Monday
May162005
The end of pensions
Monday, May 16, 2005 at 3:00AM
By Ellen Ratner
Last week, United Airlines won court approval to terminate all four of its defined-benefit pension plans. This is a shot across the bow of the American middle class. It is a direct hit on the tradition of work and retirement in this country.
Yes, United Airlines is in bankruptcy. It has been fighting for survival for nearly four years. But despite the Sept. 11, 2001, attack on its planes, crews and passengers, an economic recession, SARS, war in Iraq and exploding oil prices, the employees of United Airlines have continued to safely fly over 1,500 flights with over 173,000 people each day. They have given up almost $3 billion a year in wage and benefit concessions, which do not include the changes to work rules that require most of them to work 30 percent more for half the pay. For their efforts, the 134,000 current and retired employees got a big thank you last week when they lost their pensions to the Pension Benefit Guarantee Corporation.
The Pension Benefit Guarantee Corporation is somewhat of a misnomer. It should be called the Pension Benefit Corporation. It does not guarantee anything other than that the unlucky retiree will get some percentage of the pension they worked their entire life for. The problem with the PBGC is the same problem with Social Security. As soon as we begin to talk about it, most Americans begin to doze off. We are a here-and-now nation. The past is boring the future is something to worry about tomorrow. The question, "What's on television tonight?" is about as far into the future as most Americans like to think about.
Life is much different in Europe, particularly "old Europe." They've been through wars and famines and recessions and booms and they are wiser. European pensions are an "earned" entitlement just like they have been in America. Only the word "entitlement" loses its pejorative connotation when it crosses the Atlantic. People in Europe view their pensions as a sacred right that no government would dare allow to be diminished.
As one French woman said last week to a United Airlines employee, "What do you mean that you have lost your pension? The government will never allow this to happen?" The United employee then explained that the Pension Benefit Guarantee Corporation was going to take over the pension and that she would get a fraction of her pension from them. The French woman then said, "A fraction? That is no guarantee! Why do they call it a guarantee?" She's right. Just like Social Security is turning out to be no "security" at all.
The French woman makes an excellent point. Her belief that the government will not allow workers to lose their pensions shows what happens when you drink a half a bottle of red wine a night. In the last year, the most hotly contested items on Capitol Hill have been about who gets to marry whom and who gets to die when. Congress cannot be bothered with reforming pension investment practices.
It's complicated. It requires doing some real homework. Pensions do not lend themselves to demagoguery. And there are precious few lobbyists for the American who has worked their entire life so that they don't have to eat dog food their last years on the planet. Congress has had ample opportunity to reform pension law and they have continually stepped away from the argument.
The executive branch on the other hand does have a plan for pensions. Call it the, "You're on your own" plan. President Bush spelled out the death of work as we know it in American. His Campaign 2004 stump speech, included in his acceptance speech at the Republican National Convention included his belief that the days of working for one company and earning a "defined-benefit plan" – i.e., a specified pension – are over in this country. He championed the portable 401K plan as the safety net for an "ownership society."
Just ask the employees of Enron or any of their acquired companies or Global Crossing or MCI or any one of hundreds of companies that imploded under the greed of their executives and boards. I just saw the movie "Enron, the Smartest Guys in the Room." Ms. Watkins, one of Enron's whistleblowers said it best when she said it can happen again.
United Airlines went bankrupt for a variety of reasons that include its attempt to acquire US Airways, Sept. 11, the implosion of the economy in the wake of the dot-com bomb, doubling fuel prices and the longest price war in the history of any industry. The media has successfully vilified the dreadful "unions" at United Airlines for its downfall, so no one is shedding tears for their loss or feeling their pain. Instead, the press is sounding the trumpet for the next pension raids to include the other major airlines, and the auto industry. Before we know it, the Pension Benefit Guarantee Corporation will finally call "Uncle!" and say "We just can't guarantee anything anymore."
It will ultimately be up to the taxpayers to save the American worker as pensions fall like dominos. The PBGC will soon be swimming in $23 billion of debt and this is only the beginning – it will make the savings-and-loan bailout look like cab fare.
The taxpayer's burden will end the $500 tax cut that middle-class Americans got from the president, while corporations win another victory on the backs of the American worker. And, once again, our government has wiped out Peter to pay Paul.
Last week, United Airlines won court approval to terminate all four of its defined-benefit pension plans. This is a shot across the bow of the American middle class. It is a direct hit on the tradition of work and retirement in this country.
Yes, United Airlines is in bankruptcy. It has been fighting for survival for nearly four years. But despite the Sept. 11, 2001, attack on its planes, crews and passengers, an economic recession, SARS, war in Iraq and exploding oil prices, the employees of United Airlines have continued to safely fly over 1,500 flights with over 173,000 people each day. They have given up almost $3 billion a year in wage and benefit concessions, which do not include the changes to work rules that require most of them to work 30 percent more for half the pay. For their efforts, the 134,000 current and retired employees got a big thank you last week when they lost their pensions to the Pension Benefit Guarantee Corporation.
The Pension Benefit Guarantee Corporation is somewhat of a misnomer. It should be called the Pension Benefit Corporation. It does not guarantee anything other than that the unlucky retiree will get some percentage of the pension they worked their entire life for. The problem with the PBGC is the same problem with Social Security. As soon as we begin to talk about it, most Americans begin to doze off. We are a here-and-now nation. The past is boring the future is something to worry about tomorrow. The question, "What's on television tonight?" is about as far into the future as most Americans like to think about.
Life is much different in Europe, particularly "old Europe." They've been through wars and famines and recessions and booms and they are wiser. European pensions are an "earned" entitlement just like they have been in America. Only the word "entitlement" loses its pejorative connotation when it crosses the Atlantic. People in Europe view their pensions as a sacred right that no government would dare allow to be diminished.
As one French woman said last week to a United Airlines employee, "What do you mean that you have lost your pension? The government will never allow this to happen?" The United employee then explained that the Pension Benefit Guarantee Corporation was going to take over the pension and that she would get a fraction of her pension from them. The French woman then said, "A fraction? That is no guarantee! Why do they call it a guarantee?" She's right. Just like Social Security is turning out to be no "security" at all.
The French woman makes an excellent point. Her belief that the government will not allow workers to lose their pensions shows what happens when you drink a half a bottle of red wine a night. In the last year, the most hotly contested items on Capitol Hill have been about who gets to marry whom and who gets to die when. Congress cannot be bothered with reforming pension investment practices.
It's complicated. It requires doing some real homework. Pensions do not lend themselves to demagoguery. And there are precious few lobbyists for the American who has worked their entire life so that they don't have to eat dog food their last years on the planet. Congress has had ample opportunity to reform pension law and they have continually stepped away from the argument.
The executive branch on the other hand does have a plan for pensions. Call it the, "You're on your own" plan. President Bush spelled out the death of work as we know it in American. His Campaign 2004 stump speech, included in his acceptance speech at the Republican National Convention included his belief that the days of working for one company and earning a "defined-benefit plan" – i.e., a specified pension – are over in this country. He championed the portable 401K plan as the safety net for an "ownership society."
Just ask the employees of Enron or any of their acquired companies or Global Crossing or MCI or any one of hundreds of companies that imploded under the greed of their executives and boards. I just saw the movie "Enron, the Smartest Guys in the Room." Ms. Watkins, one of Enron's whistleblowers said it best when she said it can happen again.
United Airlines went bankrupt for a variety of reasons that include its attempt to acquire US Airways, Sept. 11, the implosion of the economy in the wake of the dot-com bomb, doubling fuel prices and the longest price war in the history of any industry. The media has successfully vilified the dreadful "unions" at United Airlines for its downfall, so no one is shedding tears for their loss or feeling their pain. Instead, the press is sounding the trumpet for the next pension raids to include the other major airlines, and the auto industry. Before we know it, the Pension Benefit Guarantee Corporation will finally call "Uncle!" and say "We just can't guarantee anything anymore."
It will ultimately be up to the taxpayers to save the American worker as pensions fall like dominos. The PBGC will soon be swimming in $23 billion of debt and this is only the beginning – it will make the savings-and-loan bailout look like cab fare.
The taxpayer's burden will end the $500 tax cut that middle-class Americans got from the president, while corporations win another victory on the backs of the American worker. And, once again, our government has wiped out Peter to pay Paul.
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