Rupert Murdoch's Wall Street Journal, the Pravda of the 1 percent, is at it again, continuing its push to gut the retirement security of millions of middle class workers across the country while enriching the Wall Street moneymen who just three years ago took our economy over the cliff.
Virtually everyone agrees that our nation faces a retirement security crisis, but the Journal last week published a shameful op-ed calling for the elimination of pensions for nurses, firefighters, corrections officers and others who still have them. Having punched private sector workers retirement in the gut, these folks won't be happy until the whole concept of a secure retirement for working Americans is a thing of the past.
The typical AFSCME member -- men and women who plow our streets, care for the sick, protect our children, clean our buildings and keep our communities safe -- receives a pension of approximately $19,000 a year after a career of public service. The employees have earned and paid for these pensions. Employee contribution rates commonly amount to 3 percent to 10 percent of their paychecks. These contributions, combined with investment earnings, usually account for 75 percent or more of all pension benefit funding.
The economy's collapse in 2008-2009 took its toll on everyone's retirement savings. But our nation's public pension systems, which were fully funded before the crash, continue their robust recovery earning their highest returns in decades in fiscal year 2011. Pensions continue to provide irreplaceable retirement security to millions of Americans who provide public services. Yet, the corporate-backed opponents of pensions are creating a myth that the system is falling apart and that state and local governments are going bankrupt because of the $19,000 pensions sanitation workers are earning.
That is simply not true. According to the Center for Economic and Policy Research, the size of the projected state and local government pension funding shortfalls is manageable. In most states, the total shortfall for the pension funds is less than 0.2 percent of projected gross state product during the next 30 years. Even in states with the largest shortfalls, the gap is less than 0.5 percent of projected state product during that period. And, because pension payments are made over generations of workers, funding can remain stable over long periods, and funding challenges managed over decade long periods, despite short-term economic setbacks. These are facts that the opponents of public pensions simply ignore, as they seek to punish workers for Wall Street's psychopathic behavior.
Andrew Biggs and Jason Richwine -- representing two right-wing, corporate-funded propaganda outfits, the American Enterprise Institute and the Heritage Foundation -- were given prime space on the Journal's op-ed page last week to make an argument for radically transforming the retirement savings of working Americans. They laid out a reckless plan to end guaranteed retirement accounts, and in some cases require workers to forfeit their life savings, and force public workers to enrich Wall Street firms that have already demonstrated their inability to produce adequate resources to meet the needs of retirees. What's even worse, their plan would cost taxpayers significantly more than the current system, thereby transferring even greater amounts of taxpayer money into the coffers of Wall Street bankers.
This scheme would put the retirement savings of millions of working, middle-class Americans with earned pensions into a casino-like 401(k) system. In the private sector, it has already failed miserably. It's a plan that could devour the ability of hard-working public employees to retire with any semblance of security. Even the Journal admitted in an article last year that the median household with a 401(k) has less than one-quarter of the savings needed for retirement. Yet it seems the editorial page editors ignore this fact and continue their misguided crusade against workers' economic security.
And let's put an end to the notion that public employees haven't had to accept reductions. Fully 40 states have reduced benefits and/or increased employee contribution requirements in the past two years. AFSCME is willing to work with government officials at all levels to enact sensible pension reforms.
While pension funds face manageable challenges, the same cannot be said for the failed 401(k) system that Wall Street and the corporate chieftains have forced onto private sector workers. After three decades of experience with it, we know 401(k)s do not meet the one true test of effectiveness: economic security in retirement. Yet instead of devoting their energies to fixing the system they foisted on workers, the right-wing, pension heretics are intent on destroying the retirement security of the remaining Americans who have it.
That's not a real solution. It's just another cynical effort to attack working Americans and benefit the folks at the top of the income ladder. We need to ensure that more workers in our country have real retirement security and say no to the extremists who want to transfer more of America's wealth to the top 1 percent.