The 1 Percent Bunch: They Help the Wealthy Dodge Their Fair Share
Cities and states are taking drastic measures to get out of an economic slump, including turning to reverse Robin Hoods who target America’s middle class.
Whether you’re a city worker in Detroit or a state employee in Rhode Island, public workers across the nation have much more in common with each other than they did just a few years ago.
We face vicious and well-funded attacks from special interests that demonize us as though it was our greed and lavish lifestyles, rather than Wall Street’s, that caused the 2008 economic crisis.
Nothing could be more ridiculous.
AFSCME successfully fended some of these attacks. In Cincinnati, for example, voters in November resoundingly rejected a tea party-backed measure that would have decimated public worker pensions by turning them into 401(k)-style plans.
Leaders and members of the six AFSCME Council 8 local unions representing Cincinnati city employees mobilized, held emergency meetings with the public, and completed neighborhood walks aimed at educating voters.
But in other places the fight goes on and the outcome is uncertain. Politicians facing decades of underfunded pensions are now shifting blame and responsibility unfairly to workers. They’re getting plenty of help from elected (and unelected) public officials. The result: America’s middle class is under attack.
Roads that Lead to the Same Place
In some places, like Detroit, corporate-backed politicians are making drastic cuts to workers’ and retirees’ pensions and falsely claiming there is no alternative to bankruptcy.
In December, a federal judge ruled Detroit’s bankruptcy legal, dealing a devastating blow to the retirement security of the city’s public service workers.
While it’s true the city’s finances were in bad shape, Michigan Gov. Rick Snyder specifically went after public employee pensions, in blatant disregard of the explicit language of the constitution he swore to uphold and protect. His politically appointed so-called “emergency manager,” Kevyn Orr, refused to meet with AFSCME or any other labor unions to work together and try to minimize the harm inflicted on city workers and their families — a fact the judge acknowledged.
In Rhode Island, the newly elected general treasurer, Gina Raimondo, chose a different path but with negative consequences that similarly threaten the retirement security of state employees.
In late 2011, Raimondo guided passage of the Retirement Security Act, which raised the minimum age for retirement, took away cost-of-living-adjustment increases, and removed the safety of pensions by partly replacing them with risky 401(k)-style plans, among other things.
Although on the surface these two divergent paths – bankruptcy and pension “reform,” which is more like pension theft – are very different, they have something in common: They are based on the monumental misconception that somehow public employees are to blame for our fiscal mess and should be made to pay.
Taking Advantage of the Weak
The Great Recession took its greatest toll on those already vulnerable, like Detroit public service workers and retirees. AFSCME retiree pensions in Detroit are only about $19,000 a year.
In the last few years, Wall Street fat cats have managed to recover their losses impressively quickly while working families continue to lag behind.
And yet instead of helping those who remain most vulnerable, politicians like Raimondo and Snyder are helping the rich get richer by funneling public funds in their direction.
As part of her plan to help the wealthy, Raimondo began investing taxpayer money in hedge funds, which are riskier and more expensive “alternative investments” with no guarantee of higher returns.
Raimondo is a former venture capitalist. She was elected in 2010 thanks to contributions from hedge funds who knew they stood to benefit by putting her in office.
And they were right. Over the next 20 years, taxpayers in Rhode Island will have to pay more than $2 billion dollars in fees alone to Wall Street hedge funds. During the same period of time, state employees will have to go without cost-of-living-adjustments that add up to the same amount of money.
In other words, Raimondo is a reverse Robin Hood taking from the poor to give to the rich.
AFSCME Council 94 called on the Securities and Exchange Commission (SEC) to investigate Raimondo’s apparently illegal investment practices after releasing a damning report titled, “Rhode Island Public Pension Reform: Wall Street’s License to Steal.”
“The treasurer has emerged as the leading national advocate of a disingenuous form of public pension ‘reform,’ which involves slashing workers’ benefits and thwarting public access to information regarding the riskiest of pension investments while, in secret, dramatically increasing the risks to retirement plans and the fees they pay to Wall Street,” the report states.
J. Michael Downey, president of AFSCME Council 94, said, “Instead of promoting retirement security for all Rhode Islanders, the changes in the state’s public pension apparently enriched wealthy hedge fund managers from out of state.”
In November, Frank Ciccone, a Rhode Island state senator, echoed AFSCME by asking the SEC to look into “misleading information” found in official documents regarding the state’s investments. He referenced the AFSCME report and said the SEC should look into any possible violations of the law.
The Rich Must Pay Their Fair Share
Similarly, in Detroit, the former law firm of Kevyn Orr, the emergency manager, stands to gain millions of dollars in fees from the city’s bankruptcy proceedings. And Wall Street banks and firms are eager to find out how they might split up the city’s remaining assets to further enrich themselves, perched like vultures above a once-thriving American metropolis.
The road that nobody except unions and their allies had the courage to travel is that of calling on local and state governments, as well as the federal government, to raise taxes on the wealthy so they, too, can make sacrifices on behalf of our country.
The Great Recession of 2008 was caused by Wall Street’s reckless behavior, and it’s Wall Street who must pay.
Rhode Island General Treas. Gina Raimondo is a former venture capitalist, as is Michigan Gov. Rick Snyder. Detroit emergency manager Kevyn Orr’s former law firm stands to rake in millions from bankruptcy proceedings he’s overseeing for the city.
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