Opinion

The Great Debate

The truth about pension reform

This article was written in response to “How should John Arnold approach pension reform?” (February 16) by Felix Salmon.

Felix Salmon’s recent post about my involvement in pension reform and Mayor Chuck Reed’s efforts in California contains serious mischaracterizations.

Salmon repeatedly claims that my wife, Laura, and I and our foundation, LJAF, “support plans making it easier for governments to default on existing promises.” Nothing could be further from the truth. We strongly believe that pension reform should not aim to cut or eliminate benefits, and we believe equally strongly that workers deserve to be a part of a fiscally sound, responsibly managed retirement savings system that provides a path to retirement security. Our communities need a simple, transparent system that holds governments accountable to pay for promises to workers. The current system falls far short of this goal. State and local governments have accrued at least a trillion dollars in pension debt, which has led to benefit cuts in 48 out of 50 states. It is unfair to workers to place them in a system where governments’ failures to fully fund retirement promises can necessitate unexpected benefit changes. For the past three years, we have worked to protect workers by encouraging governments to responsibly address their pension problems through reforms that are comprehensive, sustainable, and fair.

In the interest of furthering constructive debate based on facts and not rhetoric, I offer specific comments on Salmon’s recent blog post.

Insofar as there’s a pensions problem, it’s in large part a function of how labor negotiations work in the real world. Local governments, operating on a tight budget, can’t offer the kind of pay raises that the unions demand — and so the unions accept juicier pension benefits in lieu. The present value of the pension benefits is invariably larger than the amount of money the unions would accept as a simple raise — but so long as the current government doesn’t need to pay anything, both the government and the unions are happy. The unions get valuable rights for life, while the government gets to leave for its successors the question of how to pay for them . . . None of this will be easy: the whole reason why pension obligations started ballooning in the first place was that local governments didn’t have the money to hand out pay raises. So the unions will push back against these ideas: they like any system which makes it easier for them to accrue valuable benefits at negligible up-front cost to the government.

Why North America is stronger than its parts

Twenty years ago NAFTA, the most ambitious free trade agreement negotiation of its time, gave birth to a profound transformation of the economies and the regional value chains of Mexico, the United States and Canada. Trade dramatically changed the relationship between the three countries, though asymmetries of power and economic vitality persist.

This week, at the North American Leaders Summit in Toluca, Mexico, Presidents Obama and Peña Nieto, together with Canadian Prime Minister Stephen Harper, continued a dialogue about trade, economic growth and the energy revolution in North America. A priority for all parties should be the continued economic integration of the three countries — the region’s greatest hope for job creation and prosperity.

Since 1994 NAFTA, in terms of trade, has triggered a rising tide, lifting boats in all three countries. The numbers are compelling: more than $1 trillion of trade in goods and services annually between the three partners; $1.2 billion of daily trade between Mexico and the U.S.; 6 million U.S. jobs directly related to trade with Mexico; and Canada and Mexico buying more U.S. products than any other nation on the face of the earth.

Fannie and Freddie are more complicated than that

This article was written in response to “How Ralph Nader learned to love Fannie and Freddie” (February 18) by Bethany McLean.

Bethany McLean’s article deserves a number of clarifying responses.

McLean injects an air of complexity and confusion with regard to my positions on a number of separate issues in what seems to be an attempt to imply a more interesting narrative for her article than exists in reality. Some clarifications are in order:

In the 1990s and early 2000s I opposed corruption in the government-sponsored enterprises (GSEs). I was clear about my admonition of the government subsidies they received in the form of an implicit government guarantee without meeting their obligations to advance affordable housing. I was clear that their drive for profits could tempt them deeper into murky legal waters. My opposition to their management compensation packages and questionable accounting practices were made plain.

Ukraine: Obama must escape the ‘Cold War syndrome’

When it comes to the mounting crisis in Ukraine, President Barack Obama is stuck playing an old role. Since World War Two, U.S. presidents have steadfastly held to the same course when it comes to Russia.

Obama is but the latest interpreter of the Truman Doctrine, which pledged the United States “to support free people who are resisting attempted subjugation by armed minorities or by outside pressure.”

When President Harry S. Truman threw down that challenge to Congress in 1947, he didn’t use the phrase “Cold War.” He didn’t name the Soviet Union. But everyone knew what he was talking about.

For Moscow, Ukraine is always ‘Little Russia’

Moscow — Ukraine has had two weeks to find a compromise in its Russia versus the West dispute. Russian President Vladimir Putin has been focused on promoting his soft image with the Winter Olympics in Sochi. With the games ending Sunday, however, time has run out and the crisis in Kiev and other cities is only getting worse.

If Putin uses Russian history as a guide, it would not be out of the question that Russian tanks rolled into Ukraine. After all, Soviet leaders did just this to retain control during the Hungarian uprising in 1956 and the 1968 Prague spring in Czechoslovakia.

For Putin stands to lose influence and his ability to affect policy in Ukraine if the opposition gains control. This is at the core of the current Ukraine crisis.

from Jack Shafer:

Who’s afraid of Comcast?

Set aside for a moment everything you've read about the $45 billion bid Comcast made for Time Warner Cable last week. Blank from your mind Paul Krugman's prediction that the deal will result in a Comcast monopoly. Pretend you didn't read the New York Times piece about the acquisition presaging further consolidation in the cable market, with Charter Communications picking off Cox Communications. Thump yourself with a neuralyzer, if you can, and remove from your memory the protest against the transaction by Michael Copps, former Federal Communications Commission commissioner.

Finally, purge from your bile ducts the seething hatred you hold for Comcast and Time Warner Cable, those hurtful memories of rising bills, rotten service, and phone-tree purgatory and allow me to persuade you that we're having the wrong telecom argument when we quarrel about mergers and acquisitions. Instead of blocking mergers or beating concessions out of the telecom giants, let's give them the treatment they really fear: Policies that encourage the entry of competitors, which are the bane of every monopolist.

If you hate your cable television company -- to simplify a half-century of history -- blame it on the government. In the founding days of the industry, local municipalities mistakenly insisted that cable TV was a "natural monopoly" that must be regulated like telephone service. In nearly every case, the selection of a cable operator was a political one, with the most flattering supplicant winning the right from city councils to string wire on utility poles and cross right-of-ways to sell cable service. The municipalities collected franchise fees from the cable companies, shook them down for sweeteners like municipal channels and public access studios, regulated their rates, and required the operators to wire all if not most of their jurisdiction.

The antitrust case against Comcast-Time Warner

For Netflix viewers, the proposed $45.2 billion Comcast-Time Warner Cable deal is simple: Will they get their House of Cards and how much it will cost?

For regulators, the proposed deal is rife with complexities. Now that Netflix’s efforts to secure a spot with Time Warner Cable reportedly are stalled, the video-streaming service is a prism for understanding how the federal government might approach the deal.

Netflix is a content provider and original programmer, and its 30-plus million users will depend on the proposed cable giant for a reliable broadband connection. Like ESPN, CBS, the National Football League, AT&T, Verizon and other stakeholders, Netflix’s entire business model could be undermined. It will be negotiating for a chunk of the country’s audience, but it is also subject to a limited market share if the proposed Comcast-Time Warner Cable offers it a less preferential stream.

Ukraine after the Maidan

Writing the first draft of history is always difficult, especially when the opening act curtain has not officially fallen. Yet developments in Ukraine have now reached a critical turning point, with certain consequences likely to follow.

Historians will long debate the chain of events that provoked the February 18, 2014 confrontation. What we know is that the simmering demands of the opposition — over Ukraine’s thwarted path to Europe, the failure to re-instate the 2004 Constitution and President Victor Yanukovich’s insincere negotiations – all boiled over in a violent clash with the Ukrainian security services. The fight for Ukraine’s future was being resolved in the streets of Kiev – in live pictures transmitting around the globe.

Two symbols undoubtedly will emerge from the events of the last few days: a heroic Maidan and a bloody Yanukovich. Half the population will not accept the results, but it is also unlikely that Ukrainian opposition can impose its will on the country. So even if the Maidan were somehow to hold its ground and gain the upper hand — and it was still resisting at the time of this writing — a political consensus would still have to be found.

The religion-fueled fight in Syria

The second round of peace talks in Geneva between representatives of Bashar Al-Assad’s regime in Syria and rebel forces has ended with both sides blaming each other for the lack of progress. Beyond the finger-pointing, however, lies a growing danger to the goal of a negotiated settlement. The civil war’s religious divides are widening, making compromise unthinkable.

Representatives of the Syrian regime went to Geneva solely with the hope of convincing the opposition to let President Bashar al-Assad stay in power so he can forge an alliance against jihadist forces fighting in Syria, most notably the al Qaeda affiliates Jabhat al-Nusra and the Islamic State in Iraq and the Levant. Their argument — one that many, including former U.S. Ambassador to Iraq Ryan Crocker, have made — was that Assad is better than any likely alternative.

But the Syrian National Coalition, representing opposition forces, rejected the proposal outright. The coalition, which purports to be a post-Assad transitional government in waiting, has decided, along with Secretary of State John Kerry, that al Qaeda will be dealt with after Assad is gone. Its standing, however, is severely constrained by its lack of political credibility on the ground. It has become little more than a vehicle for Qatar and Saudi Arabia to vie for control of Syrian politics.

from Bethany McLean:

How Ralph Nader learned to love Fannie and Freddie

Corrects story issued February 18 in third-to-last paragraph regarding efforts to contact Ralph  Nader.

“It is time for [government-sponsored enterprises] to give up ties to the federal government that have made them poster children for corporate welfare. Most of all, Congress needs to look more to the protection of the taxpayers and less to the hyperbole of the GSE lobbyists. –Ralph Nader, testimony before the House Committee on Banking and Financial Services, June 15, 2000

“Fannie Mae and Freddie Mac should be relisted on the NYSE and their conservatorships should, over time, be terminated. –Ralph Nader, letter to Treasury Secretary Jacob Lew, May 23, 2013

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