Coming Boomer pension cuts: what impact on economy?

[Joanne98]

October 12, 2010 — Over the last two decades, pension cutbacks have left relatively few private sector workers with defined benefit pensions plans. Now, with health and pension funds for state and local government employees said to be facing massive funding shortfalls, many are describing the guaranteed retirement benefits paid to teachers, police officers, street cleaners, and other public workers as overly expensive and sclerotic. These pensions, the argument goes, are unrealistic — they are throwbacks to another era that must now be curbed.

As Andrew G. Biggs, the chief expert on pensions at the American Enterprise Institute, a conservative think tank, puts it, government workers are enjoying the good life off their neighbors’ backs, relying on their employers’ questionable accounting practices to downplay taxpayer liabilities. “There is no reason public-sector employees should receive retirement benefits that are either larger or more secure than those received by private-sector workers,” Biggs wrote in an April 2010 essay on retirement policy.

Consumer spending accounts for 70 percent of economic activity, according to government figures. By 2015, Boomers will account for 40 percent of that consumer spending.One might imagine that policymakers would want to consider thoroughly the societal consequences before adopting (or failing to adopt) measures to effectively put a stake through the heart of the defined benefit plans that many public sector workers have depended upon for their retirement. One might likewise imagine that the impact of past and prospective reductions in the retirement benefits of private sector retirees would weigh heavily in any decisions about the future of pensions. In fact, however, an important question has been notably absent from the debate: With 78 million Baby Boomers heading into retirement over the next 20-plus years, how will cuts in guaranteed monthly pension benefits to both public and private sector workers — in addition to those that have already been implemented — affect the ability of future retirees to engage in economy-sustaining consumer spending?

http://remappingdebate.org/article/coming-boomer-pension-cuts-what-impact-economy

[bemildred]

1. Let's do executive compensation first, nothing could be more "sclerotic" than that. nt

[xchrom]

2. Boomers need to get proactive with this stuff

It's going to jeopardize peoples ability to live.

[leveymg]

3. Let's retire AEI and Andrew G. Biggs.

[westerebus]

10. Hey Agent Mike!

This guy says you SUCK!

That you're a lazy dumb ass who couldn't make it in the real world.

You're over paid and you're a leech on society.

And you don't deserve a pension.

Neither does you kids or spouse if something happened to you.





*************
That ought to do it.

[DemReadingDU]

4. Where are the cuts to the Pentagon, military and defense?

[Pharaoh]

5. We don't talk about that!

That's almost as bad as talking about 911

[Art_from_Ark]

12. Yup, that's the 1000-pound sacred cow in the room

[dixiegrrrrl]

15. "...But whenever we see things done wildly, but taken tamely, then the State is growing insane..." -

Gilbert Keith Chesterton 1910

[ixion]

18. great quote

and true...

[sinkingfeeling]

6. Why is it that anything anybody from AEI writes is given attention?

[leveymg]

8. Because it often is . . .

in all the wrong places.

[barb162]

7. Oh so many effects on the economy

People will get SS but really have to save to amass enough money for retirement. So many people now who are about to retire with no pensions resent paying taxes to fund some very generous government employee pensions.

[jtuck004]

13. Roughly 1/3 of people retire with no money except their SS,

and it nears half of all retirees when you add in people whose income won't get them through 2-3 years.

For many people their home has been the single investment that has kept them whole for a while, and now the investment banks have made that very tenuous, so the number with nothing other than supplemental SS is likely to increase.

[truedelphi]

22. We run a smallpublishing company and at least half our book

Sales to people here in the USA are to people on pensions.

When that money is taken from them, our business will suffer as well. (We currently do great over in China though. And that is actually what helps keep us solvent.)

[fasttense]

23. Why are we even taxing Social Security?

Before the RepubliCONS came along Social Security was tax free. So we tax the poor elderly and give the uber rich corporate aristocracy a big cut. Shouldn't that make the boomers angry? The elderly poor are taxed but the rich fat cats get off scott free.

We are forcing the cost on government onto the poor and then giving it away to the rich. That's what should be making people angry!!!!!

[Zenlitened]

9. "Biggs" appears to be a synonym for "idiot," or perhaps "asshole."

“There is no reason public-sector employees should receive retirement benefits that are either larger or more secure than those received by private-sector workers,” Biggs wrote in an April 2010 essay on retirement policy.

We certainly shouldn't consider raising the boats in which private sector workers sail, eh? No, the only option is to scuttle the boats of public sector workers, so they can drown, too.

But leaving that aspect of his grotesque bias aside... does Mr. Biggs (ha!) really believe that those who have negotiated more successfully in their own interests should now be penalized?

That they should be stripped of the advantage they have gained, and made equal to those who did not achieve the same success?

That is essentially his argument. And it's certainly an interesting one, coming from the Financial Darwinism crowd.

Be interesting to see that same argument applied to other aspects of economic life. I suspect Mr. Biggs (hahaha!) and his cronies might object if it were applied to... oh, say... themselves, no?

[golfguru]

11. Temporary pain...long term gain

However higher priority for cuts should be American
military bases all around the world, tax benefits to
companies who outsource jobs.

[Crazy Dave]

14. Our city did like our government

They looted the city employee pension fund to build roads and other pet projects under the guise of investing the money to collect higher property taxes. Now there's a shit load of roads next to roads and roads to nowhere and no more city pension. They're now borrowing money for it.

[fasttense]

16. But no one questions the tons of money CEOs get in retirement.

None of this will stop until normal Americans get out and protest like the French.

"There is no reason public-sector employees should receive retirement benefits that are either larger or more secure than those received by private-sector workers,” Biggs wrote.

There is no reason CEOs, Bank/Wall Street/Insurance executives and Congress/the President/Supreme Court should receive retirement benefits that are larger and more secure than those received by everyone else in America.

[raccoon]

19. How about starting a thread on this, Fasttense? nt

[golfguru]

17. No CEO is worth more than 100 times the lowest paid worker

in the same outfit. Anything more than 100 times
is larceny pure and simple.

[AnneD]

20. I am pissed...

I paid ss tax for many quarters. In fact, when I went to the school district (second carreer) I already had enough quarters. Several years ago, the ability to collect even survivor benefits were taken away from me because I had a state pension.

Look the whole reason they have pensions is to attract workers. I have consistantly made 20-30k less (as a Nurse)per year over my entire career by working in the public sector rather than the private sector. I conciously made that trade off when I was in my 30's. And now they want to make me switch horses in the middle of the stream. I don't think so. Most public workers DID make that trade off. They are doing everything they can legally do now to short change us and raid out retirement here in Texas but we have continued to fight them.

They want to do to public workers what private business did to workers-raid the retirement cookie jar for their own purposes!!!!! Over THEIR dead bodies.

[Yavin4]

21. The Public Sector Employees Who Took These Jobs Did So At Less Than Private Sector Salaries

in return they got pensions. Now, these slick assholes want to deny them their pensions. Fuck off AEI.

[Warpy]

24. The problem is that the pension funds were invested in scams

that promised unrealistically high returns, including Enron and the SIVs the investment banks were turning out that were based on bum loans in California and Florida. The money just isn't there any more and future workers are going to have to contribute a lot more to support retirees and that is politically unpleasant to consider.

God forbid they ever think about raising taxes on the sainted rich to cover the massive shortfall in state funds.

They're fighting the unions and trying to cheat people out of the pensions they've paid for because they lost the money.