Sunday, December 18, 2016

Our New Deal retirement security is being blown to smithereens. And still, tens of millions of Americans continue to goose-step behind the super-wealthy predators who are destroying it.

Above: An oil painting by Ivan Albright (1897-1983), created while he was in the New Deal's Public Works of Art Project, ca. 1934. A description for the painting states, "Ivan Albright's obsessively detailed painting style put on canvas the crushing impact of drudgery and advancing age... Wrinkles multiply over her drooping flesh, speaking too eloquently of years full of ceaseless labor." Image courtesy of the Smithsonian American Art Museum.

In 1944, in his Second Bill of Rights speech, President Franklin Roosevelt advocated for the right of every American to have "adequate protection from the economic fears of old age." And the policies that he and his fellow New Deal policymakers had earlier put in place went a long way towards ensuring that outcome. Most people's retirement depends on (or used to depend on) four things that the New Deal created or strengthened: A pension, Social Security, savings, and the value of one's home.

Recently, Newt Gingrich gleefully told the Heritage Foundation that Donald Trump's election could begin to show "firmly that we have replaced the FDR model and that we are now in a period of very different government" ("Gingrich brags that Republicans are coming for everything FDR accomplished," ThinkProgress, December 14, 2016). 

Actually though, Republicans, Libertarians, and Neoliberal Democrats have been chipping away at the retirement security of non-wealthy Americans for decades now. Let's look at what the New Deal did for retirement security vs. the situation today.

First Pillar of Retirement - Pensions

The New Deal

Thanks to the Wagner Act, and other New Deal policies, unions were strengthened. They were able to bargain for better pay, safer working conditions, and better benefits - all with less fear of retaliation from management. One of the benefits that unions bargained for was strong fixed pension plans. My father, for example, worked very hard for many decades as a machinist. He was a member of a union, and that union bargained for and won a nice pension that he enjoyed during his retirement. Upon his passing, a percentage of that pension transferred to my mother. And this union activity didn't hurt the company at all - the owners were still millionaires, many times over.  

The situation today, after our abandonment of the New Deal:

Fixed pension plans are going the way of the Dodo Bird. In an effort to become even more wealthy than they already are, super-wealthy Americans have been switching workers from fixed pension plans to 401(k) retirement plans (poverty plans actually). And with union participation much smaller than in previous decades, there's little workers can do about it.

There are two major problems with 401(k)s. First, they rely partially on employee contributions. But wages for American workers have been stagnant for decades. This means that workers have less to contribute and, worse, must sometimes raid their 401(k)s to get money to pay for life's necessities. Second, 401(k)s are subject to the the stock market. And since the stock market experiences booms and bust, and is managed, partially, by fraudsters and white collar criminals (see, e.g., "More bankers ok with breaking the law to get ahead," CNN, May 19, 2015), the strength of 401(k)s is unsteady, to say the least. The result is that "401(k)s have left the overwhelming majority of Americans unprepared for retirement" (Economic Policy Institute, March 3, 2016).

The Institute for Policy Studies recently highlighted that "100 CEOs Have as Much Retirement Savings as 116 Million Americans." But wait, a rising tide lifts all boats, right? Um, well, not exactly. For example, the report shows that "Topping the list is Progressive CEO Glenn M. Renwick, who can expect a monthly retirement check of $1,035,733. How does that compare with regular workers lucky enough to have 401(k) plans? With an average balance at the end of 2013 of $18,433, these workers can count on a monthly check of just over $100."

Above: The description for this 1936 photograph reads: "Maria Beans, over 80 years old, who was a slave in her childhood, having no stove in her kitchen must use an old galvanized bucket for a cooking fire to prepare a meal for her little 3 year-old great-great granddaughter at Montgomery, Alabama." Before Social Security, and before unions fought for and obtained better pensions, this is how a lot of Americans lived. A lot of right-wing politicians want America to return to this way of life - a way of life where, if you end up in extreme poverty, they'll brush you off and say, "Well, you didn't work hard enough." Ironically, they will then (as they do now) cater to their super-wealthy donors, many of whom were born into wealth and never had to work in the first place (the talking points, "pull yourself up by your bootstraps" and "work harder," never seem to apply to those who are born into wealth). Photo courtesy of the Library of Congress.

Second Pillar of Retirement - Social Security

The New Deal:

President Roosevelt signed the Social Security Act into law on August 14, 1935. It's feature policy was an old-age pension system. And the system worked so well, that in the 1950s Republicans bragged about expanding it: "The record of performance of the Republican Administration on behalf of our working men and women goes still further... Social Security has been extended to an additional 10 million workers and the benefits raised for 6 1/2 million" (Republican Party Platform of 1956).

Indeed, Social Security has been going strong for 80 years. It's been the best poverty mitigation program in American history. And, if the Social Security tax cap were removed, forcing super-wealthy Americans to pay the same as non-wealthy Americans, Social Security could be (a) expanded, and (b) protected forever.

The situation today, after our abandonment of the New Deal:

Social Security has been under attack by millionaire Republicans and millionaire Neoliberal Democrats for decades. Bill Clinton wanted to privatize it; President Obama wanted to cut it; and Ayn Rand ideologues, like Congressman Paul Ryan, want to do all of the above, with the end-goal of eliminating it altogether. And with a right-wing president and a right-wing Congress about to take power, we can expect to see some type of cut and/or privatization within the next few years.

Above: Believe it or not, there was actually a time when Republicans cared about the working class and poor. This Social Security document & calculator (as well as the 1956 Republican Party Platform I mentioned above) proves it. It says, "Increased Benefits Under The New Social Security Program, Enacted By The 83rd Congress And Signed By President Eisenhower." The 83rd Congress was controlled by Republicans (both houses) and President Eisenhower was a Republican. Today, however, the Republican Party has been taken over by extremists, charlatans, and crackpots, who seek to cut, privatize, or get rid of Social Security altogether. Unfortunately, most conservative voters are oblivious to their party's history, and thus don't know that Republican politicians once supported and expanded Social Security, during the very decade that conservative voters pine for - the 1950s. Image from personal collection.

Third Pillar of Retirement - Savings

The New Deal:

Here again, we have New Deal-protected collective bargaining. Unions fought for better wages and, after union participation blossomed after World War II, the middle-class grew like never before or since. Workers could actually save for retirement.

The New Deal also enhanced savings with the creation of the Federal Deposit Insurance Corporation (FDIC). This prevented savings from being wiped out when banks failed. Tens of millions of Americans still enjoy this protection today (most without any knowledge of where it came from). 

The situation today, after our abandonment of the New Deal:

Union participation is down, our jobs have been exported to third world markets, and wages have stagnated for decades. Under these circumstances, is it any wonder that "66 million Americans have no emergency savings" (CNBC, June 21, 2016), let alone any savings for retirement?

Above: A miner in Carbon Hill, Alabama, 1938. Miners and many other blue collar workers benefited greatly from their unions, and also from the New Deal's protection of their unions. They were able to earn better pay, and thus save more. Photo courtesy of the National Archives.

Fourth Pillar of Retirement - The Value of One's Home

The New Deal:

Through policies like the National Housing Act of 1934, which solidified long-term mortgages with affordable interest rates, the New Deal boosted home ownership. Americans had yet another brick to add to their retirement foundation. My parents, for example, were able to sell their house in 2003 for much more than what they had bought it for. This was a major boost to their retirement security.

The situation today, after our abandonment of the New Deal:

Many people lost their homes after the 2008 recession; and many people can't afford to buy homes today, because of low and stagnant wages, as well as the overall job insecurity that exists in modern America.

So, what caused the recession? A lot of things, of course, like the drastic rise in gas prices that occurred during the Bush Administration (remember when those prices shot up to over $4.00 per gallon - I sure as heck do). But a lot of it was due to the abandonment of New Deal policies, i.e., the abandonment of regulations and strong regulatory oversight. We de-regulated the financial industry (yes, the repeal of Glass-Steagall had a huge role to play in the recession - whether in creating it and/or exacerbating it) and regulatory bodies were soft on enforcement. In short, the cops weren't walking the beat, and Wall Street took advantage of it by selling junk on the stock market.

Above: An old pin-back button from the New Deal's Federal Housing Administration (FHA). The FHA carried out the provisions of the National Housing Act of 1934 and facilitated greater home ownership in the United States. Image from personal collection.

Can we salvage our retirements? Probably not; at least not in our lifetimes  

The retirement catastrophe that is upon us will probably not be solved for many decades, because tens of millions of Americans are completely oblivious to their nation's history, and thus still march behind the super-wealthy predators who are systematically destroying their lives. Indeed, seeing so many middle and low-income Americans rally behind Hillary Clinton and Donald Trump made me lose faith that Americans are able to properly diagnose what ails them, let alone fix the situation.

The fact is, many super-wealthy Americans are ruthless sociopaths, seeking to become gods in a land of mass poverty and despair. To trust them to "make America great again" is ridiculous in the extreme. They send jobs overseas and then call their laid-off workers "takers" and "parasites." They invest in perpetual war and death, knowing full well that it will be the children of the non-wealthy who will suffer the most. They invest in private prisons and mass incarceration, thereby profiting off a subtle type of slave labor. They've made bankruptcy harder--and in some cases impossible--to ensure that most low-income Americans will never achieve the American Dream, but will become indentured servants instead. They inflate the cost of medicine and then lobby to kick people off Medicaid. They continue to sell cancer-causing products, like cigarettes, so that they can live in luxury on a foundation of dead bodies. They hide money in offshore accounts, to avoid taxes, while our revenue-starved infrastructure falls apart and delivers brain-damaging lead to babies. They add billions to their already-bloated wealth while financially-stressed Americans kill themselves in ever greater numbers, and then they buy politicians to make sure those results continue. 

Read all that again, and then tell me they're not monsters. 

And still... STILL!... tens of millions of people continue to goose-step behind these super-wealthy predators - believing these soulless creatures will save them.

Isn't that amazing?

Above: The description for this 1938 photograph, from Carbon Hill, Alabama, reads: "K.E. Kropp, Real Estate & Insurance: 'It's been a wonderful help to the businessmen in general. Industries have been down and it kept the people going. WPA money was put to good use and made the town for us. It's helped business too." It is my firm belief that Americans of the 1930s, generally speaking, were smarter than we are today. They understood, for example, that a strong consumer class drives a strong economy. Many Americans today, on the other hand, believe that the economy must coddle super-wealthy investors, i.e., we must shower them with tax breaks, so they'll invest that greater after-tax income in ways that produce a bevy of good-paying jobs. And, astoundingly, even after 30-40 years of this trickle-down nonsense--nonsense that has outsourced our jobs, corrupted our democracy, neglected our infrastructure, reduced our employment benefits, and caused our wages to stagnate, tens of millions of Americans just voted for MORE trickle-down economics (see, e.g., "Trump Tax Plan Gives 47% Of Cuts To Richest 1%, New Analysis Finds," Forbes, October 11, 2016). As I said, our ancestors were smarter than we are. Photo courtesy of the National Archives.

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