you ever asked someone a yes-or-no question and received
a confusing, long-winded, and inept answer? Such a response
is a bit unexpected; nonetheless it has happened to
all of us. However, when dealing with a federal bureaucracy,
ineptness should have been my expectation – and yet
it wasn’t. After all, Ludwig von Mises stated in his
masterful book Bureaucracy: "The plain citizen
compares the operation of the bureaus with the working
of the profit system, which is more familiar to him.
Then he discovers that bureaucratic management is wasteful,
inefficient, slow, and rolled up in red tape."
Oh boy, did I make this discovery in spades. So here
is a brief tale of my maddening yet comical experience
with a federal bureaucracy – the Pension Benefit Guaranty
Corporation (PBGC) – which, by the way, is likely heading
for a taxpayer funded bailout. There may be a lesson
or two in here.
what was the question posed, via the prescribed e-mail
link, to the PBGC? First of all, I provided pertinent
information such as my name, home address, and case
number. Then I followed with this question: "Do
I qualify for a lump-sum payout?" If the answer
is "yes" then please provide details. If the
answer is "no," then please explain why not.
My expectation, naïvely, was to have an answer within
a few days – not four months! More about this later.
June 11, 2001, Reliance Group Holdings declared Chapter
11 Bankruptcy. It was a poorly run holding company and
was deservedly liquidated – the marketplace had spoken.
Having worked at Reliance Surety Company for nine years
(1984–1993), I was keenly interested as to whether or
not the Pension Benefit Guaranty Corporation would take
over Reliance’s employee retirement plan. Due to my
years of service, I had become vested in this retirement
plan and would receive a few hundred dollars per month
in retirement income. Effective February 28, 2002, the
PBGC assumed Reliance’s pension liabilities; and I surmised
that my small, yet noteworthy, monthly income would
be secure. Never fear, as I was now one of those workers
whose benefits were "protected" by an act
of Congress – as described in the PBGC’s own words:
Pension Benefit Guaranty Corporation (PBGC) is mandated
under Title IV of the Employment Retirement Income
Security Act of 1974 (ERISA) to insure, under statutory
limits, participants in covered defined benefit pension
plans in the United States. As of September 30, 2005,
the PBGC covered 44.1 million workers in over 30,000
active plans and was directly responsible for the
future benefits of 1.3 million active and retired
workers whose plans had failed. The PBGC receives
no taxpayer monies and its obligations are not backed
by the full faith and credit of the United States
Government. (Emphasis added)
not so fast. According to the PBGC’s 2004 Annual
Report, this safety-net agency had a deficit net
worth of $23 billion. Even Forbes Magazine is
Will Bail Out The Bailer? Considering the financial
woes at General Motors, Ford, and the major airlines,
it is certain that the PBGC’s deficit position will
only grow worse over time. By the PBGC’s own calculations,
the retirement plans "insured" by it were
under-funded by $450 billion. In my opinion, the PBGC
will either be allowed to fail in its mission or it
will be bailed out by America’s taxpayers. So much for
the idea that my Reliance pension was made "secure"
by Uncle Sam.
to the Maddening yet Comical Experience
August of 2005, a friend who had also worked at Reliance
Surety Company informed me that he received a lump-sum
payout from the PBGC. Having researched the PBGC’s financial
condition – which, as mentioned above, is terrible –
and knowing that the Federal Reserve will continue to
debase the dollar, I decided to contact the PBGC to
find out if I qualified for a lump-sum payout as well.
What follows is a summarized version of the exasperating
exchange between the PBGC and me:
grief! It took four months to get a simple yes-or-no
answer. To make this experience all the more surreal,
the PBGC has the audacity to state the following in
its 2004 Annual Report: "Nothing
is more important to PBGC than providing the highest
quality service to its customers. The Corporation has
an intense focus on meeting the needs and expectations
of its customers while carrying out its statutory missions."
Most certainly, without the profit-and-loss test of
the free market, the PBGC and all public bureaucracies
will fail miserably in "customer" service
let alone financial management. Could you imagine if
Amazon.com took four months to send you a readily available
book? It would already be out of business.
to think I just had a conversation, at the gym, with
a gentleman who advocates socialized medicine. Perhaps
a run-in with the IRS, PBGC, or any other public bureaucracy
would change his mind? I doubt it, as socialists believe
any bureaucracy can operate swimmingly with the "right
man" in charge. To be sure, this is pure fantasy.
Hence, here is another dose of wisdom from Ludwig von
Mises’ book Bureaucracy:
champions of socialism call themselves progressives,
but they recommend a system which is characterized
by rigid observance of routine and by a resistance
to every kind of improvement. They call themselves
liberals, but they are intent upon abolishing liberty.
They call themselves democrats, but they yearn for
dictatorship. They call themselves revolutionaries,
but they want to make the government omnipotent. They
promise the blessings of the Garden of Eden, but they
plan to transform the world into a gigantic post office.
Every man but one a subordinate clerk in a bureau.
What an alluring utopia! What a noble cause to fight!
all this frenzy of agitation there is but one weapon
available: reason. Just common sense is needed to
prevent man from falling prey to illusory fantasies
and empty catchwords.
and common sense are nowhere to be found at the PBGC.
My mistake was to have any such expectations in the
I would like to see the PBGC and each if its bureaucratic
brethren dry up and blow away. It is my responsibility
to save for my own retirement. Thus, a more serious
mistake would be to plan on receiving retirement income
via Uncle Sam’s nutty wealth redistribution schemes
– as administered by bungling bureaucracies such as
the PBGC and the Social Security Administration. With
the federal government’s unfunded liabilities amounting
to $50 trillion (and growing), reason and common sense
tell me that I had better take care of myself both physically
and financially. To depend on the kindness of bureaucratic
strangers would be utterly foolish.