Legislation to make it harder for corporations to default on payment to pension plans must be a staple of Democrat campaigns in the upcoming mid-term and national elections. This dilemma impacts corporations, stockholders, employees and pension-fund managers. The only one of these groups finding themselves without representation in DC happens to be the employees. The Democrats have to step up and seize this opportunity.
Republican loyalty is firmly on the side of the corporate sector and it’s shareholders, while lobbyists for the pension-fund managers are finding success in loosening regulation pertaining to value and earnings estimates of pension funds. These estimates are often overstated, creating a bubble, not unlike the accounting practices that brought Enron and Worldcom crashing to the ground.
To inflate earnings companies predict high returns on their pension funds whether they are realistic or not. By predicting a high rate of return, more money can be redirected from the pension funds to the balance sheet, creating higher earnings and investment. A fund can legally be predicted to make a return of 8%, come in at under 1% and the next year be predicted to again come in at 8%. This practice is similar to what CEOs and CFOs are going to jail for, and our elected legislators in DC look the other way when it comes to this enterprise that should be deemed criminal.
On the backs of these examples of how false accounting hurts everyone over time, politics on the issue should be easy to frame in the sense that our overall goal is to create a level playing field in the market. One company should not be able to falsely predict pension-fund earnings while a competitor doing it legitimately suffers for following the rules. The bubble this creates will eventually burst and right now the pensions are allowed to be legally defaulted on.
When this happens, the federal program (PBGC) picks up the slack and provides the workers a portion of what they should have received from the company they worked for. In 2001 PBGC reported a surplus of $8 billion, but last year it reported a deficit of $23 billion. If this program were to continue in this direction and go bankrupt, the government would have to bail it out to the tune of anywhere from $90-$200 billion. Legislation is needed to make it harder for companies to overstate pension-fund returns and also for them to default on the pensions when filing for bankruptcy.
Ironically the Republican controlled executive and legislative branches have instead moved to rewrite individual bankruptcy law on behalf of credit card companies. The focus in DC right now is not about the individual, but the company that employs or hands out credit to the individual. Corporate responsibility in terms of how they reward credit lines and wrongly inflate earnings on the backs of individual Americans should be on the table for discussion. Individual taxpayers and workers are what enable the system to exist in the first place, not the other way around.
Investors know that when you put money in the stock market there is a risk involved. There should be NO risk involved for an American working thirty or more years of their life for a company when it comes to their pension. Politicians are employed by the taxpayers/voters, yet on this issue their attention is only spent on reducing the risk of companies, stockholders and pension-fund managers. The workers are paid to perform a service, and without their efforts, the success of the other three would be impossible. It is the American worker who makes it all possible, yet the American worker is now without representation in DC. Democrats must take on that role starting today!
Posted by Al Swearengen as Al Swearengen, politics at 6:24 PM GMT+4
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As Congress winds down and their budget resembles the kind of hard work you and I would most likely get fired for turning in if we tried, Terri Shiavo has gone from being a woman on life support in Florida to now serving as our government’s Halloween costume for the week. For Republicans it’s a most welcome movement to keep her alive amidst Tom Delay’s crooked behavior, a Bin Laden lieutenant confirming that the man was in Tora Bora during the war as was argued during the debates and Social Security reform moving at a snail’s pace. This case right here is just what the doctor ordered for the GOP, and if the federal judge doesn’t order the feeding tube put back, it’ll be a royal flush.
What we have here is a win-win situation for Republicans. Because if they put the tube back in it will be a hard fought victory, but if the judge upholds the prior decisions, the next step will have been taken to encourage the public to advocate the denouncement of the entire legal profession. Standing in the way of a party’s ability to do whatever they wish are these very judges, so of course we are told over the hate-radio airwaves to hate lawyers and already the flamethrower has been aimed at the bench. This is just an opportunistic time and place to hook up the propane tank.
People are already getting ugly on the ‘keep her alive’ side, and although I haven’t seen it, I’m sure they’re getting ugly on the other side as well. The argument of her parents against Terri’s husband is all based on hearsay. The law puts the burden of proof on the accuser. This woman and her husband were married, and now the same people who scream and yell about sanctity when gays wanted the same are ignoring the power of that agreement in this case. The ’sanctity’ of these things – marriage and life – is only a useful concept when it’s needed to wedge an issue into our brains. What’s so sacred about marriage if your parents ultimately get to decide what happens to you when a machine is needed to keep you alive?
President Bush, while governor of Texas, passed a law that took people off of life support if they couldn’t afford the medical bills. So it’s not as much about this woman’s life as it is the political opportunity. The media is now pulling us around like a hooked fish, Sean Hannity is broadcasting from outside her hospice, Michael Jackson is late for court wearing his jammies.
Yes, the media is doing a fine job of ensuring that while Congress has worked to ensure that more of our country is owned by China in the coming year, we’re all dumbfounded and ignorant to anything other than the bright pretty colors.
Posted by Al Swearengen as Al Swearengen, Religion, politics at 8:34 AM GMT+4
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This issue is politicized and spun to pit us against one another, like most things. But the basis for the argument against raising the minimum wage is pretty much the opposite of everything in the Bible and the rhetoric of every politician alive today.
What they’re asking you to do is to value your ability to pay a nickel less for a roll of toilet paper at the expense of a fellow American trying to put food on the table. That you are a consumer first and an American second. The phrase is ‘American consumer’, not the other way around…don’t forget that.
I paid 750 dollars a few years back for a used Honda Civic, which is the same price I paid for a BMW 5-Series while living in Germany. In Japan an American made automobile can be bought for less money than it costs here in the states. How can this be?
How can we believe whatever the lobbyists tell us on this issue? The corporations are effected by having to pay a higher minimum wage – WallMart, McDonalds, Target, Carl’s Jr, etc…they’ll pay the least amount possible in wages that they can. The ‘we want to provide the consumer’s low prices’ line is bull. They’ll charge what people will pay, plain and simple. It’s about competing with other corporations for your dollar, not out of the goodness of their heart.
Why should they be able to compete in this way at the expense of your fellow American worker? Energy prices are up, gas prices are up, cost of living increases…why shouldn’t wages rise as well? It’s a family values issue. Moreso though, it’s about doing the right thing.
Don’t believe the hype on this one. You’ll hear that raising the minimum wage will create job loses, but the minimum wage jobs there now wouldn’t be there if they weren’t necessary. The result will be an extra couple of cents added to prices, which won’t kill anyone. Americans need to stick up for fellow Americans, not CEOs. They make enough money, let them figure it out.
This is not communist China or the USSR. Let’s not act like it is.
Posted by Al Swearengen as Al Swearengen, Economics, politics at 4:58 AM GMT+4
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