One of the lesser-known benefits coincident with achieving great wealth in business is that it imbues you with acute and penetrating insight into social and economic policies affecting your fellow citizens. The very fact of business success automatically confers a special degree of acumen that transforms you into a particularly creditable and reliable resource of information on public policy and entitlements. Truth be told, the fact that the very wealthy shoulder the burden of their experience with such altruism and compassion ought to give us pause when we try to divine meaning from our own admittedly lower-tiered experiences. If only we could capture a small fraction of their knowledge we might train our aspirations beyond the mundane cares of our own existence.
For that reason alone we should be profusely thankful for the sage advice our business leaders now offer to navigate the the disturbing economic tides that surround us.
WASHINGTON (AP) — An influential group of business CEOs is pushing a plan to gradually increase the full retirement age to 70 for both Social Security and Medicare and to partially privatize the health insurance program for older Americans.
The Business Roundtable's plan would protect those 55 and older from cuts but younger workers would face significant changes. The plan unveiled Wednesday would result in smaller annual benefit increases for all Social Security recipients.
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"The recommendations are based on what's best for the country," says Business Roundtable President John Engler.
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John Engler is a former governor of the state of Michigan. According to Wikipedia, his Administration was characterized by "the privatization of state services, tax reduction, educational reform, [and] welfare reform." He name was strongly considered as a Vice-Presidential candidate for Bob Dole, and he strongly supported the election of George W. Bush. After leaving the governer's mansion Engler became the President of state and local governmental functions at Electronic Data Systems, then became the President and CEO of the National Association of Manufacturers. In 2011 he was named President of the Business Roundtable. As such he provides a public "face" to a loose affiliation of conservative millionaires and billionaires that is otherwise completely dominated by corporate CEOs:
Jim McNerney, President & CEO, The Boeing Company.[9]
Vice Chairs and Committee ChairsDavid M. Cote, Chairman and CEO, Honeywell International Inc..[9]
Andrew Liveris, Chairman & CEO, Dow Chemical.[9]
Robert A. "Bob" McDonald, Chairman, President and CEO, Procter & Gamble.[9]
Committee ChairsAjay Banga, President and CEO, Mastercard Inc..[9]
Alexander M. Cutler, Chairman & CEO, Eaton Corporation.[9]
Gary W. Loveman, Chairman, President & CEO, Caesars Entertainment Corporation.[9]
Douglas R. Oberhelman, Chairman & CEO, Caterpillar Inc..[9]
Rex W. Tillerson, Chairman & CEO, ExxonMobil Corporation.[9]
Committee Vice ChairRandall L. Stephenson, Chairman & CEO, AT&T Inc.[9]
[nominating Committee ChairHarold McGraw III, Chairman, President & CEO, McGraw-Hill Companies.[9]
Members at large Ursula Burns, Chairman and CEO, Xerox.[9]
Kenneth Chenault, Chairman & CEO, American Express Company.[9]
Jamie Dimon, Chairman, President & CEO of JPMorgan Chase.[9]
Mike Duke, President and CEO, Wal-Mart Stores, Inc.[9]
Jeffrey R. Immelt, Chairman & CEO, General Electric.[9]
Edward B. Rust, Jr., Chairman & CEO, State Farm Insurance
As an example of the staggering wealth of the foregoing individuals,
Jeffrey Immelt's compensation over the last six years averaged 12 million per year. Put another way, Mr. Immelt earned an average of $1,000,000 per month. The average Social Security payment for a retired worker is
$1230 a month. So Mr. Immelt earns one thousand times what the average worker receives in Social Security, every month.
Another member of the Roundtable is Gary Loveman. Mr. Loveman has the honor of being among Forbes' list of the 25 highest paid men in America. In 2008, for example, Mr. Loveman earned $39 million dollars. So, by applying a simple ratio we can assume that Mr. Loveman earned over 3000 times per month what the average Social Security recipient receives, every month.
So it makes perfect sense that the Business Roundtable would rely upon Mr. Loveman as a spokesman for "what's best for the country" compared to the relatively impoverished Mr. Immelt. After all, if we assume that expertise in these matters is governed by the amount of wealth that one accumulates, he has three times as much insight and acumen into public policy matters:
“America can preserve the health and retirement safety net and rein in long-term spending growth by modernizing Medicare and Social Security in a way that addresses America’s new fiscal and demographic realities,” said Gary Loveman, chairman, president and chief executive of casino giant Caesars Entertainment Corp.
Mr. Loveman graciously offers this
anecdote to explain his position to those of us who might not understand:
Workers might not relish spending those extra years on the job to keep their health insurance. But it’s the cost of living longer, as Gary Loveman, Business Roundtable member and chief executive officer of Caesars Entertainment (CZR), illustrated with a personal anecdote at a press conference:
“My father, who was an employee of AT&T (T) for more than 40 years, retired at age 61 and lived to be 95. He was a 34-year recipient of Social Security benefits—something that near his death, he noted to me with great pride that he had been on both [AT&T's] payroll and the federal government’s payroll for much longer than anyone could possibly have anticipated. That’s, of course, generally speaking, good news,” Loveman said. “But it’s a problem the country simply can’t afford over a sustained period of time.”
Indeed, the real "problem" was that Mr. Loveman's poppy received something known as a "pension." While this "problem" unfairly allowed the elder Mr. Loveman to live in better than squalid conditions even as the young Gary
earned his Bachelor's at Wesleyan and PhD at MIT , it doubtless presented a significant
problem for AT&T. Happily, however, that corporation appears to have
solved the problem, as the experience of this archetypal AT&T middle manager illustrates:
Cutting Benefits
With so many ways to tap pension surpluses, companies had an incentive to cut pension benefits even when their plans were overfunded.
Many companies, including AT&T, converted their pensions to so-called cash-balance plans, which slowed the growth of benefits for older workers and, in many cases, froze them altogether for a period of years. Mr. Skarka, 64, who left the company in 2003, says his pension would have been $50,000 a year, but is only $18,000 because of the pension changes.
His $1,500 monthly pension was further reduced by $500 a month to pay for his share of retiree health benefits, leaving the South Thomaston, Maine, resident a monthly pension of just $1,000.
But really, this is quibbling. After all, the Roundtable's proposal would not affect anyone over the age of 55! So far into the future!
[W]e believe that changing the age of eligibility for entitlement programs over an appropriate period of time to allow planning is both fiscally responsible and an appropriate recognition of our changing workforce.”
Surely the average 54-year-old can make plans at this time to work an additional eight years in order to receive the fruits of his life's labor. As anyone with an "appropriate recognition of our changing workforce" will confirm,
myriad opportunities abound:
Some might argue that fabuolously wealthy businessmen have no business at all meddling in publically funded benefit programs, that their personal experience in the private sector is so removed from that of average Americans that they really ought to be disqualified from any role in the process whatsoever. But those are not the arguments of the rich. Indeed, F. Scott Fitzgerald famously observed: "Let me tell you about the very rich. They are different from you and me."
Few people, however, are aware of the full context of that quote:
"Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different."
F. Scott Fitzgerald, "Rich Boy", 1925
Yes, the rich are different. How different? When was the last time Congress and the White House gave your ideas a hearing?
Loveman, who chairs the Business Roundtable's health and retirement committee, said the business leaders will be meeting with members of Congress and the administration to press them to enact their plan.
Note: For another take on the Business' Roundtable proposal, see
this Diary by NCPSSM.