More Middle Class Casualties
Monday, June 13th, 2005From Washington Post
Ellen Saracini lost her husband, United Airlines Capt. Victor J. Saracini, when his Flight 175 crashed into the World Trade Center on Sept. 11, 2001. Now she stands to lose more than half of her widow’s pension in a very different kind of crash — United’s default of its $9 billion pension obligations.
The scale of the default, the largest in U.S. history, has received more attention than the toll on the lives of the bankrupt airline’s 120,000 employees and pensioners. Saracini discussed its impact on her and her two daughters in an interview yesterday, saying she hopes her story will help shift the focus to the laws and policies that allow such defaults.
“My own situation is not a crisis — I have my husband’s life insurance to keep us secure in our house,” she said from her home in Yardley, Pa. “But a lot of other people have real hardship — medical costs they won’t be able to afford, houses they won’t be able to keep. If I can help draw attention to them, I’ll do it in a heartbeat.”
Let’s all applaud Ellen. Someone who doesn’t thinks only of herself! I congratulate her, and I bet her kids are nice people, too. We need more people out there whom, when times get tough, refuse to shrivel up and whine. Always are there people who are worse off. Always these people need care and attention. Ellen will “get by” because of her outlook, and the friends she makes by helping publicize this disaster.
Saracini was among about 2,000 United pensioners and employees who e-mailed their stories to Rep. George Miller (D-Calif.) in recent days for what he called an online hearing on the human impact of the default. “We have been overwhelmed — both numerically and emotionally — by the response,” said Miller, one of several politicians in both parties warning that a wider crisis will loom if the nation’s pension security laws are not revised.
More than 20 other companies have defaulted on pension funds of more than $100 million in the past three years, and last week, executives of troubled Delta and Northwest airlines said they may be next. Miller has proposed a six-month moratorium on defaults, as Congress debates how to fix what many lawmakers call “broken” pension protection laws.
“Like Enron, workers’ lives and retirements have been ruined,” Sen. Charles E. Grassley (R-Iowa) said last week. “But unfortunately, this time it’s perfectly legal.”
Don’t wash your hands of it just yet, Senator. Did you or did you not vote for all the corporate pork tax cuts of recent years? Show us the ink on your hands.
In e-mails to Miller that his staff is posting online, and in interviews, United retirees recounted stories of job-hunting in their sixties and seventies, facing medical costs they no longer can afford, uprooting families to move to lower-cost communities, selling dream retirement homes and losing money they had counted on to support elderly parents.
The Pension Benefit Guarantee Corp. (PBGC), the federal insurance program that faces its own solvency crisis and is to take over the United pensions, ensures a maximum of $45,000 a year in benefits for those who retired at 65, but considerably less for those who retired younger — much as Social Security pays less to early retirees. This particularly hurts pilots, whom the law requires to retire from major airlines at 60 and who now collect as much as $125,000 a year in pensions, depending on length of service. The PBGC’s maximum coverage for those who retire at 60 is $28,000 — a cut of 50 to 75 percent for pilots. Saracini will receive even less because her husband was 51 when he was killed.
That’s a beautiful thing.
My right-minded friends are going to holler for my saying this, but haven’t we seen several corporate taxes cut recently? Haven’t we just seen a law passed that makes it harder for individuals to declare bankruptcy? I am aware that many citizens took advantage of the system, many who might otherwise have been able to work things out on their own. Here we have a global corporate entity bailing out on its commitments, and a republican Senator says, effectively, “Shucks, them’s the breaks.”
Not only that, we have a small epidemic on our hands. Especially when we stop to consider all the people screwed around when companies go “Enron.”
United might or might not be able to fix things, I don’t know. The real slap in the face of Americans, as John Clark pointed out, is the government agency BPGC, whose only function is to act as a safety net in these supposedly rare instances, which is out of funds because the whole government is living out of Asia’s pockets! But that’s not the official take, this is:
PBGC Executive Director Bradley D. Belt said in an interview that United is only the latest — and largest — illustration of what ails the federal pension protection system: It allows companies to drastically underfund pensions, and even to disguise the problem. Defaults have so escalated in troubled sectors of the economy, Belt said, that the PBGC now is on the hook for $450 billion in pension obligations, compared with $50 billion only three or four years ago. In three years, it has gone from having a $7 billion surplus to a $23 billion deficit. Without changes to the 30-year-old pension protection system, he said, the PBGC could itself become insolvent.
As such, Belt said he sees a grim upside to the tide of financial problems United retirees are now bringing to the public’s attention.
“If there’s a silver lining on that very dark cloud, it’s a wake-up call to policymakers that this problem has a very human dimension and very human costs, and it’s critically important to change the rules so we don’t have future Uniteds,” Belt said.
If there is a silver lining, it’s in another’s pocket.
To paraphrase John D. Clark, the company defaults its employees on benefits, the congress defaults it obligation to its constituents, the president defaults on the nations assets, and past presidents somehow are at fault for thinking government is “by the people, for the people.”