The U.S. Taxpayer may have to bailout American Airlines’ Union Pension Plan

Posted by PITHOCRATES - December 4th, 2011

Week in Review

We simply can’t afford pension plans anymore.  Defined benefit plans need to go the way of the dinosaurs and fast.  Most retirement plans have already gone to employee 401(k) plans.  Where the employer pays the employee and forgets about him.  Or her.  Only unions and the public sector cling to these golden parachutes.  Because they know in the end they can get the taxpayer to pay for them when their greed gets the better of them (see US may have to foot American Airlines’ pension bill by NEWSCORE posted 12/1/2011 on the New York Post).

US firms or taxpayers may be on the hook to pay for American Airlines’ massive pension bill, if the bankrupt carrier chooses to drop its pension plans as part of restructuring efforts, the Financial Times reported Thursday.

Joshua Gotbaum, director of the Pension Benefit Guaranty Corporation (PBGC), told the FT that taking on American’s pension plans would worsen the insurer’s deficit and might trigger higher premiums for the companies that finance it.

The PBGC is funded by US firms that offer defined benefit pension plans. The agency insures about 27,600 single employer plans and 1,500 multi-employer plans, guaranteeing defined pension plans for about 44 million US workers…

PBGC has already requested permission from Congress to raise the premium it charges US corporations by $16 billion over 10 years.

America can’t afford a privileged class any longer.  The declining birth rate put an end to that a long time ago.  For pyramid schemes don’t work when the top is wider than the base.

We need to transition from defined benefit to defined contribution.  No more pensions.  People must save for their own retirement with a 401(k), IRA, annuity, etc.  And that goes for Social Security, too.  Not now.  But some future generation will have to pay for their own retirement.  Because sometime in the future Social Security just won’t be there anymore.  Not with a declining birth rate.  And unless you want to establish strict Catholicism as the state religion (no birth control or abortion), that birthrate isn’t going to change.  So that leaves only one option.  No more pensions.  Or privileged classes.

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FUNDAMENTAL TRUTH #45: “The bluest of cities in the bluest of states have the most activist governments, the deepest recessions and the most abject poverty.” -Old Pithy

Posted by PITHOCRATES - December 21st, 2010

Blue States Bleeding Red

We call it the Great Recession.  It started with the subprime mortgage crisis.  Then the dominoes started falling.  And unemployment rates started to climb.  So many people lost their jobs that it wasn’t only banks and auto companies staring into the abyss of bankruptcy.  Our city and states were, too.

But not all our cities and states.  Some were hanging in there during the Great Recession.  There was a pattern.  Sure, it was a rule with some exceptions, but a general rule all the same.  And if you looked at one of those red/blue electoral maps, you could see the states (and the cities) having the biggest financial troubles.  You just looked for the blue.

The blue states are the ‘Democrat’ states.  The red states are ‘Republican’.  And the states that are in the news with financial troubles tend to be the blue states.  The New England States.  The Mid-West states.  And the West Coast states.  The rate of business failures and high unemployment rates have hammered these states.  Taxable income plummeted.  Without the income to tax, tax revenue plummeted.  And these blue states are bleeding red.

Blue States and Unionized Public Sector Employees

These are the Big Government states.  Home for most of the nation’s liberal democrats.  Although liberal democrats make up only about 20% of the national population, most of them live in these states.  And when you pack a lot of this 20% into these small areas, their influence can reach a majority.  And they can control these cities and states.  And do.

These liberals are the guilty rich (anti-capitalist inheritors of great wealth).  Crony-capitalists (anti-capitalists who eschew the free market and bribe politicians in exchange for governmental favoritism).  Big Union (anti-capitalists who eschew the free market and seek legislation that favors them).  The celebrity rich (anti-capitalist movie stars, musicians, painters, artists, etc., who don’t live in the real world).  University professors (anti-capitalists who still have posters of Che Guevara up in their classrooms).  The mainstream media (anti-capitalists who want to shape opinion instead of practicing journalism).  And, of course, the poor and government-dependent.

And then you have public sector employees.  Unionized public sector employees.  And their ranks are growing.  They don’t work very hard.  But boy are they paid well.  And talk about fat benefits.  Pension plans that most can’t even imagine.  They have made themselves a privileged class.  And with their boss having the power to tax, that privileged class will be remaining privileged for a long time to come.  Unless a Great Recession comes along.

Much of Flyover Country not having any Budget Crises

What is flyover country?  It’s that are area of the country liberals fly over when traveling between the West Coast, the Big Union Mid-West, New England and, of course, Washington D.C.  It’s that area in between.  The red states.  You see, liberals fly over the red states because they don’t like them.  Or Republicans.

Because America is a center-right nation, and the liberals have concentrated in the blue states, that has left most of ‘fly over’ country conservative.  And what do conservatives NOT like?  Big Government.  So liberals don’t go where they’ve not welcomed.  For Big Government is the heart and soul of liberalism.

So the red states don’t have Big Government.  They don’t have masses of government-dependent people.  And they don’t have large public sectors.  Or public sector union employees.  Which means they don’t have huge Big Government budgets.  Or budget crises.

The Public Sector Out Paces the Private Sector in the Blue States

But the blue states do.  Their Big Cities are packed with government-dependent people.  And they have a huge public sector to cater to these people.  And a public sector union that pays this public sector very well.  They have pay and benefit packages that are to die for.

Of course, a public sector doesn’t make anything.  They have no goods or services that they can sell in the free market.  They have but one source of income.  Taxes.  And when times are good, taxes are good.  But when times are poor, so are taxes.

Part of the liberal democrat’s strategy to remain in power is to get as many people as possible dependent on government.  This helps make Democrat voters (people who vote Democrat because they are afraid of losing their government benefits).  And justifies their huge government budgets.  So they keep adding people to the public dole.  And keep growing their budgets.  It’s a foolproof plan.  As long as the private sector grows along with the public sector.  So the private sector can keep paying the taxes to support the public sector.  And the privileged class.

Big Government – The Road to Bankruptcy

But it doesn’t always work.  When businesses fail they don’t have any income.  So they can’t pay any income taxes.  And when a business fails people lose their jobs.  And their incomes.  So they don’t pay any income taxes either.  But it doesn’t end there.  Without any income, they can’t buy anything in the free market.  So other businesses see their sales decline.  And have to lay off employees.  And these laid-off people can’t buy anything in the free market.  So more businesses see their sales decline.  And they lay off people.  And on and on it goes.  Where does it stop?  Usually in a bad recession.  Or even a great one.

You add all of this up and what do you get?  Big cities with growing budgets (and growing pension obligations).  And shrinking tax revenue to pay for it.  Costs exceed revenues.  Ergo, bankruptcy.

And some of the states with the most generous public sector pay and benefits are California, Illinois and New York.   Some of the bluest of blue states.  And coincidentally, these are the states facing some of the biggest budget crises.  Actually, it’s no coincidence.  It’s the ultimate consequence of Big Government.  Bankruptcy.

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Hmmm, Help the Economy or Class War?

Posted by PITHOCRATES - September 17th, 2010

Do you know why some Democrats are now urging their leaders to extend the George W. Bush tax cuts?  That’s right, because Bush and the Republicans were right. 

The Democrats want to tax and spend.  But you can’t tax and spend if you don’t win reelection.  And there lies the problem.  They’ve crashed the economy.  Created a permanent underclass.  And shook down the average working stiff to pay for it.  The problem the Democrats have is that there are still too many people who want to have a job.  And until they can take the vote away from these people, they can’t just take their money.  They have to…represent them.  Yeech.  (That would be how these Democrats feel.  Personally, I feel that representing your constituent is a beautiful thing.  So rare these days.)

You see, Democrats are elitists.  They’re part of the Washington aristocracy (which includes RINOs, too).  Life was simpler in the 15th century.  Or so they would think.  And this is what they would say.  If they were honest. 

People knew their places in the 15th century.  The noble classes owned the land.  And the land was everything.  The lord of the manor enjoyed the good life while the peasants worked the land.  Feudalism.  The way it was supposed to be.  Not these days.  This uppity middle class works wherever they want and does whatever they wish.   With no deference to us.  We who are better than they.  No, they act, well, as if they are our equals.  Imagine that!  These impertinent, despicable guttersnipes.

But they’re not honest.  So they don’t say this.  But when they act against the will of the people, they don’t have to.  Their actions speak louder than words.

So now they must deign to listen to these voters.  And these voters want something that’s alien to them.  Jobs.  So they must turn to the alchemy of the Republican Party.  That mysterious witch’s brew.  They have no idea what it is.  But it stimulates the economy.  For real.  It’s one part tax cuts.  Something else.  They don’t know.  It’s all Greek to them.  They don’t know anything about the economy.  But when the Republicans get their way, a crap-load of money comes into Washington.  And they can take it from there.  For they know how to spend that money.  Their money.  So they’ll act like Republicans.  For a little while.  Just long enough to make it through another election cycle.  Then they can stop that nonsense and return to tax and spend.  With a great, big pile of new money.  Their money.  Yeah, that’s right.  To them, it’s all their money.  If only us dunderheads would get it through our thick skulls.

So the Washington aristocracy will call a temporary truce in the class war.  And they will try to stimulate the economy.  And this time it won’t be another spending bill to fund some underfunded union pension plan.  It’ll be something that actually stimulates.  Because it’s for real this time.  It’s election time.

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