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The GOP’s War Against Retirees

As millions of Americans remain concerned about whether they will have enough money to fund their retirement, they can remain assured that the GOP is intent on making these post-working twilight years as difficult as possible.

While retirement once had an appealing ring to it over 50 years ago, that concept is now as foreign as job stability and $1 a gallon gas.

That’s because the GOP, as the main party of the neoliberal state, is continuously seeking to dismantle and

Out-of-touch with the public?  The Republicans face a great cultural divide emerges again in the Republican Party.

Out-of-touch with the public? A great cultural divide emerges in the Republican Party.

derail any pro-retiree initiatives that have been floated by Democrats or reformers seeking to strengthen the financial security of people who have stopped working. This war against retirees has been going on since the Reagan era and the formalization of the neoliberal state, which sought to dismantle all New Deal programs, curtail social solidarity and push for financial deregulation and trade treaties as the means of consolidating financial power.

Given these new institutional arrangements, neoliberal theory gets derailed when financial institutions become insolvent and have to be bailed out by taxpayers in order the preserve the sanctity of the financial system. This is what happened in the 1987-1988 savings and loan crisis (cost to taxpayers $180 billion), the 1997-1998 Long-Term Capital Management hedge fund bailout (cost: $3.5 billion to taxpayers) and all this pales compared to the $3.7 trillion paid out to financial institutions in the 2008 mortgage-related recession. (cited in Bailout by Neil Barofsky, page 165.) Aside from the great flaw in neoliberal policy, which allowed these events to occur, the other great problem is that few working people have noticed that Republicans are working against their interests and why this is happening.

Accompanying the expansion of Reagan’s neoliberal state, the Bush administration renewed discussions about privatizing Social Security in order to divert some of $1.5 trillion in assets held on the balance sheet of Social Security. These assets are comprised of special interest-bearing notes issued by the federal government and are essentially notes that the federal government owes to itself. These notes were intended to be in a trust fund.  But that intention has been eroded by politics over the years.

In one famous interchange between the two parties that illustrates the political gap in understanding Social Security, Vice President Al Gore in a 2000 presidential debate promised to “keep Social Security in a lockbox,” (so its funds could not be diverted for other federal programs). In the same debate, Governor George W. Bush responded that “what he (Gore) is doing is loading up I.O.U.’s for future generations.” Bush’s statement showed he did not understand that when Social Security was created in 1935, it was designed as a “pay-as-you-go” system with the current labor force paying into the fund for the dedicated benefit of older or disabled Social Security beneficiaries.

Even worse, a barrage of misinformation and carefully written propaganda messages has convinced too many Americans that a secure financial retirement, accompanied by a viable Social Security system, is un-American, a drain on the economy and hurts the middle-class. These messages, accompanied by stagnant real wages, increased job insecurity and unprecedented wage inequality indicate that Americans are now into an era of prolonged forced austerity, with no light at the end of the tunnel.

As a result, given the most extreme scenarios, Americans can have more in common with the economic problems unfolding in Greece, especially as they relate to forced pension cuts of 30% or more for Greek retirees and an unemployment rate peaking at 28% in September 2013.

Taken one step further, gullible voters, including many in the Tea Party, have adopted this anti-retiree propaganda and voted against their own economic self-interests by backing a unified block of Republican candidates that have an entirely separate, pro-corporate, pro-U.S. Chamber of Commerce, agenda aimed at dismantling public support for New Deal initiatives, unions, public protests and preventing working Americans from living out their post-working careers with any sense of financial security.

There are many examples of Republican programs to reduce or eliminate retirement benefits in all forms to retirees that are occurring simultaneously at the strategic and tactical levels, and in both the federal and state governments.

Here are just a few examples:

Reducing Social Security Benefits

According to PoliticusUSA, continued Republican attempts to dismantle Social Security by cutting disability cash assistance programs to 11 million disabled Americans. As it is today, these payments to the disabled allow them to earn just enough money to keep them above the poverty line. “The rule change is a part of a Republican effort to kill Social Security. If the disability fund can’t be replenished, Benefits will have to be cut, and some of the most economically vulnerable people in our society will be pushed deeper into poverty,” according to presidential candidate Sen. Bernie Sanders (I-VT.)

Looking forward, Sanders noted that and Republican presidential candidate Rep. Paul Ryan (R-Wis.) is now chair of the House Ways and Means Committee, and has more power to derail Social Security. “With Ryan heading up their response, the Republicans are more likely to insist on drastic changes to the entire program,” Sanders said.

Eliminating Pensions at the U.S. Postal Service

Created by Ben Franklin in 1775, the U.S Postal Service has played an essential role in promoting democracy throughout the nation’s history.  But that is old news, at least to the Republicans, who now insist it should be privatized since its origins as a natural monopoly can now be replaced by the likes of Federal Express, UPS, private bankers, venture capitalists and their lobbyists.

Mail carriers: No more pensions for you

Mail carriers: No more pensions for you

Why is the US Postal Service such an important target?  First, as the second largest civilian employer in the United States with about 600,000 workers, (Wal-Mart is the largest), the USPS has almost 240 years of national infrastructure as assets.

Second, corporations who want to dismantle the service will pay dearly to elected officials to access the spoils of a national communications system that has already been paid for by U.S. taxpayers.  On the ideological front, the political façade was presented by conservative ideologue Edward L. Hudgins in testimony before the Subcommittee on Treasury, Postal Service, and General Government Committee on Appropriations in the United States House of Representatives in April 30, 1996.

In this testimony, Hudgins saidthe federal government maintains a monopoly on the transport and delivery of messages on pieces of paper or other material media. It is a federal crime for private suppliers to offer these services. Yet problems with the U.S. Postal Service are chronic. More and more, the defects of the Postal Service stand in contrast to the successes of the private sector-created telecommunications revolution.”

This is a familiar criticism, but the USPS’ financial problems have been exacerbated by a unique burden imposed on it by conservatives in Congress seeking to sink the system. Specifically, due to a mandate included in the Postal Accountability and Enhancement Act of 2006, the USPS was forced to pre-fund employee healthcare benefits 75 years into the future.

In practice, this meant the USPS had to pre-fund healthcare benefits for 75 years in only 10 years.  In dollar terms, the USPS had to generate $5.5 billion a year since this outrageous hurdle was erected in 2007. Worse, they will have to continue funding this amount through 2016. This was a glaring and prejudiced action since no other corporation in the U.S., private or public, had to meet this outrageous standard for either its health or pension benefits.

It is also discriminatory since the USPS does not take taxpayer money (it relies on the sale of postage and supplies to fund operations), so why not extend these same burdens to other underfunded corporate pension and health plans in the private sector?

Writing on the Jonathan Turley web site, Elaine Magliaro said the legislation imposing this burden on the USPS was passed “on a voice vote by a lame duck Republican Congress.” The goal: to break the postal union and privatize the service.

Were it not for this prejudicial pre-funding burden, the USPS would be close to profitability and financially sound. As it is, a Republican Congress has interfered in the financial and business operations of a non-public corporation for purely political reasons and jeopardized pension benefits for one of the nation’s largest unions. The Republican push to privatize the USPS also ignores that private post offices in Europe have had significant problems, ranging from lost mail to long delays in deliveries.

Darryl Issa (R-Cal.)

Darryl Issa (R-Cal.)

Finally, it is worth noting that the architect of the USPS pre-funding scheme is Rep. Darrell Issa (R-Cal.) Issa’s past includes arrests for weapons charges and auto theft, suspicions of arson, and accusations of intimidation with a gun. He also held the position of chairman of the House Oversight and Government Reform Committee. The mainstream media has turned a blind eye to Issa’s sordid history, which negates the question about the power of the liberal media. Why? Because if the media was anti-corporate or anti-capitalist, it would promote Issa’s criminal past. Instead, it has remained silent.

 

Expect to Work Longer

By tampering with pensions and post-work financial security, Republicans are also fundamentally changing the nature of work. Retirement and work are the yin-yang of modern human existence. By changing the formula for life after work, policy makers also change life in the workplace. These changes are not lost on workers of all types, from young people spending hours in cubicles to those working with their hands.

The changes come in the form of consumer confidence levels, changes in discretionary spending, and attitudinal shifts about American work and life. Average Americans are also still reeling from the $7 trillion in lost home equity which evaporated during the 2008 recession (Bailout, Barofsky, page 226.) Since home equity is the major contributor to the retirement wealth for a majority of Americans, this loss could easily take a decade to recover. In the process, it has derailed the American dream for millions.

At the local level, states are also tightening retirement plan requirements. “Nearly every state since 2009 enacted substantive reform to their retirement programs—including increased eligibility requirements, increased employee contributions reducing benefits, including suspending or limiting cost-of-living increases,” said Alex Brown, research manager at the National Association of State Retirement Administrators.

“More than 45 states have wielded the budget knife on pension benefits, deploying a variety of these changes and resulting in overall benefit cuts averaging 7.5%, according to an analysis by the NASRA. That also means new employees can expect to work longer and will need to save more on their own to match the benefits paid to existing employees and current retirees.”

All this points to a new world where individuals assume more financial risk for their retirements, but have fewer financial resources to build wealth. Maybe it’s time for average Americans to do what the top 1% do every day: vote for their own financial interests and don’t get deceived or bamboozled by empty political promises or arguments about “making America great again” or “re-taking the country” from some unidentified thieves who presumably stole it.

The better motto would be “Ignore the politicians and financial experts and take control of your own financial life and retirement.”

 

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Chuck Epstein

Chuck Epstein

Chuck Epstein has managed marketing communications and public relations departments for major global financial institutions and participated in the launch of industry-changing financial products. He also has written by-lined articles for over 50 publications, five books and served as editor and publisher of nation’s first newsletter on the topic of using the PC for personal investing and trading. (“Investing Online, 1994-1999). He also is a marketing consultant, writer and speaker on topics related to investor protection and opportunities in the very dynamic cannabis industry.

He has held senior-level marketing, PR and communications positions at the New York Futures Exchange, Chicago Mercantile Exchange, Lind-Waldock, Zacks Investment Research, Russell Investments and Principal Financial.

He has won national awards from the Mutual Fund Education Alliance (MFEA) and his web site, www.mutualfundreform.com, was named best small blog in 2009 by the Society of American Business Editors and Writers (SABEW).

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