get changed whenever it is necessary to make sure that money flows upward from ordinary workers to the rich. In 21st century America, upward redistribution seems to be the guiding principle.
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Dean Baker: The War on Public Sector Workers
Many of these people were offered a pension for lower wages and now that the piper is due, no one wants to pay. The stories of people getting outrageous pensions is overblown. This is one more sickening thing about America.
Upward redistribution of wealth could be impeded if those who mismanaged these pensions were held responsible for their decisions.
Your letter carriers does not pay into social security either; neither will any of their hours worked for the US Postal Service count towards their social security. They pay into an entirely different retirement account. They can still collect social security, but only if they have had some other job besides the Postal Service, and they must have had social security taxes withheld from their paychecks.
It is why we have a debt money system in America, not a value money system.
Without our debt the banks cease to exist since nearly each and every one of our debts is money created out of thin air with the wave of a pen. Take away that phony money, and the banks have nothing.
They not only did see it coming, they mad sure that it hit us head on!
And they practiced wiping out The People's savings and retirements with Enron, World Com, GM, and a whole bunch of countries like Ireland, Greece, and others where Goldman Sachs, the IMF and the World Bank have a history of crushing nations and destroying People.
It looks like it's our turn, if they get their way.
You'd have to look up the OCC, Fed, OTS, FDIC for the federal bank system totals. The Fed isn't in the federal budget, and you'd have to look at that separately in their published annual statements.
Don't include the SEC, since they don't regulate bank lending and they regulate many other industries. And of course FNMA, FMAC, FHA aren't regulators, so don't include them..
What numbers and sources are you quoting for defunding of bank regulators? And over what time period? Boy, I'd like to have the actual facts so I could throw them at my conservative friends!
For the record, AIG, Goldman, and the rest received LOANS. They have to pay back that money. If we bail out the pensions, how is that money going to be repaid?
None here. The comparison of underwater home owners is a good one but should have included
soldiers as well. This country sends off fine young men and women and hopes that they come
back safe and sound but when they don't, they get the same kind of treatment. This is what
happens when someone get the screwy idea that the country should be run like a corporation.
People are treated like overhead and instead of honoring agreements they look to the courts for
support to break those agreements.
http://finance.yahoo.com/news/Are-Pensions-the-Cause-of-zacks-594748065.html?x=0&.v=1
"Is There Another Possible Reason?
Perhaps, just perhaps, these workers are being made into scapegoats for problems they didn’t cause. State and Local pension funds are large institutional investors, and like most large institutional investors, they lost a lot of money during the financial meltdown. Some but not all of that has been recovered as the market has bounced back over the last two years.
However, not all the funds were in equities, and many of the state funds had large portfolios of the toxic mortgages that Wall Street was peddling during the housing boom. In 2010, the Wall Street Bonus pool reached $142 billion, or roughly 1% of GDP. To be fair, that is a worldwide total and many of the big Wall Street firms like Goldman Sachs (NYSE: GS - News) and JPMorgan (NYSE: JPM - News) are global operations.
That implies that lots of people on Wall Street are getting bonuses for a single year that are greater than an a retiree in the 10% highest percentile will receive in a lifetime."
What you really meant to write is:
"Government pensions are funded by three sources: employee contributions, investment returns and TAXPAYER contributions. "
And in CA, taxpayers also make up the shortfall from investment returns. While ordinary taxpayers have seen their 401K's tank, they have to also make up the difference for the tanking of state employee funds - its a double hit.
I think that this is more the case than being as greedy as the MSM is trying to make them out to be.
http://www.bls.gov/news.release/union2.nr0.htm