THE BLOG
09/13/2010 03:58 pm ET Updated May 25, 2011

Defending the Middle-Class: Why We Need Unions, Pensions, and Public Employees

Politicians and media pundits have joined the conservative effort to demonize unions, pensions, and public employees. In fact, if you landed on the planet today, you would think that the global financial meltdown was caused by greedy unionized public employees. Instead of blaming the super-wealthy for their huge gambling losses, there is a growing consensus claiming that the working poor and the downsized middle class are the cause of all of our problems.

In the case of pensions for public employees, the popular sentiment is that these benefits will starve local and state governments, and so they should be eliminated or at least severely reduced. Leading the media frenzy against pensions is the misunderstanding of the cause and effects of unfunded pension liabilities. What no one seems to be saying is that due to the unethical and possibly illegal activities of Wall Street, most pension funds lost close to a third of their value in 2007 and 2008. While the banks and financial institutions were bailed out, no relief came to these pension funds, and new accounting rules forced public pensions to declare all of their present and future pension liabilities. However, we should remember that these liabilities do not have to be paid for today; in, fact, the pension liabilities cover the present and future retirement costs of all people in the system.

Since reporters and the general public do not understand how pensions work, they are easily scared by what looks to be giant deficits. Furthermore, employers are using these huge numbers to get employees to accept reduced benefits, and the side effect of this scare tactic is that the public has turned on pensions, public employees, and unions. Unintentionally, the media, public employers, and the general public are playing into the hands of the wealthiest people in America who do not want to pay middle-class workers a decent wage with acceptable benefits.

While it may be necessary to restructure pensions, it is important to stress that many employees have been contributing large parts of their salaries to ensure that they would have a viable income when they retired. Moreover, many employers have profited from being able to attract and retain workers earning reduced salaries because of the promised retirement packages. If these plans are not protected, not only will employers be breaking their promises, but more senior citizens will fall into poverty, which will present another drag on the economy through the reduction of consumer demand.

Driving this attack on the middle class benefits and the working poor is the discovery by wealthy corporations and individuals that the best way for them to increase their earnings is to decrease the income and benefits of everyone else. In this move to concentrate wealth at the top, we find that nearly two-thirds of the income growth since 1979 has gone to the top 10 percent of US taxpayers. This tremendous concentration of wealth has been coupled with a decrease in tax rates for these wealthiest Americans, which in turn has resulted in giant state deficits and the reduction of needed social programs.

If current trends continue, the top ten percent will continue to increase their earnings, while everyone else suffers. Of course, the great magic trick in all of this is that the Republican party has convinced many Americans that the real threat to their economic survival comes from the poor and the middle class. Perhaps no state better exemplifies this situation than California where the consolidation of wealth has surpassed the national average. Since these rich Californians are not paying their fair share of taxes, the state cannot support even its basic functions, and a huge deficit has resulted in massive budge cuts. Making matters worse is the law that requires a two-thirds supermajority to pass any budget or tax increase. The result is that even the Terminator cannot get a budget passed.

To resolve this impasse, California is considering billionaire Meg Whitman for governor. Not only is she spending over a hundred million dollars of her own money on her campaign, but she is running on a very scary platform, which is basically to blame welfare for all of the states problems. Once again, we have the super wealthy blaming the poor for the problems in our economy. This is like a billionaire blaming her maid for the fall in her investment portfolio.

Of course, Whitman, like so many other Republicans, also wants to attack unions, public employees, and pensions for our fiscal woes. She believes that we should replace defined benefit plans with defined contribution plans so that the next time the stock market tanks, everyone will lose all of their money. Whitman is as superficial as her commercials, and her only hope of winning is if she convinces workers and middle class people to vote according to their prejudices.

What we need is a candidate who will stand up for workers, organized labor, and the middle class. Jerry Brown may not be the perfect candidate, but he does have a history of supporting rational policies that do not cater to the super wealthy. A key to this election will be the passing of Proposition 25, which allows a budget to be passed by the legislature with a simple majority vote. If Brown wins and Proposition 25 passes, California will be able to escape from its paralysis and start putting people back to work.