A pension debate in Rhode Island this fall could set the stage for how dozens of other states take up the issue when regular sessions resume in 2012. As Progressive States Network reported last month, calls for dramatic changes to public pension systems and social security are largely an opportunistic move by conservatives to advance a privatization and anti-tax agenda. The debate playing out in Rhode Island has turned into another unfortunate instance of this, driven by a take-it-or-leave-it proposal by State Treasurer Gina Raimando – a venture capitalist by trade – that would slash benefits and partially privatize the system. To support the proposal, a newly formed lobbying organization supported by financiers and business lobbyists is running a full-press political campaign that is choking out discussion of more reasonable alternatives.
As protests on Wall Street spread across the country, the dire need for progressive solutions to financial corruption and savage inequality is capturing national attention. One aspect of Wall Street’s agenda that has not been sharply criticized enough is emerging as a defining issue in the presidential campaigns of challengers to President Obama: dismantling Social Security and public pension systems. Texas Governor Rick Perry has grabbed the most headlines by absurdly characterizing Social Security as a “Ponzi scheme,” and calling it a “crumbling monument to the failure of the New Deal.” Other presidential candidates are also trying to stake out positions to privatize retirement funds, and state policymakers who are leading ideological attacks on workers have targeted pension funds in an effort to pit union and non-union workers against each other.
Refuting right-wing attacks on state workers, a new report
by the National Institute for Retirement Security (NIRS) and the
Council on State and Local Government Excellence (CSGE), Out
of Balance? Comparing Public and Private Sector Compensation Over 20
Years, demonstrates that state and local employees earn an average
of 11 and 12 percent less, respectively, than comparable private sector
This Dispatch will emphasize that there is no crisis in most state
retirement systems, even according to the numbers of the researchers
demanding state leaders take unneeded action to cut the incomes of
retirees. And despite the hype from a few carefully selected anecdotes
of retirees gaming pension systems, the reality is that the
overwhelming number of public employees receive pretty bare-bones
benefits, in some cases not enough even to keep them out of poverty.
In an effort to stimulate local economic growth and free up credit markets, New MexicoSen. Tim Keller and Rep. Brian Egolf introduced HB66,
which would require the state to give preference to community banks and
credit unions to manage the state's general fund operating cash
depository account. Currently, Bank of America holds the $1.4 billion account.
As the economic downturn progresses, American workers are facing a
disturbing rise in employers using credit ratings to determine job
worthiness. According to a 2006 survey by the Society for Human Resource Management,
the number of firms using credit histories to screen applicants rose
from 25% in 1998 to 43% despite such inquiries often being
discriminatory and even illegal.
In the last few decades, there has been a massive shift from
traditional defined benefit retirement plans -- where workers are
guaranteed a yearly return in retirement -- to defined contribution
plans like 401(k)s where money may be contributed each year with no
guaranteed return. The numbers are stark:
of workers with pensions (which includes today only 60% of the
population), 83% had defined benefit plans in 1980, while only 39% had
a defined benefit plan by 2004.