The right has never had any particular penchant for telling the truth, particularly when it gets in the way of a good storyline that justifies screwing the middle class or poor. So, it’s no surprise that the latest right wing meme-that state worker pensions are driving states into bankruptcy-is basically a lie. Dean Baker (though I am an avid Baker fan, I came to this via Balloon Juice) has written an extensive analysis of the situation, and shows that the problem was not created by grasping teachers, or even, to any significant degree, by underfunding. No, the culprits are the usual suspects: the Wall Street Crime Syndicate that destroyed the economy. But even after their work had been done, the situation is hardly dire, except in the fevered imaginations of the right and the serious people within the Beltway. This is the last paragraph from his executive summary:
In sum, most states face pension shortfalls that are manageable, especially if the stock market does not face another sudden reversal. The major reason that shortfalls exist at all was the downturn in the stock market following the collapse of the housing bubble, not inadequate contributions to pension funds.
You can read the whole thing here (pdf).
This unfolding episode gives us a bit of a peek into an alternate universe in which Social Security was privatized in-let us say, 2001. At this moment, millions of people would have lost huge chunks of the only retirement plan in which they had any stake. Instead of accepting the blame for ruining these people’s lives, or blaming the “investment advisers” that would have descended on millions of unsophisticated investors to relieve them of their money, or blaming the Wall Street criminals for torpedoing the economy, the right would be blaming the people that it had forced into a system they lacked the time or knowledge to understand, just as they are blaming the state workers for having the nerve to think they are entitled to the pensions for which they contracted.
We are, by the way, currently experiencing something like that alternate reality. Almost anyone with a 401k will tell you they lost big bucks in 2008, and few of us are back to where we were at that point, never mind ahead. The only reason that situation is not a major issue, other than the willingness of the average American to allow him or herself to get screwed by Wall Street, is that everyone who is looking at a smaller 401k retirement nest egg is at least assured (for the moment) of a social security benefit that is not dependent on the willingness of Wall Street to leave some scraps for the rest of us.
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