By James Kwak
Several weeks ago, I wrote a column criticizing the “Fix the Debt” CEOs for saying that we should raise taxes while not mentioning the one tax break that means the most to them as individuals—the preferential rate for capital gains—and, in many cases, giving money to the presidential candidate who promised to protect that tax break for them.
A friend pointed out another glaring example of these CEOs’ hypocrisy. Of the CEOs in Fix the Debt, 71 lead public companies; of those, 41 have employee pension funds. Of those, only two pensions are fully funded; the other pensions are underfunded by an average of $2.5 billion, according to the Institute for Policy Studies.
More generally, according to the same source (see full report), S&P 500 companies’ pensions are only 72 percent funded. Social Security, by contrast, will pay full benefits for the next twenty-some years, and will pay about 75 percent of scheduled benefits thereafter even if nothing is changed. And those company pension funds benefit from the lax standards of private pension accounting, which allow them to assume optimistic rates of return. Social Security’s funding estimates have much less risk because it is paid for by interest on Treasury bonds and by payroll taxes, which are much less volatile than the stock market.*
So when anyone tells you that we should listen to so-and-so because of his success in the business world, run far, far away. Luckily we learned that lesson in time for November 6.
*Someone is sure to point out that company pensions are underfunded relative to being pre-funded, while Social Security is a pay-as-you-go system. But that’s beside the point. The federal government has the power to collect payroll taxes, which is why we can count on future program revenues. Corporations do not have the power to unilaterally raise prices on their customers (without losing sales), so they can’t reliably increase revenues in the future; that’s why they are supposed to be setting aside money today.
The Baseline Scenario 
Reblogged this on RD Revilo.
Nice to know that the federal government has such a secure revenue stream. It’s just so simple. Raise taxes. I already work half a day so that others can stay at home and enjoy my labor. Why not make it more? Now the people at work are like **** it and do a crappy job. Thanks liberal scum. You have made this slave’s life a living hell.
“….while not mentioning the one tax break that means the most to them as individuals—the preferential rate for capital gains—…”
So let’s hope someone, during the negotiations, is sticking with this tax break and putting it out there as a new source of revenue from those people for whom this is their only source of income – people who don’t *work* for a wage/salary/hourly rate. It’s definitely a *welfare* tax – their personal welfare :-)
I’m not sure which is the greater hypocrisy, that so many of the pension funds are underfunded or that over 40% of these CEOs don’t feel the need to even offer pensions, but rather shift the risk to their employees and the social safety net. The report also tells us that 54 of the 71 CEOs have pension plans, 13 more firms than offer them to their employees. The average value of those plans is a shade over $12M, which makes for one hell of a pension payment.
I have to object strongly to saying Social Security “will” do anything for the next twenty-something years or thereafter. These are projections that are educated guesses at best — and overall, for the last 20 years they have been somewhat too conservative. When we say SS “will” pay 75% after the Baby Boom surplus is finally used up, that is a projection of what the pay-as-you go revenue will be at that point. We really barely have a clue how accurate that will be. It conveys a false sense of certainty — and one usually used to undermine the program — to say something “will” happen.
I have been surfing online more than 3 hours today, yet I never found any interesting article like yours. It is pretty worth enough for me. In my opinion, if all site owners and bloggers made good content as you did, the internet will be a lot more useful than ever before.
To: “anon”
You’re welcome, conservative bitch.
Anon:
How does that work? 50% of your productive time and income go to others who ‘stay at home and enjoy your labor’? I’m guessing you’re talking about Social Security and Unemployment insurance? So for 50% of your time to be paying for about 25% of the U.S. budget, you must be in the… what… 200% tax bracket? Nice trick.
Please visit Earth more frequently in the future. You may learn something.
James Kwak = denial
No one could ever say Republicans weren’t the masters of hypocrisy. For example every 4 years going through the motions of inviting minorities to speak at the convention (get ready for that in 2016). But you have to give Republicans credit, they always knew the exact right time to call “Boy!!!! Hey BOY!!!!” to entice the big one up on the porch:
And Republicans knew the exact correct time to say “Boy!!! Boy!!!… you better stay in the work field and stick to your own devices and contrivances, BOY, we don’t need your filthy hands to cook our children’s food today.”
http://www.okgazette.com/oklahoma/article-17138-what-would-jc-do.html
Mr. Watts has now figured out it’s not so useful to Republicans anymore to yank Mr. Watts around to different events around the District of Columbia, fundraisers and party conventions as his Republican masters are saying “See here…?? Looky here now you Yankees. Looky here!! We treat these BOYS good. See, this boy looks mighty happy now, don’t he??”
Some day in the future someone will hopefully do research in behavioral psychology on how extended time in the military gets the mouse through the most self-destructive parts of the maze. Until then we’ll have to hope someone slips General Powell some truth serum and asks him “how on God’s green Earth did an above average intelligence man fall for that beckoning up to the porch??”
anon:
What color is the sky in your world?
These CEO’s aren’t worried about the fact that some day the SS trust fund will run out of special bonds. They object to the fact that for the foreseeable future, those bonds will have to be redeemed. And that might add to pressures for the government to raise taxes to redeem those bonds and do the other things that government does.
Question: how do you know when a CEO is LYING?
Answer: His/her lips are moving.
Originally it went like this.
“I can tell that you are lying, because your lips are moving”.
It was in reference to cock sucking kids, and the tattoo’s they carry around with them in their adult lives. We don’t harp about it much now cause the damage is done. As far as CEO’s go. A is for arrogance, B is for bigotry, And C is for cliff onomics.