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Corporate America's Plan to Loot Our Pensions Is the Latest Battle in Decades-Long Assault on the Middle Class

While the safety net is being withered by attrition, record corporate profits are deemed off-limits for discussion about closing the budget gap.

The severe economic crisis, now in its fourth year, is being used to batter the remnants of the social welfare state. Having decimated aid to the poor over the last 30 years, especially in the United States, the economic and political elite are now intent on strangling middle-class benefits, namely state-provided pensions, health care and education.

The initial neoliberal assault under Ronald Reagan and Margaret Thatcher reorganized the capitalist economy and hammered private-sector unions into submission. This was accomplished by putting labor back into competition with itself by off-shoring industrial production, through deregulation and with frontal assaults on labor rights, organizing and solidarity.

Similarly, the current attack is a two-pronged effort to reorganize state social services, either by eliminating or privatizing them, and decimate public-sector unions whose workers provide those services. While the safety net is being withered by attrition, police and spying agencies are getting more powers and funding, and the wealth of the super-rich and record corporate profits are deemed off-limits to taxation to close any government budget gap.

Simply put, the elderly are superfluous to capitalism. With high rates of joblessness the “new norm,” more and more people are being made disposable. This leads to an efficient if brutal logic: cutting old-age income and health care will make it easier to scrap old, useless workers. In fact, this reality is already coming to pass. One study published in 2008 found that over a 16-year period life expectancy had declined for many poor American women — precisely those who are disproportionately represented among the elderly heavily dependent on Social Security and Medicare.

Slashing social services affects everyone by increasing the pool of workers desperate for any sort of paying job, pushing down wages and benefits. This will all be pushed under the rubric of “personal responsibility,” and it will probably be successful as long as opposition is weak and divided. The main beneficiaries will be the super-wealthy who gain both from tax cuts as the social sector is chopped up and higher corporate profits as wages and benefits are slashed more deeply.

The attack on pensions is mainly occurring in the West and those countries close to its orbit. So while the United States, Greece, Ireland, Japan, France, TurkeySpainPoland and  Latvia have been cutting or trying to squeeze state-run pensions, others such as  BoliviaChina and Venezuela have been increasing funding of old-age pensions in recent years (though within these countries the picture is more complicated because social spending may be declining overall and  inflation increasing).

The Right has stridently opposed Social Security since it was enacted in 1935, but the modern attack on pensions originated during the Reagan-Thatcher era. While he proposed making Social Security  voluntary during the 1964 Goldwater campaign, when he reached office Reagan temporarily froze cost-of-living adjustments, raised the future retirement age to 67, taxed benefits of higher-income earners, made it more difficult for the disabled to claim benefits and forced the self-employed to pay 100 percent of payroll taxes. Then under Clinton, according to some economists, inflation was understated to suppress cost-of-living adjustments, resulting in benefits that should be 50 percent higher than the current average of  $1,072 a month. Thatcher and Tony Blair formed the same one-two punch as Reagan and Clinton, but they went further by partially privatizing much of the state-run pension system.

The second historical component is the current crisis, which is severely widening the economic chasm. According to the  New York Times, corporate profits “have grown for seven consecutive quarters, at some of the fastest rates in history,” hitting a record of $1.66 trillion on an annual basis. Taking advantage of Federal Reserve and U.S. Treasury monies, Wall Street has notched  record profits over the last two years. And the top one percent actually  increased their share of the wealth through the end of 2009.

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