Killing the Middle Class in Broad Daylight

On April 22, republican Senate Majority Leader Mitch McConnell told conservative radio host Hugh Hewitt that the Democrats supposedly demanded too much in the stimulus package, but he held fast, stood his ground. “I refused to go along with [them], and the White House backed me up, and that was — we’re not ready to just send a blank check down to states and local governments to spend anyway they choose to.”

The hard hitting Hewitt agreed, “I’ve been warning people that pension funds for public employees are dangerously underfunded. And I know that the Speaker and your colleague, Chuck Schumer, wants to pour money into these funds. But they need to be reformed. I mean, some of the benefits they grant are ridiculous.”

Hewitt challenged the Senate leader, “Will you insist on reforms of state pension plans if they get replenished by the next bill?”

McConnell was adamant, “you know, we’ll certainly insist that anything we’d borrow to send down to the states is not spent on solving problems that they created for themselves over the years with their pension programs.”

One did not hear such talk about corporate malfeasance or criminality regarding the big bailouts to the banks and big industry. Not one word on the new mortgage ponzi scheme currently exploding or the stock buybacks. In fact the corporate handouts passed by liberals and conservatives was given secrecy. Once again, the inbred guilt of the masses helps them to accept the master’s whip. It helps one absorb the pain of abject impotence. Guilt of the masses justifies their punishment.

The ruling class contempt and hatred for the uppity middle class comes out vividly against the backdrop employee pensions. Contrary to McConnell’s claim that governments’ problems plaguing were “created for themselves over the years with their pension programs”.

That of course is an outright lie. Pensions, public and private, have been looted over the years, and politicians and Wall St. bankers have constantly broken their promises by ultimately cutting funds or closing pensions altogether.

In 2013 Matt Taibbi wrote about the Looting the Pension Funds. He points out “. . . prior to the [2008] crash, state pension funds nationwide were cumulatively running a surplus.” After detailing some of the swindles states and “money managers” perpetrate on their largely unsuspecting masses, he concludes:

Thanks to a deadly combination of unscrupulous states illegally borrowing from their pensioners, and unscrupulous banks whose mass sales of fraudulent toxic subprime products crashed the market, these funds were out some $930 billion. Yet the public was being told that the problem was state workers’ benefits were simply too expensive.

That was just the public sector. Leverage buyouts (the looting of vulnerable companies by more powerful ones), of the ’80s and again in the 2000s, and exemplified by Mitt Romney at Bain Capital, exacerbated the pension problem in the private sector. Reports Taibbi, “Firms like Bain even have a colorful pirate name for the pools of takeover money they raise in advance from pension funds, university endowments and other institutional investors. ‘They call it dry powder,’ says Slavkin Corzo, the union adviser.”

But the troubles with pensions go even deeper than predatory bankers and state actors. Way back in 2011 Ellen Schultz, a former Wall Street Journal reporter, wrote a book called Retirement Heist. In an excerpt from the book, she wrote similar to Taibbi, how employee pensions were doing well in the ’90s. But inevitably came the retirement “crisis” for which the employees and retirees took the heat and the real crooks walked away with billions:

No one disputes that there’s a retirement crisis, but the crisis was no demographic accident. It was manufactured by an alliance of two groups: top executives and their facilitators in the retirement industry – benefits consultants, insurance companies, and banks – all of whom played a huge and hidden role in the death spiral of American pensions and benefits.

Like the corporate owned states, businesses like Verizon and GE “borrowed” from their employee pensions. “To replenish the surplus assets in their pension piggy banks, companies cut benefits,” writes Schultz. “Employers used actuarial sleight of hand to disguise the cuts, typically by changing the traditional pensions to seemingly simple “cash balance” pension plans, which superficially resembled 401(k)s.”

Even worse new rules changes, made cutting benefits extra enticing

It boosted earnings, thanks to new accounting rules that required employers to put their pension obligations on their books. Cutting pensions reduced the obligations, which generated gains that are added to income. These accounting rules are the Rosetta Stone that explains why companies with massively overfunded pension plans went on a pension-cutting spree and began slashing retiree health benefits even when their costs were falling.

Surely, these are unintended consequences! In addition to this, “these newfound tricks coincided with the trend of tying executive pay to performance. Thus, deliberately or not, the executives who green-lighted massive retiree cuts were indirectly boosting their own pay.” Unintended for sure!

Fast forward to Jan 7, 2020, Reuters reports in Risk of pension meltdown grows due to inaction by U.S. Congress, just as CV gets going, “As many as 117 multiemployer pension plans covering 1.4 million participants are underfunded and sponsors have told regulators and participants that they could fail within the next 20 years . . .”

To solve this big business induced “problem”, which Reuters omits pointing out, the Democrats want to offer low-interest loans to bolster pensions. Republicans prefer to increase amounts “paid by employers, add new premiums paid by plan participants and force more conservative accounting assumptions.” Either through interest payments, higher premiums or management fees, the Man must be paid. One can’t let a good pool of funds go unmolested.

Meanwhile, as the established order continues wagging a finger at the little individual for crimes they did not commit, DC lawmakers inserted provisions in the multi-trillion dollar Wall Street bailout for a $174 billion in temporary tax breaks “bonanaza” according to the NY Times.

These are hardly measures aimed at reviving the economy. Most of these breaks have been long sought by corporate lobbyists. One of the provisions is only available to companies “with at least $25 million in annual receipts”. This is little more than a outright swindle. It’s ” ‘just shoveling money to rich people,’ said Victor Fleischer, a tax law professor at the University of California, Irvine.”

At least Trump’s Republican 2017 tax cut, of which he infamously said to his friends, “you all just got a lot richer”, had some restrictions, unlike the most recent bipartisan stimulus.

“Under the cover of the pandemic, they are undoing the perfectly sensible limitations” that moderated the size of the 2017 tax cuts, said H. David Rosenbloom, a corporate tax lawyer at Caplin & Drysdale and head of the international tax program at New York University’s law school. “And taking into account the giveaways in that act, it’s a joke.”

The Institute for Policy Studies reports, since January 1 Jeff Bezos’s “worth” went up by $25 billion. That was as of April 15. “Between March 18 and April 10, 2020, over 22 million people lost their jobs as the unemployment rate surged toward 15 percent. Over the same three weeks, U.S. billionaire wealth increased by $282 billion, an almost 10 percent gain.”

Instead of throwing the dog a measly bone, McConnell and his ilk (liberals and conservatives) would rather not give states “more” money. Some governors feign outrage. The senate leader wants, rather, to allow them to declare bankruptcy, which would give them the official green light to cut benefits and pensions even more.

There are few more glaring examples of the war on the middle class than the destruction of pensions. At the same time the culprits of that destruction reach ever dizzying heights of wealth. Could it be more obvious? Yet the middle class barely stirs and “shelters in place” per their masters.

Be a revolutionary: go outside — without a mask.