"Turnaround artists" trash worker pensions and leave the bill to taxpayers

[swag]

http://www.nytimes.com/2005/09/18/business/18pensions.html

Whoops! There Goes Another Pension Plan
By MARY WILLIAMS WALSH
Published: September 18, 2005

excerpt . . .

The same financial alchemy has been performed at Polaroid and US Airways, at textile companies like Cone Mills and WestPoint Stevens, and at a host of smaller companies over the last four years. And bankruptcy specialists say that it is almost certain to keep happening, because shedding pensions - and pensioners' health care obligations - is turning into an irresistible way to make a high-risk investment pay off.

"It's become a kind of system to bail out companies," Thomas Conway, vice president of the United Steel Workers of America, said of the pension corporation, which Congress created in 1974 to protect retirees if their employers went bust. "People have been able to use it tactically, as a business strategy, and I don't think that's what Congress meant."

Over the long term, the rate of defaults is clearly rising, said Lynn M. LoPucki, a professor of law at the University of California, Los Angeles, who has tracked the large companies that have shed their pension plans while in bankruptcy since 1980.

Less obvious is precisely how the trend will ultimately affect retirees, who sometimes have their pensions cut in the process. The cuts appear to be hitting more and more workers, but the government has not calculated how many since 1998.

Nor is it certain how the trend will affect taxpayers, who may wind up on the hook if the rising tide of failed pension obligations overwhelms the resources of the pension corporation. A year ago, when the agency last reported its balance sheet, it had $39 billion in assets and $62.3 billion in liabilities, leaving a shortfall of $23 billion. The Congressional Budget Office on Friday estimated that the deficit will widen to $86.7 billion by 2015 and $141.9 billion by 2025.

. . . more

[GAspnes]

1. even the businessmen admit it's a bad loophole

I don't doubt that they're playing by the rules of the game, but the whole Pension Benefit Guarantee Fund law, while well-intentioned, was badly written.

Certainly Northwest Airlines is looking at the option...

http://www.startribune.com/stories/535/5620558.html

"As devastating as the step could become for employees and shareholders, industry analysts say the company now has an extraordinary new opportunity to overhaul its aging fleet, escape from under billions of dollars in pension obligations and revamp work rules from another era."

My brother saw the handwriting on the wall when he left American. His choices were (a) stay with the pension plan, or (b) take a lump sum. He picked (b), which is turning out to be the more lucrative option.

[Journeyman]

2. What I'd like to know is why the People and their Government. . .

should be on the hook to help those who had the misfortune to be employed by lying scumbags (who were sold pie-in-the-sky scenarios of happy retirement), while those citizens who were fortunate enough to work for companies that made no pretense towards lies about caring (who offered no pensions and made no promises of future care) must suffer in silence and want.

In other words, why protect the fools who believed in corporate largesse at the expense of those who lived their lives with no baseless illusions?

[swag]

3. It would be nice

had the law been written more carefully to protect workers and retirees, rather than to allow corporations to reneg on their promises and stick the taxpayers with the bill.

[Journeyman]

5. But why protect workers and retirees AT ALL? . . .

No one is ensuring that non-pensioned citizens have any protections, so why should those who foolishly believed that a self-serving corporation gives a damn whatsoever about them be protected in the pipe-dream they chose to live? If we as citizens are to be forced to make good on some corporate wet dream bought into by gullible fools, why don't we go one step further and demand that every company must provide a pension?

I live with no illusions about the goodness of corporate America. Why must I be forced to pay so that ignorant fools can retain their fantasy?

[swag]

8. Perhaps your question would be better asked at lewrockwell.com

or some such place, but the short answer is that society and capitalism tend to work best when capitalism is counterbalanced by some level of government regulation of enterprise (so as to avoid Enrons and the like, and to ensure faith in the transparency of corporate activities and confidence in the capital markets, lest there be more Worldcoms waiting in the wings), and when underpinned by some level of social safety netting, so that problems like poverty can be limited or mitigated for the benefit of all.

This administration and congress have done everything to destroy these counterbalances and social underpinnings, and we see every day the results of their efforts.

[Journeyman]

9. So if someone has no such "safety net". . .

because they realized decades ago that corporate malfeasance and government complicity were two sides of a coin, and chose at that time not to participate in a criminal scam, why should they be required to now subsidize the ill-considered actions of people who cannot or will not recognize the realities of the day.

You said so yourself: the present government and the corporations it has covered for are doing everything to destroy the "counterbalances and social underpinnings" of a purely fictitious reality. Surely you don't believe all this destruction to be product of merely the past five years?

[swag]

12. I would say that we have actively degnerated to the status quo over the

past 25 years (beginning with the age of Reagan), not the past five years. Further I would suggest again that your "realities" reflect not reality, but a corrosive meat-and-potatoes style cynicism that has been engendered by many decades of Republican, corporate and Libertarian (i.e., of the free-market fetishist variety) propaganda that has, unfortunately, provided a self-fulfilling prophecy for the nation.

Again, what seems to be your central argument might find a better home on a libertarian site.

It all depends on what sort of society one wants to live in, I suppose. We are living in one that seems very much guided by the thoughts you profess. I would prefer to live in a civil and functioning society.

To each his own.

[Journeyman]

13. Until the society you envision encompasses all. . .

it's just so much blather with only a select few enjoying its benefits. If that's what you hold as civil and functioning, you've a long way to go to gain an appreciation for the fullness of humanity.

On edit: Why aren't you arguing that the benefits of this "compassionate society" be extended to all, instead of merely afforded to those who find themselves in the foolish position of having depended on the corporate liars for the fictitious reality they've lived, that they would be taken care of in retirement by the same corporate slugs who now want to rob them.

Argue that EVERYONE should have a pension and medical care for life, not just those who put their misguided trust in the corpos. and maybe I'll see that you truly care about people and aren't just looking after your own ass.

[swag]

14. "Why aren't you arguing that . . . "

Because argument to absurdity is obviously your forte, and I could never hope to vie for your crown.

I am obviously a capitalist, albeit one who advocates strong corporate regulatory controls and good social safety nets.

It's unclear whether you're a collectivist or an extreme libertarian. I suspect it shall remain so.

[Journeyman]

15. Yes. It's absurd for me to want everyone to be well cared for. . .

while your "capitalism" extends to your pocketbook and dies a lonely death within your self interests. What, pray tell, is absurd about wanting everyone to have the "social protections" you feel are so important for yourself?

Again, you don't give a shit for anyone who doesn't have what you have, so why concern yourself with anything beyond that which serves your limited needs.

And what sort of "capiitalist" are you? A corporate officer with directional control, or just some simple lackey who hopes the government will step in when the need arises to save you from the mistakes you've made in putting your trust in a predatory beast?

Me? I've owned my company for over a decade, and employee seven people whom I pay very well and don't bullshit about what I can and cannot do for them.

[swag]

16. You are making several unfounded accusations against me.

Shame on you.

Nevertheless, I am almost as proud of you as you are of yourself.

Charge on, capitalist hero!

[SoCalDem]

6. In the 70's , steel mills started to close

and car manufacturers were hemorrhaging with debt and low sales , due to the first "oil crisis".. The PBGB was about the ONLY way to protect the workforces of those (and other industries) from losing their pensions.

It used to be..when a business declared bankruptcy they were DONE. Employees cut loose, business boarded up. The newer bankruptcies of businesses are "tactical" bankruptcies. The businesses are just traded like baseball cards, between the same group of super-rich "entrepreneurs..The very existence of the PBGB, allows them to keep doing it. The workers are mostly non-union these days, so it's even easier to get away with. and most companies have shifted the retirement responsibility away from the companies and onto the workers.. Employees these days are more like "outside contract workers", so companies change ownership and rules like most of us change underwear.. employees don't like it?..they can quit or wait at their desks to be outsourced.:grr:

And YES.. the "lowly taxpayer" always takes it in the gut.. Why do you think the rich folks are always wanting and getting tax cuts? THEY don't want to pay for their own dirty deeds...they expect (and get) us to do it for them./.

That's how they KEEP their money.. WE pay for their mistakes and deliberate malfeasance

[antigop]

7. Let's take your argument one step further

Why should those citizens who are fortunate enough to work in areas not subjected to hurricanes have to pay for those who do?

Why should FEMA exist? If those people want to live in hurricane areas and in areas below sea level, that's their choice. Why should the rest of us have to pick up the tab?


Be careful what you wish for...

[Journeyman]

10. As I would expect my fellow citizens to come to my aid. . .

if my region were devastated by an earthquake, so I will (and have) come to the aid of those victims of other natural disasters. The needs of the nation are ever present in all such natural calamities.

What I question is why those who have no stake in corporate pensions have to support those who have such a stake? After they've supported you to ensure you have the money promised you by criminals and incompetents, when and how do those without such ephemeral promises collect their due share?

Be careful who you believe should be robbed to pay debts owed solely to you. . .

[annabanana]

4. yet ANOTHER "starve the beast" tactic....

There will be nothing left that we can call "American" when everything we consider "public" has been sold or scraped to pay the bills....

There will be no "there" to America...

[OneBlueSky]

11. when the needs (or wants) of corporations supersede those of . . .

individual citizens, this country is in deep trouble . . .

the ethical thing for these companies to do would be to liquidate and go out of business, with the proceeds going to fulfill their pension obligations to the people who made their companies successful in the first place . . .