I don’t really have time or the brain cells at 1:00 AM to write about the latest AIG feeding frenzy, but I do feel compelled to put something out there to counter the Boston.com article suggesting that the taxpayers are now funding outrageous pension benefits.
Let’s be clear: Non-qualified benefits are subject to forfeiture, are not protected in bankruptcy, and are the absolute last thing that would be paid if the company were liquidated. If the government takes full ownership, there would be no benefits paid on those non-qualified contracts. They are required to be subject to risk of forfeiture in order to retain their tax-deferred status.
Qualified benefits are the same benefits that anyone — not just executives — covered by a pension plan can earn. They are based on salary paid of $235,000 or less, and are subject to statutory limits. These limits apply whether you are the CEO of AIG or the owner of a vegetable stand on the corner.
Here is the text of a comment I left on Crooks & Liars with regard to this issue:
Before you aim at these plans, you’d better learn about them.
As I said on Twitter, everybody wants to hate AIG. Me, too. But taking aim at their qualified retirement plans because they have to disclose the value of accrued benefits on the balance sheet is an ignorant attack, one that would be far better left alone. For starters, the calculation of benefit values and liabilities for balance sheet purposes bears almost no relationship to reality, or the actuarial requirements for pension funding set by the Internal Revenue Service. Simply put, the FASB standards for pension benefits inflate the numbers by a minimum factor of 2.
All qualified retirement plans, whether AIG, or Granny’s Home-Grown Beet Farm down the street, are subject to the same rules. There wasn’t an exception made for AIG.
[A] comment earlier in this string starts to touch on the problem that AIG and many others (including the UAW, and other “friendly entities” to Dems) have, which is that the value of the assets will be substantially lower to fund those benefits than was reflected on the balance sheets you used for this post. That means that accrued liabilities are likely to double, and if AIG does declare bankruptcy, some (but not all) of those benefits will be insured by the PBGC — the Federal Government’s version of pension insurance, similar to the FDIC.
Don’t stir the pot with this. It’s already a disaster, but if progressives start taking aim at this, and turning up more Congressional hearings, and the House writes a bill aimed at hammering AIG, every single person in this country who is lucky enough to still be covered under a Defined Benefit plan (after they’ve been used as a tax carrot and stick depending on the state of the economy for the past 20 years) will lose future benefits.
A feeding frenzy is unnecessary here. Step back, do some research first, (feel free to email me on pension questions, or contact someone at http://asppa.org for details before going off on this. As one who has worked in this field for nearly 30 years, I guarantee you that attacking qualified benefits will have repercussions that will reach down to union workers and employees of the smallest businesses. It’s ignorant to walk this road.
As one who has navigated 25 years of pension legislation written at the whim of the current mood or revenue need of the day, I seriously hope that we can limit our criticism of AIG to the (many) legitimate issues on the table. The pension liabilities on a balance sheet are not one of those issues.
(As a side note, the FASB standards for reporting and valuing pension benefits bear no relationship to reality. Similar to the mark to market rule, accountants and actuaries seem to have difficulty agreeing on much of anything).
Gobsmacked. Astonished, even. How can people who claim to be educated not understand a simple concept: What you say carries weight? It matters.
Words can be used to inspire, uplift, discourage, denigrate. They affect markets and moods. Not saying or responding is as powerful as shaking your fist at someone, but ultimately it takes words to create culture wars, wars between nations, wars between people, misunderstandings and missed connections. (This isn’t news to anyone. I just felt the need to say it. Again.)
This week brought a stunning array of some of the most irresponsible use of words I’ve seen in a very long time.
Let’s begin with Rick Santelli over at CNBC. I have long held the opinion that CNBC wields far too much power with regard to how it reports financial news and how that news is received. Watch this week’s Frontline on the financial crisis. CNBC’s participation in the way it happened and the way it was shaped for the viewing public is striking. I don’t think anyone can come away from that report without understanding that part of what ails financial markets can be laid at the feet of CNBC. They are an out of control freight train with no competition to stop them. They need some. Desperately.
Which brings me to Santelli’s rant last Wednesday. Before President Obama had even outlined his plan for people facing foreclosure, Santelli, and other CNBC “hosts” were talking it down. Keep in mind, these are the same people who talked UP the bailout for banks and Wall Street back in October, assuring the public that only a Federal bailout of Fannie Mae, Freddie Mac, and IDG would save us all from ruin.
Here is Santelli in all of his glory:
Do we all feel righteous now, after watching that? Wanna go get some tea and toss it in Boston Harbor? Here are some reasons why you shouldn’t, courtesy of Twitter friend roadkillrefugee. (Hint: Santelli forgot a few key facts and protocols…)
- Santelli/CNBC never mentions that GE was recipient of $139 B from taxpayers to bailout out its own incompetent management.
- Santelli/CNBC not outraged GE’s CEO was offered bonus after horrible stewardship of GE. Yes, he declined, but can’t decline w/o an offer…
- What was GE’s Board/Comp Comm thinking when it decided to give Immelt a bonus with taxpayer dollars?
- CNBC is following FNC (Fox News) model of adopting an ideological editorial identity. To compete with FBC, it’s feigning Joe Stock Trader populism
- CNBC uncritically enables the poor governance practices, deregulation and corruption that have fed Wall Street insiders
- Right now, CNBC is not reporting on Wall Street, it’s cheerleading for Wall Street
In case it didn’t quite sink in, I’m going to repeat it. CNBC’s parent company, GE, was the beneficiary of $139 BILLION in the first bailout, and Rick Santelli has the NERVE — the GALL — to complain about a total foreclosure package of $75 Billion, putting the dog whistle for the reactionaries with the term “moral hazard“.
And finally, this: Santelli was proclaiming the health and soundness of the economy right alongside John McCain last September.
Words in September and February, carelessly used, amplified by the studio hosts and magnified. They do harm.
While there’s no question that we’re in a crisis right now, the most immediate crisis is one of trust and confidence. Period. So when the most powerful voices dog whistle the right-wing reactionaries with loaded words like “moral hazard” and oblique references to communism, what they say matters to people poised to receive those messages.
Like Rush Limbaugh. And Alan Keyes.
Ordinarily I wouldn’t quote them, much less mention them. But what they are doing is so dangerous, so utterly immoral, that I can’t let it pass.
Since President Obama’s inauguration, Limbaugh has repeatedly expressed the hope that his presidency will fail, a repugnant and unpatriotic hope that would mean we all will fail. But last week, he put this call out: “They” must be STOPPED. And this, in the context of telling a listener that understanding a Democrat is like trying to understand a murderer or rapist.
And that pushes the Republicans one step closer to the slime bucket, poised at the edge so Alan Keyes can push them the rest of the way in. Alan Keyes’ commentary was so incredibly loaded with vitriol and hate it was nearly impossible to sit through the whole thing. But be aware: what Keyes said on Friday hovers dangerously close to shouting “Fire” in a crowded theater.
In the span of about five minutes, Keyes says our President is an “abomination”, that “we have to stop him” or the US will cease to exist. He dredges up the old canard (proven false over and over and over) that President Obama was not born in the US, and suggests that the military not obey his commands because he is not a legitimate President.
Even though Keyes is a nutjob, he’s not alone. What’s most chilling about his words is the violence they contain. Keyes and Limbaugh are spouting a to-do list, using their public figure status as a bully pulpit to put out a call within the sound of their voice to do, feel, and act violently. They offer the reassurance that there is some sort of entitlement to this, because they are being violated by the nasty Democrats in power.
It’s pure bullshit. Any rational thinker knows that. But the problem is, they have a wide-ranging amplifier, and in the case of CNBC, that amplifier is partially funded by taxpayer bailout funds. They are using their voices and their words to summon the troops to violence.
This is a disturbing trend. It is one thing to have legitimate political and policy disagreements, and entirely another to lie to people with the sole intention of fomenting unrest and violence.
God help us all if they succeed. That would be an abomination.
We teach our children to use their words, and to use them wisely. Yet, these men are proving that some people don’t listen to their mothers. Or learn the most basic lessons of fruitful and adequate discourse. They should learn. Or have their amplifiers turned off.
I didn’t mention the New York Post cartoon…but it all falls into what I view as a concerted effort to push racism, hate and violence into the public dialogue.
(Thanks again, @roadkillrefugee, for the inspiration. Visit his blog)
Also, if you needed any evidence that whackos will behave violently when spurred by hate speech, read this.
Watch this video. The key points start coming out at 2:20 or so, and continue on to the end.
I have some huge questions about this, and I’m sure you will too after viewing it. Let’s talk about it in the comments.
(h/t Boing Boing)