"They've had some rough times recently," Peskin says of the parrots. "A rapacious developer tried to cut down their trees."

I can't find any verification of this........


CBS News | An Unlikely San Francisco Treat | January 8, 2006 11:03:47: "'They've had some rough times recently,' Peskin says of the parrots. 'A rapacious developer tried to cut down their trees.' "

Palaima: Longing for an America that's no longer with us

Congressman Resigns After Admitting He Took Bribes - New York Times

Congressman Resigns After Admitting He Took Bribes - New York Times

 
 

George Lakoff: The Post-Katrina Era

George LakoffThu Sep 8, 2:30 PM ET

It is impossible for me, as it is for most Americans, to watch the horror and suffering from Hurricane Katrina and not feel physically sore, pained, bereft, empty, heart-broken. And angry.

The Katrina Tragedy should become a watershed in American politics. This was when the usually invisible people suddenly appeared in all the anguish of their lives — the impoverished, the old, the infirm, the kids, and the low-wage workers with no cars, no tvs, no credit cards. They showed up on America’s doorsteps, entered the living rooms, and stayed.

Katrina will not go away soon, and she has the power to change America.


The moral of Katrina is mostly being missed. It is not just a failure of execution (William Kristol), or that bad things just happen (Laura Bush). It was not just indifference by the President, or a lack of accountability, or a failure of federal-state communication, or corrupt appointments in FEMA, or the cutting of budgets for fixing levees, or the inexcusable absence of the National Guard off in Iraq. It was all of these and more, but they are the effects, not the cause.

The cause was political through and through — a matter of values and principles. The progressive-liberal values are America’s values, and we need to go back to them.

The heart of progressive-liberal values is simple: empathy (caring about and for people) and responsibility (acting responsibly on that empathy). These values translate into a simple principle: Use the common wealth for the common good to better all our lives. In short, promoting the common good is the central role of government.

The right-wing conservatives now in power have the opposite values and principles. Their main value is Rely on individual discipline and initiative. The central principle: Government has no useful role. The only common good is the sum of individual goods.

It’s the difference between We’re-all-in-this-together and You’re-on-your-own-buddy.

It’s the difference between Every citizen is entitled to protection and You’re only entitled to what you can afford.

It’s the difference between connection and separation.

It is this difference in moral and political philosophy that lies behind the tragedy of Katrina.

A lack of empathy and responsibility accounts for Bush’s indifference and the government’s delay in response, as well as the failure to plan for the security of the most vulnerable: the poor, the infirm, the aged, the children. Eliminating as much as possible of the role of government accounts for the demotion of FEMA from cabinet rank, for Michael Brown’s view that FEMA was a federal entitlement program to be cut, for the budget cuts in levee repair, for placing more responsibility on state and local government than they could handle. for the failure to fully employ the military, and for the lax regulation of toxic waste dumps contributing to a “toxic stew.”

This was not just incompetence (though there was plenty of it), not just a natural disaster (though nature played its part), not just Bush (though he is accountable). This is a failure of moral and political philosophy — a deadly failure. That is the deep truth behind this human tragedy humanly caused.

It is a truth that needs to be told starting now – over and over. There can be no delay. The Bush administration is busy framing it in it’s own way: bad things just happen, it’s no one’s fault; the federal government did the best it could — the problem was at the state and local level; we’ll rebuild and everything will be okay; the people being shipped out will have better lives elsewhere, and jobs in WalMart! Unless the real truth is told starting now, the American people will accept it for lack of an alternative.

The Democratic response so far is playing right into Bush’s framing. By delaying a response for fear it will be called “partisan,” the Democratic leadership is allowing Bush to frame the tragedy. And once it is framed, it is hard to reframe! It is time to start now.


Hurricane Katrina should also form the context in which to judge whether John Roberts is fit to be Chief Justice of the United States. The reason is simple: The Katrina Tragedy raises the most central issues of moral and political principles that will govern the future of this country. Katrina stands to be even more traumatic to America than 911.

The failure of conservative principles in the Katrina Tragedy should, in the Post-Katrina Era, invalidate those principles — and it should invalidate the right of George Bush to foist them on the country for the next 30 years. John Roberts, as Chief Justice of a conservative court, would have enormous powers to impose on the nation those invalid principles.

Do not be fooled by the arguments of “strict construction”, “narrow interpretation,” and the avoidance of “judicial activism” that will be brought forth in the hearings. What Roberts is brilliant at is the use of “narrow interpretations” to have maximal causal effect. Narrow interpretation, in his hands, can serve the purpose of radical conservative judicial activism.

Consider a small example, the Case of the Hapless Toad. The Constitution empowers Congress to regulate “commerce … among the several states.” This clause has been interpreted by the Court to make it the constitutional basis for much of civil rights legislation and all major environmental laws. Over the past decade, the Court has been diminishing the powers of the federal government over the environment by limiting the scope of that clause, even limiting the application of the Clean Water Act. A completely narrow interpretation could eliminate all environmental laws (e.g., clean water and air, habitat protection) and threaten our civil rights.

Roberts has written in favor such a narrow interpretation. The case concerned a developer who wanted to build a large housing tract in California that would destroy one of the last remaining breeding grounds of the arroyo southwestern toad, threatening its continued existence. The U.S. Courts of Appeals on Washington, D.C., upheld the right to life of the toad species under the Endangered Species Act. But Roberts, in a July 2003 opinion, wrote that the Interstate Commerce Clause, on which the Endangered Species act is based, should not apply to "a hapless toad that, for reasons of its own, lives its entire life in California." Such a narrowing would threaten the legal basis of the Endangered Species Act. Anti-discrimination legislation is also based on the Interstate Commerce Clause. What about discrimination wholly within one state? Were Roberts to apply a similar narrowing criterion, much of anti-discrimination law would go out the window.

The point is simple. Narrow interpretations can have massive causal effects and be a form of radical judicial activism in the conservative cause.

After the Katrina Tragedy, we cannot afford a radically activist Chief Justice with the same philosophy that has failed America so badly. The ultimate moral and political issues apply in both cases. John Roberts as Chief Justice would be a danger to our democracy and possibly to our very lives.

Copyright © 2005 HuffingtonPost.com. All rights reserved. The information contained in Huffington Post commentary may not be published, broadcast, rewritten or redistributed without prior written authority of huffingtonpost.com.

The Larger Shame - New York Times



--------------------------------------------------------------------------------

September 6, 2005
The Larger Shame
By NICHOLAS D. KRISTOF
The wretchedness coming across our television screens from Louisiana has illuminated the way children sometimes pay with their lives, even in America, for being born to poor families.

It has also underscored the Bush administration's ongoing reluctance or ineptitude in helping the poorest Americans. The scenes in New Orleans reminded me of the suffering I saw after a similar storm killed 130,000 people in Bangladesh in 1991 - except that Bangladesh's government showed more urgency in trying to save its most vulnerable citizens.

But Hurricane Katrina also underscores a much larger problem: the growing number of Americans trapped in a never-ending cyclone of poverty. And while it may be too early to apportion blame definitively for the mishandling of the hurricane, even President Bush's own administration acknowledges that America's poverty is worsening on his watch.

The U.S. Census Bureau reported a few days ago that the poverty rate rose again last year, with 1.1 million more Americans living in poverty in 2004 than a year earlier. After declining sharply under Bill Clinton, the number of poor people has now risen 17 percent under Mr. Bush.

If it's shameful that we have bloated corpses on New Orleans streets, it's even more disgraceful that the infant mortality rate in America's capital is twice as high as in China's capital. That's right - the number of babies who died before their first birthdays amounted to 11.5 per thousand live births in 2002 in Washington, compared with 4.6 in Beijing.

Indeed, according to the United Nations Development Program, an African-American baby in Washington has less chance of surviving its first year than a baby born in urban parts of the state of Kerala in India.

Under Mr. Bush, the national infant mortality rate has risen for the first time since 1958. The U.S. ranks 43rd in the world in infant mortality, according to the C.I.A.'s World Factbook; if we could reach the level of Singapore, ranked No. 1, we would save 18,900 children's lives each year.

So in some ways the poor children evacuated from New Orleans are the lucky ones because they may now get checkups and vaccinations. Nationally, 29 percent of children had no health insurance at some point in the last 12 months, and many get neither checkups nor vaccinations. On immunizations, the U.S. ranks 84th for measles and 89th for polio.

One of the most dispiriting elements of the catastrophe in New Orleans was the looting. I covered the 1995 earthquake that leveled much of Kobe, Japan, killing 5,500, and for days I searched there for any sign of criminal behavior. Finally I found a resident who had seen three men steal food. I asked him whether he was embarrassed that Japanese would engage in such thuggery.

"No, you misunderstand," he said firmly. "These looters weren't Japanese. They were foreigners."

The reasons for this are complex and partly cultural, but one reason is that Japan has tried hard to stitch all Japanese together into the nation's social fabric. In contrast, the U.S. - particularly under the Bush administration - has systematically cut people out of the social fabric by redistributing wealth from the most vulnerable Americans to the most affluent.

It's not just that funds may have gone to Iraq rather than to the levees in New Orleans; it's also that money went to tax cuts for the wealthiest rather than vaccinations for children.

None of this is to suggest that there are easy solutions for American poverty. As Ronald Reagan once said, "We fought a war on poverty, and poverty won." But we don't need to be that pessimistic - in the late 1990's, we made real headway. A ray of hope is beautifully presented in one of the best books ever written on American poverty, "American Dream," by my Times colleague Jason DeParle.

So the best monument to the catastrophe in New Orleans would be a serious national effort to address the poverty that afflicts the entire country. And in our shock and guilt, that may be politically feasible. Rich Lowry of The National Review, in defending Mr. Bush, offered an excellent suggestion: "a grand right-left bargain that includes greater attention to out-of-wedlock births from the Left in exchange for the Right's support for more urban spending." That would be the best legacy possible for Katrina.

Otherwise, long after the horrors have left TV screens, about 50 of the 77 babies who die each day, on average, will die needlessly, because of poverty. That's the larger hurricane of poverty that shames our land.

E-mail: nicholas@nytimes.com



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IEM Team to Develop Catastrophic Hurricane Disaster Plan for New Orleans & Southeast Louisiana:

June 3, 2004

IEM, Inc., the Baton Rouge-based emergency management and homeland security consultant, will lead the development of a catastrophic hurricane disaster plan for Southeast Louisiana and the City of New Orleans under a more than half a million dollar contract with the U.S. Department of Homeland Security/Federal Emergency Management Agency (FEMA).

In making the announcement today on behalf of teaming partners Dewberry, URS Corporation and James Lee Witt Associates*, IEM Director of Homeland Security Wayne Thomas explained that the development of a base catastrophic hurricane disaster plan has urgency due to the recent start of the annual hurricane season which runs through November. National weather experts are predicting an above normal Atlantic hurricane season with six to eight hurricanes, of which three could be categorized as major.

The IEM team will complete a functional exercise on a catastrophic hurricane strike in Southeast Louisiana and use results to develop a response and recovery plan. A catastrophic event is one that can overwhelm State, local and private capabilities so quickly that communities could be devastated without Federal assistance and multi-agency planning and preparedness.

Thomas said that the greater New Orleans area is one of the nation’s most vulnerable locations for hurricane landfall.

“Given this area’s vulnerability, unique geographic location and elevation, and troubled escape routes, a plan that facilitates a rapid and effective hurricane response and recovery is critical,” he said. “The IEM team’s approach to catastrophic planning meets the challenges associated with integrating multi-jurisdictional needs and capabilities into an effective plan for addressing catastrophic hurricane strikes, as well as man-made catastrophic events.”

IEM President and CEO Madhu Beriwal is the recipient of a s pecial merit award from the Louisiana Emergency Preparedness Association ( LEPA ) for her work in New Orleans hurricane emergency preparedness.

IEM, Inc. was founded in 1985, and is one of the leading emergency management corporations in the U.S. While some organizations include emergency management as one of many business areas, helping to plan for and manage emergencies is IEM’s core business . IEM’s clients include some of the foremost federal emergency and defense organizations in the U.S., including the Department of Homeland Security/FEMA, the Defense Threat Reduction Agency and the Centers for Disease Control and Prevention. www.ieminc.com

Established in 1956, Dewberry is a multidisciplinary planning, engineering, and design firm, employing more than 1,600 individuals. As FEMA’s largest contractor, Dewberry plays a significant role in the national effort to reduce the impact of both natural (flood, fire, earthquake, tropical storm, cyclone, hurricane, tornado, and winter storm) and man-made (hazardous waste, terrorism, etc.) hazards on people, property, and the economy. www.dewberry.com

URS Corporation provides planning, engineering, architecture, and applied science to hundreds of government agencies and private industrial and commercial companies worldwide. The company has more than 26,000 employees -- the largest Architectural & Engineering firm in the U. S. for the fourth consecutive year.URS has approximately 500 employees in Louisiana. URS has over 30 years of experience in hazard mitigation planning and engineering support work for FEMA and other customers. www.urscorp.com

*James Lee Witt Associates was a member of the original team, but did not participate in the project.









IEM Team to Develop Catastrophic Hurricane Disaster Plan for New Orleans & Southeast Louisiana

June 3, 2004

IEM, Inc., the Baton Rouge-based emergency management and homeland security consultant, will lead the development of a catastrophic hurricane disaster plan for Southeast Louisiana and the City of New Orleans under a more than half a million dollar contract with the U.S. Department of Homeland Security/Federal Emergency Management Agency (FEMA).

In making the announcement today on behalf of teaming partners Dewberry, URS Corporation and James Lee Witt Associates*, IEM Director of Homeland Security Wayne Thomas explained that the development of a base catastrophic hurricane disaster plan has urgency due to the recent start of the annual hurricane season which runs through November. National weather experts are predicting an above normal Atlantic hurricane season with six to eight hurricanes, of which three could be categorized as major.

The IEM team will complete a functional exercise on a catastrophic hurricane strike in Southeast Louisiana and use results to develop a response and recovery plan. A catastrophic event is one that can overwhelm State, local and private capabilities so quickly that communities could be devastated without Federal assis"

HoustonChronicle.com - AROUND THE REGION

Sept. 1, 2005, 8:30PM
AROUND THE REGION

CONSTRUCTION
Halliburton hired for storm cleanup
The Navy has hired Houston-based Halliburton Co. to restore electric power, repair roofs and remove debris at three naval facilities in Mississippi damaged by Hurricane Katrina.

Halliburton subsidiary KBR will also perform damage assessments at other naval installations in New Orleans as soon as it is safe to do so.

KBR was assigned the work under a "construction capabilities" contract awarded in 2004 after a competitive bidding process. The company is not involved in the Army Corps of Engineers' effort to repair New Orleans' levees.

The Globe and Mail: Oops! Microsoft's Earth falls flat

Federal Influence Over Airlines Grows: "A federal bankruptcy judge on Tuesday approved the airline's plan to terminate pension programs that cover 120,000 active and retired workers, clearing the way for the largest corporate-pension default in U.S. history."

MSN Money - Extra: Can the U.S. stop using oil by 2050?

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A Personal Burden

Chile switched to a privatized pension system nearly 25 years ago, and millions of workers still fall through the cracks

By Marla Dickerson
Times Staff Writer

February 13, 2005

Weary from decades of working nights and weekends at a public hospital, nursing assistant Inelia Pardo Acevedo recently retired.

But the 64-year-old plans to look for a part-time job to pad the nest egg in her personal retirement account. The $225 a month she draws under Chile's privatized system doesn't stretch far. And what galls her is that colleagues who stuck with traditional pension plans get three times as much, guaranteed for the rest of their lives.

The government "painted this wonderful picture of private accounts," Pardo said. "They fooled me. They fooled us all."

As the Social Security debate heats up in the United States, many are looking south to Chile, where nearly a quarter century of experience with privatization hasn't settled the question of how to best construct an old-age safety net.

In 1981, Chile scrapped a pay-as-you-go system similar to the one in the U.S., in which the contributions of active workers were used to pay pensions of existing retirees. Instead, many Chileans began funneling 10% of their wages into professionally managed private accounts that allowed them to invest in stocks and bonds.

Nearly two dozen nations, including Britain, Argentina, Sweden and Singapore, have since adopted some version of Chile's plan. President Bush has lauded it as "a great example" of why Americans should be allowed to divert a portion of their Social Security contributions to personal accounts.

By some measures, the switch has been a resounding success. Private retirement savings have fueled Chile's capital markets, boosted the nation's economic growth and restored fairness to a system that once doled out benefits based on workers' political clout.

Chileans have tucked away more than $60 billion into their own accounts, the equivalent of two-thirds of the nation's gross domestic product. Average returns on those investments have topped 10%.

But high management fees have trimmed retirees' payouts substantially, while big holes remain in Chile's safety net. An estimated half of the nation's workers aren't saving enough to qualify for even a minimum government pension of about $134 a month. The transition has been brutal for the first wave of retirees such as Pardo, many of whom made the change too late in their careers to reap the full benefits of compound interest.

And although many pension experts laud individual accounts as the only way to assure long-term solvency, opinion polls show that most Chileans are skeptical of their pioneering reform.

"Millions of Chileans would go back to the old system if they could," said Manuel Riesco, director of the National Center for Alternative Development Studies, a Santiago think tank critical of Chile's reform.

Even supporters of Chile's model say that proponents of U.S. privatization may be raising expectations too high. Economists doubt American workers would see such lofty investment returns, or that the economy would get the same lift, in part because the U.S. appears unwilling to swallow the tough fiscal medicine that Chile endured to make the transition.

Guillermo Larrain Rios, who heads the regulatory body that oversees Chile's pension system, marveled at a recent article by a U.S. newspaper columnist who predicted that privatization would reform democracy and even the character of the American electorate.

"It is irresponsible to ask a pension reform to do all that," Larrain said. "Our reform was a good one. But it has limits."

The U.S. faces the same demographic pressures that propelled Chile's bold move. The Andean nation, however, began its experiment with privatization at a very different point in its development. Chile was a military dictatorship saddled with a hodgepodge of rickety, disparate pension plans when leader Gen. Augusto Pinochet allowed U.S.-educated Chilean economist Jose Piñera to construct a single program centered on private accounts.

All salaried employees entering the labor force after the program's inception in 1981 were required to enroll in the new system. Meanwhile, the government enticed most workers in the old plans to switch. It did that by dangling carrots such as lower withholding taxes, by providing them with so-called recognition bonds to give them credit for their previous contributions, and by offering them a chance to earn fat returns in the stock and bond markets.

"They promised us gold and riches," said Maria Quintanilla Carvajal, 63, a government secretary who rued the day that she left her guaranteed-benefit plan to invest on her own behalf.

Quintanilla and hundreds of thousands of Chileans approaching retirement age are finding that they would have been better off remaining in the old system. The gap stems mainly from the way some workers' recognition bonds were calculated, resulting in lower benefits at retirement. Workers have formed an advocacy group that is pressuring the government to compensate them for their so-called pension damage.

While most everyone agrees that these workers were shortchanged, experts say the culprit is Pinochet-era policies that stiffed them on the conversion, rather than a problem with private accounts, which have delivered solid returns.

Some argue that the true performance of the reformed system can't be evaluated until after 2020, when the first generation of workers to have spent their entire careers contributing to their own accounts begins to retire. Still, a survey conducted last year showed that more than half of those Chileans polled had little or no confidence in the privatized system.

Nieves Stuardo Arevalo is among them. At first blush, the 48-year-old social worker would seem to have every reason for optimism. She entered the workforce the same year as pension reform was born and has contributed steadily ever since. The $52,000 she has saved is a small fortune in a nation with annual per capita income of about $4,500, and she is only half-way through her working life. But the lack of a fixed lifetime benefit spooks her.

"It's really not much" considering how long people live these days, she said of her nest egg. "It worries me."

Stuardo is one of the lucky ones. The Chilean government guarantees a so-called minimum pension to workers who have contributed to the system for at least 20 years in the event they outlive their savings. That figure ranges from $134 to $153 a month depending on the retiree's age.

The trouble, critics say, is that nearly half the workforce isn't saving enough to qualify for even that modest sum. Participation is purely voluntary for the self-employed and those toiling in Chile's sizable underground economy, so few bother. Many other workers move in and out of the formal economy on short-term contracts, and thus contribute to their investment accounts only sporadically. Nearly 60% of Chileans enrolled in the system have accumulated less than $3,500.

Millions of workers fell through the gaps of the old system as well. But some studies have concluded that the problem has worsened under privatization. That has some analysts concerned about a wave of elderly poor swamping Chile's welfare rolls down the road.

"There is going to be tremendous pressure … to raise taxes," said Andras Uthoff, an economist at the United Nations Economic Commission for Latin America and the Caribbean in Santiago.

To be sure, the coverage gap bedeviling Chile's privatized system wouldn't be a major issue for the U.S., where the underground economy is smaller and the self-employed are already paying into Social Security.

And the U.S. would probably do better on costs. The Chilean pension market is controlled by just six management companies, whose fees and profits have been criticized as excessive. An average Chilean worker who retired in 2000 would have seen half of his contributions eaten up by fees, according to a recent World Bank study.

Pension experts believe Uncle Sam would be able to demand much better terms given its clout and the competitiveness of U.S. financial markets.

Although the U.S. can avoid some of the biggest pitfalls of Chile's privatization, it isn't likely to experience the same benefits. For example, privatization helped Chile develop its fledgling capital markets, but America's are already the most sophisticated in the world. In addition, Chilean investors profited from some uncanny market timing that brought them huge gains in both the bond and stock markets early on, a situation that appears unlikely to repeat itself in the U.S.

Those banking on a Chilean-style economic growth spurt are bound to be disappointed as well. Pension privatization helped Chile boost its national savings rate and freed up capital to fuel the private sector, but only because the nation ran big budget surpluses to help pay for the transition. Those and a slew of other changes to open Chile's economy have resulted in average GDP growth exceeding 5.5% annually since 1990.

In contrast, the U.S. is burdened with huge budget deficits. And the Bush administration has proposed borrowing even more to maintain existing Social Security promises to retirees if his plan is approved and younger workers begin channeling a portion of their contributions to their own personal accounts.

The end result, said Chilean economist Joseph Ramos, is that the U.S. will get no net increase in its national savings rate, "so you're not going to get the powerful growth effect we saw in Chile."

While privatization may have been good for Chile's economy, workers like Quintanilla say it hasn't done much for them.

"I'll probably have to work the rest of my life now," she said. "I'm angry."

*

Social insecurity

In any given month, only about half of Chileans with personal retirement accounts contribute to them. And most participants had accumulated less than $3,500 as of September 2004.

Chilean workers' participation in private accounts
Not contributing: 51%
Contributing: 49%

Breakdown of private accounts by size
$3,481 or less: 59%
$3,482 to 8,702: 19%
$8,703 to $17,403: 11%
More than $17,404: 11%

Source: Chile's Superintendent of Pension Fund Administrators
Los Angeles Times
http://www.latimes.com/business/la-fi-chile13feb13,0,5035829.story?coll=la-home-business

Copyright 2005 Los Angeles Times

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Sweden’s Choice

By Susan Stranahan and Carol Simons

February 2005

Sweden dramatically altered its pension law in 1999. Similar to U.S. Social Security, Sweden’s old system paid out a defined benefit based on salary and years of employment, using contributions from current workers to support retirees.

The new plan includes mandatory individual accounts. Of the 18.5 percent payroll tax that workers set aside for retirement, 16 percent goes to a defined benefit program. The other 2.5 percent must be put into individual investment accounts. Workers choose from some 650 funds or accept the government-managed default fund.

The government launched the private account plan with a massive public relations campaign that encouraged participants to select their own portfolios, says Annika Sundén, an economist at the Center for Retirement Research at Boston College. "There was tremendous emphasis that ‘now you have the chance to affect your benefit in a positive way.’ People were very enthusiastic."

Then the market dropped. "Most people lost money and have not recuperated," Sundén says. "The default fund performed better than the average portfolio, and people started questioning the wisdom of managing their own pension funds." However, she says, during the last six months, the default fund returned 7.2 percent, outperforming the defined benefit program.

When the plan began, 68 percent of participants chose their own portfolio. In 2001 that number decreased to 20 percent of new participants. Last year it dropped to 10 percent. "The experience taught people that the best thing to do is not do anything, even though this goes against the whole idea of choice in the first place," Sundén says.

Privatization Bombed in Britain | Privatization Bombed in Britain

Privatization Bombed in Britain

Now they’re looking for a way out

By Norma Cohen

February 2005

The president’s bold new plan to partly privatize Social Security, which has many on Wall Street salivating, is not new at all. In fact, it looks remarkably similar to Britain’s 25-year experiment with pension reform, which included substituting private investment accounts for a portion of government pension benefits. It is an experiment now regarded as a dismal failure.

In short, the British public—and government—lost money. They learned the hard way that the costs of administering private accounts can affect returns and reduce the size of a retirement pot by up to 30 percent.

Unusual for Britain, there is now an emerging consensus among labor and business, liberals and conservatives, that the government pension system—the United Kingdom’s counterpart to Social Security—needs serious reform. Recommendations for an overhaul are expected after the elections in May.

One reason for the intense attention is that the U.K.’s traditionally generous system of employer-sponsored pensions is collapsing, exposing the weakness of the government pension system just as more retirees are being forced to rely on it.

So while the United States is looking at privatization, British experts are eyeing the more generous and simpler U.S. Social Security system.

David Willetts, a Conservative member of Parliament whose intellectual acumen has earned him the nickname "Two Brains," is one admirer of the American system. "I like the way they distinguish between Social Security and means-tested welfare," he says. "They have higher Social Security benefits to keep elderly people off welfare."

The Confederation of British Industry (CBI), the functional equivalent of the U.S. Chamber of Commerce, last year made a surprising call for a higher state retirement benefit to be paid for by raising taxes and the retirement age, from 65 to 70. The maximum payout for a single person at age 65 is around 4,200 pounds per year, or about $8,000, although British retirees do not pay for health care or prescription drugs. (In the United States the average annual Social Security benefit is $11,000.)

"Not many people would think that Britain, with its emphasis on social programs, would be less generous than the United States," says Anthony Thompson, head of pensions policy at CBI. "We were surprised ourselves."

CBI’s U-turn on pension policy stems partly from self-interest. Government spending on state pensions has been low, and workplace pensions have traditionally been generous. Now employers are straining under the burden and want the government to play a greater role.

The National Association of Pension Funds, an employers’ group, agrees. It’s "actually cheaper for the state to carry the risk," says Chief Executive Christine Farnish, adding that in looking for a system that offers the best combination of modest guaranteed retirement benefits and low cost, the U.S. Social Security program seems the best model. "It doesn’t have to make a profit, and it delivers efficiencies of scale that most companies would die for," she says.

The story of how Britain’s retirement system reached its current crisis began 25 years ago, when Margaret Thatcher’s Conservatives swept to power on a tide of national disgust at high unemployment, high taxes and poor services. Though her pension reforms were ideological, they were also pragmatic: tax cuts could not be delivered without some cuts in benefits. So the first reform, passed in 1979, was to link increases in state pension benefits to prices instead of wages, something the Bush administration is considering.

Ros Altmann, a Harvard-trained specialist in pension economics who is on the board of the London School of Economics, says that at the time neither the voting public nor most politicians understood the true implications of altering that link. But advocates for the change knew what they were doing: they were slowing the rate of growth in pension increases, because wages have historically risen by 1.5 to 2 percentage points ahead of inflation each year.

"Two percent doesn’t sound like much," Altmann says. "But with the effects of compound interest, that amounts to nearly a 50 percent reduction in the value of benefits over 30 to 40 years."

Thatcher’s second reform was based on ideology. The Thatcherites wanted a home-owning, share-owning nation, something similarly expressed by the Bush administration. The idea was to replace the so-called "nanny state," in which government looked out for people, with a state in which everyone would have to look out for themselves.

In 1986 the Thatcher government offered to let people divert part of their social security taxes into a personal investment account similar to a 401(k). For help in designing the plan, the government turned to the insurance industry, the main source of long-term investment products in Britain. By assigning this role to the industry that would benefit most, the government had in effect asked the fox to design the chicken coop.

The competition to sell pension investment products to the public was intense. Products were numerous and complicated, and few people could understand them. Fees and costs often were not fully disclosed by agents, who could pocket a portion of the first few years’ sales. Rules were poorly designed and rarely enforced.

At the start, the public response was wildly positive, and the program was hailed as one of the triumphs of the Tory government. By 1991 more than 4 million Britons had signed up, attracted by the promise of generous tax incentives.

It soon became apparent that all was not well. More money was being lost by taxes being diverted to private accounts than the government would have paid out in entitlements. Gone was a 1.58 billion-pound surplus in the National Insurance Fund.

Worst of all, many workers who switched from good company pension plans to private investments ended up with a poorer retirement. Since the private investments required upfront charges and commissions, plus annual administration fees, there was often little on which investment returns could accumulate. People began to realize that they could no longer be certain that investment returns would equal what they had given up by switching to private accounts. Later, after the stock market crash in 2001, even the insurance industry began advising customers to return to the government system.

In 2004 alone, 500,000 people abandoned private pensions and moved back into the traditional government plan. Another 250,000 are expected to move back this year.

In dealing with its problems, the U.K. Pensions Commission has concluded that there are only four possible solutions: cut state retirement benefits, increase taxes, increase personal savings or delay retirement. Noting that there is no political support for the first choice, the commission determined that each of the three other choices, on its own, would be too painful and that only some combination could work.

According to U.K. Pension Commission Chairman Adair Turner, a vice president of Merrill Lynch in London and the former director general of the U.K.’s biggest business lobbying group: "There are no other choices."

Norma Cohen covers pension issues for the Financial Times in London.

Los Angeles Times: True Confessions: A Democrat Likes George

Talk Show: "A $140 Million Payday For Frank Raines

Ousted Fannie Mae CEO Franklin D. Raines has quite the gilded parachute to soften his landing. In addition to $19 million in severance payments, Raines, 55, gets a lifetime salary of $1.37 million. If he lives until 75, that's $27.4 million. Add: $21 million in stock already awarded, $23.8 million in future stock payouts, a life insurance policy, and an additional $23.8 million in performance-based options. That's on top of more than $17.5 million paid to Raines since 1999. The grand total is worth $140 million -- not bad for just six years on the job.

By Jessi Hempel "

Franklin Raines: "JANUARY 10, 2005

THE BEST & WORST MANAGERS OF 2004 -- THE WORST MANAGERS

Franklin Raines
Fannie Mae

On Labor Day, he was a favorite to be Treasury Secretary should John Kerry win the White House. At yearend, he had left under a cloud. The charmed career of Franklin D. Raines -- a poor kid from Seattle who climbed through Harvard and a Rhodes Scholarship to become White House budget director and CEO of Fannie Mae (FNM ) -- crashed to a halt on Dec. 21. That was six days after the Securities & Exchange Commission's top accountant declared that mortgage giant Fannie misstated earnings for 3 1/2 years, leading to an estimated $9 billion restatement that will wipe out 40% of profits from 2001 to mid-2004.

Supporters of Raines, 55, insisted that he wasn't culpable for Fannie's misuse of obscure accounting standards. But that argument didn't wash. Raines was in charge in 2001, when Fannie chose to create what the SEC dryly called 'its own unique methodology' to calculate the earnings impact of its trillion-dollar portfolio of derivatives. Raines gave Chief Financial Officer J. Timothy Howard free rein and tolerated 'weak or nonexistent' financial controls, according to a scathing report issued in September by the Office of Federal Housing Enterprise Oversight, Fannie's regulator.

Worse, the CEO failed to manage the scandal. When sibling Freddie Mac's accounting first came under fire in mid-2003, Raines's arrogant insistence that Fannie was above reproach spurred OFHEO to do a white-glove examination. And when that uncovered the improper bookkeeping, Raines insisted on an SEC review, which he maintained would vindicate Fannie. 'Frank was supposed to be the great political risk manager,' says independent banking analyst Bert Ely in Alexandria, Va. 'Instead, he compounded the problems.'

When Fannie's board balked over ousting Raines, OFHEO forced its hand. Raines described his exit as an 'early retirement' that was self-initiated and says that it shows he was accountable for the SEC findings. Fittingly, Raines -- a man who built a $54 billion behemoth with his mastery of behind-the-scenes politicking -- went down spinning.



Copyright 2000-2004, by The McGraw-Hill Companies Inc. All rights reserved."

MSN Money - : The real threat to your Social Security

Europeans are bewildered that Americans can feel more threatened by Janet Jackson's breast than by unregulated handguns. But the Bush administration had to work hard to take all the good will accumulated over the decades since World War II and the Marshall Plan, and replace it with distrust and hostility. As my Uncle José, who is profoundly pro-American, puts it sadly: "There's so much anti-Americanism now. That is Bush's achievement."

excerpted from "A Spanish Lesson" (By NICHOLAS D. KRISTOF Published: April 10, 2004, New York Times)