Any discussion of the global assault on pensions must begin with the three-year-long capitalist crisis, particularly the historical and geographical conditions.
The economic crisis is being used to batter the remnants of the social welfare state.
Having decimated aid to the poor over the last 30 years, especially in the United States, the economic and political elite are now strangling middle-class benefits, namely state-provided pensions, healthcare and education.The initial neoliberal assault under Ronald Reagan and Margaret Thatcher 30 years ago reorganized the capitalist economy and hammered private-sector unions into submission.
Similarly, the current attack is a two-pronged effort to reorganize state social services, either by eliminating or privatizing them, and to decimate public-sector unions that fulfill these services.
While social services are starved, police and spying agencies are metastasizing their powers and funding, and the wealth of the super-rich and record corporate profits are off-limits to close any government budget gap.Simply put, the elderly are superfluous to capitalism. If successful, efforts to cut social benefits will increase the pool of unemployed and drive down wages. The main beneficiaries will be the super-wealthy who gain both from tax cuts as the social sector is chopped up and higher corporate profits as wages and benefits are slashed more and more...
While the right has stridently opposed Social Security since it was enacted in 1935, the modern attack on pensions originated during the Reagan-Thatcher era. As president, Reagan temporarily froze cost-of-living adjustments, raised the future retirement age to 67, taxed benefits of higher-income earners, made it more difficult for the disabled to claim benefits and forced the self-employed to pay 100 percent of payroll taxes.
Then under Clinton, claim some economists, inflation was understated to suppress cost-of-living adjustments, resulting in benefits that should be 50 percent higher than the current average of $1,072 a month. Thatcher and Tony Blair formed the same one-two punch as Reagan and Clinton, but they went further by privatizing much of the state pension system.
The second historical component is the current crisis, which is severely widening the economic chasm.
The overall economic picture is dire: industrial production is back to where it was in 2000 and the all-important capacity utilization rate — which measures use of productive capacity — is below 75 percent, compared to a level above 80 percent before the crash...
With so much idle productive capacity, giving tax breaks to spur business investment is throwing away money. When business investment, consumption, trade, debt and speculation all falter, only government can revive a capitalist economy. But, as The Indypendent first pointed out in December 2008, the Obama administration knew the stimulus would fail. The downturn was sapping a staggering $1 trillion a year from the economy, but the plan offered a relatively meager $787 billion over more than two years, and much of that was in useless tax breaks.
The pro-Wall Street Obama administration never considered a program of re-industrialization because this would have required redistribution either indirectly through debt-driven financing of jobs programs (which would shore up wages and labor bargaining power) or directly by taxing the rich to pay for rebuilding the global economy after they torched it.
Obama has consistently fought for policies that involve weakening labor, driving down wages, letting unemployment rise, and squeezing social services and benefits, all to transfer more wealth upward.The wealthy have profited three times off the crisis: from the bubble itself, from the bailouts and from government bonds sold to them to pay for the bailouts. Putting pensions on the chopping block would give them a fourth opportunity to profit off the same crisis.If government debt is a problem, then bondholders should take a haircut because they took the risk. Of course, that’s not how capitalism works. So, in the case of Social Security, which has nearly $2.6 trillion in its trust fund and can meet ALL obligations through 2037, the plan is to raid it to pay off bondholders.
That’s why a crisis is being manufactured. Obama’s deal to reduce payroll tax by two percentage points will pilfer an estimated $120 billion from the trust fund, which will supposedly be paid back by revenues from the general treasury. This means the deficit will increase, and amplify the echo-chamber panic over Social Security and debt.Cutting pensions will be disastrous to long-term economic health.
Social Security accounts for 40 percent of the income of the population over 65 and nearly 50 percent for women in this group. This also means more people in the workforce as older workers delay retirement.
Because the elderly tend to spend their benefits right away, on housing, food, transportation and medical services, this means lower economic activity.
And combining all this with trying to crush public workers also means more unemployed, less tax revenue and a shrinking economy.
It all adds up to a recipe for a long-term depression. http://www.indypendent.org/2010/12/21/back-to-the-poorhouse/
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