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While America’s CEOs are fretting about the government’s so-called “fiscal cliff,” (The only ones I see fretting about the fiscal cliff are citizens who are concerned about the half-wits in D.C. who seem intent on destroying our country.)
millions of American workers face a financial disaster that gets much less media attention. There’s a half-trillion dollar deficit in the nation’s worker retirement benefits.
The Great Recession, which decimated retirement assets, played a big role in building this lesser-known cliff. But many corporations could have avoided the problem by shoring up these funds during the boom years. Instead, they siphoned pension assets for other profit-boosting purposes (This doesn't quite make sense. Pension reserves are set by law, and pension contracts are legally enforceable mutual agreements. Some are negotiated by unions, others are offered as part of benefit packages to attract employees. If laws were broken by "siphoning" pension assets, then these companies need to be prosecuted. Otherwise, companies can do with their money what they please.).
When the pension deficits started to balloon, many corporations responded by slashing back their benefit programs (Unfortunately, many of these pension programs were overly generous. Many companies simply were dumb in agreeing to them, but in the midst of union negotiations with the ever-present threat of strikes, these companies simply gave too much up and are now taking the heat for their bad decisions. These decisions trickle down into the workers, of course, but the unions should've known better. Interestingly, to this day, even in the midst of this financial calamity, unions are still pushing for more and unwilling to give up anything.).
As a result, Americans today are more reliant on government-funded Social Security and Medicare programs than at any other time in the last 60 years (Government-funded? The standard position of the Left, which happened to be asserted in a recent letter printed in the local newspaper, is that SS is an insurance plan, an investment, funded by the taxpayers with segregated funds that are not co-mingled with the general fund. This must be a freudian slip to admit that SS is just another tax and spend welfare program.).
What’s even more outrageous is that the very same CEOs who have contributed to rampant retirement insecurity are now calling for cuts to these earned benefit programs for senior citizens (Oops, now they're earned benefit programs. This is false. See my comments about this here.
While I certainly agree that certain corporations participated in the events that led to the crash, they are hardly the only players. Government is the 600 pound gorilla in the room. Government spends more money in a year than the total value of the top 20 US corporations combined! government sets policy, passes laws, and intervenes in the economy. Its economic impact caused by taxation, regulation, and oversight [or lack of] cannot be ignored. I would go so far as to say that had not government so deeply meddled in the economy, the crash would have never happened. CEOs are pikers compared to government.
And it's worth noting for the record that the author displays no outrage for the government "siphoning" dry the Social Security Trust Fund. I discuss that here.).
millions of American workers face a financial disaster that gets much less media attention. There’s a half-trillion dollar deficit in the nation’s worker retirement benefits.
The Great Recession, which decimated retirement assets, played a big role in building this lesser-known cliff. But many corporations could have avoided the problem by shoring up these funds during the boom years. Instead, they siphoned pension assets for other profit-boosting purposes (This doesn't quite make sense. Pension reserves are set by law, and pension contracts are legally enforceable mutual agreements. Some are negotiated by unions, others are offered as part of benefit packages to attract employees. If laws were broken by "siphoning" pension assets, then these companies need to be prosecuted. Otherwise, companies can do with their money what they please.).
When the pension deficits started to balloon, many corporations responded by slashing back their benefit programs (Unfortunately, many of these pension programs were overly generous. Many companies simply were dumb in agreeing to them, but in the midst of union negotiations with the ever-present threat of strikes, these companies simply gave too much up and are now taking the heat for their bad decisions. These decisions trickle down into the workers, of course, but the unions should've known better. Interestingly, to this day, even in the midst of this financial calamity, unions are still pushing for more and unwilling to give up anything.).
As a result, Americans today are more reliant on government-funded Social Security and Medicare programs than at any other time in the last 60 years (Government-funded? The standard position of the Left, which happened to be asserted in a recent letter printed in the local newspaper, is that SS is an insurance plan, an investment, funded by the taxpayers with segregated funds that are not co-mingled with the general fund. This must be a freudian slip to admit that SS is just another tax and spend welfare program.).
What’s even more outrageous is that the very same CEOs who have contributed to rampant retirement insecurity are now calling for cuts to these earned benefit programs for senior citizens (Oops, now they're earned benefit programs. This is false. See my comments about this here.
While I certainly agree that certain corporations participated in the events that led to the crash, they are hardly the only players. Government is the 600 pound gorilla in the room. Government spends more money in a year than the total value of the top 20 US corporations combined! government sets policy, passes laws, and intervenes in the economy. Its economic impact caused by taxation, regulation, and oversight [or lack of] cannot be ignored. I would go so far as to say that had not government so deeply meddled in the economy, the crash would have never happened. CEOs are pikers compared to government.
And it's worth noting for the record that the author displays no outrage for the government "siphoning" dry the Social Security Trust Fund. I discuss that here.).
Nearly 100 CEOs have banded together in an effort to convince the American public that Social Security and Medicare lie at the root of America’s fiscal challenges (As much as I dislike CEOs, they happen to be correct on this issue. 62% of government spending is attributed to entitlement programs, and at the rate of growth [due in part to baby boomers like me who are approaching retirement age in great numbers], this number is expected to exceed 100% within 20 years.).
Their “Fix the Debt” campaign features plain-spoken Americans in their ads and sounds moderate because they call for both spending cuts and revenue increases.
But the real objectives of the campaign include massive new corporate tax cuts and reduced spending on Social Security and Medicare, which would likely involve raising the retirement age (It's odd to me that the writer so objects to raising the retirement age, since democrats in congress have done this before. And Congress has the legal authority to do so. Citizens, unions, churches, and corporations are free to take positions on the issue as they choose. Why wouldn't corporations want lower taxes? What is so objectionable about expressing an opinion?).
American workers, at present, cannot collect Social Security and Medicare until age 66, the highest retirement age among rich countries. In 2020, the Social Security retirement age will rise to 67, assuring that American workers will be toiling longer than those in any other industrialized country for years to come. In contrast, Japanese and Chinese workers can collect their equivalent of Social Security starting at age 60 (If collecting government retirement benefits is better at age 60, why not lower the age to 50? Or 40? Why should we be so uncivilized as to require 30-year-olds to "toil" so very long, wasting their lives working, when they could be retiring while they're young enough to really enjoy it?).
The Fix the Debt campaign’s CEO supporters need not worry about Social Security because they’re members of the “I’ve Got Mine Club.” Fifty-four of the CEOs leading Fix the Debt directly benefit from lavish executive retirement programs. Their collective pension assets total $649 million, which comes to more than $12 million per CEO. That’s enough to garner a $65,000 retirement check each month starting at age 65 that will continue for as long as they live, according to a new report by the Institute for Policy Studies, which I co-authored (Sure, let's set up a little class envy here. Someone else is doing well, they're in charge of multi-million dollar corporations, so it only makes sense to attack them for their success as if their success has any bearing on the lives of the middle class.
See, that's the thing. If a law were passed that reduced CEO pay to a million dollars, that would have zero impact on the lives of average Americans. But every cause needs a bogeyman to blame the evils of the world upon.).
In contrast, the average retiree receives just $1,237 from Social Security each month.
Yet, the firms headed by Fix the Debt CEOs owe their U.S. pension funds more than $100 billion, according to the IPS study. U.S. law requires corporations to keep their pension debts to manageable levels, but this pressure has often resulted in benefit cuts (Faced with deficits at those kinds of levels, it seems prudent to cut benefits. But what about the trillions owed to the SS trust fund? Is that of concern to the author?).
General Electric, which has a staggering $22 billion pension deficit, shut down its pension fund last year, saying it had become a “drag on earnings” (at a whopping cost of 13 cents per share, according to the company’s estimates) (Did G.E. do something illegal? Again, it seems like a prudent business decision to me. $22 billion is a ton of money. And by the way, G.E. CEO Jeffery Emmelt is a member of Obama's financial adviser team.).
Like many other firms, GE has shifted new employees to a less costly 401(k) plan, putting the risk for poor stock market performance onto employees (False. 401(k) plans do not force workers into the stock market, since there invariably is a moneymarket fund available. And I wonder what the author might have to say about the many public pension systems that invest in the stock market?).
Beware of wealthy CEOs who are lecturing the rest of us about tightening our belts (Which CEOs did this? Names, please. And by the way, since the author is lecturing us, would it be imprudent to ask the writer what his income is or what his pension value might be?).
American workers would be far better off if CEOs worried more about fixing their own companies’ pension debts (American workers would be, by orders of magnitude, much better off if the government fixed its spending habit and left the free market alone.).
Scott Klinger is an associate fellow at the Institute for Policy Studies (www. ips-dc.org), and co-author of the report “A Pension Deficit Disorder: The Massive CEO Retirement Funds and Unfunded Worker Pensions at Firms Pushing Social Security Cuts.” He wrote this for the Baltimore Sun.
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