OK

  We have a real problem in the debate about pensions that is very closely connected to the financial implosion we're still trying to dig our way out of: the criminals and fools on Wall Street are hiding and avoiding prosecution, or at the very least, they are managing to keep their jobs despite their stupidity and greed. So, rather than march the Wall Street crooks/incompetents into the public square--I actually would like to do that literally and have a prime time live special anchored by Oprah for that one, asking Robert Rubin and Lloyd Blankfeid et al, "do you ever feel guilty about what you did? Do you talk to your therapist about it"?--public workers are taking the brunt of the fear racing through America. So, let's look at the facts....

  To start with, let's be clear again about what pensions are: they are wages that hundreds of thousands of workers put off getting today so that they could retire later with a little income that would mean having chicken and vegetables for dinner, not dog food. And rather than take the George W. Bush approach to a crisis--please, America, go shop and spend your money--unions, and their members, said, "nope, we're not going to just go on a spending spree today. We want to be long-term, smart responsible thinkers and make Americans can live out their later years in some security."

   Now, here is the truth about pensions--I'm going to use New York City and State as examples. Mayor Michael Bloomberg and others--mainly in the wing-nutsophere and think thanks that are rarely labeled as shills for the "free market"--claims that that  pension contribution have exploded exponentially in recent years, so now, we have to "get serious" and cut benefits dramatically.

   But, it's worth understanding what the long-term trend has been and why pension contributions have increased. And this official chart tells the story:
       

   The New York City Employees Retirement System, for the entire decade, had a DECLINE in employer (the "employer" being the city) contributions from $845 million  in 1990 to $145 million n 1999. At the same time, the net asset value of the Fund increased from $18 billion in 1990 to $41 billion in 1999. So, someone was managing this pretty well.

   Then, you notice that contributions from the city start a steady increase around 2000 or so. Well, gee, why was that? In a word, the greed and incompetence of Wall Street.

   The first time, you might note, that the line starts climbing again is around 2000. Hmmm...what happened there? Oh, yeah: the Internet asset bubble finally blew up (yes, that was a gift from the "good economic times" of the Clinton Administration). So, by law, the pension funds had to try to make up investments that had gone south.

    So, that wasn't the big new demands on the parts of workers. NO. That was the greed and foolishness on the part of the financial system--encouraged, no doubt, by policymakers of both parties--can you say, Robert Rubin?--and the Federal Reserve.

    But, WORKERS' demands had nothing to do with this.

   Let's move to our most recent calamity. The net asset value of the NYCERS fund declined by over $30 billion between 2007 and 2009.

    Workers demands? NO--THE financial fraud and the near collapse of the financial system, which meant employer contributions had to increase to make up for the money which was, in my view, effectively stolen.

   The same trend is fairly similar, with some differences (the bump in the mid-90s for fire and police) for state workers:
                     

    The employer contributions decline dramatically and, then, again, in the early part of the previous decade begin to increase.

    So, here is the sum up we need to keep in mind and repeat:

Pension contributions by employers—which as we know are DEFERRED WAGES!!!--went down.

And only had to go up because of Wall St corruption.

And, with all of that, we're talking about a $19,000 per worker contribution that is pretty modest.

   Facts are pesky, aren't they?

   What can be done?

   Consider this contrast: As I wrote recently, quoting The Wall Street Journal, "In 2010, total compensation and benefits at publicly traded Wall Street banks and securities firms hit a record of $135 billion, according to an analysis by The Wall Street Journal." So, the very people responsible for the financial criminality and/or incompetence on Wall Street are now the beneficiaries--again.

    On the other hand, we have a demand in New York, and in many other states, to cut the pensions of millions of workers, who were the VICTIMS of the financial criminality and/or incompetence on Wall Street.

    Solution: Let's sue Wall Street for all those losses and demand that those firms now making money hand over fist make every pension fund whole for the broad fraud perpetrated.

Originally posted to Tasini on Wed Mar 02, 2011 at 10:21 AM PST.

Also republished by In Support of Labor and Unions.

EMAIL TO A FRIEND X
Your Email has been sent.