United We Default - Is the auto industry next?

The Wall Street Journal ^ | May 12, 2005 | The Wall Street Journal

[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...

[.cnI redruM]

Margaret Thatcher once pointed out. "The problem with socialism is that you eventually run out of other people's money."

I wonder what these losers will do when that actually happens.

[G.Mason]

"I wonder what these losers will do when that actually happens."

I've often thought the same thing. Surely this welfare socialist system will collapse under it's own weight, I thought. But no ... not many give a damn. In fact about half the voters seems to wish to pay more taxes.

Now the more conservative Republicans are exactly like the Democrats were in the '60's, and the Rhino's are like Lieberman / Gore of 2000.

Will we wind up like Germany in the thirties, taking our daily pay home in a wheel barrow? Time will tell.

[.cnI redruM]

>>>>In fact about half the voters seems to wish to pay more taxes.

That's an inaccurate read. About half the voters want the guy 1 income bracket up from them to pay more taxes...

[G.Mason]

"That's an inaccurate read. About half the voters want the guy 1 income bracket up from them to pay more taxes..."

Now hold on there a minute. If that is true, and I nod in agreement with what you are saying, then we are far worse off than I suspected. Add the "Greatest Generation" and all other retirees that want more, more and a little bit more.

Now we have the reason we are seeing this slide to the left by both parties. The parmount reasoning for the politician is ...Will this get me re-elected.

The majority in Congress could give a rat's butt about America becoming more socialist. Oh, should an entire city get wiped out in one blow they would demand our military stop it, but the slow eroding of these United States, drip by bloody drip, does not phase them in the least.