STATE AND LOCAL PUBLIC PENSION FUNDS ACROSS THE COUNTRY ARE IN POLITICAL AND ECONOMIC CRISIS. At stake is a comfortable and deserved retirement for millions who have spent their lives serving the public—teaching our children, picking up our garbage, running our libraries. The crisis could also profoundly affect the budgets of state and municipal governments, already weakened by decades of austerity.
The Right decries this parlous situation and demands savage cuts. The unions and their friends say there’s no problem—just reactionaries crying wolf to push an austerity agenda.
But despite the clear bad-faith agenda of the Right—at a recent conference of the Koch brothers’ political network, one speaker joked about their efforts to “bring down the [Alabama] pension system”—the pension problem is real.
Governments have promised trillions of dollars to present and future retirees—$5.9 trillion (according to Federal Reserve statistics)—to be paid out sometime in the future. Unfortunately, they don’t have anywhere near that kind of money, either on hand or in the foreseeable future. Crisis-driven cuts have only made the situation worse. The Fed has calculated that, all told, the nation’s pension accounts are $1.7 trillion in the hole—and others put the shortfall at closer to $4 trillion.
It didn’t have to come to this. During the New Deal, unions advocated for an expansion of Social Security to fund pensions. What they got instead is the current pension fund system, one that is in thrall to both the vagaries of Wall Street and prevarications of politicians. Perhaps, with crisis looming, the time is nigh to consider scrapping the current system and going back to the idea of publicly provided pensions for all—a universal basic retirement income.
– In These Times