Posted on 05/12/2005 5:31:12 AM PDT by Brilliant
A bankruptcy court's decision this week to permit United Airlines to default on four underfunded pension plans is no surprise. This is what happens when Congress puts the taxpayer on the hook as the insurer of last resort. The ...questions are: Who's next? And ...how much will the taxpayers eventually be forced to ante up?
United's default means that responsibility for the pensions of 120,000 workers and retirees now falls on the federal government... The court bought United's argument that getting rid of its pension plans was necessary for the airline's survival...
But the PBGC itself is in financial hot water, with obligations that currently exceed its assets by $23.3 billion... So unless Congress can come up with a way to bolster the agency's finances, it'll be up to the taxpayers to make up the deficit. If United's default creates a domino effect...
At the close of last year, the PBGC figured its "reasonably possible exposure" at $96 billion. That's the estimated amount of underfunding in pension plans... the pension promises made by car makers and parts companies are underfunded by between $45 billion and $50 billion, the agency says...
...As United's workers are learning, defined benefit plans ultimately depend on the financial health of a single employer.
...unions are blaming United management for the pension fiasco, and not without some cause. But they have helped to put the industry into its current state by using the whip hand they are given under the Railway Labor Act to threaten strikes and force up labor costs in the good times. Now the unions are discovering that they will lose some of the pension benefits they bargained for. The same thing will eventually happen to the Social Security benefits of workers if the AFL-CIO and AARP succeed in blocking private investment accounts...
(Excerpt) Read more at online.wsj.com ...
If this comes to the taxpayers, then I want to see it paid for in blood by the industry and union executives who bear responsibility for it. Hanging is appropriate.
Here's a better question: Where in the Constitution does it say that the American taxpayer is reponsible for bailing out the pension plan of a for-profit corporation?
There is no legal basis for this--as you probably know.
Their actions were legal at the time, and the constitution forbids ex post facto laws.
Excuse me, but isn't this a done deal? What do you mean "not let"?
Seems to me this is what we get in a federally propped up economy. The airlines cannot be allowed to go under, Amtrack cannot be allowed to go under, GM , etc. etc..
Meanwhile the unions, who aided and abetted in driving the airlines, auto industries, the nations public school system and others, into rot and decay, are now zeroing in on WalMart, and the feds keep printing money and tell us that we are doing swell.
You could take that to the bank, but it won't lower your "interest" rate.
I would give United thre options.
1. Continue to make your obligations as before and suck it up.
2. Agree to a payment plan where as the government will cobver this for a time but united must pay back with interest the money spent. Similar to the Chysler bail out.
3. Liquidate the company with the pension plan first in line for moneys from the sales.
The last one is most palatable. The problem with letting them off is that we're keeping an inefficient company in business even though it's not paying its pension benefits. By doing that, we're penalyzing those who are paying their benefits, by giving them unfair competition that does not have pension obligations. In the process, we are weakening other airlines that are solvent and doing their duty. Soon, they will therefore have the same problem as United.
Better to let one go bust, and improve the financial condition of the whole remaining portion of the industry.
I admit that I am conflicted....Giving millions of dollars to upper management to continue to take the company down seems kind of an outrage...but on the other hand, United is operating in a hostile environment, with its customers being hassled and scrutinized by government agents before they even get to board an airplane.
But we can agree that union demands of the past and present are mostly responsible for all big industry's troubles today. Heck...Uniteds unions, as we speak, are demanding more, and are threatening a "walkout" if United goes thru with their plans.
The judge could convert it to Chap. 7, let it go out of business.
The current pension underfunding problem and the Social Security problem are the direct result of 40 years of Democrat control of the Congress.
Over that time period, the Democrats were warned that approving judges who did not respect the Constitution was going to expand federal government obligations; diverting SS trust fund money into the general budget was going to create a future IOU deficit; abuse of the "commerce clause" power expanded unconstitutionally Congress' "power" to obligate the taxpayers to bail out a poor business decision; that it was unwise and unconstitutional to grant a special privilege to union's to disrupt a private property owners business with government protection for their decision not to work and thus be replaced, etc.
It was the WWII generation and their children who voted for these members of Congress, Gephardt, Foley, O'Neill, McGovern, Kennedy, Biden, Daschle, Wright, Johnson, Rayburn, Eagleton from 1954 to 1994, who were nothing but selfish, short sighted, socialist/communist and now are "immortalized" with highways, bridges, and federal buildings being named after them.
And now the "true" price has to be paid for the stupidity of the people who voted for that gang of unAmerican, communists.
Economist's such as Milton Friedman and Freidrich Hayek, a former President, Ronald Reagan, and just the plain old history of man, predicted the inevitable "collaspe" of these finacial Ponzi schemes.
I am not trying to be a pessimist, but that's never going to happen, and for the reasons stated in post # 5.
GM next year followed closely by Ford.
If we the people bail them out then we the people should
have a say so in the day to day running of the company
we now own...
Not the government or the executives or the stock holders
we the people are the new stock holders in such a case..
We can start by shutting down the EPA...hanging the executives
and the Union reps together..(figuratively if vous prefere)
imo
CA state budget is in the red as everyone knows, but another large part of the reason beside services for illegals, is the money promised to State Employee union pensions. Some retire at full pay for the rest of their life. All this for votes. Done under Gray Davis. When the state goes bankrupt, I suspect the promises will go too. Its not far away. Civilians have been getting hosed for years now, but unions could vote themselves more from the public treasury and toss the finger wave to the rest of the unwashed. There will be a domino effect. It will catch up with states than refuse to control their spending and promises made with answers of more taxes only. When they dessimate the working class, and wages go down, tax revenues go down. Somehow this concept is lost on the average politician as they are happy to squeeze the tax payer with extreme malice.
No......Delta Airlines is next.
They know....they just don't care. They also know that when they're out of office and milking their connections - there'll be zero accountability for the catastrophes they leave in their wake.
If they want to do a restructuring of a failing business via bankrupcy court, ALL the bonuses and stock options for management going back ten years should be returned to the company.
And management should be completely changed. Put people in charge that have worked in that company for twenty five years, not just dropped for a few years to raid the treasury.
Let the unraveling begin. When Delta and American see this, they're gonna say "Hey, wait a minute! How come they get to ditch their ball and chain - and then come back and tangle with us as if it's a fair fight?! No way! We're going Chapter 11 too. We'll ditch our pensions and come back swinging!"
And how can Uncle Nanny say no? Whether the government gets a clue or not and tries to stop the Imelda Marcos shoe collection from dropping, they'll find a judge who'll rule that it would be patently unfair to hobble the others with their pension obligations. But no problema, our trusty government can always turn around and say "Here camel tax payer - here's another load a' straw."
And then GM, Ford, and Delco will back up to the unloading dock - and the run will be on.
Gosh darn...aren't we blessed with interesting times!
Exactly. Same with Congress. Rules for thee, not for me. We must change their 'entitlements' to be the same as the rest of us. They must be forced to live within the same rules they make. As far as holding them accountable or prosecuting them for negligence, all we have is the ballot box, and as long as one person wins and another loses, he'll get the vote from the winner. Voters need to wake up to the game.. it's just not taxing the middle, it's about destroying the middle. We need to throw the leftist bums out.
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