Re: US Pensions
- Original Message - From: JDG [EMAIL PROTECTED] To: Killer Bs Discussion brin-l@mccmedia.com Sent: Friday, May 13, 2005 6:36 AM Subject: Re: US Pensions At 10:29 PM 5/12/2005 -0500, Dan M. wrote: And what happens if the company goes bankrupt? The pension fund wasn't owned by the company...it was not considered a company asset. The problem was not that the pension obligations went to other creditors (the employees were creditors after all). It was that the company was able to use vodoo ecconomics to fund the pensions. Wow, how surprising. It really all always comes back to bashing Republicans with you, doesn't it? Well, supply side ecconomics was voodoo. Bush I was right. Creative accounting was allowed to overstate the values of the pension assets. First, we are talking about companies in bankruptcy.I find it very difficult to believe that everything would be hunky-dory if the company had just made even *more* payments in the past. Not everything. You may not know the dynamics of what's going on. Bankrupt companies are competing on price, _after_ they've been able to write off major obligations. As a result, their cost structures are lower, and they can undercut companies that were better offforcing them down. As a result of the bankrupt airlines competing (contributing to oversupply and a price structure that's impossible for most airlines which have not gone bankrupt to compete with, one by one the other carriers are going down. If one or two of the worst actually disappeared, then the rest could stay out of bankrupcy. Second, many of these funds are invested heavily in the company's own stock - perhaps not in the case of United - but it does exist, and this practice should be discontinued. That's one of the things that was allowed in the '80s. My memory was that was a change from the government regulations requiring prudent management of the pensions before that. So, by your logic, I can presume that you favored the Bush tax cuts, as cutting taxes for the rich surely builds support among the rich for helping the poor - without which we'd be leaving our grandparents to eat dog food No, because the net effect is to direct money away from the poor and toward the rich. Let me give a corporate parallel. If a particular company within a has high costs and higher income, the company is still profitable. Slashing the high costs in that company may be more detrimental than cutting lower costs in another. SS can be thought of as an entity. There are SS taxes, and SS payments. The SS taxes are not enough to pay for future payments, so I suggested a mechanism for slowing their growth. The net effect is progressive. I really don't see the problem with me assuming the properties of algebra in discussing economics. Dan M. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: US Pensions
At 10:29 PM 5/12/2005 -0500, Dan M. wrote: And what happens if the company goes bankrupt? The pension fund wasn't owned by the company...it was not considered a company asset. The problem was not that the pension obligations went to other creditors (the employees were creditors after all). It was that the company was able to use vodoo ecconomics to fund the pensions. Wow, how surprising. It really all always comes back to bashing Republicans with you, doesn't it? First, we are talking about companies in bankruptcy.I find it very difficult to believe that everything would be hunky-dory if the company had just made even *more* payments in the past. Second, many of these funds are invested heavily in the company's own stock - perhaps not in the case of United - but it does exist, and this practice should be discontinued. Third, if the pension plan is based upon providing defined benefits, then these benefits are based upon the continued survival of the company. Again, if the company goes under, that is a huge risk for the employee. If the money were spent to fund SS instead of paying for part of Bush's tax cuts, Paying for tax cuts is a non-sequitur. It's all income transfer. No, it is not a transfer. It is the forgoing of income. What happened in reality is that taxes went from slightly progressive to virtually flat above, roughly, a 40k family income. This is another matter entirely from your original proposition that tax cuts must be paid.And why are you definiing progressivity here only in terms of payments and not in terms of payments and benefits, if that is the definition that you want to use? Social Security is also fully funded this year, so that is a non-sequitur as well. So, you are saying that Reagan lied to me, but it's no big deal? Surprise, surprise, it all comes back to bashing Republicans for you. What does Reagan have to do with anything here? Did Reagan make some sort of unique statement about Social Security that Democrats did not? Did the *data* cause you to just pull Reagan's name out of the dark here? And when did I say that anything is no big deal?Your comment is so snippy its hard to pick out exactly what the substance is here, but I am not aware of having ever said that much of anything in regards to Social Security is no big deal. Look at the taxes _and_ the benefits and see if, on average, SS is progressive or regressive. You're playing word games. No. I just like to look at data. I would be very surprised to learn that you used *data* to define the concepts of progressive and regressive.Perhaps you have a source for this? A poor person making minimum wage is paying a 15.3% tax rate. A CEO making $22 million this year is paying a 0.06% tax rate. That's regressive under anybody's definition of economics. How much does the CEO as a fraction of what he pays? How much does the poor person get? I am presuming that the word get is missing after CEO. At any rate, what the CEO or the poor person gets does not factor into the definitions of progressive and regressive with which I am familiar. Otherwise, one could pass tax cuts for the rich and call them progressive! And heck, using your logic we could raise taxes on welfare recipients and call it progressive too - after all, they're *getting* more than rich people, are they not? You can see how this logic is a recipe for absurdity.It also does not change the fact that the tax burden for making government pension payments to retirees falls vastly disproporitionately on the working poor. And oh yeah, that CEO earning $22 million is going to get a taxpayer-funded check when he retires. And, if he didn't, the poor person would have gotten nothing. Look at how we look to cut Medicaid but expand Medicare. Programs that only favor the poor are on the bottom of the priority list. Mularkey.The CEO is making $22 million in a single year, and he is going to support Social Security because the government is going to write him a check for a couple thousand dollars a month when he retires You are surely kidding me. And if he didn't get this check, we would have *no* government program to support poor retirees??? So, by your logic, I can presume that you favored the Bush tax cuts, as cutting taxes for the rich surely builds support among the rich for helping the poor - without which we'd be leaving our grandparents to eat dog food JDG ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: US Pensions
On May 13, 2005, at 4:36 AM, JDG wrote: At 10:29 PM 5/12/2005 -0500, Dan M. wrote: And what happens if the company goes bankrupt? The pension fund wasn't owned by the company...it was not considered a company asset. The problem was not that the pension obligations went to other creditors (the employees were creditors after all). It was that the company was able to use vodoo ecconomics to fund the pensions. Wow, how surprising. It really all always comes back to bashing Republicans with you, doesn't it? There are a lot of folks on this list about whom you could say this, but Dan is not one of them. Think of the many times that Dan has taken Nick to task w/r/t Iraq. Then again, where's the Republican-bashing in that message? Is it Dan's use of the phrase voodoo economics? I know that it was used to criticize a Republican presidential candidate, but perhaps you recall that it was used *by* a Republican presidential candidate (G. H. W. Bush, of Ronald Reagan's supply-side economics, in the 1980 primaries). Dave ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: US Pensions
On 5/13/05, JDG [EMAIL PROTECTED] wrote: At 10:29 PM 5/12/2005 -0500, Dan M. wrote: And what happens if the company goes bankrupt? The pension fund wasn't owned by the company...it was not considered a company asset. The problem was not that the pension obligations went to other creditors (the employees were creditors after all). It was that the company was able to use vodoo ecconomics to fund the pensions. Wow, how surprising. It really all always comes back to bashing Republicans with you, doesn't it? Maybe I was trying to find something logical in your rant to respond to and that seems as good a place as any. From the passage of the Employee Retirement Income Security Act (ERISA) in 1974 up until 2003, more than 160,000 Defined Benefit plans have gone under in the U.S.. 65,000 of these plans failed between 1975 and 1985, most of which occurred in the Reagan period of 1981-85. From 1986 to 2002 another additional 95,000 plans failed, Courts and legislatures throughout the 1990s made 401Ks more attractive with tax breaks and other advantages--as they simultaneously continued to screw traditional group pension plans. According to the Government's Pension Benefit Guarantee Corporation (PBGC), there were 112,000 Defined Benefit pension plans in 1983. Today there are less than 31,000 such plans. Today pension benefits worth $1.5 trillion insured by the PBGC are at risk because the PBGC itself is about to go broke. The Corporate-Government strategy of the last 20 years has succeeded in eliminating so many Defined Benefit plans that too few may exist today to keep the PBGC afloat. The PBGC is not backed by the 'full faith and credit of the US government' and receives no federal tax dollars. The 31,000 pension plans still participating in the PBGC have to pay a fee to the PBGC fund that insures pension payments to workers in the 3200 plans it still supports, or to other pension plans that may also soon go broke. And as the number of plans participating in the PBGC shrinks, the costs get higher for those pension plans remaining. But they can opt out of the PBGC and increasingly have. In 1980 nearly 80% of all defined benefit pension plans participate in the PBGC. By 2000 only 53% participated. In contrast to Social Security, a real crisis does exist for Group Pension Plans today. And Bush's plan here, we predict, will be similar to that for Social Security. First, the current crisis in Defined Benefit Pension Plans will be allowed to worsen further. Indeed, the Bush administration has been passing rules the past two years that won't resolve the crisis but are designed actually to make it worse. For example, its most recent ruling was to allow corporations with Defined Benefit plans in financial trouble to avoid making additional necessary contributions to their funds for two years. Another recent Bush rule prohibits unions from negotiating changes to their plans if they are in financial trouble. And not least, there are the new arbitrary rules concerning 'Cash Balance Plans'. Cash benefit plans are new plans that companies can push that enables them to cash out defined benefits and convert them to the more advantagaeous for the corporations 401Ks. This weakens the remaining defined benefit plans more. Recent rules passed by the Treasury Dept. of the Bush Government have been designed to encourage 'Cash Balance' plans, and thus the shift to 401Ks and the weakening of remaining Union negotiated Defined Benefit Plans. Prediction, Bush will attempt to save defined benefit plans the same way he is trying to save Social Security - legislate it out of existence. He will borrow money to eliminate the PBGC and force the defined benefit plans to be cashed out and converted to 401Ks. -- Gary Denton Easter Lemming Blogs http://elemming.blogspot.com http://elemming2.blogspot.com ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: US Pensions
On May 13, 2005, at 4:36 AM, JDG wrote: At 10:29 PM 5/12/2005 -0500, Dan M. wrote: And what happens if the company goes bankrupt? The pension fund wasn't owned by the company...it was not considered a company asset. The problem was not that the pension obligations went to other creditors (the employees were creditors after all). It was that the company was able to use vodoo ecconomics to fund the pensions. Wow, how surprising. It really all always comes back to bashing Republicans with you, doesn't it? How exactly does that (inaccurate) observation either help resolve the current discussion or show your position to be worthy of note? -- Warren Ockrassa, Publisher/Editor, nightwares Books http://books.nightwares.com/ Current work in progress The Seven-Year Mirror http://www.nightwares.com/books/ockrassa/Flat_Out.pdf ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: US Pensions
On 2005 May 13, JDG [EMAIL PROTECTED] When a worker relies upon an employer's pension plan, that worker is essentially putting his or her savings nest egg ... into the hands of the managers of a single corporation. ... This is one of the stronger arguments I have seen for the current mechanism for social security. The argument could be made even stronger by pointing out the higher risk aversion of people who are poorer compared to those who are richer, at least with regard to late-in-life income. A person who expects a late-in-life income of one million US dollars per year is likely to be less averse to the risk of losing $5,000 per year of that income than a person who expects a late-in-life income of $20,000 per year. To answer Bob's question, I don't think that the question is how can Congress make employer's pension plans illegal. I did not ask that question, or anything near it. I asked ... how well can non-bankrupt companies can make competitive financial returns ... In other words, the question is what kind of political arrangements will be needed? That is very different. However, JDG is correct when he says that (I presume he means in practice, rather than possible theories) ... the government is the ultimate insurer against catastrophic risk, This is also an argument for the current mechanism for social security. (This leaves aside the questions of whether the tax ought to be regressive or whether the rich should benefit from the poor, which are different from the question of which entity should bear the risks, each individual or all taxpayers as a group.) -- Robert J. Chassell [EMAIL PROTECTED] GnuPG Key ID: 004B4AC8 http://www.rattlesnake.com http://www.teak.cc ___ http://www.mccmedia.com/mailman/listinfo/brin-l
US Pensions
[Over the past two days, there have been two big developments, one concerning pensions, the other concerning manufacturing.] In the United States, its bankruptcy judge permitted United Airlines to default on its pensions. (United Airlines is in bankruptcy.) The default is for US$ 9.8 billion. A US government entity called the Pension Benefit Guaranty Corporation will assume Uniteds pension obligations. The default puts United Airlines, which is still operating, at a competitive advantage against non-bankrupt airlines. They may declare bankruptcy, too. Delta has already said it may do so later this this. Also, the default adds to the obligations of the Pension Benefit Guaranty Corporation. My understanding is that the Corporation gains its revenue in two ways: one is by charging a fee to various businesses. This fee will have to rise. The other is by charging the US taxpayer (which I do not think it has done so far). Both General Motors and Ford, the two large remaining US auto firms, also have huge unfunded pension obligations. Other US companies also have unfunded pension obligations with the total in the hundreds of billion US dollars -- an amount near to the size of the annual government or trade deficits, that is to say, several percent of of total US income. The question is how well can non-bankrupt companies can make competitive financial returns under current circumstances when they must pay for pensions but bankrupt companies do not and foreign companies from countries with state provided pensions do not. (In the US, state-provided pensions are called `social security'.) In other words, the question is what kind of political arrangements will be needed? -- Robert J. Chassell [EMAIL PROTECTED] GnuPG Key ID: 004B4AC8 http://www.rattlesnake.com http://www.teak.cc ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: US Pensions
To a rough approximation there are two fundamental aspects of economic security: income and savings. When a worker relies upon an employer's pension plan, that worker is essentially putting his or her savings nest egg in the same basket as his or her income egg, and handing the basket into the competent (or incompetent as the case may be) hands of his or hers managers.Pardon my bluntness here, but this system is just plain stupid.Or at the very least, stupidly risky. (Although considering another significant aspect of our retirement system involves taxing the poor to write checks for the rich, employer pension plans may look almost sane by comparison. But I digress) To answer Bob's question, I don't think that the question is how can Congress make employer's pension plans illegal. No American worker should be duped into entrusting nearly his or her entire economic security - both income and savings - into the hands of the managers of a single corporation. Such a strategy is simply too risky, and given that the government is the ultimate insurer against catastrophic risk, that is simply an unfair risk for workers to be imposing upon the community. JDG ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: US Pensions
- Original Message - From: JDG [EMAIL PROTECTED] To: Killer Bs Discussion brin-l@mccmedia.com Sent: Thursday, May 12, 2005 9:05 PM Subject: Re: US Pensions When a worker relies upon an employer's pension plan, that worker is essentially putting his or her savings nest egg in the same basket as his or her income egg, and handing the basket into the competent (or incompetent as the case may be) hands of his or hers managers.Pardon my bluntness here, but this system is just plain stupid.Or at the very least, stupidly risky. You know, back when I started working, it wasn't. Companies are/were legally oblidged to fund their pensions on an as-you-go basis. But, businesses were able to buy (sorry lobby for) a change in the law that allowed them to siphon money from the pensions, claiming they were tremendously overfunded. So, they got the law changed to reflect some, shall we say, creative bookeeping. As a result, many pension plans are now terribly underfunded. (Although considering another significant aspect of our retirement system involves taxing the poor to write checks for the rich, employer pension plans may look almost sane by comparison. But I digress) If the money were spent to fund SS instead of paying for part of Bush's tax cuts, that wouldn't be the case. Look at the taxes _and_ the benefits and see if, on average, SS is progressive or regressive. Dan M. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: US Pensions
At 09:51 PM 5/12/2005 -0500, Dan M. wrote: Pardon my bluntness here, but this system is just plain stupid.Or at the very least, stupidly risky. You know, back when I started working, it wasn't. And what happens if the company goes bankrupt? If the money were spent to fund SS instead of paying for part of Bush's tax cuts, Paying for tax cuts is a non-sequitur. Social Security is also fully funded this year, so that is a non-sequitur as well. Look at the taxes _and_ the benefits and see if, on average, SS is progressive or regressive. You're playing word games. A poor person making minimum wage is paying a 15.3% tax rate. A CEO making $22 million this year is paying a 0.06% tax rate. That's regressive under anybody's definition of economics. And oh yeah, that CEO earning $22 million is going to get a taxpayer-funded check when he retires. JDG ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: US Pensions
- Original Message - From: JDG [EMAIL PROTECTED] To: Killer Bs Discussion brin-l@mccmedia.com Sent: Thursday, May 12, 2005 10:18 PM Subject: Re: US Pensions At 09:51 PM 5/12/2005 -0500, Dan M. wrote: Pardon my bluntness here, but this system is just plain stupid.Or at the very least, stupidly risky. You know, back when I started working, it wasn't. And what happens if the company goes bankrupt? The pension fund wasn't owned by the company...it was not considered a company asset. The problem was not that the pension obligations went to other creditors (the employees were creditors after all). It was that the company was able to use vodoo ecconomics to fund the pensions. Unfortunately, in the 80s, the US governments stopped insisting on sound accounting practices with pension funds. If the money were spent to fund SS instead of paying for part of Bush's tax cuts, Paying for tax cuts is a non-sequitur. It's all income transfer. What happened in reality is that taxes went from slightly progressive to virtually flat above, roughly, a 40k family income. Social Security is also fully funded this year, so that is a non-sequitur as well. So, you are saying that Reagan lied to me, but it's no big deal? Look at the taxes _and_ the benefits and see if, on average, SS is progressive or regressive. You're playing word games. No. I just like to look at data. A poor person making minimum wage is paying a 15.3% tax rate. A CEO making $22 million this year is paying a 0.06% tax rate. That's regressive under anybody's definition of economics. How much does the CEO as a fraction of what he pays? How much does the poor person get? And oh yeah, that CEO earning $22 million is going to get a taxpayer-funded check when he retires. And, if he didn't, the poor person would have gotten nothing. Look at how we look to cut Medicaid but expand Medicare. Programs that only favor the poor are on the bottom of the priority list. Dan M. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: US Pensions
On May 12, 2005, at 8:18 PM, JDG wrote: At 09:51 PM 5/12/2005 -0500, Dan M. wrote: Pardon my bluntness here, but this system is just plain stupid.Or at the very least, stupidly risky. You know, back when I started working, it wasn't. And what happens if the company goes bankrupt? To channel Erik, you're not paying attention. For one thing, in (say) 1950 or so, the thought of IBM (example) going bankrupt was absurd. So was the thought that a professional would EVER change careers. Start with a company, retire from that same company four decades later. It's grossly unfair of you to take your 2005 perspective and use it to show how naive people were in, say, the 1970s, before globalization, before the iron curtain rusted through, before ATT was broken up, before airlines were deregulated, before 401Ks, before rapacious and incompetent CEOs were permitted to gut their own companies in the name of short term gain. Up through the 1970s and possibly early 80s, going with a pension plan was by far one of the best, wisest and most sound choices ANY employee could make. It meant the difference between dogfood and a retirement of comfort and luxury. -- Warren Ockrassa, Publisher/Editor, nightwares Books http://books.nightwares.com/ Current work in progress The Seven-Year Mirror http://www.nightwares.com/books/ockrassa/Flat_Out.pdf ___ http://www.mccmedia.com/mailman/listinfo/brin-l
