By Lambert Strether of Corrente.
Oddly, or not, “progressive” and Democratic loyalist commentary on the Cromnibus bill has — with occasional honorable exceptions — focused almost exclusively on Elizabeth Warren’s fight against a derivatives provision that might benefit big banks, as we saw yesterday, and has been silent about a provision that could do far worse and far more immediate harm to working people who made their retirement plans based on the belief that their pension rights were secure and backed by legislation, and the idea that a contract was a contract. Oldthink, I know!
So in this post I want to rectify that mysterious silence, and take a look at the truly nauseating Kline-Miller amendment, passed by the House, and part of the Senate bill forwarded to Obama for his signature. David Dayen summarizes:
Under the bill, trustees would be enabled to cut pension benefits to current retirees, reversing a 40-year bond with workers who earned their retirement packages.
Under ERISA, the 1974 law governing pensions in the private sector, benefits already earned by a worker can’t be cut.
Now they can. That’s right. Even if you’re retired and vested in a private pension plan, your benefits could be cut. Congress retraded the deal (if I have the finance jargon right). That’s nauseating even for today’s official Washington. And the bill was passed in a thoroughly bipartisan fashion: Kline is a Minnesota Republican, and Miller is a “liberal” California Democrat. [Reach me that bucket, wouldja?]
Who Does Kline-Miller Affect?
I said your pension could be cut, so here’s how Kline-Miller works and who it applies to. (I don’t have a pension and I’m not a union guy, so bear with and correct me.) Politico:
The House Rules Committee added the Kline-Miller amendment to the $1.1 trillion omnibus spending bill last night. The measure would give multiemployer pension trustees the option to cut vested benefits in order to save plans headed toward insolvency and would increase insurance premiums to the financially troubled Pension Benefit Guaranty Corporation (PBGC).
It works like this: Trustees submit an application of proposed benefit suspensions to the Treasury Department. The Treasury Department consults with the Pension Benefit Guaranty Corporation and the Labor Department before approving the application. Following Treasury approval, participants vote on the proposed cuts. If more than 50 percent of participants disapprove, trustees can’t make the cuts. There’s a loophole, however: If the Treasury, the Labor Department and the PBGC determine that the plan would cost the PBGC more than $1 billion [That’s not even real money these days!] upon becoming insolvent, trustees can still implement the cuts.
How many workers will be affected? Michael Hilzick again:
[M]ultiemployer pension plans are generally negotiated by a union to cover employees of all companies in a given industry. About 1,400 such plans cover about 10 million workers, according to the Pension Rights Center. About 150 to 200 of the plans, covering 1.5 million workers, are seriously underfunded and could run out of money sometime during the next 20 years.
Wait, you say. 1.5 million workers isn’t very many, and besides, I have a single employer pension, and so I’m safe from the chopping block. Not so fast! What matters is that a precedent has been set. The Wall Street Journal is practically rubbing its hands:
[The] measure included in Congress’s mammoth spending bill permits benefit cuts for retirees in one type of pension plan, a big shift that lawmakers and others believe could set a precedent for other troubled retirement programs.
Lawmakers and experts, while divided over the merits of the change, largely agreed that it could well be the first of many.
Alicia Munnell, director of Boston College’s Center for Retirement Research says the change:
“is letting the genie out of the bottle. Once it becomes legal to cut accrued benefits, then it’s a different world. It’s really precedent-making change. [While not opposed to giving trustees flexibility, she said] “It needs to be applied very, very judiciously.”
What could go wrong? The bottom line here is that the legalities and the contractual relations and whatever moral commitments were made don’t really matter. What does matter is that whenever there’s a big pot of money lying around that theoreticallly should go to working people — say, retirement funds, but it could be anything — Congress can retrade whatever deal put the money into the pot, and years after the fact, too. Oh, and workers lose the right to challenge the cuts in court. Nice!
Why Is Kline-Miller Wrong?
First, Kline-Miller gives workers no time to adjust. Reuters:
The big problem here is that the plan fails to put retirees at the head of the line for protection. When changes of this type must be made, they should be phased in over a long period of time, giving workers time to adjust their plans before retirement. For example, the Social Security benefit cuts enacted in 1983 were phased in over 20 years and didn’t start kicking in until 1990.
Second, giving workers no time to adjust is all the more egregious, because Kline-Miller was rushed through, even though there was no crisis. Pension Rights:
According to PBGC projections, approximately 150 to 200 plans, covering 1.5 million workers and retirees, could run out of money within the next 20 years.
A problem that affects comparatively few workers that’s twenty years off, and for this we have to set a precedent that up-ends the entire system? This is worse than the Grand Bargain! Michael Hilzick:
What’s most irksome about the Congressional maneuvering is the ginned-up atmosphere of urgency around it. For even seriously impaired pension plans, the day of reckoning may be 10 or 20 years off; a lot can happen in that time frame to improve their condition or for other solutions to bubble to the surface.
As Rahm Emmanuel didn’t say, never let a non-crisis go to waste!
Third, Kline-Miller pits workers against each other, and in two ways. Reuters:
The legislation does prohibit benefit cuts for vested retirees over 80, and limited protections for retirees over 75 – but that leaves plenty of younger retirees vulnerable to cuts. And although workers and retirees would get to vote on the changes, pension advocates worry that the interests of workers would overwhelm those of retirees. (Active workers rightly worry about the future of their plans, and many already are sacrificing through higher contributions and benefit cuts.)
First, it’s wrong to have two-tier social insurance. There’s no reason citizens should get a worse deal because they’re younger (and any meaningful Social Security reform would make benefits age neutral. None of this “I’ve got mine” crapola). Second and worse, you can just see different groups of workers fighting over benefits like crabs in a bucket — 50% plus one taking the bigger slice of the shrinking pie. I bet the bosses will love that! This from California “liberal” Miller is one of the more cynical framings I’ve seen:
“We should give (workers) the opportunity and responsibility of trying to save their own pensions”
Yes, by fighting each other!
Fourth, Kline-Miller is a union-busting measure (and as we’ll see in a minute, that’s going to exacebate problems with other pensions). In These Times:s
Jim Carothers, 69, a retired car-hauler from Redford, Mich. who currently gets benefits from the Central States Fund, is more blunt about the stakes.
“I think it would mean the complete death of the labor movement of this country. I don’t know how you would organize people and promise them anything if we get a contract,” Carothers says. “The question becomes, well, why would I join the union then if you can’t deliver what you’re promising? And that for the labor movement strikes me as an incredibly dangerous proposition.”
Exactly. What’s the point of a union contract if Congress can unilaterally retrade the deal after the fact? I thought contracts were supposed to be sacred. Or doesn’t that apply when workers are involved?
What Were the Alternatives to Kline-Miller?
First, there are options available, even accepting that legislation needed to be passed this sesson. Reuters:
[Randy DeFrehn of the National Coordinating Committee for Multiemployer Plans], AARP and other advocates reject the idea that solvency problems 10 to 15 years away require such severe measures. They have pushed alternative approaches to the problem; one that is included in the deal, DeFrehn says, is an increase in PBGC premiums paid by sponsors, from $13 to $26 per year. Advocates also have called for other new revenue sources, such as low-interest loans to PRGC by the once-bailed-out big banks and investment firms.
So why not have the sponsors pay the full freight? The workers already did! (Though I have to say that getting a loan strikes me as… .Well, let’s call it weak tea. Or weak TINA.)
Second and more radically, unions could and should have been strengthened. Read between the lines of this bland Wall Street Journal article:
Multiemployer plans are administered by unions and are funded by multiple employers in a given industry, typically in fields such as trucking, retail and construction. There are about 1,400 plans in all, covering roughly 10 million people. Because of declining ratios of active workers to retirees, and loose funding standards, some of the larger [Multiemployer plans], such as the Teamsters’ Central States fund, are in dire financial condition.
Yeah, those “declining ratios” just happened naturally, right? Leaving aside the issues of financial mismanagement by trustees and the Great Financial crash, the problem is an actuarial one, right? In These Times:
The national trend of de-unionization coupled with job losses from the recession have meant that fewer and fewer workers are paying into funds as more and more retirees are starting to receive benefits.
So, if the ratio between active workers and retirees has gone out of whack, why not strengthen unions so that there are more “active workers” signed up? Especially since the problem is 10 or 15 years away? Is there some reason a “liberal” California Democrat wouldn’t consider that? (Note above we show why Kline-Miller makes union membership less attractive, so it’s sending union pension actuarial conditions in exactly the wrong direction.)
Third, the think tank behind Kline-Miller is the National Coordinating Committee for Multiemployer Plans. Here’s their report. It’s titled:
“Solutions not Bailouts”
But what would be so very wrong with — work with me, here — just bailing the pension plans out? I can’t see why bailing out workers isn’t a solution. It certainly was for the banksters! International Business Times:
While Congress responded to the 2008 financial crisis by rescuing the banking industry with an $700 billion bailout [and that’s only TARP!], there’s no rescue on the way for retirees. Lawmakers are offering no bailout to close multiemployer plans’ aggregate $42 billion deficit.
$42 billion? Spread out over decades? That’s chicken feed! What’s wrong with these people?
Conclusion
TINA rears its ugly head. The Times:
Now, with retired coal miners in danger of losing meager pensions, the political system seems unwilling to even consider a taxpayer-supported solution.
The union leaders agree. In These Times:
Thomas Nyhan of the Central State Fund, too, says he’s been backed into a corner by political realities, and supports the NCCMP proposal out of his fiduciary duty to keep the plan solvent.
What’s baffling to me is why Nyhan — along with so many other Obama supporters and Democratic loyalists — don’t try to change “political realities.” Like Elizabeth Warren:
Washington already works really well for the billionaires and big corporations and the lawyers and lobbyists. But what about the families who lost their homes or their jobs or their retirement savings the last time Citi bet big on derivatives and lost? What about the families who are living paycheck to paycheck and saw their tax dollars go to bail Citi out just six years ago? We were sent here to fight for those families, and it’s time – it’s past time – for Washington to start working for them.
Indeed. But:
(To be fair, Google search has been crapified, and I’d be happy to be wrong on this.)
Come on, Democrats. Aren’t retirees with pensions “middle class families”? Or don’t they count? Can’t we stop playing small ball? There Is No Alternative — until there is!
NOTES
[1] It seems clear to me that the entire policy of gutting social insurance for retirement is deflationary. From a financial advice column:
[A CreditCards.com survey] found that a significant percentage of people don’t see an escape from debt. They believe they will die with it. The irony wasn’t lost on me that the survey was taken earlier this month as people piled on debt while holiday shopping.
So how do the two issues — the debt-until-I-die survey and pension battle — tie together?
We are increasingly on our own. Our retirement income is largely going to depend on how much we’ve managed to save and invest for ourselves.
Even those fortunate enough to still have traditional pensions should be making backup plans. You may very well not be able to rely on a once-ironclad agreement of a set and steady stream of income that would come faithfully until you die.
Your backup plan is to expect change. This means staying out of debt and getting rid of the debt you do have as soon as you can, including your mortgage.
So I’m not seeing gutting America’s pension system as a way to boost aggregate demand, that’s for sure. As Illargi says:
Deflation is not about lower prices, it’s about lower spending.
And paying down debt isn’t spending. It’s saving.
66 comments
Comments are closed.
NC is once again the voice crying out in the wilderness. Not only are a handful of private pensions in trouble, but so are a handful of local and state pension funds. I would like to see some figures on the public sector troubled funds. One can rest assured Congress has seen them, or someone has. If $42B is enough to pass a law in the middle of the night, what are the numbers like for local and state jurisdictions? What about $200T and counting in unfunded federal obligations? I suspect and agree whole heartedly $42B is pocket change to those members of Congress who voted to allow this. Once again, it is a case where cuts should start with their pensions and benefits, which they haven’t earned except by virtue of their office, before cutting anywhere else, and by the same proportion.
Taking this idea one step further; why not make very high worth retirees, political as well as financial, pay for their own security details? Make Bill and Barak , ‘Shrub’ and 41, foot the bill for all those Secret Service guys and gals, (and their hookers.)
On a lighter note, this is a stark example of the abrogation of the New Deal Social Contract. Time to call back the ‘Bonus Marchers.’
Seconded!
Shared sacrifice!
If you call out the Bonus Marchers, Barack would send his “new McArthur” to restore law and order PDQ. Occupy got similar treatment.
Are you sure this is worded so it only applies to multiemployer plans? What does the text actually say?
No one seems to realize that new systems must account for human nature, behavior and heuristics before being implemented. Today, we still look at spreadsheets and mostly refuse to incorporate intangibles in our analysis. . When ERISA was adopted, they obviously had no clue how these intangibles would distort everything. I wonder how many experts with strong social skills or from the humanities participated in its conception? Humanities is clearly undervalued in our society and it shows up in all our social structures. No, it’s all about hard assets… oil, cars, houses…
There is a definite link between Wall Street, pension plans and these bubbles. Large pools of money attract vultures. These plans require long term planning in an environment of sort-termism. They were doomed to fail because nothing was aligned; because the whole structure was based on free lunches and kicking the can down the road which over the long-term leads to malinvestment.
If these plans were shut down and converted to pay-as-you-go, a huge percentage of the skimming would disappear and Wall Street would get right sized. The problem is that no one wants their taxes to go up. They prefer to keep their money, invest it and then complain about the thieves on Wall Street when the pension is not there thanks to large fees and devastating market crashes.
Growing boomer pools of money contributed to the current size of Wall Street which has led to its control of government. In a private pension system, you are guaranteed that at least 50% of people will fail because not everyone can beat the market and all kinds of other reasons.
I have been arguing for a while now that the young are getting a raw deal and I have been placated for saying so. It is interesting to see an article point it out.
What the progressives should be doing is fighting for fairness. That would mean pooling all these pension plans and then offering an equal pension to all retirees of an equal basic amount. And those who have contributed over that basic amount could invest on their own privately.
But most progressives will freak out over such an idea because those of means will not want to share and will not truly believe socialism. And that’s why the left is going nowhere.
Reply to Moneta:
What, “free lunches”……..?
For years we accepted less monetary wages in leu of future modest pension plan…….
We had no free lunch!
Wall St. And too many legislators have succeeded in crushing organized labor and they will have to live with the consequences while they still insist on no culpability in this financial mess.
There were no, free lunches…….
Free lunches as in propping up financial markets. Bailouts are free lunches for the .1%.
When someone gets a free lunch, someone else has to pay. If this happened it’s because the entire structure was set up wrong in the first place.
Well put Moneta.
Going out on a limb, I’ll guess that Larry Summers and the rest of the “contracts are sacred” crowd will be silent on this, if not audibly chortling.
That’s no limb you are on, but solid granite. Invoking Larry Summers’ name in this context brings into stark relief his criminal mind.
Thanks to Tim (?) I found this, circa 1991.
From the record of a congressional hearing at finance.senate.gov (h/t Wikipedia):
DATE: December 12, 1991
TO: Distribution
FR: Lawrence H. Summers
Subject: GEP
‘Dirty’ Industries: Just between you and me, shouldn’t the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Least Developed Countries]? I can think of three reasons:
1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.
2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I’ve always thought that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.
3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. The concern over an agent that causes a one in a million change in the odds of prostrate[sic] cancer is obviously going to be much higher in a country where people survive to get prostrate[sic] cancer than in a country where under 5 mortality is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable.
The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.
—Lawrence Summers,
Summers plan worked to perfection. The dirty industries moved to China and turned it into a muliti century toxic waste dump, Walmart was the biggest driving force in the 90’s rush to ship manufacturing work to China, freeing up labor here to work at Walmart for peanuts and no pension.
Summers seat at the policy table was more like a throne, and for the last twenty years, has been dispensing his insanity to successive presidents, and to their shame, they listened and acted on his advice.
When Mammon is your God and you worship at the temple of unfettered capitalism Summers is the perfect high priest. Devoted to the cause, articulate enough to sell the philosophy, and completely lacking in anything resembling a soul or compassion for anyone not in the .01%.
The leadership of my Union have a separate pension fund which is very well managed and did not invest in an expensive Florida luxury Diplomat Hotel like they did with the rank and file National Pension. They did not tell us they were spending our dues lobbying for these changes. At our meeting last Thursday no comments were allowed to bring this to the members attention and no mention was made by the leadership.
The changes remove the Pension Trustees from fiduciary liability when they cut our earned benefits. This is the change they believe in.. We will be needing a lot of buckets when the members discover this betrayal by the union leadership and their lackey bipartisan Democratic and Republican operatives.
This is the other side of the problem. Our unions are, by and large, captured bureaucracies just like our regulatory agencies. The reason unions have gotten a bad rep in a lot of places has as much to do with how the union leadership has actually operated (or perhaps I should use Robin Ford’s “mis-leadership”) as with trash-talking from the Republicans. The unions are weak, in large part I think, because the guys in suits who run the unions are as disconnected from the rank-and-file as the bosses are–and care about as much about the well-being of the membership.
I think what the union movement needs, if it’s going to have any sort of future, is a major grassroots shake-up to oust mis-leadership of the variety you describe. Unfortunately, Congress isn’t the only institution where the a-holes tend to rise to the top…
Exactly! Our brothers and sisters in the IBT sorely need new leadership, that’s for sure! Here’s our take on this whole debacle at the TDU:
https://www.tdu.org/news/congress-hoffa-butcher-teamster-pensions
The unions are weak because they are constructed (legally and institutionally) based on a 1930s economic structure that no longer exists. One could argue that they see protecting their membership as only Job 2 (Job 1 being protect the union infrastructure). But the notion that unions are weak because of bad leadership or bad decision-making is entirely missing the forest for the trees.
I think you and diptherio are both right. Even with excellent truly democratic leadership, unions face an economic and political environment that makes organizing and improving things for workers very difficult. That moronic union-busters like Scotty Walker can even survive, much less thrive in a former bastion of progressive unions like Wisconsin is an astonishing indictment of our times.
I fear we are going to need a major upheaval to get things back on the right track. A lot of union rank-and-file members are starting to wake up, but they will need many people with the courage of Mother Jones to help them recover any meaningful power.
On this particular pension debacle I posted an earlier reply to diptherio that hasn’t yet surfaced. I won’t duplicate it all here, but it included this link to a post expressing our discontent in the TDU with Jimmy Jr.’s (mis)leadership in this instance.
https://www.tdu.org/news/congress-hoffa-butcher-teamster-pensions
(Job 1 being protect the union infrastructure)
Job 1 for union leadership is covering themselves in money.
Why do the republicans seem to get a pass here? Were they really just doing what they were elected to do, i.e. gut middle class benefits?
The vast majority of the affected retirees are in the red states. They receive their pensions through the Central States fund or similar funds. They are retired miners, mill workers, factory workers or truckers. Their status may be middle class, lower middle class, or less, but they are overwhelmingly die hard republicans. So why not rail more against the republicans for representing wall street’s interests above the interests of their constituents?
You do understand this was passed in a democrat controlled senate and will be signed into law by a democrat president.
The understanding that a “contract” was a legal obligation was destroyed by this administration in the Chrysler bailout where bond holders, who had legal superiority over other debtors, were denied their rights in order to prop up and fund an inept union. Yes, their was a time when contracts meant something but this administration and the democrat party have redefined many standards that will ultimately be used against them.
problem with talking about contracts and Chrysler (or GM) is that when they went into bankruptcy a different part of those contracts came into play. as the rules changed. the reason bonds pay interest is to make up for the loss use of the cash and to also pay for the risk of doing the loan (bonds are that really). after going onto bankruptcy, bond holders are now a group of creditors, each getting a seat at the table, based bankruptcy rules, and based on size. to exit the company needs to get a majority of the creditors to agree to changes. and considering the alternative to exit is continued shrinkage of value, and possible collapse of the company, meaning you would get nothing at all (since its likely that the ‘assets’ would loose a lot of value. and they do). course they werent the first contracts torn up either. seems like a lot of union contracts from decades ago were also ‘torn’ up. but you didnt any complaints about those did you?
I don’t like the ERISA amendment, but contracts aren’t social suicide pacts. There’s good reason, however, to insist that they be honored in the case of parties, like retirees, who can’t adjust.
That said, the Chrysler example, is just wrong. The bondholders had agreed to be bound by a majority vote and the majority voted to take the deal. The holdouts who litigated were actually in violation of their contract.
If the citizens continue to view the corruption of the U.S. government as a partisan issue, nothing will change. Both parties voted for the TARP bailouts, both parties support perpetual wars, and neither has shown any desire to prosecute criminals in the financial industry.
Reply to Noonan:
Your short para is right on target!
I’ve been banging that drum since financial collapse …….until my friends are sick of hearing it…..
Social,, pollitical and financial corruption now rules this regressive and corrupt country!
You raise a good point. Republicans seem to have it made. They’ve carved out this crazy position in which they can do just about any old depraved thing and not only get away with it, but wear their depravity and raw ignorance proudly for all to see. And then to top it all, if someone remarks on just how monstrous the Republicans are, and why isn’t anyone commenting on that, they are shushed with remarks about how Republicans are at least up front about it so the Democrats seem to get all the grief.
But what this perfectly reasonable complaint misses is that criticizing Republicans does not in the least exonerate Democrats. These are not really like two different teams that compete with each other (so that one looks better in proportion to how bad the other looks) as much as they are like two slightly different mob organizations that are both causing untold damage and stuffing their pockets as fast as they can. The Democrats have gotten away with wearing the good guy costume up until recently and so, as people become aware they they are functionally no different from Republicans, they are getting the lion’s share of criticism. There is nothing quite as despicable as a traitor.
In the meantime, people are also becoming aware that both parties are conscious of these comparisons and perfectly comfortable wearing the costumes. They are after all, both using appearances like a tag team to further the looting.
Republicans? This was a bipartisan effort by House Education and Workforce Committee Chairman John Kline (R-Minn.) and senior Democrat Rep. George Miller (D-Calif.), subsequently passed by a Republican-majority House and a Democratic-majority Senate.
Of more concern is the way the dirty deal went down:
Before Congress became a failed institution, it was standard practice that legislation affecting broad social policy was shunted to a committee, reviewed in committee hearings, and then (if released from committee) sent to the full chamber for debate. That’s the transparent way in which parliamentary democracy is supposed to function. In the past, it was mainly ‘pork’ projects that got slipped in at 3 a.m. with zero review.
Now major social policy is crafted in the dark of night, never even having been introduced with a bill number that stakeholders could read. This is a simulacrum of democracy — a stinking joke. That’s why the Capitol dome is modeled on the corona of the male reproductive organ. D***h**ds ‘r us.
Really good points!
The somewhat meager discussion on the last thread about Warren not filibustering is indeed an issue as is her when data is insufficient loyalty to default Democratic party positions and her hawkishness. The information in this post about pensions, particularly the implications and precedent setting part of it is -as usual- excellent and timely.
Still, are those who see a ray of sincerity in Warren, particularly with regards to her fairly strong commitment to economic justice, automatically to be thrown in the Warren-Democrat bucket?
Contracts are sacred??? Hahahahaha! Go ask a Native American about that….
Particularly salient given the recent threats (or have they actually done it) to give away oil development rights over tribal lands to foreign companies.
Go ask the San Carlos Apaches, who just got a big copper mine crammed down their throats thanks to Hanoi John McShame:
————
Amazing? More like unconstitutional, Tom. Good thing it’s been suspended for 13 years …
“Unconstitutional”, I’m afraid, has become an endearing term of nostalgia. Remember at the end of “Bourne Supremacy” when the bad guys went to jail? That was back when any such outcome could still be hoped for, I watched it again recently and all verisimilitude (not that there ever was too much) is gone.
It is now so clearly hilarious to think state sponsored malefactors face any prospect of consequences as to make the whole premise of the movie absurd, and with it the notion of Constitutional Government. Its only the fear that someone in future may actually give a shit about the law that keeps the kleptocrats paying up for de-criminializations of whatever looting they dream up.
As a small business man in New York, about ten years ago I figured out that a contract in Post Constitutional America is only as good as the intentions of the richer party to it. The courts now are so firmly on the side of institutional corruption that bald political action is the only viable hope for justice of any kind, but our surveillance state is doing quite well at foreclosing that avenue as well. So far….
Does congress make laws or enter into contracts, or both?
When it declared the speed limit was 65 MPH and then changed to 55 MPH, was that a precedent for contract breaking?
Or do we sat it’s a legislative sovereign, in that it can make as many laws, however fickle, contradictory or not beneficial to many people, as it desires?
Congress makes laws; employers & employees make contracts.
Congress passed a law making it legal to unilaterally break the terms of a contract, and to do so solely because the party who wishes to break the contract failed to perform on their own obligations.
pensions are clearly a sub-optimal way to guarantee living standards for our elderly. The best way to ensure retirement security is to simply give everyone a retirement income at 65. 2X or 3X the poverty level income for every individual would be a much fairer and more humane way to provide for the elderly.
Oops, I forgot, we cant afford it because the Dollar comes from rich people and China instead of the monopoly issuer aka Congress (sigh).
This is about contracts and behind that about one kind of contract for those who can and another kind (one that can as of now be legally looted) for those who can not defend themselves – and finally about EW who is failing to point this out or take action. No one is arguing that pensions should guarantee a retirement base level.
Yes, never do anything until we’re in a crisis. Then act quickly but phase the response in gradually in order to allow time for people to adjust.
Thanks for this excellent post.
No biggie. I am sure the bill also has provisions for mortgage write-downs to benefit troubled homeowners. And bond write-downs when the debtor (i.e. banks) are struggling. The AIG clawback provision is in particular worthy. I am looking forward to writing my credit card company an appreciative letter when I default on my balance without consequence.
The real intent, methinks, is not just to complete the pension raid. It is to kill social security.
Meanwhile, the aspect that has gotten even less attention is the ridiculous clam that the Dems had to go along with this epic crony orgy in order to get a better deal than they’ll get next year. That talking point deserve some serious scorn and ridicule.
Oops, should not read “debtors (banks)”. I mean, the banks should take the haircuts.
Why is it contracts mattered during the financial meltdown, when the justification for using billions in taxpayer money was that all those bonuses and such were due to contracts, and you know, contracts just need to be honored? But the contracts for pensions? Gone with a stroke of the pen by Obama.
The good news is that any contract the left has with the Democratic party is null and void, terminated for specific nonperformance and gross breach.
Third parties are there and waiting for the left to suck it up and deliver the only message that the Dems will hear.
I have been proudly and happily voting third party since Clinton started triangulating by passing corporate friendly and national security laws, signalling two decades ago what was to come.
Same here vis third parties, which I’ve voted for on & off all of my voting life. With reluctance I voted for Clinton the first time, and then voted for Nadar during Clinton’s second run. With even more doubt and reluctance I caved in and voted for Obama in 2008 (mainly bc of that weird dumb harpy Palin – yeah, suckered by the R-Team on that one) – and was not totally shocked, but was disgusted, with the outcome.
Voting is rigged anyway (recall 2000 & 2004 elections), so might as well push for some different viewpoints to be heard via third party votes. Recommend it.
ah yes, computer voting fraud, well…. as if we needed further reasons, but the Dem’s absolute refusal to do a damn thing about GOP gerrymandering, procedural disenfranchisement, and computer machine fraud is in and of itself adequate cause to sever our relationship with that party. Both Gore and Kerry’s abdication in the face of clear rigging sealed that deal forever.
If the Dems don’t care enough to fight for our votes that we actually cast, then why the heck should we bother voting for them in the first place?
Can you imagine what the GOP would do if the hats were reversed?
Yep. The Democrats do nothing about any of this, therefore they want the outcomes.
I am not a state worker, but my local district govt in CA contracts with CalPers for our pensions. Although our little outfit has pre-funded our pensions & then some, I keep advising staff here that they’d be well advised to save save save and save some more bc it’s no guarantee that a pension will be there when we retire. I know most aren’t listening to me. Some have kids, so what can they do? They are mostly living paycheck to paycheck and find it hard to save. Some could save but I witness them spending like drunken sailors, so…
As for me, I plan to work until I’m at least 70, if I can, probably a couple years past that. I’m VERY lucky to have a good job with good pay (for now) with now only “OK” benefits (but better than nothing). I have saved like a maniac all my life, and I look great “on paper.” But frankly, who knows what will happen. My parents are/were both long-lived. It’s an expensive life these days, and med. expenses just keep going up and up and up.
This last “budget” bill was horrible for the 99s. My guess is that the Torture Report was released when it was to obfuscate how the 1% succeeded in rapine & plunder of the hapless rubes once again, more’s the pity.
Also agree that this is not an R-Branch v. D-Branch spat of the UniParty. Wake up and smell the coffee. EVERY parasite in the District of Criminals works solely and only at the behest of and for the benefit of the .1% and above. The rest of what we witness going on can simply be called Kabuki Show. They’re all complicit and none of them gives a rat’s patoot about the 99s. Any crumbs that inure to our advantage are by accident, not design.
I don’t’ know how one can plan to work till 70 when it’s hard to get a job after 50 – oh government work, maybe they employ people after 50, can’t see how private sectors workers are anything but screwed.
I too think the Torture Report was to divert attention, and that in no way minimizes it.
Can we start calling it the Crime-nibous bill, or maybe Crony-nimbous
We could if (sigh) we didn’t care about the Google. Anyhow, it will fall off the front page in a week, tops. Worth inventing a sobriquet for something enduring, perhaps, but not this.
Anyhow, you forgot Crapnibus.
Just in time for Christmas, too!
Well, I am a union member and a pensioner in the Central States retirement fund. I am getting kicked in the teeth twice. UPS pulled out of the Central States fund 6 years ago and in our contract it reads that if Central States cuts benefits then UPS will make up the difference. UPS claimed they wanted to take care of their own workers and not other company’s employees in the fund. Read the following that UPS got put in the bill, and you will see that their lobbying has gotten them out of that responsibility. (Forgive formatiing)
81
1 (III), benefits suspended under
2 this paragraph shall—
3 ‘‘(I) first, be applied to the max-
imum extent permissible to benefits
5 attributable to a participant’s service
6 for an employer which withdrew from
7 the plan and failed to pay (or is delin
quent with respect to paying) the full
9 amount of its withdrawal liability
10 under section 4201(b)(1) or an agree
11
ment with the plan,
12 ‘‘(II) second, except as provided
13 by subclause (III), be applied to all
14 other benefits that may be suspended
15 under this paragraph, and
16 ‘‘(III) third, be applied to bene17
fits under a plan that are directly at18
tributable to a participant’s service
19 with any employer which has, prior to
20 the date of enactment of the Multiem21
ployer Pension Reform Act of 2014—
22 ‘‘(aa) withdrawn from the
23 plan in a complete withdrawal
24 under section 4203 and has paid
25 the full amount of the employer’s
VerDate Nov 24 2008
82
1 withdrawal liability under section
2 4201(b)(1) or an agreement with
3 the plan, and
4 ‘‘(bb) pursuant to a collec-
tive bargaining agreement, as
6 sumed liability for providing ben-
7 efits to participants and bene
ficiaries of the plan under a sepa
rate, single-employer plan spon10
sored by the employer, in an
11 amount equal to any amount of
12 benefits for such participants and
13 beneficiaries reduced as a result
14 of the financial status of the
15 plan.
16 ‘‘(E) BENEFIT IMPROVEMENTS.—
17 ‘‘(i) IN GENERAL.—The plan sponsor
18 may, in its sole discretion, provide benefit
19 improvements while any suspension of ben20
efits under the plan remains in effect, ex21
cept that the plan sponsor may not in22
crease the liabilities of the plan by reason
23 of any benefit improvement for any partici24
pant or beneficiary not in pay status by
VerDate Nov 24 2008 19:24 Dec 09, 2014 Jkt 000000 PO 00000 Frm 00082 Fmt 6652 Sfmt 6201 C:\USERS\HHALPERN\APPDATA\ROAMING\SOFTQUAD\XMETAL\7.0\GEN\C\113-RU00-H
December 9, 2014 (7:24 p.m.)
L:\XML\113-RU00-HR83ARCP-AMNT1.XML
L:\vr\120914\R120914.011.xm
The question is can Congress override a contractual agreement, and can UPS change a contract in the middle of it without the union being allowed to open new negotiations. I don’t put any faith in Hoffa is no union leader, he being a prime example of “business unionism” and the sell out of workers while working deals with management.
Thanks for the UPS information. I deliberately didn’t focus on that aspect (and the finance aspect) because I wasn’t all sure I’d get the detail right, and the bill was horrific enough on its face.
How the heck did this happen, anyhow?
‘The question is can Congress override a contractual agreement.’
http://en.wikipedia.org/wiki/Liberty_bond
————
That was a long time ago, when the Supreme Court would actually strike down acts of Congress. Now everything they do is ‘all legal.’ And your loss is ‘unquantifiable.’
A perfect illustration of how reactionary politics has become. As the world’s economy is declining, American politician’s begin to pass legislature that essentially takes the problems out of their hands. Derivatives and now pensions.
Funny, though, how they political/elite class love to have their hands all over the money when things are great. Now, of course, it’s the American taxpayer’s problem.
The system will never be rectified until a) a moral, balls to the ground, pro-small government, anti-war president takes the reign or b) revolution and as we know ‘a’ wont happen, I’m almost glad they are beginning to pass these asinine laws. They need to go full retard as soon as possible.
Unions are the one institution through which working people have a voice in the political process and I have been a union member for most of my working life. So, I hate to criticize unions, except to those I know fully support them. But the problems with ERISA have not been secret and the attacks on pensions and Social Security by both parties has been ongoing. So, where is the bill in Congress, the website with who supports the bill and who opposes it, the educational forums within unions, the tables on the streets, the flyers at the subway stations and the supermarkets, the public forums, the marches, the sit-ins at Congressional offices? Teresa Ghilarducci was called “the most dangerous women alive” for proposing a national, funded pension system to supplement Social Security. When some union official expresses outrage about Kline-Miller, he or she should look in the mirror. They will see part of the problem.
this is nothing….just wait for Pres Showbama to deliver on the corporate loophole providing for tax free repatriation of $100s billions stashed overseas and untaxed, by American Corporations!
Pres Showbama, completely changed the complexion of American Politicks…..but LITTLE ELSE!
It’s over 2 trillion.
Maybe closer to 3.
I agree with other commenters that this provision goes far beyond the million or so pensioners immediately affected. Potentially, it could affect everyone who makes defined-benefit contributions to any sort of retirement fund (including of course SS, as already noted).
Cutting pensions across the board at increasing rates is one of the quickest way to reduce a middle-class population to poverty. Every single union pensioner and future pensioner – indeed, every single individual who contributes to SS – should be alerted to this provision and its implications.
I think it’s true that some union leaderships were complicit (it’s possible at least), but others were the unwitting victims (e.g. municipal pension funds) of those touting investment returns on “sophisticated” financial instruments, aka derivatives. Other funds whose levels depended on state legislatures voting appropriate contribution and payout levels were the victims of politicians afraid of losing votes by upping contributions or lowering benefits in a timely fashion to mirror overall average investment returns over time.
As someone living in a country which has already instituted this policy, and whose pension was cut by ~ 50% without notice, I find this legislation extremely frightening – for everyone, with the possible exception of the top 5-10% of earners, whose discretionary income permitted them to save significant amounts over the long term.
This is also the same Congress that passed “pension smoothing” to lower the deficit. http://time.com/2982869/highway-transportation-bill-pension-smoothing-deficits/ Now, the pension plans are in trouble and Congress’s plan is to cut pensions. Wouldn’t have been better to just not have passed smoothing and instead require companies to adequately fund pensions?
Has anyone actually read the text? How do we know that it only applies to multiemployer plans?
Let me suggest people start eating the rich before they are on the streets and starving.
Could these pension cuts apply to single employer plans?
http://www.congressweb.com/NRLN
NRLN Action Alert – Congress’ Vote to Cut Pensions Is Outrageous
Congress has passed a trillion dollar omnibus spending bill that includes giving trustees of multi-employer pension plans the ability to cut pensions earned by 1.5 million workers and retirees. Many pensions will be cut by up to 50 percent to retirees who are in no position to make up for the monthly short-falls they will be sorely missing in order to be financial secure.
Congress did not stipulate that this change applied to multi-employer plans only, it enacted the law in a way that it changed ERISA to permit the change to some underfunded multi-employer plans but did not add “only”. Therefore, Congress did not preclude that underfunded single-employer pension plans couldn’t be de-risked by allowing plan sponsors to cut pension benefits in the future! Most NRLN grassroots advocates are in a single-employer pension plan!
I believe single employer pensions have already been subject to cuts. My husband’s multi-millionaire, big Dem contributor under funded his pension plan. He declared bankruptcy (after feathering his family’s nest, I’m sure) and the pension was taken over by PBGC. Some of the larger pensions were cut after PBGC took over (we were spared that, but only because his pension had already been cut by 40% thanks to another of this sob’s dirty tricks).
We’re in the middle years of the baby boomers’ mass retirement. As people reach thier 60s and find cat food or dog food is thier daily dinner option, there will be blood. Without sufficent income , the retirees turn to thier children. . Thier children, already downtrodden and forced to care for parents will escalate the unrest. Bank on it. This enactment further destroys the ‘merikan social contract and accelerates revolt. Congress is sleepwalking to the scaffold.
As a retiree with almost 31 years in…I always said the Union Fat Cats slept with management and politicians with little care of what members would ultimately end up with..and I was right.The union heads pushed and pushed for Obama care…now look at the mess that’s left…I predicted that too.the membership was stupid…I have lost my medical coverage and now will have to shell out minimally $4000.00 to $5000.00 a year out of pocket..and now the loss of a great percentage of my pension if not all.Lets not forget…all the talk of the “Chained CPI” in both parties and how that will literally destroy our Social Security checks.There seems to be little recourse offered in the emails I have read so far….I say this everyday to people where I work part time….we as Americans have to stop talking …its the Republicans fault…or its the Democrats fault…both party’s have some of the most corrupt,lying,theiving members in it…wake up and start voting these people out…think of yourself as an American…”WE AS AMERICANS CAN SAVE OUR COUNTRY AND OURSELVES” Lets work together….I would like a 3rd party..that we hold accountable…so we can eliminate the present day corruption in Washington.
Unfortunately it is not just multi-payer pensioners that got shafted. Today I received my notice from GM’s hourly rate employees pension plan, a single payer plan that a UAW trust runs for us. Our plan states the same as your plan. We must be 80 percent funded. Instead of starting from the date the bill past they backdated it to October first, 2013. 2010-2012 we were under funded at 71.75 percent. 2012-2013 under funded at 73.58 percent. 2013 -2014 This is the first year we were funded less than .20 percent, if more than that percentage we would be flagged as a “Funding Shortfall.” I cannot see use going two or three years funded at less than their flagged “Funding Shortfall.” Meaning our pension at current rate will be cut. Another hit on the shrinking middle class. Our “government”, does not want our wages to increase, they want the third worlds wages to mimic the wests.