Monthly Archives: March 2015

Significant pension cuts loom for retirees

by Mark Williams, published March 22, 2015, in the Columbus Dispatch

Since Whitley Wyatt retired in 2000 after 33 years as a trucker, he’s collected a pension of $3,300 a month.

Now, the 71-year-old says as much as $2,000 of his monthly check is at risk because of legislation passed by Congress last year that is meant to help underfunded multiemployer pension plans bolster their finances by giving them a way to cut benefits for some retirees.

“We definitely will have to adjust our lifestyle,” he said of him and his wife if there is a cut that big. “We have ongoing and increasing medical expenses. It could be catastrophic just from the respect of the money we contribute to charity and church (and) money we contribute to our grandkids for their future education.”

Wyatt, of Washington Court House, said he doubts many other retirees are aware of the risk to their pension as a result of the legislation passed in December as part of a spending bill meant to run the federal government through the rest of its fiscal year.

The legislation affecting the retirees was added at the last minute. It is targeted at companies that enter into pension plans with other companies.

There are about 10 million workers and retirees in 1,400 multiemployer plans, according to the Pension Rights Center in Washington.

About 150 to 200 plans covering 1.5 million workers and retirees could run out of money within the next 20 years. The measure would affect nearly 48,000 retired, inactive or active workers in Ohio.

Continue reading Significant pension cuts loom for retirees

Retirement Crisis: The Great 401(k) Experiment Has Failed for Many Americans

BY KELLEY HOLLAND

You need to know this number: $18,433. That’s the median amount in a 401(k) savings account, according to a recent report by the Employee Benefit Research Institute. Almost 40 percent of employees have less than $10,000, even as the proportion of companies offering alternatives like defined benefit pensions continues to drop.

Older workers do tend to have more savings. At Vanguard, for example, the median for savers aged 55 to 64 in 2013 was $76,381. But even at that level, millions of workers nearing retirement are on track to leave the workforce with savings that do not even approach what they will need for health care, let alone daily living. Not surprisingly, retirement is now Americans’ top financial worry, according to a recent Gallup poll.

To be sure, tax-advantaged 401(k) plans have provided a means for millions of retirement savers to build a nest egg. More than three-quarters of employers use such defined contribution plans as the main retirement income plan option for employees, and the vast majority of them offer matching contribution programs, which further enhance employees’ ability to accumulate wealth.

But shifting the responsibility for growing retirement income from employers to individuals has proved problematic for many American workers, particularly in the face of wage stagnation and a lack of investment expertise. For them, the grand 401(k) experiment has been a failure.

Continue reading Retirement Crisis: The Great 401(k) Experiment Has Failed for Many Americans

The Retirement Crisis

by Yves Smith, published March 26, 2015

This interview, with Teresa Ghilarducci, who the Wall Street Journal called “the most dangerous woman in America,” discusses how and why pensions are under stress, and what can be done to fix them. While she agrees that the retirement crisis is real, she also argues that it is eminently fixable, particularly since there really is no free lunch. The alternative, of widespread poverty among the aged, also imposes costs on government and society.

Ghilarducci also points out that the biggest reason that pensions are coming up short is due to how much the managers are extracting in feed. Ghilarducci’s dangerous idea, which she discusses here, is that of lowering the Medicare age to 60. She contends that it will pull in older workers that are un or underinsured, but also generally healthier than the over 65 Medicare pool. The combination of intervening earlier for some long-term ailments, most important of all diabetes, plus getting a broader set of risks into the pool, will lower overall costs.

From the summary at INET:

The retirement crisis is anything but imaginary. According to research conducted by Professor Teresa Ghilarducci, head of the Department of Economics at the New School in New York City, only 44% of workers in the United States have access to a retirement plan at work. Except for workers with defined benefit plans, most middle class U.S. workers will not have adequate retirement income — 55% of near-retirees will only have Social Security income at age 65.

Continue reading The Retirement Crisis

PRC rejects Discover NSA and the Postal Service’s “subjective intuition”

by Save The Post Office, published March 26, 2015

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For the first time since they were created in 2002, a Negotiated Service Agreement (NSA) has been rejected by the Postal Regulatory Commission.  Yesterday the PRC turned down the Postal Service’s request to add a NSA with Discover Financial Services to its market-dominant list.

This is quite an unusual event.  Since the 2006 Postal Accountability and Enhancement Act, the PRC has reviewed about 500 NSA requests.  (According to this PRC presentation about NSAs, as of May 2014, that number included 446 competitive and 24 market-dominant NSAs.)

Every one of the requests was approved, including previous NSAs with Discover.  In yesterday’s order on the Discover NSA, the Commission pointed out that this was the first NSA it had been unable to approve, “and it is not a decision the Commission takes lightly.”

Continue reading PRC rejects Discover NSA and the Postal Service’s “subjective intuition”

The cost-cutting approach to higher education

by Harry Targ, published March 25, 2015, The Rag Blog

Though some reform ideas have merit, the real problem is lack of funding from the government.

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Reform advocate: Purdue University President Mitch Daniels at commencement exercises for Purdue North Central, 2014. Image from nwi.com.

WEST LAFAYETTE, Indiana — Purdue University President Mitch Daniels testified March 17, 2015, before a subcommittee of the House of Representatives Committee on Education and Workforce on what he calls higher education reform. He also spoke during that week to the American Council on Education and the Brookings Institute.

A centerpiece of his recommendations was “income share agreements” whereby students partner with investors, particularly alumni, who would provide funds for their education in exchange “for a small share of the student’s future income.”
Daniels was touting this idea in addition to new cost-saving policies at Purdue University, such as offering three-year degree programs, using different metrics rather than course hours to measure student preparation, and tuition freezes. He has also urged a reduction in costly federal regulations.

Continue reading The cost-cutting approach to higher education

Why the 99 Percent Keeps Losing

by Robert Kuttner, published March 23, 2015, mirrored from Common Dreams

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‘The remedies that would restore economic opportunity and security to ordinary Americans are far outside mainstream political conversation, and will not become mainstream until forced onto the agenda by a genuine mass movement.’ (Image: file/public domain)

Our current political situation is unprecedented. The vast majority of Americans keep falling behind economically because of changes in society’s ground rules, while the rich get even richer — yet this situation doesn’t translate into a winning politics.

If anything, the right keeps gaining and the wealthy keep pulling away. How can this possibly be?

Let me suggest seven reasons:

Reason One. The Discrediting of Politics Itself. The Republican Party has devised a strategy of hamstringing government and making any remediation impossible.
Instead of the voters punishing Republicans, the result is cynicism and passivity, so the Republican strategy is vindicated and rewarded.

The media plays into this pattern by adopting a misleading narrative that makes the gridlock in Washington roughly the equal fault of both parties — with lazy phrases such as “Washington is broken,” or “politics is broken,” or “partisan bickering.” (Do a Google search of those clichés. It will make you sick.)

Continue reading Why the 99 Percent Keeps Losing

The GOP’s Bloody Budget Axe

by Bud Meyers, published March 26, 2015

Unlike politically incorrect journalists in the mainstream media (including Fox News), one can’t accurately report on the GOP’s proposed bloody budget cuts — and then, just to appear non-partisan, say it’s “Congress” who’s proposing the cuts — when it’s the Republicans within Congress who are the ones proposing all these bloody budget cuts.

OK — maybe “bloody” might have been an unfair adjective to use. So instead, let’s use the word barbaric, bitter, brutal, brutish, callous, cold-blooded, cold-hearted, cruel, harsh, inhuman, immoral, grievous, harrowing, heartless, merciless, painful, pitiless, remorseless, ruthless, sadistic, savage, severe, traumatic, unkind or just plain vicious. There’s no other way to sugar-coat the facts.

President Obama, recently remarking on the GOP’s new budget proposals, said: “The budget that [the House Republicans] are putting forward and the theories they’re putting forward are a path to prosperity for those who have already prospered”.

As the New York Times had observed, “Obama cast Republicans as naysayers clinging to the idea of tax cuts for the wealthy financed by slashing programs for everyone else. Obama said that they were doubling down on trickle-down economics while pretending to care about the middle-class.” So finally, at least the President of the United States is no longer being politically incorrect (after years of playing nice and trying to “compromise” with Republicans).

But first, one question needs to be asked: Why do the Republicans always insist on passing legislation that they know Obama will always veto, rather than attempting to draft more palatable and bipartisan proposals — something that actually has a chance of passing — rather than grid-locking all government functions? Is it in the hope that something else (like an abortion amendment) might slip through the cracks when the Democrats aren’t paying attention or caught napping?

Continue reading The GOP’s Bloody Budget Axe

Epic Fail for the Postal Service: The wrong model and the wrong BOG

by Mark Jamison, published March 23. 2015 at Save The Post Office

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In 2001 Postmaster General Bill Henderson submitted the first blueprints for a transformation of the Postal Service into a sleeker, more efficient business entity.  To justify the transformation, the rhetoric has repeated one mantra: the problem with the Postal Service is its outmoded and defective business model.

A great deal of our speech with public policy is often coded — for example, “makers and takers” can often sound a lot like “black and white” — but in this case Henderson and his successor Jack Potter were pretty clear about their goal.  The way forward for the Postal Service, they said, would include cuts to the workforce, post office closings, a smaller postal infrastructure, and a general retreat from the idea of the Postal Service as a universal service provider.

The big mailers talk about the “failed business model.”  Postal commentators going back to Murray Comorow and through Alan Robinson have talked about the ‘failed business model.”  The folks in Congress, Republicans particularly but also Democrats like Tom Carper, all bemoan the “failed business model.”

In focusing on the idea of a “failed business model,” these voices were able to elude facts like the billions siphoned out of the Postal Service to support payments to the Retiree Healthcare Benefit Fund that were essentially unnecessary.   Any discussion of rationalizing rates in ways that didn’t involve simply handing over postal revenues to narrow interests in the mailing community was avoided.  The idea of supporting universal service and postal infrastructure with modest budget contributions from the federal government was rejected.

Instead, everyone seemed to agree that the nation’s postal infrastructure must be totally self-sufficient.  That was the preference of postal management as well, since money from Congress never comes with no strings attached.  Management takes every opportunity to remind people of this.  At the end of every press release is this sentence: “The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.”

The real problem

Assertions that the postal business model had failed reflected nothing other than a wish to apply a corporate model to a basic government service and function.  It didn’t matter that we had the most effective postal system in the world, a system that delivered more mail to more addresses at cheaper rates than virtually anywhere else.  It didn’t matter that our network of postal plants and post offices were the hearts of American communities.  It didn’t matter that the Postal Service provided 800,000 good jobs with good benefits, or that the income from these jobs flowed throughout local communities, supporting businesses large and small.

The sad fact is that none of the things that did matter to the average person mattered to those who set postal policy.  They had imbibed from the well that had transformed the American economy from an engine of shared growth and prosperity to a shell game that enriched the few at the expense of the many.

In a little more than two generations we have watched as all the burdens of the economy have been shifted to those who work for a living.  We have seen the end of defined benefit pension systems, deteriorating access to employer-paid health insurance, and the rise of a model that eschews full-time work for part-time contract labor.  A successful postal business model has thus come to involve cheap labor, reduced service, and the privatization or outsourcing of public infrastructures.

Continue reading Epic Fail for the Postal Service: The wrong model and the wrong BOG

How Privatization Degrades Our Daily Lives

by Paul Buchheit, mirrored from Common Dreams

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‘USPS is so inexpensive, in fact, that Fedex actually uses the U.S. Post Office for about 30 percent of its ground shipments,’ writes Buchheit. (Photo: file)

The Project on Government Oversight found that in 33 of 35 cases the federal government spent more on private contractors than on public employees for the same services. The authors of the report summarized, “Our findings were shocking.”

Yet our elected leaders persist in their belief that free-market capitalism works best. Here are a few fact-based examples that say otherwise.

Health Care: Markups of 100%….1,000%….100,000% 

Broadcast Journalist Edward R. Murrow in 1955: Who owns the patent on this vaccine?
Polio Researcher Jonas Salk: Well, the people, I would say. There is no patent. Could you patent the sun?

We don’t hear much of that anymore. The public-minded sentiment of the 1950s, with the sense of wartime cooperation still in the minds of researchers and innovators, has yielded to the neoliberal winner-take-all business model.

In his most recent exposé of the health care industry in the U.S., Steve Brill notes that it’s “the only industry in which technological advances have increased costs instead of lowering them.” An investigation of fourteen private hospitals by National Nurses United found that they realized a 1,000% markup on their total costs, four times that of public hospitals. Other sources have found that private health insurance administrative costs are 5 to 6 times higher than Medicare administrative costs.

Markup reached 100,000% for the pharmaceutical company Gilead Sciences, which grabbed a patent for a new hepatitis drug and set the pricing to take whatever they could get from desperate American patients.

Housing: Big Profits, Once the Minorities Are Squeezed Out 

report by a coalition of housing rights groups concluded that “public housing is a vital national resource that provides decent and affordable homes to over a million families across the country.” But, according to the report, a privatization program started during the Clinton administration resulted in “the wholesale destruction of communities” and “the displacement of very large numbers of low-income households of color.”

Continue reading How Privatization Degrades Our Daily Lives

Tom Engelhardt: The New American Order

Tom Engelhardt: The New American Order: 1% Elections, The Privatization of the State, a Fourth Branch of Government, and the Demobilization of “We the People”
by Tom Engelhardt, published March 22, 2015

Have you ever undertaken some task you felt less than qualified for, but knew that someone needed to do? Consider this piece my version of that, and let me put what I do understand about it in a nutshell: based on developments in our post-9/11 world, we could be watching the birth of a new American political system and way of governing for which, as yet, we have no name.

And here’s what I find strange: the evidence of this, however inchoate, is all around us and yet it’s as if we can’t bear to take it in or make sense of it or even say that it might be so.

Let me make my case, however minimally, based on five areas in which at least the faint outlines of that new system seem to be emerging: political campaigns and elections; the privatization of Washington through the marriage of the corporation and the state; the de-legitimization of our traditional system of governance; the empowerment of the national security state as an untouchable fourth branch of government; and the demobilization of “we the people.”

Whatever this may add up to, it seems to be based, at least in part, on the increasing concentration of wealth and power in a new plutocratic class and in that ever-expanding national security state. Certainly, something out of the ordinary is underway, and yet its birth pangs, while widely reported, are generally categorized as aspects of an exceedingly familiar American system somewhat in disarray.

1. 1% Elections

Check out the news about the 2016 presidential election and you’ll quickly feel a sense of been-there, done-that. As a start, the two names most associated with it, Bush and Clinton, couldn’t be more familiar, highlighting as they do the curiously dynastic quality of recent presidential contests. (If a Bush or Clinton should win in 2016 and again in 2020, a member of one of those families will have controlled the presidency for 28 of the last 36 years.)

Continue reading Tom Engelhardt: The New American Order