Monday, October 24, 2005

Broken Promise Over Pensions

Today on my KMOX show, I talked to Time magazine reporter Don Barlett about his cover story on the broken promise made by corporations to their employees -- work hard and long for us, and we'll take care of you in retirement, with a pension and health benefits.

When United Airlines won the right to gut its pension guarantee earlier this year, I said that it was the first and largest in a row of dominoes that would fall -- that other airlines and corporations would soon follow suit. Sure enough, Delta and Northwest have done so, GM won concessions from its unions over pensions, more companies are soon to make similar moves, and we're on the path to a huge crisis over these underfunded plans. With the PBGC (Pension Benefit Guarantee Corporation) unable to serve as the safety net it was designed as, we're headed for a crash on par with the Savings & Loan crisis of the 1980s.

As Barlett points out, the blame must be placed squarely at the feet of Congress, which changed the rules away from protecting employees and allowed CEOs and other execs to get away with the kind of accounting that would be considered criminal in any other enterprise. You'll hear a lot more about this story in the coming months, and Barlett's piece is an important primer.