“United Airlines has reached a settlement with the federal government,” reports Democracy Now!, “that will result in the airline saving $645 million in each of the next five years at the expense of taxpayers.”
“The government is allowing the airline to hand over four under-funded pension plans in what the Wall Street Journal is calling the largest corporate pension default in U.S. history.” More below:
The Center for American Progress [SEE NOTE BELOW] noted on Monday that the federal Pension Benefit Guaranty Corporation agreed to allow the airline to shed $10 billion in pension commitments just as President Bush signed legislations making it harder for citizens to declare bankruptcy. (DN!)
I just searched — and searched and searched — and it wasn’t the Center for American Progress. I scoured its site, my Monday newsletter, and my RSS feed. Nothing there. Then I discovered, through a Google search, that Goodman is quoting ThinkProgress.org. Even seasoned journalists like Amy Goodman make errors (!). There’s comfort in that. However, what she reports is accurate, and yet ONE MORE SIGN that the American people are getting the shaft.
More from ThinkProgress.org:
The point is UAL is dumping $9.8 billion in retirement obligations on the federal government – in other words, on taxpayers – so it can get on stable financial footing. Besides hurting taxpayers, UAL’s failure to meet its commitements will adversely affect UAL workers. And last week, President Bush signed legislation that will make it more difficult for those same workers to file for bankruptcy and receive the same privilege as United Airlines – that is, of being able to start over when faced with an unforeseen financial crisis.
In General, the legislation will make it harder and more expensive for millions of average Americans to be forgiven trifling sums – most of which would barely make a mark on the $30 million per year credit card industry profits.
During the debate over the bill, Americans were repeatedly accused – despite directly contradictory evidence – of “abusing bankruptcy laws.” We’ll see who speaks up about UAL’s “abuse.”
Postscript: Why have I never been to ThinkProgress.org‘s site before? It’s terrific. And I signed up for their e-mail newsletter.
pumps so much money into aviation that they might as well nationalize the service.
I like competition and variety in air travel. But the market either isn’t working, or it’s being distorted beyond recognition by bailouts like this one.
And what is going to happen to the price of aviation fuel in the coming years? Who will be able to afford to fly?
Where is a bill in the senate for corporate bankruptcy reform… sounds like UAL has executed a successful Enron around taxpayers and share holders.
If this stands, and it looks like it will, all United retirees will see substantial reductions in retirement benefits, even those employees whom United asked–no, make that begged–to take early retirement over the last few years. I’m not too broken up about the reduction in the already bloated pilots’ retirement benefits. But the machinists, the ground crews, the counter people, and especially the flight attendants could be looking at some very hard times.
Yes, the federal government, through tax dollars, is going to have to cover a portion, but only a portion, of the promised pension benefits. What would be the cost of covering all of it compared to the Iraq war spending? Not very much at all.
As a Chicagoan I have a soft spot for UAL. Nonetheless, this process is a thumbnail for much of what has gone to terribly wrong with America. Corporations should have no more bankruptcy privileges than individuals. If UAL cannot or will not fulfill its pension obligations its property should be seized and the proceeds used to pay its debts.
Somebody tell me why corporate obligations are somehow more sacrosanct than credit card debt. Corporations like UAL have campaigned hard to keep us from “socialistic” interference with the free market. OK, let the market and the law work now.
The pension system of the US is underfunded by either $23 trillion ($23,000,000,000,000) or $47 trillion ($47,000,000,000,000) depending on whose figures you accept.
I can’t say either way. I started to get interested and then realized I simply cannot take on another research project.
One thing I did learn was the Fed’s allow corporations to invest in their own stock as a pension “investment.” I cannot possibly communicate how incredibly stupid this is.