A guest commentary by Tom Louderback
We profoundly respect our veterans for their courage and sacrifices, but apparently, we think their pensions are too expensive. That would explain the deafening silence when Congress cut military pension benefits by about 20% in 2016 in the National Defense Authorization Act of that year.
Or, maybe it doesn’t explain the cut. Who even remembers pensions? They’ve been gone for workers in the private sector for many years. Few can relate to the concept anymore. Our parents and grandparents were sustained by pensions in their retirements. That was then.
Today, only a few in the private sector are covered by pensions. This disappearance began during the Reagan administration, and the motivation for getting rid of them was mostly cynical politics.
The Republicans had feared the growing economic power of union pension funds ever since the New Deal. So, they did not want to see the economic power of the labor unions grow along with the growth of their members’ pensions.
This fear motivated the Reagan administration to implement some crafty political strategies the Republicans still apply today whenever they occupy the presidency. The first strategy is to keep the ERISA regulations (the “Employee Retirement Income Security Act”) as complicated as they can. These complications cause higher overhead costs, which in turn, discourages employers from offering pensions.
Hand in glove with the first strategy, the Reagan administration opened the 401(k) retirement saving plans to everyone. This opening gave employers a cheap alternative to pensions, and it paid it off very well for the Republicans as a great many employers terminated their pensions within the next ten years.
This trend was a tremendous cut in the standard of living of working people. Many did not see it, though, because they were decades away from retirement at that time.
Note that 401 (k) retirement saving plans were not designed to provide retirement security as pensions once did. They were intended only as tax shelters for business executives. No one really believed these savings plans would be better than pensions for the employees – and they aren’t as it turns out. Consider that most Baby Boomers are retiring today with minimal retirement savings.
Once the Republicans’ pension-termination strategy was firmly in place, they intensified their attacks on the labor unions by countless tactics such as new restrictions on union organizing activities, disregard of existing laws, and hostile appointees to the courts, the National Labor Relations Board, and US Department of Labor. The hostile environment the Republicans established vanquished the power of most employees to negotiate for pensions. Their mission was accomplished.
That’s how we got to where we are today. Many of our parents and grandparents had pensions, but few in the following generation are covered. Some of the Republicans, like Mitch McConnell and Rand Paul, will blame it on global competition as though this was the only possible cause of the decline in our standard of living for working people in our country. But, the reality is the Republicans set us on that downward slope years before the global economy started to change. Most pensions had already been terminated by then.
In a related move, many of us will remember that the George W. Bush administration attempted to privatize Social Security. That turned out to be a very unpopular move. The public practically rebelled against it. Bush backed down.
The Republicans’ political target was plainly obvious to many at that time. They wanted to shrink the Social Security trust fund. Besides that, they knew that their political allies on Wall Street wanted a piece of the action in Social Security.
Never forget that Bush’s attempt at privatizing came a just few years after his massive tax cuts had refunded the Clinton administration surpluses. Bush could have invested those surpluses in Social Security instead. That would have been prohibited by Republican orthodoxy, though.
Simply put, the Republicans believe that working people do not deserve economic security in retirement. You have to build a fortune to deserve that, as they see it. Not wealthy? Too bad for you.