It has always been an essential part of the modern American Dream that after you have put in 20 years of work, your company rewards your loyalty with a pension, to keep the gold in your Golden Years. Like most promises of the Industrial Age, it was a wonderful dream as long as no one did the math. What would happen, no one asked, when there were more pensioners than workers? Nothing, the answer would have been, because funds for each and every pension were set aside as the worker worked, and invested wisely, so that there would be plenty of money for each and every retiree.
But what would happen, no one thought to ask, if American industry and government lost their basic decency, and sacrificed the welfare of future pensioners to swell the fortunes of the current Masters of the Universe? What would happen, no one wondered, if the managers of the pension funds were so incompetent that instead of fattening the accounts, they starved them. Now we know what would happen.
Virtually every pension fund in the country — for municipal, state and federal government workers, union members, and employees of private companies — finds its treasury stuffed with IOUs from the companies and agencies that were supposed to keep it solvent (“sorry we can’t meet our obligations to you this year but we will next year or the year after that or the year after that or the year after that or the year after that. we promise”) and the records of bad stock market bets gone sour.
This is usually a topic for debate among actuaries and accountants — everyone else’s eyes glaze over at the mere mention of this, one of the most treacherous and lethal campaigns to be directed at any class of Americans since the Indian Wars. We don’t take responsibility for the Indian Wars because they happened so long ago, and we shrug off the implications of the pension debacle — the sudden depriving of millions of elderly Americans of the money for food, shelter, medicine and clothing — because it somewhere off in the distant future.
Except it’s not. It’s starting now:
- At the end of 2015, the pension funds of the companies listed in the S&P 500 were underfunded by a staggering 375 billion dollars, after having been fully funded as recently as 2007. Underfunded is a polite term for treachery: the companies have not deposited in the pension fund the money they have promised to pay their qualified retirees.
- State and local government pensions are in far worse shape: they are five and one-half trillion dollars short of the money they have promised — and are obligated by law — to pay their retirees.
- The Pension Benefit Guarantee Corporation (PBGC), a US government agency, insures the private pension funds covering 40 million Americans. So far, it is responsible for paying the benefits owed by 71 pension funds that have gone broke (it does not pay the full benefit, more like 70 per cent, and it does not use taxpayer funds — yet.). The PBGC says it will run out of cash within ten years.
- The Central States Pension Fund, for Teamsters union truck drivers in several states, one of the country’s largest funds covering a quarter of a million people, plans to cut benefits for more than a quarter million retirees — some by more than half — beginning July 1, and expects to be insolvent by 2025.
This rapidly gathering storm is not going to limit its effects to retired people. No less an authority than Investor’s Business Daily suggests that the public pension shortfalls alone could bankrupt the Unites States government. They estimate the existing debt at over $17 thousand for every American. Failure to honor a private pension is a breach of trust; failure to pay a public pension is a breach of the law.
As this crisis matures, with announcements coming every week now that another fund is reducing benefits or otherwise in trouble, so too will the related crises in social security and among the people — nearly half the households of working people — who have no personal savings or preparation for their retirement.
When they came for the Muslims and the Mexicans, I did not speak up for obvious reasons. But now they’re coming for the old people.