My grandfather spent 20 years of his life working in a Detroit factory.
He worked hard for what he earned. He trusted that sacrificing some of his pay to invest it in a pension would pay off after years of hard work. So that’s what he did. He retired, and his pension allowed him to provide for himself and my grandmother.
He and his coworkers knew that the pensions that they invested in were a valuable part of their income, not just a handout from their employer.
Right now, in Detroit, Emergency Financial Manager Kevyn Orr doesn’t see pensions the same way.
A quick review: In 2011, Gov. Rick Snyder and his allies in the Republican-controlled legislature passed a bill allowing entire cities to be taken over by “emergency financial managers.” These EFMs, appointed by the governor, were allowed to completely overrule decisions made by local elected leaders.
What Orr isn’t saying is what these workers sacrificed to protect their pensions. They accepted pay cuts, health insurance cuts and cuts to future pension benefits just to guarantee that the pensions they had worked a lifetime for would be there for them when they retired.
This is unacceptable, and we need to do better.
We can’t allow the wealthy elite like Snyder and Orr to take away hard-earned income from working families. Workers like my grandfather worked, saved, and sacrificed for years to make sure their pension would be there. It’s not a piggy bank for Orr and his rich friends to play with.
While the country remains shut down because of irresponsible House Republican hostage-taking, progressive members of Congress and working families are looking ahead to fight against any proposed grand “bargain” that would include benefit cuts to Social Security, Medicaid or Medicare. Members of the Congressional Progressive Caucus (CPC) spoke Thursday before working families and allies, specifically rejecting any such cuts.
While some politicians and pundits are proposing the use of the so-called “chained” CPI to determine Social Security cost-of-living adjustments over time, progressives and working families realize that the “chained” CPI would actually cut the income of retirees and people with disabilities. Hostage-taking House Republicans keep changing their random demands to end the government shutdown, and their latest demand is for Democrats to agree to cut Social Security benefits or Republicans will keep hurting people through refusing to pass a clean continuing resolution.
Rep. Elijah Cummings (D-Md.) noted the problems with “chained” CPI: “The ‘chained’ CPI would result in very real and harmful cuts for seniors, the most vulnerable in our society. These cuts would only deepen over time while the cost of living goes up.”
Pointing out a better policy option, Rep. Mike Honda (D-Calif.) said: “Instead of talking about the ‘chained’ CPI or cutting benefits, my mom would say you just need to make the pie bigger, we’re just going to talk about one cut—and that’s cut the crap….Cut the crap, scrap the cap.” Currently, wealthy Americans don’t pay into Social Security on any income above $113,700. Scrapping that arbitrary cap would go a long way to shoring up Social Security’s future.
Rep. Alan Grayson (D-Fla.) made it clear where the CPC stands on these issues: “We will vote against any and every cut to Social Security, Medicare and Medicaid,” he said. “If it ain’t broke, don’t break it.”
Pension battles are heating up in cities across the nation as conservatives and Republicans are pushing to strip public workers of their retirement plans, often with little or nothing offered as a replacement. The primary argument, although a false one, is that these pensions are “too expensive” and that during times of fiscal woes, cities can’t afford them. In reality, these plans are often little more than veiled attempts to abandon commitments to workers and shift spending to more conservative priorities.
Working families had a victory in Tucson, Ariz., this month when a judge threw an initiative off the November ballot after it was determined that many of the required signatures gathered to put the question before the voters were improperly gathered. The initiative would’ve eliminated the city’s pension plan and replaced it with a 401(k)-style plan.
While there was a victory for working families in Arizona, pension plans in numerous other cities aren’t quite as safe. Here are five cities to watch as pension plans become a more prominent target of conservatives:
1. Cincinnati: A group of mostly out-of-state tea party activists, including the Liberty Initiative Fund from Virginia, succeeded in gathering enough signatures to put an initiative on the Nov. 13 ballot that is very similar to the one that just failed in Tucson. The plan, if passed, would eliminate the city’s pension fund for any future hires, replacing it with 401(k)-style private funds directed by individual employees, effectively privatizing the pension system. Many of the city employees who would be in the new plans are not eligible for Social Security and would have no safety net to fall back on if the stock market did poorly or they failed to successfully manage their new accounts.
2. Jacksonville, Fla.: The Pew Charitable Trust is partnering with the John & Laura Arnold Foundation and is expected to promote what is called a “cash balance” plan to replace the city’s current pension plan. If the plan mirrors what Pew proposed in Kentucky, it would amount to a significant reduction in retirement savings for future retirees, who would get a set cash amount based on years of service. This measure has not been officially proposed yet.
3. Memphis, Tenn.: The mayor’s office is proposing a series of pension changes that the local Fire Fighters (IAFF) call a barrage of attacks on workers. The proposed changes include setting a minimum age to receive retirement benefits, reducing benefits for employees who take early retirement and using a salary average to determine pension benefits.
4. Phoenix: Citizens for Pension Reform is gathering signatures for a ballot initiative that would switch the city’s pension plan from a defined-benefit plan to a defined-contribution plan and capping potential benefits for current employees. The switch, similar to the proposals in other cities, would amount to a benefit cut.
5. Tulsa, Okla.: The mayor is also suggesting making the change from a defined-benefit plan to a defined-contribution plan. The change would affect only new employees and would not include firefighters or police, who are enrolled in a state-managed retirement system.
In a humorous treatment of a serious subject, AFSCME is using GIFs—those ubiquitous, short animated photos—to tell the story of Detroit’s bankruptcy.
Featuring goofiness from cat boxing, to “Seinfeld’s” Newman, corgis on a treadmill, Eminem’s out-of-it halftime interview with Kirk Herbstreit and Brent Musburger and 20 more, GIFtroit outlines the facts behind Detroit’s bankruptcy, including Gov. Rick Snyder’s (R) hijacking of state revenue due Detroit, his financial “martial law” edict that strips cities of the power to govern themselves, Wall Street’s role and more.
GIFtroit also explains how more than 21,000 city retires are threatened with pension and health care benefit cuts while current city workers, including firefighters and police officers, face wage, benefit and job cuts.
While retirees and workers are the targets of the budget-gutting advocated by Snyder’s appointed “emergency financial manager,” Kevyn Orr, GIFtroit points out that Orr is:
Living in a taxpayer-funded hotel penthouse suite, spending extravagant amounts on room service and hiring assistants at $225,000 salaries.
AFSCME and other Detroit unions are challenging the city’s claims in U.S. Bankruptcy Court, and Judge Steven Rhodes is expected to rule on the city’s eligibility for bankruptcy protection later in the fall. Today, more than 100 Detroit workers, retirees and residents who filed objections to the bankruptcy are getting a chance to speak out before Rhodes.
1. “There is nobody in this country who got rich on their own. Nobody. You built a factory out there—good for you. But I want to be clear. You moved your goods to market on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory….Now look. You built a factory and it turned into something terrific or a great idea—God bless! Keep a hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”—September 2011.
2. “People feel like the system is rigged against them, and here is the painful part, they’re right. The system is rigged.”—September 2012.
3. “Hardworking men and women who are busting their tails in full-time jobs shouldn’t be left in poverty.”—August 2013.
4. “Look around. Oil companies guzzle down the billions in profits. Billionaires pay a lower tax rate than their secretaries, and Wall Street CEOs, the same ones that direct our economy and destroyed millions of jobs still strut around Congress, no shame, demanding favors, and acting like we should thank them. Does anyone here have a problem with that?”—September, 2012.
5. “It is critical that the American people, and not just their financial institutions, be represented at the negotiating table.”—Summer 2009.
6. “Americans are fighters. We’re tough, resourceful and creative, and if we have the chance to fight on a level playing field, where everyone pays a fair share and everyone has a real shot, then no one—no one can stop us.”—September 2012.
7. “And that’s how we build the economy of the future. An economy with more jobs and less debt, we root it in fairness. We grow it with opportunity. And we build it together.”—September 2012.
8. “I understand the frustration, I share their frustration with what’s going on, that right now Washington is wired to work well for those on Wall Street who can hire lobbyists and lawyers and it doesn’t work very well for the rest of us.”—October 2011.
9. “If you’re caught with an ounce of cocaine, the chances are good you’re going to jail….Evidently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night.”—March 2013.
10. “Corporations are not people. People have hearts, they have kids, they get jobs, they get sick, they cry, they dance. They live, they love and they die. And that matters. That matters because we don’t run this country for corporations, we run it for people.”—September 2012.
11. “If there had been a Financial Product Safety Commission in place 10 years ago, the current financial crisis would have been averted.”—Summer 2009.
12. “Nobody’s safe. Health insurance? That didn’t protect 1 million Americans who were financially ruined by illness or medical bills last year.”—February 2005.
Visit the convention website to learn more details to follow the action at convention online.
In a victory for some 3,100 retired Mine Workers (UMWA) members and a setback for Peabody Energy and its attempt to duck its health care obligations, a U.S. Court of Appeals’ bankruptcy appellate panel todayreversed a lower court’s ruling that would have allowed Peabody to shed its responsibilities.
The retirees worked for Heritage Coal before Peabody spun it off to Patriot Coal. The UMWA says Peabody created Patriot solely for the purpose of ducking health care and other obligations for miners and retirees.
A bright ray of good news in what has been a long, dreary period for the retirees, their dependents and widows who have been desperately worried about what’s going to happen to their health care.
The union has been engaged in a Fairness at Patriot campaign to win justice and protect the pensions and health care for the workers and retirees at Patriot and to hold Peabody accountable to its obligations. Says Roberts:
Peabody has spent years trying to get rid of its obligations to the thousands of retirees who made it the richest coal company in the world. This decision foils part of that plan. And it makes us even more determined to keep fighting to make sure the company lives up to its entire obligation to these miners.
UMWA members at Patriot Coal operations in West Virginia and Kentucky last week ratified a settlement the union reached with the company that makes significant improvements in terms and conditions of employment over a federal bankruptcy judge’s order from last May. But says Roberts:
We are now able to turn our full attention to securing the lifetime health care benefits Peabody and Arch Minerals [which also was involved in the creation of Patriot] promised these retirees. If those companies thought our public effort to highlight their poor corporate citizenship was over, they will quickly find out otherwise. We’re moving into a new phase of that effort, and soon. We fully intend to hold Peabody and Arch accountable.
Sen. Jay Rockefeller (D-W-Va.) introduced the Medicare Drug Savings Act of 2013 that would produce savings without passing on costs to seniors.
The act offers a solution that strengthens Medicare’s fiscal footing while shielding beneficiaries from harmful cost-shifting, unlike most other Medicare proposals we hear about. The Congressional Budget Office (CBO) estimates that restoration of Medicaid-level drug rebates for low-income Medicare beneficiaries would save the federal government $141 billion over 10 years. Here are some critical facts about the bill from the AFL-CIO and other allies:
America’s workers strongly support allowing Medicare to secure lower prices drugs. According to a recent national poll, 85% favored “requiring drug companies to give the federal government a better deal on medications for low-income people on Medicare.”
Implementing Medicare drug rebates is not new law. Upon passage of the Medicare Modernization Act (MMA), millions of older adults and people with disabilities gained access to prescription drug coverage through private plans approved by the federal government, known as Medicare Part D. At the same time, the MMA severely limited the tools available to the federal government to control spending on pharmaceutical drugs in Medicare. In particular, the MMA eliminated rebates offered by pharmaceutical manufacturers for drugs provided to beneficiaries dually eligible for Medicare and Medicaid. Applying Medicaid-level rebates to Medicare drugs simply restores a practice that existed for dually eligible beneficiaries prior to the passage of the MMA.
Restoring drug rebates to the Medicare program is a proven cost saver. Already the Medicaid program benefits from lower drug prices due to federally determined rebates on brand name and generic medications. A 2011 comparison of 100 brand-name drugs under Medicaid and Medicare Part D found that Medicaid rebates required by law reduced expenditures by 45% for the drugs under review. Whereas, Medicare rebates secured by private drug plans reduced expenditures by only 19%.
Pharmaceutical spending on research and development is not at risk. Studies show that research and development investments in particular types of drugs are not directly linked to specific revenue sources, such as Medicaid. These findings, coupled with an examination of industry spending trends, suggest that reinstating Medicare drug rebates will not limit research and development. We reject the argument that pharmaceutical manufacturers will be unable to fulfill their commitment to innovation if the Medicare program is allowed to secure more reasonable drug prices.
Applying Medicare drug rebates will not shift costs to Medicare beneficiaries or employers. Some stakeholders claim that applying Medicaid-level drug rebates for low-income Medicare beneficiaries will increase costs for other Part D beneficiaries, but research supports otherwise. The same research suggests that costs for purchasers outside of Medicare—namely employers— will be largely unaffected if the Medicare rebates are restored.
During President Obama’s second inaugural address yesterday, he affirmed we’re stronger when we work together:
But we have always understood that when times change, so must we; that fidelity to our founding principles requires new responses to new challenges; that preserving our individual freedoms ultimately requires collective action. For the American people can no more meet the demands of today’s world by acting alone….No single person can train all the math and science teachers we’ll need to equip our children for the future, or build the roads and networks and research labs that will bring new jobs and businesses to our shores. Now, more than ever, we must do these things together, as one nation and one people.
He also lifted up working peoples’ shared belief in a robust social insurance system.
We do not believe that in this country freedom is reserved for the lucky, or happiness for the few. We recognize that no matter how responsibly we live our lives, any one of us at any time may face a job loss, or a sudden illness, or a home swept away in a terrible storm. The commitments we make to each other through Medicare and Medicaid and Social Security, these things do not sap our initiative, they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great.
Our journey as a nation is not complete until we achieve equality and economic opportunity for all.
For our journey is not complete until our wives, our mothers, and daughters can earn a living equal to their efforts. Our journey is not complete until our gay brothers and sisters are treated like anyone else under the law—for if we are truly created equal, then surely the love we commit to one another must be equal as well. Our journey is not complete until no citizen is forced to wait for hours to exercise the right to vote. Our journey is not complete until we find a better way to welcome the striving, hopeful immigrants who still see America as a land of opportunity; until bright young students and engineers are enlisted in our workforce rather than expelled from our country. Our journey is not complete until all our children, from the streets of Detroit to the hills of Appalachia to the quiet lanes of Newtown, know that they are cared for, and cherished, and always safe from harm.
While congressional Republicans are heavily focused on cutting Social Security, Medicaid and Medicare benefits and other harmful budget cuts that threaten the 98%, a better approach is to eliminate loopholes that allow the wealthiest 2% of Americans and Wall Street to pay much less than their fair share of taxes. Focusing on loopholes keeps money in the hands of working families, which helps the economy grow without increasing hardship and economic insecurity for working people.
Many current loopholes just aren’t fair. Take, for example, what Think Progress calls the “Mitt Romney Loophole.” People like Mitt Romney who manage investment funds get paid in two ways. Part of their income is a management fee that is taxed as ordinary income, currently at a top rate of 39.6%. But fund managers also get a cut of the profits of the investments, which is taxed as a capital gain, with a top tax rate of only 20%. The typical investment manager takes a management fee of 2% and gets a 20% cut of the profits, meaning they avoid paying the normal tax rate on the vast majority of their income, something working families are not able to do. As Think Progress explains:
This loophole is one of the main reasons that Mitt Romney paid a tax rate of just 13.9 percent on income of more than $20 MILLION. Meanwhile, millions of middle-class workers pay a much higher rate on their much, much lower salaries.
Closing this loophole would not only make our tax code fairer and more progressive, it would help raise revenue to protect vital programs and leave room in the budget for investments to grow the middle class. Closing just this one loophole that often benefits the ultra-wealthy would raise $21 billion over 10 years.
Means-testing Social Security and Medicare is an idea thrown around a lot to “find savings” because, on the surface, it doesn’t sound too painful. Wealthy people typically are able to save more and invest in retirement than lower- and middle-income earners, so they don’t need Social Security and Medicare as much, right? Wrong.
Means-testing Social Security and Medicare is a cynical way to weaken and destroy benefits for middle-income working people.
Lynn Stuart Parramore at Alternet writes:
In Washington-speak, “means-testing” is a scheme to deny or reduce Medicare and Social Security benefits for people who are “too wealthy” in the name of saving money. It’s a counterproductive, harmful idea, but one that well-intentioned liberals often get snookered into embracing.
At their heart, programs like Medicare and Social Security are about fairness, equality and shared citizenship, values that progressive Americans hold dear.
Medicare and Social Security are not welfare programs. They are benefits that people pay for as they work. They are also smart social insurance programs that spread risk across society in order to protect everyone at rates no private insurance scheme, with its much smaller risk pool, could touch.
She spoke with economist Joseph Stiglitz, who added, “We don’t means-test public education because we believe that we want people to have the same opportunities and we lose out on that with means-testing.”
2. Means-Testing Won’t Stop at the Wealthy
This is where we get into the nitty-gritty that means-testing Social Security will actually cut benefits for middle-income earners…even people who make around $60,000 a year and less. Those are not the people we usually think of as being wealthy. In order to produce any significant savings, people typically considered middle class will be affected.
Political economist Thomas Ferguson told Parramore:
The truth is that means-testing is a device to destroy political support for what are still the most popular of all government programs—programs that have survived decades of attacks by the right.
3. Means-Testing Doesn’t Make Economic Sense
It’s simply untrue that means testing produces great savings, writes Parramore.
In fact, it will likely raise costs for middle- and lower-income seniors who rely on Medicare and Social Security to live decently in retirement….Means-testing will cause many high-income beneficiaries to view the programs as unfair, and they will opt out, purchasing their own insurance and retirement policies on the private market. Programs like Medicare and Social Security depend on spreading risk across a large pool of people. For example, the departure of higher-income beneficiaries from Medicare, who tend to be younger and healthier, would increase overall costs and diminish public support.
4. Means-Testing Plays into Conservative Deficit Hysteria
Even entertaining the idea of benefit cuts through means-testing suggests that Social Security is in crisis. It’s not.
Conservatives promote deficit hysteria because they have a fundamental hatred of government and wish to destroy the New Deal programs that have benefited the middle class and the poor. If they were really concerned about deficits and spending, they would not support costly and unnecessary wars, monopolistic conditions and extremely low taxes for the wealthy and large corporations….Social Security does not contribute to the deficit. It is a well-managed program in fine fiscal condition, and there is no justification for tampering with it now. The Trustees Report shows that the program will be able to meet all of its obligations at least until 2033. If there is a tweak needed down the road, that can be handled very simply by raising the cap, which stands now at just over $100,000.
Medicare was started in 1965 to provide health insurance to people 65 and older regardless of their medical history or income. Since then, 75% of the program’s Supplementary Medical Insurance (SMI), the part that goes to pay doctors, has been financed by general revenues, the largest chunk of which comes from personal income taxes. The personal income tax is progressive, which means that upper-income people pay a larger share of their income in taxes for SMI.
Since 2007, specific means-testing features have been added. For example, beneficiaries with incomes over $85,000 have been required to pay higher SMI premiums. Beginning in 2013, the 2.9 percent hospital insurance tax will continue to apply to the first $200,000 of income for individuals or $250,000 for couples filing jointly, but it will rise to 3.9 percent on income in excess of those amounts.
6. The Coming Old Age Crisis
A secure retirement is quickly becoming a thing of the past with vanishing pensions, a shaky job market, declining wages and constant attacks on Social Security and Medicare. We need more robust Social Security and Medicare benefits, not less.
The United States is a rich country, and a dignified retirement for our elderly should be one of our proudest achievements. And yet Social Security and Medicare are under near-constant attack. Pensions are vanishing, and despite 401(k)s and other voluntary retirement plans, workers still can’t save nearly enough to retire securely. [Economist Teresa] Ghilarducci warns that the economic structure of retirement in America is falling apart. She exposes the Wall Street financiers who want to privatize Social Security, the risk of 401(k) plans, do-it-yourself retirement schemes and companies like Enron that have left employees high and dry.