Beware of wealthy CEOs who are lecturing the rest of us about tightening our belts.
While America’s CEOs are fretting about the government’s so-called “fiscal cliff,” millions of American workers face a financial disaster that gets much less media attention. There’s a half-trillion-dollar deficit in the nation’s worker retirement benefits.
The Great Recession, which decimated retirement assets, played a big role in building this lesser-known cliff. But many corporations could have avoided the problem by shoring up these funds during the boom years. Instead, they siphoned pension assets for other profit-boosting purposes. When the pension deficits started to balloon, many corporations responded by slashing back their benefit programs.
As a result, Americans today are more reliant on government-funded Social Security and Medicare programs than at any other time in the last 60 years.
What’s even more outrageous is that the very same CEOs who have contributed to rampant retirement insecurity are now calling for cuts to these earned-benefit programs for senior citizens.
Nearly 100 CEOs have banded together to convince the American public that Social Security and Medicare lie at the root of America’s fiscal challenges. Their “Fix the Debt” campaign features plain-spoken Americans in their ads and sounds moderate because they call for both spending cuts and revenue increases.
But the real objectives of the campaign include massive new corporate tax cuts and reduced spending on Social Security and Medicare, which would likely involve raising the retirement age.
American workers, at present, cannot collect Social Security and Medicare until age 66, the highest retirement age among rich countries. In 2020, the Social Security retirement age will rise to 67, assuring that American workers will be toiling longer than any other industrialized country for years to come. In contrast, Japanese and Chinese workers can collect their equivalent of Social Security starting at age 60.
The Fix the Debt campaign’s CEO supporters need not worry about Social Security because they’re members of the “I’ve Got Mine Club.” Fifty-four of the CEOs leading Fix the Debt directly benefit from lavish executive retirement programs. Their collective pension assets total $649 million, which comes to more than $12 million per CEO. That’s enough to garner a $65,000 retirement check each month starting at age 65 that will continue for as long as they live, according to a new report by the Institute for Policy Studies, which I co-authored. In contrast, the average retiree receives just $1,237 from Social Security each month.
Yet, the firms headed by Fix the Debt CEOs owe their U.S. pension funds more than $100 billion, according to the IPS study. U.S. law requires corporations to keep their pension debts to manageable levels, but this pressure has often resulted in benefit cuts.
General Electric, which has a staggering $22 billion pension deficit, shut down its pension fund last year, saying it had become a “drag on earnings” (at a whopping cost of 13 cents per share, according to their estimates). Like many other firms, GE has shifted new employees to a less costly 401(k) plan, putting the risk for poor stock market performance onto employees.
Beware of wealthy CEOs who are lecturing the rest of us about tightening our belts. American workers would be far better off if CEOs worried more about fixing their own companies’ pension debts.
Scott Klinger is an Associate Fellow at the Institute for Policy Studies, and co-author of A Pension Deficit Disorder: The Massive CEO Retirement Funds and Unfunded Worker Pensions at Firms Pushing Social Security Cuts. IPS-dc.org
Except where otherwise noted, content on this site is licensed under a Creative Commons Attribution 3.0 License.
Looking for something?
New on bluetabletalk…
- The Parched Truth About American Jobs
- When Are 12-year Olds Sex Offenders?
- Obama Admin Secretly Obtains Trove of Associated Press Phone Records in “Unprecedented Intrusion”
- Failing to Heal: Hunger Strikes in Guantánamo and the Role of Medical Professionals
- US Foreign Policy on Trial in Guatemala’s Genocide Trial
- Future Politics: Fast Forward or Full Reverse
- Survival of the … Nicest? Check Out the Other Theory of Evolution
- Victory for Lake County 8th Grader as School Board Settles Gay-Straight Alliance Lawsuit After One Day
- America Wages War on Sex
- How Reinhart-Rogoff and the Austerians Produced a Sloppy Scholarly Fraud
- National Day of Reason Reaffirms the Separation of Church and State
- Breasts: A Natural and Unnatural History
- Dump the AARP
- Why Pride, Dignity and Respect Hold the Key to Ending Violence
- ACLU Statement on Miranda Rights of Boston Bombings Suspect
- Painting a Grim Picture of Art Education
- Following Push by ACLU, Lake County School Board Decides Not to Ban All Clubs
- The Case for Platonic Marriage
- CEO Pay: The French Have a Better Idea
- Fracking the First Amendment
The good man understands what is right,
the bad man understands profit.
“The greatest country, the richest country, is not that which has the most capitalists, monopolists, immense grabbings, vast fortunes, with its sad, sad soil of extreme, degrading, damning poverty, but the land in which there are the most homesteads, freeholds — where wealth does not show such contrasts high and low, where all men have enough — a modest living— and no man is made possessor beyond the sane and beautiful necessities.”
–Walt Whitman (1819-1892)
'He leaves us a lesson, which is to never accept any injustice.'
–The French President, François Hollande, speaking of Stéphane Hessel, dead at age 95.
“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered…”
Around the web…
Above the law"The laws, Cicero wrote in the days of the Roman Republic, “are silent in time of war.” But what if the war has no end, no defined enemy, no defined territory? How can markets work if the financial behemoths are too big to fail and too big to jail? If the national security state has the power of life or death above the law, and Wall Street has the power to plunder beyond the law, in what way does this remain a nation of laws? " --Katrina van Heuvel
Waking From My Moral Coma"It is the killing, it is the permanent war, it is our deranged national priorities. It is the system we live under which requires the serial deaths of all those innocents to maintain our economic health that should appall us. We sup upon the blood and bonemeal that is the byproduct of the idea that is America, and we sleep. And we sleep." -William Rivers Pitt
- Diana on Is Your Bubbly Soap Making the Kids Sick?
- Bob HILL on Vocabulary for the New Millenium: Reconciling Independence with Interdependence
- Gerry Tatham on Alan Grayson. “Aaron Swartz, R.I.P.”
- Rabbi Stanley Howard Schwartz DD on Alan Grayson. “Aaron Swartz, R.I.P.”
- j j on SOTU 2013: Not a Game-Changing Agenda
Globalizing Torture: CIA Secret Detention and Extraordinary Rendition