Saturday, April 22, 2006
That’s the state to live and die in . . . . r-r-rich
— Charles Dickens, Our Mutual Friend
Once again the tidings of the season and the news from the news reminded one and all that it is better to be rich than to be poor. The week ended with news of the Cheneys’ tax refund and began with stories in the New York Times and the Wall Street Journal reminding us that the rich get richer and the rest don’t.
The Cheney news was that Dick and Lynne Cheney would be getting a $1.9 million tax refund because they had overpaid their estimated taxes. They were simply getting back their own money. Being slightly more money than many of my readers anticipate receiving in wages for the foreseeable future, to say nothing of tax refunds, it highlighted the difference between Dick and Lynne, and the rest of us.
The refund has nothing to do with the pay Mr. Cheney got for being vice president, which is only $205,031, nor does it have anything to do with $211,465 of deferred compensation he received from Halliburton that a White House spokesman pointed out has nothing to do with Halliburton’s performance or earnings. It had to do with profits Mr. Cheney realized when he exercised stock options given him when he left Halliburton. The White House spokesman forgot to say those profits had something to do with Halliburton’s performance and earnings since they affect the stock price. (Halliburton and the Iraqis have been the principal beneficiaries of Mr. Bush’s invasion of Iraq. Thanks to Mr. Bush’s post-war planning, Halliburton stock has proved to be worth more than Iraqi lives).
The Wall Street Journal depressed retired readers by pointing out in discouraging detail what many retirees had already discovered. A cutback in medical benefits promised upon retirement does not affect all retirees equally.
The United Auto Workers Union agreed with General Motors in 2005 that retirees should begin paying a portion of their health insurance premiums, a change that will cost retirees hundreds of dollars each year. Ron Gettelfinger, UAW president, admitted it was difficult to agree that retirees should begin paying for something they’d been getting for free but it was “a right decision to make in the long term.” He was not, of course, referring to rich retirees. Their treatment was described in the Wall Street Journal story written by Ellen Schultz and Theo Francis.
The story showed that the more money a retired executive receives from the company in retirement, the more likely it is that the executive will not be asked to pay for health insurance. The less money a retired employee receives in retirement, the more likely it is that the employee will have to pay all or part of his or her health insurance premiums.
Northrop Gruman Corp. requires its vanilla flavored retirees to pay an ever increasing share of their health insurance premiums based on inflation whereas a select group of executives participate in a different program in which all cost increases based on inflation are paid by the company.
AT&T pays its top executives $100,000 annually for out of pocket health care costs before and after retirement. Commenting on this benefit a spokeswoman said that compared with other companies AT&T gives those who are not top executives “very good medical benefits”. Not reported was how “very good medical benefits” for the humble employee compare with the benefits received by the more exalted.
At Northwest Airlines regular employees must work 23 years before they are eligible for retiree health insurance coverage beginning at age 55. It disappears when the employee qualifies for Medicare. The company’s top executives, in contrast, receive full health care coverage for life for themselves and their dependents after three years with the company.
The report on health benefits for the retired was not the only reminder that the rich get richer. On April 13 the New York Times described the retirement package received by Lee R. Raymond, chairman and chief executive of Exxon from 1993 to 2005. It was reportedly worth $398 million and included not only cash, stock options and stock but country club fees and other benefits. It was not clear whether Mr. Raymond had to pay for his own health insurance out of the $398 million. A follow-up story two days later reported that during the time Mr. Raymond led the company his average daily compensation was $144,573, somewhat more than many of his employees earn in a year.
There is something to be learned from the foregoing. In favoring tax cuts and other benefits for the rich, Mr. Bush is not demonstrating original thinking. He is reflecting the attitude towards money that the rich would say has made America great. The non-rich can simply envy as they wonder.