Greased by lobbying and campaign cash, tax breaks for retirement savings are one thing Congress agrees on. But they also blow out the deficit and add to income inequality.
Only 11 percent of private sector workers are in real pension plans.
Raising the retirement age isn’t just about having the “best years of retirement be stolen,” as French protesters have warned. It’s about fairness and not putting years more of the nation’s labor burden on the working class. Next time the government moves to raise the retirement age, we should follow the French example to protest and proclaim, “It’s a No.”
In the 1960s, more than a third of seniors lived in poverty. Federal programs like Medicare to help the elderly, the situation improved significantly. But last year, the poverty rate for those 65 or older increased, even as it sank for everyone else.
Pension legislation historically has been bipartisan—and it very well might be again in the future. After more than a decade of failed efforts, the retirement security of 1.5 million Americans and their families, finally, took priority.
The upward redistribution of income has cost Americans workers $50 trillion over the past several decades. On average, extreme inequality is costing the median income full-time worker about $42,000 a year.
The government-promoted plans let employers completely off the hook and put the entire burden of retirement savings and investment management on workers. They put another nail in the coffin of traditional plans in which employers share the expense.
The way major U.S. companies provide for retiring workers has been shifting for about three decades, with more dropping traditional pensions every year. The first full generation of workers to retire since this turn offers a sobering preview of a labor force more and more dependent on their own savings for retirement.
Democrats and coal-country Republicans say miners are uniquely deserving because of an agreement in 1946, when the government seized mines and ended a strike by agreeing to provide health and pension benefits. Legislative leaders have agreed to the provisions as part of a $1 trillion government funding bill, and rank-and-file members are expected to approve it later this week.
Kansas Gov. Sam Brownback wants to make a decades-long bet that pension-fund returns will exceed current interest rates for taxable municipal bonds. “The use of pension bonds impugns an issuer more than a downgrade, because it shows they’re willing to saddle future generations with risk in order to make current budget discussions easier,” says Matt Fabian, a partner at Concord, MA-based research firm Municipal Market Analytics.
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