Friday, March 5, 2010
Random thoughts from a warped and fevered mind...
Many employees work for companies that provide a pension plan. The company contributes funds to the plan, which are then invested, and there is a promise of a payout to the employee upon completion of certain terms of service and at retirement. The liability for this type of retirement plan resides solely with the sponsoring company. They have to fund the plan each year according to an acturarial standard which proscribes the total amount of money that goes into the plan based on such factors as the number and ages of the participants. Additionally, the company is responsible if there is an investment shortfall, meaning that if investments don't perform as expected, they must fund the plan back to the acturarial standard. The best single indicator of a pension plan's health is what is called the "funding percentage". A plan with a funding percentage of 100% is fully funded and can meet their obligation to their retirees. A lower percentage means that the plan will have difficulty in meeting these obligations. Want to know a little secret? According to Moody's, every one of the 108 active pension plans in this country are underfunded and could collapse. The best funded pension plan is the Alaska Restaurant and Hotel Employees Pension Plan at 79% funding. This simply means that the best pension plan in the United States lacks 21% of the funds necessary to meet its obligations to its retirees. And this will be a very big problem for our country and for pension plan particpants.
They say that the most beautiful things in life can't be seen or touched. At least that is what my restraining order says.
So given that so many of the union pension funds are so severely underfunded and in financial trouble, is it any wonder that the unions are the loudest proponents of socialized medicine? Why, you might ask? The hope is that if Obamacare passes, pension particpants from the various unions can be moved under this program to lessen some of their financial liability. A good indicator of how important this is to the unions is the fact that Andy Stern, the President of the Service Employees International Union (SEIU), has been practically living at the White House as the Obama adminstration has crafted their program for socialized medicine. And if you can plow through some of the verbiage in that proposal, you will see that there are numerous concessions made to the unions and their members. Oh, by the way, the SEIU pension is underfunded by 35%, according to Moody's. Always follow the money, good people.
I practice "safe lunch". I use a condiment.
Non-farm payrolls fell for the 25th time in the past 26 months, as February saw another 36,000 jobs lost. The stated unemployment rate is 9.7%. When you factor in the under-employed and those that were employed and have now stopped looking for work, our real rate of unemployment in the U.S. is closer to 17%. The unemployment problem is not intractable but at the same time, there are no easy solutions. Until businesses get a sense of what Washington is going to do with tax policy and other legislative initiatives such as socialized medicine, they will not be hiring in great numbers. Stimulus programs are superficial, akin to putting a band-aid on a severed artery. This country must address the structural causes of unemployment and address those effectively for this economy to get moving. Lower taxes; removing unnecessary regulatory costs of doing business; and a consistent free trade policy are some of the basic steps necessary that will allow companies to have the confidence to begin hiring again.
I was once arrested for assault at a toy store. Battery not included.
And that, my friends, is my view.