Flight attendants strip in protest

[DrSmellThis]

...and let me just say I fully support people's democratic right to speak their minds. :)

http://money.cnn.com/2005/05/16/news/newsmakers/stewardess_strip/index.htm

But United's bankruptcy and pension liquidation raises questions, in light of the new bankruptcy bill Bush just signed:

Why is it that troubled corporations are getting more bankruptcy rights (even as their executives vote themselves enormous raises while their ship sinks) and financially busted individuals -- for whom 50% of bankruptcies are medically related -- much less rights?

Do credit-card companies really need their already wonderful profits to be legally protected that much more (CC execs have described the new law as a "coup" for them), when they are freely choosing to aggressively troll for financially vulnerable customers? Do they really deserve a higher priority than kid's child support, as under the new bill?

If you work your ass off for 35 years for a company and pay into your pension fund, shouldn't those pension funds be separate from the corporation's negotiable assets -- like it is by law in some other democracies around the world?

The assault on the middle class is endless.

[belgareth]

That Bush signed after being approved by our elected representatives! Let's hold all of the bas...s accountable! They can be voted out of office, please remember this next election.

I have mixed feelings about the credit card companies. There is a certain amount of personal responsibility here as well. Financially vulnerable or not, those people incurred those debts freely and knowingly. They do have some obligation also. It's kind of a sore spot with me as a business owner. I've had a client file bankruptcy on me and I am getting less than $0.10 on the dollar, paid over a 5 year period. We had gone through all the proper steps of checking references and credit but still lost thousands of dollars. After looking over his paperwork, the bankruptcy was mostly the result of mismanagement, he even concealed loans to improve his debt ratio. Why should my business suffer for his lack of management skills and dishonesty?

Personally, I rarely use credit. Two cars and a small percentage of a house financed. No unsecured debt and no plastic other than two debit cards: One for personal use and the other for business. It saves me a pile of money over time.

The flight attendents are getting a royal screwing, no doubt about it. I don't know all the details but strongly feel the government has an obligation to protect the employees first in a situation like this. That's where my mixed feelings come in. In protecting the employees will another vendor, like myself, get screwed and have to take it from their employees? I'd like to know more.

[metropolitan]

all i have to add to this is that i saw some of the pictures and damn... they are all from 55 to 64 years old and hot as all hell!
i need to marry a flight attendant, pension or no pension.

[DrSmellThis]

Bel: I come from a long line of small family business owners, and share your concerns. Small businesses are caught in the middle too often. I've also lost thousands from clients not paying. Surely there must be a better, more just solution.

But if your client pays by credit card, don't you get the money regardless of their personal situation?

My hope is that a lot of these corrupt congresspersons lose their seats in 2006. Unless your reps are showing integrity, vote them out, be they democrat or republican!

[DrSmellThis]

all i have to add to this is that i saw some of the pictures and damn... they are all from 55 to 64 years old and hot as all hell!
i need to marry a flight attendant, pension or no pension.Thinking your woman will still be hot at that age definitely scores points! This is one reason I value health consciousness. :wub:

[belgareth]

Bel: I come from a long line of small family business owners, and share your concerns. Small businesses are caught in the middle too often. I've also lost thousands from clients not paying. Surely there must be a better, more just solution.

But if your client pays by credit card, don't you get the money regardless of their personal situation?


I don't take credit cards any longer. Too expensive and too few of my clients want to use them because I primarily serve small businesses. Clients that have been with me for a period of time are set up on an AR system and are billed monthly. This particular company ordered several very nice systems that we delivered about 2 weeks before they filed. It was another of those royal screwings. The computers became assets and were liquidated instead of being returned to me. It wouldn't have made a huge differences because they became used equipment which doesn't yield much when sold. Since, as a matter of policy, I do not sell used equipment I would have had to send it to a liquidator myself. It was a no win situation.

There should be a better way but under current and recent law, there isn't. It seems strange that the small businesses are called the backbone of this country and they are the ones to get screwed the most.

[DrSmellThis]

Here we agree. It is precisely the backbone of our country -- the middle class in general, including small business owners -- that is getting screwed the most in recent years (The poor is also getting hosed).

Recent economics and politics have mostly been about extreme power consolidation.

Makes me want to go on a stewardess bender! :p

[Mtnjim]

Here we agree. It is precisely the backbone of our country -- the middle class in general, including small business owners -- that is getting screwed the most in recent years (The poor is also getting hosed).

Recent economics and politics have mostly been about extreme power consolidation.

Makes me want to go on a stewardess bender! :p
Let's see....
Major companies dump their pension systems, Bush is pushing to dump Social Security, and numerous companies have dropped health insurance. Major companies are consolidating and pushing the "mom and pop" businesses out. Naw, the middle classes and poor are being "taken care of" just fine. Not long now and we'll have a feudal system firmly in place and all the serfs necessary to run it.:whip::whip::box::box::box::whip:

[belgareth]

That sure does sound like where we're going, doesn't it. Do they just get stupid when they go into politics or have they all failed to read any history and seen how such systems fare?

[belgareth]

Here we agree. It is precisely the backbone of our country -- the middle class in general, including small business owners -- that is getting screwed the most in recent years (The poor is also getting hosed).

Recent economics and politics have mostly been about extreme power consolidation.

Makes me want to go on a stewardess bender! :p
Well, my opinion was only tentative. I'm sure we can find something to disagree about, can't we? :rofl: :lol: Wouldn't want to disappoint everybody by us having an agreement, would we?

What do you mean recent? It's been going on for 3-4 decades, at least. It just keeps getting worse for all us poor slobs that weren't born into the elite and haven't managed to steal or cheat our way up there.

[DrSmellThis]

I mean it has continued to get worse over the past 4 decades to where the middle class was doing well in the fifties, sixties and seventies, and is now doing poorly. It seems the past two and a half decades have been markedly worse, though certain critical things started to deteriorate during Carter's term.

Then this downfall of the middle class has really accelerated in the past 3-4 years, as the pandering to power among the elite has lost all vestiges of adherance to integrity, responsibility, and justice; while the various corruptions of power have been almost wholeheartedly accepted and embraced. It just seems that this process is more solidified in the form of leaders' power-oriented beliefs, values, intentions and character; as opposed to mere traits and tendencies. So for example, instead of a company like Halliburton getting an unfair break or three, it just gets all the breaks. And instead of a lie or three, we get only lies.

But the politicians of both parties have been lying to us about the economics of middle class degeneration consistently during the past 25 years, trying to make us think they're doing their jobs.

I guess Jimmy Carter inadvertantly taught other politicians since then, including Reagan, that you never say anything negative about what is generally happening in the country. You paint the turd pink. People will always make it easy to tell rosy lies to them, and it takes courage not to take advantage of that. Unfortunately most politicians are childish cowards. There are exceptions.

[belgareth]

It's interesting to note that Thomas Jefferson saw this coming 250 years ago.

[DrSmellThis]

...as inevitable? I know he saw clearly the potential for various kinds of abuses. Jefferson was a remarkable man, to say the least. But it's logical, not rocket science.

[Mtnjim]

Corporations were temporary entities up until about 100 years ago. They were formed for a specific purpose, and then when that goal was reached, they were dissolved. About a hundred years ago, courts gave corporations "people" status. Since then, corporations, and those running them have been seeking and acquiring power to them selves.

During the past decade or so, this country has become one run more for the benefit of corporations and their overlords and less for the "common man". Now corporations are not evil, their sole purpose is to acquire profits. Those running the corporations and the politicians who are owned lock, stock, and barrel by the corporations are evil and should be removed from office. Unfortunately, those seeking office are those owned by the corporations (with rare exception) so getting the current batch out and replacing with a new group of rats does us no good.

This phenomenon isn't limited only to this country; it is a worldwide occurrence. Some places like China are simply more blatant about it. Soon, we will be living in a world where it is openly acknowledged that everything exists for the most powerful corporations and that people are simply replaceable working stock whose sole propose is to service the corporations.:frustrate

[belgareth]

...as inevitable? I know he saw clearly the potential for various kinds of abuses. It's logical, not rocket science.No, not inevitable but a strong possibility without firm control of the government. Had Jefferson been allowed to he would have placed a long list of 'The Government Shall Not' lines into the constitution. It probably would not have prevented the situation MtnJim describes so well but would have given the people more power to deal with it. The only point I think was missed is that according to current policy, the primary purpose of government is to protect the powerful ruling elite.

Now, the $50 question, what to do about it? As MtnJim said, replacing one group of rats with another is pointless. They are all bought and paid for and will do as their masters tell them to do.

[DrSmellThis]

Stop telling us the truth, Jim! It hurts so good.

But corporations are indeed "evil" in the same way that any actual person whose every cell was completely and absolutely oriented toward making profit in any way possible, to the extreme, and to the destruction of all other values and intentions -- would be supremely destructive to everything but himself or herself; especially if that person was by definition already on another level of power.

An ethics of profit for humanity must mean the end of humanity.

So it is clear that corporations cannot in the future be considered artificial persons with all such rights and powers; except inasmuch the common good is sought by them, and except in particular ways and time frames directly related to their purposes for common human welfare.

That is why the chartering process needs to be completely and utterly different than it is right now.

Chartering should be a matter of degree and aspects, and not cast in stone in a "black and white/for eternity" manner. It should be continually negotiable in relationship to the community, and responsibility should be built into it.

That is the logical solution, short of elimenating corporations. It doesn't have to be achieved overnight, but it must be achieved.

Otherwise we will have created an artificial world of maximum brutality, such as Jim described; a world whose only accomplishment will be to quickly self destruct.

[Mtnjim]

..But corporations are indeed "evil" ... I would disagree in the same manner that a gun kills people or a boat is a smuggler. A gun only kills and a boat only smuggles when the people controlling them choose to.:POKE:

[DrSmellThis]

If the gun was a "person" whose only action and design was to shoot people as often as possible it would be a very bad gun indeed.

Your logic does not make intentional persons of guns and boats, but rather tools. That would be fine, and I'd agree with that scenario.

But as it stands people do not really control corporations in any fundamental sense. They only assist them to maximize wealth. (This is not necessarily as true of very small, private corporations.)

And the people not working for the corporation? Laws regulating corporations are minimal in the same way that those regulating actual people are (and should be in that case). But you can't have the same kind of approach to controlling a "population" of corporations as you would have to a population of people. The control has to be at the "existential level" with corporations, as I described.

Your logical picture is similar to the scenario I painted as regards chartering. In that case they wouldn't have to be evil. Every action and profit intention of every corporation would be rooted in the intentional context of the human community (which would be rooted in the context of the natural community, BTW, but that's a different discussion).

But corporations as intentional persons are indeed evil in the way I described. They don't have the ability to self regulate like people do. Corporations are evil in the same general way cancers are (substitute "eating and reproducing" for profiteering) as well.

But if we could retrain cancer cells to repair and regenerate organs; and move on to something else good when finished; (like some of the stem cell research aims to do) even cancers would be suddenly fine.

[belgareth]

I'll have to agree with MtnJim that corporations are not inherently evil. There is nothing wrong or evil in something created to generate a profit. The evil, if you can use that term, is the people hiding behind it and using the tool called a corporation to do evil for the sake of profit. People do control the corporation, it has no will of it's own but is only a tool of somebody else's.

[DrSmellThis]

I get what you're saying, but that's only practically true of very small, private corporations.

The system is set up so that execs are beholden to shareholders, to maximize their wealth. And for shareholders, it's generic return on the dollar, like putting money in a bank account.

Do you guys see what I'm saying (posts 16, 18)? That system is missing an element.

[belgareth]

I've not seen a corporation yet that did not have a board of directors and a CEO running things. Come to think of it, that is part of the legal definition of a corporation. The corporate entity is not capable of decision making, only the humans running it are, which makes them the source of the problem, if any.

[DrSmellThis]

Again, the board and CEO are beholden to shareholder wealth. They serve the corporation, not the other way around. It's just Business 101 (I do have a business admin degree and was a stockbroker, for what little it's worth here).

So yes, there is always personal responsibility in the equation, but it's a systems issue.

[Mtnjim]

I get what you're saying, but that's only practically true of very small, private corporations.

The system is set up so that execs are beholden to shareholders, to maximize their wealth.

Do you guys see what I'm saying (posts 16, 18)? That system is missing an element.
Example of an "evil" corporation: Enron!!

The leaders and some of the workers acted in evil ways, remember "screwing granny" in California?

The leaders left the workers without jobs or retirement funds.

The leaders left the shareholders "holding the bag" and without profits.

The leaders walked away with huge compensation packages.

The leaders, in this case, will be made examples of (in a loud public way) to distract people’s attention, but will end up with "slaps on the wrist". While leaders of other corporations continue with "business as usual"!

Example of a "good" corporation?

Hmmmm, Ben & Jerry's??

They donate to environmental causes,
They pay a "living wage".
They provide benefits to the workers and community.
While, admittedly, a smaller company than Enron, it's the best I could come up with off the top of my head. Not to mention that there are so few "good corporations" left anymore.

[Mtnjim]

Again, the board and CEO are beholden to shareholder wealth.
Agreed, to a point. They are beholden to a certain segment of shareholders... That's where "insider trading" comes in. They don't give a dang about "Joe Sixpack" and his 10 shares. But when it comes to Dick Chaney and his 100,000 shares, that's a different story.

Anyone see a pattern here. The myth of the "common man shareholder" verses the elite?

[DrSmellThis]

True, that. Good examples. Paul Newman's company is another good example.

But that rarity where normal people take good control of the large corporation just highlights the prominence of the systems issue.

Individual responsibility just makes things lean this way or that in individual cases.

The individual will of CEO's cannot be counted on to exert the necessary control of corporations. Our point of control, where we are holding the gun, is all wrong, from a systems perspective.

It's like having to steer the moving, runaway boat from down in a tiny raft with your hands. Maybe you're affecting the course, but it's a little vain to think you're steering. The solution is inside the system, up on the level of the system (the boat).

On a systemic level, corporations really do function like artificial persons. We need to breathe some soul into them at their existential level, where we create them.

Then the boat might have a captain, the rudder might come unstuck; and only then might it be employed as a tool for our purposes.

That would theoretically go a long way toward fixing the problem, as well as other problems our world is having.

[DrSmellThis]

Agreed, to a point. They are beholden to a certain segment of shareholders... That's where "insider trading" comes in. They don't give a dang about "Joe Sixpack" and his 10 shares. But when it comes to Dick Chaney and his 100,000 shares, that's a different story.

Anyone see a pattern here. The myth of the "common man shareholder" verses the elite?You've added a good nuance here. You could come at it from that angle too. That's the snowball rolling down a hill effect. The whole thing becomes a self-serving, self contained power structure.

[Mtnjim]

True, that. Good examples. Paul Newman's company is another good example.
Yes, I forgot about that. I shouldn't have since I liked him in "Butch Cassidy and the Sundance Kid".

Another example, do you think "Mary Jones, Joe Sixpack's sister" got a call from Whatshisname right after he got off the phone with Martha Stewart to warn her get out before the bad news came out??

AND try and get into the valuable "initial offering" of any reasonably situated new company. Those shares are "reserved" before they ever hit the market.

[DrSmellThis]

That's a feedback loop that makes the core problem of the system that much worse:

You're beholden to shareholder wealth, just as you (or your crony, perhaps The Dick himself) are the shareholder that gets the largest gains in wealth.

Now you're even more beholden, and the corporation is correspondingly even less of a tool for the community; and even more of a cancer, "evil person", or runaway boat.

The "best" scenario in this case is that you become a cancer within a cancer (like Kenneth Lay within Enron), and hurt the "mother cancer's" profits.

Smart CEO's don't typically let that happen, however; dumb ones get replaced; or meanwhile, the societal destruction increases in acuity as the mother cancer gets violently ill; as it did during Enron's malaise.

Here in Oregon we were ground zero for the fall of Enron, who still owns my utilities provider. God I need a stewardess! :twisted:

[Mtnjim]

White House Moves Disability Benefits to The Chopping Block

BUZZFLASH NEWS ALERT

News from the DNC:

Washington, DC - A day after the chief White House economist admitted that the Bush plan to privatize Social Security would include cuts to survivor benefits, the Bush administration also acknowledged that it would not protect disability benefits despite earlier assurances that these earned benefits would remain untouched. This is the latest trial balloon in the Bush administration’s real plan to dismantle Social Security. The announcement may help explain why a new Harris poll found that only 36 percent of Americans think President Bush’s “comments on saving and strengthening Social Security are his real motives for changing the program, while 49% believe his real agenda is to dismantle it.” [Wall Street Journal, 5/13/05]

“For the second day in a row, the Bush administration has admitted that despite past assurances, they never intended to protect Social Security disability and survivor benefits,” said DNC spokesman Josh Earnest. “From steep benefit cuts for the middle class, to risky private accounts, and now no protections for disability or survivor benefits, it’s becoming clearer every day that Bush’s real plan is to dismantle Social Security.”

THEN
Bush: Disability Benefits Won’t Be Cut. “[Bush] said he has no plans to cut benefits for the approximately 40 percent of Social Security recipients who collect monthly disability and survivor payments as he prepares his plan for partial privatization.” [Washington Post, 1/16/05]

NOW
Bush Administration Won’t Protect Disability Benefits. “Future Social Security retirement benefits for disabled workers is a matter for negotiations with Congress as it drafts solvency legislation, the Bush administration said Thursday, declining to say whether they should be raised, lowered or left unchanged. ‘Any plan that maintains current disability benefits will need to address the transition to retirement, and those details will be worked out through the legislative process,’ said White House spokesman Trent Duffy.” [AP, 5/13/05]

BUZZFLASH NEWS ALERT

[Mtnjim]

Fortune magazine says employees counting on company pensions to help fund their retirements may be in for a rude awakening when corporations renege on their commitments and drastically slash expected benefits. The business journal reports the pension plans of the largest American corporations no longer have enough money set aside to pay the more than one trillion dollars in benefits owing to their current and future retirees. Companies calculate their future obligations on the basis of actuarial projections of the revenue they expect their plans’ bond and equity holdings to generate over time. But the stock market and interest rate plunge have played havoc with these projections, and instead of meeting the shortfall – an estimated $240 billion and growing – from profits, as required by law, companies are slashing benefits and – shades of Enron! – employing creative accounting and auditing techniques to disguise future liabilities. The Fortune article painstakingly describes the accounting subterfuges and regulatory changes which are allowing companies to cut the promised retirement income of US workers, but the same pension shortfalls and management evasions characterize private and public sector plans in all of the OECD countries, the effects of which are certain to be felt over the coming decades.
-Supporting facts

Bye-Bye Pension: Soon hundreds of corporations may slash pensions by as much as half

By Janice Revell
Fortune
March 3 2003
On a cold Philadelphia day this past February, 50-year-old Janice Winston received something that warmed her considerably: a $400,000 payment from her former employer, Verizon Communications. The money represented the pension benefits Winston had earned during her 29 years on the job. It was also about $215,000 more than the company had hoped to pay her.

A full seven years earlier, Winston's employer, Bell Atlantic (which later merged with GTE to form Verizon), had made an elegantly simple, barely noticeable change in its pension plan that would have slashed the anticipated retirement benefits not only for Winston but also for thousands of her fellow employees.

What Bell Atlantic (and, for that matter, IBM and some 300 other big companies) had done was to switch its dowdy defined-benefit pension plan to an exciting new type of plan being touted by benefits consultants. Even its name had a dollar-happy ring to it: "cash balance." In the simplest terms, both cash-balance and traditional plans set aside a percentage of an employee's pay every year for a pension. And in both plans the benefit remains "defined"--that is, unlike a 401(k), it can't be slammed by the stock market and is funded wholly by the employer. The difference lies in how that benefit is calculated.

For Winston, a soft-spoken engineer, that new math was going to cause her to lose half her expected nest egg. Hardly the hell-raising type, she didn't organize noisy demonstrations or shout obscenities at management from the building rooftop. Instead, she began a grassroots campaign to force Bell Atlantic to return to the old plan. She sent dozens of e-mails to then-CEO Ivan Seidenberg, hopped into the elevator with him when he happened to visit the Philadelphia office, even flew out to the annual shareholders' meeting in Denver at her own expense to press the issue.

Remarkably, the strategy worked. In early 2000, Bell Atlantic reversed course, allowing thousands of employees to remain in the company's traditional pension plan. And when the company merged with GTE, it even sweetened the plan--hence Janice Winston's big fat payment last month.

It makes a really sweet story. Unfortunately, it's unlikely to repeat itself for millions of other employees. We'll go a step further: Brace yourself for a very un-fairy-tale ending to this story. Millions of American workers are sure to see a large slice of their retirement income go up in smoke. It may not happen right away, but the groundwork is being laid right now. Of course, people have been saying for years (including people at this magazine) that economic necessity--the chasm between the cost of promises made and companies' ability to keep them--leaves management no choice but to reformulate, rethink, and in some cases renege on post-employment benefits for their workers. What's new in the past few months is that they're quietly taking action. The profoundest benefit cuts will happen perhaps a decade or more from now--but you may as well add them to your retirement worry list, alongside those limp 401(k)s, rocketing health-care costs, and underwater stock options.

To some, especially those brought up in the new economy, pensions may seem like a holdover from the days when people envisioned retirement security as a three-legged stool, in which the first two legs are Social Security and household savings. And to be sure, the share of American workers with company pension plans has progressively slipped in each decade--from almost 40% at the beginning of 1980 to about 20% now.

Still, for those in many giant companies--more than 70% of the FORTUNE 500 --pensions remain a very big deal. From the oil-futures trader at Exxon Mobil to the drug researcher at Eli Lilly, the plans cover 23 million active workers and pay more than $111 billion each year to another 21 million who are already retired. One way or another, those benefits are going to be sharply curtailed--whether through a cash-balance conversion or other changes we'll discuss in a bit. Warns Dave Hilko, a principal and benefits consultant at Deloitte & Touche: "There's no guarantee on these pension plans any more."

That is not to say that company managements are wholly to blame for the sudden turnaround. As FORTUNE reported in December, the lethal combination of a cratering stock market and plunging interest rates has played havoc with the finances of corporate pension plans. For the first time in years, the plans don't have enough money set aside to pay for the $1.2 trillion or so in benefits that they owe current and future retirees. The size of the shortfall? Some $240 billion, or more than half of what they earned in 2002. That shortfall is forcing companies to pour billions of additional dollars into the plans and is whacking billions more off earnings.

Shareholders, to put it mildly, are not content with the status quo. After all, the money going into pension plans is ultimately coming out of their pockets. The stocks of companies with some of the worst pension problems, like General Motors, Ford, Delta, and American Airlines' parent, AMR, have been absolutely pummeled. In executive suites throughout the country, CEOs and CFOs are taking note. "It's not okay to say to shareholders, 'We can fix this over the next ten years,'" says Mike Johnston, who heads the North American retirement practice at benefits consulting firm Hewitt Associates. "Companies have to fix it now."

Of course, the best way out of this mess for everyone involved--shareholders, companies, and employees alike--would be a nice, sharp rebound in the stock market during the next year or two that just blows away that $240 billion pension deficit. Whoops--we're back in fairyland again. Credit Suisse First Boston estimates that if big corporate pension plans generate an average return of 10% on their stock market holdings in 2003, they'll still have to pump some $29 billion into their plans. In 2004, they'll have to shovel in another $44 billion. (For the record, the S&P 500 is down about 5% this year.)

No, the real salvage work is happening on the liability side of the equation. Translation: Benefits are going to be cut. A lot of companies may even be tempted to just dump their costly defined-benefit plans and replace them with cheaper 401(k)-type alternatives. There's reason to believe it would have happened a long time ago if there hadn't been such compelling tax and accounting reasons for sticking with traditional plans. (More on that later too.)

But first, let's get to the "right now." Many companies are right now lobbying furiously to make a subtle--yet for many employees, potentially damaging--change in their pension plans. It involves tinkering with the interest rates they use to calculate how much they owe workers. To figure out how much money needs to be in its pension plan, a company's financial officers must calculate the present value of its obligations, or what it would cost in today's dollars to make good on the benefits promised to workers when they retire. To determine this minimum funding level, companies factor backward using a so-called discount rate, which by law is tied to the 30-year Treasury bond. Simply put, when the discount rate goes up, the present value of a company's pension obligations shrinks. And that lowers the dollars a company has to put into its pension plan today.

But just as a stock market rebound is no sure thing, companies can hardly count on a sharp increase in interest rates anytime soon. So in an effort to remove this annoying uncertainty, companies are pushing federal lawmakers to let them use higher-than-mandated interest rates--about 1% to 1.5% higher, to be specific--when calculating pension liabilities. If they're successful, it will make a huge difference in the health of their pension plans, at least on paper. According to Ron Gebhardtsbauer, a senior pension fellow at the American Academy of Actuaries, each percentage-point increase in interest rates would decrease the pension liabilities of companies by about 10% to 12%. That's no small chunk of change, considering that a slew of large companies are shouldering pension liabilities in excess of $1 billion.

Permitting companies to increase the discount rate used in determining pension obligations would have a side effect, naturally: It would decrease the amount paid out to workers who take their pension income as lump-sum payments when they retire--by as much as 20% or more, according to Gebhardtsbauer--since those payments are also based on the discount rate. Congress, which sets the discount rates that pension plans must use, is expected to make a decision on the issue this year. The word on the Hill is that corporate America will get at least some relief on this front.

But even if employers get their way with discount rates, most observers say that change alone won't be enough to dig many out of the pension hole. To get out completely, a number of companies are simply going to slash retirement benefits. And it looks as if they're sharpening the axe: According to a survey released in January by Deloitte & Touche, 40% of major pension-plan sponsors are seriously considering cutting the benefits they offer under their traditional plans. What's more, regulations proposed by the Treasury Department in December would make it much easier for them to do so.

The proposed regulations give companies, for the first time in three years, the okay to convert defined-benefit plans to the cash balance version. That's despite the fact that an army of critics has labeled such conversions discriminatory against older workers and in violation of federal pension law. In fact, by late 1999 the plans had generated so much controversy that the Internal Revenue Service, which as part of the Treasury Department determines whether pensions qualify for tax-favored treatment, stopped sanctioning them.

In essence, the new regulations would end the IRS moratorium and make it easier for companies that convert to ward off age-discrimination suits like those launched by the employees of IBM and AT&T. It's no surprise that the proposed regulations have worker groups and others screaming foul. "What we're seeing is a massive assault on the pensions of millions and millions of workers," says Vermont Congressman Bernie Sanders, who along with 216 other Congressmen and Senators sent a letter to President Bush asking him to quash the proposed rule change.

To understand why, a quick review of how pension plans work is in order. Traditional plans are back-loaded--that is, a worker's retirement benefits accrue slowly during his first few years on the job and then increase sharply toward the end of his career. In a typical plan, benefits are based on a formula that incorporates years of service and salary--for instance, an employee may accrue a pension benefit equal to 1.5% multiplied by his years of service, and multiplied again by his average salary during the last five years on the job. So after one year of service, a worker's annual retirement benefit may equal just 1.5% of his salary; after 30 years, that amount may have ratcheted up to 45%.

In cash-balance plans, by contrast, benefits accrue evenly throughout a worker's career. Every year the company contributes a fixed percentage of the employee's salary, say 5%, to a hypothetical retirement account, which in turn earns a hypothetical rate of interest, often tied to the 30-year Treasury rate. Cash balance plans tend to be a big hit with younger employees, because they can rack up retirement benefits much faster than they would under a traditional plan. They're also more favorable to job hoppers, since employees who leave a company can take whatever they've accumulated in their retirement accounts with them, provided they've been with the company for a specified minimum length of time, usually five years. Less than a third of traditional plans offer this feature.

But while cash-balance plans may be highly appealing to younger workers, critics say that when employers convert traditional plans to the cash-balance variety, older workers are hit hard. Here's why: Under a cash balance plan, a 25-year-old and a 60-year-old earning $60,000 each might get the same $3,000 pension credit. But that $3,000 is obviously worth more to the 25-year-old, who will receive 40 years of compounding returns on the money before reaching normal retirement age, than it is to the 60-year-old, who has only five years left to retirement. And that, say some, flies in the face of the federal law governing defined-benefit plans, which states that the rate of benefit accrual cannot decrease on account of age. "Most cash-balance plans are in violation of the statute," says Norman Stein, a law professor at the University of Alabama who also sits on the Department of Labor's advisory council for employee retirement plans.

There's yet another doozy of a math trick that plays out during a conversion to a cash-balance plan--often it can whack as much as 50% from a worker's expected retirement benefits. When a company makes the switch, it calculates two amounts. The first is the value of the retirement benefit to which the employee would be entitled if he left the company at the time of conversion. That's done by figuring out the present-day, lump-sum value of the pension benefit the worker has already earned, using a discount rate. The lump-sum value for a worker with 20 years' service, for instance, might equal $100,000.

The second number the company calculates is the employee's "opening account balance" under the new cash-balance plan. That amount is also based on the present value of what an employee has earned to date. But here's the rub: Instead of using a discount rate that's tied to the 30-year Treasury bond, the company can use a rate that's higher--say, by 2%. And as we've noted earlier, the higher the discount rate, the lower the present value of the lump sum. What's more, when companies convert to a cash-balance plan, they also eliminate the early-retirement subsidies offered in most traditional plans, typically to employees aged 50 and older. Those subsidies can add tens of thousands of dollars to the value of a worker's pension. But since they're eliminated under the cash-balance plan, the opening account balance doesn't have to reflect their value.

The net result is that the opening account balance for our hypothetical employee could be far lower than the value of the benefits he's actually earned to date. It might be, say, $60,000 instead of the $100,000 he'd get if he walked out the door right then and there. The problem is, if our employee were to stay put, he wouldn't earn any new pension benefits until his opening account balance "caught up" to the $100,000 he had earned under the old plan. In essence, his pension would be frozen for years to come.

That's exactly what Larry Cutrone, a former tech worker at AT&T, claims happened to him when the company converted its traditional plan to a cash-balance plan in 1998. Cutrone, 55, was downsized from his job in September 2001, and says the conversion has slashed his pension from the $47,000 a year he had expected to just $23,000. A Vietnam vet, Cutrone says he feels like "collateral damage." A company spokesperson defends AT&T's cash balance plan as fair.

Not all companies that switch to cash-balance plans do so in a way that harms older workers. In the best-case scenario, firms will offer all employees the choice of staying in the old plan. FedEx told FORTUNE that it intends to convert its traditional plan to the cash-balance version later this year, but the company will offer all employees the option of remaining in the old plan. The company will still save money over the longer haul, but not as much as it would if it weren't offering the choice. "We wanted to do the right thing by our employees," says spokeswoman Sandra Munoz.

That kind of protection is rare: According to a 2000 study by the government's General Accounting Office, only 9% of companies converting their plans to cash balance offer all employees the choice of remaining in the old plan. About two-thirds offer partial transition benefits that lessen, but do not eliminate, the blow. The GAO study estimates older workers typically experience pension-benefit reductions ranging from 20% to 50% when cash-balance conversions take place.

Under the proposal now before Treasury Secretary John Snow, cash-balance plans would not be deemed age-discriminatory if older workers receive at least the same percentage of pay in their cash-balance accounts each year as younger workers do. In other words, when the conversion takes place, older workers could still find themselves with pensions that are essentially frozen for years to come. And the proposal calls for no requirements to provide employees with transition benefits. Public hearings on the regulations are scheduled for April 9, after which Snow will make a final determination.

Most Capitol Hill observers don't expect the proposed regulations to pass in their current form. That's not just because the Treasury Department fears recriminations from employee groups or Democratic legislators. Companies that want to implement cash-balance plans aren't happy with the regulations either: They feel the proposals are too vague regarding what's considered age-discriminatory. The likely outcome is that Treasury will refine the regulations after the hearings and submit new proposals later this year.

But here's a news flash: It doesn't really matter what Snow decides. Many companies are going ahead with pension plan conversions anyway--and betting the IRS won't disallow them later. The stakes are simply too high to do nothing. Take Delta Air Lines, which in November announced that it is switching its 56,000 non-union workers to a cash-balance system. Workers who retire within the next seven years will be allowed to choose either the old plan or the new one, whichever works out best. According to the company, the switch will result in a savings of about $500 million during the next five years. "Unless these steps are taken, Delta's retirement expenses would increase at an unsustainable rate," says executive vice president Bob Colman in a press release. Vanessa Joe, a Delta flight attendant for the past 15 years, says she understands why the airline is doing what it's doing but thinks all long-time employees should have the option to stay in the old plan.

Consumer groups, as you'd expect, are crying foul about any substantial changes to employee pensions. "If you've made promises to older workers in their 40s or 50s and they've relied on those promises, it's not fair to change the rules of the game," insists Karen Friedman, a director at the Pension Rights Center, a consumer watchdog group.

Fair or not, though, companies can change the rules of the game virtually anytime they want. That's a central tenet of America's corporate pension system: It's entirely voluntary. By law, a company is obliged only to pay what its employees have already earned under an existing plan. Cutting future pension benefits is perfectly legal, as long as the cuts apply equally to all plan participants and don't discriminate against older workers.

What's more, if the government forces companies to offer older workers the option of remaining in their traditional pension plans, many businesses will likely pursue alternatives that could leave workers far worse off. For instance, an employer might simply choose to freeze its defined-benefit plan altogether (that is, pay only what workers have earned to date) and replace it with a 401(k), in which employees themselves put up the bulk of the cash. "No company is going to continue with a plan that locks it into heavy liabilities and extreme rules," says Mark Ugoretz, president of the ERISA Industry Committee, a lobbying group that represents big corporate pension payers. "Rather than be saddled with a permanent and costly commitment to maintain the status quo, employers will abandon the system altogether."

Why haven't more companies dumped their old plans already? For starters, during the stock market boom of the late 1990s, big pension plans were overflowing with billions of dollars in surplus assets. Thanks to the arcane rules surrounding pension accounting, companies booked the gains on pension assets into reported earnings--some, like IBM and General Electric, were able to goose annual profits by 9% or more. More important, perhaps, were the tax consequences: If a company had terminated its plan, it would have had to pay a whopping 50% tax on the pension fund's surplus assets.

Today, that pension income has been replaced by pension expense--CSFB estimates that pension losses will subtract $25 billion in net earnings from the S&P 500 in 2003 alone. So if you can't at least trim your losses, why not drop this unsustainable burden and run?

It's worth noting that it's not unionized employees who are likely to see their pensions slashed. Defined-benefit pension plans are a crucial component of the collective bargaining agreements negotiated between companies and unions--and the latter aren't predisposed to accept cash-balance conversions. "I don't know of any negotiations out there where it's on the table," says Gordon Pavy, a collective bargaining specialist with the AFL-CIO. Indeed, conspicuously absent from Delta's changeover are the airline's 8,000 unionized pilots.

And that has fed into an already increasing tension between union and non-union workers over employee benefits. Janice Winston says that was certainly the case at Bell Atlantic, where unionized employees were excluded from the company's original conversion to the cash-balance plan. "Our argument was that if it's not good enough for the union employees, why is it good enough for us?" she says. In fact, the pension crisis appears to be creating a whole new class of worker advocate. "That's the irony of these abuses," says Friedman. "We've seen a new kind of activist born in this country. They're white-collar, they're highly sophisticated, and once they become activists they don't stop."

No, they may not stop--but that doesn't mean they'll win. In fact, one retirement benefit that's long been considered a given for the baby-boom generation--subsidized early retirement--is almost sure to die off in the next few years. "Most traditional pension plans have created a labor-market effect that many employers have decided, rightly or wrongly, they no longer want to have," says Dallas Salisbury, president of the Employee Benefits Research Institute in Washington, D.C. "It's the retired-in-place syndrome. You have employees who are 48 years old, they hate their job, they hate the company, but they know they'll cross a magic threshold at 50 or 55." And that threshold is just becoming too expensive to keep in place, say benefit consultants. "We can't afford as a society to continue to pay people to leave a company at age 55," contends Larry Sher, a principal at benefits consulting firm Buck Consultants in New York City. "It can't be sustained."

Deloitte's Hilko offers, however, what may be the single most important message for the millions of baby-boomers lucky enough to still be counting on a lush pension in retirement: "Don't take for granted what you have today.

[Mtnjim]

http://www.reclaimthemedia.org/stories.php?story=05/05/04/5127004
Counterterrorism in the newsroom
posted by rtm on Thursday May 05 2005 @ 02:38AM [ Media Literacy/Bias ]
Mobilizing Against an Orwellian System of Definitions
by Mark Hand, Alternative Press Review

When segments of the U.S. mainstream media began describing Iraqis
resisting U.S. occupation of their country as "terrorists," you knew
the militarists in Washington had won a decisive victory in the
propaganda wars. The guerrilla fighters were no longer just
"insurgents," the term that all major media outlets adopted in the
summer of 2003. The Iraqi resistance had graduated into "terrorists."

It doesn't get any more mainstream than Newsweek, the Washington Post
Co.-owned newsweekly. In its Feb. 7, 2005 issue, the magazine described
Sami Muhammad Saeed al-Jafi as "a terrorist demolition man who
confessed to 32 car bombings over the last two years" in Iraq. In the
same article, Newsweek recounted how American warplanes dropped six
guided bombs on a large villa about 11 miles outside the city of Ramadi
that killed 21 members of a family, including a dozen children. Nowhere
in the piece did Newsweek use the "t" word to describe the American
bombers.

The news media has always had double standards in its coverage of U.S.
foreign policy. The media's selective use of the word "terrorism" to
describe what's going on in Iraq today proves once again such
value-laden words should be forbidden in newsrooms across the nation.

Through the ages, the label of "terrorist" has been used as a
propaganda weapon by nation-states against people and groups who
oppose, sometimes violently, the policies of government. The U.S.
mainstream media long ago embraced the government's definition of
terrorism, which typically applies to the exploits of non-state actors
but also gets attached to "rogue" states such as Iran, Syria and Libya.
On the rare occasion the media references acts of terrorism committed
by a Western state, the person or group making such a claim is painted
in a derisive light.

In a different world, with a revamped news media, reporters would be
allowed to refer to the 9/11 attacks as acts of terrorism without being
guilty of hypocrisy as long as they referred to the U.S. government's
conduct in Afghanistan and Iraq as terrorism. The same rules would
apply to the actions in Iraq of America's junior partners, Britain and
Australia, as well as Russia's actions in Chechnya and Israel's conduct
against the Palestinians. And so on.

Terrorism is exemplified by hijackers flying airliners into office
buildings in New York City and pilots dropping bombs from warplanes
onto buildings in Fallujah. It's not one or the other. Terrorism is
action that involves causing physical injury or death ("violence") to
innocent people ("non-combatants") to further an ideological cause.
Using this definition, what occurred in New York City on 9/11 certainly
qualifies as terrorism as do the actions of the U.S. government in Iraq
and Afghanistan during the past three-and-a-half years.

Christopher Hitchens, a cheerleader for the U.S. invasions and
occupations of Afghanistan and Iraq as well as NATO's intervention in
Yugoslavia in the 1990s, has written extensively on the use of the word
"terrorism" and prefers that reporters and commentators reserve using
the "t" word only in reference to the most heinous acts of violence.

"All parties to all wars will at some time employ terrorizing methods.
But then everybody except a pacifist would be a potential supporter of
terrorism," Hitchens wrote in a Nov. 18, 2002 article on online
magazine Slate. "And if everything is terror, then nothing is - which
would mean we had lost an important word of condemnation."

Hitchens isn't averse to using the term terrorism to describe the
actions of governments - just not the conduct of the U.S. and British
governments. He's attacked President Clinton for ordering a cruise
missile strike on a pharmaceutical plant in the Sudan and Henry
Kissinger for his role in various nefarious activities while working
for Presidents Nixon and Ford. But they weren't acts of terrorism,
according to Hitchens. And don't hold your breath waiting for him to
describe any of the military adventures launched by his favorite recent
American president, George W. Bush, as acts of terrorism.

In fact, Hitchens attacked Noam Chomsky when the MIT professor dared to
compare the 9/11 attacks to Clinton's bombing of the Sudanese
pharmaceutical plant. After much taunting by Hitchens, Chomsky
responded:

"That Hitchens cannot mean what he writes is clear, in the first place,
from his reference to the bombing of the Sudan. He must be unaware that
he is expressing such racist contempt for African victims of a
terrorist crime, and cannot intend what his words imply. This single
atrocity destroyed half the pharmaceutical supplies of a poor African
country and the facilities for replenishing them, with an enormous
human toll. Hitchens is outraged that I compared this atrocity to what
I called 'the wickedness and awesome cruelty' of the terrorist attacks
of Sept. 11 (quoting Robert Fisk), adding that the actual toll in the
Sudan case can only be surmised, because the US blocked any UN inquiry
and few were interested enough to pursue the matter. That the toll is
dreadful is hardly in doubt."

Hitchens' rules for the use of terrorism are essentially the same as
those adopted by the mainstream media. In Hitchens' world, the U.S.
destruction of Fallujah in late 2004 was part of the U.S. government's
noble "war on terrorism." In a November 2004 speech at Kenyon College
in Ohio, Hitchens referred to the U.S. military's actions in Fallujah,
explaining that "the death toll is not nearly high enough . too many
[jihadists] have escaped."

The mainstream media essentially agreed with Hitchens' interpretation
of the siege of Fallujah, refusing to describe the U.S. military's
conduct as terrorism. Instead, the media has essentially bought into
the U.S. government's spin about the occupation representing one front
in the "global war on terror."

Edward Herman explains in his book "The Terrorism Industry" that the
mainstream media have identified the main terrorists of the world - the
United States and other aggressive nation-states - as victims engaging
in "counterterror." This identification has become particularly acute
since 9/11 as the media has adopted the government's propaganda term
"war on terrorism" not only in its editorials and commentary but in
news stories.

Since George W. Bush declared his "war on terrorism," some dissident
commentators have pointed out that the war on terrorism can never be
won. Nor can it ever end. Neither result is logically possible because
"terrorism" is a policy of both state and non-state actors, not a
tangible enemy. Hence, any war waged against it can neither have a
winner nor an ending.

Plus, if Americans were to wage an honest "war on terrorism," they'd
first have to target what Martin Luther King Jr. described as the
greatest purveyor of violence in the world today - their own
government. Americans would be forced to reject the pronouncements of
their mass media, which would continue to follow a national agenda and
party line on terrorism.

Mass media owners and reporters generally believe in the exceptional
character of the state and the benevolence of its leaders, Herman
writes. "Under the force of such symbolism, the mass media close ranks
with the government, and the media's capacity to challenge the state
agenda and terminology, already compromised by normal sourcing
practices, is suspended altogether," Herman explains. "A full-scale
propaganda campaign can ensue with full mass media cooperation and
complete suspension of any watchdog service. The government is allowed
to define the key words and issues, inflate their importance at its
discretion, and mobilize useful symbols."

Herman's analysis sounds extremely familiar because it applies
perfectly to how the mass media today has embraced the U.S.
government's "war on terrorism." His descriptions also represented the
media's behavior in the 1980s when the "The Terrorism Industry" was
first published. In fact, the analysis applies to all modern
governments and mass media outlets that have been faced with threats to
"national security."

James Bovard writes in "Terrorism and Tyranny," a book released in the
post-9/11 era, that the word "terrorism" must not become "an
incantation that miraculously razes all limits on government power."
"Excessive trust of government can be subversive of democracy," Bovard
says. If Bovard is correct in his assessment, the mainstream media
could be found guilty on many counts of subverting democracy, based on
its subservience to the state, especially on issues related to foreign
policy.

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[Mtnjim]

Copyrighted work reprinted here is for educational non profit purposes. It was offered free to me on the internet (as a member of a wide audience) and is copied here free to others (adding to its value)—it is fair use of the work.
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May 23, 2005

America Wants Security

By <http://www.nytimes.com/top/opinion/editorialsandoped/oped/columnists/paulkrugman/index.html?inline=nyt-per>PAUL KRUGMAN

It was a carefully staged Norman Rockwell scene. The street was lined with American flags; a high school band played "God Bless America."

Then, under the watchful gaze of Wal-Mart's chief operating officer, Maryland's governor vetoed a bill that would have obliged large businesses to spend more on employee health care.

The news here isn't that some politicians wrap their deference to corporate interests in the flag. The news, instead, is that Maryland's State Legislature passed a pro-worker bill in the first place. In fact, the bill passed by a veto-proof majority in the Maryland Senate, and fell just short of that margin in the House.

After November's election, the victors claimed a mandate to unravel the welfare state. But the national election was about who would best defend us from gay married terrorists. At the state level, where elections were fought on bread-and-butter issues, voters sent a message that they wanted a stronger, not weaker, social safety net.

I'm not just talking about the shift in partisan alignment, in which Democrats made modest gains in state legislatures, and achieved a few startling successes. I'm also talking about specific issues, like the lopsided votes in both Florida and Nevada for constitutional amendments raising the minimum wage.

Since the election, high-profile right-wing initiatives, at both the federal and state level, have run into a stone wall of public disapproval. President Bush's privatization road show seems increasingly pathetic. In California, the conservative agenda of Arnold Schwarzenegger, including an attempt to partially privatize state pensions, has led to demonstrations by nurses, teachers, police officers and firefighters - and to a crash in his approval ratings.

There's a very good reason voters, when given a chance to make a clear choice, increasingly support a stronger, not a weaker, social safety net: they need that net more than ever. Over the past 25 years the lives of working Americans have become ever less secure. Jobs come without health insurance; 401(k)'s vanish; corporations default on their pension obligations; workers lose their jobs more often, and unemployment lasts much longer than it used to.

The latest Wall Street Journal/NBC poll showed what the pollsters called an "angry electorate." By huge margins, voters think that politicians are paying too little attention to their concerns, especially health care, jobs and gas prices.

At the state level, many, though by no means all, politicians are responding to those concerns. The push to raise the minimum wage is a useful political barometer: seven states have raised the minimum in just the last two years.

True, there are limits on what state governments can do: they fear that if they do too much for workers, they'll drive business and jobs away. I'd argue that the fear is often exaggerated. For example, Wal-Mart may avoid states that force it to provide health insurance, but given the hidden subsidies the company receives - one way or another, taxpayers end up paying a lot for uninsured workers - this may not be such a bad thing. Still, any major strengthening of the safety net will have to come at the federal level.

Why, then, is Washington so out of touch?

At a gala dinner in his honor, Tom DeLay cited his party's recent achievements: "bankruptcy reform, class-action reform, energy, border security, repealing the death tax." All of these measures are either irrelevant to or actively hostile to the economic security of working Americans.

Yet as Mr. DeLay boasted, many Democratic members of Congress also voted in support of these measures. In so doing, they undermined their party's ability to claim that it stands for something different.

So where will change come from?

Everyone loves historical analogies. Here's my thought: maybe 2004 was 1928. During the 1920's, the national government followed doctrinaire conservative policies, but reformist policies that presaged the New Deal were already bubbling up in the states, especially in New York.

In 1928 Al Smith, the governor of New York, was defeated in an ugly presidential campaign in which Protestant preachers warned their flocks that a vote for the Catholic Smith was a vote for the devil. But four years later F.D.R. took office, and the New Deal began.

Of course, the coming of the New Deal was hastened by a severe national depression. Strange to say, we may be working on that, too.

E-mail: <mailto:krugman@nytimes.com>krugman@nytimes.com


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