 |
||||||||
 |
|
|||||||
|
||||||||
|
 |
Big business likely to lose 401(k) battle
© St. Petersburg Times WASHINGTON -- Nobody expected President Bush to break ranks with big business, especially so early in his administration. Perhaps that is why the media failed to report the reaction of big business when Bush decided recently to endorse a proposal designed to protect 401(k) retirement accounts against the activities of unscrupulous employers such as Enron. Even for a Republican president, Bush has been remarkably loyal to business interests since he took office with the help of their campaign contributions and support. His early decision to soften the rules governing workplace ergonomics, for example, was seen as a sign of his abiding commitment to their agenda. Thus business lobbyists in Washington were taken by surprise when the president proposed to allow employees after three years with the company to sell stock placed in their 401(k)s by their employers. As employers see it, the president's proposal is an assault on a system that has worked well for them and for their workers. Bush is not likely to yield to their opposition, however. Nor are the pro-business members in Congress expected to block the proposal from becoming law. That is because Bush's position was motivated by political necessity. In order to distance himself from his friends in Enron's executive suite, he had to do something to allay the fears of many Americans that their employer might leave them unemployed with a 401(k) full of worthless company stock. Many members of Congress -- both Republicans and Democrats who took campaign contributions from Enron -- are up against the same political reality as the president. According to the Pew Research Center for People and the Press, 60 percent of Americans are well aware of what happened to the employees of Enron when the company executives cashed out before declaring bankruptcy and left the workers holding worthless stock. Few complex business stories have ever created waves among average Americans like this one. Although business executives are strongly opposed to changing the 401(k) rules, even they are hesitant to speak out too strongly against the president's proposal. Randall Johnson, a vice president at the U.S. Chamber of Commerce, says that while members of his organization have serious concerns about the idea, they have not publicly declared their intention to oppose it. He said the chamber is still polling its members to determine how most 401(k)s would be affected by the proposal. But there is no doubt that big business is determined to fight this move. A group called the Coalition on Employee Retirement Benefits has been formed for this purpose, with the support of hundreds of companies, large and small. While they oppose the president's plan, they hate the alteratives proposed by Democrats even more. Democrats would either cap the amount of company stock that could be placed in an employee's 401(k) at 10 percent or 20 percent, or allow workers to sell their stock after only one year at the company. And just in case the Congress ignores their arguments against these proposals, the business groups are also trying to scare workers who have 401(k)s, suggesting the legislation could backfire on them. If the government decides to give beneficiaries a greater opportunity to sell the company stock in their 401(k)s, the companies say, employer matching contributions will dry up. In a letter sent last week to House Speaker Dennis Hastert, the coalition said the president's proposal would ultimately "limit employee choice and deter employer matches." The group added: "We urge Congress to focus instead on encouraging investment education and professional investment advice so that workers have the tools to make wise retirement planning decisions." What the companies are reluctant to admit is that many of them prefer using stock to match the employees' contributions to their 401(k)s because it helps to stabilize the stock price. The longer employes hold the stock, the better it is for the stock. Moreover, the companies fear their stock prices will plummet if, as a result of legislation, all their employees are permitted to dump the stock at one time. My guess is that despite all of its influence, big business is going to be the loser in this battle. Americans with 401(k)s are seen by Congress and the president as a powerful voting block. In fact, business will be lucky if members of Congress do not toughen up Bush's proposal just to prove their commitment to the 56-million American voters who have 401(k)s.
 © 2006 • All Rights Reserved • St. Petersburg Times
490 First Avenue South • St. Petersburg, FL 33701 • 727-893-8111 
|
|
Times columns today Howard Troxler Sara Fritz |
