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.