May 27, 2005
The pension crisis, caused by United Airlines' $10 billion pension default and the Pension Benefit Guaranty Corp's (PBGC) operating deficit, has prompted capitalists to create a solution. Their answer: socialist measures. If they succeed, American corporations will shift their employee obligations from the private sector to taxpayers, says John B. Roberts II, who served in the Office of Planning and Evaluation and the Office of Political and Intergovernmental Affairs in the Reagan White House.
This goes beyond corporate welfare, he says. Corporations are looking to offload their costs onto government, while preserving transnational access to markets, consumers and labor. The idea of capitalist-socialism has pushed CEOs to support universal health care, since the annual price of premiums is rising and health insurance costs sink troubled companies into bankruptcy.
The pension crisis brings us to this point, says Roberts:
- Most of the 30,000 defined-benefit pension plans that exist today are concentrated in our least-competitive industries.
- These pension plans are underfunded by $450 billion.
- A wave of pension plan terminations over the past 18 months has damaged the PBGC?s financial condition, leaving it $23 billion in the red.
Proposed legislative changes designed to preserve private financing and ensure the PBGC?s solvency have hit a barrier. Businesses oppose the changes because they create new costs for companies. As a result, Congress and the White House are considering a taxpayer bailout, says Roberts.
But the government cannot afford to pay for promises to employees that corporations break. According to Roberts, Congress should enact the proposal that businesses "pay-as-you-go" into the PBGC's reserves to keep the system alive. But globalism drives corporations to cut costs and businesses can no longer afford to provide employee benefits.
Source: John B. Roberts II, "Capitalist-socialism," Washington Times, May 18, 2005.
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