Wow. Is that the sun? Hold on a minute. Let me peek out the window. Yep. Mr. Sol returns to Northeast Ohio. And even though it’s only about 45 degrees, hey, better than the March-like weather we’ve had here for the last few days. Now, if I could just get out and run — hearing the gentle pitter-patter of my dead foot and leg on the concrete. This is going to be a long couple of weeks.
But since I can’t run, I’ll sit here and opine about pensions, promises and federal employees.
Well, it’s not fair — or accurate — to paint Obama and elected and appointed cohorts with the socialism brush. And becoming more like France is most likely the only direction we can take — given our changed demographics as a nation and the fact that the Wizards of Wall Street and Captains of Industry crashed the economy. But saying that — people who are retired, or nearing retirement like me, have to be fretting these days about the future and concerned about what the inevitable changes in Social Security and Medicare will mean. (And note to younger taxpayers: Someone if going to have to pay for all this, even if benefits for social programs are slashed significantly.)
And the fact that promises made about pensions and benefits mean basically nothing these days is frightening — and it should raise concerns for most everyone, not just those grabbing hold of the Golden Buckeye cards. Here’s an example.
I have mentioned in these posts that throughout the nationalization of Government Motors very little has been said about the pensions and benefits of retired or soon-to-be retired employees, blue-collar and white-collar. Bigger fish for the media to fry, I guess. Well, here’s some perspective from a Business Week online article, “GM Retirees Face an Uncertain Future“:
Worrying about the future isn’t new to GM’s 493,000 retirees and surviving spouses, who have watched the automaker lose market share for years. But with the company’s Chapter 11 bankruptcy filing on June 1, retirees have entered a new, uncertain zone. GM’s restructuring will affect salaried retiree health care, some executive pensions, and retiree life insurance, the company says. But details are incomplete.
salaried retirees are more at risk
On June 2, GM spokesman Tom Wilkinson acknowledged that there’s no solid answer for retirees yet, although GM filed a first-day motion to continue employee benefits, including the pension plan. “But that’s not certain until the judge approves the sale of GM,” Wilkinson explained. “I believe the assumption everyone has is that those [employee benefits] will be moved to the new company, but there probably will be some reduction in those benefits.” He added that those reductions are more likely to involve health-care and life insurance benefits—rather than pension payments—for salaried retirees.
Millions of people in this country face this kind of uncertainty and not just in the auto industry. And it’s difficult for most people living on fixed incomes to adjust to significant cutbacks once they are no longer working. (And let’s throw in the stock market crash for good measure.) Yeah, I know. Jimmy Carter, a federal employee with a fixed government pension, said life isn’t fair. And that’s true enough.
But here’s a question. If we are determined to nationalize our economy — corporations, banks and so on — and then pump billions into state and local governments and educational institutions to keep them from going belly up, why not apply the federal government employee model to all employees in this country, public and private?
Here’s from a Washington Post article this morning, “Weighing the Pros and Cons of a Federal Job“:
The Office of Personnel Management provides a comprehensive overview of federal employee benefits on its website, http://www.opm.gov. Some key benefits of federal employment are:
- Health Care. The Federal Employee Health Benefits Program (FEHBP) offers the widest selection of health care plans of any U.S. employer. Federal employees also have access to vision and dental plans, life insurance, flexible spending accounts, and long-term care plans.
- Paid Time Off. Federal employees enjoy liberal amounts of paid time off, including thirteen days of sick leave per year, ten paid federal holidays, and thirteen to twenty-six days of paid vacation, depending on years of service.
- Retirement Benefits. Federal employees have access to retirement benefits through the Civil Service Retirement System (CSRS) or the Federal Employee Retirement System (FERS). Under both plans, retired employees receive an annuity, which is calculated based on years of service and “high three” average pay. The annuity is complemented by Social Security benefits and participation in the Thrift Savings Plan (TSP), which offers 401(k)-type investment options. Retired federal employees also have the option of continuing health benefits at the same monthly cost that they paid before retirement.
Sweet. Wonder who is paying for all that? OK — this isn’t a rant against federal employees, or anyone working in education or the public sector for that matter.
It’s about this. Organizations and institutions lose credibility because they renege on promises — most often involving customer service and product quality. But the trend of reneging on promises made about pensions, health care, Social Security and so on is accelerating. Ask, for instance, those in the airline industry who took some mighty big pension and benefit haircuts. Over the long run reneging on promises is not going to fly in this country, either ethically or politically. Probably not in France either.