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Sirota writes: "In light of Arnold's corporate pedigree, it's no surprise that, rather than 'laying the foundation for effective government solutions,' as Pew's mission promises, the Pew-Arnold partnership has been a campaign to reduce guaranteed retirement income for pensioners."

Enron billionaire John Arnold. (photo: AP)
Enron billionaire John Arnold. (photo: AP)


The 1 Percent's Demonic Plot

By David Sirota, Salon

26 September 13

 

How an Enron billionaire, Wall Street and a major "nonpartisan" foundation are quietly robbing American workers

n May of 2013, the Pew Charitable Trusts released a report that sounded a frightening alarm. Entitled "Retirement Security Across Generations" and widely cited throughout the national media, the study found that a lack of retirement savings, less guaranteed pension income and the economic downturn have collectively exposed the next generation of Americans "to the real possibility of downward mobility in retirement."

Summing up the study's implicit push to stabilize Americans' retirement future, a Pew official declared that lawmakers must focus on creating policies that help workers "make up for these losses and prepare for the future."

Pew's analysis, though eye-opening, was not particularly controversial. Writing in the Wall Street Journal, conservative Martin Morse Wooster acknowledges that the Pew Trusts are "treated as benign truth-tellers, so high-minded as to be beyond politics" – and the call to shore up Americans' retirement security, indeed, upheld the organization's promise
to "generate objective data." Based on indisputable evidence, it proved that the country's move away from guaranteed pension income – and states' willingness to raid worker pension plans to finance massive corporate subsidies – will have disastrous consequences.

What was surprising was the fact that at the same time one branch of Pew was rightly sounding this moderate non-ideological alarm to shore up retirement security, and Pew's Economic Development Tax Incentives Project was warning of states' wasteful tax subsidies, a more political branch of the organization was working in tandem with controversial Enron billionaire John Arnold to begin championing an ideologically driven plan to make the retirement problem far worse.

This Pew-Arnold partnership began informally in 2011 and 2012 when both organizations marshaled resources to try to set the stage for retirement benefit cuts in California, Florida, Rhode Island and Kansas. With legislative success in three of those four states, Pew and Arnold created a formal partnership in late 2012 that targeted another three states, Arizona, Kentucky and Montana.

This formal partnership continues today, with the organizations issuing joint reports and conducting joint legislative briefings advocating cuts to guaranteed retirement income. It is widely expected that this partnership will continue working in these same states and potentially expand operations into Colorado, Pennsylvania, Oklahoma and Nevada.

Should an Enron Executive Be Dictating Public Pension Policy?

In the lead-up to his anti-pension partnership with Pew, Arnold's most relevant connection to pensions and retirement security came from working at Enron – a company whose collapse destroyed its own workers' pensions and helped to damage the financial stability of public pension funds across America. Indeed, as The New York Times reported, "The rapid decline of the Enron Corporation devastated its employees' retirement plan." Meanwhile, in a separate story, the newspaper noted that "across the United States, pension funds for union members, teachers, government employees and other workers have lost more than $1.5 billion because of the sharp decline in their Enron holdings."

In light of Arnold's corporate pedigree, it's no surprise that, rather than "laying the foundation for effective government solutions," as Pew's mission promises, the Pew-Arnold partnership has been a campaign to reduce guaranteed retirement income for pensioners. As Marketwatch reported in 2013, Pew and Arnold are "advocat(ing) for cash balance plans." They are advocating for 401(k)-style defined contribution plans as well.

Like President George W. Bush's proposal to radically alter Social Security, many of these plans would transform stable public pension funds into individualized accounts. They also most often reduce millions of Americans' guaranteed retirement benefits. In many cases, they would also increase expenses for taxpayers and enrich Wall Street hedge fund managers.

A Pension-Cutting Movement That Ignores Data

These pension-slashing initiatives are part of a larger movement that aims to reduce or eliminate guaranteed retirement income for public workers. Leading this movement under the euphemistic guise of "reform," Pew's Public Sector Retirement Systems Project and the Arnold Foundation are trying to distract attention from what McClatchy Newspapers documented: namely, that "there's simply no evidence that state pensions are the current burden to public finances that their critics claim."

Rather than acknowledge that truth, Pew and Arnold have successfully manufactured the perception of crisis – which has prompted demands for dramatic action. Pew and Arnold have consequently helped shape those general demands into specific efforts to cut guaranteed retirement income – all while downplaying (or altogether omitting) any discussion of the possibility of raising revenue through, for instance, ending taxpayer-funded corporate subsidies and so-called "tax expenditures."

This deceptive message persists, even though these annual subsidies are typically far larger than the annual pension shortfalls. Indeed, to advocate cuts in retirement benefits, Pew and Arnold cite a 30-year, $1.38 trillion pension gap – a $46 billion annual shortfall. Yet, they rarely ever mention that, as The New York Times reports, "states, counties and cities are giving up more than $80 billion each year to companies" in the form of subsidies and tax expenditures.

Such an insidiously selective message is eerily reminiscent of Margaret Thatcher's infamous "There Is No Alternative" framing. It suggests that harming millions of middle-class workers is the only way forward – and that states shouldn't dare consider raising pension-fund revenue by eliminating corporate subsidies. Thanks to Pew, Arnold and other groups, this has now become the dominant argument even though the amount state and local governments now spend on such wasteful handouts is far greater than the pension shortfalls.

Perhaps the most famous illustration of the pervasiveness of this deceptive argument comes from Detroit, Michigan. When the city recently declared bankruptcy, much of the media and political narrative around the fiasco simply assumed that public pension liabilities are the problem. Few noted that both Detroit and the state of Michigan have for years been spending hundreds of millions of dollars on wasteful corporate subsidies. Worse, the very same political leaders pleading poverty to demand cuts to municipal pensions were simultaneously promising to spend more than a quarter-billion taxpayer dollars on a professional hockey arena.

But as outrageous as the blame-the-pensioners mythology from Detroit is, it is the same misleading mythology that is now driving public policy in states across America.

In Rhode Island, the state government slashed guaranteed pension benefits while handing $75 million to a retired professional baseball player for his failed video game scheme.

In Kentucky, the state government slashed pension benefits while continuing to spend $1.4 billion on tax expenditures.

In Kansas, the state government slashed guaranteed pension benefits despite being lambasted by a watchdog group for its penchant for spending huge money on corporate welfare "megadeals."

In each of these states and many others now debating pension "reform," Pew and Arnold have colluded to shape a narrative that suggests cutting public pension benefits is the only viable path forward. This, despite the fact that A) cutting wasteful corporate welfare could raise enough revenues to prevent such cuts; B) the pension "reform" proposals from Pew and Arnold could end up costing more than simply shoring up the existing system; and C) pension expenditures are typically more reliable methods of economic stimulus than corporate welfare.

Those inconvenient facts have been ignored in the political debate over pensions. Thanks to the combination of Pew's well-known brand and Arnold's vast resources, the pension-slashing movement's extremist message has been able to dominate the political discourse in states throughout America.

The result is a skewed national conversation about state budgets – one in which middle-class public sector workers are increasingly asked to assume all the financial sacrifice for balancing the government books, and corporations and the wealthy are exempted from any sacrifice whatsoever.

A Microcosmic Story for the Citizens United Age

This is the story not merely of two nonprofits nor merely of one set of economic issues – it is a microcosmic tale of how in the Citizens United age, politically motivated billionaires can quietly implement an ideological agenda in local communities across the country.

Operating in state legislatures far away from the national media spotlight, these billionaires can launder their ideological agenda through seemingly nonpartisan foundations, with devastating legislative consequences for millions of taxpayers and families. And as the battle over America's retirement proves, it isn't just the infamous Koch Brothers at work anymore.

In this particularly important fight over pensions, Arnold is leveraging his Enron fortune and his ties to top Republican activists to forge a powerful partnership with Pew. Having already spent at least $10 million on his crusade to cut retirement benefits, Arnold's partnership with Pew is now driving and distorting the legislative debate over public pensions in at least seven states – and has helped enact huge cuts to retirement benefits in many of them.

With other billionaires now reportedly following Arnold's lead and investing in the campaign to cut public workers' retirement benefits, the Pew-Arnold plot is poised to expand into every state in America. Indeed, as Institutional Investor reports, "From Blackstone Group co-founder Peter Peterson to New York City Mayor Michael Bloomberg, some of the wealthiest Americans are beginning to pay increasing attention to this issue," meaning that pensioners will "have to get used to billionaires brandishing checkbooks" in their political crusade to cut retiree benefits.

The Corporate Bait-and-Switch

The goals of the plot against pensions are both straightforward and deceptive. On the surface, the primary objective is to convert traditional defined-benefit pension funds that guarantee retirement income into riskier, costlier schemes that reduce benefits and income guarantees, and subject taxpayers and millions of workers' retirement funds to Enron's casino-style economics.

At the same time, waging a high-profile fight for such an objective also simultaneously helps achieve the conservative movement's larger goal of protecting profligate corporate subsidies.

The bait-and-switch at work is simple: The plot forwards the illusion that state budget problems are driven by pension benefits rather than by the far more expensive and wasteful corporate subsidies that states have been doling out for years. That ends up 1) focusing state budget debates on benefit-slashing proposals and therefore 2) downplaying proposals that would raise revenue to shore up existing retirement systems. The result is that the Pew-Arnold initiative at once helps the right's ideological crusade against traditional pensions and helps billionaires and the business lobby preserve corporations' huge state tax subsidies.

In bequeathing its brand to an Enron billionaire and embracing this campaign, Pew is being steered back toward its ultraconservative roots. In the process, the retirement security of millions of Americans is being jeopardized.

 

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+51 # dkonstruction 2013-09-26 09:45
One of the biggest takeaways from this piece (aside from the issue of pensions and what most Americans have to live on during retirement) is the question of the role of the non-profit industrial complex (non-profits and their funders).

There was a time when most of us heard the word non-profit or charity and automatically assumed these were the "good guys", the organizations working for a better society (or even world). What we need to wake up to is that this was never the case and that this is now a huge problem.

Yet, there is still little to no analysis on the part of progressives/th e left on the role of the non-profit industrial complex in contemporary capitalism. For example:

1) Housing non-profits that collectively get hundreds of millions of dollars to do "foreclosure prevention" work from the very same banks and federal gov't that are doing the foreclosing (such that they do not organize homeowners to fight back collectively or really take on banks).

2) Foundations such as the Gates Foundation that are spreading GMO seeds in the underdeveloped world as the way to deal with hunger (forcing farmers to stop storing and trading seeds for free and instead only purchase patented corporate-owned seeds.

3) Non-profit "micro-finance" companies that promote debt (through lending, sometimes at very high interest rates) to the world's poorest and most vulnerable as a way out of poverty.

And there are many more examples.

(cont.)
 
 
-14 # skeptic 2013-09-26 20:50
The problem with "guaranteed pension benefits" is that it can't be sustained. Years ago, money could be parked in a long term saving account or CD's or other protected investments and the income could be used to fund pensions.

But banks are offering less than one percent interest per year, so there is no way to generate the kind of funds to keep these pensions afloat. The article suggests that "millions of workers" are being swindled. But let's be honest here. Private industry has moved away from guaranteed benefits to things like 401K funds. The "millions of middle class workers" the writer alludes to, are mostly government workers.

Why do government workers deserve more benefits than the rest of us? Do they work harder than people in private industry?

Really? Am I the only one who has dealt with the TSA or the DMV or the county clerks and wondered, "on what basis were these people hired?" My wife works for the police dept jail and her brother works for the county welfare dept. They know plenty of govt slackers

As for the "wasteful corporate subsidies" the article mentions, they generate jobs.

I work in the film industry in LA. But states like Louisiana and cities like Detroit offered huge tax breaks to studios, if they would film there, to bring jobs. It worked. Nobody films in Los Angeles anymore. You may call it "pork" but I'm betting crews from New York to Albuquerque are calling it "work".
 
 
+11 # dkonstruction 2013-09-27 06:21
Skeptic,

I for one am not now nor have I ever defended "govt slackers" and I agree with you that workers in the private sector should get the same pensions that public employees get but the answer is not to say cut the salaries and benefits of public employees but rather to fight to get better pay and benefits for all workers.

And, who says that pensions should be invested in private banks getting virtually no interest? As I said, pensions of public employees should be deposited into publicly owned financial institutions and the pension funds of private sector workers should be under the control of the workers themselves and kept separate from the rest of the companies assets so they cannot be gone after when the company gets into financial trouble.

Why cannot these pension monies be invested, for example, in affordable rental housing that will pay a hell of a lot more than 1% (or whatever it is nowadays that the banks are paying) forever since rent payments are ongoing? There are plenty of other socially responsible and profitable investments that could be make with pension funds.

The fact that some states offer tax breaks and that some countries pay slave wages is a real problem that we have to address but the "answer" is not simply accept this "race to the bottom" such that we decide that our only "solution" is to pay minimum wage and no benefits (including pensions) in order to "compete" either with ourselves or with the rest of the world.
 
 
+1 # RLF 2013-10-03 03:14
You're typical of the government worker(your wife) who gets molto benefits and then thinks everyone else shouldn't. Lot's of these gov. workers vote Republican. That's a good reason for this shut down to last a couple of months...so gov. workers can get a taste of the uncertainty that haunts the rest of us out here.
 
 
+42 # dkonstruction 2013-09-26 09:52
It is long past time for progressives/th e left to have some analysis of the role of the non-profit industrial complex and talk about alternatives. Non-profits play several critical roles for "the system"

1) They "manage" the system's social problems and by doing so in some ways institutionaliz e them instead of working to eliminate them.

2) They provide a buffer between the gov't and the people such that people often direct their anger, frustration etc., at the non-profits and never really deal with those that are actually causing the problems;

3) provide "union busting" cheap labor and thus help to keep wages low (many of the jobs that non-profit workers do would be jobs that in the past would be done by unionized government workers who would earn a much better salary and get much better benefits (including a pension meager as that might be).

Finally, there is the issue of the non-profits not wanting to bite the hand that feeds them i.e., they never want to really challenge or confront either their gov't or private funders (typically the very same people/institut ions that cause and perpetuate the problems in the first place) or organize their constituents to fight back in any kind of substantive (let alone militant) way.

How we deal with all of this are big questions but they are questions that we need to be asking and looking for alternative ways to both fund and address the problems that the are currently being left to the non-profit industrial complex.
 
 
+37 # policymaven 2013-09-26 11:03
hats off to David for a brilliant piece of investigative work. The billionaire plot against pensions is unfortunately working all too well. It all began back in the 1970s when corporations started shifting monies and employees into 401(k) plans, rather than defined-benefit pension plans. And we all know how well that has worked out. A careful examination of the new nonprofit foundations established by the likes of Mr. Gates and others reveals the horror show that they are implementing for the 99%. This globalization of billionaires is worse than any science fiction book I have read to date.
www.Heist-themovie.com
 
 
+12 # wantrealdemocracy 2013-09-26 14:22
One fact that was not mentioned is that Enron billionaire John Arnold would be in jail if on 9/11 the building holding all the legal evidence and evidence against Enron in setting up the evil cheating in a phony energy crisis. The evidence was over whelming that Enron had coordinated the shut down of the power grid to make the governor to raise the rates on all of California. The whole 9/11 official story is a lie. The people who did this were not Muslim terrorists. It was done by power hungry beasts who wanted to make money by getting us into the wars in Afghanistan and Iraq. Plus for the bastards is that they destroyed the evidence on Enron. Lost also was the evidence on the Savings and Loan fiasco.
Something is really wrong in our government. We need a real investigation of what caused those building to collapse at free fall speed on 9/11.
 
 
-31 # MidwesTom 2013-09-26 11:22
For years non-profits campaigned to raise the wages for farm workers in California; government funded social workers complained about the working conditions and fined the farmers. The Associated Press has a story today about the labor shortage in the farm fields of California caused by tighter border security. Guess what, with a labor shortage the farms are now paying $2 and $3 more per hour than last year and offering other benefits to get and keep workers. Pay for pickers is now over $10 and $11 per hour.

I do not know what clearer proof one could want to the idea that 11 million illegal workers are a major cause to our drop in wages and high unemployment. If the farmer wants to harvest his grapes he must hire workers, and he must pay enough to get and keep his workers. Reduce the number of workers available, and the wages go up.
 
 
+17 # dkonstruction 2013-09-26 12:01
Quoting MidwesTom:
Guess what, with a labor shortage the farms are now paying $2 and $3 more per hour than last year and offering other benefits to get and keep workers. Pay for pickers is now over $10 and $11 per hour.

I do not know what clearer proof one could want to the idea that 11 million illegal workers are a major cause to our drop in wages and high unemployment. If the farmer wants to harvest his grapes he must hire workers, and he must pay enough to get and keep his workers. Reduce the number of workers available, and the wages go up.


So, on the one hand there is a labor shortage so wages have gone up (what about the millions and millions and millions of unemployed Americans?...gu ess they just don't want to jump at taking these farmers up on these lucrative job opportunities to work for high wages and benefits and great working conditions). On the other hand there are 11 million illegal workers in the country who are forcing wages down.

You neglected to point out that the AP story you reference also says that the income of farmworkers "are some of the lowest in the nation." Nor do you mention that these are temporary, migratory (and thus not full-time or steady) workers who therefore also receive no benefits. Nor do you mention the working conditions for farm workers which have always been amongst the worst in the country. Guess these are minor annoying points that simply don't concern you.
 
 
0 # RLF 2013-10-03 03:21
Illegal workers in the farm and construction industries are a part of what allowed this country to go on as if nothing was happening while their wages dropped...along with cheap Chinese goods and credit bubbles. These things are running out now and Americans are starting to feel the pinch.
 
 
+12 # dkonstruction 2013-09-26 12:17
Quoting MidwesTom:
For years non-profits campaigned to raise the wages for farm workers in California; government funded social workers complained about the working conditions and fined the farmers. The Associated Press has a story today about the labor shortage in the farm fields of California caused by tighter border security. Guess what, with a labor shortage the farms are now paying $2 and $3 more per hour than last year and offering other benefits to get and keep workers. Pay for pickers is now over $10 and $11 per hour.

I do not know what clearer proof one could want to the idea that 11 million illegal workers are a major cause to our drop in wages and high unemployment. If the farmer wants to harvest his grapes he must hire workers, and he must pay enough to get and keep his workers. Reduce the number of workers available, and the wages go up.


And, in fact, the people who have worked the hardest and the longest to campaign to raise the wages of farm workers in California themselves going back to the long hard fight to create the United Farm Workers Union in the first place. For those interested in reading more about more current conditions of US farmworkers there is an excellent (though very depressing) chapter in Eric Schlosser's (author of Fast Food Nation) book "Refer Madness: Sex, Drugs and Cheap Labor in the American Black Market." on the conditions (and heinous contracts) for California strawberry pickers.
 
 
+11 # Billsy 2013-09-26 12:23
Your simple minded analysis fails to comprehend that it is the unintended consequences of tighter border patrols that illegals not only remain longer in the U.S. but begin to miss family thus encouraging them to bring others across the border even at great risk & peril. Prior to such restrictions migrant labor was truly migrant crossing back & forth at will. Scapegoating immigrants as you are doing is counter productive and a distraction from the point of the article. Germany has no such problem with depressed wages and they have included documented "guest" workers among their labor force since the 1970s, albeit with higher rates of unemployment. Their economy however has a more effective social safety net for the unemployed, poor and disabled.
 
 
+7 # stoher9 2013-09-26 14:24
Yeah, That would make sense if the 11 million undocumented workers had left, but they are still here. The tightened border security has just slowed the flow of new immigrants. What has really slowed immigration is a lack of jobs here & better job opportunities in Mexico. I read that article you pulled you wages info from by GOSIA WOZNIACKA AP reporter. I also found ten other articles that put migrant farm worker average wages in CA at about 7.00 per hour which is reduced by rent deductions for shacks on the farm as well as high prices for goods at the farm "store".
 
 
+8 # ericlipps 2013-09-26 15:34
Quoting MidwesTom:
For years non-profits campaigned to raise the wages for farm workers in California; government funded social workers complained about the working conditions and fined the farmers. The Associated Press has a story today about the labor shortage in the farm fields of California caused by tighter border security. Guess what, with a labor shortage the farms are now paying $2 and $3 more per hour than last year and offering other benefits to get and keep workers. Pay for pickers is now over $10 and $11 per hour.

I do not know what clearer proof one could want to the idea that 11 million illegal workers are a major cause to our drop in wages and high unemployment. If the farmer wants to harvest his grapes he must hire workers, and he must pay enough to get and keep his workers. Reduce the number of workers available, and the wages go up.


Tom, riddle me this: if these swarthy hordes are in this country illegally, and therefore have every interest in remaining as invisible to the government as possible, how do you know there are 11 million of them? Who did the count, and how?
 
 
+1 # reiverpacific 2013-09-27 07:45
Quoting MidwesTom:
For years non-profits campaigned to raise the wages for farm workers in California; government funded social workers complained about the working conditions and fined the farmers. The Associated Press has a story today about the labor shortage in the farm fields of California caused by tighter border security. Guess what, with a labor shortage the farms are now paying $2 and $3 more per hour than last year and offering other benefits to get and keep workers. Pay for pickers is now over $10 and $11 per hour.

I do not know what clearer proof one could want to the idea that 11 million illegal workers are a major cause to our drop in wages and high unemployment. If the farmer wants to harvest his grapes he must hire workers, and he must pay enough to get and keep his workers. Reduce the number of workers available, and the wages go up.

"There you go again" (quote Reagan)!
Reducing everything to a simplistic hit at immigrants you know nothing about.
Y'r theme-songs, along with the anti-Muslim chant, are gettin' a bit stuck in their groove.
 
 
0 # RLF 2013-10-03 03:25
To think migrants are evil is different to being realistic about their effect on employment and income in the US. It is the same as being called antisemetic every time one disagrees with Israeli policy.
 
 
+3 # reiverpacific 2013-09-27 07:53
Isn't this the same "Pew Charitable Trust" that gives "Grants" to PBS, so that they can help to steer that ship into their own particular distinctly anti-social harbor, which is in anything but the Public interest, as PBS has become.
They're OUR airwaves y'know, that have been taken over by the Plutocracy like Pew and their ilk.
The very mention of the name "Enron" should raise red flags all over the financial and media spectrum but in the US of Amnesia, they can just about get away with anything they want to visit on former and current victims.
 
 
0 # FDRva 2013-09-27 17:27
Funny--the sainted Barack Obama is not fighting this demonic Wall Street plot.
 
 
+1 # Skeptical1247 2013-09-28 10:26
Strangely enough, even though it seems that the O-ministration is coddling Wall St. Bankers, Securities and Insurance salesmen and Fortune 400 CEO's, way more than I can stomach, two things need to be pointed out:

1. This pension fraud didn't just start in 2009. It has been going on for decades. The disgusting extent of unrestrained looting of private pensions was only publicized recently via Mitt's run for President when it hit the public consciousness. Same goes for the public pension fraud now being aired in this article...AND

2. It never ceases to amaze me that when people, for no other apparent reason, inject Obama's name into a discussion where it has little relevance to the original topic, that folks don't wonder what the hell your problem really is.

Could it be that you expect the black dude to clean up all the shit dumped on his doorstep by scumbag white Republicans before he ever took office? With same said scumbags fighting every step of the way, every goddam day to prevent the cleanup? I am not an Obama lover by a long shot, but I am a realist. And realistically speaking, all you have contributed to the conversation is thinly veiled racist bullshit..
 
 
0 # sharsand 2013-09-29 11:51
THANK YOU, DAVID SIROTA. LISTEN TO YOU ON WCPT (CHICAGO PROGRESSIVE)AND YOU'RE SO CLEAR AND CONCISE WITH YOUR EXPLANATIONS AS TO WHAT'S GOING ON IN THIS COUNTRY TODAY. ANY TIME YOU WANT TO SPEAK TO OUR COALITION FOR CAMPAIGN FINANCE REFORM, PLEASE LET ME KNOW. OUR COALITION INCLUDES MANY HIGHLY RESPECTED ORGANIZATIONS. SHARSAND@AOL.COM
 

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