Response To The Collapse of the Private Pension System

02/07/2005

Paul Munnis

It seems that not only healthcare insurance for American workers is becoming scarce but now the nation’s corporations are busy designing legal ways to deny the issuance of pension fund money to retirees.

To say it isn’t so is to be in total denial of what is really going on around us. As company after company looks at liabilities and especially at the under funded portion of their pension plan promises, their corporate accountants are looking for ways to eliminate pension payouts. Even for those companies that are fully funded they would prefer to pay the money as executive bonuses or as stockholder dividends than to give it to workers for retirement. The result is a collapsing national retirement system.

Our Federal Government is no different and would like to scuttle Social Security and reduce taxes on American corporations to keep the multinationals corporations in America and not have them move on to India or China.

When Social Security was put into place it was as a supplement to our private pension system. Now the private pension system is going away and it is forcing us to realize that Social Security is inadequate for the masses of Americans. Instead of increasing it to meet future needs we are talking about privatizing it and some talk about eliminating it.

Over the years Congress has tried to beef up retirement opportunities with 401K’s and Roth IRA’s. Yet, life is full of unexpected events, people have to live, and the retirement funds are most often raided at sometime or other over a workers lifespan in order to survive and just to feed and house their family members. The sad truth is that unless retirement funds are somehow locked away and made untouchable then they will be raided at some time or other.

As we sit debating the retention of today’s Social Security program over a funding issue that is way down the road and requiring increased funding then it draws our attention away from a much more serious problem that we Americans have. Social Security must be expanded and not reduced or eliminated for American citizens. Whereas today Social Security is designed to meet only a portion of our retirement needs it will be necessary tomorrow for it to become the primary retirement system for most Americans.

Thus benefits must be increased both in terms of cash payouts and also medical healthcare coverage must be improved. We think the way to achieve improved healthcare is by using Medicare as the foundation.

Congress needs to be working to assure the program expansion. We would like to make two proposals for Congress to consider:

The first proposal is that the contribution made to Social Security by employers in America be increased by two and a half times the present contribution. Presently it is a dollar for dollar match, we think that it is fair that it more than double because American Corporations are being relieved more and more of their share of the tax burden and are shifting the tax burden onto the middle class. Also, American worker productivity is climbing requiring companies to hire fewer workers and that shorts the Social Security trust fund.

We argue that the middle class needs to fight back and thus shift the responsibility of Social Security back onto the corporations. If they aren’t helping to build our country, the place where they make and sell their goods and services, then they need to at least pay for the social needs of our workers who make them successful in their business. This would allow for a 100% increase in Social Security cash payouts and also eliminate the Social Security deficit.

The second proposal is that Medicare be expanded to not only cover the elderly but also to cover every citizen in America with at least minimum healthcare insurance. Today we have Medicare Part A (hospital) and all on Social Security get that coverage. We would like to see all those that are American citizens get Medicare Part A regardless of their age. We want Part A paid for from U.S. government general tax revenues.

We also have Medicare Part B (physician), this is elective and the retiree pays for it today. We would like to see that available to all American citizens and as a supplement for all just as it is for retirees today. We think it should be paid for by the individual just as it is paid for today by retirees. It should not be optional and even continue to be paid by those in retirement.

We would then insist that physicians, nurses, nursing homes, hospices, clinics, and hospitals, be required to treat Medicare patients as a condition of licensing. We would also want a national drug program that is at least as generous as Canada’s.

In return, Medicaid (the State programs paid for by the Federal Government) and state worker health insurance, would both end and so would all veterans healthcare. These would be all merged into the one single national program. All Americans would be on the same program including members of Congress. That would be democratic coverage for a democracy.

Once these monies are consolidated then they will pay for most of the needs of Americans and the rest can be paid for by assuring that 401K’s and Roth IRA’s be locked until the individual goes onto Social Security. At that time their accounts will be unlocked and they can pay the taxes due on the profits they made and can use the rest to pay for their medical care in a private account that they can draw from for healthcare. Legal immigrants would have a five year waiting period plus must attain American citizenship in order to become vested in the national plan.

These two proposals could be phased in to cover demographic groups progressively over time. They require no Federal borrowing of trillions of dollars to meet for the needs of our people. They do not eliminate the insurance industry or down size it since the insurance industry can still sell medical-gap insurance coverage and retirement investments to those who can afford them. Finally, the stock market would benefit since 401K’s and the Roth IRA’s would become more stable instruments of private investment for retirement and operate just as the Bush plan advocates for privatization of part of our retirement.

We must not kill these two programs of Social Security off as the neo-cons would have us do. We must not privatize them quite as Bush would have us do. Instead we must expand them for the good of the nation and all of our citizens.