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12/02/2004

More Pressing Than Social Security

My last post on privatization of Social Security got such a good response I thought I should throw some more gas on the fire.

While Republican lawmakers and the Bush Administration are sounding alarm bells for Social Security, a program that will run out of money in roughly 40 years, there is a much more pressing issue that nobody wants to deal with. We are 16 years away from an S&L style bailout of bankrupt pension plans.

"The federal agency that insures workers' pensions said this week its deficit for traditional corporate retirement programs doubled to a record $23.3 billion, prompting renewed hand-wringing on Capitol Hill about the sorry state of private retirement plans."

Wait, did they say private retirement plans? As in privatization of Social Security? And yet this fool proof plan is resulting in a record number of pension bankruptcies. And why, you may ask, are these private pension plans failing at a record pace? "Private pensions have been battered by an unstable stock market, soured investments, low interest rates, and a failure of companies to commit enough funding to support weak plans. Those problems show up as a steady rise in the number of newly failed plans, from 92 in 2000 to 192 last year." Did I hear that right? An unstable stock market has caused 100 huge private pensions to go bankrupt in just four years? It's probably just a coincidence that this happened under the watchful eye of George Bush.

As the above quote mentions, there are no laws requiring companies to fully fund their pension plans that their loyal employees count on. Instead of Republicans making corporations step up to meet their obligations, they allow these companies to run to the government for a bailout. The government will in turn run to the taxpayers for a bailout. All the while these corporations and their exorbitantly paid executives are reaping the benefits of the Bush tax plan catered to benefit them. I guess we are still waiting for all that money to "tickle down".

Don't take my word for it, here is what Bernard Wasow a senior fellow and economist at The Century Foundation, a nonpartisan public policy institution has to say, "Are Social Security privatization and trouble at the PBGC related? You bet. The trouble at the PBGC illustrates the great risks involved in retirement planning, risks that have swamped enough private pension plans to require a Congressional bailout. Yet the Bush administration is proposing to wind down the only part of retirement income that is secure -- guaranteed against the business cycle, inflation, and corporate malfeasance -- and replace it with risky private accounts, with no guarantees at all."


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