It may be difficult for those on the wrong end of economic inequality to understand, but there are some conservative economists who claim inequality promotes investment, but the overriding opinion is that too much inequality is destructive and can hinder a nation’s long term growth. In 2011, researchers from the International Monetary Fund published work indicating that income equality increased the duration of countries’ economic growth spells more than free trade, foreign investment, or low foreign debt. Obviously, economic inequality in America is well beyond a social and economic problem, and two noted economists have released preliminary research that revealed Americans have not witnessed economic inequality favoring the richest 1% since the 1920s and it is about to get worse; much, much worse if the Koch brothers’ American Legislative Exchange Council (ALEC), State Policy Network, and their Republican facilitator Paul Ryan have their way.
It is a fact of life that income inequality has grown steadily since the 1980s with the richest 1% taking an inordinate amount of wealth from the labor of higher productivity coupled with stagnant wages, but there is also a great gap regarding wealth. Wealth is a household’s total assets including savings, equity in a home, pensions, and cash on hand minus what that household owes, and according to Emmanuel Saez and Gabriel Zucman, the gap between wealth held by the richest 1% and the rest of the population is at levels not seen since the 1920s “explosive inequality dynamics.” The economists note that wealth is always “very concentrated” at the top, but although the top 10% made gains over the past three decades, the highest concentration since the 1980s has been in the top 0.1% who hold more than $20 million in assets, and for those in the top 0.01% with over $100 million in assets their wealth exploded.
There has been virtually no increase in wealth for everyone below the top 0.1% of Americans. After the Great Depression, progressive capital taxes and the New Deal prevented wealth inequality from growing inordinately until about 1986 when the bottom 90% began being barely able to save anything that the Republican Great Recession made incredibly worse. Today, hardly any Americans are able to save or even count home equity as an asset, and coupled with stagnant or poverty-level wages enriching corporations and the rich, the top 1% will continue accumulating all the wealth in America. For many Americans, the only “wealth” they count is their pension to stave off starvation and homelessness in old age that Republicans, Koch brothers, Wall Street, ALEC, and the State Policy Network are crusading to rob to enrich corporations, Wall Street, and the richest 1%.
Toward the end of 2013, ALEC joined its Koch-funded sister organization, the State Policy Network, in a campaign to dismantle public pension systems completely as one of its top 2014 legislative priorities that the National Public Pension Coalition (NPPC) representing public sector employees said is a major threat to the financial security of millions of state and local public employees. That wealth public employees depend on in their retirement is just too much for the rich, Republicans, Koch brothers, and Wall Street to pass up and they are actively working to steal it for themselves under the guise of “helping” states and the federal government rein in spending. However, as is always the case with Republicans and their funding mechanism, any “pension” savings is relegated to tax cuts for the rich to increase their wealth. Veterans got a small taste of Paul Ryan’s greed for their pensions in the 2013 budget agreement, and his latest budget proposal expands the great pension robbery even more to partially fund the monumental tax cuts for the rich and corporations.
The Republican campaign against public pensions was featured in the Institute for America’s Future Report, “The Plot Against Pensions” that focused on the work of a former Enron executive, John Arnold, to promote the false notion that there is a public-pension “crisis” that is solved by replacing pension programs with scams that shift all the risks to workers, eliminates benefits, and create incredible new profits for Wall Street. ALEC decided pension wealth for retirees was better spent on tax cuts for the rich and Wall Street and is working to convince states to convert public pensions to 401(k) plans or other “defined contribution” plans that took a righteous beating in the 2008 market crash. In a report by an associate of John Arnold, it said states could address the “pension shortfall” if “legislators moved from defined-benefit systems to properly designed alternatives, such as defined-contribution, cash-balance, or hybrid plans.” According to the report, defined-contribution plans are not necessarily more expensive for workers and taxpayers than a defined-benefit pension plan, but like everything Republicans propose, it is so much bovine excrement masquerading as a scam to enrich the wealthy and Wall Street and rape more wealth from the population.
According to the NPPC, “When states have adopted pension overhaul legislation, they have found that it came at a significant cost. Alaska and Michigan went down that road and saw their pension debts increase. West Virginia adopted a 401(k)-like plan for public employees in 1991, but reversed course in 2006 after it found that public employees had such low incomes in retirement that they were eligible for means-tested public assistance programs, driving up costs to the state.” The Plot Against Pensions also reported that in a state ALEC holds up as a shining example of “pension reform,” Rhode Island, fees to Wall Street money managers drove up costs so much that a great friend of business, Forbes magazine, called it “just blatant Wall Street gorging.” What ALEC, SPN, and Republican Paul Ryan never address is the devastating cost to retirees who lose what little wealth a lifetime of work built and the life of poverty they get to look forward to while Wall Street and the rich increase their wealth.
The concept of stealing Americans’ pensions that Ryan, Wall Street, and the Kochs’ ALEC and SPN are promoting is precisely what George W. Bush proposed, and Paul Ryan adamantly supported, in 2005 with the Social Security privatization scam. Like all pension stealing scams, besides enriching the wealthy, privatizing Social Security is as much about creating poverty in the elderly as diverting their wealth to Wall Street and tax cuts for the rich. In fact, the Economic Policy Institute (EPI) rightly concluded that Social Security is the most effective anti-poverty program in America, but like all other anti-poverty programs, Ryan and Republicans are on a crusade to end them to enrich the wealthy.
Republicans could not care less about a decent retirement for any worker regardless that their contributions often fund public projects and are a better use of a state or federal government dollars than handing them directly to the rich and Wall Street. ALEC claims it is not fair that many private companies shifted from pensions to 401(k) plans and cry foul that public employees did not lose 25% or more of their pensions when Republicans and Wall Street crashed the economy in the 2008 recession and was bailed out by the taxpayers. Republicans will not rest until they have secured all the wealth in America for Wall Street, the rich, and the Koch brothers and with nothing left to steal from Americans except their retirement, Americans can look for ALEC and SPN legislation in their states to pillage pension accounts from public sector workers with the same tenacity that Paul Ryan is going after Veterans and federal employees’ pensions and all for the Kochs and Wall Street. It is but another indication that Charles Koch was lying through his teeth when he wrote in the Wall Street Journal that he is a “champion of greater well-being and opportunity for all Americans.”
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