Looting the Pension Funds

Looting the Pension Funds

Portside Date:3

Rolling Stone Matt Taibbi,

In the final months of 2011, almost two years before the city of Detroit would shock America by declaring bankruptcy in the face of what it claimed were insurmountable pension costs, the state of Rhode Island took bold action to avert what it called its own looming pension crisis. Led by its newly elected treasurer, Gina Raimondo – an ostentatiously ambitious 42-year-old Rhodes scholar and former venture capitalist – the state declared war on public pensions, ramming through an ingenious new law slashing benefits of state employees with a speed and ferocity seldom before seen by any local government.
Detroit's Debt Crisis: Everything Must Go [1]
Called the Rhode Island Retirement Security Act of 2011, her plan would later be hailed as the most comprehensive pension reform ever implemented. The rap was so convincing at first that the overwhelmed local burghers of her little petri-dish state didn't even know how to react. "She's Yale, Harvard, Oxford – she worked on Wall Street," says Paul Doughty, the current president of the Providence firefighters union. "Nobody wanted to be the first to raise his hand and admit he didn't know what the fuck she was talking about."

How America’s 401(k) Revolution Rewarded the Rich and Turned the Rest of Us Into Big Losers | Alternet

How America’s 401(k) Revolution Rewarded the Rich and Turned the Rest of Us Into Big Losers | Alternet

Off shore funds

There was a criticism raised, a question raised about the figure I gave of  some $3 Trillion dollars in off shore accounts.
Here is supporting evidence.

Financial tax

This Forbes article describes some of the size of the problem.

http://www.forbes.com/sites/connieguglielmo/2013/08/01/apple-google-among-top-u-s-companies-parking-cash-offshore-to-reduce-taxes-study-says/

http://www.independent.ie/business/irish/eu-launches-probe-into-our-sweetheart-tax-deals-for-us-firms-29573181.html

http://www.theguardian.com/global-development/datablog/2012/jul/19/developing-world-offshore-wealth-external-debt

U.S. corporations.

http://www.uspirg.org/reports/usp/offshore-shell-games

note.  European corporations also have off shore funds, as do Asian corporations.  So, the above is only a partial- U.S. list.
The OECD study was also sent to the respondent.

and,

Tax Havens by the Global Elite.

http://www.icij.org/offshore/secret-files-expose-offshores-global-impact

Hiding money off shore.

$21 trillion: Hoard Hidden From Taxman By Global Elite

* Study estimates staggering size of offshore economy

* Private banks help wealthiest to move cash into havens

Heather Stewart, business editor

guardian.co.uk

21 July 2012

http://www.guardian.co.uk/business/2012/jul/21/global-elite-tax-offshore-economy

A global super-rich elite has exploited gaps in cross-

border tax rules to hide an extraordinary £13 trillion

($21tn) of wealth offshore - as much as the American and

Japanese GDPs put together - according to research

commissioned by the campaign group Tax Justice Network.

James Henry, former chief economist at consultancy

McKinsey and an expert on tax havens, has compiled the

most detailed estimates yet of the size of the offshore

economy in a new report, The Price of Offshore

Revisited, released exclusively to the Observer.

See article for details. 

Average family pays $6000 in subsidies to big business.

Add It Up: The Average American Family Pays $6,000 a Year in Subsidies to Big Business

http://www.commondreams.org/view/2013/09/23

$6,000.
That's over and above our payments to the big companies for energy and food and housing and health care and all our tech devices. It's $6,000 that no family would have to pay if we truly lived in a competitive but well-regulated free-market economy.
The $6,000 figure is an average, which means that low-income families are paying less. But it also means that families (households) making over $72,000 are paying more than $6,000 to the corporations.
1. $870 for Direct Subsidies and Grants to Companies
The Cato Institute estimates that the U.S. federal government spends $100 billion a year on corporate welfare. That's an average of $870 for each one of America's 115 million families. Cato notes that this includes "cash payments to farmers and research funds to high-tech companies, as well as indirect subsidies, such as funding for overseas promotion of specific U.S. products and industries...It does not include tax preferences or trade restrictions."
It does include payments to 374 individuals on the plush Upper East Side of New York City, and others who own farms, including Bruce Springsteen, Bon Jovi, and Ted Turner. Wealthy heir Mark Rockefeller received $342,000 to NOT farm, to allow his Idaho land to return to its natural state.
It also includes fossil fuel subsidies, which could be anywhere from $10 billion to $41 billion per year for research and development. Yet this may be substantially underestimated. The IMF reports U.S. fossil fuel subsidies of $502 billion, which would be almost $4,400 per U.S. family by taking into account "the effects of energy consumption on global warming [and] on public health through the adverse effects on local pollution." According to Grist, even this is an underestimate.

SWA-Income | Figure 2K | Income growth for families at the 20th, 50th, and 95th percentiles, 1947–2010 | State of Working America

SWA-Income | Figure 2K | Income growth for families at the 20th, 50th, and 95th percentiles, 1947–2010 | State of Working America

How the Case for Austerity Has Crumbled by Paul Krugman | The New York Review of Books

How the Case for Austerity Has Crumbled by Paul Krugman | The New York Review of Books

Phil Angelides- The Economic Crisis and its altern...

Phil Angelides- The Economic Crisis and its altern...: Phil Angelides: Five sweeping reforms needed to prevent another financial crash PUBLISHED SATURDAY, SEP. 21, 2013  Sacramento Bee. ...

Fraud and criminal

One of our in-class discussions focused on whether J.P. Morgan and others were guilty of fraud, and were their actions criminal ?
Here is an opinion piece on this subject.

JPMorgan Chase: ‘Incredibly Guilty’

By Richard (RJ) Eskow

An outside observer might be forgiven for thinking JPMorgan Chase isn’t so much a bank as it is a criminal enterprise with a bank attached to it. Even before the London Whale scandal, Chase’s documented list of crimes included repeated fraud, perjury, forgery, bribery, and violations of laws against trading with Iran and Syria.

It also shot a man in Reno just to watch him die.

Okay, that last statement isn’t true. But the rest of the crimes on that list, and a number of others, are well-documented. And yet, remarkably, not a single senior executive at the bank has been indicted – or, to our knowledge, even been the subject of a criminal investigation. The bank just agreed to pay nearly a billion dollars in fines over the “Whale” case. And the SEC finally ending its practice of allowing criminal banks to “neither admit nor deny wrongdoing” when paying for their misdeeds. Chase admitted its guilt as part of the settlement.

Already More Than a Lost Decade: Income and Poverty Trends Continue to Paint a Bleak Picture | Economic Policy Institute

Already More Than a Lost Decade: Income and Poverty Trends Continue to Paint a Bleak Picture | Economic Policy Institute

Critical Analysis

The following are the analysis skills to be required in the new Common Core Standards for California Students 8-12.
I propose that we use these standards in our discussion of the economic crisis.

Neil Barofsky on the Need to Tackle Banking Reform

In 2012

Robert Reich (The Myth of the "Free Market" and How to Make the Economy Work for Us)

Robert Reich (The Myth of the "Free Market" and How to Make the Economy Work for Us)

Current status of the economy. Fall. 2013.

Economic Policy Institute.

A Decade of Flat Wages: The Key Barrier to Shared Prosperity and a Rising Middle Class

August 21, 2013 | By Lawrence Mishel and Heidi Shierholz | REPORT

California.

UNEVEN PROGRESS: WHAT THE ECONOMIC RECOVERY HAS MEANT

FOR CALIFORNIA’S WORKERS. California Budget Project.  www.cbp.org

Joe Stiglitz's speech at the AFL-CIO convention

Joseph Stiglitz is a Nobel Prize winning economist.

Wealthiest Americans Take Home Biggest Share of Income Ever Recorded | News & Notes, What Matters Today | BillMoyers.com

Wealthiest Americans Take Home Biggest Share of Income Ever Recorded | News & Notes, What Matters Today | BillMoyers.com

Financial Crisis- Could it happen again?

USA Today's view. Could the financial crisis happen again?

http://www.usatoday.com/story/money/business/2013/09/08/legacy-2008-financial-crisis-lehman/2723733/

The Lehman Collapse

Five years after Lehman’s collapse hastened a worldwide economic panic, the government faces lingering questions about the decision to spare executives likeRichard S. Fuld Jr., who ran Lehman for 14 years until its demise. Not a single senior executive from any Wall Street bank faced criminal charges from the crisis, either. And the government’s deadline for filing most charges will expire this month, the anniversary of Lehman’s collapse, providing a reminder of the case and its unpopular outcome.

Federal prosecutors and the S.E.C. have never officially announced their decision to close the Lehman investigation.

New York Times.  9/9/2013. Page A-1.
Also: from Robert Reich.

Happy Anniversary Lehman Brothers, And What We Haven’t Learned about Wall Street Over the Past Five Years

SUNDAY, SEPTEMBER 8, 2013

While attention is focused on Syria, the gambling addiction of Wall Street’s biggest banks is more dangerous than ever.

Five years ago this September, Lehman Brothers went bankrupt, and the Street hurtled toward the worst financial crisis in eighty years. Yet the biggest Wall Street banks are far larger now than they were then. And the Dodd-Frank rules designed to stop them from betting with the insured deposits of ordinary savers are still on the drawing boards — courtesy of the banks’ lobbying prowess. The so-called Volcker Rule has yet to see the light of day.

Paul Krugman: The Present Crisis. Sept. 6,2013

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  September 5, 2013 Today's Op Ed . 

Years of Tragic Waste

By PAUL KRUGMAN

In a few days, we’ll reach the fifth anniversary of the fall of Lehman Brothers — the moment when a recession, which was bad enough, turned into something much scarier. Suddenly, we were looking at the real possibility of economic catastrophe.

And the catastrophe came.

Wait, you say, what catastrophe? Weren’t people warning about a second Great Depression? And that didn’t happen, did it? Yes, they were, and no, it didn’t — although the Greeks, the Spaniards, and others might not agree about that second point. The important thing, however, is to realize that there are degrees of disaster, that you can have an immense failure of economic policy that falls short of producing total collapse. And the failure of policy these past five years has, in fact, been immense.

Some of that immensity can be measured in dollars and cents. Reasonable measures of the “output gap” over the past five years — the difference between the value of goods and services America could and should have produced and what it actually produced — run well over $2 trillion. That’s trillions of dollars of pure waste, which we will never get back.

Retirement Inequality Chartbook: How the 401(k) revolution created a few big winners and many losers | Economic Policy Institute

Retirement Inequality Chartbook: How the 401(k) revolution created a few big winners and many losers | Economic Policy Institute