The Confiscation of Pensions by State and Local Governments

Walter L. Bell, Ph.D.
If you have been reading the press and watching the news lately, you may have noticed that cities like Detroit and Chicago and states like Oregon have looked to use pensions as a means of balancing budgets. Pensions were set up so that workers of all kinds could invest part of their salaries in a pension which was controlled by law with fiduciary experts who were supposed manage those pensions, with strict guidelines governing the actions of the managers who could be sentenced to prison terms for fraud and other misdeeds. One of the states leading the move to provide pensions for public workers was Wisconsin, until Scott Walker became the Governor, and decided to use those monies to balance the state budget. Scott Walker is a member of ALEC, a secretive organization made up of Corporations, Lawyers, Legislators, millionaires, billionaires, and mostly Republican Senators and Representatives, at both the State and National levels.

Cities like Chicago and Detroit have confiscated pension funds through bankruptcy and other means to build sports arenas. A federal judge ruled that in the instance of bankruptcy, that a city such as Detroit could confiscate pension funds to pay for the misdeeds of organizations such as ALEC, city managers, corporations who set up operations offshore to escape federal regulations and taxes, and use pension monies to pay for the misdeeds of others. In short, it appears that retirees, and union workers have no rights to the money that was set up for their retirement.

Several administrations, starting with President Reagan and including Presidents Bush, President Clinton and President Obama have turned a blind eye to the plight of union workers except when looking for donations for campaign funds. We have Raume Emanuel, the Mayor of Chicago, Secretary of Education Arnie Duncan and also the former Superintendent of Chicago Public Schools who have denounced Public Schools in favor of Charter Schools where teachers must work ten hour days and are not allowed to join unions. Supposedly the teacher’s unions protected inept teachers from being fired, so the way to fix the problem was to create Charter Schools and work to eliminate unions including teachers’ unions and industrial unions as well. In addition, since our industrial complex has been sent offshore where workers are paid so little that they cannot feed their families, that leaves the few existing unions pension funds to be plundered by persons like Walker and Emanuel in order to build sports complexes in both Chicago and Detroit as well as in other cities.

In order for the Republican Party to gain traction they have lost in recent elections, they have refused to raise the minimum wage, and have allowed corporations to fire workers who try to join unions. One of the most prominent of these is Walmart, which until recently had been a member of ALEC, until it withdrew its membership because it feared more adverse publicity because it sells more guns than any other corporation. The latest Republican fiasco is to eliminate unemployment for workers who have been unemployed for more than a year. This will leave people who have not been able to get jobs in the United States because those jobs have been shipped offshore. Like WallmartMcSrooge, we have RepublicanMcSrooge, a party which has abandoned the Middle Class workers in the United States.

Detroit Michigan–The Demise Of A Great Industrial City

Walter L. Bell, Ph.D.

I have never visited Detroit, but, after viewing Anthony Bourdain’s account of the city, I was saddened that American Companies had abandoned this city in order to find cheap labor in other parts of the world. This city was responsible for manufacturing our war machines when the Allied Forces were on the brink of collapse during World War II. It would have been unpatriotic and dishonorable to have abandoned this city at that time because the workforce was not only one of the most highly skilled in the United States, but that workforce was highly paid, unionized, and had pensions to support them when they retired. Now that Detroit has filed for bankruptcy, the promises of retirement with dignity has become a source for bailing out years of mismanagement of the city and the lack of patriotism by the companies for relocating the operations where slave labor and sweatshop conditions abound.

During several administrations, both Republican and Democratic, the nation entered into NAFTA, WTO, GATT, IMF, FTAA, MAI alliances with countries all over the world to accomplish two things: 1) Allow corporations to avoid taxation in the United States, and 2) provide corporations with the world’s cheapest labor so that these same corporations could then import those goods back into the United States duty free. President Clinton was one of the most ardent supporters of NAFTA and the other list of Treaties and the demise of the Glass-Steagall Act of 1933 which separated Banking and Investing institutions that had led to the Great Depression of the 1930’s. In 2008 we entered a period of meltdown with the combined Bank/Investment debacle where we had Banks and Insurance Companies such as AIG which were too big to allow to fail. To make matters worse, when TARP monies were transferred from the Treasury to the Banking/Investment firms, huge bonuses were awarded to the same executives who gambled away the monies entrusted to them in the stock market and in derivatives, a new form of gambling in the stock market. Even our Congress was involved by using insider information to invest in the stock market which could get a private citizen sent to prison. Congress passed a law to prevent the use of insider information to make them wealthy, but I have read that the law has been quietly rescinded.

The move to use monies from pension funds to bail out state and municipal treasuries continues. The Governor of Oregon has lowered the States’ commitment for the funding of pensions in order to use the money to balance the budget. We have individuals in highly paid positions who used outside sources of money to pad their pensions, such as the former Athletic Director of the University of Oregon, which has impacted the State of Oregon Budget. The Governor and his buddies in the Legislature passed this resolution, that has now been challenged and referred to the State Supreme Court.

In almost every instance, it has been the lack of appreciation for highly paid, skilled, and union workers which has led to the demise of our industries in the United States. Even within the United States, the move to avoid union labor has been to move industries from highly unionized states to the South where there are no unions. Most of the foreign car companies who manufacture cars in the United States are located in the South. Boeing, which has its home office in Seattle, when building the Dreamliner had to call in its contracts for parts which were scattered all over the world, because they had no quality control over those parts. This problem led to cost overruns because of the lack of quality control, so they had to use their union labor in Seattle, who were highly skilled and also highly paid to build the Dreamliner. It seems to have escaped their attention that in the long run, highly skilled and highly paid workers, are worth more than unskilled workers, because they are planning to relocate some of the manufacturing to non-union workers in North Carolina where they had poor quality control along with unqualified foreign contracts in the early stages of manufacturing the Dreamliner.

Finally, we need stringent laws to protect the pensions of those retired workers who spent the life in industry and other occupations. We need to have workers who are skilled and loyal, and who can look forward to good pay. Corporations like Walmart do not allow their workers to join unions, but yet Waltmart has asked their own workers to give some of their money for the support of their own employees who cannot make a living wage. Walmart, Inc. needs to be renamed WALSCROOGE, INC. WE need a new form of patriotism and commitment by the National, State, and Local governments to provide for the education and support of workers both union and non-union, so that the ordinary citizens can have a chance at the American Dream where we all succeed together through shared commitment and sacrifice.