Kill Pensions For Regular People But Let The Rich Slide

[marmar]

from the Working Life blog:



Kill Pensions For Regular People But Let The Rich Slide

by Jonathan Tasini
Friday 21 of January, 2011


Each day brings a stupefying new chapter in the class warfare underway in America. Today, it's the unfathomable idea that regular people who had worked their entire lives serving the public should now be effectively cast out into the cold, their pensions ripped up. But, what we need to connect is this: there is plenty of money to solve our financial challenges at the state and federal level but our political leaders have made a conscious decision to let the rich (read: the political leaders' campaign contributors) escape unscathed.

To set the stage for my point:

Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.

Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign.

But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government’s aid.

Beyond their short-term budget gaps, some states have deep structural problems, like insolvent pension funds, that are diverting money from essential public services like education and health care. Some members of Congress fear that it is just a matter of time before a state seeks a bailout, say bankruptcy lawyers who have been consulted by Congressional aides.

Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout. Along with retirees, however, investors in a state’s bonds could suffer, possibly ending up at the back of the line as unsecured creditors.

But, hold on. The real scandal is something I, and many others, have pointed out for a long time: The careful and decades-long obliteration of a fair tax system has brought these pension plans to the brink. That has been aided by the irresponsibility, and criminality, of many of the fools in the financial sector. ...........(more)

The complete piece is at: http://www.workinglife.org/blogs/view_post.php?content_id=15084

[sarcasmo]

1. The war on teachers was never about teachers or students it is about pensions.

[LiberalEsto]

2. Pensions are YOUR money

You paid into them.
What companies paid into them was part of our earnings.
There is no right whatsoever by anyone to take away what belongs to you. Especially without due process of law for each and every pension holder.

[xchrom]

3. Recommend

[WillyT]

4. HUGE K & R !!!

:mad:

:kick:

[Overseas]

5. K&R. Great article. States refusing to raise taxes in the highest income brackets

when an increase of two percent at the top could do so much.

States would rather declare bankruptcy and destroy the pensions of dedicated workers rather than impose on their wealthy campaign donors.

In New York State, and virtually, every other state, we could wipe out fiscal deficits, or certainly make them more manageable and even trivial, and continue to have decent pensions for people if the wealthiest paid their fair share--rather than continue to get unconscionable tax cuts. In NY, if the state replaced the existing rate structure (consisting of 5 brackets with rates ranging from 4.0 to 6.85%) with one consisting of 14 brackets with rates ranging from 2.0 to 15.0%, we could bring in $6-7 billion more, and perhaps as high as $11 billion.

Indeed, the one sentence in yesterday's story that really should have been the headline is this:

In New York, an increase of two percentage points in the state income tax could raise about $9 billion and perhaps tip the state into surplus.

That is simply worth repeating again: In New York, an increase of two percentage points in the state income tax could raise about $9 billion and perhaps tip the state into surplus.

And, from my point of view, we would not need to touch regular people at all. We could deal with this fiscal challenge (notice I do not use the word "crisis") by demanding that the rich stop plundering the country and give a little back.

Instead, we get the theme that states somehow magically have gone broke--because of some irresponsible spending habits (I leave aside graft because frankly I think that is a sideshow) and, now, the time has come to "get real" and cut back.

[Gidney N Cloyd]

6. This story's been all over the wires last few days. I keep hearing "Illinois, for example"despite...

...despite the fact that Illinois at least did the mature thing and raised income taxes. The politicians here actually sucked it up and made a potentially career-ending move for the sake of addressing the budget problem.
So of course as the article goes out on the wires, trimmed down to a 20 second read but with that throw-away line in place, and is picked up by TV and radio newsrooms, Illinois takes it up the ass. There are states in much worse trouble that are doing everything possible to avoid dealing with reality, but, no, Illinois, which apparently angered the corporate PTB, gets to be the poster state for insolvency.