Bushites continue their pension attack

Sheriff
Bush put on his holster after Wall Street failed to heed Preacher Bush’s
sermonettes. The new disguise worked momentarily, and market indicators went
up. Townsfolk cheered as three bad guys — Adelphia Communications founder
John Rigas and sons — were arrested and booked for “one of the most extensive
financial frauds ever to take place at a public company,” as the SEC put it.
Adelphia had already filed for bankruptcy, with $18 billion in debt.

                  The debacle is another insult
to the Buffalo-Niagara region, and thus to Rochester and other communities at
the whirlpool’s edge. According to the Buffalo
News, 200 Adelphia jobs are going down the drain, and 1500 more are threatened.
The company may survive in some form by “making lemonade of the lemons the
Rigases bequeathed,” said the News editors.

                  One big lemon may finally be
squeezed out. A planned Adelphia office tower in downtown Buffalo — corporate
welfare writ tall — is now on hold. But the company’s stock price has done
great damage well outside the walls by helping sink 401(k)s in mutual funds.
For example, a recent report from CNN/Money,
drawing on Morningstar, names big player Vanguard Windsor. This fund, says the
report, is now “struggling at the bottom of its category… because of stakes
earlier this year in Adelphia Communications and WorldCom.”

The occupant
of the White House tries to sound tough. But he’s stumbling through a script
his elders wrote, one that will cause aging communities like Buffalo and
Rochester infinitely more pain than the Rigas gang ever could.

                  Bush still is threatening the
biggest and best — and for some people, only — pension plan we’ve got. In
the face of a boom-bust episode vaguely reminiscent of the 1920s, he’s still
calling for partial privatization of Social Security. And forget the “partial”
business; it’s clear that some Bushites dream of wholesale privatization or
even abolition. Last summer, treasury secretary Paul O’Neill told the Financial Times that “able-bodied adults
should save enough on a regular basis so that they can provide for their own
retirement, and, for that matter, health and medical needs.” This should have
caused, but didn’t, a Rocky Mountain-size firestorm.

                  Such talk is a direct attack
on places like Rochester. Look at the data. According to the 2000 US Census, in
Monroe County there are 6,681 individuals 65 and over who are living in
poverty. Many others in this age group are less than well off. Mean household
retirement income in the county is just over $18,000; mean household Social
Security income is $12,000 and change.

                  The Social Security
Administration says an American with “steady, low earnings since age 22” who
retires this year at age 65 will get $682 per month. Chances are this
individual, the typical $6.50-per-hour worker, has little or nothing beyond the
SS benefit. So he or she — most often she — must get by on $8,184 per year.

                  And many people are worse off,
of course. A friend told me about an 80-something woman who lives in an urban
high-rise on just over $500 a month in Social Security. The woman told my
friend she hadn’t bought a new bra in 20 years. Now, the middle class is
accustomed to slumming for fun at local secondhand clothes outlets and garage
sales. But you can bet they’re not looking for used underwear.

                  All this argues not just for
protecting Social Security against the Bush whackers. It implies (no, it
screams) that we must increase the benefits and maintain the COLAs which
literally keep so many retirees alive.

We need to
shore up the private portion of retirement security, too.

                  Recent horror stories — the
incredible vanishing 401(k) at Enron and Global Crossing, et al. — should
make us turn back to defined-benefit plans.

                  But how to get there? Despite
its corruptions or because of them, Big Business still rules the neighborhoods
that count: Wall Street and Pennsylvania Avenue. Opposition is building in the
wings — thank the goddess for Ralph Nader and the Greens. But for the near
term, we’ve got to save people from the ancien
régime that never dies. To paraphrase a statement from the first Great
Depression: Long-term solutions are necessary, but people retire every day.

                  I know that ethics and
business mix about as well as carrying water for Harken Energy mixes with
drilling for Bahrain oil. But a basic ethical question must be addressed; there
will be no resolution to the retirement gamble until there’s a philosophical
shift. We need to acknowledge what we owe others, not just ourselves. And the
more we think about “personal accounts” — not just the Bushite carve-outs
from Social Security but also the 401(k)s and their ilk — the behinder we
get.

                  First, let’s get real about
our relation with those who bequeathed an economy to us. As a class, retirees
deserve the good life, not just a few crumbs.

                  Yes, many retirees do have it
good. But half of all retirees get 90 percent of their income from Social
Security, says economist Ellen Frank, a professor at Boston’s Emmanuel College
who specializes in the “macro” issues of investments and returns. All retirees,
says Frank, must “have a claim” on the economy. That is, they must be treated
not as inconveniences but as full participants in community life, which for
good or ill runs on money. Indeed, where do those Social Security checks go but
into the local supermarket and drugstore, not to mention the landlord’s bank
account?

                  But Frank wants us to think
outside our freight containers of assumptions and social habits. For one thing,
she points out that some countries give lots better entitlements. For example,
she says the German government guarantees everyone 80 percent of pre-retirement
income for life.

                  In the US, that sort of social
contract will be a long time coming. But Frank sees lesser possibilities here
that could do great good.

                  Citing the work of University
of Notre Dame economist Teresa Ghilarducci, Frank suggests we look at some kind
of “multi-employer plan.” The idea is classic: spreading benefits and risk
around, so individuals and households won’t end up like post-Enronites. As
Frank describes it, such a plan could be simple and close to the people it
serves. Community organizations and credit unions, she says, could administer
shared investment plans in safe vehicles for thousands or maybe tens of
thousands of people. This, she adds, would take the burden off small businesses
that can’t afford good plans.

                  Check out Ghilarducci’s idea
at the Pension Rights Center (www.pensioncoverage.org). Ghilarducci’s summary
convincingly claims that an “alternative multi-employer plan” can solve many
common problems associated with retirements. First, an AMP makes it easier for
smaller employers to sign on, and it eases the burden of competition with
similar employers. An AMP also “can take advantage of savings on large group
annuities and professional management fees” — savings that aren’t available
to the lone individual or business.

                  And for all you young folks
out there: Plans like AMPs, says Ghilarducci, are suited to “new economy” jobs.
That’s because the plans solve portability problems for workers who go from job
to job (voluntarily or not) or become self-employed.

                  Come to think of it, younger
workers need to hear this message most of all — because they’re precisely the
ones who’ve been enchanted by “fixed-contribution” plans, corporate
wheeling-and-dealing, and the Big Lie that Social Security is broken.

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This article appears in Aug 7-13, 2002.