Tuesday, April 13, 2010

Scheming to steal workers' pensions

Amy Muldoon looks behind the hype about how public-sector workers get "exorbitant" pensions--and finds a cabal of right-wing politicians and CEOs out to bash unions.

Public-sector retirees protest an attack on their pension benefits (Christine Stuart | CTNewsjunkie.com)
Public-sector retirees protest an attack on their pension benefits (Christine Stuart | CTNewsjunkie.com)

ACCORDING TO the business press and crusading politicians, the unfettered greed of some in our society is threatening to bankrupt city and state governments, and cause public services to be hollowed out.

Who are these selfish criminals? Wall Street bankers? Defense contractors? Tax-dodging corporate executives?

No, the culprits, according to the latest media hype, are public employees.

The problem, we're told, is that public-sector workers have the nerve to collect "fixed" or "defined benefit" pensions--meaning that their pensions are negotiated according to pay and years of service, as opposed to "fixed contribution" pensions such as 401(k)s that are based on the values of stocks and investments (and which therefore can be worthless if you have bad luck).

A recent cover story in the investors' magazine Barron's by Jonathan Laing--headlined "The $2 Trillion Hole"--touts a recent Pew study which found that the shortfall between what's owed to public-sector workers for their pensions and the funds that have been set aside to pay them is now valued at up to $2 trillion. (The exact dollar amount of the gap is greatly disputed but lies somewhere between $1 and $3 billion).

Laing finds it outrageous that public employees usually retire with a guaranteed pension. His article, and similar one in Forbes and the Wall Street Journal, consciously whip up anti-union and anti-public sector vitriol.

Of course, it's not surprising that the wealthy would bemoan decent compensation for working people. But their intention with the current hype is to generate a backlash from private-sector workers against their brothers and sisters in the public sector. This, they hope, will provide the political space for further attacking public-sector unions.


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