Part III - Why 401K's are NOT the Solution

So, the state of Utah has been putting insufficient money into its pension plan? and now there isn’t enough money there to meet upcoming liabilities.

And the solution here is for the state, in future, to contribute “roughly half” of what it’s been spending up until now in pension contributions.

Needless to say, this makes no sense on either front.

The liability to existing workers doesn’t go away if a different plan is adopted for new workers, so the problems at the pension plan aren’t being addressed.

On top of that, it’s hard to see how contributing much less to new workers’ retirement is going to help them at all, either.

From a pensions perspective, there’s no winner at all: the only entity better off is the state, from a cashflow perspective.

401(k) plans are a bad deal for taxpayers.

Dollar for dollar, a traditional pension plan yields more pension benefits than do 401(k) plans because 401(k) management and investment fees are three times higher.

The only clear winners when pensions switch over to the 401(k) plans are brokers and bankers…

The unintended effect of widespread 401(k) plans is more volatility. In contrast to traditional pensions and Social Security, 401(k) plans fuel bubbles and make recessions worse.

When the economy is booming, 401(k) plan asset values soar, making people spend more and work less. Not what you want in an expansion.

Worse, when the economy plummets and takes 401(k) assets with it, people do the opposite; they cling to the labor market and rein in spending – again, two things you don’t want in a recession.

For rich professionals who jump from job to job every few years, 401(k) plans do make a certain amount of sense.

For public servants spending a lifetime in the police force or in elementary schools, by contrast, they emphatically don’t.

Click herefor the full text.

Part II - The Overblown Crisis and The Contract

The redistribution of wealth…

Last year, New Jersey Gov. Chris Christie (R) decided to forgoe the $3 billion annual state contribution to the pension plan while pushing $1 billion in tax cuts for the state's wealthiest citizens.

Meanwhile, Christie's budget for fiscal 2012 includes $200 million in corporate tax cuts, with plans to increase those cuts to $690 million a year by 2016, along with $180 million in 2012 tax cuts for homeowners.

It's a fairly straightforward proposition: Christie is taking money from public workers and giving much of it to corporations, cloaking the transfer of wealth in the language of fiscal responsibility.

A gross distortion…

As it stands, pension contributions appear to have a relatively small impact on state budgets. "They have time to make adjustments," said Keith Brainard, research director for the National Association of State Retirement Administrators. "The idea of imminent insolvency is a gross distortion."

Despite major standoffs between conservative governments and labor unions in Wisconsin, Indiana, Ohio and Florida, these states' pension plans are all on strong footing, even given disastrous economic conditions.

Wisconsin and Ohio were each cited in a 2010 study by the Pew Center for the States as "a national leader in managing ... long-term liabilities for both pensions and retiree health care."

Florida was cited by the same report as a "top performer" for its pension fund.

After the massive 2008-2009 House of Finance Bailout…

In early 2010, Goldman Sachs announced two blockbuster numbers: profits of $13.4 billion for the prior year and compensation of $16.2 billion -- the equivalent of about $500,000 for each employee at the Wall Street titan.

When news of Goldmanesque bonuses first sparked public outrage, both Wall Street and the White House combated the criticism with a persistent argument:

Yes, it might be deeply frustrating to see taxpayer dollars used to further enrich already wealthy bankers, but these bonus deals were were contractual obligations and America is a nation of laws.

Not so sacrosanct anymore…

Now, with state leaders planning pay cuts for teachers, firefighters and other public workers, contracts aren't described as so sacrosanct anymore.

In Wisconsin, Indiana, Ohio, Florida and New Jersey, Republicans swept into power last year by voters outraged about ongoing economic distress are now targeting benefits for pensioners...

hiking taxes for employees who will one day receive a pension and, in Wisconsin, even trying to eliminate the right for public employees to collectively bargain for a pension.

Pensions, needless to say, are, like some Wall Street bonuses, contractual obligations. They're deferred compensation that formed the basis for years or, in some cases, decades of work already performed.

Bonus This…

The average annual pension for government workers is roughly $19,500 a year, according to the American Federation of State, County and Municipal Employees, one of the nation's largest labor unions.

That would mean $500,000 could provide about 25 years worth of payouts to a retired public servant.

The $9 million bonus Goldman Sachs chief executive Lloyd Blankfein received for 2009 could have provided two decades of pension pay for 23 such public workers.

"These people would never invest all of their own money in Treasury bonds alone, yet they expect pensions to plan as if they did," says EPI's Morrissey.

"They're resorting to accounting gimmicks to make the hole look a lot bigger than it really is. The reality is that contributions can be adjusted very gradually because there isn't any immediate cash-flow problem."

The Contract…

The employer has to figure a way to have the little guys who make their companies run profitably, not live in poverty during their golden years.

The compact or contract between employer and faithful employee has been broken.

Gone are the days when the employer (private or public sector) would match or contribute to the faithful employee’s pension plan.

Gone are the days where if the employee dedicated their career and life towards the advancement of the corporation or city, they would receive a just reward for their diligence and perseverance in the form of a pension.

Thanks for 30 years....

tough break on your little 401k when the market crashed, but the burden is all on the employee and none on the employer.

401k's as a stand alone are another way to fatten corporate/finance America's pockets at the expense of the little guy.

Click here to read the full text.

Part One - The Shameful Attack and Truth

The Nattering One Muses...Rather than place blame, directly were it belongs, with the politicians responsible for the House of Finances ascendancy over the last thirty years...

and the rich blue blood fatcats that got them elected in order to rape and pillage globally along with their globalization (new world disorder) plans...

along with the greed and hubris of Wall Street, real estate, bankers and financial criminals who brought us the house of cards or shit we now live in...

Public servants are convenient scapegoats.

It's far more convenient to go after people who are doing the public work -- sanitation workers, police officers, fire fighters, teachers, social workers, federal employees -- to call them "faceless bureaucrats" and portray them as hooligans who are making off with your money and crippling federal and state budgets.

Public employees earn far more than private-sector workers?

That's untrue when you take account of level of education. Matched by education, public sector workers actually earn less than their private-sector counterparts.

Only 23 percent of private-sector employees have college degrees; 48 percent of government workers do.

Over the last fifteen years the pay of public sector workers has dropped relative to private-sector employees with the same level of education.

Public sector workers now earn 11 percent less than comparable workers in the private sector, and local workers 12 percent less.

Even if you include health and retirement benefits, government employees still earn less than their private-sector counterparts with similar educations.

Public-sector pensions are crippling the nation? Public-employee pensions obligations are out of control?

Some reforms do need to be made. Loopholes that allow public sector workers to "spike" their final salaries in order to get higher annuities must be closed. And no retired public employee should be allowed to "double dip," collecting more than one public pension.

But these are the rare exceptions of ABUSERS. Most public employees don't ABUSE and do not have generous pensions.

After a career with annual pay averaging less than $45,000, the typical newly-retired public employee receives a pension of $19,000 a year. Few would call that overly generous.

And most of that $19,000 isn't even on taxpayers' shoulders. While they're working, most public employees contribute a portion of their salaries into their pension plans.

Taxpayers are directly responsible for only about 14 percent of public retirement benefits.

Bargaining rights for public employees have caused state deficits to explode?

Some states that deny their employees bargaining rights -- Nevada, North Carolina, and Arizona, for example, are running giant deficits of over 30 percent of spending.

Many that give employees bargaining rights -- Massachusetts, New Mexico, and Montana -- have small deficits of less than 10 percent.

Public employees often know more about whether public programs are working, or how to make them work better, than political appointees who hold their offices for only a few years.

This version of class warfare is to pit private-sector workers against public servants.

The ruling class would rather set average working people against one another -- comparing one group's modest incomes and benefits with another group's modest incomes and benefits -- than have Americans see that the top 1 percent is now raking in a bigger share of national income than at any time since 1928, and paying at a lower tax rate.

Shameful indeed.

More to come in this FOUR PART series.

Click this link to read the full text of former Secretary of Labor Robert Reich’s op-ed.

The Nattering One Muses... Lazarus has arisen, rise and tell others...

We need to school some liberal left wing Democrats and conservative right wing Republicans.

We won't mention anyone else calling themselves tea baggers, because calling a Ex-Democrat - a Libertarian, or a Ex-Republican - a Tea Party member, is like calling a Ex Nazi - a Socialistic Swastika Lover.

Warm and fuzzy, isn't it? Tell that to the six million Jews that were gassed and turned into ashes.

Your political camouflage is a thin cheap veneer, and deep down, you know what you are, and you can't handle the truth.

The truth being, you can't change your spots or stripes and hide from the Nattering One or anyone with an ounce of common sense.

We of the COMMON SENSE party call BULLSHIT and SHAME on all of you... and like the hunters we are, we will expose you through your words and actions.