Tuesday, May 17, 2005

Wexler offers proposal to fix Social Security

Rep. Robert Wexler, Florida Democrat, broke with his party leadership yesterday and introduced a plan to fix Social Security by raising taxes, saying it's time more Democrats join the dialogue by introducing plans of their own.
"I hope mine is the first of several Democratic plans that are offered," Mr. Wexler said. "I believe it's time Democrats offer an alternative to the president."

Who says the democrats are devoid of any ideas of their own? Here's Wexler's original plan, brace yourself- Raise taxes! Wait it gets better. Raise taxes on the rich! That's right they've gone back to their bag of tricks and pulled out "Class Envy". Let's punish the most successful members of society and those that dare to hire them. Have the most productive members of society pick up the slack. I was expecting something innovative like means testing, privatization, cutting benefits or raising the retirement age. All I got was the same old tired solution, jack up the taxes.

How's this one for an innovative solution?
Dem Wants to Block Pension Defaults After United Airlines Okayed to Dump Pension Plan

Democratic Rep. George Miller of California wants Congress to impose a six-month moratorium blocking bankrupt companies from dropping their workers' pension plans after United Airlines was allowed to do so last week. A bankruptcy judge approved a deal between United and the federal agency that insures pensions that allows the airline to end its pension plans, in what is the largest corporate pension default in U.S. history. Under the deal, the Pension Benefit Guaranty Corp. would guarantee $6.6 billion of the nearly $10 billion in benefits in United's pension plans, meaning many workers will get pension cuts.

Miller, who's worried this could lead to a rash of other struggling airlines and other industries following suit, teamed up with fellow Democratic Rep. Jan Schakowsky of Illinois to introduce legislation Friday to stop pension defaults for six months while Congress considers what should be done. Miller wants to raise the issue with House Education and Workforce Committee Chairman John Boehner, an Ohio Republican, who's been working on a bill to reform traditional pensions. There are also other congressional efforts pending to deal with the pension issue, but Miller is worried too many defaults will take place before Congress acts, and so is asking for the ban.

A House Democratic staffer told Reuters there is precedent for a pension default moratorium. In the 1980s, Congress intervened in similar way after LTV Steel Corp. announced it wouldn't pay health benefits for retirees. Congress then changed bankruptcy law to prevent companies from arbitrarily canceling health benefits.

This isn't a solution it's a joke! It's called delaying the inevitable.

Now here's a real solution to the problem. Letting workers invest Social Security taxes through private accounts would guarantee they don't end up like the poor suckers at United Airlines.

The Pension Benefit Guaranty Corp. is headed for a spectacular bankruptcy following United Airlines' decision to terminate its retirement plan and leave the $6.6 billion burden to the PBGC. That's why the agency was created: to bail out private pension plans that can't make good on their obligations, says Investor's Business Daily (IBD).

US Airways also is in bankruptcy, and it too has dumped $3 billion in retiree obligations on the PBGC. Delta threatens to drop its plan as well. A host of steel companies have already done so. Could General Motors and other automakers be next?

PBGC's deterioration under the onslaught of collapsing private retirement plans is alarming, says IBD:

Last year it ran $23 billion in the red, nearly double its loss of a year earlier. This year, the deficit will likely be even worse.

Just five years ago, PBGC ran a surplus, but 9-11, a recession and bad decision-making by corporate investment managers undercut all that.

Today, private pension funds owe some $450 billion more to their retirees than they can pay.

There is a lesson here and it pertains to Social Security reform, says IBD. With $13 trillion in unfunded liabilities, Social Security's problems dwarf PBGC's. Yet, it's pretty much the same deal: Workers have been promised everything, but there's not enough money to pay for it all.

Workers whose retirement plans are taken over by the PBGC see retirement benefits slashed by as much as 50 percent. The same thing will happen to today's workers in Social Security, says IBD.

Letting workers invest Social Security taxes in private accounts -- ones they actually own, with real money in them -- would guarantee they don't end up like the unfortunate employees of United, says IBD.

Source: Editorial, "(Im)moral Hazard," Investor's Business Daily, May 12, 2005.

6 Comments:

At 3:11 PM, Blogger Sick Boy said...

Didn't Rome, just prior to falling down raise taxes on it's citizens? Was not the legal citizen taxed to pay for "security" in the frontiers of the empire so as to "satisfy" the new "immigrants" who provided their work force? Ahh, the echoes of history. ?

 
At 11:26 PM, Blogger jgp said...

PAT SAID, "Now here's a real solution to the problem. Letting workers invest Social Security taxes through private accounts would guarantee they don't end up like the poor suckers at United Airlines."

And this fixes the pension problem how?

You are saying SS and privitization would have made up for the billions of dollars that, how did you put it, those "SUCKERS" at UAL have HAD STOLEN.

You are mixing apples and oranges here Pat.

The crime is that CONGRESS fiddled away with steroid hearings while the UAL pension pot was beginning to boil over.

It goes back even further, when the ATSB neglected to live up to the congressional mandate to provide loan guarantees to the airlines that were "significantly" impacted by 9-11. If I recall correctly, UAL lost 2 aircraft and 22 crew members. Yet, after making 3 revised attempts for the loan, and exceeding the ATSB requirements on the backs of their employees UAL was denied the GUARANTEE.

This despite the fact the finanacing had been aranged by WALL STREET investment bankers. (EVEN if UAL had defaulted the taxpayer would not have lost a dime as the assets at UAL exceeded the 1.5 bil they were looking to guarantee.)

Regardless the ATSB turned UAL down and said they could procure financing in the capital markets. THIS is the genesis of the pension debacle at UAL. EVERYONE knew that WALLSTREET would not underwrite the loan with the pension shortfall. The Govt knew it.

Now the GOVT is crying crocodial tears that this will cost billions, DUH. All of this would have been prevented with the loan "GUARANTEE".

Secondly, congress could have prevented this default with the stroke of a pen. It was done in Canada a few years back to save the AIR CANADA pensions. All they had to do was pass legislation allowing the pension formula to be recalculated over a longer period of time. But damn, those steroids were just too important.

Now that the horse is out, CONGESS wants to do something. To late for those "suckers" who give their lives and careers to UAL I guess. What a bunch of idiots they were huh? Hell so what, so they have to sell their houses.

Oh BTW, Im one of those SUCKERS at UAL. But just to make you feel better, Im not getting a dime of taxpayer money. You see Im not at least 51 years old, the age the PBGC requires to pay a minimum benefit. Just like the 70% of the other pilots at UAL under 51 who have put in 100's of millions into the pensions that will not get a dime.
Your crying because you will loose pennies while I loose an entire retirrement plan worth countless dollars.

Fix SS, fine I agree with the priivitazation. But even if PRES BUSHES plan had been in effect, it pales in comparison to what I earned.

Pension funding needs to be fixed so that other poor "suckers" dont get robbed of what they have worked life times for.

 
At 4:09 PM, Blogger Sick Boy said...

And where are the Union Reps who people pay thousands a year to "represent" them? Prior proper planning prevents piss poor performance. If I owned a business, promised a pension, went bancrupt, wrote bad checks; do you think I should be bailed out- AGAIN and again? Should of invested in gold, or even the stocks, better rate of return than fat boy union reps. They drive Sevilles don't they? Glad I am young, and haven't had the wool pulled over my eyes by those honorable, trustworthy, pillars of society Dummycraps.

 
At 12:15 AM, Blogger jgp said...

Well Im not sure what the union reps can do about a whole hog government sanctioned stealing of the pension funds. Of course I use the term stealing euphamistically. Actually the greed lies at Wall Streets doorstep, they are the ones insisting that large corporations divest in order for them to invest. They dont give a dam about company promises or employee loyalty.

Everybody thinks that this pension debacle was the fault of the airline or business itself. It actually goes back to '2000 when intrest rates tanked. The pension moneis at UAL, for the pilots at least, were over 95% funded at that time. With the precipitous drop in interest rates the funds that pensions were tied up in took a huge hit and over the years have continued to decline. That tied to the plummet of the industry with the 911 catalyst, SARS (WHICH ACTUALLY LOST the industry more money than 911) huge loss of business trafic, encroachemnt of low cost carriers, security fees, the 35-40% ticket tax and the cherry on top of this disaster, sky rocketing fuel. ( every 1 penny increase in fuel price, costs UAL 60 million more! In 2004 alone UAL was 1.2 billion over budget just due to fuel. Remove that fact and UAL along with all other carriers would have turned operating profits.)

So, in regards to this BAILOUT, where is it?

It has not appeared at UAL.

The Governement had 2 choices allow the pensions to be recalcualted or grab the monies through the PBGC. The govt. chose the latter. There is not one employee at UAL that wants the GOVT s hands on their hard earned cash. As I said unless you were at least 51, yu get NOTHING, even if you had been hired at 20 had been working at UAL the last 30 years, you get butkis. That is outrageous, to add insult to injury those that are getting anything are only getting a percentage of thier EARNED pension and if you were a pilot it will work out to about 30% of what you earned. If this is what is considered a BAILOUT I CERTAINLY DO NOT WANT IT.

As I see it, constitutionally the most important job of the FEDERAL Govt. is defense of this nation. On 911 more than 6 of the hi jackers were on FBI watch lists, yet were free enough to pull of their acts of cowardice.

The GOVT response was to ground all airlines for 5 days. However the airlines had to continue paying for aircraft, employees, airport fees, gate space... . Close any capital/labor intensive endevour down for a few days and see what happens. Then reopen with only 1/3 of your normal business for the next 2 mos. Not too many businesses can survive such an economic hit.

The Govt blew its primary job, and as a result the airlines have been in a tailspin ever since.

There is a school of thought that says, "just let the industry go", survival of the fittest and all that.

The US AIRLINE industry pumps over 900 billion dollars into the US economy every year. That is just shy of 1 trillion, with a "T". Directly and indirectly nearly 1 million people are employes by the airlines, the ac manufacturers their suppliers and on down the line.



In my opinion the GOVT needs to get its hands off of the industry.

We are the most regulated, "DEREGULATED" industry you can find.
We are taxed more than alcohol, tobacco, guns and ammunition. Since when is taking a trip considered a vice? Yet almost 40 dollars of your 100 dollar ticket goes to uncle SAM and into the general fund, it does not and has not gone to the airlines and to airport/airspace improvement.

The GOvt recently MANIPULATED competition at Chicago Ohare. They forced UAL and American to reduce thier schedules under the guise of relieving congestion. Now the "REST OF THE STORY" The govt then went and gave all of those slots to other airlines! No congestion was relieved and the 2 dominant carriers were put at a disadvantage by "FREE MARKET" Pres Bush. The Govt is at it again trying to take away slots from UAL and American. The Govt forced UAL to GIVE AWAY gate space to upstart "low cost" independence air. This is gate space that throught the years UAL had bought and paid for. THEY HAD TO GIVE IT AWAY to the equivalnet of a wetback competitor! Free market rules my ass! It is only free market when it works to the GOVTS advantage.

If you want the GOVT to stop helping the industry. TELL THE FRIGGING US GOVT to get its hands out of our pockets and its paws off of our business.

If this is what you consider a BAILOUT, if this is what you consider HELP. No thank you. They can keep it.

There are 120,000 employees at UAL that will gladly relieve the PBGC of its new found burden.

Write your CONGRESMAN and Senator and tell them to get off of thier collective asses and address this issue.

 
At 8:20 PM, Blogger Sick Boy said...

Chairman Mica is my district rep. Aviation Sub Committee Chair. Chairman Young out of Tampa is Appropriations Chair. FYI.

 
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