A Stitch in Haste

Just a quick reminder that the Pension Benefit Guaranty Corporation is still heading full-throttle toward insolvency and a taxpayer bailout:

The Pension Benefit Guaranty Corp. disclosed in its annual financial report that as of Sept. 30, it had $56.5 billion in assets to cover $79.2 billion in pension liabilities.

There has been an explosion in recent years in the number of big, ailing companies — especially in labor-heavy industries like airlines and steel — transferring their pension liabilities to the PBGC. With billions of dollars flying out of the agency's door, concern has been mounting in Congress and elsewhere over its financial footing.
...
Without a legislative overhaul of the private pension system, the PBGC eventually will run out of money to pay the pension claims of the retirees of companies whose plans it has assumed, some experts predict. That would mean that people retiring from financially troubled companies would have nowhere else to turn for their promised pension payments — raising the possibility of a taxpayer bailout.

Of course, "labor-heavy industries" is a polite way of saying "unionized industries." The American landscape is littered with industries that have been collectively bargained straight into bankruptcy. The PBGC is no different (if Delphi and a few more airlines aren't enough to nudge the agency off the cliff of insolvency, then the increasingly likely bankruptcy of General Motors certainly would). The PBGC crisis is not a question of if, but of when.

Overpromise, ignore the demographics, ignore the finances. Then, once it's too late, blame the people who came before you and stick taxpayers with the bill — for a few tens of billions of dollars in the case of the PBGC.

Now multiply that by a factor of 100 or more and you have an idea what it will be like when the Social Security crisis arrives in earnest, around 2017 or so.

The worst kind of bankruptcy is a bankrupt idea.