OLEAN -- The judging for my first annual Improvement in Government Award is now complete. The winner is Rep. Fortney (Pete) Stark, 71, a colorful, plain-spoken Democratic congressman from Fremont, Calif., who's now in his 15th term in the House of Representatives.
It has long been my contention -- after covering Capitol Hill for more than two decades -- that the stilted, polite, pompous language of the House and Senate is not only woefully time-consuming and wasteful, it is a feeble attempt at decorum. It leads to a sort of faux dignity, clubby back-scratching, smarmy political deals, and a fake aura that everything is OK in Washington when it isn't. By the time all the unctuous compliments, greasy appellations, and "honorable" this-and-that references are handed out, observers don't know whether a congressman is criticizing a colleague or trying to make a dinner date.
Late last week, Pete Stark took a shot at ending all that laughable hoo-hah.
Stark called his colleague Rep. Scott McInnis, a five-term Republican congressman from Grand Junction, Colo., a "wimp" and a "fruitcake" and challenged him to a fight.
It happened at a House Ways and Means Committee markup of a $50 billion pension bill. The Democrats -- cheesed off at the heavy-handed midnight total rewrite of the language in the proposed legislation by the Republican panel's leadership -- walked out of the session in protest and convened in a nearby library. They left Stark behind to guard the fort. He asked for a reading of the bill, a rarely employed delay tactic, which can consume about two hours.
McInnis, who is 50, told the complaining Stark at one point, "Go get your medication. You need to take your pills." In the ensuing dialogue, McInnis told Stark to "shut up."
Most members of Congress, instead of replying the way you or I might to an obvious age insult, would have lodged a formal objection to "the member's language" in archaic and roundabout terms. Not Pete Stark.
"Oh, do you think you are big enough to make me, you little wimp?" he asked. "Come on. Come over here and make me. I dare you, you little fruitcake. You little fruitcake. I said you are a fruitcake."
Keep in mind that McInnis is not only 21 years younger than Stark, he's also an ex-cop. Still, he said he considered Stark's comments a serious bodily threat. According to the Rocky Mountain News, McInnis said, "I fully intended to defend myself."
The GOP summoned the sergeant-at-arms. No blows were exchanged. I think I like the "fruitcake" part of Stark's outburst the best.
"Come on and make me" is a pretty standard playground retort, but the triple fruitcake reference is brilliant, compared to the flapdoodle and bull-doody that usually get thrown around the House.
For the first time in years, listeners could harbor absolutely no doubt as to what was going on, or as to the intent of the statements.
In terms of plain speaking, you might actually give Stark a life achievement award for his "body of work" in Congress. He once claimed all of former congressman J. C. Watts' children were illegitimate. And eight years ago, he called Rep. Nancy Johnson, a Connecticut Republican, a "whore for the insurance industry."
The vituperation over the pension bill underscores a deeper problem in Congress, however. Democrats are fed up with what they consider Republican ram-rodding of legislation favorable to Big Business, and the pension proposal is a good example.
The midnight rewrite would have allowed workers to put more tax-deferred income into their personal retirement accounts, but it would also let corporations set aside fewer dollars to cover their pension obligations to retirees.
The GOP-controlled panel also batted down a proposal to make American firms disclose more information about the health of their pension plans.
Big Business lobbyists were seeking a permanent change in the way pension funding is calculated, but they ended up with a three-year trial period in the bill that now goes to the full House. Follow closely here.
The three-year recession and the constant lowering of interest rates to fight it are raising hob with pension funds. The recession has reduced the real value of American pension funds by billions in the last three years -- many are waaaay short of the money needed to cover retirees -- and there's a tricky footnote.
A company has to calculate the rate at which its pension fund must grow to cover future benefits. This used to be pretty standard -- an assumed 7 percent over 20 years, or in the go-go '90s even double-digit assumptions. It was sometimes pegged to the prime rate, or prevailing mortgage rates, or other federal financial percentages, or to conservative money market fund rates. Now, with money funds paying about 1 percent or less, and with mortgages available at a little over 4 percent, the application of these percentages to long-term lookahead gives Big Business a problem.
If you have a legally fixed obligation -- the amount you anticipate paying X number of retirees in Y years -- applying an assumed growth rate of 1 percent to that, or 4 percent, means you have to come up with whopping sums to fund that obligation. Current law, which gives the businesses a temporary break, expires in six months. If Congress doesn't extend it or recalculate it with new law, the mandatory pension fund contributions will probably stagger some firms.
Last week's Ways and Means bill pegs the rate to corporate bonds, which reflect higher rates than the current one, which is tied to the 30-year Treasury bond. If this becomes law, and the companies can use the higher rate, they will be able to assume much greater and faster growth, and thus make smaller obligatory contributions to pension funds -- to the tune of billions of dollars saved.
So, what's wrong with this? Well, for one thing, the Bush administration's own math whizzes -- including Treasury Secretary John Snow -- warn that the Pension Benefits Guarantee Corporation, the agency that assures private pensions are paid, could go broke if pension funds aren't shored up realistically by their corporate administrators.
House conservatives, however, think mostly in the fashion of the Enron playbook, and are eager to please all those corporate lobbyists who shower money on them like rain in the Amazon basin.
Another thing wrong is that Big Business is saving billions each year by switching to "cash balance" pensions instead of the traditional "defined benefits" plan.
Under the old method -- which is still the one most Americans think of when they hear the word "pension" -- you worked most of your life for one firm, which paid money into a fund, then when you retired, you got a monthly paycheck for the rest of your life at such-and-such a fraction of your full salary or wage. These used to include health benefits, almost universally, but companies long ago started using Medicare as an excuse to chop those.
Under "cash balance," or "cash value" as it is sometimes called, the newly popular system requires you to work a small number of years (often five) to become "vested" in your pension rights, then if you leave, gives you the so-called "pension" in one lump sum. It might amount to a year's salary, maybe two.
The reason for this is a significant paradigm shift in the last decade largely unnoticed by many Americans. Instead of cultivating employees who will work loyally for the same firm for decades before taking their gold watch, Big Business now seeks to "roll over" the workforce every five years or so. The motivation is to avoid buildup of substantial salary and benefit expenses.
Hell, the executives in the corporate tower figure, smart young folks can be trained faster and more efficiently in today's computer world, and with speed-of-light changes in our corporate culture, institutional knowledge isn't worth a hoot anymore. (That's provably wrong, but that's another column.)
If you get rid of the aging lard in your workforce, you can keep a large percentage of your employees making peanuts, and thus reduce your salary and benefit expenses. Similarly, when these young folks -- as they often do -- switch companies, you just pay them a "cash balance" lump sum and, being young, they happily take a year's salary, thinking thoughts like "Wow, I can buy a new car with this."
There is no corporate loyalty anymore, and that's the way corporations like it. Nice having you here for a while -- move on, is the new philosophy.
If you are the average working slob, it is not until you hit mid-40s or so that you even start thinking about real retirement and how you are going to handle it financially. (This, happily, is changing with the advent of self-funded retirement funds and personal retirement accounts.)
But if you wake up at 45, after receiving three or four one-year-salary lump sum "pensions," the realization that retirement may be only a decade away and the cupboard is pretty bare can be shocking.
There are statistics on this. Third Millennium, a New York advocacy group for young professionals, regularly polls people between 21 and 39 years of age to determine their workplace thoughts, especially regarding corporate loyalty.
In a recent survey, only 66 percent of workers in that age group expected to be with the same company in five years, and only 51 percent believed the same for 10 years. Now, when you ask workers in their 40s the same questions, fully 82 percent in that age cohort expect to be working for the same employer five years from now, and 65 percent believe they'll be around in a decade.
When all this uncertainty -- recognized or not -- is factored into the current corporate vista, the general sense of queasy trepidation can be overwhelming, especially considering futile attempts to emerge from the stubborn recession, which evaporates worker wealth. The greatest trigger of bile -- even Congress is beginning to notice -- is the growing chasm between corporate executive wealth and worker salary. Even the current so-called "recovery" is uncertain and still in the incubation stage.
Listen to what stock investment expert Richard C. Young, in his "Young's Intelligence Report" newsletter, has to say about that:
"This recovery comes amidst tremendous investor anger. CEOs now make 600 times what their workers make. They are not even part of the same moral landscape as the private investor. CEOs are not punished for failure -- and investors are fed up with a system that's rigged. After all, as investors we've taken our lumps. Risks and rewards haven't been shared equally."
And this guy is a fiscal conservative.
I'm not trying to be pessimistic here. But if all these Baby Boomers hit retirement with their tsunami of pension demands, as they will, and the corporate pension books are rigged with rosy Enron-type figures -- as it looks like they will be -- this current "recession" will look like the Roaring Twenties.
| Niagara Falls Reporter | www.niagarafallsreporter.com | July 22 2003 |