New push for federal workers to contribute more to pensions


IN FOCUS: Washington lawmakers pushing to require federal workers to pay more for retirement

RICH KARLGAARD: The Republican bill was hardly asking for anything. They are asking for federal workers to increase their contribution from 1.2 percent of their paycheck, to 1.5. Not a big increase. I am surprised it was battled so much. Let's put it into context. We have an annual deficit running over a trillion dollars and the government now spends a quarter of GDP. Everybody has got to do something here. That was not much to ask for.

RICK UNGAR: It is interesting because if you look at the top line of the report on this that came out recently, you can make a pretty good case for asking them to do this. As usual, however, the devil is in the details and you have to look just a little bit deeper. When we are talking about federal employees with only a high school degree, it is a very sweet deal for them. They are getting 70 percent more in benefits and a better salary. But, when you look at professionals and employees with doctorates, not so good. They are making on average, 23 percent less than their private sector counterparts and they are about even on the benefits. I think we have to be a little bit careful and not dissuade those who we need in government service to come, while not giving too sweet of a deal to the people who should not have it.

STEVE FORBES: In terms of pay what government workers put in now, each dollar they put in, the government puts in $14 for benefits. There is a lot of room that they can kick in a little more.

KYM MCNICHOLAS: I have no doubt in my mind that it is really, really good that we all pay more into our retirement, I just do not think that federal workers should be forced to do so. I do not think anyone should be forced to do anything like that. They cannot afford it. Why are we targeting these working class men and women? Haven't they gone thought enough? Congress already froze their wages for two years to the tune of $60 billion in lost wages. It is a wonder that these union leaders are in an uproar. Yes, I said union leaders, and I normally don't agree with them, but to force these federal workers to pay three times more for their pension is just wrong. They cannot afford it right now.

MIKE OZANIAN: The overall number is astounding David. For these public employees, on average, they are getting 16 percent more in compensation. Rick mentioned the big difference for high school degrees, even for college degrees the benefits are 43 percent more. Those PhD's Rick, they are a tiny fraction of those government employees.

ELIZABETH MACDONALD: My dear friend Rick Ungar, as much as I like him, he is just cherry picking the data because federal doctorate worker degrees get 2 percent higher of benefits, the master degrees get 36 percent higher benefits and the real issue is benefits are driving it, 48 percent higher versus a private worker. Why? Because a federal worker gets both pensions and 401(K) where as private workers only get 401(K). That is what is really driving the differences. What you are getting for your buck at the federal workforce level? You are getting 401(K) money, that is why the numbers are much higher for federal workers.

President Obama's new budget includes new FDA 'user fees'

STEVE FORBES: What this does David, is keep in place a system that might have been good in 1950 or 1850 but is inadequate today, especially with diseases like cancer. All this does is perpetuate, have the private sector subsidize the FDA's antiquated ways of doing testing. If they didn't have the money that would have to get into the modern age and that would save lives, instead of having a lot of people die because they are not fast in approving drugs they should approve and devices they should approve.

VICTORIA BARRET: The FDA is trying to modernize and I think the goal here, and yes there are fees, but I think the goal here is to get generics to the market faster. That in the end, will save us a lot of money because generics are much cheaper and they account for a large chunk of prescriptions we take every day. That is the hope. The FDA has to get its funding somehow. The answer isn't to get rid of the FDA, so hey this is the system we have got.

ELIZABETH MACDONALD: I am a little nervous about this. Twenty-one federal agencies now get up to 80 percent of their budget from fees when Steve makes the point those fees tend to be passed along to customers. But to Victoria's point, I hear exactly what Victoria is saying. But, what is creepy about this is there is a conflict of interest where you are paying a fee to the government to speed up your approval process for a generic drug. That is really what is happening. It is a 30 month review period; they want to speed it up to ten months under health reform.

DENNIS KNEALE: We spend $300 billion a year in this country on prescription drugs and the FDA says $300 million that is one dollar on a thousand. Don't worry about that, worry about a bigger issue. This is the sign of the imperial bureaucracy. Suddenly we found a new way to solve the deficit. Let's just pass a passel of brand new laws on business and then let's charge business for having to abide by the law. It is a fantastic plan. It is an imperial bureaucracy that is out of control. Go to congress for taxpayer dollars for your budget.

RICH KARLGAARD: It assumes that government bureaucracies and agencies can never go backwards, that they can never shrink. I mean as Victoria said, of course we shouldn't get rid of the FDA, but long ago the FDA exceeded its original mandate which was to ensure safety. Now, in the case of drugs, it has to ensure efficacy that these drugs work. Well, that has added years and cost to bringing a new drug to market. People should realize that the drug market is a global market and all we are going to succeed at doing is driving the most innovative drug and biotech companies off shore.

RICK UNGAR: It is interesting, everybody has been a little bit right and a little bit wrong. EMac is absolutely right when she points out how creepy it is that the drug companies are paying for the salaries of the people who have to approve them. Dennis is right that it is a very small percentage. Look at the end of the day these fees are used to speed up drug approvals. I do have one complaint however, I will quickly note that I do not like that the fees are being tacked onto generic drug makers, when it is really first use manufacturers who get the greatest benefit out of it. I would raise it a little bit on those people.

Whitney Houston reportedly was broke when she died

STEVE FORBES: [This happens often] because they focus on their artistry and leave to others management of them money and figure it is going to take care of itself. Unfortunately, going back to Joe Lewis, the great boxer, the money went away and he was left with a huge tax bill and dies broke. It happens all the time. One good thing I think David, that has come from our list of the top celebrities each year is making these celebrities conscious. When you make it how do you preserve it and how do you create capital, instead of money that goes out and you are left with nothing?

ELIZABETH MACDONALD: Our hearts go out to the Houston family because this is a terrible loss. She was a national treasure. But, to the issue at hand, you see this time and again, Michael Jackson, Pamela Anderson, Gary Coleman, MC Hammer, Kim Basinger, Debbie Reynolds, Tony Braxton. What happens is they think short term and not long term. With Whitney Houston, it is my understanding that she does not have the rights to her music. She gets royalty fees. That is another thing that needs to be renegotiated on the part of all these great artists.

MIKE OZANIAN: I think that when you see a celebrity like this, you tend to think that this generally just happens to them and as sad as this is, the problems of addiction and falling prey to inept financial planners is replied. Listen go to a narcotics anonymous meeting or an AA meeting and you will see truck drivers, beauticians and all types of people there. You know hat, when those people get in trouble unfortunately they do not make the news and maybe if more people sort of came out and spoke about this it would be something we could better deal with.

RICH KARLGAARD: When you look at the list of celebrities, particularly signers for some reason who died before their time, it is very tragic. Mike raises the point about addiction. That is absolutely true. A Hollywood film director said something about when celebrities get into trouble; he called it the dark side of the force. The force is all this emotional energy that goes into their artistry. The dark side of the force is that other parts of their life are neglected and when you compound it with addiction, tragedy almost always results.

VICTORIA BARRET: I think it is also compounded by the fact that who you can trust? You have people who want to be your financial advisors and claim to know a lot more than you do about your money, but are they trustworthy? Are they really going to make the right decisions for you? It is a lot for one person to take on, especially in the case of someone like Whitney. She was signed at a very young age, 19-years old. So it happens so early, you have to take on a lot of responsibility that most of us would not be ready for.


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