Wait, Pew is Helping Do What to Public Pensions?
The widely respected Pew Charitable Trusts is engaged in a major ongoing campaign with right-wing Enron billionaire John Arnold to undercut public pensions across the country, writes David Sirota in a report released Thursday for the Institute for America's Future. According to Sirota, Pew positions itself as a nonpartisan organization dedicated to the public interest, but when it comes to pensions, Pew has taken an extreme position and allied itself with conservative activists bent on undoing public pension programs across the country to protect corporate subsidies.
Earlier this year, Pew issued a report that there was a crisis in America's pension system and called for policies to help make up pension fund shortfalls in an effort to shore up the financial future of current workers. But Sirota found that the policies Pew is pursuing--shifting from defined-benefit plans to cash-balance or defined-contribution plans--not only don't shore up the future, they almost universally lead to cuts in pension benefits and more retirees being forced into poverty. The only ones to profit from such moves, he said, are the corporate entities whose subsidies will be saved by cutting pensions.
Defined-benefit plans guarantee retirees a steady income that won't change based on the stock market or a bad economy. Such plans allow workers to accurately budget for retirement so they can live a comfortable lifestyle without fear of falling into poverty or running out of money. In a defined-contribution plan, benefits are variable and can decrease based on the economy or stock market. A bad economy can devastate contributors to such plans, leaving them with little to live on.
Pew began working with the Laura and John Arnold Foundation in 2011 by pushing the pension changes in several states. After success in a few states, they formalized their partnership and began pushing their devastating cuts in other states. Arnold is a former Enron executive who made billions of dollars and bailed out of the company before its notorious crash. Enron, Sirota notes, is a prime example of why the pension changes being pushed by Pew and Arnold are a bad idea.
According to Sirota, Pew and Arnold have promoted the narrative that pensions are not only underfunded and in trouble, but that they are the major drag on government budgets and are responsible for such woes as the recent bankruptcy of the city of Detroit. But a closer look at the data shows that corporate subsidies are a much bigger drag on those budgets, and the plans pushed by Pew and Arnold could actually make budget problems worse. Over the years, Sirota found, one of the biggest driving forces of budget and pension plan shortfalls has been the raiding of those funds to finance corporate subsidies and tax cuts for wealthier Americans and corporations.
Pew's data shows a $46 billion annual shortfall in pension plans across the country, a significant amount. But it is barely half the $80 billion that is spent on corporate subsidies each year by the same governments. The reforms that Pew advocates actually have a significant chance of increasing costs for state and local governments. The proposed plans are very risky and leave workers open to significant losses that would undercut their ability to pay their bills in retirement. Sirota said that if the attempts to undercut pensions are successful, it is likely the same tactics would be used to undercut Social Security as well.
Read the full report .
In the latest issue of Rolling Stone, Matt Taibbi has a story that delves deeper into the history and local detail of the conservative assault on public pensions.
