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Pension Troubles, Part Two
In a follow-up to our concern over the restructuring of investments at the Pension Benefit Guaranty Corporation (PBGC), the one piece of the puzzle was as yet unknown when that piece was written was what will Congress do, if anything to fix the problem? Well, they offered a solution to the serious underfunding of many of this country's corporate pension plans with a plan to bail them out all courtesy of the Senate, whose version is much different that previously proposed plans from the House. The Senate legislation would allow companies to change the way they calculate those outrageous investment errors made when their speculation in the markets fell onto bad times. Along with many millions of other investors, companies kept far too much money involved in the equity markets in the hopes that over-funding of the plans would lead to higher profits. The Senate bill makes those obligations, pension payments owed to current retirees and the promises made to future ones, look much smaller. The bill totals over $96 billion in relief of which 16% is directed specifically at airline and steel companies and unions. This does little more than put off for another administration what should be paid for today.

The recalculation of these plans, including the one outlined for unions does nothing more than continue to support a smoke and mirrors recovery. If this legislation passes under the pen of the President, he will sign it despite the chatter from the Secretaries of the Treasury, Labor, and Commerce, an ironic trio who also make up the board of the PBGC - whose own funding is in question and liable to lead towards a tax payer bailout.

The solution seems simple. Pass it on to the consumer now. If companies were not allowed to hide their plan's shortfalls, prices would rise to help fund those problems. The other alternative is to increase the deficit further, taking perfectly good money away from the White House slash "taxes and spend plan". Either way, we pay.

Part Three

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