A Stitch in Haste

Want to see the future? Read this New York Times piece on the looming airline pension crisis:

[T]he federal agency that insures company pensions is facing a possible cascade of bankruptcies and pension defaults in the airline industry that some experts fear could lead to another multibillion-dollar taxpayer bailout.
...
The Pension Benefit Guaranty Corporation is already hobbled by debt, having picked up the pieces of more than 3,200 failed pension plans in its 30-year life. The scale of the failures has risen sharply in the last three years, but the agency has few tools at its disposal to prevent the situation from becoming worse.
...
[B]ecause pension obligations, unlike bank deposits, do not have to be paid off all at once, it is difficult to raise alarms about the threat.

"The real blowup doesn't happen right away; it happens over time," Mr. Kandarian said. "You've got to address it now, but it doesn't look like a crisis now. The crisis is always over the next hill." The risk is that the longer the problems are avoided, the worse they can get.
...
It wasn't supposed to be this way. In 1974, Congress responded to an ugly string of pension failures in the auto industry by passing landmark legislation. From then on, any company that promised pensions to its workers would be required to set aside enough money to pay them. Rules were written to determine how much money was enough. To weave the retirement safety net even more tightly, Congress also created the pension insurance program.

Those protections were hailed as "the greatest development in the life of the American worker since Social Security" by Senator Jacob K. Javits, the New York Republican who died in 1986. But for many workers, those protections no longer look so secure.

"You see that the whole thing could really be a house of cards that could come crashing down," Mr. Dean said.

All the same phenomena as with Social Security: so-called "guaranteed" benefits that in fact are supported by absolutely nothing except unenforceable promises (there is no "lock box"!); dubious actuarial assumptions, a slow crawl deeper and deeper into crisis, culminating in massive benefit cuts, bankruptcy and, ultimately, taxpayer bailout on a mammoth scale.

If you're under 40, this is what you can look forward to without privitization. This is exactly what will happen to Social Security, for exactly the same reasons, unless major changes are adopted immediately.

UPDATE: Apparently the Times editorial board doesn't read its own paper -- they're a week late and a thesis short with this empty editorial on the PBGC.