Paper money

Can a bankrupt pension plan boost a company's bottom line? Corporate accounting rules say absolutely!

The U.S. Securities and Exchange Commission puts out a steady stream of terrific reportage that reveals so many ugly, frightening, and corrupt things about corporate America that there would be rioting in the streets if the average bloke could actually decipher it. It's no small thing, then, that economist Robert B. Reich continues to insist on reading and deciphering the agate type for us.

Right now, over at the website for the magazine he founded, the American Prospect, Reich has posted a short, easy-to-read column on a recent study by S.E.C. that found that 200 companies, including the 100 largest in the country, are shortchanging their pensions to the tune of some $86 billion--but miraculously pumping up their balance sheets with some $91 billion in supposed pension assets.

The maneuver has led to some whoppers. United Airlines projected its pension fund would earn $740 million back in 2000, making the company look profitable. In fact, United's pension fund gained only $21 million. If the company had used this real figure it would have shown an overall operating loss. Two years later, of course, United filed for bankruptcy. And now it's ended its pension fund, $10 billion in the hole.

The United debacle has had ripples closer to home in recent weeks. Currently, Northwest Airlines is lobbying Congress for immediate pension assistance insisting that without it, they'll have little choice but to do as United did. But even with the assistance, they're warning that they plan to stop adding to the pension funds altogether. There's an article about it in this week's City Pages, complete with dollar figures--dug out of S.E.C. reports--on the posh retirement windfalls Northwest's execs can expect for piloting the airline through all of this tricky math.

In the light of these and other S.E.C. findings, the airline's mechanics' union has asked for a forensic audit of Northwest's pensions. Northwest wants pension concessions from taxpayers. It's hard to argue that they should get it without opening the books.

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