BCT Editorial – 7/21/05

This page was last updated on July 23, 2005.

Pension ploy; Editorial; Beaver County Times; July 21, 2005.

Below is a detailed critique of the subject editorial.

“Corporate welfare in the United States is growing more popular with each passing day.

“Cox News Service reports that because of high fuel costs, there is more than a 50-50 chance that Northwest and Delta airlines will seek bankruptcy within the next 12 months, and that American and Continental airlines might not be far behind them.

“When that happens, they’ll no doubt dump their pension obligations on the Pension Benefit Guaranty Corp., the federal agency that insures private pensions.”

[RWC] The editorial fails to note a Democrat-controlled Congress created the PBGC in 1974. A liberal Republican president – Richard Nixon – signed the bill. Once again we have a liberal “chicken” coming home to roost.

I wonder what the Times editorial position was on the PBGC in 1974.

“Once they are free of their pension obligations, as US Airways and United Airlines already have done, they will become much more attractive to investors, who then could make a killing by buying low and selling high.

“If you want to see how this scenario might play out, look at what happened in the domestic steel industry.

“The Philadelphia Inquirer reports that when the International Steel Group Inc. was sold to Mittal Steel Co. NV, lead investor Wilbur L. Ross Jr. made profit of $260 million on a $31 million investment. A group of investors, including mutual funds and steel-company executives, walked away with similar gains.

“And U.S. taxpayers, as the backers of last resort for PBGC, made these sweet profits possible.”

[RWC] No, the Democrat-controlled Congress and President Nixon “made these sweet profits possible.”

“But the five steel companies that were bought up by ISG, one of which was LTV Steel Co., came gift wrapped after U.S. Bankruptcy Court judges allowed them to cut severance benefits, including health-care coverage, and dump long-term pension obligations for nearly 190,000 former and current employees on PBGC. The paper reports that ‘left some retirees with sharply lower retirement incomes, and left the rescue fund ... with responsibility to pay $6.4 billion in pensions that the companies had promised.’

“PBGC’s obligations are numbingly high. The Inquirer reports that the federal government now insures pensions that are underfunded by $450 billion, a 20-fold increase from the late 1990s.

“The irony in regard to American and Continental is that, as Cox reported, they would be in good shape if not for high fuel costs, which means their stock most likely would soar once their pension obligations were dumped.

“Nobody wants to see retirees or current employees denied their pensions, albeit at reduced amounts, but this is corporate welfare, plain and simple.”

[RWC] No kidding, and it was made possible by liberals as noted above.

Make no mistake, the Times doesn’t oppose corporate welfare. Indeed, many of the so-called economic development positions taken by Times editorials implicitly foster various forms of corporate welfare.

“The investor class gets to pocket millions upon millions of dollars while those who were stripped of their pension and health-care benefits get nothing in return for their sacrifices, sacrifices that, along with the PBGC pension dump, made these profits (and future ones) possible.”

[RWC] The so-called “investor class” comprises over half the families in the U.S.

You’ll note there’s no mention of the role of union management in the pension mess. If labor unions are so good at looking out for their members, why didn’t their contracts address adequate funding of pension plans? If elected liberals are so concerned with the welfare of the “working class,” why didn’t they enact legislation to ensure adequate funding of pension plans?