THE CASE FOR A 21st CENTURY NEW DEAL – A FAIR RETIREMENT FOR PEOPLE

Meet Chris. He has worked at Caterpillar for almost 40 years as a white collar employee in IT. He is approaching retirement; his traditional pension benefit will be about $1000 per month ($12,000 per year). When he retires, Chris will pay about $560 per month for health insurance benefits for he and his wife, even with Medicare. In 1974, the Caterpillar CEO made $325,000 per year and employees retired with a good pension which included health insurance at no cost. In 2013, the Caterpillar CEO made $12 million per year and he can expect a generous retirement package with almost all benefits paid thanks to Caterpillar; in contrast, employees’ retirement benefits have been cut and health insurance premiums have been increased including paying more for drugs. Chris has other investments that will help him during his retirement, but as he said, “without them I would have to keep working until I die.

Meet Ruth. She worked at IBM for 17 years. In 2001, IBM eliminated its traditional pension plan and went completely to 401K plans. Employees with a significant amount of time in the traditional pension plan ended up losing a significant part of their retirement savings even after winning a lawsuit against IBM. Employees with less time in the traditional retirement plan received a check for a couple of hundred dollars as a settlement. In 2002, IBM CEO Lou Gerstner retired with a $190 million package, and in 2012, IBM CEO Sam Palmisano retired with $271 million package. Ruth was laid off in 2004 and has no retirement from IBM; work has been hard to come by since then due to the economy. If and when she retires, she will have a meager Social Security check monthly and her savings and insurance from her husband’s death to live on.

Meet Dennis. He retired from Delta Airlines as a pilot. When Delta declared bankruptcy and divested itself from its pension plan in 2005, it turned its pension responsibilities over to Pension Benefit Guaranty Corporation (PBGC). Dennis’ pension went from $1939 per month to $95 per month. In 2012, the Delta Airlines CEO pay package was $8.9 million.

Meet Sandra. She has worked for the Illinois state government for 33 years and is a union member. State employees’ pay is modest compared to the private sector, but that is in exchange for fair benefits and pensions; it is part of their contract. In 2013, Governor Pat Quinn (Democrat) signed a law cutting state worker pension plans as a way to fix Illinois’ budget problems. The unions took Quinn to court and the case is in process. Sandra says if the law is allowed to go through; it will mean a 50%-70% reduction in her pension. It’s the difference between a comfortable, but not extravagant, retirement and having almost nothing to live on. Early in his term, Governor Quinn engineered a tax break for some Illinois private sector corporations that allows them to keep part of the taxes collected from employees. Governor Pat Quinn wants Sandra’s vote so he can be re-elected in a tight race next week against billionaire Bruce Rauner (Update 11/7/14: Quinn (D) lost re-election).

These people (as well as numerous others who told similar stories) did nothing wrong.

They played by the rules. And then they had the rug pulled out from under them.

Both the Democrats and Republicans have passed laws resulting in the current pension crisis, and created a mess in doing so, on behalf of the rich and big business all based on some fake ideology used as a cover to rob and steal from American workers.  In doing this, lawmakers and their masters have created what Forbes magazine describes as The Greatest Retirement Crisis In American  History.

It is un-American and anti-American.

The same thing is happening to millions of people across the nation. They are finding their retirements under attack and they will come up short at retirement as a result of what corporations are being allowed to do through laws passed that overwhelmingly favor big business and the executive class.

reitrement-heist_custom-0ea527a54a4ceb2c93cf1c435cbc63691df38b1e-s6-c30As Ellen Schultz points out in her book “Retirement Heist”, around the 1980s things started changing from employees having traditional pension plans to the companies ending that and offering 401k plans, and it has been a disaster for people because they are not financial planners. In addition, 401k plans were originally intended to supplement traditional employee pension plans for retirement, but as companies moved toward lavish and extravagant pay and retirement plans for executives, traditional employee pension plans were tossed by the wayside and 401k plans became the primary retirement plans, and then eventually today, more companies are not even offering any retirement plans.

Meet John. He is the current Republican Speaker of the U.S. House of Representatives. He has a net worth of $5 million. He was an Ohio state representative from 1985 to 1990, and a US Congressional representative from 1991 to present. Depending on how much longer he serves in office, he will be eligible for an annual federal retirement pension of between $59,160 and $130,500 plus all benefits paid courtesy of taxpayers. This is the same for all Congressional representatives and Senators. John Boehner hates government but obviously loves the perks and he is not going to worry where his next meal comes from.

The NDP Proposal

One of the stated goals of the NDP is for individuals to have an income of at least $38,000 annually and for families to have an income of at least $52,000 annually; this is for both working and retired people. Annual Cost-of-Living-Adjustments (COLA) tied to regional price indexes will apply to account for cost-of-living differences across the country.

The first thing is to double monthly Social Security payments to seniors.

Second, the NDP will implement Medicare for all with 100% expenses paid, which means no supplemental insurance needed from private corporations.

Third, remove pension plan management from corporations. They have mismanaged  it from the beginning intentionally.

Fourth, the NDP strongly supports unions and their management of pensions. They have consistently provided better results compared to private sector companies’ management of employee pensions.

Fifth, eliminate taxes for people with incomes under $45,000.

Last, for workers, there should be a national retirement plan. It is the one piece that is currently missing, and moves the 401k plans back to their original intent as a supplement for retirement.

This proposal means that retirees can have income from a traditional pension plan, a 401k pension plan, and Social Security; Medicare will provide 100% coverage for health insurance so there will be no health insurance premiums to pay.

Although some retirees will have income from pensions and Social Security as well as other sources, some won’t because of the upheaval, instability, and outright thievery of the last few decades that has seen pensions shattered and lives destroyed.

How It Works

Individuals:
Example 1: $12,000 (pension) per year + $22,000 per year (Social Security doubled) = $34,000 + $4,000 (Basic Income) = $38,000 per year

Families:
Example 1: $12,000 per year (pension) + $22,000 per year (Social Security doubled) = $34,000 + $18,000 (Basic Income) = $52,000 per year

In each case, the Basic Income will be used to make up the difference to ensure that target income goals are met for individuals and families.

The Basic Income can be paid directly to people either as cash or a combination of cash and credits for housing, food, energy, and services.

What is the Democrats’ plan?

Under Clinton, he was willing to cut Social Security, Medicare, and Medicaid until the Lewinsky scandal sidelined it.

Under Obama, he is willing to cut Social Security, Medicare, and Medicaid as part of a Grand Bargain with the Republicans.

As you can see, Democrats have really co-opted (or “triangulated” if you prefer) the Republican position. This is as far away from what FDR believed with the New Deal as you can get, and proves that they have become Wall Street donkeys who don’t represent the people.

How To Pay For This

The modern Democrats (or “New Democrats” if you prefer) are working hand-in-hand with Republicans to eliminate the Middle Class. They voted wholeheartedly for the Bush & Obama wars and the Bush tax cuts. There is not a dime’s worth of difference between the two parties today. They argue over minor points but like a long-time married couple, they agree on 99% of the corporate agenda, which no longer represents working people or the Middle Class.

This is how we will pay for it:

  • End the wars. These wars are costly and expensive boondoggles estimated to cost between $3 trillion and $4 trillion to date with Defense industry companies committing war profiteering, which monies should be recovered
  • Increase the tax rate to 78% on businesses earning over $250 million while limiting deductions to 7%
  • Increase the tax rate to 99% on Defense industry companies like Halliburton
  • End the cap on Social Security taxes for individuals and businesses
  • Cut the Pentagon budget 55%
  • Cap personal fortunes at $50 million
  • Reinstate the inheritance tax to its previous rate
  • Close all tax loopholes that businesses have bought & paid for with lawmakers
  • Add a 4% tax per transaction on high-volume Wall Street stock trades
  • Confiscate all the monies in offshore tax havens (in 2012, it was reported that globally the rich and corporations hid $21 trillion in offshore accounts to avoid paying taxes)
  • Eliminate presidential and congressional pensions (millionaires should not be receiving taxpayer-funded pensions)

 

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The Working People’s Party