Mar 31, 2009

Cavuto and Limbaugh Agree That Retirees Should Save The Auto Industry

In today’s shows both Neil Cavuto and Rush Limbaugh made articulate recitations on the need for retirees to take it on the chin to allow the auto companies the opportunity to get themselves out of their current predicament. There are some issues that I’d like to argue.

First would be Cavuto's reference to the steel industry. Unlike the current situation that the retirement funds of the auto workers are in, the steel workers retirement funds were massively overfunded. Wall Street came up with the scheme that would allow them to purchase these companies using the employee pension funds as their preferred funding source. After a few take-over’s any weakening in the economy was enough to tank them, forcing the fed to assume their pension responsibilities.

You can argue that it was the cheap Japanese imports that caused the steel industries failure, but the pension funds were fully funded prior to the long series take over’s that raided their pension funds.

Next would be the assumption that the retirees have to accept reduced benefits so that the companies can be saved. That may be the case today but if these companies were forced to adequately fund their commitments instead of filling the funds with promises; we would not be in this position today.

Today everyone is falling all-over themselves to save companies where managements have taken their companies to the brink of failure because of some past decision that were made to obtain some short term gain. At some point we have to make companies live up to the agreements made to their staff or it will be open season on retirees forever.