Pensions are in the news, and is a ticking time bomb, says George Will in today’s NY Post.
Pension plans are underfunded by an estimated $450 billion. Who will bail them out? Taxpayers beware.
The judge who recently allowed United to bail out on its billions in pension debts said it was done to attract financing to keep flying. But perhaps United — or US Airways, or a carrier contemplating bankruptcy as a means of escaping “legacy” costs — should go out of business. The airline industry is afflicted with excess capacity and is hemorrhaging red ink — more than $30 billion since 2000 — largely because of the older carriers’ promises of medical care and pensions for current and retired employees.
But muscular interests have huge stakes in keeping all existing airlines flying. The government has invested $9.5 billion in various subsidies for the big carriers which, in dire straits, might try to hand another $20 billion in pension obligations to Washington. Since 9/11, General Electric, which manufactures and maintains jet engines and leases more than 700 aircraft to airlines, wants all carriers to survive. American Express has paid Delta $750 million for frequent-flier miles to award certain card users.”
And what do we do when Delta, Continental and US Air say they also want to stop paying for their pensions? egads!