We have a huge crisis in the country. The private pension system is collapsing. The public pension system is on the brink of collapse, and people are beingpitted one against the other. But, what we often fail to do is connect the dots: between the collapse of the public pensions system and the robbery of the country by the richest people. Here's another example.
The traditional press is reporting this, first the NYTimes:
This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.
Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.
Since then, Nettie Banks, 68, a retired Prichard police and fire dispatcher, has filed for bankruptcy. Alfred Arnold, a 66-year-old retired fire captain, has gone back to work as a shopping mall security guard to try to keep his house. Eddie Ragland, 59, a retired police captain, accepted help from colleagues, bake sales and collection jars after he was shot by a robber, leaving him badly wounded and unable to get to his new job as a police officer at the regional airport.
Far worse was the retired fire marshal who died in June. Like many of the others, he was too young to collect Social Security. "When they found him, he had no electricity and no running water in his house," said David Anders, 58, a retired district fire chief. "He was a proud enough man that he wouldn’t accept help." [emphasis added]
Let me repeat that last emphasis: the man was too proud to ask for help and so he died alone with no electricity and no running water in his house.
Though bankruptcy law remains murky on how far a city or town can go in scrapping deals for current retirees, cases like Prichard and other workout efforts stand to reshape the debate over how local governments deal with mounting public-pension problems.
The stakes are high for taxpayers, public workers and bondholders, as concerns escalate about whether governments can pay their debts.
But legal and municipal-finance experts say rising pension costs, combined with dwindling state and federal aid, could push more cities to follow Prichard's lead, or at least raise the prospect as possible leverage in contract negotiations with public workers.
It is astonishing that both these stories, and I presume, the rest in the media, ignore the obvious:
The careful and decades-long obliteration of a fair tax system has brought these pension plans to the brink.
In New York States, and virtually, every other state, we could wipe out fiscal deficits 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.
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.
By abandoning their responsibility in society, the richest among us have consigned millions of people to a retirement of poverty and a struggle to survive. The richest have benefited from the services provided by the public workers in our country but they refuse to pay their fair share--and so public workers are cast off.
The public pension fight is crucial and will mirror the larger fight at the federal level when the Catfood Commission adherents try to push their plan in 2011.
We can't let the modern-day Jay Goulds triumph. Gould was the 19th Century Robber Baron, who said, "I can hire one half of the working class to kill the other half."
We can't let that happen. And we can't let people fight and die alone because we allowed the rich to walk off with the nation's wealth so they could buy another yacht and another mansion and let the rest of us struggle with no electricity and no water.
UPDATE IN RESPONSE TO SOME COMMENTS: I think we seriously need to distinguish between economics VERSUS power. There is absolutely no economic reason--NONE--that we could not have real, defined benefit pensions in America. ZERO ECONOMIC REASON, I REPEAT.
The only reason our pension system is collapsing is because of POWER--the power of the ruling elites in the business and political worlds to simply decide that people should not get decent pensions--defined benefit pensions. They decided that it was more important to drain the lion's share of our wealth into the hands of a few: that has happened because of an unfair tax system AND a decision to drain real pension money into the 401k sham system...which meant more profits for Wall Street. This, btw, is the entire motivation behind Social Security privatization--to put more money in the hands of Wall Street firms.