- Warren Buffett once said:
- "There's class warfare, all right, but it's my class,
the rich class, that's making war, and we're winning," Obama's deficit-cutting
agenda the latest battle.
- On May 4, Hugo Radice, Life Fellow of the University
of Leeds School of Politics and International Studies, headlined an article,
"Cutting Public Debt: Economic Science or Class War?" asking:
- "Is cutting the public debt really an objective
economic necessity, or is it actually a deeply political stance, reflecting
the interests of the business and financial elites?"
- Analyzing historical public policies, he explained the
shift from earlier Keynesianism to "the unchallenged hegemony of free-market
neoliberalism since the early 1990s." In fact, over the past three
decades, it was notable, beginning under Britain's Margaret Thatcher and
America's Ronald Reagan, establishing practices that succeeding administrations
hardened. As a result, Britain's New Labour governs like Conservatives
while American Democrats mimic Republicans, especially on imperial and
pocket book issues.
- Radice calls it class warfare, pitting private wealth
against public good, "a new common-sense" based on property rights,
individualism, and notion that free markets work best so let them, including
the right to demand massive public spending cuts, ones Radice says "are
not, repeat not, economically necessary."
- Nonetheless, for over 30 years, they've been ongoing.
Since the mid-1970s, real wages haven't kept pace with inflation. Benefits
have steadily eroded. High-paying jobs disappeared. Improved technology
forced wage earners to work harder for less. More than ever, "free"
markets work only for those who control them.
- As a result, the class struggle between haves and have-nots
escalated. A handful of powerful winners emerged. Wealth disparity extremes
became unprecedented. Exploitation increased and successive crises, busts
following speculative booms. Easy credit fueled them by excess lending
and spending as well as high public and private debt levels. To heal, officials
now call for "shared sacrifice," their sharing, our sacrifice.
- Richard Wolff calls mainstream economics "faith-based."
For Michael Hudson it's "junk economics," a Wall Street power
grab, holding industrial America and wage earners hostage, debt peonage
the final solution, benefitting only a powerful, elite few.
- Today's buzzword across Europe and America is austerity,
Obama's deficit commission declaring war on ordinary workers. Targeted
are their jobs, benefits, standard of living, and retirement futures from
draconian cuts. A scam to transfer greater wealth to the rich, trillions
more than already looted, the grandest of grand theft, class warfare of
the worse kind, a bipartisan scheme to wreck the economy and working Americans
- After endorsing deficit commission proposals, a second
New York Times editorial headlined "Waiting for the President,"
- There's "no way to wrestle the deficit under control
without both cutting spending and raising taxes." Everything "must
be on the table," Obama out in front promoting it. Watching from the
sidelines increases odds "it will never go anywhere." Strong
White House leadership is needed to support "the commission's plain
- The Times editorial, other mainstream opinions, and Obama's
deficit cutters avoided constructive alternatives, the right way to address
high debt, foster economic growth, and lift all boats equitably. Obvious
- -- waging war on concentrated wealth and power;
- -- an across-the-board populist agenda, elevating social
justice as issue one;
- -- slashing the defense budget, minimally in half, ideally
much more, including closing overseas bases, reducing force levels, ending
foreign occupations, and renouncing imperial wars;
- -- a progressive income tax replacing today's dysfunctional
- -- removing the payroll tax ceiling, taxing all earned
income at the same rate;
- -- empowering workers to bargain collectively with management
on equal terms;
- -- a guaranteed living wage, adjusted by urban, rural,
state and local considerations;
- -- a guaranteed income for the indigent;
- -- real regulatory reform, reinstituting vital ones eroded
- -- abolishing monopoly and oligopoly power;
- -- strengthening public education;
- -- enacting universal, single-payer healthcare, excluding
predatory insurers, except as a voluntary option;
- -- returning money creation power to Congress as the
- -- a Tobin Tax to make Wall Street and rich investors
pay their fair share; and
- -- establishing government of, by, and for the people
- Benefits of a Tobin Tax
- Besides discouraging speculation, economist Robert Pollin
estimates that at one-half of one percent, about $350 billion annually
can be raised. A one-tenth of one percent tax on the estimated $500 trillion
in annual derivatives trades could bring up to $500 billion a year. Depending
on volumes and taxable trading threshold levels, those figures might be
greater or smaller but nonetheless considerable. Most important, they'd
help grow the economy productively, cut the deficit, and raise everyone's
standard of living equitably, especially working Americans left out of
bipartisan equation thinking - corrupted for America's aristocracy, Wall
Street giants most of all.
- Instead ordinary Americans are sacrificed on the alter
of capitalist excess, their pain the price for its gain, a shocking indictment
of a broken system - venal, depraved, degenerate, and criminal, deserving
a dagger in its heart to kill it before making workers serfs, including
destroying their retirement security.
- America's Growing Retirement Crisis
- In the May 2006 issue of Monthly Review, Teresa Ghilarducci
titled her article "The End of Retirement," saying:
- "Scarcely a day passes without a new pension nightmare:
Social Security privatization," corporations ending private pensions,
declining household savings, cancelled retirement healthcare benefits,
and "401(k) accounts becoming '201(k)s,' " having replaced traditional
pensions, defined benefit obligations fast disappearing.
- These developments reflect a nightmarish reality. Today's
"ownership society" forces everyone to manage their financial
futures, leaving them vulnerable to marketplace uncertainties, a task
few have enough expertise to handle, especially during hard times, eroding
years of built up resources savagely, what older workers may be unable
- Conditions are far worse today than in May 2006. Yet
Ghilarducci said "For the first time in US history, every source of
retirement income is under siege: Social Security, personal savings, and
occupational pensions." Also Medicare for retirees, their dependents,
and the disabled, as well as Medicaid for the nation's poor - vital income-equivalent
plans without which millions would be uninsured or underinsured, leaving
them vulnerable to the catastrophic illness costs.
- In July 2010, Professor James W. Russell, writing in
Socialism and Democracy, titled his article, "Retirement Crisis in
the United States," saying:
- "The great 30-year experiment in 401(k) and similar
retirement financing schemes that depend on stock market investments has
failed. Even before the" 2008 crash, it was clear, the signs "everywhere
that very few workers would be able to accumulate enough wealth through
these accounts to insure" their retirement futures.
- Like Russell, economist Richard Wolff explains that until
1980, each generation since the 19th century was better off financially
than previous ones, including more retirement security. No longer, workers
since victimized by institutionalized inequality. Examples include eroded
union representation, mostly in commerce and industry, stagnant wages,
weakened or lost benefits, and high-risk defined contribution plans replacing
secure defined benefit ones.
- By 1935, during the Great Depression, 34 European nations
and America established social insurance programs. It was a watershed time,
"consistent with the socialist value of solidarity through socialization
of support for children, the elderly, the disabled, and others unable to"
to work productively for a living.
- Social Security in America As Amended
- The Social Security Act became law when Franklin Roosevelt
signed it on August 14, 1935, perhaps his finest hour, a measure during
hard times against the 50% poverty rate. It still is when US poverty rates
are soaring, perhaps heading for Great Depression levels or higher.
- The program works well as mandated, taxing active workers
and their employers to support eligible retirees, their dependents and
the disabled. As Russell explains: "It is a formula that has worked
remarkably well since its inception, producing the federal government's
most successful and popular domestic program."
- Employers also began offering pensions in a package of
other benefits. It worked the same way, they and workers contributing for
retirees, "a pay-as-you-go formula" - simple, effective, and
assured, based on employment tenure under individual company plans.
- The Revenue Act of 1978, however, changed things, its
sections 401(k), 403(b), and 457 letting retirement plan contributions
be made with pretax dollars. Though intended to encourage workers to participate
in defined benefit plans, employers used it advantageously, increasingly
switching them to defined contribution ones, providing no assurance of
enough income at retirement.
- In contrast, "defined benefit plans are progressive
reforms within capitalist societies that are consistent with guaranteeing
old age support as worker or social rights." Today, they're fast disappearing,
victimized by neoliberal "reforms" for business, especially financial
industry predators, not employees.
- Russell cites two reasons why 401(k)s failed:
- -- by falsely assuming worker investments (mostly stock
market ones) will provide a secure retirement; given other lifetime obligations,
including medical expenses, home purchases and mortgage payments, and college
tuitions, it's not possible for most people; and
- -- the financial services industry profits hugely from
private investment plans, siphoning off large commission amounts that add
up through the years; as a result, American workers have subsidized the
industry's expansion while jeopardizing their own futures.
- In contrast, government or business provided plans are
"dedicated purely to supporting retirement instead of creating private
wealth," often more for investment firms than their customers, and
therein lies the problem. Instead of secure retirement income, having enough
depends on marketplace uncertainty that in crisis times can be ruthless,
destroying years of savings quickly, savagely, and unfairly.
- As a result, for millions, 401(k)s and similar plans
have been poison, failing to deliver on promises. Three arguments were
made to sell them:
- -- they'd way outperform traditional pensions - untrue;
- -- retirement income would "owned" - true,
but it hardly matters; and
- -- they'd be portable - importantly true in a highly
mobile society, jobs and careers today changed more often than earlier.
- A major problem is how commonly these plans are used
- for home purchases, medical expenses, college tuitions, other needs,
or discretionary ones, depleting funds intended for retirement.
- In contrast, Social Security works as intended by financing
it, not private wealth or profits for industry predators. Bogusly, critics
claim it's going bankrupt when, in fact, it's sound and secure if properly
administered, needing only modest adjustments at times to keep it that
- Moreover, as explained above, simple revenue enhancement
methods exist, including a progressive income tax; removing the payroll
tax ceiling, taxing all earned income at the same rate; and instituting
a Tobin Tax - combined they might keep Social Security flourishing for
a millennium, for sure a century or two, and more.
- "They could and should be (ways to expand) Social
Security benefits and (begin) phas(ing) out employment-based retirement
plans" that don't deliver on promises. Retirement plans should have
fundamental goals - to provide predictable, adequate income amounts, adjusted
for inflation, delivering as much annual working lifetime earnings as possible.
Achieving it depends on replacing today's "three-legged stool"
- "Social Security, employment-based benefit(s), and personal savings
- with a national system in which Social Security accounts for the"
lion's share of income, "topped off by personal savings" that
for most people are meager.
- A Final Comment
- For American workers, achieving retirement security is
simple and achievable, but not with opposition from powerful, destructive
forces - financial giants complicit with government, willing bipartisan
majorities plotting to jeopardize the future of millions. A previous article
explained how, accessed through the following link:
- Only mass outrage can stop them from slashing Social
Security, Medicare, Medicaid, and other social benefits on the way to ending
them - a venal plot to make America another banana republic, its working
millions oppressed serfs, their present and future security destroyed.
Obama and congressional majorities support this in league with big money
backers, largely Wall Street racketeers profiting hugely from sucking public
and personal wealth to themselves. The die is cast. It's their future or
ours. There's no in between. Grassroots activism only, or lack of it, will
- Stephen Lendman lives in Chicago and can be reached email@example.com.
Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge
discussions with distinguished guests on the Progressive Radio News Hour
on the Progressive Radio Network Thursdays at 10AM US Central time and
Saturdays and Sundays at noon. All programs are archived for easy listening.